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Golden Weaving v. TIIC - WP.No.12158 of 2005  RD-TN 490 (6 February 2007)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 06..02..2007
C O R A M
The Honourable Mr. A.P. SHAH, Chief Justice and
The Honourable Mr. Justice K. CHANDRU
Writ Petition No.12158 of 2005
Golden Weaving Mills (P) Ltd.,
59/11, South Avani Moola Street,
Madurai-615 001, rep. by its
Managing Director B. Anbuvel. ..Petitioner
1. The Tamil Nadu Industrial Investment Corporation Ltd., 692, Anna Salai, Nandanam, Chennai-35.
2. The Tamil Nadu Industrial Investment Corporation Ltd., Plot No.3, Vaigai Colony, Anna Nagar,
Madurai-625 020. ..Respondents - - - - -
Prayer : Writ Petition filed under Article 226 of the Constitution of India seeking the relief as stated within.
- - - - -
For Petitioner : Mr. Sivam Sivanandaraj
For Respondents: Mr. Jayesh Dolia - - - - -
O R D E R
( Order delivered by the Honourable Chief Justice ) The petitioner Golden Weaving Mills (P) Ltd. has filed this writ petition under Article 226 of the Constitution of India for the issuance of a writ of prohibition or any other appropriate writ, order or direction in the nature of writ, prohibiting the respondent Tamil Nadu Industrial Investment Corporation Limited from taking action under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI Act').
2. Briefly stated, the facts giving rise to this petition are as follows :
The petitioner is a private limited company incorporated under the provisions of the Companies Act and is engaged in manufacturing of yarns, fabrics and other materials. Previously, there were three industrial units, namely M/s. Sivagami Muthukamatchi Textiles (P) Ltd., M/s. Subha Textiles and M/s. Vinotha Textiles, which have now been merged as Golden Weaving Mills Pvt. Ltd., i.e., the petitioner herein. The respondent has been established under Section 3 of the State Financial Corporations Act, 1951 (hereinafter referred to as the 'SFC Act'). The three previous units had obtained financial assistance from the respondent to the tune of Rs.55,24,000/-, Rs.37,59,000/- and Rs.26,92,000/- respectively and the said three units had failed to repay the availed loan amount to the respondent. Consequently, the respondent initiated proceedings under Section 29 of the SFC Act and took possession of the units. At that stage, the management of the petitioner-company approached the respondent and offered to take over the above above three units. At the time of taking over an amount of Rs.1,56,00,000/- was due to the respondent from the above three units. The units were taken over by the petitioner but the petitioner failed to repay the loan amount, and consequently, the respondent again initiated proceedings under Section 29 of the SFC Act to recover the balance amount due. The petitioner challenged the action of the respondent in W. P.No.2288 of 2001 and interim stay was granted subject to the payment of the balance amount in instalments. During the pendency of this writ petition, the petitioner approached the Board of Financial Reconstruction ('BIFR' in short) and a reference came to be registered as Case No.56 of 2002. The petitioner-Company was declared as a Sick Undertaking under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the SICA") and the Indian Overseas Bank was appointed as the Operating Agency to formulate a Draft Rehabilitation Scheme. In view of the bar created by Section 22 of the SICA the respondent was unable to initiate any action under the SFC Act. In the meanwhile, Parliament has enacted the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Section 41 of the SARFAESI Act has introduced an amendment to Section 15 of the SICA, whereby proceedings before the BIFR will abate if more than three-fourths of the Secured Creditors have taken any measures to recover their secured debt under Sub- section 4 of Section 13 of the SARFAESI Act. By resorting to the provisions of the SARFEASI Act, the respondent issued a notice dated 4.2.2005 under Section 13(2) of the SARFAESI Act demanding repayment of the dues to the respondent. The respondent has set out in the above notice that if the demand is not complied within sixty days from the date of receipt of the notice, the respondent would proceed further under Section 13(4) of the SARFAESI Act. The legality and validity of the notice issued under Section 13(4) of the SARFAESI Act is questioned in the present writ petition.
3. Mr.Sivam Sivanandaraj, learned counsel appearing for the writ petitioner strenuously contended that the respondent-Corporation is governed by the special legislation, namely the SFC Act, which gives wide and sweeping powers to the respondent-Corporation. The respondent is now trying to bypass the provisions of the special Act and exploit the provisions available to it under the SARFAESI Act with a view to defeat the bar under the SICA. According to the learned counsel the provisions of the SFC Act which is a special enactment applicable to the respondent-Corporation would be rendered nugatory and redundant if the respondent is allowed to resort to the provisions of the SARFAESI Act. Learned counsel urged that Section 46-B of the SFC Act provides that the said Act shall be in addition to, and not in derogation of, any other law for the time being in force in respect of industrial concerns who remain as defaulters. Therefore, any action taken in pursuance of Section 13(4) of the SARFAESI Act would be in derogation of Section 46-B of the SFC Act read with Section 22 of the SICA and would thus be barred in view of Section 36 of the SARFAESI Act. Learned counsel submitted that when two distinct statutes provide two similar remedies, the doctrine of election would apply and the respondent-Corporation having resorted to the provisions of Section 29 of the SFC Act, is not entitled to avail of the provisions under Section 13 of the SARFAESI Act. Learned counsel further submitted that in any event, the respondent- Corporation does not even represent 75 of the secured creditors so as to enable it to initiate action under the SARFAESI Act. Thus, even the amendment to the SICA as made by the SARFAESI Act would not be available to the respondent- Corporation so as to initiate action against the petitioner- Company under the SARFAESI Act.
4. In reply, Mr. Jayesh Dolia, learned counsel appearing for the respondent-Corporation submitted that the respondent is a financial institution within the meaning of Section 2(1)(m) of the SARFAESI Act and is entitled to take appropriate action under Section 13 thereof, with a view to preserve and protect the security offered to the respondent- Corporation. Learned counsel submitted that the Indian Overseas Bank has also taken action under the SARFAESI Act and therefore, the submission of the petitioner-Company that the respondent-Corporation does not represent 75 of the secured creditors is completely misconceived. Learned counsel submitted that the remedies available to the respondent-Corporation under the SARFAESI Act are in addition to the provisions under the SFC Act and therefore, the respondent-Corporation would be justified in taking action under Section 13 of the SARFAESI Act. Learned counsel further submitted that the doctrine of election would not apply in the present case inasmuch as the remedies under the SFC Act are not available to the respondent in view of the proceedings before the BIFR, and this is not a case where the respondent is simultaneously pursuing both the remedies.
5. Before adverting to the submissions advanced at the bar, we may briefly refer to the relevant provisions of the SFC Act and the SARFAESI Act. Section 29 of the SFC Act provides that where any industrial concern which is under an obligation and a liability to the Corporation under an agreement makes a default in repayment of the loan or advance or any instalment thereof or otherwise commits breach of any of the terms of the agreement, the Corporation has the right to take over the management or possession or both of the defaulting industrial concern. It also has the right to transfer by way of lease or sale and realise the property pledged, mortgaged or hypothecated or assigned to the Corporation as security for the loan. Any transfer of property of the defaulter thereafter made by the Corporation shall vest in the transferee all rights in or to the property transferred by virtue of Section 29(2) of the Act. Vide Section 29(3) of the Act, the Corporation has the same rights with respect to the goods manufactured, or produced wholly or partly as it had in respect of the original goods forming part of the security. Section 29 of the Act, therefore, deals with not only the rights of the Corporation in cases of default by the industrial concern, but also provides for a remedy to take over the management of the defaulting industrial concern with or without possession as well as the right to transfer by way of lease or sale of the hypothecated property to realise its dues. Since, Section 29 of the Act provides both the rights and the remedies as also the procedure for enforcement of the rights and is a complete code in itself, it is open to the Corporation to act under Section 29 of the Act to realise the dues from the defaulting concern by following the procedure prescribed under Section 29 of the Act. The Corporation does not require the assistance of the court to enforce its rights while invoking the provisions of Section 29 of the Act to recover its dues from the defaulting concern.
6. Section 30 of the SFC Act empowers the Financial Corporation to require any industrial concern to discharge forthwith, in full, its liabilities to the Corporation. Section 31 of the Act has been enacted also to take care of a situation where any industrial concern, in breach of any agreement, makes default in repayment of the loan or advance or any instalment thereof or the Corporation requires immediate repayment which the defaulting industrial concern fails to make. The Corporation may in any such event without prejudice to its rights and remedies under Section 29 of the Act, apply to the District Judge within the local limits of whose jurisdiction, the industrial concern carries on the whole or a substantial part of its business inter alia for any of the following orders -
(a) for the sale of the property pledged, mortgaged, hypothecated or assigned to the Corporation as security for the loan or advance;
(b) for transferring the management of the industrial concern to the Corporation; and
(c) for an ad interim injunction restraining the defaulting industrial concern from transferring or removing its machinery or plant or equipment or any other material from the premises of the concern without the permission of the Board.
Section 32 of the Act deals with the procedure and powers of the District Judge while dealing with the applications made under Section 31 of the Act.
7. Thus the provisions of Sections 29 and 31 of the SFC Act deal with the rights and the procedure to be followed to enable the Corporation, in the event of breach of agreement or default in payment of loan or advance or an instalment thereof, by the loanee, to recover the same. Section 46-B of the SFC Act contains a non-obstante clause and provides that the provisions of the Act and of any rules or orders made thereunder shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than the said Act, but save as aforesaid, the provisions of the said Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern.
8. Turning our attention to the provisions of the SARFAESI Act, we may briefly note the definition clauses under the said Act. Section 2(1)(zc) of the Act defines 'secured asset' to mean the property on which security interest is created. 'Secured creditor' has been defined in clause (zd) of Section 2(1) of the Act, which means any bank or financial institution or any consortium or group of banks or financial institutions and includes (i) debenture trustee appointed by any bank or financial institution; or (ii) securitisation company or reconstruction company; or (iii) any other trustee holding securities on behalf of a bank or financial institution, in whose favour security interest is created for due repayment by any borrower of any financial assistance. 'Secured debt' has been defined in clause (ze) of Section 2(1), which means a debt which is secured by any security interest and 'security interest' has been defined in clause (zf) of Section 2(1), which means a right, title or interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31 of the Act.
9. Section 13 appears in Chapter III of the SARFAESI Act and this Section is the main enforcing provision in the Act. It provides that a secured creditor may enforce any security interest without intervention of the court or tribunal irrespective of Section 69 or Section 69-A of the Transfer of Property Act, where according to sub-section (2) of Section 13, the borrower is a defaulter in repayment of the secured debt or any instalment of repayment and further the debt standing against him has been classified as a non- performing asset by the secured creditor. Sub-section (2) of Section 13 further provides that before taking any steps in the direction of realizing the dues, the secured creditor must serve a notice in writing to the borrower requiring him to discharge the liabilities within a period of 60 days, failing which the secured creditor would be entitled to take any of the measures as provided in sub-section (4) of Section 13. It may also be noted that as per sub-section (3) of Section 13, a notice given to the borrower must contain the details of the amounts payable and the secured assets against which the secured creditor proposes to proceed in the event of non-compliance with the notice given under sub-section (2) of Section 13. Sub-section (4) provides for four measures which can be taken by the secured creditor in case of non-compliance with the notice served upon the borrower. Under clause (a) of sub-section (4), the secured creditor may take possession of the secured assets, including the right to transfer the secured assets by way of lease, assignment or sale; may take over the management of the secured assets under clause (b), including the right to transfer; under clause (c) of sub-section (4), a manager may be appointed to manage the secured assets which have been taken possession of by the secured creditor and may require any person who has acquired any secured assets from the borrower of from whom any money is due to the borrower to pay the same to him as it may be sufficient to pay the secured debtor as provided under clause (d) of Section 3(4) of the Act. Sub-section (8) of Section 13, however, provides that if all the dues of the secured creditor, including all costs, charges and expenses, etc. as may be incurred are tendered to the secured creditor before sale or transfer, no further steps be taken in that direction.
10. Section 37 of the SARFAESI Act clearly provides that the provisions of the SARFAESI Act are in addition to, and not in derogation of, the various Acts mentioned therein or any other law for the time being in force.
11. Section 41 of the SARFAESI Act, which speaks of amendments to certain enactments, provides that the enactments specified in the Schedule to the SARFAESI Act shall be amended in the manner specified therein. The Schedule to the SARFAESI Act contains an amendment to the SICA. As a result of this amendment, a reference pending before the BIFR 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 SARFAESI Act.
12. In A.P. State Financial Corporation vs. Gar Re- Rolling Mills, (1994) 2 S.C.C. 647, the question before the Supreme Court was whether the Financial Corporation set up under Section 3 of the SFC Act is entitled to take recourse to the remedy available to it under Section 29 of the Act even after having obtained an order or a decree after invoking the provisions of Section 31 of the Act, but without executing that decree or order. The High Court held that the Corporation having moved the Court for a relief under Section 31 of the Act was not entitled to recover the amount of debt due by taking recourse to the provisions of Section 29 of the Act and allowed the writ appeal filed by the company. On appeal, while reversing the judgment of the Division Bench, the Supreme Court held as follows : "13. On a conjoint reading of Sections 29 and 31 of the Act, it appears to us that in case of default in repayment of loan or any instalment or any advance or breach of an agreement, the Corporation has two remedies available to it against the defaulting industrial concern, one under Section 29 and another under Section 31 of the Act. The choice for availing the remedy under Section 29 or Section 31 of the Act is that of the Financial Corporation alone and the defaulting concern has no say whatsoever in the matter, as to which remedy should be taken recourse to by the Corporation against it for effecting the recovery. The expression without prejudice to the provisions of Section 29 of this Act as appearing in Section 31 of the Act clearly demonstrates that the Legislature did not intend to confine the Corporation to take recourse to only a particular remedy against the defaulting industrial concern for recovery of the amount due to it. It left the choice to the Corporation to act in the first instance under Section 31 of the Act and save its rights and remedies under Section 29 of the Act to be availed at a later stage, with the sole object of enabling the Corporation to recover its dues. It is not, however, obligatory on the part of the Financial Corporation to invoke the special provisions of Section 31 of the Act, it can even without taking recourse to the provisions of the said section invoke the procedure prescribed under Section 29 of the Act for realisation of its dues. Where the Corporation takes recourse to the provisions of Section 31 of the Act and obtains an order from the court, it shall ordinarily and invariably seek its enforcement in the manner provided by Section 32 of the Act, which provisions are aimed to act in aid of the orders obtained under Section 31 of the Act and it cannot simultaneously initiate and take recourse to the remedy available to it under Section 29 of the Act unless it gives up, abandons or withdraws the proceedings under Section 31 of the Act, at whatever stage those proceedings may be. The Corporation cannot simultaneously pursue two remedies at the same time. The reach and scope of the two remedies is essentially different even if somewhat similar result flows by taking recourse to either of the two provisions in certain respects.
15. The Doctrine of Election clearly suggests that when two remedies are available for the same relief, the party to whom the said remedies are available has the option to elect either of them but that doctrine would not apply to cases where the ambit and scope of the two remedies is essentially different. To hold otherwise may lead to injustice and inconsistent results. Since, the Corporation must be held entitled and given full protection by the Court to recover its dues it cannot be bound down to adopt only one of the two remedies provided under the Act. In our opinion the Corporation can initially take recourse to Section 31 of the Act but withdraw or abandon it at any stage and take recourse to the provisions of Section 29 of the Act, which section deals with not only the rights but also provides a self- contained remedy to the Corporation for recovery of its dues. If the Corporation chooses to take recourse to the remedy available under Section 31 of the Act and pursues the same to the logical conclusion and obtains an order or decree, it may thereafter execute the order or decree, in the manner provided by Section 32(7) and (8) of the Act. The Corporation, however, may withdraw or abandon the proceedings at that stage and take recourse to the provisions of Section 29 of the Act. A decree under Section 31 of the Act not being a money decree or a decree for realisation of the dues of the Corporation, as held in Gujarat State Financial Corpn. v. Naatson Mfg. Co. P. Ltd.1 recourse to it cannot debar the Corporation from taking recourse to the provisions of Section 29 of the Act by not persuing the decree or order under Section 31 of the Act, in which event the order made under Section 31 of the Act would serve in aid of the relief available under Section 29 of the Act.
16. The doctrine of election, as commonly understood, would, thus, not be attracted under the Act in view of the express phraseology used in Section 31 of the Act, viz., without prejudice to the provisions of Section 29 of this Act. While the Corporation cannot simultaneously pursue the two remedies, it is under no disability to take recourse to the rights and remedy available to it under Section 29 of the Act even after an order under Section 31 has been obtained but without executing it and withdrawing from those proceedings at any stage. The use of the expression without prejudice to the provisions of Section 29 of the Act in Section 31 cannot be read to mean that the Corporation after obtaining a final order under Section 31 of the Act from a court of competent jurisdiction, is denuded of its rights under Section 29 of the Act. To hold so would render the above-quoted expression redundant in Section 31 of the Act and the courts do not lean in favour of rendering words used by the Legislature in the statutory provisions redundant. The Corporation which has the right to make the choice may make the choice initially whether to proceed under Section 29 of the Act or Section 31 of the Act, but its rights under Section 29 of the Act are not extinguished, if it decides to take recourse to the provisions of Section 31 of the Act. It can abandon the proceedings under Section 31 of the Act at any stage, including the stage of execution, if it finds it more practical, and may initiate proceedings under Section 29 of the Act." (emphasis supplied)
The Supreme Court thus held that the doctrine of election suggests that when two remedies are available for the same relief, the party to whom the said remedies are available has the option to elect either of them, but that doctrine would not apply to cases where the ambit and scope of the two remedies is essentially different.
13. A similar contention was raised before the Supreme Court in Transcore vs. Union of India, 2006 (5) C.T.C. 753, where it was argued that the banks or financial institutions, having elected to seek their remedy in terms of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), cannot invoke the SARFAESI Act for realizing the secured assets without withdrawing or abandoning the O.A. filed before the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act. This argument was expressly rejected by the Court and it was held as follows : "40. The heard of the matter is that NPA Act proceeds on the basis that an interest in the asset pledged or mortgaged with the bank or FI is created in favour of the bank/FI; that the borrower has become a Debtor, his liability has crystallized and that his account with the bank/FI (which is an asset with the bank/FI) has become sub-standard.
41. Value of an asset in an inflationary economy is discounted by 'time' factor. A right created in favour of the bank/FI involves corresponding obligation on the part of the borrower to see that the value of the security does not depreciate with the passage of time which occurs due to his failure to repay the loan in time.
42. Keeping in mind the above circumstances, the NPA Act is enacted for quick enforcement of the security. The said Act deals with enforcement of the rights vested in the bank/FI. The NPA Act proceeds on the basis that security interest vests in the bank/FI. The NPA Act proceeds on the basis that security interest vests in the bank.FI. Sections 5 and 9 of NPA Act is also important for preservation of the value of the assets of the banks/FIs. Quick recovery of debt is important. It is the object of DRT Act as well as NPA Act. But under NPA Act, authority is given to the banks/FIs, which is not there in the DRT Act, to assign the secured interest to securitisation company/asset reconstruction company. In cases where the borrower has bought as asset with the finance of the bank/FI, the latter is treated as a lender and on assignment the securitisation company/asset reconstruction company steps into the shoes of the lender bank/FI and it can recover the lent amounts from the borrower.
43. According to Snell's Equity (Thirty-first edition) at page 777, a dual obligation could arise on the same transaction, namely, A's obligation to repay a sum of money to B or some other obligation. In such a case, B can sue A for money or for breach of the obligation. However, B will often have some security which covers the obligation of A, say, in the form of an asset over which B can exercise his rights. B may be entitled to this security either by law or by operation of common law principles or under the transaction (contract). In addition, B may acquire a personal right of action against the third party. Security over the asset (property) may be obtained by mortgage, charge, pledge, lien, etc. Security in the form of right of action against a third party is known as guarantee. Broadly, there are three types of security over the asset. One is where the creditor obtains interest in the asset concerned (mortgage). Second is securities in which the rights of the creditor depends on possession of the asset (pledge/lien). The third is charge where the creditor neither obtains ownership nor possession of the asset but the asset is appropriated to the satisfaction of the debt or obligation in question (charge). The dichotomy, which is of importance, is that more than one obligation could arise on the same transaction, namely, to repay the debt or to discharge some other obligation.
44. Therefore, when Section 13(4) talks about taking possession of the secured assets or management of the business of the borrower, it is because a right is created by the borrower in favour of the bank/FI when he takes a loan secured by pledge, hypothecation, mortgage or charge. For example, when a company takes a loan and pledges its financial asset, it is the duty of that company to see that the margin between what the company borrows and the extent to which the loan is covered by the value of the financial asset hypothecated is retained. If the borrower company does not repay, becomes a defaulter and does not keep up the value of the financial asset which depletes then the borrower fails in its obligation which results in a mismatch between the asset and the liability in the books of the bank/FI. Therefore, Sections 5 and 9 talks of acquisition of the secured interest so that the balance sheet of the bank/FI remains clean. Same applies to immovable property charged or mortgaged to the bank/FI. These are some of the factors which the Authorised Officer of the bank/FI has to keep in mind when he gives notice under Section 13(2) of the NPA Act. Hence, equity exists in the bank/FI and not in the borrower. Therefore, apart from obligation to repay, the borrower undertakes to keep the margin and the value of the securities hypothecated so that there is no mismatch between the asset-liability in the books of the bank/FI. This obligation is different and distinct from the obligation to repay. It is the former obligation of the borrower which attracts the provisions of NPA Act which seeks to enforce it by measures mentioned in Section 13(4) of NPA Act, which measures are not contemplated by DRT Act and, therefore, it is wrong to say that the two Acts provide parallel remedies as held by the judgment of the High Court in M/s. Kalyani Sales Co. As stated, the remedy under DRT Act falls short as compared to NPA Act which refers to acquisition and assignment of the receivables to the asset reconstruction company and which authorizes banks/FIs to take possession or to take over management which is not there in the DRT Act. It is for this reason that NPA Act is treated as an additional remedy (Section 37), which is not inconsistent with the DRT Act.
45. In the light of the above discussion, we now examine the doctrine of election. There are three elements of election, namely, existence of two or more remedies; inconsistencies between such remedies and a choice of one of them. If any one of the three elements is not there, the doctrine will not apply. According to American Jurisprudence, 2d, Vol.25 page 652, if in truth there is only one remedy, then the doctrine of election does not apply. In the present case, as stated above, the NPA Act is an additional remedy to the DRT Act. Together they constitute one remedy and, therefore, the doctrine of election does not apply. Even according to Snell's Equity (Thrity-first Edition, page 119), the doctrine of election of remedies is applicable only when there are two or more co- existent remedies available to the litigants at the time of election which are repugnant and inconsistent. In any event, there is no repugnancy nor inconsistency between the two remedies, therefore, the doctrine of election has no application." (emphasis supplied)
The Court ultimately held that the withdrawal of the O.A. pending before the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act is a pre-condition for taking recourse under the SARFAESI Act. It is for the bank or the financial institution, as the case may be, to exercise its discretion as to cases in which it may apply for leave and in cases where it may not apply for leave to withdraw.
14. In the light of the decision in Transcore's case (supra), it is clear that a creditor is entitled to choose one or more cumulative remedies open to him, unless precluded by statutory provisions or by the doctrine of election; that in the absence of any bar, it is open to the creditor to choose one or more of the cumulative remedies. The doctrine of election is a doctrine evolved by Courts on equity. It is based on the principle that a man shall not be allowed to approbate and reprobate. If a person has chosen a particular remedy and has intentionally relinquished another remedy, he is debarred by the doctrine of election to pursue the remedy he has intentionally given up. As indicated earlier, this is not a case where the respondent-Corporation is pursuing both the remedies simultaneously. The remedy provided under the SFC Act is not available to the respondent - Corporation in view of the express bar under Section 22 of the SICA. Moreover, Section 37 of the SARFAESI Act specifically states that the provisions of the SARFAESI Act are in addition to, and not in derogation of, the various Acts mentioned therein or any other law for the time being in force. Therefore, the fact that the respondent-Corporation is governed by the SFC Act and the petitioner-Company can take action under Section 29 or Section 31 of the Act is really of no consequence if the respondent-Corporation decides to avail of the remedy available to it under a different statute which has been enacted with a view to protect the security of the banks and financial institutions. There is nothing in the SFC Act to show that there is any bar, either express or implied, in proceeding under the SARFAESI Act. In the instant case, there are two secured creditors, namely the respondent- Corporation and the Indian Overseas Bank and both the secured creditors have taken measures under the SARFAESI Act. Therefore, the bar created under Section 22 of the SICA would cease to operate in view of the clear provisions of the amendment to the SICA contained in the Schedule specified under Section 41 of the SARFAESI Act.
15. Learned counsel appearing for the petitioner- Company submitted that the provisions of the amendment to the SICA would apply only during the pendency of the reference before the BIFR. According to him, the BIFR has already declared the petitioner-Company as a sick undertaking and therefore, the amendment would not apply. We are unable to accept this submission. The reference of the petitioner-company is still pending before the BIFR and as per the amended provisions of Section 15 of the SICA 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 debts under sub-section (4) of section 13 of the SARFAESI Act.
16. The doctrine of election has no application to the present case, as the respondent-Corporation is invoking solely the provisions of the SARFAESI Act and the other remedies under Section 29 and 31 of the SFC Act are not available to the respondent-Corporation. Thus, the argument that the respondent-Corporation is barred from taking recourse to the provisions of Section 13 of the SARFAESI Act is clearly misconceived and cannot be accepted.
17. For all these reasons, we find no substance in the writ petition and the writ petition is accordingly dismissed. No costs. Consequently, W.P.M.P. No.13283 of 2005 is closed.
1. The Tamil Nadu Industrial Investment Corporation Ltd., 692, Anna Salai, Nandanam, Chennai-35.
2. The Tamil Nadu Industrial Investment Corporation Ltd., Plot No.3, Vaigai Colony, Anna Nagar,
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