The transfer of debts and underlying securities of the petitioner company is legal and valid under the provisions of the SARFAESI Act, RDB Act, and BR Act.

1. The petitioner in WP(C).No.27021/2010 is a Public Limited Company incorporated under the provisions of the Companies Act 1956, carries on business inter alia in manufacturing medical equipments in the field of cardiology, patient monitoring, imaging etc (hereinafter referred to as the petitioner company). They are also manufactures of Printed Circuit Boards and alkaline Batteries. The company claims to be providing employment to about 1200 persons, directly and indirectly. The factory of the petitioner company is located at Palakkad in Kerala. The petitioner in WP(C).No.25000/2010 is a trade union registered under the provisions of the Trade Unions Act 1926, representing workers of the petitioner company.

2. The challenge in these writ petitions is against proceedings initiated under section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) by M/s. Pegasus Assets Reconstruction Private Limited (respondent No.1 in WPC.27921/2010 and respondent No.3 in WPC.No.25000/2010) against the assets of the petitioner company.

3. Parties in both these writ petitions are one and the same. The pleadings on facts and grounds, as well as exhibits produced are more or less the same in both these cases. For the sake of convenience, the order of the parties as well as the order of exhibits is referred hereinafter as in its order in WP(C). No.27021/2010.

4. A brief history on the facts of the case is as follows. With respect to liquidating debts of the petitioner company, an arrangement with its secured creditors and preferential share holders were evolved in the form of a scheme, which was filed before this court under the provisions of section 391 to 394 of the Companies Act. The scheme was approved with effect from 31.3.2003, through Ext.P1 judgment in C.P.No.13/2005. By virtue of the scheme, the debts of the petitioner company as on 31.3.2003 along with underlying securities were restructured and the rights and liabilities between the petitioner and its secured creditors and preferential share holders were settled. The scheme in question is produced as Ext.P2.

5. An Assets Reconstruction Company, viz. M/s. Assets Reconstruction Company of India Limited (ARCIL) had acquired debts and secured assets of the petitioner company from its various secured creditors (Banks and other financial institutions) by virtue of separate agreements. M/s. ARCIL, through agreements dated 5.4.2008 and 7.4.2008 had assigned their rights along with the underlying securities, which constitute 55% of the total debts of the petitioner company, in favour of the 2nd respondent, which is a banking company constituted under the provisions of the Banking Regulation Act 1949 (BR Act) . Exts. P3 and P4 are the agreements executed between ARCIl and the 2nd respondent. The 2nd respondent in turn assigned the above debts and underlying securities in favour of the 1st respondent, which again is another asset reconstruction company, by virtue of Ext.P5 agreement.

6. According to the petitioner company, they were negotiating with the 2nd respondent Bank for settlement of the liabilities. But pursuant to Ext.P5 agreement the 1st respondent caused Ext.P7 legal notice calling upon the petitioner company to make payment of outstanding balance of Rs.275,47,28,329.14 (Rupees Two Hundred and Seventy Five crores, Forty Seven lakhs, Twenty Eight Thousand, Three Hundred and Twenty Nine and paise Fourteen only). The petitioner company had caused Ext.P8 reply requesting the 1st respondent not to precipitate the issue since negotiations with the 2nd respondent was at close to finalisation of settlement. The 1st respondent was requested to wait till finalisation of the proposed settlement. But the 1st respondent issued demand notice under Section 13(2) of the SARFAESI Act as per Ext.P9. Eventhough the petitioner company had addressed the 2nd respondent Bank to permit settlement of the liabilities in terms of th