ASSET RECONSTRUCTION COMPANY INDIA LTD Vs. KUMAR METALLURGICAL CORPORATION INDIA
LAWS(DR)-2005-2-2
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on February 28,2005

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.) BOTH these appeals can be disposed of by this Common Order. Appellants in Regular Appeal RA No. 10/2005 are Asset Reconstruction Company (India) Limited (for the sake of brevity hereinafter referred to as ARCIL), while the other Regular Appeal being RA No. 11/2005, is filed by the Custodian appointed by the ARCIL. BOTH these appeals are arising out of the impugned Order dated 7.2.2005, passed by the learned PO of DRT, Hyderabad, in Securitisation Appeal SA No. 15/2005. By the impugned Order the learned PO allowed the application made by the applicant/defendants M/s. Kumar Metallurgical Corporation Ltd, and set aside the proceedings taken out by respondent No. 1 ARCIL under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for the sake of brevity hereinafter referred to as SARFAESI Act).
(2.) Few facts which are required to be stated are as follows: The respondent No. 1 Company had availed credit facilities from ICICI Ltd. (subsequently merged with ICICI Bank Ltd.), Industrial Development Bank of India (IDBI) and IFCI Ltd. It was a consortium loan. The respondent No. 1 committed default in repayment of the said facilities and, therefore, ICICI, IDBI and IFCI, filed OA No. 945/2001 in DRT, Hyderabad for recovery of the amount due to them and for enforcement of their securities. The said OA is pending in DRT, Hyderabad. The first respondent, in between, made reference to the Board for Industrial and Financial Reconstruction (BIFR) and consequently proceedings of OA No. 945/2001, were adjourned sine die. Icici Bank Ltd. in pursuance to the Assignment Agreement dated 31.3.2004, as per provisions of Section-5 of SARFAESI Act, assigned its rights, title and interest in the financial assets to the appellants in Appeal RA No. 10/2005, namely, to ARCIL, as trustees. The appellant ARCIL are registered with the Reserve Bank of India (RBI) as per the provisions of Section 3 of the SARFAESI Act and are entitled to the rights of Icici Bank, Ltd. under the loan documents executed by respondent No. 1 with the erstwhile Icici Ltd. and, therefore, have become a secured creditor in terms of Section 2(zd) of the SARFAESI Act.
(3.) THE appellants ARCIL, thereafter, in exercise of their powers under Section 13(2) of the SARFAESI Act, issued notice dated 1.11.2004, to the respondent No. 1 for taking action under the SARFAESI Act for recovery of monies due to them. THE paid notice was replied to by the respondent No. 1, vide their letter dated 29.12.2004, which was received by the appellants. THE appellants ARCIL also replied to the said notice vide their letter dated 5.1.2005, whereby they held the objection raised by respondent No. 1 as untenable. THE appellants, thereafter, secured consent of more than 75% of the secured creditors including the SASF and IFCI Ltd. vide their letters dated 10.1.2005 and 17.1.2005, for initiating action under Section 13(4). THEreafter, the appellants ARCIL approached the District Magistrate, Nalgonda, under Section 14 of the SARFAESI Act, for the purpose of taking over possession of plant belonging to respondent No. 1 and for handing over the possession of secured assets to the Authorised Officer of the appellant. On receipt of the said application made by the appellants ARCIL, the District Collector, Nalgonda, passed orders on 20.1.2005, directing taking over of possession by the Mandal Executive Magistrate and Revenue Officer, Chityal, and for handing over the same to the Authorised Officer of the appellants. THE Mandal Revenue Officer conducted a panchanama along with the list of inventories in the presence of the independent panchas and handed over possession to the appellants ARCIL. THE Authorised Officer of the appellants ARCIL tendered possession notice as per Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 to the representatives of the respondent No. 1. As the same was referred to be received, the appellants pasted it at a conspicuous space on the Notice Board of the factory of respondent No. 1. After taking over possession of the factory, the appellants ARCIL appointed one Manaksia Limited (Appellant in appeal RA-11/2005 and respondent No. 2 in appeal RA-10/2005), as their agent and custodian of the secured assets by issuing letter dated 22.1.2005, and the said agent-cum-custodian was put in possession of the assets on the same day. Copy of the possession notice drawn up by the Authorised Officer along with copy of the panchanama and inventory of assets was sent to the respondents with the appellants letter dated 24.1.2005. Fact of taking over possession of the factory was also notified in two English Newspapers namely, "THE Economic Times", and "THE Times of India" and also in one Telgu Newspaper "Eenadu" in Hyderabad and Nalgoda editions. THE appellants ARCIL, thereafter informed the other secured creditors, financial institutions and BIFR by addressing letter dated 24.1.2005, informing them of the measures taken under Section 13(4) of the SARFAESI Act and placed the said facts on record for confirming that the respondents proceedings before the BIFR stood abated.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.