Gujarat High Court
Lalitaben Govindbhai Patel vs Gujarat State Financial Corporation on 4 February, 2021
Author: Vineet Kothari
Bench: Vineet Kothari, Gita Gopi
C/LPA/2480/2010 ORDERDATED04.02.2021
LALITABEN GOVINDBHAI PATEL V. GUJARAT STATE FINANCIAL CORPORATION
IN THEHIGHCOURTOF GUJARATAT AHMEDABAD
R/LETTERSPATENTAPPEALNO. 2480of 2010
In
R/SPECIALCIVILAPPLICATIONNO. 12979of 2009
With
R/SPECIALCIVILAPPLICATIONNO. 11116of 2008
With
CIVILAPPLICATION(FORORDERS) NO. 1 of 2010
In
R/SPECIALCIVILAPPLICATIONNO. 11116of 2008
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LALITABENGOVINDBHAIPATEL& 2 other(s) Versus GUJARATSTATEFINANCIALCORPORATION& 8 other(s) ============================================================================== Appearance:
MRAS VAKIL(962)for the Appellant(s)No. 1,1.1,1.2,2,3 MRABHIJITP JOSHI(1330)for the Respondent(s)No. 6 MRBH BHAGAT(153)for the Respondent(s)No. 9 MRDEVANGD TRIVEDI(2503)for the Respondent(s)No. 1 MRKMPARIKH(575)for the Respondent(s)No. 3 MRNANDISHY CHUDGAR(2011)for the Respondent(s)No. 5 MRPRANAVG DESAI(290)for the Respondent(s)No. 4 MRRDDAVE(264)for the Respondent(s)No. 2 ============================================================================== CORAM: HONOURABLE DR. JUSTICE VINEET KOTHARI and HONOURABLE MS. JUSTICE GITA GOPI Date: 04/02/2021 ORALORDER (PER: HONOURABLEDR. JUSTICE VINEET KOTHARI)
1. The present intra-Court appeal arises out of the order passed by the learned Single Judge on 06.10.2010, in which, first, an interim order was passed by the coordinate Bench of this Court headed by the Hon'ble Chief Justice, by which the order passed by the learned Single Judge was stayed until further orders. The said stay order in the matter is operating for the last ten years.Page 1 of 5 Downloaded on : Sat Feb 06 03:15:51 IST 2021
C/LPA/2480/2010 ORDERDATED04.02.2021 LALITABEN GOVINDBHAI PATEL V. GUJARAT STATE FINANCIAL CORPORATION
2. The matter, essentially, arises out of recovery action by secured creditors and financial institutions, who extended financial help to the original borrowers / guarantors - Lalitaben Govindbhai Patel and others (Guarantors) to secure the loan given by Gujarat State Financial Corporation and others in favour of borrower, Respondent No.4 - M/s.
Ganpati Pulp and Paper Mills Ltd.. The said Borrower Company, upon default, went into liquidation by the winding-up order passed by this Court. The action under section 29 of the State Financial Corporation Act, 1951 was taken and the Assets of the said Borrower - M/s. Ganpati Pulp and Paper Mills Ltd., were taken over and the same were sold by GSFC in favour of Respondent No.5 - M/s. Shree Industries Ltd.
3. A part of the sale consideration was converted into loan and the said purchaser - M/s. Shree Industries Ltd. also defaulted and the said purchaser / borrower approached the BIFR / AAIFR under the provisions of the Sick Industrial Companies (Special Provisions) Repeal Act, 1985, as it then existed and while the proceedings were pending before the BIFR / AAIFR, a new law in the form of the Insolvency and Bankruptcy Code, 2016 (for short, "the IBC, 2016") came to be enacted by the Parliament and the proceedings regarding insolvency Resolution / Recovery from the defaulting corporate debtor on its winding-up were to be taken up by the National Company Law Tribunal (NCLT), which was constituted under the provisions of Section 408 of the Companies Act, 2013.
4. Section 408 of the Companies Act, 2013 stipulates that the NCLT shall exercise such powers and functions as may be conferred on it by the provisions of the Companies Act, 2013 or any other law for the time Page 2 of 5 Downloaded on : Sat Feb 06 03:15:51 IST 2021 C/LPA/2480/2010 ORDERDATED04.02.2021 LALITABEN GOVINDBHAI PATEL V. GUJARAT STATE FINANCIAL CORPORATION being in force. Under the provisions of IBC, 2016, the NCLT is designated and defined as the Adjudicating Authority and thus, has all the relevant powers to deal with these issues.
5. In these circumstances, in view of the matrix of facts involved in the present case, where several of the secured creditors or financial institutions are yet to recover their amounts from the First Defaulter Company and Second Defaulter Company, the proceedings against the Second Defaulter - M/s. Shree Industries Ltd. appear to have abated by virtue of The Eight Schedule under section 252 of the IBC, 2016, by which the Sick Industrial Companies Act (Special Provisions) Repeal Act, 2003 came to be amended and which provided as under:-
"In Section 4, for sub-clause (b), the following sub-clause shall be substituted namely -
"(b) On such date as may be notified by the Central Government in this behalf, any appeal preferred to the Appellate Authority or any reference made or inquiry pending to or before the Board or any proceeding of whatever nature pending before the Appellate Authority or the Board under the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall stand abated;
Provided that a company in respect of which such appeal or reference or inquiry stands abated under this clause may make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 within one hundred and eight days from the commencement of the Insolvency and Bankruptcy Code, 2016:
Provided further that no fees shall be payable for making such reference under Insolvency and Bankruptcy Code, 2016 by a company whose appeal or reference or inquiry stands abated under the clause."
6. As per the aforesaid provision, it appears that the Company, whose Page 3 of 5 Downloaded on : Sat Feb 06 03:15:51 IST 2021 C/LPA/2480/2010 ORDERDATED04.02.2021 LALITABEN GOVINDBHAI PATEL V. GUJARAT STATE FINANCIAL CORPORATION reference was pending before the BIFR / AAIFR, could make a reference to the NCLT under the provisions of the IBC, 2016, within 180 days from the date of commencement of the IBC, 2016, which is 28.05.2016.
7. If the said Company, whose reference is pending before the BIFR / AAIFR, does not make such reference to the NCLT, then what happens to the pending proceedings seems to have not been specified in the provisions of the IBC, 2016 or other relevant laws. Whether the abatement will become final or such pending proceedings could be referred to the NCLT, by any of the parties or by the Court, is a question for our consideration.
8. In these circumstances, as prayed by the learned counsel, we grant some time to them to make submissions on the following points :-
(i) Whether any proceedings, in any manner, in respect of the Assets of the Company in question - M/s. Ganpati Pulp and Paper Mills Ltd or M/s. Shree Industries Ltd., are pending before the NCLT or not and if the proceedings are pending, the details and status of the same may be placed before the Court ?
(ii)If no such proceedings are pending before the NCLT as of now, whether this Court can refer the entire matter to the NCLT and direct it to decide all the questions of law involved in the present case and the questions of facts, including the respective rights of the secured creditors, leaving it open to the parties to raise their respective claims / counter-claims and defences before the NCLT at this stage or not ?Page 4 of 5 Downloaded on : Sat Feb 06 03:15:51 IST 2021
C/LPA/2480/2010 ORDERDATED04.02.2021 LALITABEN GOVINDBHAI PATEL V. GUJARAT STATE FINANCIAL CORPORATION
9. Put up on 09.02.2021 on the top of the Board, as prayed.
(DR. VINEET KOTHARI,J) (GITA GOPI,J) PRAVINKARUNAN Page 5 of 5 Downloaded on : Sat Feb 06 03:15:51 IST 2021