TaxTMI 
TaxTMI 
2016 (5) TMI 909
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....lications, the said averments are one and the same, therefore, both these applications are taken together to dispose of them by this common order. 5. The facts in brief as pleaded by the applicants are that, M/s. Cauvery Papers Limited (In Liqn.,) i.e., respondent No.1 herein had borrowed a term loan of Rs. 305 Lakhs from IDBI, IFCI and ICICI on 8.09.1982 and further loans of Rs. 28.80 Lakhs and Rs. 34 Lakhs on 27.03.1985 and 09.11.1987 respectively, for its project at Satyagala Village, Mysore District, for manufacture of M.G.Kraft and colored poster papers. The respondent-company (In Liqn.,) was declared as a Sick Industrial Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, by the Board for Industrial and Financial Reconstruction (hereinafter referred to as 'BIFR' for short) on 26.10.1988 and the document in this regard is produced at Annexure-A. 6. The further facts that a reference under Section 15(2) of the Sick Industrial Companies (Special provisions) Act, 1985, (hereinafter referred to as 'SICA' for short) of the respondent-company (In Liqn.,) was made to the BIFR. The BIFR on 26.10.1988, declared the responden....
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....ent No.4 Banks, failed to obtain the express leave of this Court to continue with the proceedings before the DRT and respondent No.2-Recovery Officer. Section 446 of Companies Act 1956 provides for the Suits stayed on winding-up order. 7. This Court vide its order dated 2.1.2003 was pleased to accept the highest bid of Rs. 2,01,67,667/- for the Land, Building, Plant and Machinery, and the highest bid of Rs. 7,25,000/- for the comprising stocks of the respondent-company (In Liqn.,) Hence, this Court granted permission to Official Liquidator representing the respondent-company (In Liqn.,) for Sale of the assets of the respondent-company (In Liqn.,) and it is manifestly clear that the sale is made after winding-up of the respondent-company (In Liqn.,). There is no basis and justification by respondent No.2 at Annexure-F order sheet in D.C.P.No.3096 as to re- commencement/continuance of recover proceedings on 24.02.2014 after having kept the same in abeyance from 10.12.2007. Section 537 of the Companies Act 1956, provides for the avoidances of certain attachments, executions, etc., in winding-up by Tribunal. In lieu of the above mentioned provisions of the SICA, 1985, and t....
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....s of the order of DRT dated 25.09.2000. The written statement filed by the Official Liquidator before the DRT is annexure-B. The DRT instead of suspending the proceedings as contemplated under Sections 22 of SICA and Sections 441, 446, 537 of Companies Act 1956, in O.A.NO.872/1999, continued with the judicial proceedings and passed a judgment dated 22.12.2003 thereby allowing the claims of the claimant banks viz., IDBI, IFCI, ICICI. The claims of the respective banks was decreed as per the recovery certificate wherein the claim of Bank No.1 (IDBI) was decreed at Rs. 5,08,27,177/-, the claim of Bank No.2 (IFCI) was decreed at Rs. 2,46,23,546/- and the claim of Bank No.3 (ICICI) was decreed at Rs. 2,07,79,225/- and interest at the rate of 14 % p.a. from 5.7.1999 to 22.12.2003 for each of the aforesaid banks. The copy of the judgment in O.A.N0.872/1999 dated 22.12.2003, is produced at Annexure-C. The defendant No.2 in O.A.No.872/1999 before the respondent No.5-DRT i.e., Sri N.B. Rukmangada, who was the director of the respondent-company (In Liqn.,). arrived at an amicable one time settlement with regard to the decreetal amount of Bank No.1 i.e., IDBI and by way of a compromise memo da....
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....he aforesaid defendant No.2 was filed by respondent No.3- IARC on 24.06.2015 before respondent No.2 under Rule 85 of the second Schedule to the Income Tax Act, 1961, read with Section 22 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. However, respondent No.2 in DCP No.3096 allowed the said application on 24.06.2015 itself without even issuing a notice to the applicants herein above mentioned as contemplated under Rule 60 of the Income Tax (Certificate Proceedings) Rules, 1962, which requires issuance of notice in Form ITCP-29 to the legal representatives. The copy of the said application to bring the legal representatives is produced at Annexure-G. Respondent No.3-IARC filed an application seeking to furnish security to the extent of the amount recoverable and failing which to attach 3,61,251 number equity shares of Rs. 10/- each in Cauvery Hydro Energy Limited, which are in the name of judgment debtor No.2 i.e., Sri N.B. Rukmangada and the same came to be allowed on 27.05.2015 by respondent No.2, a copy of the said application along with the warrant issued by respondent No.2 is produced at Annexure-H. Since the Respondent company (In Liqn.,) is represe....
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....Hence, the question of respondent No.2 proceeding for granting injunction as sought for in the interlocutory application filed by the respondent No.3 Bank is ultra vires of the judgment and decree passed by DRT in O.A.872/1999. The joint deed of guarantee dated 9.11.1987 executed by Sri N.B. Rukmangada and Sri K.S. Manohar in favour of the three banks viz., IDBI, IFCI and ICICI guarantees liability on the part of Sri N.B. Rukmangada for the total amount of Rs. 15 Lakhs only, i.e., Rs. 7,50,000/- in favour of Respondent No.3 and Rs. 7,50,000/- in favour of Respondent No.4 herein. The copy of joint deed of guarantee dated 09.11.1987 is at annexure-L. There is no pious obligation for the applicants herein to repay the outstanding dues of respondent No.3 and respondent No.4 as the said loan was not contracted for their benefit or for the benefit of the family. The personal guarantee of Sri N.B. Rukmangada was a limited liability with regard to respondent No.3 and respondent No.4. The judgment and decree passed by the DRT Bengaluru in O.A.872/1999 is violative of Sections 438 and 441(2) and 446 and 537 of the Companies Act, 1956. The judgment and decree passed by the DRT, Bengaluru in O....
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....nk v. Canara Bank AIR 2000 SC 1535. ii. United Bank of India v. Satyawati Tondon AIR 2010 SC 3413. iii. Pandurang Keshav Gorwardkar (supra) 12. Perusing the materials on record i.e., the pleadings and the documents produced, some of the material facts with the date of events, which are not in dispute according to both the sides are as under:- (1) On 8.09.1982 money of Rs. 304 Lakhs borrowed by Respondent-company from 3 banks i.e., IFCI IDBI and ICICI, (assigned to IARC respondent No.4). (2) 27.03.1985 respondent-company takes further loan of Rs. 28.8 lakhs. (3) 8.11.1987 N.B. Rukmangada, gave a guarantee to the extent to of Rs. 7.5 Lakhs to respondent No.3 (4) 9.11.1987 respondent-company takes further loan of Rs. 34 Lakhs. (5) 26.10.1988 respondent company declared as SICK industrial company by BIFR as per the document Annexure-A. (6) 10.09.1997 order of BIFR declaring respondent company as SICK was confirmed by the Appellate Authority AAIFR (7) 21.04.1997 BIFR recommends winding up of the respondent company (8) 13.5.1997 company petition No.167/1997 numbered by the High Court against the respondent company. (9) On 5.7.1999 OA.872/99 filed in th....
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.... Tribunal may impose. (2) The Tribunal shall, not withstanding anything contained in any other law for the time being, in force, have jurisdiction to entertain, or dispose of- (a) any suit or proceeding by or against the company; (b) any claim made by or against the company (including claims by or against any of its branches in India); (c) any application made under Section 391 by or in respect of the company; (d) Any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company; Whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after commencement of the Companies (Amendment) Act, 1960] (65 of 1960) (3) ***Omitted by the Companies (Second Amendment Act) Act, 2002 (4) Nothing in sub-section (1) or sub- section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.] Section 529A of the Act, 1956 reads as under:- "Section 529A: Overriding prefer....
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....iate directions regarding the realization of its securities consistent with the relevant provisions of the Companies Act regarding distribution of the assets of the company-in-liquidation." 16. In another decision relied upon by learned counsel for applicants in the case of Pandurang Keshav Gorwardkar (supra), the Hon'ble Apex Court at para No.55 and sub para 18 so also para No.56 has observed as under:- "18. In the light of the discussion as above, we think it proper to sum up the legal position thus: (i) A Debts Recovery Tribunal acting under the recovery of Debts Due To Banks and Financial Institutions Act, 1993 would be entitled to order the sale and to sell the properties of the debtor, even if a company-in- liquidation, through its Recovery Officer but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. (ii) A District Court entertaining an application under Section 31 of the SFC Act will have the power to order sale of the assets of a borrower company-in-liquidation, but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. (iii) ....
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....ng the general law." 17. I have also perused the decision of the Hon'ble Supreme Court rendered in Civil Appeal No.5225 of 2008 decided on 27.10.2014 in the case of KSL & Industries Ltd. (supra). Their Lordships have laid down the proposition in the said decision that the provisions of SICA, in particular, Section 22 shall prevail over the provision for the recovery of debts in the RDDB Act. It is further observed that in these circumstances as already directed by the two Judge Bench of this Court, the judgment and order dated 23.02.2006 of the High Court of Delhi is set-aside. But in the case on hand, the applicants who have filed the present application are not at all the workmen of the company-in-liquidation. They are the legal representatives of one Sri N.B. Rukmangada, who was the director of the company-in-liquidation, who furnished guarantee to the financial institution when the company borrowed the loan from the said financial institution. After the demise of the said Sri N.B. Rukmangada, the guarantor, the present applicants claiming to be his legal representatives have filed the present application. The official liquidator had also appeared before the recovery o....
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....ll be filed within a period of forty-five days from the date on which a copy of the order made, or deemed to have been made, by the Tribunal is received by him and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Tribunal. (6) The appeal filed before the Appellate Tribunal under Sub-Section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal." 19. So when such statutory remedy was available to the applicants, they could have challenged....
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....in any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad Manu/SC/0399/1968: AIR 1969 SC 556; Whirlpool Corporation v. Registrar of Trade marks, Mumbai Manu/SC/0664/1998: (1998) 8 SCC 1 and Harbanslal Sahnia v. Indian Oil Corporation Ltd. Manu/SC/1199/2002: (2003) 2 SCC 107 and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order. 22. In Punjab National Bank v. O.C. Krishnan MANU/SC/0452/2001: (2001) 6 SCC 569 this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed: 5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short "the Act"). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Act. We do not propose to go into the correctness of the decision of the High Co....