Respondent Company could not derive advantage of section 22 of SICA.

S.J. Mukhopadhaya, J.

This writ petition has been preferred by the Bank of Rajasthan Limited (hereinafter referred to as the Bank) against the order dated 14. 2007, passed by the Debt Recovery Appellate Tribunal (hereinafter referred to as DRAT) in M.A. No. 191 of 2006 with further prayer to direct Debt Recovery Tribunal-II (hereinafter referred to as DRT-II Chennai, to proceed with O.A. No. 189 of 2003 as against the borrower-respondent Shobhagaya Steels Ltd.

2. The case of the petitioner is that the respondent Shobhagaya Steels Ltd., is a company incorporated under the Companies Act, 1956, and is engaged in the manufacture of steel ingots, tor steel and CTD bars, The Bank had granted credit facility to the said respondent during 1994, who created equitable mortgage of the immovable property situated at Plot Nos.B-58, B-74 and B-76, SIPCOT Industrial Complex, Guimmidipoondi. On the request made by the respondent-company, the facility granted was periodically enhanced by the Bank and the respondent confirmed that the equitable mortgage of the property will be continued by the Bank to secure the liabilities of the company. The mortgage was duly registered with the Registrar of Companies. Since the respondents account was overdue and was irregular, the bank called upon the respondent to regularise the account. The company having failed to take steps far regularization of the account the bank recalled the entire credit facility by notice dated 211. 2001 and called upon the respondent-company to deposit a sum of Rs.890,89 lakhs in response to which the company made payment of Rs.6,50,000/-only in three instalments, the last of which was received on 13. 2002.

Later on, by letter dated 23. 2002 of the Registrar, Board of Industrial and Financial Reconstruction (hereinafter referred to as BIFR), the petitioner-Bank was informed that the respondent-company was registered with the BIFR vide registration No. 134 of 2002. But, in the meantime, as the respondent-companys account has been classified as non-performing asset (NPA), the Bank initiated action against the respondents property under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as the SARFAESI Act). An application, O.A.No.189 of 2003 was filed before the DRT-II, Chennai, under the Recovery of Debts due to Banks and Financial Institutions Act (hereinafter referred to as the RDDB & Fl Act against the respondent and the guarantors for recovery of Rs.10,68,77,8512.

3. After complying with the statutory requirements prescribed under Section 13(2) of SARFAESI Act, the Bank proceeded and took physical possession of the property situated at Plot Nos. B-58, B-74 and B-76 at SIPCOT Industrial Complex, Gummidipoondi, under Section 13(4) of the SARFAESI Act. Peaceful possession was handed over on 212. 2003 but the respondent filed I.A.No.546 of 2005 seeking for dismissal of O.A. No.189 of 2003 on the ground that the said application was in contravention of Section 22(1) of Sick Industrial Companies (Special Provisions) Act, 1985, (hereinafter referred to as SICA, 1385). The Bank filed a counter affidavit contending that the reference pending before BIFR deemed to have been abated under 3rd proviso to sub-section (1) of Section 15 of SICA, 1985, in view of the fact that the Bank is the exclusive creditor having taken possession of the property under Section 13

(4) of the SARFAESI Act. Other plea were also taken. However, the DRT-II, after hearing the parties, by way of its order dated I3. 2006, disposed of the interlocutory application and stayed the proceedings in O.A. No.189 of 2003 against the respondent-company.

Faced with the aforesaid situation, the Bank filed M.A.No.191 of 2006 before the DRAT. During the pendency of the appeal, the Bank also published auction notice in the local newspapers setting out the terms and conditions of the sale of the respondents property of whi