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Industrial Investment Bank of India & Another v/s Premier Paper Mills Ltd. & Another


Company & Directors' Information:- INDUSTRIAL INVESTMENT BANK OF INDIA LIMITED. [Under Liquidation] CIN = U65923WB1997GOI083429

Company & Directors' Information:- PREMIER INDUSTRIAL CORPORATION LIMITED [Active] CIN = U27101MH2007PLC172955

Company & Directors' Information:- PREMIER PAPER MILLS LIMITED [Active] CIN = U99999MH1960PLC011846

Company & Directors' Information:- PREMIER MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1994PTC005511

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- PREMIER BANK OF INDIA LIMITED [Dissolved] CIN = U99999TN1956PLC002159

Company & Directors' Information:- THE PREMIER INVESTMENT CORPORATION LIMITED [Dissolved] CIN = U65929KA1951PLC000697

Company & Directors' Information:- PREMIER MILLS LIMITED [Dissolved] CIN = U99999MH1916PTC000439

Company & Directors' Information:- THE PREMIER BANK LIMITED [Dissolved] CIN = U99999MH1936PTC002499

    MISCELLANEOUS PETITION NO.79 OF 1995

    Decided On, 20 March 1999

    At, High Court of Judicature at Bombay

    By, THE HON’BLE MR. JUSTICE F.I. REBELLO

    Mr. Nasikwala i/b Mujumdar & Co . for the petitioners. Mr. Mannadiar. for respondent No.1. Mr Sunil Gangan i/b. Desai & Diwanji for respondent No.2.



Judgment Text

P.C.


Petitioners herein by the present petition have prayed for several reliefs including for sale of properties described in Exh.D to the petition as also all other properties of the respondent which are not assigned, charged, hypothecated, mortgaged or pledged to the Petitioner No.1 and for paying the net sale proceeds thereof to the 1st petitioner and respondent No.2.


2.The respondent No.2 has filed a suit against the respondent No.1 being Long Cause Suit No.1529 of 1995 and some others including the petitioners herein. The said suit is pending disposal before this Court. The suit filed by Respondent No.1 is for recovery of moneys pursuant to a cash credit facility extended by respondent No.2 to the respondent No.1. It may be noted that the respondent No.1 in respect of certain

properties has also created charge in favour of Respondent No.2.


3.The present Misc. Petition has been filed by the petitioner to invoke the Provisions of Section 40(b)(i) of the Industrial Reconstruction Bank of India Act, 1984. By virtue of the aforesaid Section the petitioners can move this Court for various reliefs including sale of the properties assigned, charged, hypothecated. mortgaged or pledged to the Reconstruction Bank as security for the assistance granted to it or for sale or loss of any other property of the Industrial concern. For better appreciation the Section to the extent it is relevant is reproduced below:

"40.(a) Where an assisted industrial concern makes any default in the payment of any dues to, or in meeting its obligation in relation to any other assistance given by the Reconstruction Bank or otherwise fails to comply with the terms of agreement with that Bank, or

(b)where the Reconstruction Bank makes an order under section 38 requiring the assisted industrial concern to make immediate repayment of any assistance granted to it and the industrial concern fails to make such repayment.

Then, without prejudice to the provisions of section 39 of this Act and of Section 69 of the Transfer of Property Act, 1882, any officer of the Reconstruction Bank generally or specially authorized by the board in this behalf, may apply to the concerned High Court for one or more of the following reliefs, namely:

(i)for an order for the sale or lease of the property assigned, charged, hypothecated, mortgaged or pledged to the Reconstruction Bank as security for the assistance granted to it, or for sale or lease of any other property, of the industrial concern."

The said Act has been repealed by the Industrial Reconstruction Bank (Transfer of Undertakings and Repeal) Act, 1997 which is deemed to have come into force on 24th January, 1997. Section 13 of the Act is, however, relevant for the purpose of disposal of this Petition. Section 13 reads as under:

"13(1) On the appointed date, the Industrial Reconstruction Bank of India Act, 1984 shall stand repealed.

(2)Notwithstanding the repeal of the Industrial Reconstruction Bank of India Act, 1984.

(a)the company shall, so far as maybe, comply with the provisions of Chapter VII of the Act so repealed for any of the purposes related to the annual accounts and audit of the Reconstruction Bank;

(b)the provisions of Chapter VIII of the Act so repealed will continue to be applicable in respect of the arrangements entered into by the Reconstruction Bank with an industrial concern under Section 18 thereof up to the appointed day and the Company will be entitled to act upon and enforce the same as fully and effectually as if this Act had not being enacted."

It is, therefore, clear from reading of the said Section that the provisions of Chapter VIII of the Act so repealed will continue to be applicable in respect of the arrangements entered into by the Reconstruction Bank with the Industrial concern under Section 18 thereof upto the appointed date and the Company will be entitled to act upon and enforce the same as fully and effectually as if this Act had not been enacted. By the Industrial Reconstruction Bank (Transfer of Undertakings, and Repeal) Act, 1997 the undertakings of the Reconstruction Bank shall stand transferred and vests in the Company as defined under Section 2(a) the Central Government has issued a Notification pursuant to which the appointed day has been fixed on 27th March, 1997. Therefore, a cojoint reading of these provisions it is clear that this petition is maintainable by virtue of the saving provision under Section 13 of the Industrial Reconstruction Bank (Transfer of Undertakings and Repeal) Act, 1997.


4.Once it is so held that the petition is maintainable the relief as prayed for will have to be granted. The respondent No.1, according to the petitioner as set out in para 17 of the petition in terms of the books of accounts maintained by the petitioner is and due and payable the said sum set out therein with further interest from 7th March, 1995 at contractual rate upto payment and/or realisation. In para 19 the Petitioners have set out that the respondent No.1 is payable to them as principal sum of Rs.94,46,292, Rs.36,34,112/- towards interest and Rs.4,75,297/- towards liquidated damages as on 6th March, 1996. Today we are really not concerned with the actual amount as due and payable. What is relevant is that the respondents are due and owing to the petitioners moneys and in respect of that the petitioners are seeking the relief of sale of the properties charged, assigned, hypothecated, mortgaged, pledged, etc. to the petitioners.


5.The respondent No.1 has put in appearance. No reply has been filed challenging the contents of the petition or the reliefs as prayed for nor have any arguments advanced opposing the relief as prayed for.


6.In so far as the respondent No.2 is concerned, it is pointed out that they have filed suit and some of the properties charged in favour of the petitioners have also been charged in favour of the respondent No.2. Bearing that in mind the interest of Respondent No.2 can be protected as ultimately there is a suit filed by the respondent No.2 wherein both the petitioners and respondent No.1 are defendants. It is also clear from the prayer sought for by the petitioners that they are claiming the sale and appropriation of the sale proceeds not only for

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themselves but also for the present respondent No.2. 7.In the light of that petition made absolute in terms of prayer clause (a). The petitioners to file an undertaking in this Court within four weeks from today that in so far as the sale proceeds from the sale of properties as set out in prayer clause (a) they will prorata satisfy the claims of respondent No.2 which may be decided and adjudicated in L.C. Suit No.1529 of 1995. The petitioners are entitled further to retain the money. The interest on the amount to be paid to respondent No.2 will be as determined by the Court in L.C. Suit No.1529 of 1995. 8.In the circumstances of the case there shall be no order as to costs.
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