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8.4) Submissions were also made on the provisions of the Bombay Stamp Act and the Registration Act to submit that remission of duty claimed under the Government Notification was only applicable in case of a document executed under the Securitisation Act and not otherwise. That the document does not fulfill the requirement of Section 54 of the T.P. Act. 8.5) On behalf of the Textile Labour Association it OJA/156/2007 28/98 JUDGMENT was submitted that the scheme of Sections 529 and 529A of the Companies Act permitted the secured creditor and the workmen to have a pari passu charge because both of them had contributed to building up of the assets of the company (in liquidation). The lender by way of advancement of loan and the workmen by input of labour. That the assignee bank not having contributed in any manner was not entitled to the pari passu charge over the assets of the company (in liquidation). (9) Learned Advocate General appearing on behalf of the Chief Revenue Controlling authority submitted that the said authority had placed on record only its opinion in so far as calculation of the stamp duty is concerned without expressing any final view of the matter because the said authority had been called upon by the Company Court to assist the Court. The views expressed in the affidavit- in-reply were only prima facie views and not an expression of opinion after adjudication of OJA/156/2007 29/98 JUDGMENT an issue. Therefore, the said expression cannot be permitted to be concluding the issue in so far as the assignor or the assignee banks are concerned.

(37) There is one more aspect of the matter.

Admittedly, number of outstanding debts relating to the same or different borrowers have been transferred by clubbing of the debts together in favour of the assignee bank. Under the provisions of the Companies Act the pari passu charge envisaged by a conjoint reading OJA/156/2007 72/98 JUDGMENT of Sections 529 and 529A of the Companies Act is available only in relation to the first charge holder and the second charge holder cannot be equated with the first charge holder. There can be instances where the same creditor bank may have first charge and second charge over same or different properties of the same borrower. If the creditor bank cannot seek priority qua the debt relatable to the second charge in the winding up proceedings, then by merely clubbing such debts relatable to the first charge and the debts relatable to the second charge in one basket the assignee bank cannot claim that the assignee should be substituted in place of the first charge holder-assignor bank. Considering the nature of the basket it would become well nigh impossible for any one to locate the debt relatable to the second charge, and thus, the entire purpose of enacting Section 529A of the Companies Act would get frustrated. Hence, the exercise undertaken by the assignors and the OJA/156/2007 73/98 JUDGMENT assignees cannot be permitted in law. (38) The Scheme of the Securitisaction Act can be broadly divided into two parts. The first part being under Chapter II of the Securitisation Act dealing with REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS OF BANKS AND FINANCIAL INSTITUTIONS; while the second part forming Chapter III relating to ENFORCEMENT OF SECURITY INTEREST. Thus as stated in the STATEMENT OF OBJECTS AND REASONS the Securitisation Act enables the banks and financial institutions to realise long-term assets, manage problems of liquidity, asset liability mis-match and improve recovery by exercising powers to take possession of securities, sell them and reduce non- performing assets by adopting measures for recovery or reconstruction. The Securitisation Act further provides for setting up of asset reconstruction Companies which are empowered to take possession of secured assets of the OJA/156/2007 74/98 JUDGMENT borrower including the right to transfer by way of lease, assignment or sale and realise the secured assets and take over the management of the business of the borrower. This would indicate that as stated in the OBJECTS AND REASONS till the Securitisation Act was enacted there was no legal provision for facilitating securitisation of financial assets of banks and financial institutions. The Securitisation Act has been enacted in light of the banking sector reforms suggested by Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government. If this object is borne in mind it becomes clear that a Banking Company cannot function as a Securitisation Company or a Reconstruction Company. In fact the bank and financial institutions have been separately granted powers for enforcing their security interest under Chapter III of the Securitisation Act. The contention on behalf of the assignee bank that the provisions of OJA/156/2007 75/98 JUDGMENT registration of securitisation or reconstruction company are applicable only in case of a non-banking Company is thus not correct. The provisions do not state that such registration is applicable only to a non- banking company. "Securitisation Company" as defined u/s.2(za) of the Securitisation Act only means any company formed or registered under the Companies Act for the purpose of securitisation.

"8. The effect of Sections 529 and 529-A is that the workmen of the Company become secured creditors by operation of law to the extent of the workmen's dues provided there exists secured creditor by contract. If there is no secured creditor then the workmen of the company become unsecured preferential creditors under Section 529-A to the extent of the workmen's dues. The purpose of Section 529-A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the Company and the assets of the Company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. There is no other statutory provision overriding the claim of the secured creditors except Section 529-A. This Section overrides preferential claims under Section 530 also. Under Section 529-A the dues of the workers and debts due to the secured creditors are to be treated pari passu and have to be treated as prior to all other dues.

(t) the pari passu charge envisaged by a conjoint reading of Sections 529 and 529A of OJA/156/2007 95/98 JUDGMENT the Companies Act is available only in relation to first charge holder and the second charge holder cannot be equated with the first charge holder. Therefore, clubbing of debts where the charges might be different does not give a right to the assignee to seek substitution in place of the first charge holder assignor bank; (u) provisions of the Securitisation Act read with objects and reasons make it clear that if the transaction in question is upheld it would mean permitting an act, which is not directly permitted by the Securitisation Act, by referring to provisions of the T.P. Act;