SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LTD Vs. ADMINISTRATOR OF SPECIFIED UNDERTAKING OF UNIT TRUST OF INDIA
LAWS(DR)-2004-5-8
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on May 05,2004

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.) THIS Misc. appeal is filed by appellants/ original defendants being aggrieved by common Order dated 12.2.2004 passed by the learned Presiding Officer of Debts Recovery Tribunal-I, Mumbai. By the impugned common order, the learned. Presiding Officer, while allowing applications made by the respondent Nos. 1 and 2 for amendment as set out in the schedules of their applications, dismissed the application of the appellants taken out by them for dismissing the original application. The respondent No. 1 is the Administrator of Specified Undertaking of Unit Trust of India in his capacity as successor in interest of Specified Undertaking of Unit Trust of India, a statutory corporation constituted under Unit Trust of India Act, 1963 (since repealed) and the respondent No. 2 is UTI Trustee Company Pvt, Ltd. in its capacity as successor in interest of Undertaking (excluding Specified Undertaking) of Unit Trust of India.
(2.) The respondent Nos. 1 and 2 who are the original applicants in Original Application No. 79/2002 and Original Application No. 23/2003 had taken out applications for amendment in the cause title of their respective original applications for substituting names of administrator of specified undertakings and UTI Trustee Company Pvt. Ltd. in the place of Unit Trust of India, The appellants application was for dismissal of the original application itself on the ground that none of the Administrators of Specified Undertaking of Unit Trust of India and UTI Trustee Company Pvt. Ltd, after bifurcation of Unit Trust of India, was either a bank or a financial institution. The appellants had challenged jurisdiction of the Tribunal to entertain, try and dispose of the original application. Contentions of the appellants can be briefly narrated as follows: According to the appellants, the original applications were filed on 25.9.2003 by the respondent Nos. 1 and 2 inter alia claiming aggregate sum of Rs. 37,92,23,257/- together with further interest thereon and for declaration that the movable and immovable properties of the appellants charged and mortgaged in favour of the respondent No. 1, be enforced and sold for specific performance of an agreement for creation of mortgage in favour of the respondent No. 10 Industrial Development Bank of India and for fixing date of redemption and for various other reliefs including appointment of Court Receiver. Thereafter, the respondent Nos. 1 and 2 filed interim application dated 31.10.2003, on which the impugned Order came to be ultimately passed. At that point of time the appellants amongst other defences had inter -alia raised issue of maintainability of the original application before the Debts Recovery Tribunal-I, Mumbai on the ground that Debts Recovery Tribunal-I, Mumbai had no jurisdiction at all to entertain the original applications on the ground that the respondent Nos. 1 and 2 were not the entities prescribed, specified and enumerated or covered under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for the sake of brevity hereinafter to be referred as the RDB Act). It was contended by the appellants that the respondent Nos. 1 and 2 were not banks and public financial institutions. It was contended by the appellants that definition of 'public financial institution' is given in Section 4A of the Companies Act and in Clause (v) of the same, mention of UTI is made as follows-- (v) The Unit Trust of India established under Section 3 of the Unit Trust of India Act, 1963 (52 of 1963). It is the contention of the appellants that in Sub-clause 2 of Section 4A of the Companies Act, it is provided that the Central Government by notification in the official gazette specifies such other institutions as it may think fit to be a public financial institution, but since there is no such notification by the Central Government with respect to the respondent Nos. 1 and 2, they are not public financial institutions. It is also contended by the appellants that when there was amendment in IFCI Act under a notification dated 15.2.1995, IFCI was named as financial institution under Section 4(2) of the Companies Act but such a notification was admittedly not issued in the present case and therefore the newly formed entities are not financial institutions under Section 4(2) of the Companies Act also. It is also contended by the appellants that Administrator of Specified Undertaking of Unit Trust of India is an individual and can never be termed as a financial institution and that Section 7 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 clearly shows that the Administrator should carry on the management of the Specified Undertaking of Unit Trust of India "for and on behalf of the Central Government", which means that the Administrator is merely a Manager or Agent of the Central Government, and it is nobody's case that the Central Government is a Financial Institution and that if the Central Government itself is not a financial institution, its Manager or Agent can never be a financial institution. It is further contended that Section 10(2) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 would make it clear that his appointment was only to oversee the process of winding up and therefore by no stretch of imagination the Administrator would be a financial institution. It is also contended on behalf by the appellants that it is not clear as to which holdings of the erstwhile Unit Trust of India had gone to the Specified Undertakings of UTI and which holdings had gone to UTI Trustee Company, that the residues had gone to the Central Government, that it was possible that the subject matter of the original application might have gone to the Central Government and since the Central Government was not a financial institution, the Tribunal would not get jurisdiction to entertain the original application.
(3.) THIS application of the appellants/defendants was hotly contested by the respondent Nos. 1 and 2. It was contended that Section 18 the Unit Trust o.f India (Transfer of Undertaking and Repeal)"Act, 2002 made it explicitly clear that there was no choice and the words "Administrator of the Specified Undertakings of UTI or UTI Trustee Company should be substituted in all Acts, Rules, Regulations and Notifications and, therefore, even if all such Rules and Regulations were not physically amended, one had to read them as stated in Section 18 of the New Act, lest Section 18 would be meaningless. It was also pointed out that even if Section 4A of the Companies Act was to be literally amended, as per Section 18 of the New Act, words "Establishment under Section 3 of the Unit Trust of India Act, 1963" would remain in Sub-clause (v). However, as per the cardinal principle of interpretation, there should always be a harmonious construction of statute and one which would give effect to the object of the Act has to be followed and the other which would lead it to absurdity has to be neglected and, therefore, if one takes into consideration objects and reasons of the amending Act, it would be clear that the Legislature intended that the newly created entities shall enjoy all benefits and privileges of the erstwhile UTI. It was submitted that, therefore, in Order to give effect to such intention of the legislation, words "Establishment under Section 3 of the Unit Trust of India Act, 1963" should have to be ignored. On these grounds, it was prayed that the application of the defendants be dismissed.;


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