State Bank of India vs Malook Chand Agroils Limited

Swatanter Kumar, J.—This is a petition u/s 446 of the Companies Act for grant of leave to the applicant State Bank of India for proceeding with the recovery proceedings pending in the Debt Recovery Tribunal at Jaipur.

The necessary facts are that M/s Malook Chand Agroils limited was ordered to be wound up by the Company Court vide its order dated 2.11.1195 passed in C.P. No. 9 of 1994. The Official Liquidator attached to the High court was appointed as Liquidator of the Company. In the petition it averred that the applicant State Bank of India had given financial assistance to the respondents under, the following limits to the extent of Rs. 75 lacs:-

i) Cash Credit Hypothecation 15,00,000/- ii) D.D.P. (Bills) 25,00,000/- iii) Letter of Credit 35,00,000/-

The borrower company had created a charge in favour of the Bank being a second charge to respondent No. 2 which was duly registered with the Registrar of Companies Delhi and Haryana. There were collateral securities by creating equitable mortgage of the property of the guarantors. The company defaulted and its account became sick. It is stated that the company owes a sum of Rs. 1,07,75,078/- as on 2.12.1994. The bank being a financial institution, instituted a petition for recovery of the aforestated amount before the Recovery Tribunal under the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, being suit No. 157 of 1997. The present petition has been filed to seek permission of the Company Court to prosecute the said case before the Debt Recovery Tribunal.

Notice of this petition was issued to the respondents. They were duly served. Learned Official Liquidator stated that be had no objection to the grant of permission while somewhat similar stand was taken by the counsel appearing for respondent No. 2 Haryana Financial Corporation, which has first charge on the property in question. There is hardly any opposition to this petition and rightly so. The mere fact that the Bank had not sought the permission of the Company Court before initiating the proceedings before the Debt Recovery Tribunal at Jaipur would not render the proceedings invalid or void in law. The bank is at liberty for valid reasons to approach the Court subsequent to the institution of the petition at Jaipur for grant of permission under the provisions of Section 446 of the Companies Act. The right of the applicant bank to seek such permission is no way adversely affected by the mere fact that such permission was not sought prior to initiation of the proceedings. In this regards reference can be made to the judgment of this Court in the case of Industrial Finance Corporation of India and others Vs. Rama Fibres Ltd. (In Liquidation) and others, .

The Haryana Financial Corporation is stated to have a first charge on the property. That also no way affects the grant of permission to the State Bank of India because their claim itself is based in the application on the plea that they have a second charge on the properties in question. There is no doubt that the bank is secured creditor.

For the reasons aforestated this petition is allowed. State Bank of India is granted permission to pursue its remedy before the Debt Recovery Tribunal at Jaipur in case No. 157 of 1997. The leave or permission granted u/s 446 of the Companies Act to the Bank is conditional. The condition being that no decree/recovery certificate so issued by the Tribunal shall be executed against the assets of the company without leave of this Company Court.

This petition is accordingly allowed. there shall be no order as to costs.