TaxTMI 
TaxTMI 
2019 (11) TMI 1766
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....ndent No.3-Gujarat State Cooperative Bank Ltd. 2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs; "(a) For a writ of mandamus and/or any other appropriate writ, direction or order in the nature of Certiorari under Articles 226 and 227 of the Constitution of India, calling for the record of the Petitioner's case and after going through the legality thereof to quash and set aside qua the petitioner herein, the Recovery Proceeding (being R.P. No.265 of 2014), which are pending before the Recovery Officer pursuant to the Recovery Certificate granted by the learned DRT in favour of respondent No.1 in Original Application (being O.A. No.162 of 2003). (b) For a Writ of Mandamus and/or any other appropriate writ, direction or order in the nature of Certiorari under Articles 226 and 227 of the Constitution of India, calling for the record of the Petitioner's case and after going through the legality thereof to quash and set aside qua the Petitioner herein, the impugned order and judgment dated 1st December, 2014, passed in Original Application No.162 of 2003, by the Presiding Offic....
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....he Original Application, being O.A.No.162 of 2013, [Original Application], which was nullity as detailed hereinafter. The aforesaid challenge also includes (i) the Demand Notice dated 2nd November, 2015, (Impugned Demand Notice), (ii) the Orders dated 29th March, 2017 and 31st January, 2018, [Impugned Orders] passed by the Recovery Officer in the Impugned Recovery Officer. By the Impugned Order dated 31st January, 2018, the Recovery Officer has inter alia attached the bank accounts of the Petitioner and further passed an Order of Attachment dated 31st January, 2018, [Impugned Order of Attachment] attaching the movable and immovable properties of the Petitioner. The reference of Impugned Recovery Proceeding hereinafter shall include the above mentioned Impugned Demand Notice, Impugned Order and Order of Attachment. Consequently, the Petitioner is also seeking to set aside the order and judgment dated 1st December, 2014, passed in the CA as nullity. 3. Respondent No.1 is a public sector bank having its Regional Office and concerned dealing Branch Office at the address mentioned in the cause title. Respondent No.1 is the applicant of the impugned Recovery Proceeding on the ba....
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....5.3 On 22nd July, 2003, GTB filed Original Application inter alia against Respondent No.2 (Defendant No.1 to the Original Application) before the Learned DRT for recovery of dues of Rs.26,12,78,787 with further interest @12% p.a. ["Purported Claim"]. It is pertinent to note that despite of knowledge of pending Reference, GTB chose to recover its purported Claim against the Petitioner by impleading the Petitioner as Defendant No.2 to the Original Application without obtaining necessary leave from the BIFR. The Petitioner craves leave to refer and rely upon the papers and proceedings of the Original Application. Hereto annexed marked at Exhibit "C" is a copy of the Original Application No.162 of 2003 (without annexures). 5.4 On 23rd December, 2003, the Petitioner filed an application before the Learned DRT seeking stay of the Original Application in view of bar under Section 22 of SICA. Hereto annexed and marked at Exhibit "D" is a copy of the stay application of the petitioner 5.5 Meanwhile, pursuant to the notification dated 13th August, 2004, issued by the Reserve Bank of India (RBI), the Scheme of Amalgamation of GTB with Oriental Bank of Commerce (Respondent No....
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....dabad. 5.9 By an order dated 14th December, 2015, the Learned DRAT adjourned the Appeal proceedings on the ground that the matter was seized up by BIFR. The Petitioner craves leave to refer and rely upon the papers and proceedings of the Appeal, including interim applications taken out by the Petitioner therein. Meanwhile. on the basis of its Order and Judgment dated 1dy December, 2014, the Learned DRT granted in favour of Respondent No.1, a Recovery Certificate against Respondent No.2 and the Petitioner. Hereto annexed and marked at Exhibit "H" is a copy of the Order dated 1st December, 2015, of the Learned DRAT Mumbai. 5.10 On the basis of the Recovery Certificate, the Recovery Officer at the instance of Respondent No.1 proceeded inter alia against the Petitioner by issuing Demand Notice dated 2nd November, 2015 in the Impugned Recovery Proceeding. The Petitioner then filed an Affidavit dated 30th December, 2015 before the Recovery Officer inter alia raising objections to the Impugned Recovery Proceeding and seeking withdrawal of these proceedings on the ground that the Petitioner was before BIFR under the provisions of SICA. In reply to the said objections of t....
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....hya Pradesh vide order dated 7th May, 2014. The order reads thus; "This company Petition has been filed by the petitioner for winding up of the respondent company on the ground of its inability to pay the debts. The respondent has filed M(C)P No.1985/2003 and IA No.614/2007 u/s. 22 of the Sick Industrial Companies (Special Provisions) Act (for short "SICA Act") for passing appropriate orders keeping in view the fact that the reference of the respondents has been registered before the BIFR and no permission has been obtained by the petitioner from the BIFR. Along with IA No.4097/2014, the respondent has filed the BIFR proceedings dated 22.1.2014 in support of the plea that the matter is still pending before the BIFR. (2) Having heard the learned counsel for parties, it is found that the reference at the instance of the respondent is registered by the BIFR as Case No.743/2002. The said fact was initially confirmed by the BIFR vide letter dated 30.11.2002 filed along with M(C)P No.1985/2003. The present petition for winding up has been filed on 8.1.2003 i.e. after registration of the reference by the BIFR. The record of proceedings of hearing dated 22..1.2014 before ....
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....rticipate in the enquiry proceedings before the BIFR in Reference Case No.743/2002 or to approach this Court at a subsequent stage in accordance with law if the need so arises. (6) The company petition is accordingly dismissed." 5. Thereafter, the respondent No.1-Bank instituted proceedings before the DRT at Ahmedabad under the provisions of the Recovery of Debts & Bankruptcy Act,,1993 (for short "the Act, 1993"). It is pertinent to state, at this stage, that while the respondent No.1 instituted the proceedings before the DRT, the writ applicant-Company was already before the BIFR. It is also pertinent to note that the original application came to be filed by the respondent No.1 in the DRT on 22nd July, 2003. Much prior to the same, an intimation was given by the writ applicant to the respondent No.1-Bank dated 13th January, 2003 as regards the writ applicant being registered with the BIFR. The reference before the BIFR is dated 30th October, 2002. 6. It appears from the materials on record that the writ applicant preferred an application in the Original Application No.162 of 2003 to suspend the further proceedings of the original application on the ground that the r....
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....iled Lawad Suit being No.214 of 2003 before the Ld. Board of Nominees. Similarly, Gujarat State Cooperative Bank Limited has also filed Lawad Suit No.997 of 2003 before the Ld. Board of Nominees. It is, therefore, prayed that in view of the above mentioned facts, the defendant No.2 be ordered to be deleted holding that the said defendant No.2 is not a necessary and proper party." 10. After the impugned order came to be passed by the DRT, the writ applicant preferred an Appeal No.102 of 2015 before the Debts Recovery Appellate Tribunal at Mumbai. On 14th December, 2015, the Appellate Tribunal passed the following order; "Since the matter has been seized up by the BIFR, therefore, stand over to 07.04.2016 for hearing on waiver application." 11. Thus, it appears that the Appellate Tribunal declined to proceed with the hearing of the appeal taking cognizance of the fact that the proceedings were pending before the BIFR. 12. In the meantime, the recovery certificate came to be issued, and pursuant to the same, the Recovery Officer passed an order of attachment dated 31st January, 2018. The order of attachment of movable and immovable property reads thus; "ORDER OF ATTACHM....
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....The learned senior counsel would submit that if the impugned order passed by the DRT could be termed as a nullity, the issue of recovery certificate, and pursuant to the same, the order of attachment would also be a nullity. The principal argument of the learned senior counsel is that at the relevant point of time, when the proceedings came to be instituted by the respondent No.1-Bank before the DRT, and at the point of time when the order came to be passed by the DRT, the writ applicant had got itself registered with the BIFR as a sick unit. In such circumstances, the writ applicant would be governed by the provisions of the SICA Act, 1985. Mr. Thakore invited the attention of this Court to Section 22 of the Act, 1985, which reads thus; "22. Suspension of legal proceedings, contracts, etc.- (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any othe....
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.... one year at a time so, however, that the total period shall not exceed seven years in the aggregate. (4) Any declaration made under sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law, the memorandum and articles of association of the company or any instrument having effect under the said Act or other law or any agreement or any decree or order of a court, tribunal, officer or other authority or of any submission, settlement or standing order and accordingly,- (a) any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any court, tribunal, officer or other authority shall remain stayed or be continued subject to such declaration; and (b) on the declaration ceasing to have effect- (i) any right, privilege, obligation or liability so remaining suspended or modified, shall become revived and enforceable as if the declaration had never been made; and (ii) any proceeding so remaining stayed shall be proceeded ....
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....s before the DRT could be said to have been automatically stayed by virtue of Section 22 of the Act, 1985. Mr. Thakore also pointed out that sometime in the year 2016, the Act, 1985 came to be repealed and the new Act called Insolvency and Bankruptcy Code, 2016 came to be enacted. 20. Mr. Thakore, in support of his principal submission, has placed reliance on two decisions of the Supreme Court viz. (I) KSL & Industries Ltd. vs. Arihand Threads Limited & Ors., (2015) 1 SCC 166 and (ii) Managing Director, Bhoruka Textiles Limited vs. Kashmiri Rice Industries, (2009) 7 SCC 521. 21. In such circumstances, referred to above, Mr. Thakore, the learned senior counsel prays that there being merit in this writ application, the same be allowed and the impugned order be quashed. 22. Mr. Thakore also clarified that it would be open for the respondent No.1-Bank to institute fresh proceedings before the DRT in accordance with law. Submissions on behalf of the respondent No.1-Bank 23. Mr. Mishra, the learned counsel appearing for the respondent No.1-Bank submitted that the loan was actually availed from the Bank by name Global Trust Bank. The Global Trust Bank came to be amalgamated wi....
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....s other matters such as the reconstruction of sick companies which it does not even specifically deal with. Thus the purpose of the two laws is different. 40. Parliament must be deemed to have had knowledge of the earlier law i.e. SICA, enacted in 1985, while enacting the RDDB Act, 1993. It is with a view to prevent a clash of procedure, and the possibility of contradictory orders in regard to the same entity and its properties, and in particular, to preserve the steps already taken for reconstruction of a sick company in relation to the properties of such sick company, which may be charged as security with the banks or financial institutions, that Parliament has specifically enacted sub-section (2). The SICA had been enacted in respect of specified and limited companies i.e. those which owned industrial undertakings specified in the schedule to the IDR Act, as mentioned earlier, whereas the RDDB Act deals with all persons, who may have taken a loan from a bank or a financial institution in cash or otherwise, whether secured or unsecured etc. 41. Indeed, the question as to which Act shall prevail must be considered with respect to the purpose of the two enactments....
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....lhi Rent Control Act had been enacted from 01.12.1975 alongwith a non-obstante clause with the knowledge that the overriding provision of the Slum Clearance Act was already in existence, the later enactment must prevail over the former. 44. In LIC Vs. D.J. Bahadur[3] this Court considered the question as to which of the two laws i.e. the Industrial Disputes Act, 1947 (the ID Act) and the Life Insurance Corporation Act, 1956 (the LIC Act), was a special law. Having regard to the doctrine of generalia specialibus non derogant (general provisions will not abrogate special provisions), it was submitted that an employee of the LIC cannot invoke the provisions of the ID Act in his complaint, and the matter would have to be decided in accordance with the LIC Act. The Court observed that the LIC Act was "special" as regards nationalization of the life insurance business. But however, the disputes between employer and employee had to be dealt with under the ID Act which was a special law for resolving such disputes and if a dispute arose between employer and employee in the Life Insurance Corporation, the LIC Act must be treated as "general law" and the ID Act should be treated as ....
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.... This Court approved the observations of the Special Court to the effect that if the legislature confers a nonobstante clause on a later enactment, it means that the legislature intends that the later enactment should prevail. Further, it is a settled rule of interpretation that if one construction leads to a conflict, whereas on another construction two Acts can be harmoniously construed, then the latter must be adopted. 48. In view of the observations of this Court in the decisions referred to and relied on by the learned counsel for the parties we find that, the purpose of the two enactments is entirely different. As observed earlier, the purpose of one is to provide ameliorative measures for reconstruction of sick companies, and the purpose of the other is to provide for speedy recovery of debts of banks and financial institutions. Both the Acts are "special" in this sense. However, with reference to the specific purpose of reconstruction of sick companies, the SICA must be held to be a special law, though it may be considered to be a general law in relation to the recovery of debts. Whereas, the RDDB Act may be considered to be a special law in relation to the r....
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....aints or suits shall lie or be proceeded with. Undoubtedly, in the narrower sense an application for recovery of debt can be giving a restricted meaning i.e. a proceeding which commences on filing and terminates at the judgment. However, there is no need to give such a restricted meaning, since the true purpose of an application for recovery is to proceed to the logical end of execution and recovery itself, that is by way of execution and distraint. We thus have no hesitation in coming to the conclusion that Section 22 clearly covers and interdicts such an application for recovery made under the provisions of the RDB Act. We might remind ourselves of the oft-quoted statement of the principles of contextual construction laid down by this Court in Reserve Bank of India Versus Peerless General Finance and Investment Co. Ltd. & Ors.[6], where this Court has observed:- "33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A s....
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.... of the SICA acts as a bar to the recovery proceedings under the RDDB Act or whether the protection of SICA is not available to the appellant company since the recovery proceedings under the RDDB Act had been concluded, the writ petitions would have to be dismissed and are accordingly dismissed. The present appeal is allowed." 27. The dictum of law as laid in KSL & Industries Ltd. (supra) is very clear. The provisions of SICA, in particular, Section 22 shall prevail over the provision for Recovery of Debts in the RDDB Act. If that be the position of law, then the learned senior counsel is right in his submission that the impugned order could not have been passed by the DRT. 28. In Managing Director, Bhoruka Textiles Ltd. (supra), a two Judge Bench of the Supreme Court had the occasion to deal with an identical issue. We quote the relevant observations; "6. The Act was enacted to make, in the public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be tak....
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....e Board or, as the case may be, the Appellate Authority." A plain reading of the aforementioned provision would clearly go to show that a suit is barred when an enquiry under Section 16 is pending. It is also not in dispute that prior to institution of the suit, the respondent did not obtain consent of the Board. 9. The provisions of the Act and, in particular, Chapter III thereof, provides for a complete code. The Board has a wide power in terms of the provisions of the Act, although it is not a court. Sub-section (4) of Section 20 as also Section 32 of the Act provides for non obstante clauses. It envisages speedy disposal of the enquiry and preferably within the time framed provided for thereafter. Section 17 empowers the court to make suitable orders on the completion of enquiry. Preparation and sanction of the scheme is also contemplated under the Act. 10. Section 22 of the Act must be interpreted giving a plain meaning to its contents. An enquiry in terms of Section 16 of the Act by the Board is permissible upon receipt of a reference. Thus, reference having been made on 27-12-2001 and the suit having been filed on 17-12- 2002, the receipt of a reference mus....