Partly allowed

State Bank of India v. the Official Liquidator, High Court Bombay

Bombay HC7 May 2014CA/69/2014

Case brief

AI extract

What is this about?

In Company Application No. 446 of 2013, the High Court granted leave to applicants to initiate proceedings as provisional liquidator. In Company Application No. 69 of 2014, the Official Liquidator was directed not to take possession of secured assets while Securitization Act proceedings were pending, with all contentions regarding prior charges kept open.

What did the court decide?

Leave granted under Section 446 to initiate proceedings. Directions issued to Official Liquidator not to take possession of secured assets pending Securitization Act proceedings.

State Bank of India Vs the Official Liquidator, High Court Bombay — Bombay HC (2014) — LawSathi Research

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931-CA446-13.DOC

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Agk

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION NO. 446 OF 2013

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IN

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COMPANY PETITION NO. 187 OF 2013

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Siemens Financial Services Private Limited…Applicants
Versus
M/s. Amar Remedies Limited…Respondents

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WITH

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COMPANY APPLICATION NO. 69 OF 2014

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IN

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COMPANY PETITION NO. 289 OF 2013

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State Bank of India
Versus

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…Applicants

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The Official Liquidator, High Court, Bombay.…Respondents

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Ms. Armin Wandrewala, with Mr. Akshay Vani, for the Applicants in
Company Application No. 446 of 2013.

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Mr. Prakash Panjabi, i//b M/s. Prakash Panjabi for the Applicants in
Company Application No. 69 of 2014.

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Ms. Yogini Chauhan, Assistant Official Liquidator, is present.

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931-CA446-13.DOC

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CORAM:G.S. PATEL, J
DATED:7th May 2014

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PC:-

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The immovable property of the Company is the subject matter of Company Application No. 446 of 2013. The Applicant claims to have supplied some machinery to the Company and obtained a hypothecation of that machinery.

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The State Bank of India, a secured creditor of the Company, claims that it has a first or prior charge over all the assets and properties, including the machinery claimed by the present applicant. The State Bank of India has already initiated proceedings under the SARFAESI Act. Possession has not been taken of the machinery because between possession under the SARFAESI Act and possession being taken by the Official Liquidator, both sides stayed their hands. The SARFAESI proceedings have, therefore, also not progressed further at least as regards the machinery claimed by the applicants.

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The provisions of law are clear. Once SARFAESI proceedings are initiated, possession of these items cannot be taken by the Official Liquidator. However, the applicants’ claim cannot, at the same time, be simply brushed aside. Ms. Wandrewala, learned counsel for the applicants, says that the applicants’ claim over the machinery is exclusive. The State Bank of India’s rights, if any, do not include the machinery supplied by the applicant and the State Bank of India has no charge over that machinery. It cannot, therefore, she submits, be a a part of the SARFAESI proceedings.

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That is not a matter that can be decided in the present application. The SARFAESI proceedings are undoubtedly in respect of the entirety of the assets and properties of the Company. It shall be

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931-CA446-13.DOC

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open to the applicants to obtain such directions or clarifications as are
necessary to establish its contentions regarding its prior or exclusive
charge over some or all of the machinery in an appropriate forum. All
contentions of both the applicants, Siemens Financial Services Private
Limited, as also the State Bank of India, are expressly kept open in
that behalf.

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In the meantime, prayer (aa) of Company Application No. 446 of 2013 can be granted. This is a prayer for leave under Section 446 to the applicants to initiate proceedings by the Official Liquidator as provisional liquidator of the Company, Amar Remedies Limited.

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Company Application No. 446 of 2013 is made absolute in terms of prayer clause (aa). The rest of the prayers do not survive. The Company Application is disposed of accordingly.

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In view of this order, Company Application No. 69 of 2014 is made absolute in terms of prayer clause (a) and (b), which read as follows:

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“(a) That the applicant being the secured creditor of the Company (in provisional liquidation) be allowed to remain outside winding up proceedings and to exercise its rights under the Securitization Act by taking possession and sale of the secured assets of the Company (in provisional liquidation) mortgaged / charged to the applicant and to appropriate the sale proceeds, subject to the provisions of Section 529(A) of the Companies Act, 1956;

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(b) that the Official Liquidator (OL) be directed not to take possession of the secured assets of the Company (in provisional liquidation) which are

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931-CA446-13.DOC

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mortgaged / charged to the applicant, as the
secured creditors including the applicant have
already initiated and/or are in the process of
initiating action under the securitisation Act;”

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(G. S. PATEL, J.)

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State Bank of India v. the Official Liquidator, High Court Bombay

Case brief

What is this about?

What did the court decide?

State Bank of India v. the Official Liquidator, High Court Bombay

Case brief

What is this about?

What did the court decide?

What the court decided

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