IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN WEDNESDAY, THE 18TH MARCH 2009 / 27TH PHALGUNA 1930 WP(C).No. 5358 of 2009(L) ------------------------- PETITIONER(S): --------------- M/S.VINSONS PROJECTS INDIA PRIVATE LIMITED, HAVING REGISTERED OFFICE AT 2 & 3, SHREENATH KRUPA BUILDING, CARTER ROAD NO.5, BORIVALI (EAST), MUMBAI 400 066, REPRESENTED BY ITS DIRECTOR MR.VINEESH.R.SHAH. BY ADV. SRI.P.K.SURESH KUMAR RESPONDENT(S): --------------- 1. UNION BANK OF INDIA, REGISTERED OFFICE AT 239, VIDHAN BHAVAN MARG, NARIMAN POINT, MUMBAI-400 021 HAVING BRANCH KNOWN AS PANAMPILLY NAGAR BRANCH, P.B.NO.4274, PANAMPILLY NAGAR, KOCHI-682 036, ERNAKULAM DISTRICT, REPRESENTED BY ITS CHIEF MANAGER. 2. THE AUTHORIZED OFFICER, UNION BANK OF INDIA, PANAMPILLY NAGAR BRANCH, P.B.NO.4274, PANAMPILLY NAGAR, KOCHI-682 036,ERNAKULAM DISTRICT 3. M/S.BHAGEERTHA ENGINEERING LTD., HAVING ITS OFFICE AT BHAGEERATHA RESIDENCY, BANERJI ROAD, KOCHI-682 018. 4. PRABHAKARA MENON, AJANTHA, KADVANTHRA, KOCHI-682 020. 5. LEELA MENON, AJANTHA, KADVANTHARA, KOCHI-682 020. 6. PRIYA DEEPAK, 28/1615, K.P.VALLON ROAD, KADVANTHRA, KOCHI-682 020. 7. M/S.G.K.GRANITES, HAVING OFFICE AT OORAKKAD, KIZHAKKAMBALAM P.O., ERNAKULAM DISTRICT REPRESENTED BY ITS MANAGING PARTNER SRI.GEORGE ANTONY. WPC/5358/09 2 8. THE REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI-682 017. R3 BY ADV. SRI.V.M.KURIAN SRI.MATHEW B. KURIAN SRI.K.T.THOMAS SRI.C.N.SREEKUMAR R7 BY ADV.SRI.VIVEK VARGHESE P.J. SRI.P.J.VINOD JOSEPH R8 BY SRI.S.GOPAKUMARAN NAIR, SENIOR ADVOCATE SRI.M.CHANDRA BOSE THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18/03/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX IN WPC.5358/09 PETITIONER'S EXHIBITS: EXT.P1: TRUE COPY OF FORM NO.13 DATED 13.5.05 SHOWING THE PARTICULARS OF CHARGE UNDER SECTION 125 OF THE COMPANIES ACT. EXT.P2: TRUE COPY OF FORM NO.8 DATED 13.5.05 SHOWING THE PARTICULARS OF CHARGE UNDER SECTION 125 OF THE COMPANIES ACT. EXT.P3: TRUE PHOTOCOPY OF THE TERMS OF COMPROMISE FOR INCORPORATING IN THE DECREE IN O.S.NO.611/06 OF THE SUB COURT, ERNAKULAM. EXT.P4: TRUE PHOTOCOPY OF THE DECREE DATED 11.6.08 IN O.S.NO.611/06 OF THE SUB COURT, ERNAKULAM. EXT.P5: TRUE PHOTOCOPY OF THE EXECUTION PETITION NO.471/08 IN O.S.NO.611/06 DATED 23.9.08 FILED IN THE SUB COURT, ERNAKULAM. EXT.P6: TRUE COPY OF THE SALE NOTICE DATED 26.11.2008 ISSUED BY THE 2ND RESPONDENT. EXT.P7: TRUE COPY OF THE NOTICE DATED 16.1.09 SENT BY THE PETITIONER'S ADVOCATE TO THE 2ND REPSONDENT. EXT.P8: TRUE COPY OF THE ENCUMBRANCE CERTIFICATE NO.71/09 DATED 6.1.09 ISSUED BY THE THRIKKAKARA SUB REGISTRY OFFICE. EXT.P9: TRUE COPY OF THE APPLICAITON FOR IMPLEADMENT FILED BY THE PETITIONER IN O.P.(ARB)NO.86/09 BEFORE THE DISTRICT COURT, ERNAKULAM. EXT.P10: TRUE PHOTOCOPY OF THE RELEVANT PAGES OF THE ANNUAL REPORT OF M/S.BHAGEERATHA ENGINEERING LTD. FOR THE YEAR 2005-06 OF THE 3RD RESPONDENT COMPANY. WPC.5358/09 RESPONDENT'S EXHIBITS: EXT.R7(a): TRUE COPY OF REPORT OF AMEEN WITH ENDORSEMENT OF SERVICE WITH THE SUB REGISTRY OFFICE, THRIKKAKARA REGARDING THE ATTACHMENT. EXT.R7(b): THE TRUE COPY OF OPERATIVE PORTION OF THE ARBITRAL AWARD. EXT.R7(c): TRUE COPY OF NOTICE DT.30.12.2008 BY THE PETITIONER TO THE 2ND REPSONDENT. EXT.R7(d): TRUE COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF PETITIONER COMPANY M/S.VINSONS PROJECT INDIA PRIVATE LTD. EXT.R7(e): THE TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER COMPANY FOR THE YEAR ENDING 2004. EXT.R7(f): TRUE COPY OF THE COVERING NOTE OF ANNUAL REPORT OF THE 3RD REPSONDENT COMPANY FOR THE YEAR ENDING MARCH, 2006. /TRUE COPY/ THOTTATHIL B.RADHAKRISHNAN, J. ------------------------------------------- W.P(C).No.5358 OF 2009 ------------------------------------------- Dated this the 18th day of March, 2009 JUDGMENT 1. The first respondent has security interest over some of the items offered by the third respondent as security. The 7th respondent has obtained an arbitration award against the third respondent. There are two attachments at the instance of the 7th respondent. It is stated that the said arbitration award is pending consideration in statutory proceedings under the Arbitration and Conciliation Act, 1996. The petitioner in this writ petition has a second charge over the properties over which the first respondent has the first charge. This stand of the petitioner is disputed by the 7th respondent, who also refused the claim of the first respondent and contends that the claim of the bank is an escalated one. While the petitioner has a decree from the civil court in its favour, an oral submission has been made by the learned counsel for the third respondent that certain amounts are due to it from the WPC.5358/09 Page numbers petitioner. But, as of now, there is no decree or other binding instruments disclosed to this Court on that account. 2. Taking the disposal of W.P(C).38097/08 into consideration, the amounts due to the EPF Organisation is settled and the remaining generated by the sale by the first respondent is to be retained by the said bank subject to orders in this writ petition. 3. In terms of Section 13(7) of the SARFAESI Act, the authorised officer of a bank carrying on proceedings under that Act is empowered to decide on the issue by determining the rights of any rival claimants in terms of that provision, which reads as follows: “Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, WPC.5358/09 Page numbers charges and expenses and secondly, in discharge of the dues to the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests”. 4. In the light of the aforesaid provision, it is appropriate that the respondent herein and the petitioner are heard by the second respondent authorised officer, who shall decide on the mode of disbursement of any amounts that may be brought in by the SARFAESI Act sale. Let that be done within an outer limit of two months from the date of receipt of a copy of this judgment. The authorised officer shall issue a decision with reasons since that is the minimum requirement even in terms of the provisions of the Right to Information Act, apart from the fact that the decision of the authorised officer could be subjected to application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The first respondent, to give finality to the issues in hand, would give copies of statements of account of the account relied on by them and also the method of appropriation of the sale proceeds. All WPC.5358/09 Page numbers other issues are left open. Parties are directed to appear before the second respondent to mark their appearance on 2.4.2009. The writ petition is ordered accordingly. Sd/- THOTTATHIL B.RADHAKRISHNAN, Judge. kkb.19/3.