Anant S. Dave

1. This appeal under Section 483 of the Companies Act, 1956 is preferred by the appellant/original applicant against the oral order dated 07.09.2015 passed by the learned Company court in OJMCA No.170 of 2015 dismissing the application seeking recall of the CAV Judgment and order dated 31.07.2015 passed in Company Application No.248 of 2014; and the very CAV judgment and order dated 31.07.2015 in which prayer of seeking substitute of the applicant, a company registered under the Companies Act, 1956, came to be rejected.

2 The above company application was preferred before the Company Court in the backdrop of certain facts that IFCI Ltd. a company registered under the Companies Act, 1956 and a public Financial Institution in terms of Section 4A(1)(ii) of the Companies Act, 1956 and established under Section 3 of the Industrial Finance Corporation Act, 1948 and thus creation of the statute empowered to transact business as specified in Section 23 of The Industrial Finance Corporation Act, 1948, provided financial facilities to M/s. Mahendra Petrochemicals Limited [for short, 'M/s. MPL'], the company in liquidation, which were secured by the company in liquidation against all the movable and immovable assets of the company in liquidation. Section 23 of The Industrial Finance Corporation Act, 1948 is about nature of business which the Corporation may transact, as defined in clauses [a] to [p] also include granting loans or advances to industrial concerns as per clause [i]. IFCI Limited was the first charge holder and M/s. MPL defaulted in making the payment of the dues in respect of the financial facilities granted by IFCI Limited. In the proceedings initiated before the Company Court, vide order dated 19.04.2010 passed in Company Petition No.150 of 1996, the company was ordered to be wound up. The case of the appellant/applicant Suzuki Parasrampuria Suiting Pvt. Ltd. [SPSPL] assignee before the Company Court was that IFCI Limited assigned the debts due of company in liquidation pursuant to executing Deed of Assignment on 28.07.2010 in favour of the appellant/applicant. Thus, all rights, title, interest and benefits in respect of the claim against the aforesaid company in liquidation together with all the security interest therein came to be assigned by IFCI Ltd. The above Deed of Assignment was duly registered with the office of Sub Registrar, Kalol - Gandhinagar. Accordingly, application for substitution was preferred by the appellant company before the Official Liquidator. In another proceedings debt was endorsed by IFCI Ltd. upon filing a pursis dated 21.11.2011 before Debt Recovery Tribunal Ahmedabad in O.A. No.452 of 2000, assigning its dues in favour of the appellant company.

3. In addition to the above, before the Company Court, provisions of Section 130 of the Transfer of Property Act was relied on in respect of argument that assignment was permissible even though appellant was not a banking company. That reliance was placed on the decision of the Hon'ble Supreme Court in case of ICICI Bank Ltd. v. Official Liquidator of APS Star Industries Ltd. [2010] 7 taxmann.com 72/104 SCL 37 in which earlier decision in the case of Khardah Co. Ltd. v. Raymon & Co. (India) (P.) Ltd. [1963] 3 SCR 183 [LQ/SC/1962/238] was considered wherein it was held that the law on the subject of assignment of a contract was well settled and an assignment of a contract might result by transfer either of the rights or by transfer of obligations thereunder. Further, reliance was placed on oral judgment dated 11/12.08.2014 rendered by the Company Court in Company Application No.126 of 2014 where issue with regard to requirement of registration of charge in light of Sections 125 and 135 of the Companies Act was considered and held that such issue was not to be addressed at the stage viz. substitution of the applicant company since it is to be kept open to all the parties to argue as and when company petition is finally decided. Otherwise, it would defeat the very purpose of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SARFAESI Act') by creating an impasse.

4. The above application was vehemently opposed by learned counsel appearing for the respondent - Bank of Baroda on the ground that such an agreement was entered into by the applicant with sole intention of defrauding the rights of the secured creditors and in violation of provisions of Sections 531 and 536 of the Companies Act, 1956 and proceedings for winding up the company were initiated in the year 1996 and final order was passed on 19.04.2010. The MoU dated 01.01.2004 was entered into between the appellant and company in liquidation and thereafter Deed of Assignment was executed between the appellant and the IFCI Ltd. on 28.07.2010 and subsequently appellant challenged the order of winding up dated 19.04.2010 passed by learned Company Judge by filing O.J. Appeal No.42 of 2010 in which Deed of Assignment was not produced. That prayer of not taking possession by Official Liquidator made in Company Application No.238 of 2010 was rejected. Even another application being Company Application No.345 of 2011 also preferred by the applicant on 28.04.2010 with a prayer that the transaction by company in liquidation with the applicant by MoU dated 01.01.2004 be validated under the provisions of Section 536(2) of the Companies Act. However, in both the aforesaid applications, the appellant had neither mentioned about Deed of Assignment dated 28.07.2010 nor it was produced before the Court. It was further argued by respondent banks that IFCI Ltd. had no 28.04.2011 right to assign debts because Bank of Baroda and Punjab National Bank had initiated the proceedings under SARFAESI Act and one of the units of the company defaulted in making payment was also sold. On handing over possession in favour of third party without producing MoU dated 01.01.2004, in earlier proceedings and after winding up order was passed on 14.01.2011, public advertisement was also issued in newspapers and by so-called document viz. MoU, the company in liquidation has illegally transferred possession of the assets of the company in liquidation to the appellant, is illegal transaction to defraud respondent No.4 - bank viz. secured creditor of the company in liquidation.

5. Learned counsel for the respondent No.4 also relied on certain communications addressed by IFCI Ltd to Bank of Baroda and One Time Settlement, etc. to which Bank of Baroda objected. Even reference about pending proceedings under Section 15 of the Sick Industrial Companies (Special Provision) Act, 1985 [for short, 'SICA, 1985'] by filing a Reference No.385 of 2000 before BIFR also relied on. It was further submitted before the learned Company Court that proceedings were already initiated under Section 13(4) of the SARFAESI Act. That reliance was also placed on Sections 125 and 135 of the Companies Act about non- registration of charge and Section 23 of the Contract Act about consideration paid for contract forbidden by law, as void.

6. With regard to judgment in the case of ICICI (supra), it was contended that appellant company was not a bank or banking company or financial institution nor securitization or any reconstruction company and therefore the assignment of debt by IFCI Ltd in favour of appellant company is not permissible and, therefore, the law laid down in the case of ICICI (supra) is not applicable to the facts of the present case.

7. The learned Company Court by well reasoned order and considering provisions of Banking Regulation Act, SARFAESI Act, Contract Act and other relevant provisions of the Companies Act, 1956 and the judgment relied on by learned counsels for the parties, dismissed application on the limited ground that appellant was not entitled to get any benefit under SARFAESI Act and cannot be termed as secured creditor and, therefore, reliance placed by the appellant on provisions of Section 130 of the Transfer of Property Act was void.

8. That O.J. Misc. Civil Application No.170 of 2015 came to be filed by the appellant to recall CAV judgment dated 31.07.2015 passed in Company Application No.248 of 2014, as above, and the above application was filed under Rule 9 of the Companies (Court) Rules, 1959 which gives inherent powers to the Company Court, on the ground that appellant did not pray that appellant may be permitted to be substituted in place of IFCI Ltd. as secured creditor for the purpose of SARFAESI Act, but it was a simple application for substitution in place of IFCI Ltd. by virtue of contract or by Deed of Assignment and provisions of SARFAESI Act would not apply.

9. The above application to recall also came to be rejected by assigning reasons and relying on various decisions about powers available with the Company Court to recall/review its order vis-a-vis Rule 9 of the Companies (Court) Rules, 1959.

10. Mr. Pahwa, learned counsel for the appellant would contend that the learned Company Judge erred in rejecting Company Application No.248 of 2014 by the CAV Judgment and order dated 31.07.2015 essentially on the ground that the appellant was not entitled to get any benefit under the SARFAESI Act and, therefore, cannot be termed as a secured creditor and even an application preferred to recall the above order on the ground that the appellant never claimed any status as secured creditor under SARFAESI Act also came to be rejected though only prayer made before the learned Company Judge was that the appellant was to be permitted to be substituted in place of IFCI Limited as a secured creditor of the company in liquidation. According to learned counsel for the appellant, learned Company Judge ought to have appreciated that stand of the appellant throughout the proceedings was that the appellant was neither the bank nor a banking company nor financial institution nor a securitization company nor a reconstruction company, but the appellant filed application only for substitution in place of IFCI Ltd. in view of registered Deed of Assignment. It is further submitted that learned Company Judge erred in holding that application for substitution is required to be made under the provisions of the SARFAESI Act. Thus, a specific case was pleaded by the appellant that the substitution prayed for by the appellant before the learned Company Judge was under the provisions of the Contract Act read with the Transfer of Property Act. While arguing this appeal, learned counsel for the appellant invited our attention to pleadings in the application seeking substitution in which nowhere it was pleaded that appellant wanted to be substituted for the purpose of enforcing any right under the SARFAESI Act. In view of inherent powers conferred under Rule 9 of the Companies Rules, 1959, learned Company Judge ought to have done complete justice and ought not to have relied upon judgments rendered in the context of scope of powers of review of the court in exercise of writ jurisdiction or under the Code of Civil Procedure, 1908 in view of distinct nature and character of Rule 9 of Rules, 1959, which is exclusive and not circumscribed by the consideration or parameters governing Order 47 of the Code of Civil procedure. It is submitted by learned counsel for the appellant that impugned judgment and order dated 31.07.2015 is therefore required to be quashed and set aside. It is further submitted that irrespective of the fact that the appellant is not a defined entity under the SARFAESI Act still by virtue of Deed of Assignment, the appellant was entitled to be substituted in the proceedings of liquidation of the company.

10.1 Mr. Pahwa, learned counsel for the appellant has relied on the following decisions in support of his submission that appellant's right to be substituted in place of IFCI Limited:

(a) Deccan Chronicle Holdings Ltd. v. IL & FS Trust Co. Ltd. [2015] 64 taxmann.com 326 (AP).

(b) Mafatlal Denim Ltd. [Company Application No. 376 of 2012].

(c) Mafatlal Denim Ltd. v. Sicom Ltd.. [SLP (C) 7887 of 2010].

(d) Aar Kay Concast Ltd. v. Reliance Capital Ltd. [2011] 12 taxmann.com 454/109 SCL 5 (Punj. & Har.).

(e) Managing Director, LVSR Farms (P.) Ltd. v. OL of High Court of A.P [Co. Application No. 524 of 2008, dated 20-6-2012]

(f) Rumonia Marketing (P.) Ltd. v. OL of Mardia Steels Ltd. [Company Application No.59/2007].

(g) ICICI Bank Ltd. (supra)

11. Mr. M.B.Gandhi, learned counsel for the respondent No.5 opposed prayer of the appellant and submitted that the learned company Judge has neither erred in law or on facts and reasons are assigned for arriving at findings and conclusions drawn warrant no interference by this Court in appeal preferred by the appellant. It is submitted that proceedings before the learned Company Judge seeking substitution by the appellant in place of IFCI Ltd. were based on submissions made by learned counsel for the appellant placing reliance on provisions of SARFAESI Act and claiming status as secured creditor therein and were considered by learned Company Judge by reproducing various sections of SARFAESI Act and also distinguished decisions relied on by learned counsel for the appellant, which had no bearing on the facts of the application and, therefore, the prayer of the appellant for substitution came to be rejected. Learned counsel for the appellant further placed reliance on various paras of the judgment and submitted that application filed by the applicant to recall CAV judgment and order dated 31.07.2015 being misconceived was rightly rejected and therefore in absence of merit appeal deserves to be dismissed.

12. In rejoinder to the above, Mr. Pahwa, learned counsel for the appellant would submit that OJ Appeal Nos. 76 and 77 of 2014 were preferred against the common oral order dated 16.12.2014 passed by learned Company Judge in Company Application No.346 of 2011 with Company Application No.238 of 2010, both, in Company Petition No.150 of 1996 whereby the learned Company Judge has not validated transaction which was made by the Directors of the company in liquidation in favour of the appellant in the appeal. It is further submitted that in view of order dated 24.12.2014 passed in both the above appeals upon an undertaking filed by the authorized signatory of the company to deposit the amount and to continue to pay monthly rent etc, Official Liquidator was permitted to take symbolic possession of the property in question while the physical possession of the property in question was to continue with the appellant and other issues were kept open including that of rights and contentions of both the sides on the aspects of assigning of debt and to agitate such issues before the appropriate forum in accordance with law.

13. Having heard learned counsels for the parties, we find at the outset that by Deed of Assignment dated 28.07.2010 following financial facilities [for short, 'financial assets'] on MPL's executing agreement, security documents and such other deeds, writings and instruments including agreement of mortgage [for short, 'agreements/security documents'] and list of such financial facilities is mentioned in Schedule A and other details in Scheduled B attached to the Deed of Assignment:—

"SCHEDULE A

FINANCIAL ASSETS

MAHENDRA PETROCHEMICALS LTD

[Rs. in Lakhs]

SUMMARY OF SCHEDULE B

The contents of Schedule B are of Term Loan of Rs.1000 lakhs , Additional Rupee Term Loan of Rs.225 lakhs, Corporate Loan of Rs.500 lakhs for which various loan agreements, deeds of hypothecation and joint equitable mortgage created by deposit of the deeds, inter-alia, in respect of its immovable properties situate at various places came to be created. In addition to the above, personal guarantee deeds and corporate guarantee deed was also executed."

13.1 Thus, in view of inability on the part of the borrower - MPL to pay outstanding dues to IFCI Ltd., One Time Settlement was arrived at Rs.58 lakhs against the outstanding dues of Rs.10865.66 lakhs [principal + interest] as on 30.06.2008 and the borrower - MPL accepted the terms and conditions of IFCI letter of approval dated 22/23.07.2008. The above outstanding dues as on 30.06.2010 is Rs.16205.80 lakhs as per Schedule-A. Upon exchange of correspondence, the assignor as per letter dated 03.09.2008, agreed to assign and the assignee has agreed to acquire the financial assistance and all rights, benefits title and interest and in the financial assistance from the assignor and likewise the assignor also agreed to assign to the assignee all such rights under the agreement for a consideration of Rs.58,00,000/- [Rupees Fifty Eight Lakhs only]. The details of the properties being assigned in favour of the assignee are briefly mentioned at Schedule-C, which is reproduced as under:

"SCHEDULE-C

SCHEDULE OF PROPERTIES

Immovable Properties

The whole of the movable properties of Mahendra Petrochemicals Limited [the Borrower] including its movable plant and machinery, machinery spares, tools and accessories and other movable, both present and future [save and except book debts] whether installed or not and whether now lying loose or in case or which are now lying or stored in or about or shall hereafter from time to time during the continuance of the security of these presents be brought into or upon or be stored or be in or about all the Borrower's factories, premises and godowns at Plot Nos.2112 & w2113, GIDC Industrial Estate, Chhatral - 382 729, District Gandhinagar [then Mehsana] or wherever else the same may be or be held by any party to the order or disposition of Borrower or in the course of transit or on high seas or on order, or delivery howsoever and where so ever in the possession of the Borrower and either by way of substitution or addition.

Immovable Properties

All those pieces and parcels of Leasehold non-agricultural land bearing Plot Nos.2112 & 2113 admeasuring about 5475 Sq. Mtrs. being, lying and situated at GIDC Industrial Estate, Chhatral, District Gandhinagar [then Mehsana[, forming part of Survey No.135 of Mouje Chatral, Taluka Kalol, District Gandhingar [then Mehsana] Gujarat State together with all buildings, sheds, columns, warehouse, etc. constructed/to be constructed there on and anything attached to the earth of permanently fastened to anything attached to the earth or any part thereof"

The above Deed of Assignment, no doubt was registered on 28.07.2010 before the office of the Sub-Registrar, Kalol-Gandhinagar, signed by executant and claimant on behalf of assignor and assignee.

13.2 On perusal of the record of this appeal, it appears that the appellant upon a request made by the respondent - MPL, an amount of Rs.70 lakhs was paid to MPL as interest to be deposited and towards consideration for using and occupying the land and building in question [which are subject matter of the liquidation proceedings before the Company Court] and that the appellant was to be into physical possession of the property for which the appellant made investment to the tune of Rs.1,93,40,946/- and also for installation of new machinery and employing labourers. That MoU dated 01.01.2004 was entered into between the appellant - SSPL and MPL. As against the above, other secured creditors viz. Bank of Baroda, IFCI and Punjab National Bank already initiated proceedings under SARFAESI Act and one of the properties situated at village Sani, Taluka Sanand, District Ahmedabad was already sold and the above property was one of the two properties for which all the three banks/financial institutions had given loan. Even in correspondence between the assignee and the respondent banks for settlement, resulted into failure and Bank of Baroda never agreed to any proposal whatsoever. Further, the charge was created in favour of other secured creditors i.e. Bank of Baroda, IFCI Ltd. and Punjab National Bank. That correspondence had taken place between all the parties for settlement of dues, no mention was ever made of MoU dated 01.01.2004 nor was it brought on record at any point of time even by company in liquidation. That a particular type of MoU was entered into between SSPL and MPL. The Company Court passed order on 19.04.2010 in Company Application No.150 of 1996 for winding up of the company and advertisement was published in a widely circulated vernacular newspaper on 11.08.2011, but correct facts were not brought on the record. That MoU dated 01.01.2004 came to be modified in September, 2008 that the debt will be assigned in favour of M/s. Suzuki Parasrampuria Suiting Private Ltd.

13.3 Even request made by M/s. SPSPL to Bank of Baroda for issuance of No Objection Certificate reveals that the request for the second charge over the property was refused. Further, the company in liquidation - MPL has approached BIFR under Section 15 of the SICA, 1985 by Reference No.385 of 2000 and the above reference was pending and since the scheme was under preparation the company could not have transferred assets of the company in view of pending inquiry under Section 16 of the SICA, 1985. Without obtaining No Objection Certificate from BIFR, no transfer of rights, title, and interest in the property/assets could have been made even by Deed of Assignment. It is an admitted fact that the company in liquidation has prepared MoU dated 01.01.2004 during pendency of reference before BIFR. In addition to above, other secured creditors viz. financial institutions/banks have taken measures under Section 13(4) of the SARFAESI Act and in view of amendment in proviso (3) of Section 15 of SICA, 1985, reference No.385 of 2000 stood abated on 17.01.2008 and hence measures initiated under Section 13(4) of SARFAESI Act by the secured creditors viz. financial institution/bank for recovery of their dues against their secured assets to which assignor was aware about assignment of deed appears to be not bonafide.

That settlement of more than Rs.160 crores of dues against paltry sum of Rs.58 lakhs towards consideration is nothing but an eye wash to defeat measures undertaken by respondent banks under Section 13(4) of SARFAESI Act as well as winding up proceedings before the Company Court. It is also an admitted fact that applicant company is not registered under Section 5 of the SARFAESI Act and keeping in mind definition of Securitisation company, reconstruction company, banking company, financial institute in SARFAESI Act viz. 2[za], 2[v], 2[d] and 2[m] respectively, it was not open for the IFCI Ltd. - assignor to enter into a Deed of Assignment with applicant bank.

13.4 Company Application No.238 of 2010 was filed by one M/s. Suzuki Parasrampuria Suitings Private Limited [SPSPL] and Company Application No.346 of 2010 was filed by M/s. Suzuki Suitings Private Limited [SSPL], the one claims to be the sister concern of the other. In Company Application No.238 of 2010 prayer was to issue direction to OL not to take possession of MPL, the company in liquidation, which was ordered to be wound up on 19.04.2010 and Company Application No.346 of 2010 was filed for validating the transaction made by the company in liquidation of entering into a MoU dated 01.01.2004 with SSPL under the provisions of Section 536(2) of the Companies Act, 1956. The Company Court in para 10 of CAV Judgment dated 16.12.2014 passed in Company Application No.346 of 2011 in Company Petition No.150 of 1996 with Company Application No.238 of 2010 in Company Petition No.150 of 1996, held as under:—

"10. For the composite reasons and discussion above, prayers in both the Company Applications are hereby rejected, and following further order is passed.

(i) The Official Liquidator shall proceed to take possession of the properties of M/s.Mahendra Petrochemicals Limited (company in liquidation) and assume the charge of the affairs and properties thereof without any delay;

(ii) The Official Liquidator shall take inventory of the assets and properties of the company in liquidation. He is allowed to open the sealed cover regarding inventory taken out pursuant to the order dated 29th February, 2012 passed in Official Liquidator Report NO.04 of 2012 mentioned hereinabove, and match the details thereof with the inventory of the assets and properties to be taken as per the present direction. It goes without saying that Official Liquidator shall take charge of the assets and properties which belonged to the company in liquidation only;

(iii) The Official Liquidator shall take necessary steps and proceed in accordance with law to exercise all powers available to him as Official Liquidator under the Companies Act, 1956;

(iv) The Official Liquidator shall file appropriate Report before this Court to proceed further to discharge his duties in relation to the assets and properties of the company in liquidation".

13.5 As against the above order, O.J. Appeal Nos. 76 and 77 of 2014 were preferred which came to be disposed of with direction contained in para 15 of the order dated 24.12.2014, which is reproduced hereinbelow:

"15. In view of the aforesaid observation and discussion, we find that the following directions shall meet the ends of justice:

(1) The transaction of lease is not validated by the learned Company Judge in the impugned order and as the appellants have declared that the appellants are not agitating the merits in the present appeal, we find that the impugned order passed by the learned Company Judge calls for no interference. Hence the order passed by the learned Company Judge on merits would remain in operation in the present matter.

(2) Consequently, the appellants would be required to hand over the possession of the property but as the appellant is ready to submit the offer for Rs.2.75 crores and is also ready to deposit the amount of Rs.27,50,000.00, it is ordered that if the appellant deposits an amount of Rs.27,50,000.00 within three weeks from today with the Official Liquidator, the Official Liquidator shall take symbolic possession of the property in question and the physical possession of the property in question may continue with the appellant, subject to finalization of the sale, as may be made by the learned Company Judge in the respective winding up proceedings upon the report of the Official Liquidator. There shall be additional condition to abide by the undertaking to deposit the accrued rent as well as future rent from time to time at Rs.54,166.00 per month and such amount shall also be deposited within the aforesaid period of three weeks. It is observed that upon failure to deposit any of the aforesaid amount within the aforesaid period, the Official Liquidator shall be at liberty to take physical possession of the property in question from the appellants.

(3) In the event the amount of Rs.27,50,000.00 is deposited and further rental amount as per the earlier direction is also deposited by the appellants, the amount of Rs.27,50,000.00 shall remain as earnest money of the offer to purchase the property by the appellant at Rs.2.75 crores. Rental amount at the rate of Rs.54,166.00 shall be credited in the account by the Official Liquidator towards the rent of the property in question. The Official Liquidator shall get the valuation of the property in question done through its approved valuer within two weeks from the date of deposit of Rs.27,50,000.00 by the appellants.

(4) The Official Liquidator shall also issue advertisement within two weeks thereafter wherein the upset price shall be of Rs.2.75 crores of the property in question and the offers from the interested persons shall be invited by giving advertisement at least in two daily news paper, one English and one Gujarati having wide circular, i. e. the Times of India and the Gujarat Samachar. After the offers are received, within four weeks from the outer date of submitting the offer, the report shall be submitted by the Official Liquidator to the learned Company Judge together with the offer of the appellant as well as the valuation report through approved valuer to the Official Liquidator. The appellant shall be at liberty to raise the offer in the event any offer is received in response to the advertisement exceeding the amount of Rs.2.75 crores. The learned Company Judge shall further make attempt to realize the highest amount of the property in question and thereafter may decide the issue of finalization of the sale in accordance with law after hearing all concerned.

(5) It is also observed and directed that in the event the offer of the appellant is not accepted, the learned Company Judge shall be at liberty to pass appropriate order for refund of the amount.

(6) It is also observed and directed that if the offer of the appellant is not accepted by the learned Company Judge and the sale is finalized in favour of any other party who has offered higher amount, the physical possession of the property in question shall be handed over by the appellant within six weeks as per the undertaking failing which the official liquidator shall be at liberty to take possession of the property with the help of the police.

(7) It is observed and directed that the rights and contentions of both the sides on the aspects of assignment of debt and the consequential aspects thereto before the appropriate forum shall remain open and shall not be prejudiced in any manner by the present order.All the parties shall cooperate in finalization of the sale proceedings.

(8) Present order is also without prejudice to the rights and contentions of the appellants to get refund of the amount of Rs.70 lacs, if otherwise permissible in law. However, it is observed that in the event such aspect is not finalized at any stage, the appellants shall not be relieved from the undertaking given to this court for the offer of Rs.2.75 crores and the other aspects relating to for the sale of the property in question.

(9) It is also observed and clarified that until the physical possession is retained by the appellants as per the above referred arrangement, the appellants shall comply with the order passed for rental payment and for submitting of the accounts. If the accounts are not submitted or the rental payment is not made, the amount of rental payment shall be made as directed earlier but the accounts shall be submitted within three weeks with the Official Liquidator in future from time to time".

13.6 Thus, learned Appellate Court has not interfered with directions of learned Company Judge in view of declaration of the appellant that they were not agitating the merits in the appeal. Hence, order passed by the learned Company Judge dated 16.12.2014 in Company Application Nos.238 of 2010 and 346 of 2011 on merit remain in operation. Therefore, transaction of lease which was not validated by the learned Company Judge remained confirm even in appeals preferred by the appellants/applicants. Even in para 7 of the above order, learned appellate Court observed and directed that the rights and contentions of both the sides on the aspects of assignment of debt and the consequential aspects thereto before the appropriate forum shall remain open and was not be prejudiced in any manner by the above order. Thus, by the application for substitution in the above circumstances, a specific plea raised by the applicant claiming status as secured creditor under SARFAESI Act rightly came to be rejected.

13.7 Even otherwise, nature of transaction of transferring right, title, interest and other benefits by way of deed of assignment of debts by IFCI Ltd., a company duly incorporated under the Companies Act, 1956, so revealed in deed of assignment in which assignor IFCI Ltd. is a public financial institution in terms of Section 4A(1)(ii) of the Companies Act, 1956 and established under Section 3 of the Industrial Finance Corporation Act, 1948 and thus creation of the statute empowered to transact business as specified in Section 23 of The Industrial Finance Corporation Act, 1948, is repository of pubic fund. That assignment of debts of more than Rs.160 crores to be recovered from the company in liquidation for a paltry sum of Rs.58 lakhs towards consideration of dues amounts unconscionable business transaction and a ground for application of mind prima facie against public interest even at the stage of considering an application for substitution in place of assignor, which has far reaching consequences. The company Court dealing with assets of the company in liquidation based on reports filed by Official Liquidator, who is an eye and ear of the Company Court cannot simply ignore or brush aside legitimate claim of other secured creditors in such a scenario.

13.8 In the case of Sesa Industries Ltd. v. Krishna H. Bajaj [2011] 9 taxmann.com 218/106 SCL 239 [LQ/SC/2011/211] (SC), the Apex Court in para 39 held as under:—

"39. An Official Liquidator acts as a watchdog of the Company Court, reposed with the duty of satisfying the Court that the affairs of the company, being dissolved, have not been carried out in a manner prejudicial to the interests of its members and the interest of the public at large. In essence, the Official Liquidator assists the Court in appreciating 25 1951 SCR 277 26 AIR 1968 SC 615 3 the other side of the picture before it, and it is only upon consideration of the amalgamation scheme, together with the report of the Official Liquidator, that the Court can arrive at a final conclusion that the scheme is in keeping with the mandate of the Act and that of public interest in general. It, therefore, follows that for examining the questions as to why the transferor-company came into existence; for what purpose it was set up; who were its promoters; who were controlling it; what object was sought to be achieved by dissolving it and merging with another company, by way of a scheme of amalgamation, the report of an official liquidator is of seminal importance and in fact facilitates the Company Judge to record its satisfaction as to whether or not the affairs of the transferor company had been carried on in a manner prejudicial to the interest of the minority and to the public interest".

13.9 Likewise, even if name of assignee is to be substituted in place of assignor, the Company Court can certainly examine such issue in the context of public interest so as to protect overall interest of secured creditors/workers and other stake-holders. The substitution in the facts of this case has genesis in the Deed of Assignment of debts and the assignment made under circumstances to which reference is made in earlier paras of this order create doubt about bonafide of transactions by assignor, a public financial institution registered under the Companies Act, 1956 in favour of assignee, a private limited company for a consideration of Rs.58 lakhs against total outstanding dues of more than Rs.160 crores can be said to be not in public interest and, therefore also, prayer of substitution cannot be granted.

13.10 In the facts and circumstances of the case, order dated 19.04.2010 came to be passed in Company Petition No.150 of 1996 whereby MPL was ordered to be wound up. Subsequently, deed of assignment of debts came to be executed by IFCI Ltd. - assignor in favour of MPL - assignee on 28.07.2010. Thus, admittedly, assignment of debt is after the order of winding up came to be passed by the Company Court. That, on order of winding up being passed, rights of the creditors of the company stood crystallized. Once the winding up order is passed, Section 449 read with Section 451(1) of the Companies Act, 1956 require the Liquidator to exercise control over the undertaking and the assets of the company. Further, on order of winding up being passed, the secured creditors/workers acquire the right to have assets realized and distributed amongst them pari-passu.

13.11 The learned Company Judge has considered the above aspect threadbare in para 20 of the judgment dated 31.07.2015 reproduced law with regard to registration of charge under Section 125 of the Companies Act, 1956 and also paras 44, 45, 46, 51 and 52 of the judgment of the Apex Court in the case of ICICI Bank Ltd. (supra) and definition of banking company, financial institution, reconstruction company, Securitisation company under SARFAESI Act and also that the applicant company was not a bank or a banking company or a financial institution or a securitization company or reconstruction company and, therefore, the appellant was not to be permitted to be substituted in place of IFCI as secured creditor for the purpose of SARFAESI Act. The above clear findings were in the context of submissions made and pleadings in the application and reply and considered by the learned Company Judge to which we are in agreement and in addition to other factual aspects noted and discussed by us hereinabove. That somersault was made in application filed under Rule 9 of the Rules, 1959 that no such status as a secured creditor under SARFAESI Act claimed by the appellant, was rightly rejected by the learned Company Judge. Even applicability of Section 130 of the Transfer of Properties Act in the facts of the case was considered by learned Company Judge is also based on submissions made by learned counsel for the appellant in the context of its claim as a secured creditor under SARFAESI Act.

13.12 Therefore, prayer of the appellant company for substitution as a secured creditor in place of IFCI Ltd. - assignor on the strength of deed of assignment of debts, is rightly rejected by learned Company Judge.

13.13 That the case law relied on by Mr. Pahwa, learned counsel for the appellant has no applicability to the facts of the case as set of facts in this case is not simple and only about substitution of applicant.

(a) In the case of Deccan Chronicle Holdings Ltd. (supra), the Andhra Pradesh High Court held that the meaning of the expression secured creditor must be given an extended meaning. It not only brings within the ambit the banks and financial institutions but also a trustee holding securities on behalf of banks and financial institutions, in whose favour security interest is created for due repayment by any borrower of any financial assistance. Such secured creditor, if meeting with other requisites can also initiate actions under SARFAESI Act. In the above case, LIC, Canara Bank and Oriental Bank had subscribed to debentures issued by the petitioner company and immovable properties of petitioner company were mortgaged in favour of respondent No.1, which in terms of debenture trust deed held securities [mortgaged properties] on behalf of debenture holders. In view of the above peculiar facts, the contention of the petitioner that respondent No.1 was a company registered under the Companies Act, 1956 and that respondent No.1 was not a securitization company and therefore it could not invoke provisions of SARFAESI Act came to be negated and not accepted and allowed respondent NO.1 to invoke jurisdiction of the Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act. The case on hand reveals that the appellant has no such status like that of respondent No.1 in the above case even after execution of deed of assignment of debts, and now that no status is claimed as secured creditor based on any of the provision of the SARFAESI Act in respect of prayer for substitution.

(b) In the case of Mafatlal Denim Ltd. (supra), this Court allowed substitution of a private limited company pursuant to the deed of assignment. Sicom Limited assigned debt in favour of Mishapar Investments Limited. The substitution was allowed after the Hon'ble Apex Court recognized the same in the pending SLP.

(c) In the case of Mafatlal Denim Ltd. (supra), [ii], during the pendency of the petition before the Hon'ble Supreme Court there was an assignment of debt between Sicom Limited in favour of Mishapar Investments Ltd. and the substitution in pursuance to the deed of assignment was allowed.

(d) In the case of Aar Kay Concast Ltd. (supra), The High Court of Punjab and Haryana, held that an assignee was eligible to take recourse of filing a winding up petition after procuring the debt from another company. After the assignment of the debt, the assignee had preferred a winding up petition in which an objection was raised about maintainability of the locus of the assignee to litigate on and for the assignor, the Court overruled the objection and dismissed the appeal. SLP against the order of the Division Bench came to be dismissed.

(e) In the case of Managing Director, LVSR Farms (P.) Ltd. (supra), when A Private Limited Company had taken debt from Central Finance Institutions (CFI's)/banks and had made an application for being considered as a secured creditor, the Andhra Pradesh High Court allowed that application. Reference has also been placed on Rule 9 of the Companies Court Rules. In the above case, application was filed by the assignee to direct Official Liquidator to recognise them as secured creditors of company under liquidation in place of Central Financial institutions viz. ICICI, IFCI, IDBI and LIC, which was opposed by other secured creditors including Andhra Pradesh Industrial Development Corporation [APIDC] to treat such assignee as sole secured creditors having charge over land of the said application. Upon consideration of various deeds of assignment executed by CFIs in favour of assignee by which title, interest and actionable claims in the deeds of the company came to be assigned having considered rival claims, the Andhra Pradesh High Court has held as under:

"Neither ASPIDC nor Andhra Bank could be said to have suffered substantial injustice as what they were entitled to was only for payment of debt due to them from Company - While a charge was created in favour of both APIDC and Andhra Bank over movable assets of Company, no charge was created by Company in favour of Andhra Bank over its immovable properties. Even if APIDC was held to be a secured creditor, holding charge over immovable properties of Company, it would only hold a pari-passu charge along with CFIs and workmen. Therefore APIDC could only claim to be entitled for a pari-passu distribution of sale proceeds, of immovable property, along with assignee and workmen represented by Official Liquidator.

Thus assignee was entitled to be treated as a secured creditor, on their having stepped into shows of assignors-Central Financial Institutions. Therefore, directed Official Liquidator, to re-examine claim of APIDC to be treated as a secured creditor-holding pari-passu charge over immovable properties of company under liquidation along with assignee and workmen - Unlike APIDC, no material had been placed before Court by Andhra Bank to show that either Central Financial Institutions had agreed to treat them as s secured creditor holding joint charge of immovable property of company under liquidation or that an application was made either by company or by them for registration of charge, over immovable property of Company, in their favour - Assignee had also not conveyed its consent to treat Andhra Bank as a secured creditor - C.A. No.1007 of 2011 disposed of and C.A. No.306 of 2012 filed by Andhra Bank dismissed".

(f) In the case of Rumonia Marketing (P.) Ltd. (supra), a private limited company had moved an application for being substituted in place of ICICI Bank pursuant to the deed of assignment and this Court permitted to represent the debt of the assignor bank pursuant to the deed of assignment.

(g) In the case of ICICI Bank Ltd. (supra) question required to be decided was "whether inter se transfer of Non Performing Assets [NPA] by the banks is illegal under the Banking Regulation Act, 1949 as held by the Gujarat High Court in the judgment under challenge".

The Apex Court referred to provisions of Banking Regulation Act, 1949 and scope of banking business in the context of RBI Guidelines expanding scope of banking business which was held to be not limited to core banking of accepting deposits and lending, but also Banking Regulation Act, 1949 leaves ample scope for banking companies to undertake such additional businesses as are not violative of prohibitive and restrictive statutory provisions and RBI can formulate policy enabling banking companies to engage in such additional activities and in the process it can define what constituting "banking business". After defining NPA and object of the guidelines issued by RBI dated 13.07.2005 under Sections 21 and 35A of the Banking Regulation Act, 1949 it was held that object of such guidelines is to minimise credit risk problem by debt restricting and assigning of debts/NPAs from one bank to another without assigning assignor's obligations towards its borrowers/debtors was permissible under Banking Regulation Act, 1949 and not violative of Section 130 of Transfer of Property Act, 1882. Even such assignment was held to be not barred by Section 5 of the SARFAESI Act. The Apex Court found the Banking Regulation Act, 1949 as a complete code on Banking and SARFAESI Act was enacted enabling specified SPVs to buy NPAs from banks. The Apex Court held that in the facts of the case, SARFAESI Act had no applicability. Moreover, it was held that NPA are created on account of breaches committed by the borrowers. Thus, the borrower violates his obligation to repay the dues and in such scenario, no opportunity is to be afforded to the defaulted borrower to participate in "transfer of account receivable" from one bank to the other. In the context of Section 62 of Contract Act, 1872, a novation of contract, in the above case answered the contention raised on behalf of borrower that an assignment of a debt can never carry with it the assignment of the obligations of the assignor unless there is a novation of contract by all parties, the Apex Court held that an outstanding in the account of borrowers [customers] is debt due and payable by the borrowers to the bank. Further, the bank is the owner of such debt and such debt is an asset in the hands of the bank as a secured creditor or mortgagee or hypothecatee and, therefore, the bank can always transfer its assets. Such transfer in no manner affects the rights and interest of the borrowers [customers] and there is no prohibition in the Banking Regulation Act, 1949 in the bank transferring such assets inter se. According to the Apex Court, the obligations referred in the impugned deed of assignment are obligations, if any, of the assignor bank towards assignee bank in the matter of transfer of NPAs.

3.14 In the above context, reasons assigned by learned Company Judge for arriving at a finding that no case was made out by the appellant on the strength of decision of the Apex Court in the above case of ICICI Bank Ltd. (supra) cannot be said to be incorrect and application for substitution preferred by the applicant bank is rightly rejected.

In view of the above discussion, this appeal fails and is hereby dismissed.

Since the main appeal is dismissed, no order on Civil Application (OJ) No. 53 of 2016 and accordingly it stands disposed of.