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GUJARAT HIGH COURT
KS JHAVERI, A.G.URAIZEE, JJ
KOTAK MAHINDRA BANK LTD. – Appellant
Versus
O.L. OF M/S. APS STAR IND.LTD. & 19 – Respondent
O.J.APPEAL NO. 156 of 2007 | COMPANY APPLICATION NO. 489 of 2006 | OFFICIAL LIQUDATOR REPORT NO. 88 of 2006 | COMPANY PETITION NO. 190 of 2003 | O.J.APPEAL NO. 157 of 2007 | O.J.APPEAL NO. 164 of 2007 | O.J.APPEAL NO. 167 of 2007 | O.J.APPEAL NO. 190 of 2007 | MISC. CIVIL APPLICATION (OJ) NO. 213 of 2006 | O.J.APPEAL NO. 195 of 2007 | O.J.APPEAL NO. 172 of 2007
For the Appellants/Petitioners: SINGHI & CO
For the Respondents: GOVERNMENT PLEADER, MR BHAGYODAYA MISHRA, MR INDRAVADAN PARMAR, MR RAJESH P MANKAD, MR RD DAVE, MR YOGESH G DEV, MS AMEE YAJNIK
The assignment of debts between banks is permissible under the Banking Regulation Act, allowing assignees to substitute in liquidation proceedings, subject to legal compliance.
Headnote:(A) Banking Regulation Act, 1949 - Assignment of debts - Following a Deed of Assignment, the Court addressed the permissibility of banks assigning debts and the implications for substitution of assignee banks in liquidation proceedings. The Apex Court clarified that assignment of debts is permissible under the Banking Regulation Act, allowing the assignees to recover dues from borrowers. The learned Company Judge’s prior conclusion on substitution was upheld, but other issues were remanded for review. Appeals partly allowed. (Paras 23, 24, 41)
(B) Substitution in Liquidation Proceedings - The court emphasized that the assignee, upon receiving a debt assignment, acquires the right to substitute itself in place of the assignor bank, provided such assignment complies with applicable laws and regulations. (Para 46)
| Table of Content |
|---|
| 1. substitution of parties based on assignment of debts (Para 1) |
| 2. legal basis of debt assignment and its implications (Para 3) |
| 3. court's adherence to apex court's guidance on substitution (Para 4) |
| 4. final proceedings and the retention of lower court's observations (Para 6) |
| 5. overall order for remanding case and open issues (Para 7) |
JUDGEMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. The appellants had filed applications seeking substitution of appellants in place of respondent no. 20 (ICICI Bank Limited) in view of the fact that the applicants had taken over the debts of ICICI Bank Limited. The said applications were heard by learned Single Judge sitting as Company Judge and vide common judgement and order dated 05-06- 09/07/2007 the applications came to be dismissed. This judgement was challenged by filing the present appeals which were decided on 12.01.2009. Against the said judgement passed by the Division Bench of this High Court, the matter was carried to the Apex Court by filing Civil Appeals No. 8393 of 2010 and allied matters. The Apex Court by order dated 30.09.2010 (reported as ICICI Bank Limited vs. Official Liquidator of APS Star Industries Limited and Others reported in (2010) 10 SCC 1) remanded the matters to the Division Bench of this High Court. While remanding and concluding the matte, the Apex Court observed as under:
- “23. As stated above, by the impugned judgment, the Division Bench of the Gujarat High Court upheld the order of the Company Court only on one ground, namely, assignment of debts by the banks inter se is an activity which is impermissible under the Banking Regulation Act, 1949. However, the Division Bench did not go into other issues which arose for determination before the Company Court, including applicability of the provisions of the Registration Act, 1908.
24. In the circumstances, we set aside the impugned judgment(s) on the question of assignment of debts as an activity permissible under the Banking Regulation Act , 1949. However, we remit these matters to the Division Bench of the High Court(s) for consideration of other issues raised in this batch of cases. Subject to above, the impugned judgment(s) is set aside and the civil appeals are allowed with no order as to costs. “
2. With the consent of the parties, the matters are taken up for final hearing today. The prayers in each application are set out as under:
- KOTAK MAHINDRA BANK LIMITED Sr.
- No.
- Sr.
- No.
- as per the Cau se list of
30.9
.201 4 Matter Prayer made in the Company Application Date of Sub.
order of in DRT Date of Decree passed in DRT
1. 47 OJA/156/2007 in COMA/489/2006 With OJCA/260/2007 A) That this Hon’ble Court may be pleased to allow the name of the applicant to be substituted in place of ICICI Bank - - Kotak Mahindra Bank Ltd. vs. OL of M/s. APS Star Industries Limited & ors.
Limited;
2. 50 OJA/159/2007 in COMA No. 291 of 2006 With OJCA/263/2007 Kotak Mahindra Bank vs. State Bank of India & ors.
(OL of Orient Chemicals Limited) A) That this Hon’ble Court may be pleased to allow the name of the applicant to be substituted in place of the State Bank of India;
16.1.200 7 -
3. 51 OJA/160/2007 in COMA No. 491 of 2006 With OJA/264/2007 Kotak Mahindra Bank vs. OL of M/s.
Varun Seacon Limited & ors.
A) That this Hon’ble Court may be pleased to permit the applicant to be substituted for and in place of the ICICI Bank Limited as the secured creditor of the Company in Liquidation;
- - -
4. 52 OJA/161/2007 in COMA No. 620 of 2006 With OJCA/265/2007 Kotak Mahindra Bank vs. OL of Stanrose A) That this Hon’ble Court may be pleased to permit the applicant to be substituted for and in place of the State Bank of India and State Bank of Saurashtra as the secured creditor of the Company in - 10.7.2014 Steels Limited (formerly Volvo Steels Limited) & anr.
Liquidation;
5. OJA/162/2007 in COMA No. 490 of 2006 With OJCA/266/2007 Kotak Mahindra Bank vs.
Star I
