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IN THE HIGH COURT OF CALCUTTA
Pinaki Chandra Ghose & Shukla Kabir (Sinha), JJ.
ASSET RECONSTRUCTION COMPANY (I) LTD.
VS.
KANORIA JUTE AND INDUSTRIES LTD.
A.P.O. No. 399 of 2010; W.P. No.53 of 2010 With MAT. No. 1351 of 2010; CAN. No. 8887 of 2010
Decided On : May 19, 2011
SARFAESI ACT - NOTICE - ASSIGNMENT - JURISDICTION - WRIT - MAINTAINABILITY - SECURED CREDITOR - APPEAL - REMEDY: 1. The appellant, Asset Reconstruction Company India Limited (ARCIL), filed an appeal against the order of the Hon'ble Single Judge, who had directed that no effect should be given to the notices dated 17th March, 2009 and 12th January, 2010 till O.A. No. 186 of 1995 is finally disposed of by the Tribunal. 2. The Hon'ble Single Judge had relied on a judgment and order delivered in a Civil Revision case, which was instituted by Kanoria Jute & Industries Ltd. against the Bank of India, ARCIL, and others. The court held that ARCIL could not be accepted as an assignee in terms of the said compromise decree and further could not be impleaded in the petition as an assignee of the decree under Order 22 Rule 10 of the Code of Civil Procedure. 3. The court also held that the decree passed by the Tribunal on the basis of the compromise petition is illegal. The court directed the Tribunal to consider the pending application being O.A. No.186 of 1995 on merits. 4. The appellant contended that the writ petitions were not maintainable before this Court in view of the expressed alternative remedy being available to the writ petitioners under section 17 of the SARF AESI Act. 5. The respondent submitted that ARCIL had no right to issue the notice for the reasons that Court did not accept its position as an assignee, the decree was set aside and the matter was remanded before the learned Tribunal for adjudication.
Fact of the Case:
1. The appellant, ARCIL, had entered into an assignment on 31st March, 2008 with Bank of India, whereby the petitioner had acquired interest in financial assets of Bank of India in respect of all financial assistance granted by the Bank of India to the Kanoria Jute & Industries Ltd. (KJIL). 2. On 15th September, 1987 the respondent KJIL was declared as sick by the Board for Industrial and Financial Reconstruction (BIFR). 3. On 31st December, 2002 the BIFR directed to wound up the company KJIL. 4. On 6th January, 2004 the Bank of India agreed to settle its claim and in pursuance thereof a compromised petition was filed before the DRT. 5. The KJL paid a sum of Rs. 51 lakhs as per terms to the Bank. 6. The DRT refused to pass a decree where the appeal was preferred before the DRT and the Appellate Tribunal set aside the order passed by the learned presiding officer of the DRT, Kolkata and issued a Recovery Certificate in terms of Clause 7(2) of the Terms of Settlement dated 30th January, 2004 which was challenged in a revisional application and the same was disposed of the High Court. 7. On 31st March, 2008 a purported deed of assignment executed between the Bank of India and ARCIL. 8. On 17th March, 2009 a purported notice under SARF AESI issued by ARCIL. 9. On 14th August, 2009 DRT disposed of O.A. No. 186 of 1995 by directing the company to pay Rs.149 Lacks along with Simple Interest at the rate of 11 per cent per annum to Bank of India within 15 days. 10. On 12th January, 2010 the company made a representation to District Magistrate to render assistance to stop illegal activities of ARCIL and on the same day ARCIL issued and pasted purported notice of possession.
Finding of the Court:
1. The court held that the ARCIL cannot be regarded as an assignee of the said decree and directed DRT to' consider the application being O.A. No. 186 of 1995 under section 19 of DRT Act. 2. The court further stated that since the decree is set aside, the opposite party No.2 (ARCIL herein) cannot claim any benefit of the alleged assignment of the said decree. 3. The court also held that the said opposite party No.2 thus cannot be regarded as an assignee of the said compromise decree and as such the said company cannot be impleaded as assignee of the decree under Order 22 Rule 10 of the Civil Procedure Code in the said proceeding. 4. The court further held that the appellant is not an assignee yet declared by the Court, since the assignment of the decree has already been set aside by the Court, ARCIL cannot claim itself as an assignee. 5. The court also held that until the said assignment is finally accepted by the learned Tribunal, the ARCIL cannot come in the sue of the Bank and claim its right .as an assignee.
Issues: 1. Whether the appellant, ARCIL, can be regarded as an assignee of the decree and can be impleaded as an assignee of the decree under Order 22 Rule 10 of the Civil Procedure Code in the said proceeding? 2. Whether the appellant, ARCIL, can come within the purview of 'secured creditor' as defined in section 2 (zd) of the SARFAESI Act?
Ratio Decidendi: 1. The court held that the ARCIL cannot be regarded as an assignee of the said decree and directed DRT to' consider the application being O.A. No. 186 of 1995 under section 19 of DRT Act. 2. The court further stated that since the decree is set aside, the opposite party No.2 (ARCIL herein) cannot claim any benefit of the alleged assignment of the said decree. 3. The court also held that the said opposite party No.2 thus cannot be regarded as an assignee of the said compromise decree and as such the said company cannot be impleaded as assignee of the decree under Order 22 Rule 10 of the Civil Procedure Code in the said proceeding. 4. The court further held that the appellant is not an assignee yet declared by the Court, since the assignment of the decree has already been set aside by the Court, ARCIL cannot claim itself as an assignee. 5. The court also held that until the said assignment is finally accepted by the learned Tribunal, the ARCIL cannot come in the sue of the Bank and claim its right .as an assignee.
Final Decision: The court disposed of the appeal affirming the order of the Hon'ble Single Judge.
Pinaki Chandra Ghose, J.
This appeal is directed against a judgment and/or order dated 17th August, 2010 passed by the Hon'ble Single Judge in W.P. No. 63 of 2010, G.A. No. 786 of 2010, G.A. No. 372 of 2010, W.P. No. 4154 (W) of 2010 wherein His Lordship (Writ Court) was pleased to pass the following order:
"Having regard to the above observations, it appears that it has been categorically held by the Court that the Bank was not entitled to get any benefit from any of the terms of the terms of settlement. It has also been specifically observed by the Court that the learned Appellate Tribunal committed an illegality by directing issuance of recovery certificate in terms of clause 7(2) of the terms of Settlement dated 30th January, 2004, in favour of ARCIL.
In such circumstances as stated above, I am of the view that no effect can be given in respect of the two impugned notices, dated 17th March, 2009 and 12th January, 2010, till final disposal of the proceeding pending before the Debt Recovery Tribunal-I, Kolkata. Consequently, no effect shall also be given in respect of the notice dated 19th February, 2010, issued by the respondent ARCIL, till final disposal of OA No. 186 of 1995.
The writ petition stands disposed of accordingly."
2. At the time of disposing of the said writ petition the Hon'ble Single Judge has relied on a judgment and order delivered in a Civil Revision case, which was instituted by Kanoria Jute & Industries Ltd. against the Bank of India, Asset Reconstruction Company India Limited and others.
3. The observations made by the Hon'ble Single Judge of this Court in the Civil Revision case, being C.O. No. 2161 of 2010, are reproduced hereunder:- .
"Thus this Court holds that the decree which was passed by the tribunal on the basis of such compromise petition is illegal and such decree cannot be retained on record. The conclusion of the Appellate Tribunal upto this, is accepted by this Court, for the reasons as aforesaid, without however approving the finding on which such conclusion was drawn by the Appellate Tribunal.
This Court also cannot accept the submission of Mr. Mitra, learned Senior Counsel, who submitted that the default clause as contained in clause 2 of the terms of compromise was attracted on the failure of the petitioner herein to deposit the agreed amount within the stipulated period as per the said compromise petition. This Court holds that the opposite party Nos. 1 and 2 cannot take both hot and cold at the same time. Once they take a stand that the compromise was practically abandoned and/ or frustrated due to passage of time and/ or change of situation making the terms of compromise unenforceable and/or incapable of implementation, they cannot claim any benefit out of any of the terms of compromise even if it was favourable to them.
As such this Court holds that the bank is not entitled to get any benefit from any of the terms of the said terms of settlement. This Court thus holds that while setting aside the order passed by the learned Presiding Officer of the Debt Recovery Tribunal-I Kolkata on 14th August, 2009, the learned Appellate Tribunal committed an illegality by directing issuance of recovery certificate in terms of Clause 7(2) of the terms of settlement dated 30th January, 2004 in favour of the second appellant, namely Asset Reconstruction Company (India) Ltd.
Accordingly that part of the direction passed by the Appellate Tribunal is set aside in view of the discussion as made hereinabove. The Debts Recovery Tribunal-I Kolkata is now required to consider the application being O.A. No. 186 of 1995 under section 19 of the said Act on its own merit in accordance with law.
Before parting with, this Court also wants to make it clear that since the decree is set aside the opposite party No.2 cannot claim any benefit of the alleged assignment of the said decree. The said opposite party No.2 thus cannot be regarded as an assignee of the said compromise decree and as such the said company cann
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