SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA Vs. KRISHNA IND CHEM P LTD
LAWS(DR)-2003-2-13
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on February 28,2003

Appellant
VERSUS
Respondents

JUDGEMENT

Harihar P.Chaturvedi, - (1.)THE applicant Bank has filed this O.A. against the defendant for recovery of the suit claim of Rs. 1,21,51,598/-(Rupees one crore twenty-one lakhs fifty-one thousand five hundred and ninety-eight only) with future interest @ 21.5% p.a. from the date of filing till the date of realization and for sale of the schedule mentioned properties with costs,
(2.)Brief facts rising to this OA are as follows:
2.1. The first defendant is a private limited company since wound up (by the Hon'ble High Court of Madras, vide order dated 21,7.2000 passed in C.P. No. 152/1999) hence is represented by the Official Liquidator. The 2nd and 3rd defendants are the directors of the D1 company, who have stood as guarantors in their personal capacity. The 4th defendant is the sister concern of the D1 company, which assured the prompt repayment by the D1, and created the mortgage over their immovable properties in favour of the applicant Bank mentioned in schedules 'C' and 'D' of the application.

2.2. It is stated that the D1, which was engaged in manufactur of Thionyl Chloride, had approached the applicant Bank for giving financial assistance on 12.2.1997. After consideration, the applicant Bank sanctioned Rs. 90 lakhs to the D1 and issued a letter of intent on 10.4.1997. For the said facility, the D2 and D3, executed all loan agreement documents under the common seal of the company. For the said facility, the D1 executed a deed of hypothecation on 31.7.1997 thereby hypothecating, by way of first charge, all the movable properties of the D1. Also the D2 and D3 executed deed of guarantee on 31.7.1997,

2.3. The applicant Bank further staled that the D4 which is the sister concern of the D1, created mortgage over the properties owned by the D4 company to secure the above said loan availed by the D1. The D1 is holding leasehold right over the said immovable property and it also offered to create mortgage over the said leasehold right. Further the D2 also offered to create equitable mortgage over the 'B' schedule property to secure the loan availed by the D1. On execution of necessary documents by the defendants, the mortgage over the Schedules 'A' to 'D' properties and the hypothecation over the Schedule 'E' properties were registered with the Registrar of companies.

2.4. It is further stated that after availing of the loan amount, the D1 implemented the project. But they were not meeting its repayment obligation in time. They also failed to renew the insurance policy and the repayment of the D1 was not satisfactory. Since two cheques issued by the defendants were returned dishonoured, after statutory notice, the applicant Bank initiated a Criminal Action against the D1.

2.5. The applicant Bank further submits that without any other alternative, sent a recall notice on 22.6.2000, but there was no response to the same. Hence, the applicant Bank invoked the personal guarantee of the defendants 2 and 3.

2.6. The applicant Bank also stated that they have received a notice from the Official Liquidator of High Court, intimating the fact that the D1 company was wound up by the Madras High Court. Hence the applicant Bank has impleaded the Official Liquidator of Madras High Court to represent the D1 company.

2.7. Hence the present Original Application by the Bank.

In the present matter the Official Liquidator has filed his report and its contents are as follows :

3.1 It is contended that the D1 company, M/s. Krishna Ind Chem (P) Ltd., was ordered to be wound up by an Order of the Hon'ble High Court, Madras vide its Order dated 21.7.2000 in C.P. No. 152/1999 and the Official Liquidator attached to the said Court was appointed as its Liquidator. The Hon'ble High Court further directed the Official Liquidator to take charge of all the assets and effects to which the company is entitled.

3.2 It is further submitted that under Sub-section 2 of Section 456 of the Companies Act, 1956, all the assets and effects of the company in liquidation shall be deemed to be in the custody of the High Court from the date of order of winding up.

3.3 It is further stated that the applicant Bank has filed this present application to enforce its rights as a Secured Creditor. It can be seen that the company in liquidation has three other secured creditors besides the applicant Bank, viz. the State Bank of Bikaner and Jaipur, Tamil Nadu Industrial Investment Corporation Ltd., and the South Indian Bank. Having regard to the fact that there are four secured creditors of the company in liquidation, the applicant Bank may be directed to prove to the satisfaction of this Tribunal that they arc entitled to exclusive charge of the properties mentioned in the original application. Unless it is proved, no further action should be taken.

3.4 The Official Liquidator further submits that the applicant Bank may be directed to prove that the charge has been registered with the Registrar of Companies, so that it is enforceable against the assets of the company which has gone into liquidation.

3.5 The Official Liquidator, citing a decision of the Hon'ble Supreme Court in the matter of Allahabad Bank v. Canara Bank, V (2000) SLT 325=I (2000) BC 627 (SC)=III (2000) CLT 129 (SC)=2000 AIR SCW 1347, stated that this Court cannot release any amount in favour of the applicant Bank straightaway. In the instant case, the claims from the workmen creditors have not been called for and this defendant will be moving the company Court seeking orders for calling claims from the workmen creditors. As this process may take some time, the applicant Bank in case if satisfies this Tribunal may sell the assets jointly with Official Liquidator and the proceeds therefrom may be permitted to be retained by the Official Liquidator in a separate account till the claims of workmen creditors are settled and paid.

3.6 The Official Liquidator, citing a decision of the Hon'ble High Court of Andhra Pradesh in the matter of Pennar Paterson v. State Bank of Hyderabad, I (2002) BC 25=(2001) 106 Company Cases 338, stated that this Court is subject to the supervisory jurisdiction of the Hon'ble High Court. The Official Liquidator further contended that the Jurisdiction of the Tribunal for adjudication and the right of execution vis-a-vis the jurisdiction of the company Court has been determined in Allahabad Bank's case, (2000) 101 Company Cases 64 (SC), but not the mode of recovery thereof. Therefore, the applicant Bank, after getting the recovery certificate should get further leave of the Company Court for its recovery of debts from the company in liquidation.

3.7 The Official Liquidator further stated that, in case by virtue of the sale, the applicant Bank is liable to realize more than the amounts due to the Bank, the Bank may be directed to pay the excess amount to the Official Liquidator for distribution amongst the ordinary unsecured creditors taking into account the provisions of the Act and the relevant Rules made thereunder.

3.8 In the light of the above facts, the Official Liquidator prays for an order of this Tribunal as follows :

(a) The applicant may be directed to produce sufficient proof in support of his claim, otherwise the applicant Bank may be directed to file his claim as per Companies (Court) Rules, 1959.

(b) The applicant Bank, if satisfies this Tribunal, may be allowed to conduct joint sale and the proceeds may be permitted to be retained by the Official Liquidator in a separate account till the workmen creditors are settled and paid.

(c) The applicant Bank may be directed to pay the excess amount, if any, for distribution amongst the ordinary unsecured creditors by the Official Liquidator.

(d) The applicant Bank may be directed to get further leave of the Company Court for its recovery of the debts as laid down by the High Court of Andhra Pradesh.

(e) To pass such other suitable order as deem fit and proper.

(3.)I considered the facts and circumstances of the present case and perused the pleadings of the parties and the documents produced and relied on by the applicant Bank. After considering the rival contentions made by the parties in their pleadings, in proof affidavit, the following issues are framed for consideration which are necessary for disposal of this OA :
POINT OF ISSUES

JUDGEMENT_602_TLDR0_20030.htm

Point of issue.



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