Kotak Mahindra Bank vs Rashmi Chhawchharia & Ors.

Per: Bidisha Banerjee, Member (Judicial)

This Court convened via hybrid mode of conferencing.

The Learned Advocate for the parties were heard in extenso.

This application has been preferred by the Kotak Mahindra Bank, having its registered office at 27, BKC, C-27, G Block, Bandra Karla Complex, Bandra (E), Mumbai- 400051 and also at Kotak Infinity, IT Park, Building No.21, 4^th Floor, Zone-2, General A.K. Vaidya Marg, Malad, East Mumbai- 400097 against the Resolution Professional of Gemus Engineering Limited, Calforge Steel Private Limited and Punjab National Bank, to seek the following reliefs:

It is argued by the learned Advocate, Ms. Zeba Khan, appearing on behalf of Kotak Mahindra Bank that the Bank is one of the members of Stakeholders Consultation Committee (SCC), it is a secured Financial Creditor by way of Deed of Assignment dated 27^th June, 2024 executed with Hero Fincorp Limited (HFCL) for assignment of receivables of HFCL to the Applicant and also and enforcement of security interest in the loan account,. It is claimed that by way of such assignment, the Applicant Bank has become absolute owner of the said debt and entitled to recover of standing dues upon exercising its security interest on the hypothecated asset.

It is alleged by the learned Advocate that the Respondent No.2, namely, Calforge Steel Private Limited is in illegal possession of plant and machinery being assets of the Corporate Debtor, namely, Gemus Engineering Limited, by way of an illegal sale by the Respondent No.3 without having any right/title to sell. It is also submitted that the Respondent No.3, Punjab National Bank had extended loan to the Corporate Debtor, Gemus Engineering Limited securing factory land/premises in its favour as collateral. Upon taking possession of the secured factory land on 7^th July, 2022, the Respondent No.3 illegally conducted an e-auction of the land on 8^th August, 2022 purportedly including plant and machineries lying on such land including machineries hypothecated to the Applicant, Kotak Mahindra Bank.

It is further alleged that the Respondent No.2, namely, Calforge Steel Private Limited being a successful bidder, is relying upon a wrongly issued e-auction notice and sale certificate dated 2^nd September, 2022 to assert illegal ownership over the plant and machinery hypothecated to the Applicant Bank.

However, it is also submitted that the Respondent No.3 by its possession hand-over notice dated 20^th October, 2023 and attached inventory, had expressly informed the Respondent No.2 about the hypothecated assets. Further the Respondent No.3 in its letter dated 11^th August, 2022 had specifically stated that no “no objection certificate” or “NOC” was granted in respect of the said hypothecated assets. Thus, according to the Applicant not only the Respondent No.3 lacked authority to sell the said assets to the Respondent No.2 but the Respondent No.2’s possession is also without legal basis and liable to be vacated.

The prayer has been vehmently opposed by Calforge Steel Private Limited, the Respondent No.2.

Learned Advocate, Mr. Shaunak Mitra, appearing on behalf of Calforge Steel Private Limited would forcefully assert that as per the auction notice, Punjab National Bank proposed to auction all the assets of the Corporate Debtor situated at Mouza Chandipur, J.L. No.09, Plot No.24P and 25P WBIIDC, Industrial Growth Centre, Uluberia, Howrah, PIN 711316 including entire plant and machinery located therein. Further that all the assets of the Corporate Debtor was sold by way of an auction notice in accordance with the provisions of SARFAESI Act and the auction notice clearly mentioned the following:

It is further submitted that the Respondent No.2, namely, duly participated in the auction sale, emerged as the highest bidder and was declared as a successful auction purchaser. It had rightfully acquired the title to the said factory premises of Gemus Engineering Limited and became absolute owner of all the assets within the factory premises which, inter alia, included all machineries situated therein. It is thus alleged that the reliefs pleaded by the Applicant are inherently contradictory and cannot be granted inasmuch as on one hand the Applicant seeks possession of its assets on the other seeks directions upon the answering respondent to disclose whereabouts of the said assets.

Learned Advocate appearing on behalf of the Liquidator submitted that the entire sale was conducted by Punjab National Bank in the year 2022 in full compliance of the provisions of the SARFAESI Act. At no point of time during the auction or thereafter, did the Applicant or Hero Fincorp Limited ever raise any objection despite being specifically informed about the auction.

Learned Advocate would further submit that none of the claimed machines could be identified inside the factory premises. It is stated that at the time of handing over physical possession of the assets of the Corporate Debtor on 20^th October, 2023, the representatives of the Punjab National Bank carried a pre-printed document titled “Transfer of Physical Possession of the Property (of NPA A/c Gemus Engineering Limited) located in Mouza- Chandipur…” and the notation was as follows:

It is also submitted that during the physical verification of assets and preparation of inventory, it was categorically recorded that

It is alleged that Hero Fincorp Limited never chose to exercise its rights at the relevant time instead assigned its rights to the Applicant, Kotak Mahindra Bank, who has belatedly sought to take steps.

Finally, it is submitted that since the location of the said machines could not be identified and the whereabouts could not be located at the premises, handed over to Calforge Steel Private Limited, this belated application has no merit whatsoever.

We have heard the learned Advocate for the parties and perused the sale certificate issued to Calforge Steel Private Limited which is as under:

The said sale certificate as it appears describes the immovable property and categorically mentions and includes the plants and machineries, building, structure, sheds therein, without excluding any particular machine as claimed by Kotak Mahindra Bank.

Further Form CGH-1 indicating charge over the property in favour of Punjab National Bank merely indicates the following:

Here also no specific charge over any particular machine is made out.

A letter dated 20^th September, 2022 seems to be by Calforge Steel Private Limited to the Officer-in-Charge, Uluberia Police Station which indicates that one Mr. Rakesh Kumar Mishra, Hero Fincorp Limited is disturbing the peaceful possession of Calforge Steel Private Limited and trying to remove one CNC machine from the factory.

It is also evident that while transfer of the assets to Calforge Steel Private Limited, it was recorded by Punjab National Bank that CNC Vertical Turret lying in the concerned premises is reportedly hypothecated to Hero Fincorp Limited. The said letter indicating transfer of physical possession, dated 20^th October, 2023 also mentions letters dated 11^th August, 2022 and 18^th August, 2022 and an e-mail of Hero Fincorp Limited dated 17^th August, 2022 as enclosed to the said letter. There are subsequent communications to Hero Fincorp Limited and Mr. Rakesh Kumar Mishra of Hero Fincorp Limited requesting them to remove the machines from factory premises but there was no response from their side.

Accordingly, since neither Hero Fincorp Limited nor its assignee Kotak Mahindra Bank has taken any steps to remove the machines in question which they claimed to hold charge over created by the Corporate Debtor in their favour, this belated application for disclosure of whereabouts of the machines and their hand-over cannot be allowed.

However, for the ends of justice, we direct Calforge Steel Private Limited to try to locate and identify the machines in question being CNC Vertical Turret which was admittedly hypothecated to Hero Fincorp Limited and if identified and located, within the premises in question hand-over the same to Kotak Mahindra Bank within a period of one month from the date of uploading of this order.

Accordingly, IA(I.B.C)/469(KB)2025 stands disposed of.

There will be no order as to costs.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.