Point of Law: No question of the NCLT sitting over the judgment and orders passed by previous bodies like BIFR, AAIFR or even learned Single Judge as was sought to be made out. On the contrary, we feel that the development of new law in the form of IBC is an opportunity for all these stakeholders to get their claims adjudicated and corporate insolvency resolved in a best appropriate manner on the Forum of NCLT which is the most competent body under the law as available now for these issues.

JUDGMENT :

Vineet Kothari, J.

1. The aforesaid Letters Patent Appeal No.2480 of 2010, Lalitaben Govindbhai Patel and others Vs. Gujarat State Financial Corporation and others has been filed by the Guarantors-Shareholders of the Defaulter Company - M/s. Ganpati Pulp and Paper Mills Limited (GPPML) (now in liquidation) with the Official Liquidator attached to High Court of Gujarat, aggrieved by the order of the learned Single Judge dated 06.10.2010 (Coram: Hon’ble Mr. Justice K.S. Jhaveri) in Special Civil Application No.12979 of 2009 - Lalitaben Govindbhai Patel and others Vs. Gujarat State Financial Corporation and seven others.

2. The said Special Civil Application No.12979 of 2009 was filed by the petitioners - Guarantors-Shareholders of GPPML challenging the One Time Settlement dated 10.06.2009 between Gujarat State Financial Corporation (GSFC) and M/s.Shree Industries Limited.

3. Though this case has a chequered history, but we need not to go into all the details of facts in view of the order proposed to be passed by us in this case, and therefore, we would quote our previous interim orders in the said Letters Patent Appeal No.2480 of 2010 itself and extracts of the learned Single Judge’s order impugned in the Letters Patent Appeal as also the Written Submissions of the learned Counsels for giving a perspective, background and relevant facts of the case.

4. The learned Single Judge, vide order dated 06.10.2010, dismissed the said writ petition filed by the Guarantors- Shareholders with the following observations:

“8. As a result of hearing and perusal of the record certain facts are undisputed. The petitioners herein are guarantors of the default unit M/s Ganpati Pulp and Paper Mills Ltd. The possession of the mortgaged properties of GPPL were taken over by GSFC under section 29 of the SFC Act in the year 1986.

8.1 The respondent no.1 GSFC accepted the offer of respondent no.5 SIL for transfer of the said mortgaged properties of GPPL, under Section 29 of the SFC Act for an amount of Rs.3.88 Crores. Out of the said amount, Rs.50 lacs were to be paid immediately at the time of taking possession of the properties and the balance amount of Rs.338 lakhs in the nature of loan to be paid in six years by way of half yearly equal installments carrying interest at the rate of 14% per annum.

8.2 For the said purpose charge was created on the said properties transferred to SIL. The SIL paid a total sum of Rs.3,45,72,307 till the year 1996. In the meanwhile SIL had taken term loan of Rs.56 lakhs from IFCI, Rs.47 lakhs from Punjab National Bank and Cash Credit Facility of Rs.150 lakhs from Punjab National Bank. For the said purpose, pari passu charges against the properties transferred to it by GSFC were created in favour of IFCI and Punjab National Bank and second charge for working capital. The said charge was created with the consent of GSFC, GIIC, Dena Bank and Bank of Baroda who were the members of the consortium.

8.3 In the year 1997 SIL became financially sick and was thus declared as “Sick Industrial Company” by BIFR under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. In the year 2007 BIFR passed an order whereby it was held that GSFC is a secured creditor of SIL and requested GSFC to participate in reconstruction and revival of SIL. Even though the said order was challenged before AAIFR by GSFC, the same came to be upheld. GSFC therefore filed Special Civil Application No.11116 of 2008 in this Court challenging the order of AAIFR dated 2nd May 2008. The said petition is pending.

8.4 Admittedly there are outstanding dues which are bad debt. Such dues could be recovered by GSFC and they could also take possession of the property especially in view the order of this Court and orders of BIFR and AAIFR.

8.5 GSFC had floated several One Time Settlement Schemes. One of the schemes was with regard to purchasers of assets taken over by Corporation and sold under Section 29 of the SFC Act. SIL therefore applied for ava