Skip to main content

Borrower/Debtor Can File Securitisation Application At The Stage Of The Possession Notice under Safaesi Rule

In M/S HINDON FORGE PVT. LTD. vs THE STATE OF UTTAR PRADESH, the appeal was filed before the Supreme Court against the judgment of the full bench of the Allahabad High Court wherein the high court had held that a securitisation application under Section 17(1) of the Act is maintainable only when actual/physical possession is taken by the secured creditor or the borrower loses actual/physical possession of the secured assets. The high court had further held that taking “symbolic possession” or issuance of possession notice, cannot be treated as “measure”/s taken under Section 13(4) of the Act and, therefore, the borrower at that stage cannot file application under Section 17(1) of the Act.

While referring to all previous major judgments including Mardia Chemicals, Travancore & Nobel Kumar, the Supreme Court actually turned the clock back on the often disputed issue of Symbolic &  Physical Possession by setting aside the order of the Full bench. The Court decided that after possession notice is issued under Rule 8(1) & (2), there is no difference between Symbolic or Physical Possession as far as the grievance of a borrower is concerned. The Court observed that the object of providing a remedy against the wrongful action of a secured creditor to a borrower will be stultified if the borrower has to wait until a sale notice is issued, or worse still, until a sale actually takes place. Referring to newly inserted APPENDIX – IV-A, the bench said it makes clear that rule 8(1) and 8(2) refer to constructive possession whereas rule 8(3) refers to physical possession. “Whether possession taken under rule 8(1) and 8(2) is called symbolic possession or statutory possession, the fact remains that rule 8(1) and rule 8(2) specifically provide for a particular mode of possession taken under section 13(4)(a) of the Act,” the court said setting aside the High Court judgment.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

When debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company

In SHITAL FIBERS LTD.  vs  INDIAN ACRYLICS LIMITED, as per the respondent, appellant had made a payment of Rs.61,83,218/­. However, there was an outstanding balance of Rs.8,92,723/­ as on 28.7.2008. Since despite repeated requests, balance amount was not paid, the respondent issued a statutory notice to the appellant. The same was duly responded to. As the payment was not made despite notice being duly served on the appellant, the respondent filed the aforesaid Company Petition seeking winding up of the present appellant for its inability to pay admitted debts. The learned Company Judge vide order dated 28.9.2015 admitted the Company Petition. However, while doing so, the learned Company Judge observed, that since the appellant was an on­going concern, an opportunity should be granted to it to settle the accounts with the respondent by 31.12.2015. Only in case of failure of the settlement, the citation was directed to be published. On appeal, the Division Bench of the High Cou...
Post a Comment
Read more

Difference Between Sale Of 'Corporate Debtor As A Going Concern' And Sale Of 'Business Of The Corporate Debtor As A Going Concern'

Citation : M.S. Viswanathan, Liquidator of Gemini Communication Limited vs Pixtronic Global Technologies Pvt. Ltd,  IA/1215/CHE/2021 in CP/699/IB/2017 Date of Judgment/Order : 15/2/22 Court/Tribunal : National Company Law Tribunal, Division Bench I, Chennai Corum : R. Sucharitha, Member (Judicial), Sameer Kakar, Member (Technical) Background Application was filed by the Liquidator under Regulation 32(e) of the IBBI (Liquidation Process) Regulations, 2016 seeking approval from the Tribunal for sale of the Corporate Debtor as a going concern. Order Allowing the application, the NCLT went into an elaborate but useful explanation of the entire law behind the term 'Going Concern'. NCLT observed that  the term 'going concern' means all such assets and the liabilities, which constitute an integral business or the Corporate Debtor, that must be transferred together, and the consideration must be for the business or the Corporate Debtor. The buyer of the assets and liabilitie...
Post a Comment
Read more