Back
2017 Supreme(Pat) 1273
IN THE HIGH COURT OF JUDICATURE AT PATNA
RAJENDRA MENON, ANIL KUMAR UPADHYAY, JJ.
International Asset Reconstruction Company Pvt. Ltd. - Appellant
Versus
M/s Eclat Industries Ltd. - Respondent
Letters Patent Appeal No. 1887 of 2016, 316 of 2017 In Civil Writ Jurisdiction Case No.4748 of 2013
Decided On : 23-11-2017
For the Appellant :Mr. Dr. Binay Kumar Singh, Mr. Rajan Ghoshrave, Advocate
For the Respondent:Mr. Yogendra Prasad Sinha, Mr. Arbind Kumar Jha, Advocate Mr. Arvind Kumar Jha, Advocate
The main legal point established in the judgment is that the decision of the Apex Committee under the Act of 2008 was not binding on the appellants, and the Writ Court had no jurisdiction to interfere with the proceedings under the SARFAESI Act.
Headnote:
SARFAESI Act - Rehabilitation Scheme - Bihar State Micro and Small Enterprises Rehabilitation Act, 2008 - [SARFAESI Act, 2002, Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Act of 2008] - The court discussed the implementation of the rehabilitation scheme under the Bihar State Micro and Small Enterprises Rehabilitation Act, 2008 and the rights of the appellant under the SARFAESI Act. The key legal provisions discussed were Section 13(2) of the SARFAESI Act and Section 5(4) of the Act of 2008, and the court's decision was influenced by the interpretation of these provisions.
Fact of the Case:
The case involved a dispute regarding the implementation of a rehabilitation scheme under the Bihar State Micro and Small Enterprises Rehabilitation Act, 2008 and the rights of the appellant under the SARFAESI Act. The respondent sought relief from the State Government and the appellant's recovery under the SARFAESI Act was restrained.
Finding of the Court:
The court found that the decision of the Apex Committee under the Act of 2008 was not binding on the appellants, and the Writ Court had no jurisdiction to interfere with the proceedings under the SARFAESI Act. The court also noted that the decision taken by the Apex Committee was not in accordance with the law and without the consent of all concerned.
Issues: The issues involved the binding nature of the Apex Committee's decision, the jurisdiction of the Writ Court in interfering with SARFAESI Act proceedings, and the validity of the decision taken by the Apex Committee without the consent of all concerned.
Ratio Decidendi: The court held that the Writ Court should not have issued the mandamus and should have granted the appellant the liberty to proceed with the SARFAESI Act proceedings. The decision of the Apex Committee was found to be not in accordance with the law and without the consent of all concerned.
Final Decision: The appeals were allowed, the Writ Court's order was quashed, and the matter was remanded back to the Apex Committee to reconsider the rehabilitation package and hear all concerned in accordance with the law.
RAJENDRA MENON, J.
1. Both these appeals have been filed by the appellants herein, namely International Asset Reconstruction Company Pvt. Ltd. (IARC)-respondent No.6 in CWJC No.4748 of 2013 and Canara Bank- respondent No.7 in the same writ petition. They call in question tenability of an order dated 29.08.2016 passed by the learned Writ Court at the instance of respondent No.1 herein M/s Eclat Industries Limited- writ petitioner in CWJC No.4748 of 2013, wherein the Writ Court has issued certain directions to the State Government in the matter of providing “corpus fund” and benefit of rehabilitation under the Bihar State Micro and Small Enterprises Rehabilitation Act, 2008 (hereinafter referred to as ‘the Act of 2008’).
2. It was the case of the respondent- writ petitioner M/s Eclat Industries Limited in the writ petition that a direction be issued to the State Government and the Departments of Industries in the State Government, who are added as respondent Nos.1 to 4, to provide relief by way of fund to the writ petitioner-Company in accordance to the Industrial Incentive Policy, 2011 framed by the State of Bihar for revival of sick industry and further prayer was that International Asset Reconstruction Co. Pvt. Ltd. (IARC), appellant in LPA No.316 of 2017, be restrained from effecting recovery against the writ petitioner-respondent no.1 in accordance to the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’).
3. It is seen that the respondent-writ petitioner M/s Eclat Industries Limited had taken loan from Industrial Development Bank of India (IDBI) and the Bank of Baroda and on account of non-payment of loan, the accounts became non-performing asset. In the meanwhile, the respondent-writ petitioner M/s Eclat Industries Limited was declared as a sick industry and proceedings were also held before the Board for Industrial and Financial Reconstruction. However, on 31.03.2010 the Industrial Development Bank of India entered into an assignment agreement with International Asset Reconstruction Co. Pvt. Ltd. (IARC), appellant in LPA No.316 of 2017, wherein assigner Bank, i.e. Industrial Development Bank of India, assigned all the debts of the borrower company M/s Eclat Industries Limited to the International Asset Reconstruction Co. Pvt. Ltd. (IARC). Similarly, another assignment agreement was executed on 22.01.2011 between the appellant-International Asset Reconstruction Co. Pvt. Ltd. (IARC) and the Bank of Baroda in the matter of assigning debts of M/s Eclat Industries Limited. After the aforesaid assignment agreements were completed, the appellant-company again by way of restructuring support finance granted sanction of Rs.60 lacs to the respondent no.1-writ petitioner M/s Eclat Industries Limited on 29.01.2011 and on 04.03.2011 the agreement for restructuring support finance was executed. When the account became non-performing asset on 11.01.2013, the appellant-Company issued notice to the writ petition-respondent No.1 under Section 13(2) of the SARFAESI Act demanding payment of Rs.45,82,581/- on or before 31.12.2012 with respect to the restructuring finance. Thereafter on 25.01.2013, again a notice was issued for making a payment of Rs.55,32,49,453/- being outstanding in the term loan and working capital loan assigned to the writ petitioner- M/s Eclat Industries Limited by IDBI and Bank of Baroda. Thereafter, the appellant International Asset Reconstruction Co. Pvt. Ltd. (IARC) took over the assets of the writ petitioner under the SARFAESI Act and physical possession was taken over by them. In the meanwhile, the writ petition in question was filed by the respondent No.1 on 27.02.2013 seeking a direction to the respondent Nos.1 to 4 to provide relief by way of corpus fund as envisaged under the Industrial Policy of 2011 and further to restrain the appellant in LPA No.316 of 2017 International Asset Reconstru
