Gujarat High Court
Asset vs M on 8 September, 2011
Bench: S.J.Mukhopadhaya, Anant S. Dave
Gujarat High Court Case Information System
Print
SCA/14924/2010 40 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 14924 of 2010
With
SPECIAL
CIVIL APPLICATION No. 3767 of 2011
With
SPECIAL
CIVIL APPLICATION No. 7652 of 2011
With
CIVIL
APPLICATION Nos.7303, 7495 and 8556 of 2011
For
Approval and Signature:
HONOURABLE
THE CHIEF JUSTICE MR. S.J. MUKHOPADHAYA
and
HONOURABLE
MR.JUSTICE ANANT S. DAVE
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
Yes
2
To be
referred to the Reporter or not ? Yes
3
Whether
their Lordships wish to see the fair copy of the judgment ?
No
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ? No
5
Whether
it is to be circulated to the civil judge ?
No
=========================================================
ASSET
RECONSTRUCTION COMPANY (INDIA) LIMITED - Petitioner(s)
Versus
M
H MILLS & INDUSTRIES LTD & 8 - Respondent(s)
=========================================================
Appearance
:
In
Special Civil Application No.14924 of 2010:
MR
SHALIN MEHTA with MR HEMANG M SHAH
for
Petitioner(s) : 1,
MR SI NANAVATI, Sr. Counsel with MS ANUJA S
NANAVATI for Respondent(s) : 1 - 4.
MR LN MEDIPALLY for
Respondent(s) : 5,
NOTICE SERVED BY DS for Respondent(s) : 6 -
7.
MR GM JOSHI for Respondent(s) : 6,
MR PRABHAKAR UPADYAY for
Respondent(s) : 7,
MR AS VAKIL for Respondent(s) : 8,
MR
INDRAVADAN PARMAR for Respondent(s) : 9,
In
Special Civil Application No.3767 of 2011:
MR
SHALIN MEHTA with MR HEMANG M SHAH for Petitioner(s) : 1,
MR
PRABHAKAR UPADYAY for Respondent(s) : 1,
MS SG ASSOCIATES for
Respondent(s) : 3,
MR VK MASHAR for Respondent(s) : 4,
MR
PARITOSH CALLA for Respondent (s) : 5 MR
AS VAKIL for Respondent (s) : 6
In
Special Civil Application No.7652 of 2011:
MR
V PRAKASH Sr. Counsel with MS UTPALA S BORA for Petitioner(s) :
1,
MRS KRINA CALLA AGP for Respondent(s) : 1.
NANAVATI
ASSOCIATES for Respondent (s) : 2 MR PERCY
KAVINA Sr. Counsel with MR TEJAS P SATTA for Respondent (s):3
MR BHARAT T
RAO for Respondent (s): 4 RULE SERVED
for Respondent (s): 5
=========================================================
CORAM
:
HONOURABLE
THE CHIEF JUSTICE MR. S.J. MUKHOPADHAYA
and
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 08/09/2011
CAV JUDGMENT
(Per : HONOURABLE THE CHIEF JUSTICE MR. S.J. MUKHOPADHAYA) In all the cases as common important questions of law have been raised, they were heard together and are being disposed of by this common judgment.
2. The main questions which arise for determination are :-
(i) Whether workmen of a company, not under liquidation, can claim their dues of wages and other benefits under Section 17 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act") if a bank or financial institution or Asset Reconstruction Company (India) Ltd. ("ARCIL" for short) takes measures under Section 13(4) of the said Act ?
(ii) Whether the Debts Recovery Tribunal in a petition under Section 17 of the SARFAESI Act can decide and order to pay the dues of workmen, if the company is not under liquidation, and the said company is purchased by auction purchaser pursuant to measures taken under Section 13(4) of the SARFAESI Act ?
(iii)Whether the power of a competent authority or a Court of law of conditional attachment of property of an employer or other persons responsible for payment of wages under Section 17A of the Payment of Wages Act, 1936 stands curtailed once measures are taken under Section 13(4) of the SARFAESI Act ?
3. Before deciding the issue, it is necessary to notice the relevant facts of all the cases, as narrated hereunder.
Special Civil Application No.14924 of 2010:
4. Petitioner-
ARCIL has challenged the order of attachment under Section 17A of the Payment of Wages Act, 1936 passed by Labour Court No.5, Ahmedabad by its interim order dated 15.10.2009 followed by order dated 16.9.2010 in Payment of Wages Application No.710 of 2009 in so far as it relates to secured assets covered by proceeding initiated under the SARFAESI Act.
Special Civil Application No.3367 of 2011 :
5. This writ petition has also been preferred by ARCIL, which is the petitioner in Special Civil Application No.14924 of 2010. In the present case, it has challenged the order dated 26.2.2010 passed by the Labour Court No.5, Ahmedabad whereby the application filed by the workmen's union (Majoor Mahajan Sangh) under Section 79(1) of the Bombay Industrial Relations Act, 1946 has been entertained and order was passed. Prayer was made to direct the appellant from reducing the strength of the permanent workmen without following the due procedure under the Bombay Industrial Relations Act, 1946.
6. The case of the petitioner is that first respondent-M.H. Mills and industries Ltd., which is now demerged entity of M.Y. Mills Packaging (India) Ltd. received financial assistance (loans) under diverse agreements between the borrower and Industrial Credit and Investment Corporation of India Ltd. (since renamed as ICICI Ltd. and merged with ICICI Bank Ltd.), State Bank of India and Bank of India for the purpose and on terms and conditions specified therein.
7. The aforesaid loans together with all the underlying security interest and all rights, titles and interest therein were acquired by petitioner-ARCIL as sole trustee of Arcil-CPS-002-1 Trust between 31.3.2004, 30.12.2004 and 19.3.2005 from ICICI Bank Ltd. under Assignment Agreement, as the sole trustee of Arcil-CPS-001-111 Trust from State Bank of India under Assignment Agreement and as the sole trustee of ARCIL-M.Y. Mills and Industries Ltd. Trust from Bank of India under Assignment Agreement in terms of Section 5 of the SARFAESI Act. The borrower-M.H. Mills demerged with M.H. Packaging (India) Ltd., second respondent herein, pursuant to an order passed by this Court in Company Petition No.25 of 2006 with Company Application No.198 of 2005.
8. Further case of the petitioner is that the borrower-respondents defaulted in payment of interest and principal installments of loans, as a result of which, the loan accounts have been classified as Non-Performing Assets (NPA) in the books of account. By its letter, the first respondent informed petitioner-ARCIL on 7.10.2009 that Torrent Power India Ltd. has disconnected the power supply of the company on 29.9.2009, as a result of which, the operation of the company has stopped. The company, therefore, was not in a position to pay wages to its workers since September 2009 as also bonus during the period of Diwali of the year 2009. It is further informed that the workers' union approached the Labour Court by filing payment of Wages Application No.710 of 2009 under Section 15 of the Payment of Wages Act, 1936 and the Labour Court No.5 passed an interim order on 1.10.2009 to the effect that "The opposite party has to keep Mills' immovable and movable properties as it is. The next hearing will be held on 12.10.2009."
9. On 15.10.2009, Labour Court No.5, Ahmedabad passed an order to fix court seal on locks of doors of all departments, godowns (backside of mills) except the main door of the Mills. By letter dated 20.10.2009, the first respondent informed the petitioner-ARCIL of the aforesaid oder passed by Labour Court No.5.
10. At that stage, the petitioner-ARCIL issued notice under Section 13(2) of the SARFAESI Act to the borrower asking it to make payment of the aggregate amount of Rs.156,25,88,757/- (Rupees One Hundred and Fifty-six Crores Twenty Five Lakhs Eighty Eight Thousand Seven Hundred and Fifty seven only) in favour of petitioner-ARCIL as due on 17.11.2009 as per the details set out therein. It was also asked to pay the amount with further interest and other amounts at documented rate from 18.11.2009 till full payment is made. The interest to the tune of Rs.120 lakhs plus liquidity damages, commitment charges etc. were also asked to be paid within 60 days. It was informed that on failure the ARCIL may exercise all or any of the measures under sub-section (4) of Section 13 of the SARFAESI Act.
11. The aforesaid notice under Section 13(2) of the SARFAESI Act was brought to the notice of the Labour Court by workmen in Payment of Wages Application No.710 of 2009 on 10.2.2010. By its restrain order dated 16.9.2010, the Labour Court had ordered sealing of its packaging division located at Sanand pending settlement of dues of workmen of the first respondent. This was informed by the first respondent by their letter dated 17.9.2010. It is only thereafter the notice was issued by ARCIL under Section 13(4) of the SARFAESI Act between 29th and 30th September 2010. The possession notice was served on 4.10.2010, but according to the petitioner, symbolic possession of the assets of the first respondent situated at mouje Saher Kotda of City taluka in the registration district and sub-district of Ahmedabad and final plot No.104 of Town Planning Scheme No.16 admeasuring 61,603 sq. mtrs. was taken on 29.9.2010. Further symbolic posession of assets situated at village Vasna Iyava of Sanand taluke, District Ahmedabad admeasuring 15075 sq.mts. was taken. Actual possession notice was served on the borrower on 4.10.2010, as noticed earlier, even though there was a specific order of attachment of Labour Court No.5, Ahmedabad.
12. The petitioner know that symbolic possession is in fact no possession in the eye of law in absence of any actual possession of the secured assets. It was actually difficult for them in view of restrained order passed by the Labour Court on 15.10.2009 and 16.9.2010. In this background, it has challenged both the aforesaid orders passed by the Labour Court.
13. The learned counsel for petitioner-ARCIL in Special Civil Application No.14924 of 2010 made the following submissions to assail the orders :-
(i) Section 35 of the SARFAESI Act overrides any attachment order passed by the Labour Court under Section 17A of the Payment of Wages Act, 1936. The attachment order passed by the Labour Court under Section 17A of the Payment of Wages Act, 1936 could be an instrument and the same being an instrument the said order will be overridden by the provisions of the SARFAESI Act and the measures taken under the SARFAESI Act.
Therefore, the attachment order dated 15.10.2009 and 16.9.2010 passed by the Labour Court under Section 17A would be overridden by action taken by ARCIL under Section 13(2) of the SARFAESI Act. For the said reason, ARCIL must be allowed to proceed under Section 13(4) and Section 14 of the SARFAESI Act unhampered by the said two attachment orders dated 15.10.2009 and 16.9.2010.
(ii) Under Section 17A, the Labour Court has jurisdiction to direct attachment of only so much of the property of wages as is, in its opinion, sufficient to satisfy the amount which may be payable under the direction. But the Court has no jurisdiction to direct attachment of all the properties of the employer irrespective of the amount which may be payable as wages to the employees. In the present case, as both the impugned orders of attachment show that they have been passed without any satisfaction recorded by the Labour Court that all the properties of M.H. Mills & Industries Ltd. have been acquired without any satisfaction, which were required to be attached so as to satisfy the amount payable to the employees as wages and the same has not been shown and the amount due to the employees under the Payment of Wages Act, 1936 has not even been determined by the Labour Court before directing attachment. Therefore, the mandate of Section 17A has been violated in the present case and hence the orders of attachment are liable to be quashed as being inconsistent and incompatible with Section 17A of the Payment of Wages Act, 1936.
(iii)No relief beyond pleadings of the parties can be granted. In the present case, the sole issue that arises is, whether ARCIL can proceed under Section 13(4) and Section 14 of the SARFAESI Act unhampered by the attachment orders passed by the Labour Court under Section 17A of the Payment of Wages Act, 1936. No other issue arises in the present case. Even from the pleadings of the parties, it can be seen that no respondent has laid a challenge to ARCIL's action under Section 13(2) and 13(4) of the SARFAESI Act. Therefore, the issue as framed by the Court may not be decided in the present case.
(iv) Section 9 of the SARFAESI Act provides for measures for assets reconstruction that a securitisation company or reconstruction company may, without prejudice to the provisions contained in any other law for the time being in force, for the purpose of asset reconstruction and having regard to the guidelines framed by the Reserve Bank of India in this behalf, provide for any one or more of the measures specified therein. Thus Section 9 empowers a securitisation company or reconstruction company to carry out the reconstruction of assets, including as provided in clauses (d) and
(f), the enforcement of security and taking possession of assets in accordance with the provisions of the Act. Such measures are provided only under Chapter III, and more particularly, Section 13 of the SARFAESI Act. The measures provided under Section 13 are available to the secured creditors only and as per the definition of "secured creditor" under Section 2(1)(zd) of the SARFAESI Act, the securitisation company or the reconstruction company also come within the definition of secured creditor.
Section 9 starts with the words "Without prejudice to the provisions contained in any other law ... " thereby implying that the powers under Section 9 are not exclusive and may be exercised simultaneously with any other power available to the reconstruction company or securitisation company. This being the position of law, the only impact of including clause (d) in Section 9 is that a securitisation or reconstruction company can pursue remedies under this section simultaneously while triggering those under Section 13.
(v) A secured creditor does not have to justify his action of choosing from any one or all of the measures under Section 13(4) of the Act by showing that it has applied its mind before making a particular choice. The object of the SARFAESI Act is one and only one -
"Speedy recovery of dues of the secured creditor without intervention of the Court."
The learned counsel placed reliance on Supreme Court decision in Transcore vs. Union of India reported in AIR 2007 SC 712 and Mardia Chemicals Ltd. vs. Union of India reported in (2004) 4 SCC 311.
Thus, under Section 13(4) of the Act, several options are given to the secured creditor for recovering the debt. The secured creditor has complete freedom to choose from any measure or choose more than one or all measures for recovering the debt. The secured creditor does not have to justify why he chose A and no B or why he chose B and not A because plain reading of the statute does not require that. If the secured creditor is called upon to justify his choice by showing, before taking any measure under Section 13(4) of the Act, that it had applied its mind for choosing a particular measure, it would amount to reading words in the statute and would amount to fixing an additional burden upon the secured creditor.
14. According to the 7th respondent- Majoor Mahajan Sangh (TLA), the petitioner-ARCIL has efficacious alternative remedy and the same is not exhausted and, therefore, the Court should not interfere with the interim order of attachment. It is submitted that as per Section 17-A(2), it is expressly provided that the provisions relating to attachment before the judgment under the Code of Civil Procedure shall apply to the order of attachment passed under sub-section (1) of Section 17A and, therefore, the Labour Court had jurisdiction to pass such an attachment order. The Court has to adjudicate upon the claim or objection in accordance with the relevant rules, the same is still pending for consideration. Thus, the petitioner has a remedy of approaching Labour Court objecting to the order of attachment on the grounds canvassed in the petition. It was contended that the BIFR in Case No.190 of 2002 pertaining to the case of first respondent by its order dated 5.10.2010 refused to entertain the grievance of ARCIL against the order of attachment and has observed that ARCIL may approach appropriate forum and bring it to the notice of the Labour Court the pendency of reference before BIFR. Instead of approaching the Labour Court, as suggested by BIFR, the petitioner-ARCIL has moved the petition before this Court which does not deserve to be entertained on merits.
15. The counsel for the 7th respondent further submitted that the petition deserves to be rejected on the ground of delay and laches as the order of attachment is passed on 15.10.2009 and has been challenged after more than one year.
16. On merit, the learned counsel for the 7th respondent would contend that the SARFAESI Act does not create first charge in favour of the secured creditor or reconstruction company or securitisation company. It only provides mechanism for recovery of dues of secured creditors. In support of his argument, reliance was placed on Supreme Court decision in Central Bank of India vs. State of Kerala reported in (2009) 4 SCC 94.
17. The learned counsel for the 7th respondent referring to the provisions of Security Interest (Enforcement) Rules, 2002 would contend that as per Rule 4(5), the possession of movable property can be taken by secured creditor from any one "except where it is in custody of Court or like authority." As per Rule 8(1), the possession of immovable property can be taken by issuing notice in prescribed form to the borrower. Therefore, except where the property is in custody of the borrower, the possession of immovable property cannot be taken under Section 13(4) of the Act. He also placed reliance on Rule 9 to suggest that the purchaser is required to deposit money to discharge any other encumbrance and the amount so deposited is required to be paid to the persons entitled thereto. Thus when ARCIL knows that there is a huge claim of workmen's dues to the tune of Rs.33 crores when the application is filed and it is more than 45 crores at present, they cannot proceed with sale unless it calls upon the purchaser to deposit the dues of the workmen for which attachment is levied.
18. It was brought to the notice of the Court that about 1500 employees including Badli workers were employed in the unit in question. The manufacturing operations were abruptly stopped by the 1st respondent on account of nonpayment of electricity bill and resulting disconnection of power supply by electricity company since 29.9.2009. Since then the workmen are rendered jobless and left high and dry and the proceedings were initiated for declaring closure as illegal and for recovery of dues of the workers which were about Rs.33 crores at the time of filing of the application and other related proceeding. It was contended that since the closure in the present case is without permission required under Section 25-O of the Industrial Disputes Act, 1947, as per Section 25(O)(6), the workmen are deemed to be continued in service and are entitled to wages till this date. According to them, the dues inclusive of wages for the period of illegal closure comes to more than Rs.45 crores. Before the order of attachment was passed on 15.9.2009, followed by second order of attachment passed on 10.9.2010, since grey cloth manufactured by the first respondent was sent for processing to packaging unit and the packaging unit is being used as godown for the clothes manufactured by the first respondent, the 7th respondent also applied for attachment of those properties and order was passed on 16.9.2010. Thus the proceedings were immediately initiated by the 7th respondent on behalf of the workmen who are rendered jobless since 29.9.2009. On the other hand, ARCIL has initiated action by issuing notice under Section 13(2) only on 27.11.2009, i.e. after the order of attachment.
Special Civil Application No.7652 of 2011:
19. This writ petition has been preferred by Amletha GSL Mill Kamdar Sangh (hereinafter referred to as "the workmen union"). The main grievance is against the third respondent, Asset Reconstruction company (India) Ltd. (ARCIL for short). Prayer has been made to restrain the respondents from altering the status quo in respect of the factory of the first respondent viz., Gujarat Spinners (I) Ltd., located in Ameltha village, Nandod taluka, Narmada district and in particular by removal of any machinery without prior leave of this Court. Such prayer has been made as the Debt Recovery Tribunal No.2, Ahmedabad refused to grant interim relief in a petition under Section 17 of the SARFAESI Act. The petitioner-Union intends to move before the Debt Recovery Appellate Tribunal, Mumbai which is not functioning in absence of the Presiding Officer.
In the present case, it appears that the second respondent- M/s.GSL (I) Ltd. (hereinafter referred to as "the company") had taken loan from banks and financial institutions. The company has about 2000 tribal workers, out of which, 700 or so are female workers. The company became sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as, "the SICA" for short) in the year 2001. The matter was taken up to BIFR for its rehabilitation. The BIFR had earlier passed order directing change of management as mode of rehabilitation. At this stage, the respondent company approached the appellate authority AIFR by Appeal No.306 of 2002. The workmen union was neither party before the BIFR nor AIFR. Therefore, the Union moved before this Court by filing the writ petition in Special Civil Application No.3852 of 2003 for impleading it as a party before the AIFR and BIFR, which was allowed. Pursuant to the order of this Court, the workmen union became party to appeal No.306 of 2002 before the AIFR. After hearing the parties, the AIFR remanded the matter back to BIFR for reconsideration of matter for rehabilitation. However, no viable scheme could be worked out.
20. In the meantime, the third respondent-ARCIL, a reconstruction company, had taken over the rights and liabilities of the banks and financial institutions from which the second respondent company had taken loan. It had 75% of the secured debts and, therefore it took measures under Section 13(4) of the Securitisation Act. For taking such action, the third respondent ARCIL obtained an order in a reference case. That reference case stood abated under proviso (3) to Section 15(1) of SICA. The order of abatement in reference was passed on 18.3.2010 by the BIFR.
21. The case of the petitioner Union is that the present total dues amount is more than Rs.10 crores and the liability as on 2009-10, includes dues like provident fund, gratuity, wages for the period of closure of approximately nine months or so. Those dues have not been paid to the workmen. The provident fund contribution has not been deposited. Suddenly, the Union came to know that asset of the second respondent Company was sold pursuant to bid held on 19.4.2011 in favour of the 4th respondent Shreeji Fibre Pvt. Ltd.. According to the petitioners, they had no knowledge about the publications since in Amletha no such publication was made and they came to know that publication was mainly made in the newspapers of Mumbai edition. The entire asset of the second respondent company has been sold in favour of the 4th respondent - auction purchaser for Rs.9.91 crores.
22. Further case of the petitioner is that the petitioner-union having come to know that 4th respondent auction purchaser has become successful bidder by letter dated 5.3.2011 represented before ARCIL to cancel the bid. It was also pointed out that Civil Judge, (S.D.) of Civil Court, Rajpipla had granted stay against the second respondent company for transfer of any property in Regular Civil Suit No.141 of 2009. No action having taken, the petitioner union preferred an appeal under Section 17(1) of the SARFAESI Act in Appeal No.57 of 2011. The Debts Recovery Tribunal No.2, Ahmedabad has refused to grant the interim relief.
23. The learned counsel for the petitioner would contend that the workers interest are required to be protected inasmuch as that the entire assets of the respondent company is sold. It would leave the workmen with nothing. Therefore, the grievance of the workmen is that the Presiding Officer, DRT-II, Ahmedabad had failed to appreciate the correct position of law as the interpretation of the SARFAESI Act is to be made and then to be determined as to which forum the workmen can agitate their claim. The petitioners choose to move before this Court under Article 226 of the Constitution of India, which is the appropriate forum for interpretation of the provisions of the SARFAESI Act vis-a-viz claim of the workmen of the company whose total asset is sold but is not under liquidation under the Companies Act.
24. The counsel for the petitioner-workmen union would contend that the decision to sale the entire asset is ultra vires the provisions of the SARFAESI Act and Article 14 of the Constitution of India, as the action is unreasonable and arbitrary.
25. He would further submit that notwithstanding that the second respondent is not ordered to be wound up, if entire asset is sold or proposed to be sold for all purposes the second respondent company stand liquidated.
26. Referring to the decision of the Supreme Court in M/s. Transcore vs. Union of India (2008) 1 SCC 125, he would contend that the Supreme Court has noticed that the SARFAESI Act provides for setting up of asset reconstruction companies which are empowered to take possession of secured assets of the borrower including the right to transfer by way of lease, assignment or sale. It is also empowered to take over the management of the business of the borrower.
27. Referring to the relevant provisions of the SARFAESI Act, it was contended that the respondent-ARCIL instead of auctioning of total properties of the company ought to have taken measures under Section 9 of the SARFAESI Act for asset reconstruction. It is bound to act in accordance with Section 3 of the SARFAESI Act, failing which the ARCIL is entitled for cancellation of registration under Section 4 of the said Act. Section 9 imposes a duty on ARCIL to apply its mind to the measures laid down therein, to determine and apply one or more of the measures, having due regard to the facts of each case and make a rational decision for the choice of measures under the said section. Non-application of mind to the measures and arbitrary choice of measures would vitiate the decision and would nullify the total action. It was contended that the Presiding Officer, DRT-II, Ahmedabad has failed to take into consideration the aforesaid fact.
28. According to the second respondent- M/s. GSL (I) Ltd., the factory was started in the year 1984 having machinery, land, building and industrial assets. It borrowed about Rs.300 crores including working capital for the purpose of expansion and with penal interest, ARCIL is claiming Rs.1200 crores. During the period between 2004-2011, the company has already paid ARCIl Rs.2.74 crores showing bonafide intention of the company.
29. In spite of sickness of the company, it has paid a sum of Rs.55,79,07,576/- by way of salary and wages to the workmen from 2000 till 2nd July 2011. The book value of the balance sheet as on 2009-10 of total fixed asset is Rs.107,77,97,186/- crores, whereas ARCIL has fixed the reserved price as 7.14 crores. In spite of several requests made by the company to ARCIL, it has given no basis of valuation and fixation of the reserved price.
30. It is further contended that ARCIL has handed over possession on 2nd July 2011 to the third respondent without any intimation to the custodian, in his absence forcibly from the employees of the company, having created an atmosphere of coercion and threat at the high handed approach of one of the MLAs who is associated with this company with support from local District Administration and police. Several assets which are owned by the three parties such as on lease finance, property owned by the charitable trust including temple and gaushala, personal belongings of the staff and employees as well as last 27 years of company records have also been handed over by ARCIL to the auction purchaser though auction purchaser has only purchased those assets which are mortgaged to ARCIL.
31. It appears that notice under Section 13(2) of the SARFAESI Act was issued in March 2009 to the company whereby ARCIL has asked as to why any or all measures under Section 13(4) will not be taken. A reply was sent and the only measure the third respondent took was to take possession symbolically and placed Mr Ashish Bagrodia, shareholder and guarantor as the custodian of the assets. Therefore, the said decision was not challenged. Thereafter, according to the second respondent, no further notice was issued and suddenly an advertisement was issued in Free Press Journal, circulation in Mumbai (approx. 60,000), and Gujarat Mitra, circulation in Gujarat (approx. 71,000), which is not in much circulation even in the States of Maharashtra and Gujarat and entire sale has been made. It has expected that the company owes money to the workers in terms of over time, unpaid wages, layoff wages, gratuity etc. and it is not its intention to evade any payment to the workers.
32. The grievance of the second respondent is that ARCIL after notice issued under Section 13(2) and in spite of receipt of objection under Section 13(3A), no decision has been passed under Section 13(3A). Therefore, it renders the sale invalid. The second respondent company have been deprived of its precious opportunity to raise objections under Section 13(3A), when Rs.300 crores was advanced for expansion and was running the factory. There was sufficient raw material inside and store consumables which were not part of the sale transaction between ARICL and the buyer but possession of the same has been illegally given to the 4th respondent-auction purchaser.
33. The 4th respondent has vehemently opposed the writ petition as there being an alternative remedy under Section 17 of the SARFAESI Act. According to it, the second respondent company obtained the loans from ICICI Bank Ltd., IDBI Bank Ltd., IFCI Ltd., Dena Bank, State Bank of India, Canara Bank, and IRADA.. Recovey applications were filed by Canara Bank and State Bank for recovery of Rs.46,46,12,735/- and Rs.44,24,65,758/- respectively. The recovery certificate has been issued and debt had been assigned to ARCIL which as come on record. Under Section 5 of the SARFAESI Act, ICICI Bank Ltd., IDBI Bank Ltd., IFCI, Canara Bank, State Bank of India have assigned their decree-debts to ARICL. ARCIL has taken over possession of land, building, plant and machinery on 4.11.2009 after following the procedure. Inventory has been carried out and necessary panchnama has been drawn. It is with the sole interest to protect the interest of the workers, ARCIL has appointed Shri Ashish Bagodiya for running the company keeping in mind the provisions of Section 9 and Section 15 to find out whether the company is viable but Shri Ashish Bagodiya could not run the company successfully. Important machineries were sold and, therefore, ARCIL decided to dispose of the land, building, plant and machineries by fixing upset price of Rs.7.14 crores on "as is, where is basis". Inter-se bidding was held on 3.5.2011 and 4th respondent was declared successful bidder and 25% amount has been deposited by the 4th respondent on 6.5.2011 but sale has not been confirmed by ARCIL. The GSL Ltd. started different tactics to delay the proceedings and filed proceedings in the Bombay High Court as well as Debt Recovery Tribunal, Mumbai. The company made a statement before the Debt Recovery Tribunal, Mumbai that they are ready and willing to make payment of Rs.10 crores but they backed out thereafter. A writ petition was also filed before the Bombay High Court by the company but no interim order was passed.
34. It is accepted that Regular Civil Suit No.141 of 2009 has been preferred by the petitioner union and pending consideration, but ARCIL is not a party in the said case.
35. As stated above, according to the 4th respondent, there being a remedy of appeal under Section 18, this Court should not interfere with the matter. The writ petition before the High Court is not maintainable. It has referred to the Supreme Court decision in Kanaiyalal Lalchand Sachdeva vs. State of Maharashtra reported in (2011) 2 SCC 782, Narayan Chandra Ghosh vs. UCO Bank reported in (2011) 4 SCC 548 and Union Bank of India vs. Satyavati Tandon & Ors. reported in (2010) 8 SCC 110 wherein all the time Supreme Court cautioned the High Court to entertain petitions where alternative remedy is available.
36. The learned counsel for the 4th respondent would submit that the 4th respondent has purchased the plant, machinery, land, building and no the company. Therefore, the 4th respondent is not liable to pay any amount to the workmen. Security interest has been created on the secured asset and not on the company.
37. We have heard the learned counsel for the parties, noticed their respective submissions as also the relevant facts and law.
38. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was enacted for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the court. It provided for registration and regulation of securitisation companies or reconstruction companies by the Reserve Bank of India; facilitating securitisation of financial assets of banks and financial institutions with or without the benefit of underlying securities; facilitating easy transferability of financial assets by the securitisation company or reconstruction company to acquire financial assets of banks and financial institutions by issue of debentures or bonds or any other security in the nature of a debenture etc. It has provided rights of a secured creditor to be exercised by one or more of its officers authorised in this behalf in accordance with the act and rules; an appeal against the action of any bank or financial institution to the Debts Recovery Tribunal and a second appeal to the Appellate Debts Recovery Tribunal; it provides that Debts Recovery Tribual should dispose of application as expeditiously as possible preferably within 60 days and enables any aggrieved person to file an appeal after depositing the requisite statutory amount before the Appellate Tribunal.
39. In the present case, measures under Section 13(4) has been taken by Asset Reconstruction Company (India) Ltd. (ARCIL). Section 2(b) of the SARFAESI Act defines "asset reconstruction" means acquisition by any securitisation company or reconstruction company of any right or interest of any bank or financial institution in any financial assistance for the purpose of realisation of such financial assistance. "Reconstruction company" has been defined under Section 2(v) means a company formed and registered under the Companies Act, 1956 for the purpose of asset reconstruction.
40. "Securitisation"
as defined under section 2(z) means acquisition of financial assets by any securitisation company or reconstruction company from any originator, whether by raising of funds by such securitisation company or reconstruction company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets or otherwise; "securitisation company"
as defined under Section 2(za) means any company formed and registered under the Companies Act, 1956 for the purpose of securitisation.
41. Under Section 3, registration of securitisation companies or reconstruction companies are mandatory. No securitisation company or reconstruction company can commence or carry on the business of securitisation or asset reconstruction without obtaining a certificate of registration under Section 3. The Reserve Bank of India under sub-section (3) of Section 3 may make inspection of records or books of such securitisation or reconstruction company for being satisfied for the purpose of considering the application for registration. The viability of securitisation company or reconstruction company are looked into by the Reserve Bank of India before registering the company.
42. Under section 4 of the SARFAESI Act, the Reserve Bank of India is empowered to cancel certificate of registration granted to a securitisation company or a reconstruction company for the reasons mentioned thereunder. The relevant of which are quoted hereunder:-
"4.
Cancellation of certificate of registration (1) The Reserve Bank may cancel a certificate of registration granted to a securitisation company or a reconstruction company, if such company--
(a) ceases to carry on the business of securitisation or asset reconstruction; or
(b) ceases to receive or hold any investment from a qualified institutional buyer; or
(c) has failed to comply with any conditions subject to which the certificate of registration has been granted to it; or
(d) at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (3) of section 3; or
(e) fails to--
(i) comply with any direction issued by the Reserve Bank under the provisions of this Act; or
(ii) maintain accounts in accordance with the requirements of any law or any direction or order issued by the Reserve Bank under the provisions of this Act; or
(iii) submit or offer for inspection its books of account or other relevant documents when so demanded by the Reserve Bank; or
(iv) obtain prior approval of the Reserve Bank required under subsection (6) of section 3:
Provided that before cancelling a certificate of registration on the ground that the securitisation company or reconstruction company has failed to comply with the provisions of clause (c) or has failed to fulfil any of the conditions referred to in clause (d) or sub-clause (iv) of clause (e), the Reserve Bank, unless it is of the opinion that the delay in cancelling the certificate of registration granted under subsection (4) of section 3 shall be prejudicial to the public interest or the interests of the investors or the securitisation company or the reconstruction company, shall give an opportunity to such company on such terms as the Reserve Bank may specify for taking necessary steps to comply with such provisions or fulfilment of such conditions."
43. Any securitisation company or reconstruction company can acquire financial assets of any bank or financial institution under Section 5 of the SARFAESI Act.
44. What measures for asset reconstruction can be taken by securitisation company or reconstruction company has been prescribed under Section 9, which reads as follows :-
"9.
Measures for assets reconstruction.-
Without prejudice to the provisions contained in any other law for the time being in force, a securitisation company or reconstruction company may, for the purposes of asset reconstruction, having regard to the guidelines framed by the Reserve Bank in this behalf, provide for any one or more of the following measures, namely:--
(a) the proper management of the business of the borrower, by change in, or take over of, the management of the business of the borrower;
(b) the sale or lease of a part or whole of the business of the borrower;
(c) rescheduling of payment of debts payable by the borrower;
(d) enforcement of security interest in accordance with the provisions of this Act;
(e) settlement of dues payable by the borrower;
(f) taking possession of secured assets in accordance with the provisions of this Act."
From the aforesaid provision, it will be evident that a securitisation company or a reconstruction company for the purposes of asset reconstruction, are required to follow the guidelines issued by the Reserve Bank of India, which may provide for different measures including the measures for settlement of dues payable by the borrower including the wages and other dues of workmen including bonus, gratuity, provident fund etc..
45. While the workmen's union have taken a specific plea that ARCIL is bound by Section 9 and required to take measures for settlement of dues of workmen as payable by borrower, according to the counsel for ARCIL and auction purchaser, the measures prescribed under Section 9 are not mandatory but directory, which ARCIL may or may not take. In place of one measure, it may take other measure or more than one measure, whichever suits ARCIL. They have taken a specific plea that ARCIL is not to justify its action of choosing of any or all the measures as prescribed under Section 9, including enforcement of security interest in accordance with the provisions of the Act, as prescribed under Section 9(d) read with Section 13 of Chapter III of the SARFAESI Act, which relates to enforcement of security interest.
46. The Reserve Bank of India in exercise of powers conferred by Sections 3, 9, 10 and 12 of the SARFAESI Act, 2002 has issued, "The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003" (hereinafter referred to as "the Reserve Bank guidelines and directions"). The same has been enacted in public interest and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any securitisation company or reconstruction company from being conducted in a manner detrimental to the interest of the investors or in any manner prejudicial to the interest of such securitisation company or reconstruction company. The guidelines and directions relates to registration, measures of asset reconstruction, functions of the company, prudential norms, acquisition of financial assets and matters related thereto. It is binding on all the securitisation companies and reconstruction companies. Under clause 6, a securitisation company or reconstruction company are required to commence/ undertake only the securitisation and asset reconstruction activities and the functions provided for in section 10 of the Act.
47. Clause 7 of RBI guidelines and directions, 2003 relates to Asset reconstruction. Sub-clause (1) of Section 7 while deals with acquisition of financial assets, sub-clause (2) relates to change or take over of management, sub-clause (3) relates to rescheduling of debts, sub-clause (4) relates to enforcement of security interest and sub-clause (5) relates to settlement of dues payable by the borrower. The provisions being relevant for the purpose of determination of issue are quoted hereunder :-
"7. Asset reconstruction.-(1)
Acquisition of financial assets. - (i) Every securitisation company or reconstruction company shall frame with the approval of its board of directors, a "financial asset acquisition policy"
within 90 days of grant of certificate of registration, which shall clearly lay down the policies and guidelines covering, inter-alia, -
(a) norms and procedure for acquisition;
(b) types and the desirable profile of the assets;
(c) valuation procedure ensuring that the assets acquired have realisable value which is capable of being reasonably estimated and independently valued;
(d) in the case of financial assets acquired for asset reconstruction, the broad parameters for formulation of plans for their realisation.
(ii) The board of directors may delegate powers to a committee comprising any director and/or any functionaries of the company for taking decisions on proposals for acquisition of financial assets;
(iii) Deviation from the policy should be made only with the approval of the board of directors.
(2)(i) Change or take over of Management. - The Securitisation Company or Reconstruction Company shall take the measures specified in sections 9(a) of the Act, in accordance with instructions contained in Circular DNBS/PD (SC/RC) No.17/26-03.001/2009-10 dated April 21, 2010 as amended from time to time.
(ii) Sale or lease of a part or whole of the business of the borrower. - No Securitisation Company or Reconstruction Company shall take the measures specified in section 9(b) of the Act, until the Bank issues necessary guidelines in this behalf.
(3) Rescheduling of debts. - (i) Every securitisation company or reconstruction company shall frame a policy, duly approved by the board of directors, laying down the broad parameters for rescheduling of debts due from borrowers.
(ii) All proposals should be in line with and supported by an acceptable business plan, projected earnings and cash flows of the borrower.
(iii) The proposals should not materially affect the asset liability management of the securitisation company or reconstruction company or the commitments given to investors;
(iv) The board of directors may delegate powers to a committee comprising any director and/or any functionaries of the company for taking decisions on proposals for reschedulement of debts;
(v) Deviation from the policy should be made only with the approval of the board of directors.
(4) Enforcement of security interest. - Where taking recourse to the sale of secured assets in terms of section 13(4) of the Act, a securitisation company or reconstruction company may itself acquire the secured assets, either for its own use or for resale, only if the sale is conducted through a public auction.
(5) Settlement of dues payable by the borrower. - (i) Every securitisation company or reconstruction company shall frame a policy duly approved by the board of directors laying down the broad parameters for settlement of debts due from borrowers;
(ii) The policy may, inter alia, cover aspects such as cut-off date, formula for computation of realisable amount and settlement of account, payment terms and conditions, and borrower's capability to pay the amount settled;
(iii) Where the settlement does not envisage payment of the entire amount agreed upon in one instalment, the proposals should be in line with and supported by an acceptable business plan, projected earnings and cash flows of the borrower;
(iv) The proposal should not materially affect the asset liability management of the securitisation company or reconstruction company or the commitments given to investors;
(v) The board of directors may delegate powers to a committee comprising any director and/or any functionaries of the company for taking decisions or proposals for settlement of dues;
(vi) Deviation from the policy should be made only with the approval of the board of directors.
(6) Plan for realisation. - (i) Every securitisation company or reconstruction company may, within the planning period, formulate a plan for realisation of assets, which may provide for one or more of the following measures:-
(a) Rescheduling of payment of debts payable by the borrower;
(b) Enforcement of security interest in accordance with the provisions of the Act;
(c) Settlement of dues payable by the borrower;
(d) Change or take over of the management, or sale or lease of the whole or part of business of borrower after formulation of necessary guidelines in this behalf by the bank as stated in paragraph 7(2) hereinabove.
(ii) The plan for realisation shall clearly spell out the steps proposed to reconstruct the assets and realise the same within a specified time frame, which shall not in any case exceed five years from the date of acquisition."
48. From the aforesaid clause (7), it will be evident that every securitisation company or reconstruction company is bound to frame a "financial asset acquisition policy" within 90 days of grant of certificate of registration laying down the policies and guidelines of norms and procedure for acquisition, types and the desirable profile of the assets, valuation procedure ensuring that the assets acquired have realisable value; the measures for change or take over of management in accordance with the circular dated 21.4.2010 issued by the Reserve Bank of India and is prohibited to take measures specified in Section 9(b) until the Reserve Bank of India issues necessary guidelines in this behalf. The securitisation company and reconstruction company are bound to frame a policy rescheduling the debts under the said provision.
49. It will be further evident that the securitisation company and reconstruction company under sub-clause (5) of clause 7 is duty bound to frame a policy laying down the broad parameters for settlement of debts due from borrowers, which includes all dues of workmen including payment of wages, bonus, overtime, provident fund, gratuity etc. The policy inter-alia is required to cover aspects such as cut-off date, formula for computation of realisable amount and settlement of account, payment terms and conditions and borrower's capability to pay the amount settled. Where the settlement does not envisage payment of the entire amount agreed upon in one installment, the securitisation company or reconstruction company are required to give a proposal in line with and supported by an acceptable business plan, projected earnings and cash flows of the borrower. The deviation from such policy can be made only with the approval of the board of directors.
50. Under sub-clause (6) of clause 7, the securitisation company or reconstruction company may plan for realisation of assets by taking measures thereunder. While the word, "may" has been used in sub-clauses (4) and (6) of clause 7, for the purpose of plan for realisation etc., the word "shall" has been used in other sub-clauses (2), (3) and (5) of clause 7 for acquisition of financial assets, change or take over of management, rescheduling of debts, settlement of deus payable by the borrower.
51. The Statement and Object of the Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003 will be evident from preamble which reads as follows :
"The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve bank to regulate the financial system to the advantage of the country and to prevent the affairs of any securitisation company or reconstruction company from being conducted in a manner detrimental to the interest of the investors or in any manner prejudicial to the interest of such securitisation company or reconstruction company, it is necessary to issue the guidelines and directions relating to registration, measures of asset reconstruction, functions of the company, prudential norms, acquisition of financial assets and matters related thereto, as set out below hereby, in exercise of the powers conferred by sections 3, 9, 10 and 12 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, issues to every securitisation company or reconstruction company, the guidelines and directions hereinafter specified.
52. From the preamble of the guidelines, it will be evident that the said directions have been issued in the public interest to regulate the financial system to the advantage of the country and to prevent the affairs of any securitisation company or reconstruction company from being conducted in a manner detrimental to the interest of the investors or in any manner prejudicial to the interest of such securitisation company or reconstruction company.
53. Therefore, the submission made on behalf of ARCIL that it is their prerogative to take recourse of any one or other or all measures under Section 13(4) and may or may not take any recourse under Section 9 of the SARFAESI Act cannot be accepted. ARCIL being bound by the guidelines issued by the Reserve Bank of India, for non-compliance of guidelines under Section 4, the Reserve Bank may cancel the certificate of registration granted to a securitisation company or a reconstruction company.
54. If any securitisation company or reconstruction company including ARCIL fail to comply with any of the provisions of the Act or Rules framed thereunder including Section 9 of the SARFAESI Act read with clauses 6 and 7 of the Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003, it is always open to challenge the action of a securitisation company or a reconstruction company including ARCIL under Section 17 of the SARFAESI Act alleging violation of such provisions and guidelines.
55. In this context, we may refer to Section 41 of the SARFAESI Act, which stipulated amendment to be made in certain enactments in the manner specified in the schedule. Pursuant to the said Schedule read with Section 41 of the SARFAESI Act, Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 was amended and two provisos below first proviso to sub-section (1) of Section 15 was inserted, which read as follows :-
"15. Reference to Board. - (1) When an industrial company has become a sick industrial company, the Board of Directors of the company, shall, within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year as at the end of which the company has become a sick industrial company, make a reference to the Board for determination of the measures which shall be adopted with respect to the company:
Provided that if the Board of Directors had sufficient reasons even before such finalisation to form the opinion that the company had become a sick industrial company, the Board of Directors shall, within sixty days after it has formed such opinion, make a reference to the Board for the determination of the measures which shall be adopted with respect to the company;
Provided further that no reference shall be made to the Board for Industrial and Financial Reconstruction after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where financial assets have been acquired by any securitisation company or reconstruction company under sub-section (1) of section 5 of that Act.
Provided also that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors, representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act.
56. From the second proviso to Section 15(1), it will be evident that the same is applicable to activities of the securitisation company or reconstruction company where financial assets have been acquired by securitisation company or reconstruction company under sub-section (1) of Section 5 of that Act. The third proviso is applicable to bank and financial institutions as also securitisation company or reconstruction company, if measures have been taken under sub-section (4) of Section 13 and such bank or financial institution or securitisation company or reconstruction company whoever is a secured creditor represents not less than three-fourth in the value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditor.
57. From the aforesaid second proviso to section 15(1), it will be evident that once securitisation company or reconstruction company acquires asset under sub-section (1) of Section 5 of the Act, the Board of Directors of the sick industrial company cannot make a reference to the BIFR for determination of the measures which shall be adopted with respect to the company. In such case, as the company cannot be declared to be sick, the workmen cannot take advantage of Section 22 of SICA nor can derive advantage of Section 13(9) of the SARFAESI Act.
58. Only because of such provision, it cannot be said that the workmen are remediless, there being adequate remedy prescribed under other Acts; their interest can be taken care of if securitisation company or reconstruction company takes measures for asset reconstruction under Section 9 of the SARFAESI Act read with clauses (6) and (7) of the RBI guidelines and directions, 2003.
59. We, therefore, hold that workmen, petitioner in Special Civil Application No.7652 of 2011 or respondent- Majoor Mahajan Sangh (TLA) of other two writ petitions in Special Civil Application No.14924 of 2010 and Special Civil Application No.3767 of 2011 are not remediless and can move against inaction on the part of ARCIL before Debts Recovery Tribunal under Section 17 of the SARFAESI Act, if no measures have been taken under Section 9 of the SARFAESI Act or the Rules framed thereunder including Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003 issued by the Reserve Bank of India.
60. The first and second questions are thereby answered in affirmative in favour of the workmen.
61. So far as conditional attachment of property of an employer, the Labour Court has jurisdiction to pass interim order of attachment under Section 17A of the Payment of Wages Act, 1936 during the pendency of application under Section 15 of the said Act.
62. In the case of Central Bank of India vs. State of Kerala reported in (2009) 4 SCC 94, the Supreme Court held that there is no provision in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 by which first charge has been created in favour of bank, financial institutions or secured creditors qua the property of the borrower. Under Section 13(1) of the SARFAESI Act, limited primacy has been given to the right of a secured creditor to enforce security interest vis-a-vis Section 69 or 69A of the Transfer of Property Act. In terms of Section 13(1), a secured creditor can enforce security interest without the intervention of the Court or Tribunal and if the borrower has created any mortgage of the secured assets, the mortgagee or any person acting on his behalf cannot sell or mortgage the property or appoint a receiver of the income of the mortgaged property or any part thereof in a manner which may defeat the right of the secured creditor to enforce the security interest.
63. Thus, it will be evident that ARCIL has no first charge of the property in question. In the case of petitioner-ARCIL, borrower has not taken any step to sell the mortgaged property or to appoint a receiver of the income of the mortgaged property or any part thereof. The property has been temporarily seized by a court of law.
64. The learned counsel for the petitioner-ARCIL relied on Section 35 of the SARFAESI Act and submitted that the provisions of the SARFAESI Act overrides other laws, which reads as follows :-
"35. The provisions of this Act to override other laws.- The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law."
From the aforesaid provision, it will be evident that the said provision shall override other laws, if the other law is inconsistent.
65. In the present case, petitioner-ARCIL failed to bring to the notice of the Court any inconsistency between provisions of two different Acts. What has been done in the present case is that the Labour Court passed interim order of seizure under Section 17A of the Payment of Wages Act, which is an order of a Court of law distinct from inconsistency of two provisions of law. Therefore, petitioner-ARCIL cannot derive advantage of Section 35 of the SARFAESI Act. Under Section 34 of the SARFAESI Act, jurisdiction of Civil Courts have been curtailed, but Section 34 being not applicable to the Labour Court, the jurisdiction of Labour Court does not stand curtailed.
66. Under the SARFAESI Act, a secured creditor can take possession of a secured asset from the borrower or any person who has occupied such asset from the borrower. But any property, movable or immovable, once taken care by Court through a receiver or is seized by a Court of law, the secured creditor under Section 13(4) read with Section 14 cannot take possession of such property. This is also known to petitioner-ARCIL and, therefore, instead of taking possession of a secured asset under Section 13(4), they have challenged the order of seizure passed by the Labour Court under Section 17A of the Payment of Wages Act.
67. The third question is answered accordingly in negative against petitioner-ARCIL.
68. ARCIL is not remediless as it can contest the matter and request for to vacate the interim order of seizure, it can show that it has a better claim for any given ground, but it cannot claim parity over the claim of the workmen under the Payment of Wages Act, 1936 or Employees' Provident Funds and Miscellaneous Provisions Act, 1952 or Payment of Gratuity Act, 1972 or any other Act. We have already noticed the Supreme Court decision in Central Bank of India vs. State of Kerala (supra) that the Securitisation Act has neither created the first charge nor created any priority over the charge of the others.
69. In view of the finding aforesaid, while we are not inclined to interfere with the order dated 15.10.2009 followed by order dated 16.9.2010 in Payment of Wages Application No.710 of 2009 passed by Labour Court, Ahmedabad in Special Civil Application No.14924 of 2010 as challenged by ARCIL, we are also not inclined to give any finding with regard to the claim of the petitioner-Union in Special Civil Application No.7652 of 2011. They having remedy of appeal under Section 17 of the SARFAESI Act where they may allege violation of the provisions of Section 9 the SARFAESI Act and the rules framed thereunder or the RBI guidelines and directions, 2003.
70. The writ petitions and civil applications all stand disposed of with the aforesaid observations, but there shall be no order as to costs.
(S.J. MUKHOPADHAYA, CJ.) (ANANT S. DAVE, J.) Valuation report submitted by ARCIL in Special Civil Application No.14924 of 2010 in sealed cover, having not been taken into consideration, be returned to the counsel for the petitioner.
(S.J. MUKHOPADHAYA, CJ.) (ANANT S. DAVE, J.) zgs/-
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