JUDGMENT F.I. Rebello. J.
1. The present appeal has been preferred by the Company in Liquidation through the Official Liquidator, challenging the order dated 4.5.2005 whereby the learned Company Judge refused to recall the order dated 17.10.2003, which was passed in application No. 142/2003. Further relief sought is to quash and set aside the order passed in Review Application No. 55/2005 on 13.6.2005. By the impugned order dated 4.5.2005 the learned Company Judge refused to recall the order dated 17.10.2003, permitting the secured creditors to proceed under Securitisation Act, and in view of that rejected Company Application No. 97/2004 and 11/2005. The learned Judge further ordered that in view of the finding recorded in the order, it was open to the State Bank-respondent to proceed to sell the secured asset of 18 acres and 20 gunthas of land as advertised by it after complying with and furnishing undertaking to the Official Liquidator as required by Section 529 and 529A of the Companies Act. It was further made dear that, respondent-State Bank of India is not entitled to sell the movables mentioned by it in the advertisement or otherwise under Securitisation Act as the same is in the custody of Official Liquidator. To that extent partly allowed Company Application No. 83/2004 and Company Application No. 9/2004. In view of this finding, the Court held that, it was not necessary to pass any orders in Company Application No. 57/2001 filed by the State Bank of India seeking leave to remain outside the winding up proceeding and the said application was also rejected. Hence, the present appeal as filed by the Company through the Official Liquidator.
2. A few facts may now be set out as under :-
By order dated 28.11.2000 B.I.F.R. recommended winding up of the Company. Petition for winding up was presented on 8.6.2001, and it was admitted on 24.8.2001. On 17.9.2001 State Bank-respondent filed Company Application No. 57/2001 to remain outside winding up proceedings and recover the dues by proceeding under the Debts Due To Bank And Financial Institution Act (hereinafter referred to as R.D.B. Act). The respondent-Bank had filed O.A. No. 474/2001 before Debts Recovery Tribunal, Nagpur tinder the provisions of the Debts Due To Bank And Financial Institution Act. The Official Liquidator was not made a party in those proceedings. By order dated 18.1.2002 the Hon'ble Delhi High Court dismissed the Writ Petition No. 4404/2001 filed by the Company against the order of B.I.F.R.. On 6.6.2003 the appellant was appointed as Provisional Liquidator with a direction to prepare inventory of property. On 11.6.2003 according to appellant all the property at Akola both movable and immovable which forms the subject matter was taken in possession in presence of the respondent, and it was locked and sealed, security was deployed, and inventory was prepared. The respondent-Bank filed an application bearing No. 142/2003 in the Company Petition without a copy to appellant or other creditors, and without any affidavit of schedule of property seeking permission to proceed against the Company under Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Securitisation Act). It is the case of the appellant that, the learned Company Judge without hearing any party in the proceedings, allowed the same on 17.10.2003. According to the appellant they filed OLR No. 63/2003 for sale of property. The State Bank objected to the same and the objection is still pending. This was filed on 6.11.2003. In the meantime the SLP No. 17406/2002 preferred against: the order of Delhi High Court, dismissing the petition against the order of B.I.F.R. was dismissed by the Hon'ble Apex Court. On 23.4.2004 the company was finally wound up. It is the case of the appellant that, by virtue of winding up all the properties of Company including the subject matter of the present appeal vests with the Hon'ble Company Court. The order was passed after hearing ail the parties including the respondent to the proceedings. In the meantime by order dated 4.10.2004, O.A. No. 474/2001 preferred by respondent-Bank against the Company and its guarantors before the Debt Recovery Tribunal was allowed.
Respondent thereafter issued advertisement on 12.10.2004 for the sale of property. Before that notice under Section 13(2) was issued by the Respondent on 8.1.2004 under the Securitisation Act. Notice under Section 13(4) was issued on 22.4.2004. Another advertisement issued on 11.11.2004 was stayed by an order in Company Application No. 91./2004. On 13.12.2004 appellant filed Company Application No. 97/2004 for recall the order dated 17.10.2003 which was granted ex-parte and by which permission was granted to the respondent to proceed under the Securitisation Act. By an order dated 4.5.2005 in the application No. 97/2004, 83/2004 and 91.2004 the Company Court was pleased to allow the respondent to sell the property. Appellant preferred Review Application No. 55/2005 on 9.6.2005 and the same was rejected on 13.6.2005.
3. One of the contentions as urged on behalf of appellant is that the property which was put up for sale a substantial part of it has not been mortgaged in favour of the respondent and as such the same could not have been sold under the provisions of Securitisation Act. At this stage it may be pointed out that, it is the case of the Respondent-Bank that equitable mortgage of 11 acres and 11 gunthas of survey No. 62 of Mauje Umri, ward No. 9 Akola was created in favour of the respondent by deposit of title deeds on 4.5.1990. On the credit facility being enhanced, further equitable mortgage for 7 acres 9 gunthas of Survey No. 61 of Mauje Umri, ward No. 9 at Akola Municipal Committee was also created in favour of the respondent-Bank by way of equitable mortgage by deposit of title deeds on 21.8.1991. It is the contention of the Appellant that, the charge in respect of 7 acres 9 gunthas has not been registered with the Registrar of Companies as required by law and consequently it is not secured asset. The Original Application No. 474/2001 has been disposed of on 4th October, 2004. Though Akola Oil Industries was a party and though Official Liquidator was appointed on 6.6.2003 as provisional liquidator, the Official Liquidator was not made party to the proceedings before D.R.T. The Company was wound up on 23.4.2004. On the Company being wound up, the provisional liquidator was made official liquidator consequent to the order of winding up. The Tribunal without the Official Liquidator being appointed to represent the Company in liquidation proceeded to dispose of the O.A. by its order dated 4.10.2004. The learned D.R.T. allowed O.A. with further direction, permitting the respondent to sell the mortgaged properties. As noted earlier, while recording the facts, the learned Tribunal proceeded on the footing that, there are two deeds of mortgages by deposit of title deeds created in favour of respondent which will cover the entire property. The first deed is dated 4.5.1990 for 11 acres and 11 gunthas and the second is dated 21.8.1991 for 7 acres 9 gunthas. As a matter of fact, it may be pointed out that, till date inspite of having knowledge of the proceedings and the order of D.R.T. the Official Liquidator seems not to have moved the Debts Recovery Tribunal for recalling its order dated 4.10.2004 on the ground that the order as passed against the Company in the absence of Official Liquidator could not have been passed.
4. At the hearing of this appeal, on behalf of the appellant, their learned counsel has principally submitted as under:-
i) That the provisions of the Securitisation Act will prevail as long as the Company is in existence. Even if Official Liquidator is appointed as provisional liquidator, the Securitisation Act will prevail till the Company is ordered to be wound up. After the winding up order it is not open to a secured creditor to proceed under the provisions of the Securitisation act.
ii) The properties that can be sold under the Securitisation Act are only secured properties. In other words, if me charge is registered under Section 125 of the Indian Companies Act. In the instant case, there is no charge registered in respect of the second mortgage. In so for as the purported mortgage created on 21.8.1991 at the highest it is an agreement to mortgage, and at any rate not being registered is void as against the liquidator and as such it was not open to the respondent to sell the property under the provisions of the Securitisation Act.
5. In so far as the first issue is concerned, we may gainfully refer to the judgment of the Apex Court in the case of Allahabad Bank v. Canara Bank and Anr., A.I.R. 2000 Supreme Court, 1535, where a similar issue came up for consideration. The issue was the provisions of the Companies Act and the R.D.B. Act The point which arose was, if there be two legislations, both Central Acts, which would prevail. The provisions of the two Acts were then considered, and various tests were applied. What is relevant for our discussion are questions Nos. 2 and 3 which have been reproduced below :-
(2) Whether for initiation of various proceedings by the Banks and financial institutions under the RDB Act, leave of the Company Court is necessary under Section 537 before winding up order is passed against the Company or before provisional liquidator is appointed under Section 446 (1) and whether the Company Court can pass orders of stay of proceedings before the Tribunal, in exercise of powers under Section 442 ?
(3) Whether after a winding up order is passed under Section 446(1) of the Company Act or a provisional liquidator is appointed, whether the Company Court can stay proceedings under the RDB Act, transfer them to itself and also decide questions of liability, prosecution and priority under Section 446 (2) and (3) read with Sections 529, 529A and 630 etc. of the Companies Act or whether these questions are all within the exclusive jurisdiction of the Tribunal ?
Points Nos. 2 and 3 were considered together The Apex Court held that, at the stage of adjudication under Section 17 and execution of the certificate under Section 25 etc. the provisions of RDB Act 1993, confer exclusive jurisdiction in the Tribunal and the Recovery Officer in respect of debts payable to Banks and financial institutions and there can be no interference by, the Company Court under Section 442 read with Section 537 or under Section 446 of the Companies Act, 1956. In respect of the monies realised under RDB Act, the questions of priorities amongst Banks and financial institutions and other creditors can be decided only by the Tribunal under the RDB Act in accordance with Section 19(19) read with 529A of the Companies Act and in no other manner. The provisions of the RDB Act 1993 are to that extent inconsistent with the provisions of the Companies act, 1956. This position holds during the pendency of winding up proceedings against the debtor Company and also after the winding up order is passed. No leave of the Company Court is necessary for initiating or continuing the proceeding under RDB Act 1993. Point Nos. 2 and 3 were accordingly decided in favour of the appellant and against the respondent. Considering the above, in so far as the R.D.B. Act is concerned, it has been held that the Tribunal constituted under the RDB Act 1993, would have exclusive jurisdiction even after winding up order is passed. The only question is whether the position is the same under the provisions of the Securitisation Act.
We may consider some provisions of the Securitisation Act Section 34 reads as under :-
"No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions act, 1993 (51 of 1993)".
Section 35 reads as under :-
"The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law".
Similarly, Section 37 of the Securitisation Act needs to be reproduced and reads as under :-
"The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992); the Recovery of Debts Duet to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force".
Section 31 sets out what properties and/or securities would not be covered by the provisions of the Securitisation Act, Section 2(z-b) defines, "security agreement" to mean an agreement, instrument or any other document or arrangement under which security interest is created in favour of the secured creditor including creation of mortgage by deposit of title deeds with the secured creditor. Section-2(zc) defines, "secured asset" means the property on which security interest is created. Section-2(ze) defines, "secured debt" to mean a debt which is secured by any security interest, Under Section 13(4), after following the procedure as set out in Section 13 (2), (3), (3 a), the secured creditors can proceed to take possession of the secured assets of the borrowers and deal with the assets in the manner set out.
Section 24 of the R.D.B. Act provides that, the provisions of that Act shall have effect notwithstanding anything inconsistent therewith contained in any rather law for the time being in force or in any instrument having effect by virtue of any law other than this Act. Sub-section (2) sets out that, the provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 and various acts as set out therein.
It would thus be clear that, the provisions of Securitisation Act are in addition to and not in derogation amongst others of the R.D.B. Act.
We may again refer to the case of Allahabad Bank (Supra) After considering the issue of leave and control by the Company Court, the Apex Court held on the issue of adjudication, execution and working out priorities that the special provisions made under the R.D.B. Act would prevail. Then considering the issue of Special Law Versus General Law, the Apex Court was pleased to hold that the provisions of the R.D.B. Act, 1993 to the above extent are inconsistent with the provisions of the Companies Act 1956 and came to the conclusion that the leave of the Company Court was not required before winding up or after winding up. On behalf of the Appellant, learned counsel drew our attention to the observations of the Apex Court in State Bank of Hyderabad v. Pennar Paterson Ltd. and Anr., 2003, Vol. 114, Company Cases, 66, where the Apex Court has observed that Allahabad Bank may have to be re-examined in so far as jurisdiction of the Company Court and Tribunal under R.D.B. Act The Apex Court, however, chose not to answer the issue and considering the law as it stands it is immaterial at what stage the official liquidator is appointed. If that be the position, we have no doubt in our mind that, considering the provisions of the Securitisation Act, and the provisions of the Companies Act, the provisions of the Securitisation Act will prevail and no leave of the Company Court is required either before winding up or after winding up for selling the secured assets. The respondent, therefore, even if had preferred an application for leave or moved under the provisions of the Securitisation Act, that really was not required. No leave was also required under the provisions of the R.D.B. Act. It was open to the respondent to initiate proceedings before the Tribunal tinder the Debts Recovery Act or for realisation of the security under the provisions of the Securitisation Act without seeking leave of the Company Court. It may also be noted that under the provisions of the proviso to Section 13(9) of the Securitisation Act, the workmen's dues are protected: In other words this by itself will be an indication that the provisions or the Securitisation Act, will prevail over the Company Act. It was therefore, within the competence of the Respondent to proceed to dispose of the assets under the provisions of the Securitisation Act. If the grievance of the appellant is that, he was not made a party, then it is open to the appellant to take such steps that appellant would be entitled to, by moving the Tribunal according to law. The first contention must be answered accordingly.
6. The second question which was urged was based on the contention that, it is only property which is secured by creating a charge in the manner provided under the Companies Act, which can be the subject matter of a notice and or attachment under the provisions of the Securitisation Act.
The learned counsel invited our attention to the judgment of the Division Bench of this Court in Official Liquidator, High Court, Bombay v. Suryakant Natvarlal Surati and Ors., (Company Cases 147). Relying upon the said judgment, it is sought to be contended that, as the second mortgage was not registered as required under Section 125 of the Companies Act, the Respondent to that extent could be treated as an ordinary creditor and not secured creditor. In Suryakant Natvarlal Surate (Supra) the proceedings were based on the mortgage created by deposit of title deeds. The learned Division Bench observed that, every charge created by a Company which was not registered under the provisions of Companies Act was ipso facto void against the liquidator upon the company being ordered to be wound up, and that no steps were required to be taken by the liquidator to make or have it declared void. The Court further held that for the application of the provisions under Section 125, the Court has to see whether under the terms of the decree, the unregistered charge created by the mortgage was kept alive or extinguished or replaced by an order of sale created by the decree. If upon a construction of the decree the Court found that unregistered charge was kept alive, the provisions of Section 125 would apply. If, on the other hand, the decree extinguished the unregistered charge, the section would not apply. It is not necessary to refer to the other propositions set out in the judgment In the instant case the respondent-Bank has produced before us the documents which have been filed before the Debts Recovery Tribunal including the letter of September, 18, 1991, forwarded to the Registrar of Company to register company's charge on me assets of the company This was in respect of 18 acres 20 gunthas which is the subject matter of the present dispute. It is, therefore, clear that, the necessary forms with all particulars had been forwarded by the Company to the Registrar for registration. The act of registration itself is a formal requirement. The order of the Tribunal would also indicate that, the contention of the respondent that the credit limits are secured by equitable mortgage created on 4.5.1990 for 11 acres and 11 gunthas and the subsequent equitable mortgage created on 21.8.1991 for the additional 7 acres 9 gunthas was accepted and the learned Tribunal proceeded on basis that the entire land had been mortgaged. The Tribunal therefore, proceeded on the footing that, there was a valid charge created in favour of the respondent. This is a finding of fact which can only be set aside in an appeal preferred against the said order or by any other remedy available to the aggrieved patty including the appellant for setting aside the order. Even though the contention was urged, in our opinion, on the fact of the present case, it will not be possible for us to hold that there was no charge created in favour of respondent-Bank for 7 acres 9 gunthas of survey No. 61. That issue, if available to the Appellant, can be considered in appropriate proceedings, that the appellant may take under the provisions of the Securitisation Act and/or the R.D.B. Act and to which the appellant is entitled to.
7. With the above discussion, we pass the following order:-
It would be open to the appellant to either move under the provisions of the Debts Recovery Act for setting aside the order passed by the Tribunal and/or to apply under Section 17 of the provisions of the Securitisation Act and/or any other provisions, if it is still the contention that, there was no charge created in respect of a part of the property sold by the Respondent.
With the above direction, the appeal stands disposed of.