1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi COMPANY APPLICATION NO. 3 OF 2009 IN COMPANY PETITION NO. 1180 OF 2002. In the matter of Madras Petrochem Ltd. Bharat Heavy Electricals Ltd. ..Org. Petitioner. And M/s. Madras Petrochem Ltd. ..Org. Respondent. And Kotak Mahindra Bank Limited. ..Applicants/Secured Creditor/Intervenor. v/s. The Official Liquidator of Madras Petrochem Ltd. & Anr. ..Respondents. .... Mr. Cyrus Ardeshir, a/w. Ms. Rohini T. Kachare, i/b. Manilal Kher Ambalal & Co., for Applicant-Kotak Mahindra Bank Ltd. The Official Liquidator, present. .... CORAM : S.J. KATHAWALLA, J. DATE : 11TH FEBRUARY 2010. P.C. Heard Counsel for the parties. 2. The Applicants have filed this Application inter alia to set aside an auction notice dated 15th December 2008, issued by Respondent No.2. 3. Originally ICICI was the Creditor of the Company in 2 liquidation. ICICI had granted various facilities to the Company in liquidation. In order to secure the dues under the said facilities, the company in liquidation mortgaged in favour of ICICI all its movable and immovable properties situate at Village Manali, Ambattur Industrial Estate, Tamilnadu. As the company in liquidation committed defaults and failed to repay the amounts due under the said facilities, ICICI issued a notice dated 28th November 2002, under the provisions of sub section 2 of section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Pursuant thereto the Authorised Officer of ICICI on 9th May 2003, took physical possession of the properties belonging to the Company, which were mortgaged to ICICI and more particularly described in Exhibits ‘A1’ to ‘A4’ of the present Company Application. 4. ICICI also filed Original Application No.350 of 2003 in the Debt Recovery Tribunal No.II, Mumbai inter alia for recovery of the amounts due to it and for a declaration that the property of the Company situate at Village Manali, Ambattur Industrial Estate, Tamil Nadu, were duly mortgaged to ICICI. During the pendency of the said Original Application ICICI by a Deed of Assignment dated 31st March 2005, assigned to the Applicants herein the debt 3 due it from the company in liquidation. By the said Deed of Assignment ICICI assigned all its right, title, interest and benefit in respect of the claim against the Company to the Applicant herein on the terms and conditions more particularly set out in the said Deed of Assignment. The Applicant herein thereafter took out a Miscellaneous Application to be substituted as the Applicant in Original Application No.350 of 2003 in place of ICICI Bank Limited. The said Application was allowed by the Debt Recovery Tribunal No.II, Mumbai. Accordingly, the Applicant prosecuted Original Application No.250 of 2003. By an Order dated 8th February 2007, the Debt Recovery Tribunal allowed the Original Application. By the said Order dated 8th February 2007, the Hon’ble Debt Recovery Tribunal ordered and directed the Company in liquidation to pay to the Applicants a sum of Rs. 2,73,14,077/- together with interest at the rate of 6% per annum. By the said Order the Debt Recovery Tribunal held that the property of the Company in liquidation situate at Village Manali, Ambattur Industrial Estate, Tamil Nadu, were duly and validly mortgaged to the Applicants. 5. The Applicants initiated Recovery Proceedings in the Debt Recovery Tribunal and on an Application made by the 4 Applicant, the Hon’ble Debt Recovery Tribunal by its Order dated 16th April 2008, appointed Mr.Ramchandran Srikanth, the Dy. Vice President of the Applicant as the Receiver of the immovable properties of the Company in liquidation. Accordingly, on 8th July 2008, the said Receiver took possession of 40.22 acres of vacant land belonging to the Company in liquidation at Village Manali, Ambattur Industrial Estate, Tamil Nadu. 6. By an order dated 30th August 2007, passed in the aforesaid Company Petition, this Court ordered winding up of the Company in liquidation and the Official Liquidator was appointed as Liquidator of the Company. It appears that on 14th July 2008, Respondent No.2 who is the Karnataka Sales Tax Authority, issued a gazetted notification dated 14th July 2008, to attach the properties of the Company in liquidation situate at Village Manali, Ambattur Industrial Estate, Tamilnadu. Immediately on getting to know of this the Applicant addressed a letter dated 21st August 2008 to the Commercial Tax Department, Assistant Commissioner (CT) Zone VIII, Chennai, inter alia setting out the relevant facts and informing Respondent No.2 that pursuant to the Order dated 30th August 2007, passed by this Court, the Company was ordered to be wound up and the Official Liquidator attached to this Court 5 was appointed as Official Liquidator of the Company. By the said letter the Applicants also informed Respondent No.2 that the said property was custodia legis and in the physical possession of a Receiver appointed by the Debt Recovery Tribunal, Mumbai and therefore requested Respondent No.2 not to initiate any further action pursuant to the said notification dated 14th July 2008, without following the due process of law. 7. By the impugned notice dated 15th December 2008, Respondent No.2 inter alia stated that they proposed to sell the property of the Company at a public auction to be held on 9th January 2009 at Chennai. The Applicants have therefore taken out this Application to set aside the said impugned notice dated 15th December 2008. 8. In the background of these facts Counsel appearing on behalf of the Applicant argued that it is well settled law that once a company has been ordered to be wound up and the Official Liquidator has been appointed, no sale of the properties can take place without notice to the Official Liquidator. Counsel appearing for the Applicants also stated that there was a Receiver appointed, who is in possession of the properties which are the subject matter of the impugned notice. The Hon’ble Supreme Court in the case of 6 Allahabad Bank V/s. Canara Bank, reported in AIR 2000 SC 1535 has held that the Debt Recovery Tribunal has exclusive jurisdiction in respect of debts due to bank and financial institution and that it was only the Debt Recovery Tribunal which could sell the immovable property belonging to the Company. The Applicants were secured creditors of the Company in liquidation. The aforesaid judgment of the Supreme Court in the case of Allahabad Bank V/s. Canara Bank was followed by a three Judge bench of the Hon’ble Supreme Court in the case of Rajasthan State Financial Corporation & Anr. V/s. Official Liquidator & Anr. Reported in (2005) 8 SCC 190, wherein the Hon’ble Supreme Court reiterated the legal propositions laid down in Allahabad Bank V/s. Canara Bank’s case and held that the Debt Recovery Tribunal acting under the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was entitled to order the sale and to sell the properties of the Debtor, even a Company in liquidation through a Recovery Officer but only after notice to the Official Liquidator appointed by the Company Court and after hearing the Official Liquidator. 9. The Official Liquidator has also filed his Affidavit in Reply to this Company Application dated 10th September 2009, 7 supporting the case of the Applicants herein. The Official Liquidator relying on paragraph 4 of the said Affidavit has stated that this Court may not allow the Assistant Commissioner, Commercial Taxes, to auction the property. 10. In view thereof, company application is made absolute in terms of prayer clauses (a) and (b). [ S.J.KATHAWALLA, J. ]