Jayant Patel, J.@mdashIn all applications, common question that arises for consideration is whether the applicants, who are claiming rights as the assignee, be permitted to be substituted in place of the original secured creditor(s) of the company(ies) in liquidation at a stage of provisional or final winding up proceedings.
2. In order to appreciate the question, certain facts may have the bearing and they are as under:
(a) All applicants claiming right as assignee of the bank(s)/financial institution(s) which, as per the applicants, had granted loan(s)/financial assistance(s) to the company(ies) concerned, are included in the present group, either at the provisional or final winding up proceedings. As per the applicants, the deeds of assignment are executed by the original loaner(s) in favour of the applicant(s)(hereinafter referred to as the applicants/assignees), but in case of every particular applicant bank, such deed is common for various loans with security interest in various immovable properties.
(b) It is not in dispute that the applicants are banks/financial institutions governed by the provisions of the Banking Regulation Act. However, it is the case of the applicants that as per the Banking Regulation Act read with the guidelines of Reserve Bank of India, such sale and purchase of the debts, including the rights in the immovable properties being secured creditors, can be sold by the loaner(s) and purchased by the assignee bank(s)/financial institution(s). As the proceedings for winding up, including for provisional and final are pending before this Court at various stages, including the stage for disposal of the properties of the company(ies) in liquidation, the applicants have approached this Court to be substituted in place of the original alleged secured creditors. It is also the case of the applicants that in certain cases where the suits/ applications are filed for recovery before the Debts Recovery Tribunal (as ''DRT'', for short) based on the deed of assignment, substitution is permitted and, therefore, as per the applicants, they are entitled to be substituted in the present proceedings also, in place of the secured creditors.
3. The secured creditors, who are on record, admitted the execution of the deed of assignment and as per the secured creditors, they are supporting the substitution of the applicants in their place and they have no objection if their assignees are permitted to be substituted in their place in the present proceedings before the Company Court.
4. Such substitution is resisted and objected on behalf of. the company(ies) where there is an order for provisional winding up and or final winding up order and it is contended, inter alia, that the alleged deeds of assignment have not lawfully conveyed rights to step into the shoes of the secured creditors and various other contentions are raised that there is no proper conveyance of the rights in the security of immovable property concerned by registration of the documents at a place, where the properties are situated and, therefore, the rights are not conveyed to the assignee(s) and, therefore, the assignee(s) cannot be permitted to be substituted. The other ''contentions are also raised, which shall be considered appropriately at a later stage. Such substitution is resisted and objected by the company or the official liquidator representing the interest of the company(ies).
5. In light of the aforesaid background of the facts, the preliminary aspect, which may be required to be considered is the scope of judicial scrutiny in a case where the application is for substitution of the parties as the assignee or the purchaser of the rights lis pendens. The analogy can be drawn from the provisions of the Code of Civil Procedure, however, by now it is well settled that at the stage of substitution, elaborate, detailed examination of the rights of the parties may not be undertaken by the court, but the court has to prima facie examine the availability of the rights by the party, who approaches before the court for substitution and in a case of transfer or assignment where the rights are prima facie conveyed through the lawful process or the process known Jo law, such substitution may be permitted by the court. It may be that in a suit for recovery of the amount before the Debts Recovery Tribunal or before the other forum, even if the substitution is permitted by the Tribunal or such forum, all defences may be available to the Defendants therein at the time when the applications before the DRT or the suit before the appropriate forum are tried and the Tribunal or the forum ultimately before passing decree may undertake the detailed examination of the aspects of assignment, transfer of the rights, discharge of obligations, validity of such assignment, whether in accordance with law or opposed to public policy or prohibited by law, etc., if required, by permitting the parties to lead evidence, including by giving opportunity to the concerned parties for cross-examination of the witnesses on various aspects, which may directly or incidentally be concerning to the legality and validity of such assignment. However, such elaborate examination of the rights or the final declaration to be pronounced on the validity of the documents or otherwise may not be required, in cases where the matter is at the stage of substitution of the proceedings. The court normally would prima facie consider the acquiring of the rights, if any, by the assignee and may permit substitution in a given case, if ultimately found prima facie by the court that the rights of the original party or the secured creditors in the present case have been acquiring by the applicant/assignee. If prima facie, the court finds that there is no lawful transfer of the rights, may be on the ground that the requisite procedure as required under the law for convening the rights are not followed, then such substitution may be declined, leaving the parties to have the final adjudication before appropriate forum, may be the Debts Recovery Tribunal or the forum where the recovery proceedings are pending. Therefore, it appears that at this stage the only aspect to be considered is prima facie acquiring of the rights by the applicant assignee through process known to law.
6. Incidentally, the reference deserves to be made to the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ''the Securitisation Act'', for the sake of convenience). After the introduction of the laws for enforcement of the security and the scheme providing for purchase and sale of transactions having security interest, such mode of acquiring interest is recognized under the Securitisation Act. Section 5 of the Act provides for giving effect to the transaction notwithstanding anything contained in an agreement in any law for the time being in force. But the aforesaid would be available to a Securitisation company or a reconstruction company, who may acquire financial assets from any bank or financial institution. Securitisation companies or reconstruction companies are '' only those companies which are registered as Securitisation companies under the Companies Act and also registered as Securitisation company with Reserve Bank of India and they are governed by the regulations for such purpose as envisaged in Chapter II of the Securitisation Act. It is an admitted position that none of the Application in the group of the applications are Securitisation companies or reconstruction companies and are only the banks or banking companies governed by the provisions of the Banking Regulations Act. Therefore, as per the scheme of the Securitisation Act if the financial assets are acquired by a Securitisation company or a reconstruction company registered as per the provisions of Securitisation Act, possibly it may be contended that the deed of assignment may have the force in law by over-riding contents of the agreement or any other law for the time being in force in view of Section 5 of the Securitisation Act. As per the deeming fiction of Sub-section (2) of Section 5, such securitisation companies acquiring rights is to be treated as deemed lenders and by statutory fiction the rights are to vest in such securitisation company in relation to such financial assets. It appears that it is on account of the enforcement of the Securitisation Act and the scheme for purchasing of the financial assets by the securitisation company or reconstruction company, the State Government has come out, with a view to give encouragement, with the notification of putting upper limits of the stamp duty of Rs. 1 lac, though as per the normal conveyance the stamp duty may be more or if the conveyance is to take place; in normal law, as per the Transfer of Property Act, there is no upper limit provided.
7. Since none of the applicants or assignees is a securitisation company or a reconstruction company, they would not be entitled to the benefits of provisions of Section 5 of the Securitisation Act of statutory fiction as a deemed lender or for vesting of the rights of the loaner, notwithstanding anything contained in the agreement or any other law for the time being in force. Therefore, in view of such situation, when the legislature itself has also not included the banking companies, but has expressly provided for the words ''any securitisation company or reconstruction company'' in the language of Section 5, if the applicant assignees are to assert their rights, they would abide by any terms of agreement or any other law for the time being in force, which as observed hereinabove would be the Transfer of Property Act, the Registration Act and also the payment of the Stamp duty as per the provisions of the concerned law governing the stamp duty, may be of Gujarat or other State. In any case, no right can be asserted by the applicants to have over-riding effect of the deed of assignment over any terms of the agreement between the loaner and the loanee or over the law prevailing for assignment of the deed or interests in the immovable properties, may be security interest or otherwise. In view of the aforesaid it will have to be considered as to whether the interest as acquired by the assignee on the basis of the alleged deed of assignment is through the process(es) known to law or not.
8. It is not in dispute that the deed of assignment is a composite deal for purchase of various debts of the assignor. The agreement or deed of assignment for the purpose of examination can broadly be considered into three parts:
(i) whether transaction can validly be made being as one or distinct one or the requirement is for distinct transaction for each loan;
(ii) the deed of assignment for assigning the rights as creditor without security interest in the immovable property;
(iii) the deed of assignment for assigning the rights as creditor with the security interest in each loan transaction.
9. On behalf of the applicants, in Company Application No. 539 of 2006, it has been contended that the deed of assignment is also registered before the registering authority at Borivali, Mumbai, and in furtherance to the said submission, the reliance is placed upon the endorsement made by the registering authority at Borivali, Mumbai, for registration of the documents vide No. Badara 5114/2006 dated 16.6.2006 for registration at Vol-I and it has been submitted by the learned Counsel for the applicants representing in the other matters also that similar is the endorsement in cases of all documents registered in Maharashtra. Therefore, these documents are registered by completion of the registration as required under the Registration Act and, hence, the rights are conveyed by the assignment and acquired by the assignee. It is further contended that since as per the applicants the transaction of purchase of the debts is in one basket as a common pool comprising of various loan transactions and the Security interest of the assignor in various properties and, therefore, as one of the properties as per the applicant pertaining to the loan, rights of which are also assigned together with the other assignments, is situated in Maharashtra, the deed of assignment was presented for registration in the office of the Sub-Registrar, where the said property is located and the document is registered under the Registration Act and, therefore, as per the applicants, the registration of document before the Sub-Registrar, where one of the properties is located, the same is sufficient to meet with the requirement of Registration Act read with the provisions of Transfer of Properties Act.
10. Whereas on behalf of official liquidator, it has been submitted that each loan transaction is a separate transaction and if the rights in the immovable properties are to be conveyed as that of the secured creditor, a separate document is required to be registered in every Sub-Registrar''s office, where the properties are located and the transaction cannot be treated as one for various loans, which were outstanding to the assignor and, therefore, it was submitted that no rights can be said to have been conveyed in immovable properties by registration of the documents before the Sub-Registrar''s office within whose area the property is not located and, therefore, it cannot be said that the rights are conveyed or transferred or acquired by the applicants after registration of the documents as per I he requirement of the Registration Act read with the Transfer of Properties Act.
11. In furtherance to the submission on behalf of the official liquidator, it was also submitted by Mr. Desai that treating the transactions as one though are separate so far as acquiring of the rights in the immovable properties are concerned, by taking undue benefit, a single document is executed of assignment, though separate document is required to be executed by paying separate stamp duty for each assignment of the rights in immovable property in each land transaction with the company concerned either in provisional liquidation or final liquidation proceedings and, therefore, it was submitted that since no proper stamp duty is paid by the applicant assignee, the documents may not be considered valid by this Court and, in any case, it would adversely affect the public revenue or public exchequer for non-payment of the deficit stamp duly for the document conveying the rights in the immovable property.
12. In this regard, it deserves to be recorded that pursuant to the order passed earlier by this Court in the present proceedings on 20 September, 2006, the notice was also issued to Chief Revenue Controlling Authority. In response thereto, Mr. V.Y. Vyasa, Chief Controlling Revenue Authority, has filed the affidavit, in which, inter alia, at paragraph 6 it has been stated as under:
I respectfully say that as per my understanding, the legal position suggests that the expression ''distinct matters'' occurring, in the aforesaid Section 5 of the Act connotes distinct transaction and even though there is identity of parties in respect of several transactions between them, if the transactions are distinct and separated, but happens to embodied in one document, that document must be treated for purposes, of stamp duty as comprising several documents. In view of the above, if an instrument comprising distinct matters is stamped as one single document/deed, the same cannot be said to be ''duly stamped'' u/s 2(h) of the Act, if such an instrument treats the distinct transactions relating to different parties as one common portfolio.
13. Therefore, as per the opinion expressed by the Chief Controlling Revenue Authority of the State separate stamp duty is required to be paid for each transaction. It is an admitted position that separate stamp duty for each transaction is not paid.
14. In view of the opinion of the Chief Control of Revenue authority, it can prima facie be said that the deed of assignment or document produced in support of the application for substitution is not properly stamped. The said aspect is coupled with the observations and the discussion made in earlier paragraph. Therefore, if the document is not properly stamped, it cannot be accepted as an evidence for supporting the rights claimed pursuant thereto in a court of law. Generally, the approach of this Court exercising the jurisdiction under the Companies Act, including in the proceedings of winding up for acceptance of the documents or for acceptance of the rights based on such documents, would be the same as being adopted by the civil court or the tribunal governed by the law of evidence and other civil laws applicable for such purpose. If the said aspect is considered in light of the express bar provided u/s 49 of the Registration Act, it can be said that the documents may be required to be considered in view of the provisions of Section 33 of the Bombay Stamp Act. Such aspects may have the bearing when such document is produced in a court of law and if no proper stamp duty is paid, it may be required to be impounded, but in any case, in view of the provisions of Section 34 of the Bombay Stamp Act, such document cannot be admitted in evidence for any purpose by any person having, by law, the authority to receive evidence. This Court exercising power under Companies Act even for the purpose of prima facie consideration would be guided by the provisions of Section 34 of the Stamp Act and, therefore, if the aspect of non-payment proper requisite stamp duty is considered, the alleged deed of assignment is inadmissible in evidence. Consequently, the rights cannot be asserted based on such deeds of assignment, which cannot be accepted as the evidence or admitted in evidence. Further as the document produced before this Court is neither original, nor even meeting with the other requirements of Transfer, of Property Act read with the provisions of the Registration Act, in view of the reasons recorded in the present order, it is not a case to impound the document and to refer the matter to appropriate authority and thereafter to accept the same in evidence. Further such a course may not be required to be undertaken by this Court considering the matter at the stage of substitution as parties, more'' particularly in view of the peculiar circumstances that the document is even otherwise also not meeting with the requirement of other laws, as stated hereinafter.
15. Apart from the above aspects, even if the matter is considered for the sake of examination that the document is admissible in evidence, then also there is no support of conveying of rights for each transaction of loan by separate agreement or deed of assignment. If the matter is considered for the assignment of the rights as creditor without security interest in the immovable property, one might contend that the assignment is legally made by one deed comprising of various] loans. However, it is not the case of any of the applicants that the deed of assignment or the assignment of the rights as creditor is without any security interest in the immovable property, over which the charge was created at the time when the loan transaction was entered into by the assignor with the loanee. Therefore, if the deed of assignment is treated only for assignment of the rights as creditor by conveying the rights in the immovable properties/security interests, the requirement under the law as per the provisions of the Transfer of Property Act read with the provisions of the Registration Act is to get the document registered with the Sub-Registrar''s office, at least, at the place where one of the properties qua such loan transaction, rights of which are conveyed in favour of the assignee, is registered. It is an admitted position that the deed of assignment, is a composite agreement for various loan transactions and there is no separate deed of assignment for each loan transaction. It may be that for one transaction of loan, there'' may be the conveying of security interest situated in various immovable properties of the very debtor, but registration of a document of various loan transactions pertaining to the assignment of rights of various loan transactions at one place, where one of the immovable properties is situated forming part of security interest in one of the loan transactions cannot be said as sufficient to meet with the requirement under the provisions of Transfer of Property Act read with the provisions of Registration Act. There are more than one reason for requirement of separate documentation of assignment for each loan transaction, which can broadly be stated as under:
(i) The deed of assignment comprises of not only the assignment of the rights of the loaner, but it also states for assigning of the obligations too under financial instruments of loan transactions, which were assigned by the claimants loanee in faour of the loaner. Therefore, when the rights and the obligations, both, are to be assigned, each transaction of loan will have to be independently considered at the time when the assignee is to assert rights in a court of law and when the loanee'' is to contend the defence of obligation. Wholesome assignment of the rights and obligation would not only complicate various issues, but it would make difficult for the purpose to asset their respective rights and obligations of the parties in the court of law. Similarly, it would complicate the issues, which may arise for consideration by the court at the time of adjudication.
(ii) As such, whether obligations can be assigned by the loaner in favour of third party without there being any agreement on the part of the loanee is also an aspect, which may have relevance at the time when the rights are to be asserted based on the assignment of the loaner and it is to be examined in each case as to whether the obligations are performed or not. Further, whether there is any implied consent of the loanee in each case or not can only be considered if the deed for assignment for each loan transaction is separate.
(iii) If the transactions are separate of assignment and considered as distinct and separate, it would require payment of stamp duty as per the head prescribed, subject to maximum of each case and would leave no room for taking any ingenuine device to cover up all transactions under one composite transaction, thereby avoiding necessary stamp duty resulting to loss to the public exchequer.
(iv) The registration of document in the office of the Sub-Registrar concerned where the immovable properties located can be made known to the public at large if the document is registered at the office of the Sub-Registrar, where the immovable properties are situated even also when the security interest in the property is to be transferred or conveyed or assigned. A composite transaction for various loans where the immovable properties are situated at various parts of the country would frustrate the basic purpose of putting the registered document at notice to the public at large, who is to enquire about the title of the concerned property by taking search at the concerned Sub-Registrar''s office where the property is situated.
16. The aforesaid are some of the grounds requiring the court to consider the matter that since each loan transaction between the loaner and the loanee is separate and distinct, it would be required for the assignor and the assignee to undertake the procedure of executing separate documentation for each and every loan transaction. It is an admitted fact that neither there is any separate documentation for assignment of each loan transaction, nor is there any registration of such document at the office, where one of the immovable properties of concerned loan transaction is located. The said aspect is coupled with the circumstances that the document is not properly stamped and, therefore, cannot be accepted as evidence.
17. The another aspect, which deserves consideration, is the acquiring of the rights by the assignee in the immovable property of the company in liquidation on the basis of alleged deed of assignment. As per the provisions of Transfer of Properties Act read with the provisions of Registration Act when rights in any immovable properties are conveyed, the document does required registration. At this stage,-reference can be made to Section 49 of the Registration Act, which reads as under:
49. Effect of non-registration of documents required to be registered.--No document required by Section 17 [or by any provision of the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall--
(a) affect the rights in the immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power,
unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877), [***] or as evidence of any collateral transaction not required to be effected by registered instrument.
18. Therefore, in absence of such registration as per Section 49 of the Registration Act, the document which is required to be registered u/s 17, shall not affect the rights in the immovable property comprised therein or shall not confer any power to adopt or shall not be received as evidence of any transaction affecting such property or conferring such power, unless such document has been registered.
19. Therefore, in cases where the rights in the immovable properties are to be affected or to be conveyed, registration of such documents is a must and it is not even the case of the applicant assignee that the documentation is not required to be registered. Therefore, the only inevitable conclusion is that unless the document for conveying or for affecting or for adopting the rights in the immovable properties is registered as per the provisions of the Indian Registration Act read with the provisions of the Transfer of Properties Act, the rights in the immovable properties as it existed prior to the execution of such document shall remain unaltered or unaffected. The said aspect is coupled with the provisions of Section 49(c) to the effect that no document shall be received as evidence of any transaction affecting such property or conferring such power unless it has been registered.
20. The deed of assignment produced in the present proceedings by the applicant shows that as per the applicant the documents were presented for registration and the registration fees have been paid. The first attempt on the part of the applicant is to contend that once the document is presented for registration the rights are the assigned and the applications can be said as having acquired the rights, in the immovable property. The said attempt deserves to be rejected outright for the simple reason that presentation of documents for registration is not the same as completed registration of the documents. The presentation of the documents for registration is the initiation of the process for registration. The documents may get complete registration only when the process is complete as required u/s 60 of the Registration Act, certifying the registration. Section 60 of the Registration Act reads as under:
60. Certificate of registration -- (1) After such of the provisions of Sections 34, 35, 58 and 59 as apply to any document presented for registration have been complied with, the registering officer shall endorse thereon a certificate containing the word ''registered'', together with the number and page of the book in which the document has-been copied.
(2) Such certificate shah be signed, sealed and dated by the registering officer, and shall then be admissible for the purpose of proving that the document has been duly registered in manner provided by this Act, and that the facts mentioned in the endorsement, referred to in Section 59 have occurred as therein mentioned.
20.1 Therefore, after the document is presented for registration and the process as required under Sections 34, 35, 58 ad 59 of the said Act are undertaken and completed, the registering officer has to endorse upon the documents, the'' certificate containing the word ''registered'' together with the number and page of the book, in which the documents have been copied and thereafter keeping in view the provisions of Section 61 of the Registration Act, it can be said that the process of registration is complete. Therefore, merely because the documents are presented for registration is no sufficient ground to conclude that the rights are acquired in the immovable property by the applicant assignee.
21. Further another aspects deserve to be recorded is that the transaction for conveyance of the rights in the immovable property, inducting by way of assignment is falling in the same category or is at par with transfer of property by sale or otherwise for the purpose of payment of the stamp duty as per the provisions of the Bombay Stamp Act. However, the State Governments in Maharashtra as well as in Gujarat have issued notification for fixing the upper limit of stamp duty in such transactions of assignment, an instrument for securitisation of loan or the assignment of debt with underline security. Therefore, if the transaction for assignment of the debt with underline securities is treated separate qua each loan transaction, separate stamp duty may be required to be paid for each document or each loan. In any case, each assignment of debt with interest in the security of each loan transaction, subject to the maximum of Rs. 1,00,000 is payable. But if all assignments of debts of all loan with the underline security are clubbed together, exceeding Rs. 1,00,000, no stamp duty may be required to be paid.
22. It also deserves to he recorded that by deed of assignment, the debt conveyed is roughly five times, the consideration actually paid comprising of more than 50 loan transactions. To say, in other words, for example in the deed of assignment produced in Company Application No. 489 of 2006 for 56 loans amounting to Rs. 52.45 crore, the consideration is Rs. 12 crore and in the very document in the further statement of the details of the debt due from the clients, if generally considered, for example in case of Apar Stars Industrial Limited in the Schedule �A� the figure mentioned is Rs. 116.70 lac, whereas in Schedule ''B, the debt mentioned is Rs. 1,088.19 lac, i.e., roughly ten times the amount than the debt shown as per the Schedule ''A''. Therefore, if figures in Schedule ''A'' of loans are considered with figures in Schedule ''B� it would be about 10 times more.
23. Two aspects may have the relevance in such transaction; one would be the value of such debt for each loan and the second would be the consideration received against such assignment or price fixed for such purpose. There may not be any second opinion on the aspects that if each loan transaction is treated as separate and distinct matter for the purpose of conveying the right separately and if computation is made for the purpose of stamp duty, it would be much, much higher even if the maximum limit is considered in comparison to the transaction being treated as one for all debts. For example, if the slab of stamp duty is considered for the properties in Gujarat, prevailing rate is 12% and if the principal amount of loan transaction is considered for the deed of assignment produced in the proceedings of Company Application No. 489 of 2006, the amount is of 56 loan transactions to various companies amounting to between Rs. 2 lac to Rs. 264 lac and if each transaction is treated as separate, the duty may be between Rs. 40 to 50 lac. As against the same the actual payment of stamp duty made is of Rs. 1 lac treating only one transaction. Even if the aspects of stamp duty is considered based on the consideration received as against the value of the (sic) in principal or with interest, the same also would, in any case, if counted proportionately with each transaction of 56 loans, the stamp duty may be, in any case, approximately more than Rs. 10 lac as against the actual stamp duty paid of Rs.l lac. Such situation may arise if the express opinion stated by the Chief Controlling Revenue Authority is taken into consideration. As it is, if the contents of the affidavit and the opinion of the Revenue Authority is considered, the document of deed of assignment can be said as not at all properly stamped and to be more specific, in view of the reasons recorded hereinabove, the actual stamp duty would be, in any case, exceeding ten times than the stamp duty actually paid if each loan transaction is treated as distinct matter.
24. In any case, if the rights in the immovable properties are not conveyed by requisite documents under the Transfer of Property Act read with the Registration Act, it can be said that the requisite procedure known to law is not followed and, therefore, the rights in the immovable properties as per the provisions of Transfer of Properties Act read with the Registration Act remains unaltered of the original loaner/secured creditor.
25. The learned Counsel appearing for the applicant assignees attempted to submit that as per the guidelines issued by the Reserve Bank of India dated 13.7.2005 to all banks and other financial institutions, purchase/sale of non-performing assets is being made permissible and, it was submitted that as per RBI guidelines of non-performing financial assets can be included in one pool and the pool of assets is to be treated as single asset in the book of the purchasing Bank and, therefore, it was submitted that when such a transaction is permitted for sale by the Bank, which is the loaner to other commercial bank, this Court may hold that one documentation is permissible or that the rights transferred or assigned, even if the document is registered before one Sub-Registrar''s office where one of the properties of one of the loan transactions is situated.
26. Whereas on behalf of opponent No. 1 company, which is at the stage of provisional liquidation, it was submitted by Mr. A.L. Shah, learned Counsel that as per the provisions of Section 6 read with Section 8, sale and purchase of the debts is not permitted and in his submission it is barred. Because, as per Mr. Shah, in view of Section 8 of the Banking Regulation Act, trading of debts is not permissible and buying and selling of the debts with the security interest in the immovable property do not fall in any of the categories as mentioned in clause (a) to (o) of Sub-section (1) of Section 6 and it was submitted that by virtue of Sub-section (2) of Section 6, there is a bar operating against the bank in addition to the provisions of Section 8. Per contra, the learned Counsel for the applicants contended that such purchase and sale of the debts with the security interest in the immovable properties would fall in clause (a), (g) and (h) of Sub-section (1) of Section 6 and it was further submitted that Reserve Bank of India itself has issued guidelines permitting such transactions anal, therefore, the interpretation as sought to be canvassed on behalf of the company in provisional liquidation raised, is counter to the guidelines issued by the RBI.
27. In my view, even if the permissibility of the transaction finder the Banking Regulation Act in view of Section 6(1) read with the provisions of Section 6(2) and Section 8 of the Banking Regulation Act are kept aside in view of the guidelines issued by RBI, which is expected to supervise the functioning of the banks, neither in the guidelines, nor any statutory provision is brought to the notice of this Court, which are to nullify the effect of the Transfer of Property Act, the Registration Act and also the State Laws of the Bombay Stamp Act, applicable to Gujarat State. Even if the contention of the learned Counsel for the applicants is considered for the sake of examination, at the most, it can be said that the guidelines of RBI permit sale and purchase of the non-performing financial assets. Whether it is to be shown in the books of accounts as individual transaction or common pool may have the relevance from the accounting point of view for maintaining the books of accounts by the bank or the banking companies and such guidelines cannot be read as giving a go-by to the statutory provisions of the Transfer of Property Act, the Registration Act or the Bombay Stamp Act, as the case may be. As such, the guidelines do not speak for any specific procedure to be followed under all the three Acts and, in'' any event, no-guidelines can be read as to nullify the provisions of any statute. Therefore, merely because for accounting purpose, RBI has issued certain guidelines cannot be read as justifiable ground to give a go-by to the mandatory requirements of law for conveying the rights in immovabla-properties. Therefore, such an attempt on the part of the learned Counsel for the applicant cannot be countenanced.
28. It was also submitted on behalf of the learned Counsel for the applicants that the registration of documents should be treated as sufficient when on property is located in the area of Sub-Registrar, which forms part of the security interest of a loan transaction included in the common pool. In furtherance to the submission, reliance was placed upon the provisions of Section 28 read with Section 65 of the Registration Act by contending that even if the document comprises of conveying of the rights in various immovable properties, the registration of documentation at one place, where one of the properties situated is sufficient and it is for the Sub-Registrar to convey the copy of the documents to the concerned office of the Sub-Registrar for recording in their books by following the procedure and, therefore, it was submitted that if the procedure is not followed by the concerned Sub-Registrar, the rights of the applicants cannot be put to peril. Alternatively, it was submitted that in the event this Court finds that the requirement is to get the document registered at various places where the properties are situated, the direction may be given for registration of the documents at various offices of the Sub-Registrars concerned.
29. The contention prima facie appears to be attractive, but upon the close scrutiny it appears to be without any basis and substance. As per the scheme of the Registration Act, Section 21 of the Act requires that no document shall be accepted for registration, unless it contains the description of such properties sufficient to identify the same. The details of the properties with distinct and separate identification is required to be included in each document conveying the rights in immovable properties, including that for security Interest when the rights in the immovable properties are to be conveyed or transferred or assigned. Not only that but when the property is located in various territorial division, a map or plan is also mandatory as per the provisions of Section 21(4) of the Registration Act. The perusal of the copy of the deed of assignment, which is pressed in service in support of the applications, shows that neither there is any distinct or identity of the property, nor is there any map or plan being part of the document showing the location or the place at which the property is situated. Therefore, when the document itself is not presented in terms of the provisions of Section 21, nor does the document in reality meet with the requirement of Section 21, the argument based on sufficiency of the registration by registering the same at one place or to invoke the duty upon the sub-Registrar as per Section 65 is without any basis whatsoever. If Section 65 is reasonably read, it enjoins the duty upon the, Sub-Registrar, provided the document is in accordance with the provisions of Section 21 together with a copy of the map or plan as required u/s 21 of the Registration Act. If the document is not in accordance with the provisions of Section 21, the applicant cannot be heard to say that it is the duty of the Sub-Registrar to forward the document at various places for registration, where the properties are situated. Further, the document being deed of assignment qua the immovable property or the rights of the security interest in the immovable properties are concerned, is completely silent regarding the identity of the immovable property except using of the words ''rights in immovable properties or the rights of security interest''. Even the property, which as per the applicants, is located in the Sub-Registrar''s office at Maharashtra, Mumbai, etc., is not identified, nor is any description or distinct identity mentioned, nor even the plan for such property is also made apart of that document. Therefore, the contention being without any foundation cannot be accepted. In the present application, keeping in view the subject matter being the jurisdiction of this Court under the Companies Act, no directions can be given for registration of the document by various Sub-Registrars, where the properties are located. Even if such directions are to be issued, in absence of the document not providing for the identity of various immovable properties, nor the plans thereto, such prayer or the submission cannot be accepted.
30. The learned Counsel for the applicants also submitted that iftfre document is not registered as per the provisions of the Transfer of Property Act read with the provisions of the Registration Act, the deed of assignment would not be void and at the most, it may be voidable since the transaction otherwise is bona fide and is also admitted by the assignor even in the present proceedings. It was also submitted that the transaction being bona fide this Court may lean the interpretation in favour of the applicants, so as to realise the security interest in the immovable properties of various companies in liquidation.
31. Whereas on behalf of the official liquidator, it was also submitted that trading of such litigation, where the matters are pending in various courts or tribunal for recovery of the debts, including by realisation of the properties by the assignor is not permissible and, therefore, this Court may not interpret the provisions liberally.
32. In my view, the transactions may be of a single loan or of various loans for purchase and sale is purely a commercial transaction or transactions between two banks in its banking wisdom and whether such transaction should be permitted in the larger interest of the banking business or should be read as prohibited on the principles of no-trading of the court litigation, are the questions which this Court may not be required to examine in the applications for substitution and may be required to be examined appropriately before appropriate forum in the event the legality and validity of such transaction is challenged by invoking the provisions of Article 14 of the Constitution of India or opposed to public policy, etc. The only aspects which may be required to be requirement under the law for conveying or assigning the rights of a loan transaction in immovable property are followed or not or as to whether the documents bear the requisite stamp duty or not. The detailed, elaborate examination of the legality and validity of such transaction may not be required at this stage.
33. The learned Counsel for the applicants did submit that in certain earlier matters, this Court has permitted substitution. It was also submitted that in certain cases the substitution is permitted by the Debts Recovery Tribunal and not only that, but in certain cases, the recovery certificates are also issued in favour of the applicant assignee by the DRT and, therefore, such companies are estopped either themselves or through the official liquidator from resisting the substitution of the applicant. It was further submitted that the observations made by this Court qua the deed of assignment in either way not only may prejudice the rights of the applicant assignee in the proceedings before the DRT, but if the order of the DRT is to be upset or modified or reversed the appeal is the proper remedy and not in the present proceedings.
34. Whereas on behalf of the official liquidator, it was submitted that such contentions were not raised in the earlier proceedings, where this Court permitted substitution and in the proceedings before the DRT also, such aspects are not examined and, therefore, the resistance in the present application is justified.
35. In none of the orders, upon which the reliance is placed by the learned Counsel for the applicants, there was any resistance and, in any case, even if the contention is considered on the basis that there was some resistance by the official liquidator, then also the fact remains that in none of the orders, upon which'' reliance is place by the learned Counsel for the applicant, this Court was called upon or required to examine the aspects as to whether the requisite procedure as per law for conveying the rights of security interest in the immovable property are followed or not and other aspects incidental thereto. Therefore, such orders are of no help to the applicants even if the law of precedent is considered.
36. The proceedings before the DRT are as such outside the scope of winding up. It may be that this Court may consider the factum of the pendency of the proceedings before the DRT. Further, even in the proceedings before the DRT, neither such, contention is examined, nor is there any view. Even otherwise also the view of the DRT cannot operate as a bar to this Court in examining the aspects, which may be required to be considered for acquiring of the rights of security interest in the immovable property through the process known to law. Further, in any case, the rights of either side in the proceedings before DRT can be pursued, as may be permissible in law.
37. The learned Counsel for one of the applicants, Mr. Thakkar made further attempt to submit that present assignment may be considered as power-of-attorney by the applicant to represent the interest of original secured creditors of the company.
38. In my view, neither the right in the application, nor the deed of assignment, which is pressed in service by the applicant, is as that of power-of-attorney and, hence, such attempt deserves to be rejected outright as being lacking any foundation.
39. In view of the aforesaid observations and discussion, as the rights are not acquired by the assignee through the process known to law, the applicants cannot be permitted to be substituted in place of secured creditors of the company in liquidation (assignor). However, in view of the aforesaid, the situation has arisen, resulting into abandonment of the rights by the assignor and non-acquiring of the rights by the assignee. It may be that in a given case on account of ultimate establishing of the right before the appropriate forum, the official liquidator in-charge of the company in liquidation may be required to pay the dues of the secured creditor(s), may be pro rata or otherwise, at a. later stage and, therefore, with a view to see that further complications may not arise or the situation may not become irreversible,-appropriate directions deserve to be issued to official liquidator, who otherwise is to function under the supervision of this Court as per the provisions of the Companies Act.
40. Hence, the following order --
(a) All applications are dismissed with the directions to the official liquidator to bring this order to the notice of the court(s) at the time when disbursement of the amount is to be made or to be permitted by this Court amongst secured creditors and the dues of the workmen, so as to enable this Court to order appropriate provisions of the secured creditors of the company concerned.
41. Before parting with, it deserves to be recorded that the observations made by this Court are prima facie and shall not be read as conclusive if the legality and validity of the deed of assignment is challenged before the appropriate forum or if the rights are asserted or the defence is raised as permissible in law, by the respective parties before the appropriate forum, which is to finally adjudicate the rights. Such observations would also apply in the event any proceedings are initiated under the provisions of the Stamp Act or the Bombay Stamp Act, as the case may be, for non-payment of the requisite stamp duty. Suffice it to say that all rights and contentions before the appropriate forum of the parties concerned shall not get concluded by the observations made by this Court and shall be treated as concluded only for substitution in the present proceedings.
