BANK OF BARODA Vs. PULSAR ELECTRONICS LIMITED

JUDGEMENT

(1.) THE applicant, "Bank of Baroda" is a Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 having a branch amongst other places at 52, Montieth Road, Egmore, Chennai -8 represented by its Senior Manager. THE applicant Bank filed this Original Application against M/s. Pulsar Electronics Ltd. (D1), represented by its provisional liquidator and 3 others. THE applicant Bank claims for a Recovery of Rs. 2,54,07,0142.75 p against the defendants 1 and 2 together with future interest thereon at rate of 21.25% and 22.25% per annum with quarterly rests in respect of the Cash Credit facilities and @ 23.25% in respect of Letter of Credit/Advance Bills, from the date of filing this OA till date of payment or realisation in full plus costs, charges and expenses. THE applicant Bank has also prayed for an order directing the D3 and D4 to reimburse the cost/market value of the stocks whichever is higher which are hypothecated to the applicant Bank along with interest at the commercial rate with quarterly rests and with porprotionate costs of the proceedings. THE applicant Bank has further prayed for sale of the schedule mentioned properties. THE applicant Bank also prayed for the cost and other relief(s) which are necessary for rendering justice.

(2.) The brief facts raising to this OA are that the first defendant, M/s. Pulsar Electronics Ltd., is a company incorporated under the Companies Act, 1956 on 31.1.1986 and was carrying on the business of manufacture of push botton telephones at the time of grant of loan. The second defendant is a Director of the first defendant company and guarantor to the facilities availed by the first defendant. At the request of the first and second defendants in the year 1987, the applicant Bank sanctioned the following credit facilities to the defendants.

(3.) THE applicant Bank has further filed an additional proof affidavit as a counter to the above said reply report of the Official Liquidator, wherein the Bank has taken this stand opposing the version of the Official Liquidator that Rule Nos. 156 and 179 of Companies (Court) Rules, 1959 will be applicable for awarding interest in this matter. As this Tribunal possesses an exclusive jurisdiction by virtue of RDDB Act, which is a subsequent enactment of Parliament and which is a special statute. THErefore, it has overriding effect on the general Act like Companies Act. THE applicant Bank has further clarified that even plain reading of the Rules 159 and 179 provides so that these rules will not be applicable wherein the rate of interest has been agreed between the parties. THErefore, the applicant Bank is entitled for claiming its contractual rate of interest. THE applicant Bank has further relied on a subsequent and latest decision of the Hon'ble Supreme Court in this respect, in the matter of Allahabad Bank v. Canara Bank and Another wherein THEir Lordships of the Hon'ble Supreme Court of India have laid down the law that leave of the Companies Court is not necessary nor Companies Court can stay the proceedings pending before this Tribunal and the jurisdiction for the Recovery Officer for execution of the Recovery Certificate is exclusive and the Certificate [granted under Section 19(22)] has to be executed only by the Recovery Officer. Because, the provisions of Section 34(1) of the RDDB Act clearly state that the Recovery of Debts Due to Banks and Financial Institutions Act overrides effects on other laws to the extent 'inconsistency'. THErefore, there is no need for the Bank or the financial institution to seek leave of the Company Court to proceed its claim before the Debts Recovery Tribunal or in respect of execution before the Recovery Officer against the Company in liquidation nor can the proceedings be transferred to Company Court. THE Company Court cannot be expected to use its powers under Section 442 against the Tribunal/Recovery Officer. Thus Sections 442, 446 and 537 of the Companies Act cannot be made applicable in respect of this Tribunal.