TaxTMI 
TaxTMI 
2015 (3) TMI 90
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....PLICATION (OJ) NO. 292 of 2007 with CIVIL APPLICATION (OJ) NO. 240 of 2012 SINGHI & CO, ADVOCATE FOR THE APPELLANT MR BHAGYODAYA MISHRA, ADVOCATE, MR INDRAVADAN PARMAR, ADVOCATE, MR RAJESH P MANKAD, ADVOCATE, MR RD DAVE, ADVOCATE, MR YOGESH G DEV, ADVOCATE, MS AMEE YAJNIK, ADVOCATE, FOR THE RESPONDENT ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. The appellants had filed applications seeking substitution of appellants in place of respondent no. 20 (ICICI Bank Limited) in view of the fact that the applicants had taken over the debts of ICICI Bank Limited. The said applications were heard by learned Single Judge sitting as Company Judge and vide common judgement and order dated 05-06- 09/07/2007 the applications came to be dismissed. This judgement was challenged by filing the present appeals which were decided on 12.01.2009. Against the said judgement passed by the Division Bench of this High Court, the matter was carried to the Apex Court by filing Civil Appeals No. 8393 of 2010 and allied matters. The Apex Court by order dated 30.09.2010 (reported as ICICI Bank Limited vs. Official Liquidator of APS Star Industries Limited and Others reported in (2010) 10 SCC ....
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....e Company in Liquidation; - - 4. 52 OJA/161/2007 in COMA No. 620 of 2006 With OJCA/265/2007 Kotak Mahindra Bank vs. OL of Stanrose Steels Limited (formerly Volvo Steels Limited) & anr. A) That this Hon'ble Court may be pleased to permit the applicant to be substituted for and in place of the State Bank of India and State Bank of Saurashtra as the secured creditor of the Company in Liquidation; - 10.7.2014 5. 53 OJA/162/2007 in COMA No. 490 of 2006 With OJCA/266/2007 Kotak Mahindra Bank vs. Star Industrial & Textile Enterprise & ors. A) That this Hon'ble Court may be pleased to allow the name of the applicant to be substituted in place of the ICICI Bank Limited; - - 6. 54 OJA/163/2007 in COMA No. 458 of 2006 With OJCA/267/2007 Kotak Mahindra Bank vs. OL of Arti Agro Industries Limited & ors. A) That this Hon'ble Court may be please to direct the Official Liquidator to hand over possession of the assets of the Company in liquidation more particularly described in Annexure-I to the affidavit in support of this application within a period of two weeks or such other period as this Hon'ble Court deems fit to the Receiver appointed by the Debts Recovery Tribunal, Mumbai-....
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....he applicant to be substitute its name in place of ICICI Bank Limited in Official Liquidator Report No. 9 of 2002 in Company Petition No. 157 of 1995; 25.4.2006 31.1.2007 15 62 OJA/173/2007 in COMA/540/2006 With OJCA/275/2007 Standard Chartered Bank vs. OL of A'bad Mfg. & Calico Prtg. Co. Limited. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 63 of 2004 in Company Petition No. 157 of 1995; 25.4.2006 31.1.2007 16 63 OJA/174/2007 in COMA/541/2006 With OJCA/276/2007 Standard Chartered Bank vs. OL of A'bad Mfg. & Calico Prtg. Co. Limited. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 303 of 2004 in Company Petition No. 157 of 1995; 25.4.2006 31.1.2007 17 64 OJA/175/2007 in COMA/542/2006 With OJCA/277/2007 Standard Chartered Bank vs. OL of A'bad Mfg. & Calico Prtg. Co. Limited. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 274 of 2005 in Company Petition No. 1....
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.....8.2006 30.1.2009 25 72 OJA/183/2007 in COMA 550 of 2006 With OJCA/285/2007 Standard Chartered Bank vs. OL of Ambica Mills Ltd. & ors. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 220 of 2002 in Company Petition No. 66 of 1988; 11.8.2006 30.1.2009 26 73 OJA/184/2007 in COMA 551 of 2006 With OJCA/286/2007 Standard Chartered Bank vs. OL of Ambica Mills Ltd. & ors. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 224 of 2002 in Company Petition No. 66 of 1988; 11.8.2006 30.1.2009 27 74 OJA/185/2007 in COMA 552/2006 With OJCA/287/2007 Standard Chartered Bank vs. OL of Vallabh Glass Works Limited & ors. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 248 of 2006 in Company Petition No. 157 of 2000; 26.6.2006 20.11.200 8 28 75 OJA/186/2007 in COMA/ 553 of 2006 With OJCA/288/2007 Standard Chartered Bank vs. OL of Ambica Mills Ltd. & ors. (a) That this Ho....
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....y. Pursuant to the said Deed, ICICI Bank Limited confirmed that the applicants shall be entitled to initiate/adopt appropriate legal action and/or continue to pursue any existing legal action in its own name against the defendants for recovery of the dues under the said facilities. 3.2 It is the case of the applicants that apropos the assignment agreement, the applicants had become lender and all the rights of ICICI Bank Limited in relation to the loan and the underlying security interests vested in the applicants and therefore the applicants vide Board Resolution authorized concerned personnel to represent the applicants in any Court of Law, Consumer Court, Tribunal or any other judicial and quasi judicial authority in connection with the legal proceedings initiated by or against the applicants. 3.3 However, it is the case of the applicants that as per the Banking Regulation Act read with the guidelines of Reserve Bank of India, such sale and purchase of the debts, including the rights in the immovable properties being secured creditors, can be sold by the loaner and purchased by the assignee Bank/Financial Institution. As the proceedings for winding up, including for provisiona....
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....egulate the business of the banking companies. That, RBI is empowered to control management of banking companies in certain situations. It is empowered to lay down conditions on which the banking companies will operate. It is empowered to regulate paidup capital, reserve fund, cash fund and above all to lay down policies in the matter of advances to be made by the banking companies, allocation of resources etc. While laying down such policies under the said Act, RBI can lay down parameters enabling banking companies to expand its business. For example, RBI's permission is required to be obtained if a banking company seeks to deal in "derivatives". It is a business which will not fall in clauses (a) to (o) of Section 6(1)(a) and yet RBI can lay down guidelines and directions enabling banking companies to deal in derivatives like futures and options. 37. The point we are trying to make is that apart from the principal business of accepting deposits and lending the said 1949 Act leaves ample scope for the banking companies to venture into new businesses subject to such businesses being subject to the control of the Regulator, viz. RBI. In other words, the 1949 Act allows banking ....
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....ing regulation and supervision in India. 39. The test to be applied is - whether trading in NPAs has the characteristics of a bona fide banking business. That test is satisfied in this case. The guidelines issued by RBI dated 13.7.2005 itself authorizes banks to deal inter se in NPAs. These guidelines have been issued by the Regulator in exercise of the powers conferred by Sections 21 and 35A of the Act. They have a statutory force of law. They have allowed banks to engage in trading in NPAs with the purpose of cleaning the balance sheets so that they could raise the capital adequacy ratio. All this comes within the ambit of Section 21 which enables RBI to frame the policy in relation to Advances to be followed by the banking companies and which empowers RBI to give directions to banking companies under Section 21(2). These guidelines and directions following them have a statutory force. 40. When a delegate is empowered by the Parliament to enact a Policy and to issue directions which have a statutory force and when the delegatee (RBI) issues such guidelines (Policy) having statutory force, such guidelines have got to be read as supplement to the provisions of the BR Act, 1949. T....
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....rs the debt with underlying security, the borrower(s) ceases to be the borrower(s) of the ICICI Bank Ltd. and becomes the borrower(s) of Kotak Mahindra Bank Ltd. (assignee). " Emphasis Supplied 4.1 In light of the above observations made by the Apex Court, Mr. Mihir Joshi, learned Senior Counsel submitted that the issue regarding substitution has already been concluded by the Apex Court. Mr. Ashok Shah, learned Senior Counsel has tried to contest this contention by submitting that the issue of substitution is not concluded by the Apex Court. We cannot accept this submission of Mr. Shah. A bare reading of the observations of the Apex Court in para 46 as extracted hereinabove makes it explicitly clear that the moment ICICI Bank Ltd. transfers the debt with underlying security, the borrower(s) ceases to be the borrower(s) of the bank and becomes the borrower(s) of Kotak Mahindra Bank Ltd (assignee). Thus it is explicitly clear that Kotak Mahindra Bank has become entitled to recover the amount from the borrowers and therefore their prayer for substitution cannot be rejected. 4.2 Mr. Joshi has also drawn the attention of this Court to the observations made by the learned Company Judg....