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2016 (2) TMI 775
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....Interest Act, 2002 prior to the appointment of the Provisional Liquidator and permit the applicant to proceed further in relation thereto, in the interest of justice." 2. Heard learned advocate Mr. Navin K Pahwa for the applicant, learned advocate Ms. Amee Yagnik for respondent no.1-Official Liquidator and learned advocate Mr. Ashok L Shah with learned advocate Mr. Pawan C Godiawala for respondent no.2. 3. Learned advocate Mr. Pahwa for the applicant submitted that the State Bank of India (hereinafter referred to as 'SBI' for the sake of convenience) had granted various credit facilities to Clarisis Organics Limited (hereinafter referred to as the 'Company' for the sake of convenience). The said credit facilities were renewed from time to time. Against the said credit facilities, the company had mortgaged the properties being land and building bearing survey no.489, 502, 502/1/A, 502/1/B, 502/1/C, 502/2-P and consolidated survey no.489 situated at village Mokhsi, Taluka Savli, District Vadodara admeasuring 30,451 sq.mtrs. The Company had also hypothecated all its movables being raw materials, stock in progress, finished goods, packing materials, plant and mach....
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....Therefore, the applicant considered the said objections raised by the company, rejected the same and by communication dated 25.1.2007 it was informed to the company that objections raised by it were rejected. Thereafter, company did not make the payment. Hence, the authorized officer of the applicant took constructive possession of the secured assets by issuing possession notice dated 12.12.2007. It was published in local daily newspapers on 14.12.2007. The said possession notice was also affixed at the site of the secured assets on 19.12.2007. 3.4 Learned advocate Mr. Pahwa thereafter submitted that when the authorized officer of the applicant went to take physical possession of the secured assets, the representatives of the company prevented the authorized officer from taking physical possession. In the meantime, the company also filed application under Section 17 of the SARFAESI Act before Debts Recovery Tribunal, Ahmedabad (hereinafter referred to as 'DRT' for short) wherein demand notice dated 15.11.2006 as well as possession notice dated 12.12.2007 were challenged. At this stage, learned advocate Mr. Pahwa pointed out that the company was before Board for Industria....
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....o know that this Court has admitted the Company Petition No.50 of 2010 by an order dated 8.2.2011 whereby the Official Liquidator attached with this Court is appointed as Provisional Liquidator to take over the possession of the assets of the company. The applicant came to know about the said aspect when SBI forwarded a copy of letter dated 8.3.2011 received by it from the Official Liquidator. The applicant, therefore, addressed a letter dated 16.3.2011 to Official Liquidator whereby the information was given to him about the proceedings taken out by the applicant under the SARFAESI Act in respect of the secured assets. It was also pointed out that the symbolic possession of the secured assets is already taken by the applicant. In spite of the aforesaid communication, the grievance is made by learned advocate that the Official Liquidator proceeded with taking over the possession of the assets of the company including the secured assets. The physical possession of the assets of the company was taken over on 18.3.2011. 3.6 In the aforesaid background of the facts of the present case, learned advocate Mr. Pahwa would submit that the applicant is secured creditor of the company and ....
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....hereby the action of the Official Liquidator in taking over possession was ratified by this Court. The applicant was also directed to deposit Rs. 1 lac with the office of the Official Liquidator to meet with the expenses of preparing inventory valuation report. The applicant is also directed to deposit Rs. 15,750/- every month with the Official Liquidator towards security charges. He further submitted that on 17.7.2014, application filed by the Company under Section 17 of the SARFAESI Act is dismissed by the DRT. 3.10 Learned advocate Mr. Pahwa appearing for the applicant has placed reliance upon the decision rendered by the Hon'ble the Supreme Court in the case of ICICI Bank Ltd. v/s. Official Liquidator of APS Star Industries Ltd. reported in (2010)10 SCC 1. The Hon'ble the Supreme Court remanded the matter back to the Hon'ble Division Bench of this Court for considering the other issues with regard to registrations, stamp duty etc. The Hon'ble the Division Bench passed an order in O.J. Appeal No.156 of 2007 whereby the matter was remanded back to the learned Company Judge. The learned Company Judge, thereafter, passed an order in Company Application No.489 of ....
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.... Department V/s Official Liquidator of Maharashtra Explosives Ltd. (in liqn.), reported in 2011 vol.113(4) BLR 2213. He mainly relied upon the observation made by the Bombay High Court in paragraphs 17,40,41,42,44,45,46. 3.17 Learned advocate further submitted that nobody has initiated any action under the Registration Act or with regard to the payment of the stamp duty against the applicant. Thus, it is not open for the respondents to contend that the applicant has not paid the proper stamp duty or proper registration is not made before the competent authority. 4. Learned advocate Mr. A.L. Shah appearing with learned advocate Mr. Pavan Godiawala for the intervenor mainly submitted that the intervenor is the creditor of the company in liquidation for an amount of Rs. 1,34,929/- by way of unsecured loan/deposit advanced to the company. He submitted that there are other creditors/deposit holders having claim against the company and they are also supporting the case of the intervenor. He further pointed out that the intervenor is a shareholder (contributory) of the company and holding 85,100 equity shares of the company. The intervenor is also alleged to be a guarantor to the SB....
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....elates immovable property, it shall be presented for registration in the office of the Sub-Registrar within whose sub-district the whole or any part of the property to which such document relates is situated. In the present case, it is pointed out by learned advocate that the immovable property is situated in sub-district of Baroda and, therefore, the same is required to be registered at the office of Sub-Registrar, Vadodara. However, the Deed of Assignment is registered in Paldi sub-district Ahmedabad. Learned counsel referred to and relied upon Section 49 of the Registration Act also. He, therefore, contended that in absence of proper registration with the competent authority, such document cannot be relied as evidence. Hence, the applicant has not acquired any security interest in the properties of the company. 4.3 Learned advocate Mr. Shah would contend that the applicant was not entitled to issue notice under Section 13(2) of the SARFAESI Act. The applicant is not lender of the company. The applicant has not classified the account of the company as Non-performing Asset (for short 'NPA' for the sake of convenience) at all. He submitted that the entire credit faciliti....
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....ower must have defaulted in repayment of the principal or installment of the secured creditor. (3) The secured creditor in respect of whom the default has been committed must have classified the account of the borrower in its books as a NPA. In the present case, the applicant has not complied with the said conditions. 4.5 Learned advocate Mr. Shah once again submitted that the company has not been classified as NPA after novatio of old credit facilities arrangement by new credit facilities arrangement in the year 2004. Even the earlier classification of the account of the company as NPA was by SBI and if it is taken into consideration, only the secured creditor i.e. SBI alone can issue a notice under Section 13(2) of the SARFAESI Act. The applicant shall not be entitled to issue such notice and, therefore, on this ground also the applicant is not entitled to initiate any action under Section 13(4) of the said Act. 4.6 Learned advocate Mr. Shah further submitted that the applicant is not at all the creditor of the company much less a secured creditor. The applicant is not entitled to initiate any action under the SARFAESI Act. The applicant has not lent any money to the compan....
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....red to Section 15 of the SIC Act and more particularly 3rd proviso of the said section which provides that:- "Provided also that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors, representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act. " 4.10 Then, he referred to Section 20(1) of SIC Act which provides as under: "20(1) Where the Board, after making inquiry under section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof is n....
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....re applicable. In spite of that, the same has been violated. Hence, the assignment itself is bad. 4.13 Learned advocate Mr. Shah would submit that the company was borrower of lender-SBI. The account of the company was declared as NPA in the year 2001. Thereafter, the said account was restructured by entering into another agreement and as submitted earlier, thereafter, SBI has not declared the account of the company as NPA. The applicant, after executing the Deed of Assignment with SBI, issued the notice under Section 13(2) of the SARFAESI Act on 15.11.2006. Therefore, after the account of company was declared as NPA in 2001, notice was issued after a period of more than 5 years and, therefore, the action under SARFAESI Act was initiated after a period of limitation. If no limitation is prescribed for initiation of action even then, the same is required to be initiated within a reasonable time. In support of this contention, learned advocate Mr. Shah has placed reliance upon the order dated 20.9.2007 passed by this Court in Special Civil Application No.13426 of 2007. Then, he placed reliance upon another order dated 20.10.2008 passed by this Court in Special Civil Application No.....
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....the transfer of rights by the original charge-holder, the creditors or shareholders, inspecting such register, would not be able to know who the present charge-holders are. The registration of this modification of share should, therefore, be effected by the company concerned in Form No.14 on payment of the prescribed filing fee." 4.17 Thus, learned advocate submitted that the applicant has not registered the charge or the modification as required under Sections 125 and 135 of the Companies Act and, therefore, the applicant is not having any right against the Official Liquidator or the company. 4.18 Learned advocate Mr. Shah further contended that the applicant is not a secured creditor within the meaning of Section 2(1)(zd) of SARFAESI Act. He referred to the definition given in the said section and submitted that no security interest is created in favour of the applicant. 4.19 Learned advocate Mr. Shah then submitted that the applicant has wrongly relied upon the decision rendered by the Hon'ble the Supreme Court in the case of ICICI Bank Ltd. (supra). The issue before the Hon'ble Court was in a narrow compass i.e. the question whether the bank can assign NPA or n....
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....e effected by registered instrument." He submitted that the State of Tamil Nadu has made an amendment in Section 28 of the Registration Act which provides that :- "28. Place for registering documents relating to land:- Save as in this part otherwise provided:- (a) Every document mentioned in clauses (a),(b),(c),(d) and (e) of sub-section (1) and sub-section (2) of Section 17 in so far as such document affects immovable property and in clauses (a),(b),(c) and (cc) of Section 18, shall be presented for registered in the office of a Sub-Registrar within whose sub-district the whole or some portion of the property to which such document relates is situate in the State of Tamil Nadu; and (b) any document registered outside the State of Tamil Nadu in contravention of the provisions of clause (a) shall be deemed to be null and void." 4.21 Thereafter, learned advocate has placed reliance upon the decision rendered by the Madras High Court in the case of Veena Textiles Ltd. v. Authorised Officer [writ Petition No. 8761 of 2014, dated 1-8-2014]. Learned advocate has placed reliance upon paragraphs 13 and 14 of the said decision. "13. It is not in dispute that....
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....e Yajnik appearing for the Official Liquidator referred to report filed by the Official Liquidator and mainly contended that the applicant is not a secured creditor and, therefore, it is not entitled to initiate proceedings under the SARFAESI Act. She further contended that the applicant has not registered its charge with Registrar of Companies as per Section 125 of the Companies Act of 1956 and therefore the Official Liquidator is entitled to reject the claim of the applicant as secured creditor. Thereafter, she contended that the applicant has nowhere stated with regard to dues of ICICI Bank Limited, IFCI Limited and IDBI Limited i.e. other secured creditors. She pointed out the averments made in paragraph 12 of the affidavit in support of Judges' summons that during the hearing of 23.7.2009 before BIFR, the advocate for TIFAC admitted that the applicant represents more than 75% for secured debts. However, she submitted that no confirmation of the aforesaid statement is available from the other secured creditors like ICICI Bank Limited, IFCI Bank Limited and IDBI Limited. What is the claim of TIFAC is also not stated. Thus, in view of absence of details, this Court may not co....
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....f 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." 6.1 Learned advocate Mr. Pahwa thereafter referred to the order dated 28.1.2015 passed by the learned Company Judge in Company Application No.489 of 2006 and allied matters and relied upon the observations made in paragraphs 2,10,11,12 to 14 and 15. 6.2 He, therefore, contended that the learned advocates for the....
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....ates for the parties. I have also gone through the documents produced on record as well as the provision of law and decisions relied upon by the learned advocates for the parties. 8. The issue which is required to be considered by this Court is whether the Provisional Liquidator can be directed to hand over the possession of the secured assets described in the schedule to the applicant on the basis of the Deed of Assignment entered into between the SBI and the applicant or not? 9. For deciding the aforesaid issue, certain important aspects emerging from the record are required to be considered which are as under:- (a) SBI granted various credit facilities to the company in liquidation. Said credit facilities were renewed from time to time. The company had mortgaged certain properties, description of which is given in the schedule at Annexure 'A' of the compilation. (b) The company had initially created mortgage in favour of three other banks also by way of joint mortgage by deposit of title deeds. Credit facilities available by the company from three other companies were settled and only SBI remained as the exclusive first charge holder. (c)....
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....l institution; or (ii) securitisation company or reconstruction company, whether acting as such or managing a trust set up by such securitisation company or reconstruction company for the securitisation or reconstruction, as the case may be; or (iii) any other trustee holding securities on behalf of a bank or financial institution, in whose favour security interest is created for due repayment by any borrower of any financial assistance.' Similarly, section 2(1)(zf) defines the word 'security interest'. It reads as under:- "2 (1)(zf): security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31." Thus, the present applicant who is a bank can be said to be a secured creditor within the meaning of provision of SARFAESI Act. The said secured creditor has a security interest within the meaning of Section 2(1)(zf) of the said Act. 12. The applicant-bank has already initiated the measures under the provisions of the SARFAESI Act in November, 2006. The symbolic possession ....
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....y state that NPAs are created on account of the breaches committed by the borrower. He violates his obligation to repay the debts. One fails to appreciate the opportunity he seeks to participate in the "transfer of account receivable" from one bank to the other. Conclusion: 53. As stated above, by the impugned judgment, the Division Bench of the Gujarat High Court upheld the order of the Company Court only on one ground, namely, assignment of debts by the banks inter se is an activity which is impermissible under the Banking Regulation Act, 1949. However, the Division Bench did not go into other issues which arose for determination before the Company Court, including applicability of the provisions of the Registration Act, 1908." 14. The Hon'ble Supreme Court in the case of Official Liquidator, Uttar Pradesh and Uttarakhand V/s. Allahabad Bank and Others reported in [2013] 4 SCC 381, considered the question whether the Company Judge under the Companies Act of 1956 has jurisdiction at the instance of the Official Liquidator to set aside the auction or sale held by the Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act of....
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....tervention of the court, i.e., the DRT or the District Judge, the sale under the SARFAESI Act is to be by the secured creditor, i.e., the bank/financial institution itself, without the intervention of the court. We also find express pointers in the SARFAESI Act against associating the official liquidator in such sale. The second proviso to section 13(9) permits a secured creditor, who opts to realise his security interest instead of relinquishing his security and proving his debt under proviso to sub-section(1) of section 529 of the Companies Act, to retain the sale proceeds after depositing the workmen's dues with the official liquidator in accordance with the provisions of section 529A. The third proviso to section 13(9) requires the official liquidator to intimate to the secured creditor the workmen's dues or an estimate thereof in accordance with section 529A of the Companies Act. The fourth proviso to section 13(9) makes the secured creditor liable to pay the balance if any of the workmen's dues if the deposit earlier with the official liquidator is on an estimate. The sixth proviso to section 13(9) also requires the secured creditor to furnish an undertaking to th....
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....out the intervention of the court but a safety valve preserving the rights of the debtor/borrower/mortgagor or for that matter any other person (see United Bank of India v. Satyawati Tondon [2010] 158 Comp.Cas. 251 (SC) aggrieved from the measures taken by the bank/financial institution under section 13(4) of the Act is provided in section 17 of the Act. The Legislature in making the sale under the SARFAESI Act without the intervention of the court, constituted DRT only as the forum for redressal of grievances. We are of the view that if the debtor/borrower/mortgagor himself/herself/itself has not been given any right of participation in the sale except in the manner provided in section 17 of the Act, the question of our interpreting the provisions in a manner vesting such right in the official liquidator who is but a successor-in-interest of the debtor/borrower/mortgagor and also representing the interest of the workmen and other creditors of such debtor/borrower/mortgagor, does not arise. Significantly, the Legislature in enumerating in section 31 the cases/situations in which the provisions of the SARFAESI Act are not to apply, did not choose to list the case/situation where the....
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..... We are therefore, with respect, unable to agree with the dicta of the Punjab and Haryana High Court in Haryana State Industrial and Infrastructure Development Corpn. (supra) and axiomatically allow these appeals and set aside the judgment of the learned single Judge. The applications filed by the bank and the auction purchaser for de-sealing of the property would thus stand allowed. However, the sale proceeds in custody of the bank are subject to the claims if any under sections 529 and 529A of the Companies Act. The bank to accordingly comply, specially with the provisos to section 13(9) of the SARFAESI Act. We may highlight that the Supreme Court recently in Employees Provident Fund Commissioner v. Official Liquidator of Esskay Pharmaceuticals Ltd. [2011] 110 SCL 520/15 taxmann.com 140(SC) has also held the dues under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, to be a first charge on the assets of an establishment and to be paid in priority to all other debts while distributing the sale proceeds." 16. The High Court Andhra Pradesh in the case of Indian Bank (supra) has observed and held in paragraphs 25 to 31, 36 and 37 as under:- "25.....
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....the respondent and Official Liquidator, we hold that the company court has no jurisdiction to deal with the issues arising out of action of secured creditor under Section 13 of SARFAESI Act. 27. But, in this case, the learned trial Judge has not only exercised jurisdiction of the company court but also that of writ court. No one can debate now that writ court has jurisdiction within its own power as enshrined in Articles 226 & 227 of the Constitution of India to entertain any dispute and it cannot be taken away by way of simple legislation. 28. Now, we examine the third question. We have already discussed that to the extent of inconsistency provision of SARFAESI Act will prevail over Companies Act. We examine whether there has been apparently inconsistent provision for taking action by the secured creditor in this Act vis-a-vis Companies Act. It will appear from Section 13 (1), as quoted above, it clearly provides that without intervention of the Court or Tribunal action can be taken for sale of securities, whereas the provisions of Section 537 of Companies Act requires leave of Company Court. We, accordingly, hold this is apparent inconsistency in two competing p....
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....e borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. (Emphasis Supplied) (6) Any transfer of secured asset after taking possession thereof or take over of management under sub-section (4), by the secured creditor or by the manager on behalf of the secured creditors shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. 31. It is clear from sub-section (6) the moment action taken under sub-section(4) by the secured creditor or any manager on his behalf of the secured creditor for transfer all rights shall vest in the transferee in relation to the secured assets. In other words, if action taken under Section 13(4) is found to be lawful and valid in accordance with SARFAESI Act, no other legal provision can invalidate it. Whereas Sections 531 & 531A provide otherwise if any transfer including sale is effected in violation thereof the same is invalid and void. Thus it appears that there has been glaring inconsistency naturally, we are const....
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....by concerned petitioners challenging the threatened action of the respondent of the said petition i.e. Kotak Mahindra Bank under Section 13(4) of the SARFEESI Act wherein it was prayed that the Court may declare that the respondent-bank (Kotak Mahindra) has not acquired any right pursuant to the Deed of Assignment dated 23.3.2006 and, therefore, not entitled to take action under the provisions of SARFAESI Act and to quash and set aside the public advertisement issued in the newspaper and with further prayer to restrain the bank from taking action in pursuance to the said advertisement. In the said matter also, the SBI took the possession of secured assets belonging to the company in liquidation and by virtue of Deed of Assignment dated 23.3.2006, the SBI assigned the debts to Kotak Mahindra Bank. Learned counsel for the said petitioners raised similar contention in the said petition that the Deed of Assignment dated 23.3.2006 is not valid and unenforceable since it created no right in favour of Kotak Mahindra Bank. It does not bear proper stamp duty. The assignments of debts by SBI to Kotak Mahindra Bank is a novatio and it is not binding to the borrowers. Kotak Mahindra Bank is no....
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.... property of the company in liquidation is put to sale under the Securitization Act. The Court hereby directs to constitute sale committee consisting of the present applicant GIIC and the Official liquidator for finalizing the value of the property and the modalities on which the property is required to be sold. This application is accordingly disposed off. However, before putting the property to sale, the meeting of the sale committee be called and in the said meeting, reserved price and other modalities shall be set out. After the offers are received, and auction is held, the applicant may submit fresh application for acceptance of any of such offers and confirmation of sale in favour of highest bidder. 10. Granting of these two applications, however, may not be construed as granting of status of secured creditor to the applicant-Bank. 11. Subject to the aforesaid observations and directions, both these applications are accordingly, disposed off." 18. Thus, when another petitioners challenged the Deed of Assignment dated 23.3.2006 executed between the SBI and the present applicant-bank on various grounds including the ground of stamp duty as well as other gro....
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....e Textile Labour Association, submitted that the Supreme Court has held that assignment of debts is a permissible activity and has permitted substitution. Accordingly, the applications for substitution stand allowed. As regards the other issues which were raised before the Company Court when the previous decision came to be rendered, it was submitted that once the applications stand allowed in view of the decision of the Supreme Court and the Division Bench, the question of deciding the rights of the parties on merits does not arise in these applications and such questions would be decided by the appropriate forum at an appropriate stage. However, nothing remains to be done by this court in these applications. 13. This Court has considered the submissions advanced by the learned counsel for the respective parties and has perused the earlier order passed by the Company Court as well as the order passed by the Supreme Court in the above-referred matter as well as the order dated 30.9.2014 passed by the Division Bench remanding the matter to this court. 14. From the submissions advanced by the learned counsel for the respective parties, it is apparent that the common....
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....stage that the registering authority or the stamp duty authorities have not at all initiated any action till today against the applicant-bank. Thus, I am of the opinion that the contentions raised by the respondent and intervenor are misconceived and are required to be discarded. 21. Another contention raised by the intervenor is that in view of Sections 125 and 135 of the Companies Act of 1956, when the applicant has not registered charge or modified the charge registered with the Registrar of Companies, the applicant is not having any right against the Official Liquidator or the Company. 22. However, the said contention is required to be considered in view of the decision rendered by the various High Courts. In the case of Pridhvi Asset Reconstruction & Securitization Co. Ltd. v. Pennar Peterson Ltd. (In Liquidation) [Company Application No. 411 of 2014, dated 22-4-2014], the High Court of Andhra Pradesh has observed as under:- "The only issue that needs consideration in this application is whether the applicant cannot claim disbursement of money without registration of the assignment of the securities with the ROC." Thereafter, it is observed as under:- ....
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.... adjudication has been made, would have been entitled to receive the money. Hence, from the point of view of the unsecured creditors, it hardly makes any difference whether the nine banks, which held the charge, or the applicant herein get money. For the aforesaid reasons, I do not find any merit in the objections of the applicant and the Official Liquidator." 23. Similarly, in the case of IDBI Ltd. (supra), the question before the Bombay High Court was whether the Company Court has jurisdiction under Section 446 of the said Act to decide the question whether the charge of the secured creditors are registered under Section 132 of the said Act and to the extent such charges are not registered, claims of the secured creditors against the Official Liquidator can be declared as void in view of the provisions of Section 125 of the said Act? The Hon'ble Bombay High Court held in paragraphs 44 to 46 as under:- "44. The questions whether the charge is registered or there is a non-compliance of Section 125(1) of the said Act, are the disputed questions of fact. In fact, the determination by the Official Liquidator under Rule 163 of the said Rules by the communicatio....
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....ed in Company Application No.1123 of 2009 on 18.8.2011, the Bombay High Court as observed and held in paragraph 11 as under: "11. Equally, it is stated that assuming it comes into existence on account of documents that are executed, yet, there is no compliance with section 125(1) of the Companies Act. It is pertinent to note that it is not the company which is raising this objection but it is the applicant who is a ex-director, has raised this objection. The company in liquidation has no objection to the second respondent proceeding on the basis that the property was equitably mortgaged to it. That the documents evidencing title are deposited with an intention to create mortgage is something on which, both, the second respondent and company in liquidation, have proceeded; that all the monies and advances have been utilised and facilities have been availed of. In such circumstances, it is too late in the day now to argue that there is no compliance with section 125(1) of the Companies Act. While it is true that the legal position as enunciated by the Division Bench in Kamani's case (supra) would apply with full force, yet, as far as sub-section 1 to be attracted, there ....
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....ct. A perusal of the relevant provisions of both enactments leave me in no manner of doubt that Securitisation Act does not envisage any such compliance. In these circumstances, the argument that the sale is bad in law for non compliance with section 125(1) of the Companies Act cannot be accepted and must be rejected." 25. Thus, in view of the aforesaid decision rendered by the various High Courts, I am of the opinion that in the present case, SBI has registered its charge under Section 125 of the Companies Act before ROC over the secured assets of company, the applicant is an assignee and, therefore, if the applicant has not registered its charge over the secured assets before the Registrar of Companies, it cannot be said that the applicant is not entitled to proceed against the secured assets. 26. Another contention of learned advocate of the intervenor is that the account of the company in liquidation was declared NPA in the year 2001 by SBI. Thereafter, credit facilities were restructured by SBI and fresh agreement was entered into in January, 2004. Thereafter, the account of the company in liquidation was never declared as NPA. SBI has thereafter not initiated the procee....