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2008 Supreme(All) 2336
[2008 (9) ADJ 227]
ALLAHABAD HIGH COURT
BEFORE :SUNIL AMBWANI, J.
IN THE MATTER OF :
M/s. B.P.L. DISPLAY DEVICES LTD., GHAZIABAD ......Respondent
(Misc. Company Application No. 1 of 2008, decided on 17th October, 2008)
Counsel :
B.K.L. Srivastava, Rajnath N. Shukla for the O.L.; Navin Sinha, Vipin Sinha and V.M. Zaidi for the ARCIL; Shyam Narain, P.K. Sinha, Sudhanshu Narain, Shahid Masood, M.P. Sarraf for the Respondent.
Headnote:Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Sections 3—Companies Act, 1956—Sections 529 and 529-A—Winding up proceedings—Recovery of dues—Sale of movable and immovable assets—Assets Reconstruction Company (India) Ltd. (ARCIL) had sought permission of Court to stand outside winding up and to enforce security interest of secured creditors by sale of charged assets under Section 13 of Act of 2002—Position of secured creditors, standing outside winding up was discussed in [Allahabad Bank v. Canara Bank (2000) 4 SCC 406]—There was no inconsistency between SARFAESI Act of 2002 and Companies Act of 1956—Nor any conflict between provisions of sale of assets by secured creditors to realise security interest—And said SARFAESI Act, however, has to be harmonised with Companies Act, as it was in addition to, and not in derogation of Companies Act of 1956 (Section 3) of SARFAESI Act of 2002—Therefore, Company Court must follow provisions of SARFAESI Act of 2002 to be put into motion, even if proceedings for winding-up have been recommended, or are pending or that Company was under liquidation—Statutory duties of Company Court for protecting workmen’s dues, and interest of other stake holders, including public interest, would, however, oblige Court to be informed with process of sale—Held, application of ARCIL to grant, or to remain outside proceedings for winding-up, and to allow applicant-secured creditor to realise their securities by effecting sale of movable and immovable property of company under Section 13 of Act of 2002, read with Rules 8 and 9 of Rules 2002 was allowed, but subject to certain conditions.
[Paras 29, 32, 33, 34, 35 and 40]
Honble Sunil Ambwani, J.—Heard Shri Navin Sinha, Senior Advocate assisted by Shri Vipin Sinha for the Assets Reconstruction Company (India) Ltd. (ARCIL); Shri Rajnath N. Shukla for the Official Liquidator; Shri V.M. Zaidi for ex-directors of the company; Shri Shyam Narain, Shri P.K. Sinha and Shri Sudhanshu Narain for BPL Display Devices Limited Workers Union; Shri Shahid Masood for the workmen (140), who were the employees of Uptron Colour Picture Tubes Ltd. taken over by BPL Display Devices Ltd.; Shri S.K. Misra for Central Excise Department of the Central Government and Shri K.K. Chawla, Accounts Assistant, who claims to be member of the core group of employees formed by M/s BPL Display Devices Ltd.
2. The Asset Reconstruction Company (India) Ltd. (ARCIL) is a company established to acquire non-performing assets of the financial institutions and banks with the objective of focused management of such assets and to maximize the recovery, for the secured creditors. The ARCIL is registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act) as a securitisation and construction company. It has acquired part of debts of ICICI Bank as well as debts of IFCI Ltd. and has stepped into shoes of the secured creditors of M/s BPL Display Devices Ltd. (the company). By a Deed of Assignment dated 30th June, 2007 and 12th September, 2008 executed by the secured creditors, ICICI Bank Ltd. and IFCI Ltd. have absolutely assigned and transferred its rights in the loan facilities with all underline security interest of the company to the secured creditors. M/s. Uptron Colour Picture Tube Ltd. (UCPTL) was declared as sick industrial company by the Board of Industrial and Finance Reconstruction (BIFR) in the year 1993. A Draft Rehabilitation Scheme was prepared for its revival. In appeal the Appellate Authority Industrial Finance and Reconstruction (AAIFR) stayed the proceedings. However, later the Supreme Court passed an order authorizing BIFR to continue the proceedings but not to pass final orders. The Supreme Court, thereafter, vacated the interim order. The scheme envisaged capital expenditure of Rs. 60 crores towards modernization/upgradation of the company’s infrastructure; contribution of Rs. 71.25 crores from the incoming promoters M/s BPL Display Devices Ltd. and their associates (BPL) for the company’s revival; write down of the company’s equity by 90% resulting in deduction in the total value of equity to Rs. 424.90 lacs; acquisition of company’s equity of Rs.193.40 lacs by M/s BPL; Rs. 75 lacs by M/s Videocon International Ltd. and Rs. 37.50 lacs by M/s Toshiba (collaborators); settlement of outstanding dues of the companies, financial institutions, banks etc.; obligations to be fulfilled in respect of M/s U.P. Electronics Corporation Ltd. (UPECL) the holding company and reliefs and concessions from the State Government and the Central Government. The ICICI was appointed by the BIFR as Monitoring Agency (MA). The scheme envisaged the networth of the company to turn positive during the year 1995-96 and to wipe out the accumulated losses during 1997-98.
3. On the applications filed by the Banks, the BIFR in exercise of its powers under Section 22 (3) read with Section 22 (5) directed on 15.7.1996 that the operation of all the contracts, assurances, agreements and settlements with the banks namely State Bank of India, State Bank of Patiala, Bank of India and Union Bank of India to be suspended for two years from 28.6.1996.
4. In the review hearing on 21.2.2002 the Monitoring Agency noted that the company could neither settle nor pay the dues of the company’s secured creditors nor could settle or pay the dues of the workers/employees. The BIFR as such directed MA to holding joint meetings to consider the status of compliance of the scheme and to submit a report. The joint meetings were convened on 23.3.2002,
