Case BriefsHigh Courts

Kerala High Court: Devan Ramachandran, J. granted peremptory order for the payment of the recovery amount in installments.

A writ petition was filed in order to question proceedings initiated and being pursued by the respondent Bank under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002.

The petitioner had to pay the overdue amount demanded by the Bank through the orders made under the SARFAESI Act, 2002. The Court proceeded with the writ application and stated that “I am conscious that I am jurisdictionally proscribed from entering into any enquiry or consideration of the legality or otherwise of the orders impugned in this writ petition on account of the imperative statutory provisions and the binding judicial pronouncements and therefore, cannot and do not propose to consider any of the legal contentions raised by the petitioner on its merits.”

But the court after enquiring with the authorized officer for the respondent allowed the request of the petitioner and granted leniency in the payment to pay overdue amount in the installments with the strict instructions, “that directions in this judgment are peremptory in nature and that the petitioner will have to comply with the same meticulously. I caution the petitioner that no further requests for extension or modification of this judgment, save in exceptional circumstances, will be permitted and that if the petitioner fails to comply with the directions herein, she will lose the benefit of this judgment and she will also be foreclosed from challenging the measures/proceedings taken by the Bank under the SARFAESI Act and impugned in this writ petition before any other alternative Forum or Court”.[Sreeja v. Trissur District Co-Operative Bank Ltd., 2019 SCC OnLine Ker 1602, decided on 20-05-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A two-member bench comprising of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial) dismissed an appeal filed against the order of the National Company Law Tribunal, Mumbai.

The directors of Fortune Pharma (P) Ltd., Corporate Debtor, had executed a  personal guarantee in favour of State Bank of India, Financial Creditor. Subsequently, the Bank enforced Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 and the company was directed to hand over possession of the factory premises to the Bank. Thereafter, the company filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016 which was allowed. Subsequently, the director of the company assigned his debt in favour of the appellant. The appellant was inducted as member of the committee of creditors by the Resolution Professional. This was objected to by the Bank, contending that the appellant was a related party. The NCLT upheld the objection of the Bank. Aggrieved thus, the appellant filed the instant appeal.

The Appellate Tribunal, at the outset, observed that the assignor was a director of the Corporate Debtor, therefore, he was a related party under Section 5(24) of the Code. Further, a debt assignment is a transfer of debt with all the rights and liabilities associated with it. The assignor assigns its debt in favour of the assignee, who steps in the shoes of the assignor. The assignee thereby takes over the right and also takes over the disadvantages by virtue of such assignment. Accordingly, the director being a related party, with assignment of debt, the disadvantage also goes to the appellant. For the aforesaid reasons, it was held that the issue was rightly decided by the NCLT. The appeal was dismissed sans merit. [Pankaj Yadav v. State Bank of India, 2018 SCC OnLine NCLAT 389, dated 07-08-2018]