IMPORTANT POINT
Once debt has been assigned to a securitisation or reconstruction company, there is a complete bar from filing a reference before BIFR.

B.P. Colabawalla, J.—By this Official Liquidator’s Report (“OLR”), the following directions are sought:-

(i) to direct the Ex-Director of the Company (in liqn.) (Mr Nikunj Kanakia) to deposit the advertisement charges of Rs.25,749/- with the Official Liquidator and permit the Official Liquidator to pay the same to the advertising agency; and

(ii) to direct Indian Overseas Bank (“IOB”) to take physical possession of the factory premises situated at B-10, MIDC Industrial Area, Akkalkot Road, Solapur (“factory premises”), and to appoint Security Guards in relation thereto. In the alternative, it is prayed that the Official Liquidator be allowed to take physical possession of the factory premises.

2. Mr Shetye, learned counsel appearing on behalf of the Ex-Directors, at the outset submitted that no reliefs in this OLR can be granted in view of the fact that the Company (in Liqn.) [M/s Lifeline Industries Ltd.] has filed a reference before the BIFR and which is pending. He submitted that there is a complete bar by virtue of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (‘SICA, 1985”) from proceeding with the present OLR or for that matter, any further proceedings in winding up.

3. On the other hand, Ms Nupur Awasthi, appearing on behalf of ARCIL stated that the debts owed by the Company (in Liqn.) to IOB have been assigned in favour of ARCIL pursuant to a Deed of Assignment dated 12 November, 2014 and which was subsequently registered on 23 January, 2015. A reference, on behalf of the Company (in Liqn.), was filed before the BIFR only thereafter on 21 November, 2015. Looking to these facts, Ms Awasthi on behalf of ARCIL as well as Ms. Jane Cox appearing on behalf of the workers, submitted that by virtue of the 2nd proviso to section 15(1) of SICA 1985, there was a complete bar on the Company (in Liqn.) from approaching the BIFR. They, therefore, submitted that the proceedings before the BIFR are non-est in the eyes of law, and therefore, no protection can be claimed under section 22 of SICA, 1985. To support this argument, both counsel placed reliance on a decision of a Division Bench of this Court in the case of Paper Prints (India) Pvt. Ltd. Vs. Phoenix ARC Pvt. Ltd., (2012) 6 Mah L J 427 : (2013) 2 Bom CR 371 as well as my decision in the case of ICICI Bank Ltd. Vs. S. Kumars Nationwide Ltd., Company Petition No.511 of 2014 Relying upon the aforesaid two decisions, and the 2nd proviso to section 15(1) of SICA, 1985, the learned Counsel contended that there was no bar under section 22 of SICA, 1985 to proceed with the and other connected Petitions decided on 1 July, 2016.

4. I have heard the learned Counsel for the parties at length and perused the papers and proceedings in this OLR. As far as the objection raised by Mr Shetye that this OLR cannot proceed by virtue of the fact that the Company (in Liqn) is before the BIFR, I find the same to be without any substance. The facts of the present case clearly disclose that the debt owed by the Company (in Liqn) to IOB was assigned in favour of ARCIL on 12 November, 2014 and which Deed of Assignment was even registered on 23 January, 2015. The reference of the Company (in Liqn) was filed before the BIFR only thereafter on 21 November, 2015. The 2nd proviso to section 15(1) of SICA 1985, clearly stipulates that no reference shall be made to the BIFR after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘sARFAESI Act”), where financial assets have been acquired by any securitisation company or reconstruction company under sub-section 1 of section 5 of the SARFAESI Act. The 2nd proviso to section 15(1) of SICA, 1985 reads thus:

“Provided further that no reference shall be made to the Board for Industrial and Financial Reconstruction after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, wh