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Judgment
K. Kannan, J.
C. A. No. 401 of 2008:
Application allowed.
Objections are taken on record.
C. A. No. 907 of 2007:
Application allowed.
Exemption from filing certified copy of annexure A1 is granted.
C. A. No. 908 of 2007:
This application is filed u/s 446 of the Companies Act, 1956, seeking directions to the official liquidator to hand over possession of the assets of the company in liquidation to enable the applicant to take action u/s 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short called as "the SARFAESI Act"). The application is resisted, apart from the official liquidator, by the ex-directors of the company, Shri K. L. Jain, through an application filed in C. A. No. 401 of 2008 on the ground that the Companies Act contains exclusive provisions which operate notwithstanding anything contained under the SARFAESI Act and that directions sought for by IFCI is not maintainable.
It is an admitted case that the secured creditor, which is a public financial institution has resorted to action under the SARFAESI Act and has issued a notice u/s 13(2) of the said Act. The application is moved before this Court for actions proposed to be taken u/s 13(4) of the Act, which empowers the secured creditors to, inter alia, take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset. Although the secured creditor has stated in his petition that power to take action u/s 13(4) exists untrammelled by any of the provisions of the Companies Act, it is conceded in court by learned Counsel appearing for IFCI that the application is moved u/s 446 only in recognition of the pre-eminent powers of the company court in dealing with the assets of the company in liquidation. He also refers to the SARFAESI Act itself which states through Section 37 that the provisions of this Act (SARFAESI) or the rules made thereunder shall be in addition and not in derogation of the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or any other law for the time being in force. The complementary nature of the provisions of the SARFAESI Act, therefore, makes it clear that the powers of the company court u/s 446 of the Companies Act are not excluded but when a winding up order has been made or the official liquidator has been appointed as the provisional liquidator, no other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with against the company, except by leave of the court and subject to such terms as the court may impose. Evidently the property which vested with the official liquidator cannot be taken possession of and sold u/s 13(4) without reference to the company court. Counsel for the official liquidator states that the IFCI could be associated with the official liquidator to take steps for sale of the property. The objections of the ex-director that no action could be taken u/s 13(4) cannot be accepted and the provisions of the SARFAESI Act must be so employed that they do not run in conflict with the powers of the company court and, hence, pilot its action to the terms as the company court may impose.
Under the circumstances, I direct that sale of the property of the company in liquidation would be undertaken by the IFCI in tandem with the powers enumerated under the Companies Act and the relevant rules to the official liquidator. The pre-eminent interest of the secured creditor to secure the best possible price for the assets by due publicity to the conduct of the sale after appropriate steps for getting the property valued cannot be under-estimated. The IFCI is, therefore, permitted to act in collaboration with the official liquidator by carrying out the process of bringing the property to sale under the relevant provisions of the Companies Act itself. Both the IFCI and the official liquidator or either of them shall be at liberty to move the company court for appropriate directions for effective steps for sale of the assets of the company in liquidation. Needless to state that the sale will be subject to confirmation by this Court.
The application is disposed of in the above terms.