- (1.) The petitioners herein have challenged a notice dated 25-1-2006 issued by the respondent under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (here-in-after referred to as the Act of 2002). The petitioners have also challenged a communication dated 15-5-2006 by which the respondent-Company disposed of the objections of the petitioners to the notice dated 25-1-2006 under section 13(2) of the Act of 2002.
(2.) Short facts leading to the present petition are as follows : 2.1 The petitioner no.1 is a Company registered under the provision of the Companies Act. The petitioner no.2 is a whole time Director of petitioner no.1-Company. The respondent is also a Company registered under the Companies Act. 2.2 The respondent-Company is a Securitisation and Reconstruction Company registered with Reserve Bank of India under section 3 of the Act of 2002. 2.3 It is not in dispute that the respondent-Company acquired under various agreements, financial assistances-together with all underlined securities and interest-in the petitioner no.1-Company. 2.4 It is virtually undisputed that substantial outstanding amount has not been paid up by the petitioners to the respondent-Company. To ensure recovery of such debts, the respondent-Company had issued a notice dated 25-1-2006 under Sub-section(2)of Section 13 of the Act of 2002. 2.5 At that stage the petitioners had approached this Court by filing Special Civil Application No.4901/2006 and raised several contentions challenging the said notice dated 25-1-2006. Learned Single Judge of this Court disposed of the said petition by an order dated 21-3-2006. In the said order, learned Judge was pleased to turn down the contention of the petitioners that respondent-Company not enjoying consent of more than 75% of the creditors could not have initiated proceedings under the Act of 2002. It was held that as the stage under section 13(4) of the Act of 2002 has not been reached, the petition based on such contention is premature. Additionally, learned Single Judge also rejected the contention raised on behalf of the petitioners that respondent-Company was required to elect its remedies and could not initiate proceedings under the Act of 2002 when application before Debt Recovery Tribunal for recovering the dues was still pending. 2.6 Aggrieved by the rejection of the petition, the petitioners herein preferred Letters Patent Appeal No.441/2006 before the Division Bench of this Court. Appeal came to be disposed of by an order dated 18-4-2006. Division Bench upheld the view of learned Single Judge with respect to the non-requirement of consent of more than 75% of creditors before issuance of notice under Sub-section(2) of Section 13 of the said Act. It was however, provided that the petitioners shall file reply to the notice to the concerned authority and all the arguments put forth before the Bench can be taken in the reply. It was further provided that such a reply shall be considered in accordance with law and if the petitioners are aggrieved then they will have liberty to approach this Court again within a week. It was also provided that no action be taken under Sub-section(4) of Section 13 of the Act within a week from the date of final order of the learned Single Judge on a petition. With these directions, Letters Patent Appeal was disposed of. 2.7 Pursuant to the said decision of the Division Bench, the petitioners replied to the notice under section 13(2) of the said Act of 2002 under a communication dated 9-5-2006. In the said reply mainly two contentions were raised. Firstly, it was suggested that the respondent does not have consent of more than 75% of the creditors to permit it to take further action under Sub-section(4) of Section 13 of the Act of 2002. The respondent was called upon to obtain consent of 3/4th of secured creditors in value of the total outstanding due and payable by the petitioner and only thereafter, to issue a fresh notice. In this regard, it was pointed out that under Sub-section(9) of Section 13 of the said Act of 2002 unless and until the respondent has such a consent, steps as provided under Sub-section(4) of Section 13 of the Act of 2002 cannot be taken. Additionally, it was also contended that proceedings initiated by the respondent against the petitioners for recovery of dues are pending before the Debt Recovery Tribunal. Unless and until such proceedings are withdrawn, no action under the Act of 2002 can be taken by the respondent. Incidentally, it was also suggested that in a Company petition filed before the High Court, scheme for compromise is being contemplated. 2.8 The respondent replied to the objections of the petitioners under its communication dated 15-5-2006. Insistence of the petitioners for being served with fresh notice after fulfilling the requirements under Sub-section(9) of Section 13 of the Act of 2002, was not countenanced. Regarding insistence for election of remedies also, the respondent felt that there is no such requirement under the law and two parallel proceedings could be maintained. 2.9 It was at this stage that the petitioners approached this Court again and have challenged the notice issued by the respondent under Sub-section(2) of Section 13 of the Act of 2002 as well as communication dated 15-5-2006 by which the objections of the petitioners came to be turned down by the respondent-Company.
(3.) In this factual background, there are two legal contentions raised on behalf of the petitioners to sustain the challenge to the impugned action initiated by the respondent-Company. First contention raised on behalf of the petitioners is that as per the provisions contained in Sub-section(9) of Section 13 of the Act of 2002, no action under Sub-section(4) of Section 13 of the Act of 2002 can be taken, unless and until the respondent-Company has consent of not less than 3/4th of the Creditors in value. It is contended that respondent-Company does not have such consent and in any case the petitioners must have an opportunity to demonstrate before the respondent-Company that such a consent to the necessary extent does not exist.;