IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN WEDNESDAY, THE 26TH MARCH 2008 / 6TH CHAITHRA 1930 CRP.No. 42 of 2008(G) ------------------------- CMA.18/2007 of ADDL.D.C. ,ALAPPUZHA. I.A. 1088/06 IN IP.5/2004 of PRINCIPAL SUB COURT,ALAPPUZHA .................... REVN. PETITIONER: RESPONDENTS 1 TO 4/PETITIONERS ------------------------------------------------------------------- 1. M/S. SWAMEES TEXTILES, MULLACKAL, ALLEPPEY. 2. P.SATHEESH KUMAR, S/O. PADMANABHA REDDIAR, MAHALEKSHMI, VELLAKINAR, ALLEPPEY. 3. GUNAPAL PADMANABHAN, S/O. PADMANABHA REDDIAR, MAHALEKSHMI, VELLAKINAR, ALLEPPEY. 4. PONNU PRAKASH, S/O. PADMANABHA REDDIAR, MAHALEKSHMI, VELLAKINAR, ALLEPPEY. BY ADV. SRI.C.S.MANU SRI.S.K.PREMRAJ SRI.ANOOP JOSEPH SRI.ANOOP.V.NAIR SRI.ABHILASH AKBAR SRI.T.B.SIVAPRASAD RESPONDENTS: PETITIONER & RESPONDENTS NO.5/1ST RES. & OFFICIAL ------------------------------------------------------------------------------- 1. THE KARNATAKA BANK LTD., MULLACKAL, ALLEPPEY, REPRESENTED BY ITS MANAGER. 2. OFFICIAL RECEIVER, DISTRICT COURT, ALAPPUZHA. BY ADV. SRI.P.B.SURESH KUMAR THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 26/03/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ORDER ON I.A.117 OF 2008 IN C.R.P. NO.42 OF 2008 DISMISSED 26/3/08 SD/- M.N. KRISHNAN, JUDGE. [ True Copy ] P.A. TO JUDGE. M.N. KRISHNAN, J. = = = = = = = = = = = = = = C.R.P. NO. 42 OF 2008 = = = = = = = = = = = = = = = Dated this the 26th day of March, 2008. O R D E R This revision petition is preferred against the order of the Principal Sub Judge, Alappuzha in I.A.1088/06 in IP 5/04 whereby the learned Sub Judge had allowed the petition with certain conditions and further directed the official receiver to surrender possession of the petition schedule item No.1, in order to enable the petitioner therein to proceed under the provisions of the Securitisation Act. The brief facts necessary for the disposal of the revision petition are stated as follows. 2. The petitioner/Bank before the Court below is a secured creditor. The Bank wants to proceed against the secured asset for realisation of the amount due to the Bank from the revision petitioners. Before that the revision petitioners moved the Sub Judge, Alappuzha with an insolvency petition which is numbered as IP 5/04 with almost 186 creditors. Creditor Nos.163 to 165 are Governmental Departments who have got statutory rights and charges for the dues to them. Now, the learned counsel for the revision CRP NO. 42 of 2008 -:2:- petitioners challenges the order on the ground that since the Insolvency Petition has been filed and the assets had vested with the Court and that the Court has appointed a receiver the Bank is not entitled to proceed against the assets and secondly there are no provisions provided under the Insolvency Act enabling the Court to pass an order releasing the security in favour of the Bank. 3. On the contra the learned counsel for the Bank has pointed out before me Sections 28(6) and Section 48 of the of the Insolvency Act Act. Section 28 deals with effect of an order of adjudication, i.e., even when a person is adjudicated as insolvent Section 28(6) envisages a situation, “Nothing in this Section shall affect the power of any secured creditor to realise or otherwise deal with his security, in the same manner as he would have been entitled to realise or deal with it if this Section had not been passed.” He also referred to Section 48 which deals with a situation regarding secured creditors. Where a secured creditor realises his security he may prove for the balance due to him, after deducting the net CRP NO. 42 of 2008 -:3:- amount realised. So a combined reading of Section 28 with Section 48 will show that a secured creditor is well protected and the Insolvency Court shall not have the right to prevent realisation of the amount due under a security. Therefore the said contention of the revision petitioner that such an order cannot be passed by the Insolvency Court cannot be accepted. 4. The learned counsel before me contend that in the absence of any enabling provision which permits the Insolvency Court to pass an order releasing the security to the Bank the order passed by the Court is illegal. I may straight away refer to Section 35 of the Securitisation Act. It is a Section which deals with notwithstanding anything contained or anything inconsistent with any law for the time being in force, the Bank is entitled to proceed against the secured assets. Further when a property is in the custody of the Court under the provisions of the Insolvency Act and if it is in the charge of the receiver it is just and natural that the person who wants to proceed against the secured asset has CRP NO. 42 of 2008 -:4:- to file an appropriate application for permission seeking release of the security so that it can be proceeded under law. This is what has been precisely done by the Bank authorities in this case and I cannot find fault with the same. 5. So far as the secured creditors other than the Bank, respondents 163 to 165 are Governmental institutions entitled to have statutory charge. The Bank has assured before Court that the amount due to them will be discharged by the Bank and to that extend they have been directed to execute a bond to that effect. So the prior charge and statutory fiction is also well protected by the order of the Court below. Therefore I do not find any irregularity or illegality committed by the Court below in passing an order and therefore the C.R.P. lacks merit and it is dismissed. 6. As a last submission the learned counsel for the revision petitioner would submit that his clients are residing in the property which is to be evicted by the Bank and proceeded against and therefore they will be left without any residential accommodation. It is seen that they were CRP NO. 42 of 2008 -:5:- businessmen conducting textile years back and it may not be correct to deprive them of their residential area instantaneously without giving them an opportunity to find out an alternate accommodation. Therefore I direct the Bank to proceed against the property under the Securitisation Act for getting possession only after a period of two months from today. M.N. KRISHNAN, JUDGE. ul/-