IMPORTANT POINT
Deed of assignment null and void, since same made in violation of S. 28(b) of Registration Act.

K. Ravichandra Baabu, J.—The first petitioner is a Limited company incorporated under the Companies Act, 1956. The second petitioner is the Managing Director of the first petitioner company. This writ petition is filed challenging the order passed by the second respondent in Roc.No.33103/2013/M4, dated 23.12.2013, whereby the properties of the petitioners were taken possession under Section 14(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002, (hereinafter referred to as SARFAESI Act).

2. The case of the petitioners is as follows:

(i) The first petitioner company is carrying on business of manufacturing of textiles. The first petitioner desired to have backward integration and opted to set up Spinning Mill to ensure regular and quality supply of yarn. Accordingly, the first petitioner prepared a project report and approached the ICICI Bank during 1993 for sanction of necessary loan. The project report was found to be viable. The first petitioner sought the loan of Rs.700 lakhs. ICICI Bank sanctioned a loan of Rs.400 lakhs and assured that the balance amount would be disbursed by the other consortium banks. SCICI now amalgamated with the ICICI Bank, granted Rs.200 lakhs. ICICI Bank further assured that the balance amount of Rs.100 lakhs would be disbursed by IIBI Bank, the another consortium Bank. Thus, the first petitioner approached the IIBI Bank for the balance amount of Rs.100 lakhs and the privity of contract came through ICICI Bank. IIBI Bank sanctioned loan of Rs.98.75 lakhs and disbursed the same in two installments. ICICI Bank filed a suit before the High Court of Bombay and a Receiver was appointed by the. Court. The first petitioner placed a proposal for One Time Settlement. After negotiation, it was found that the division could be sold for Rs.5,00,00,000 only. ICICI Bank had agreed for the proposal, but IIBI objected to the said proposal. The Spinning Mill could not be sold for Rs.5,00,00,000. Then the lender Banks sold the division in auction only for Rs.3.40 crores. The loss is attributable to unreasonable demand of IIBI. In the mean- while, IIBI filed an Original Application in O.A. No.1013 of 1999 on the file of the DRT-1, Chennai for recovery of Rs.1,99,77,619 with interest. The suit filed before the Bombay High Court was also transferred to DRT-1, Mumbai and renumbered as O.A.No.297 of 2000. ICICI Bank had filed an application before the DRT-1, Mumbai to appropriate a sum of Rs.2,11,56,000. IIBI Bank filed a petition seeking permission before DRT-1, Mumbai to withdraw a sum of Rs.41.02 lakhs from the sale proceeds. The Petition No.54 of 2005 was opposed by the petitioner company and the Tribunal rejected the petition filed by the IIBI.

(ii) IIBI Bank has executed a deed of assignment on 25.5.2011, at Calcutta, whereby various financial facilities, underline facilities with security interest were assigned to and in favour of IFCI Limited, having registered office at New Delhi. The asset of the petitioner company has been assigned to IFCI. Pursuant to the said assignment deed dated 25.5.2011, IFCI caused a possession notice dated 23.6.2012 and then publication was effected in Tamil and English dailies under Section 13(4) of the SARFAESI Act. The said possession notice is not valid and illegal. The said assignment deed dated 25.5.2011, has been questioned by the petitioners before the DRT-1, Chennai in S.A.No.114 of 2012, on various grounds.

(iii) The main contention of the petitioners in S.A.No.114 of 2012, is that there was no privity of contract between the petitioners and the IFCI and the said financial institution did not lend any money to the petitioners. The IFCI being stranger to the contract cannot act against the petitioners. The said assignment deed dated 25.5.2011 was made and executed at Calcutta in 100 Rupees Stamp Paper.