State Bank Of India v. Business Forms Limited

D.C Thakur, Presiding Officer:— While delivering the judgment in TA 86 of 2002, this Tribunal has become keenly interested in dealing with and determining an issue, necessarily arising hereinbelow—

whether the impleadment of any Bank or Banks or any financial institution or financial institutions in a legal action has been perfect and lawful by another Bank which has no concrete or direct proof, at the relevant point of time of impleading either of them or each of them, as to the facts to establish that the impleading Bank stands, so far as the ranking of charge is concerned, as the first charge holder of the assets (current or fixed) of its borrowers or on a pari passu treatment likely to be given effect to along with its other co-creditors which may be no doubt the other impleaded Bank/Banks or financial institution or financial institutions.

2. For the reason of giving a satisfactory reply to such query which has been framed on the basis of the application filed by the applicant Bank, the written statements jointly filed by the borrowers (being the constituents of such Bank), the written statement filed on behalf of State Bank of India Home Finance Limited (hereinafter referred to as the defendant No. 8), the written statement filed on behalf of the Industrial Reconstruction Bank of India (hereinafter called the defendant No. 6), the evidence-on-affidavit filed by the applicant Bank, the cross-examination of the Bank's witness and objection filed by the borrower defendants which have constituted the materials on record, it is being highly necessary to make mention summarily of the background of the commercial relationship between the applicant Bank and the constituent borrowers. In the general meeting of the shareholders of the defendant company, which is a “public company” within the meaning of Section 3, Clause (iv) of the Companies Act, 1956 (Act No. 1 of 1956), it was resolved, in amendment and supersession of the earlier Resolution passed and adopted, under Clause (d) of Subsection (1) of Section 293 of the said Act, in another meeting which was factually held on December 30, 1985, in relation to the exercise of borrowing power by the Board of Directors of the said Company (herein for short called “the Board”), after consenting to and giving the power to the said Board “for borrowing moneys from time-to-time not exceeding in aggregate Rs. 3 (three) crores outstanding at any one time notwithstanding that the moneys to be borrowed, together with the moneys already borrowed by the Company (apart from temporary loans obtained from its Bankers in the ordinary course of business) may exceed the aggregate of the paid up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose”. After-deriving substantively the strength from the adopted Resolution, the defendant Nos. 1 and 2 made one application to the applicant Bank's Shyam Bazaar Branch for grant of the cash credit account to the said Company, that application was able to receive response from the said Bank through its letter of sanction bearing No. (CAD) (Genl.) 1013 dated 15.10.1990 being addressed to the said Company. In that letter the Bank's intention was expressed in clear words that it was willing to grant or continue the following credit facilities to such company payable on demand but subject to a periodical review at the Bank's discretion. Again, the applicant Bank expressed its intention through the above letter of itself to grant the credit facility like cash credit to the extent of a sum of Rs. 83 lakhs, working capital to the extent of Rs. 18 lakhs and D.D purchase (cheques) to the extent of Rs. 5 lakhs—all to be covered within the overall cash credit limit of Rs. 83 lakhs. All these facilities were designated as the ‘fund based facility’ by the applicant Bank in its letter. The non-fund based facility was also specifically meant to consist of the letters of credit (including foreign and inland credits) to the extent of Rs. 15 lakhs and Bank guarantee to the extent of Rs. 22 lakhs. In that letter it was clearly postulated that the working capital term loan of Rs. 18 lakhs would be made repayable in twelve equal monthly instalments, each of which would be for a sum of Rs. 1.50 lakhs by the said Company. Such repayment would commence from October 1990. In this regard the rate of interest to constitute the amalgam of itself with the principal amount would be 17.5% per annum with quarterly rests.

3. The DD purchase (cheque) (fund facility of DD purchase to the extent of Rs. 0.50 lakhs) would be made available from the Madras Bank of itself. In that letter the said defendant company was informed of the material fact that all other facilities were to be availed by itself of from the Shyam Bazaar Branch of the said Bank. The other prior conditions, which were proscribed in that letter for the reason of due compliance with themselves by the defendant company, were also contained. Those conditions include inter alia the applicant Bank's right to examine the books of accounts of the company, to have the factory premises of itself inspected from time-to-time, the audited balance sheet and profit and loss accounts for the financial year 1989-90 to be furnished itself immediately. The applicant Bank also demanded as of right from the said company the immediate regularization of the irregularity, if at all committed in relation to the accounts of the group companies of Business Forms Ltd. (except M/s. Rototech Ltd.); those conditions did also prescribe the duty or liability for the company to arrange for the immediate stock audit, not to cause any drastic change to take place with its management (set up at the time of sanction without the prior permission to be obtained from the applicant Bank), to keep the Bank informed of the happening of any event or eventualities likely to have a substantial effect on its production, sales, profits, etc. such as labour problem, power cut, etc. and the remedial steps proposed to be taken by itself. The said letter of sanction was received on behalf of the said defendant company, and it was, subsequently and pursuant to the condition imposed by the applicant Bank, submitted to the Shyam Bazaar Branch of such Bank, indicating after that it had received such letter of sanction of the Bank.

4. By its letter dated November 20, 1990, the defendant company informed the applicant Bank of that Shri Arun Sud being the defendant No. 2 had already been empowered and authorized to act for and on behalf of the said company; to that effect the extract of the Resolution passed in the meeting of the Board of Directors held on December 16, 1989 at 6A. Middleton Street, Kolkata-700071 after being duly certified by the Chairman of itself was forwarded to the Shyam Bazaar Branch of the said Bank for its information and necessary action.

5. By a letter dated December 28, 1990 the applicant Bank communicated certain rearrangement of the credit limit; such reasonable suggestion of the applicant Bank was accepted by the defendant company and the terms specifically contained in the said letter were also accepted by Shri Arun Sud, the defendant No. 2 for the company.

6. After being empowered by the company being reflected through the Resolution adopted in the meeting of the Board of Directors of itself held on December 16, 1989, Shri Arun Sud, being the defendant No. 2 and Shri M.L Kachroo being the defendant No. 3 executed one Demand Promissory Note for a sum of Rs. 1,38,00,000/- on December 28, 1990 for the defendant company. On the very same day and date one Demand Promissory Note was delivered; the applicant Bank did receive from the executants one pledge letter with the list of balance and machineries, which were installed on the several days and dates in the factory premises of the defendant company being situated at ½ Digla Road, Calcutta-700020 numbering about 116 over which the declarant/executant were self-declaring themselves the absolute owner; and in the said pledge letter, it was further declared in clear words that any person other than the present applicant Bank would have no lien over such 116 plants and machineries and interest therein. Those plants and machineries were declaredly installed in the factory premises for the very purpose of the business of the company and those were not installed there with the intention of making those the permanent fixtures so as to form part of the immovable property. The said pledge letter did also contain an undertaking not to remove the machineries from the said premises without the prior permission of the Bank, in writing. A letter of undertaking not to create any further charge over the property and assets of the defendant was written on December 28, 1990 to the Branch Manager of the Shyam Bazaar Branch of the applicant Bank after containing an express undertaking therein which is being reproduced below:

“….no such mortgage, charge, lien or incumbrance shall be made or allowed while we remain indebted or liable to you in any manner without your previous written consent.”

The agreement in Form ‘K’, that is, ‘Hypothecation Agreement’ was also executed by the defendant Nos. 2 and 3 on behalf of the said defendant company for the reason of enjoyment of the various non-fund based facilities not exceeding a sum of Rs. 37 lakhs.

7. On the very same day an agreement of continuing personal guarantee was jointly executed at Kolkata by the defendant Nos. 2 and 3; and the said agreement was executed in presence of two witnesses, though the blank spaces of the said printed document were later filled in by one Tushar Bose. For the enjoyment of cash credit facility to the limit of Rs. 83 lakhs, the defendant Nos. 2 and 3 stepped into the shoes of the personal guarantors after creating collaterally an equitable mortgage on the properties. While creating such collateral security in favour of the applicant Bank, the defendants expressly said that no person other than the Bank would have the first charge on the fixed assets of Madras and Bombay plants of the credit facilities enjoying company and the applicant Bank would stand as the second charge holder on the fixed assets of Calcutta plant of the said company subject to the charge that had already been created by those defendants in favour of another defendant, that is, West Bengal Financial Corporation (being hereinafter referred to as the said Financial Corporation).

8. From the above execution, in particular, a declaration made on that very date by the defendant Nos. 1 and 3 on behalf of the defendant No. 1, it appears that the defendants have prescribed voluntarily and independently the ranking of charge in favour of the applicant Bank. At the time of being sanctioned, it has been bilaterally agreed regarding the rate of interest which shall be one percent above SBAR with, minimum of 17.5 percent with quarterly rests. Such sanction would cover a period of one year from the date of sanction likely to be renewed after the expiry of such period but being subject to the absolute discretion of the Bank.

9. There was prescribed and stipulated further a condition to be compulsorily followed and fulfilled by the defendants that the charge created by those defendants on behalf of the defendant company on the securities in favour of the Bank would be compulsorily registered with the Registrar of Companies within a period of ten days from the date of creation of such security through the execution of documents and the registration of such charge would be submitted and produced by those defendants to the applicant Bank as the documentary evidence as to when such registration had taken place in strict compliance with such stipulated condition. Accordingly, there was submitted with the Bank a Certificate of Registration of modification of charges issued under Section 132 read with Section 135 or the Companies Act, 1956 bearing the Registration No. Company No. 21-25782 which was factually issued on May 30, 1991 in favour of the defendant company by the Assistant Registrar of Companies, Government of India, Ministry of Industry. Department of Company Affairs, Office of the Registrar of Companies, West Bengal. It is necessary to make mention that the said Certificate is a Certificate of Registration of the Modification of Charges earlier created by the said Company in support of four several mortgages or charges created during the period from November 19, 1982 to January 29, 1987.

10. As a result of such fulfilment of the terms and conditions and the execution of different documents, the commercial relationship between the applicant Bank and the defendant company did emerge into practice after taking the form and character of a ‘corporate debt’. The defendant company started to avail itself of the several credit facilities in several accounts and also hypothecated, mortgaged, and or charged its assets by way of first charge so far as the first charge in relation to the Bombay and Madras plants was concerned and also prescribed a second charge in favour of the said Bank over the fixed assets in relation to its Calcutta unit after prescribing the first charge in favour of the defendant No. 4 and on payment of the claims, of the said charge holder the applicant Bank would have and stand as the first charge holder. Again, on December 9, 1993 both the above defendants expressly acknowledged their liability to the applicant Bank for payment of the said promissory notes which were executed on December 28, 1990 for Rs. 1,38,00,000/- by the defendant No. 1 in favour of themselves and endorsed by themselves, after holding and binding them liable for such indebtedness beyond the scope of even Section 18 of the Indian Limitation Act, 1963 and any like Limitation Law, in order to preclude the operation of any Limitation Law to serve the Bank's claim and interest.

11. The defendant company enjoyed the credit facilities which were being actually disbursed from the Shyam Bazaar Branch or itself till November 1992; and from November, 1993 the account maintained by the defendant company as the constituent of the applicant Bank started to become irregular. In spite of the due service of demand letters upon each of the three defendants they were found negligent in paying back the lent amount to-the applicant Bank. Besides, other irregularities and defaults were commissioned wilfully by the defendants.

12. On March 31, 1995 the applicant Bank was able to find out that an aggregate sum of Rs. 119,21,270.28 p., which was in fact calculated upto March 31, 1995 after giving the due credits for all sums of money paid and or realized on behalf of itself and after adjustment therewith, was found to be due and recoverable from the said defendant to itself in relation to the Cash Credit (stock and B.D account), Cash Credit (D.D and Cheque purchase account), Working Capital Term Loan account.

13. The applicant Bank was thereafter compelled to issue the demand notices upon each of the defendants, but each of which was unable to produce or yield any fruitful result to such Bank. The account maintained by the defendant company with itself was in reality found to generate ‘NIL’ income or ‘NO’ income to the said Bank. Thereafter the issuance of the legal notices upon those defendants did become consequent and inevitable. Such legal notices have also failed to serve the purpose of the applicant Bank.

14. Then, the applicant Bank was compelled to take the legal recourse by way of preferring one application under Sub-section (1) of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against the defendant company and its Managing Director as the defendant No. 2 and the other defendants. In that application, the applicant Bank was found to have prayed for a Certificate of Recovery to be issued for payment of Rs. 1,19,21,270.28 p. with interest from April 1, 1995 at 17.5 percent per annum with quarterly rests by the defendant Nos. 1 to 3 jointly and severally and also for determination of priority among the secured creditors which have been impleaded in that application as the defendant Nos. 4 to 8. On June 16, 1995 the said application was filed, before the Debts Recovery Tribunal at Salt Lake and was there registered as OA No. 130 of 1995; after being prima facie satisfied with the material facts as intended to be disclosed through the said application, the said learned Tribunal was pleased by its order to issue the summons upon the eight defendants asking them to show cause or causes within thirty days of receipt thereto as to why the reliefs prayed for would not be granted.

15. Thereafter, there was filed a written statement on behalf of the Industrial Reconstruction Bank of India, a body corporate constituted under the Industrial Reconstruction Bank of India Act, 1984 (hereinafter being referred to as the defendant No. 6). A copy of the said written statement was served upon the learned Advocate, appearing for the applicant Bank. On August 30, 1995 a written statement was filed on behalf of the Industrial Development Bank of India, a body corporate established under the Industrial Development Bank of India Act, 1964 (hereinafter referred to as the defendant No. 5)—such relevant fact does appear from Order No. 8 passed on August 30, 1995. A copy of such written statement was served on the applicant Bank. Those two written statements were accepted by the learned Tribunal; and were kept with the record maintained in OA/130 of 1995.

16. On July 21, 1995 the defendant Nos. 1, 2 and 3 did file their written statement; the copy of such written statement was served on the Learned Lawyer for the applicant Bank. Such shall appear evident from Order No. 5 made and passed on July 21, 1995. On November 2, 1995, the defendant Nos. 5 and 6 specifically declined to submit or adduce any evidence-on-affidavit. On behalf of the defendant Nos. 1, 2 and 3 there was also expressed an intention not to adduce any evidence-on-affidavit. Again, on November 9, 1995 the similar intention was also expressed on behalf of those defendants. There was filed that day one evidence-on-affidavit on behalf of the applicant Bank after service of the copy of such Affidavit on the other side. The Order No. 11 dated November 15, 1995 speaks of the above facts. But there was filed one objection, on behalf of the defendant Nos. 1, 2 and 3 to the evidence-on-affidavit filed on November 9, 1995. On November 16, 1995 Shri Arun Kumar Bhattacharyya was examined and cross-examined in full as the P.W No. 1 and was thereafter discharged. Order No. 12 made on November 16, 1995 reads inter alia the following:

“Evidence on behalf of the applicant Bank is closed as learned Lawyer declines to adduce further evidence. The evidence on behalf of the respondents is closed as the learned Lawyer declines to adduce any.”

By Order No. 14 dated February 12, 1996 the application preferred by the defendant Nos. 1 to 3 was rejected in view of the following:

“In the context, I am constrained to hold that the respondent Nos. 1, 2 and 3 on the date of hearing argument filed a petition for adducing evidence which was as allowed was only to cause delay.

In the circumstances, the evidence on behalf of the respondent Nos. 1, 2 and 3 is closed particularly when they have abandoned it.”

17. As this Tribunal was set up by the Central Government under Section 3 of the Present Act after conferring the jurisdiction (territorial), upon the said Tribunal, the pending OA/130 of 1995 stood transferred by operation of law from the erstwhile learned Transferring Tribunal to the present one, before which OA/130 of 1995 was renumbered as TA/86 of 2002. On Friday, June 28, 2002, the applicant Bank did make one application for the amendment of the Section 19 application, because such amendment was felt necessary for substituting the name of the original defendant No. 7 ANZ Grindlays Bank Ltd, by the M/s. Standard Chartered Grindlays Bank Ltd. Since that amendment application involved substantially not the merit to be determined on the basis of the original application preferred on June 16, 1995, this Tribunal was pleased to allow the said application instantly after granting leave to the applicant Bank to cause the necessary amendment with the cause title portion and the relevant portions of the above original application within a period as prescribed and fixed by itself. Again, on July 19, 2002 the application for amendment of Section 19 application was further made by the applicant Bank for the reason of bringing on record the Official Liquidator, High Court, Kolkata for the defendant company, because the said defendant company had already been ordered to go into liquidation and the official liquidator attached to the Hon'ble High Court at Kolkata was appointed the official liquidator for the said company and also empowered to take over the possession over all properties belonging to the said defendant company. On the similar ground that application was also allowed by this Tribunal. The applicant Bank was directed to serve the copies of the amended application upon the official liquidator for the defendant company No. 1 as well as the defendant No. 7 being M/s. Standard Chartered Grindlays Bank Ltd., appearing at no time before both the Tribunals. Even at the time of the pronouncement of this judgment in TA/86/2002, this Tribunal is failing to find out any action or step on the part of the said Official Liquidator for the said Company (in liquidation).

18. On Tuesday, February 18, 2003 there was filed one written statement on behalf of he defendant No. 8. At paragraph No. 3 of the said written statement, the said defendant has categorically raised the point for consideration. The said defendant has claimed that it has not, even at the time of filing the above written statement, granted any credit facilities to the first defendant (in liquidation); nor it has created any enforceable charge in favour of the other defendants. An allegation of misjoinder has also been consequently raised against the applicant Bank on the ground of no cause of action that has accrued in favour of the applicant Bank against the above answering defendant. At paragraph No. 5, the said answering defendant has made one claim before this Tribunal to declare itself absolved of any liability to the applicant Bank; and being consequent upon it, the deletion of its name from the record maintained in T.A No. 86 of 2002 has become consequent and inevitable.

19. the written statement filed on behalf of the defendant Nos. 1 to 3 is being taken up for consideration. At paragraph No. 1, sub-para (b) of such written statement, it has been expressly claimed on behalf of those defendants that for the reason of loss suffered by those defendants, the defendant No. 1 has already instituted one suit before the Hon'ble High Court claiming a sum of Rs. 3,49,56,500/- against the applicant Bank. In that paragraph such loss has been caused to take place by the non-disbursement of fund in respect of the export packing credit facility which has been principally approved by the applicant Bank in favour of the defendant No. 1. Such loss has been described in the following manner:

After being induced by such approval it procured one order from M/s. Iran Carbonless Paper Company, for the purpose of execution of which, it was compelled to borrow money from the open competitive market requiring from such borrower high interest. The reputation which the defendant company had been able to achieve had been lost. In the said paragraph, the said defendant has further alleged that the case of M/s. Iran Carbonless Paper Company is not a solitary one. At paragraph No. 1, sub-para (c) the allegation of non-enhancement of the credit facility by the Bank which has ultimately resulted in the non-expansion of the business of the defendant company and the infliction of the substantial loss upon the said company has been levelled against the applicant Bank. Such loss has been quantified by the defendant No. 1 to the extent of a sum of Rs. 3,49,56,500/- for the realization of which such defendant has instituted, as mentioned earlier, one Suit before the Hon'ble High Court at Kolkata against the applicant Bank.

20. At paragraph No. 3 of the said written statement, the defendants categorically contend that the claim of the applicant Bank would in no way exceed Rs. 10 lakhs against themselves and the lacking of the statutory, pecuniary jurisdiction has become inevitable for this Tribunal in the present case. At paragraph No. 5, the defendants have been though found in making the admission of the sanctioned Working Capital Term loan facility, Cash Credit facility and non-fund based facilities for opening the Letters of Credit and Bank Guarantees, they are being found denying and disputing the creation of the first charge in favour of the applicant Bank which may become evident from the following words of the defendants:

“The aforesaid credit facilities were against hypothecation of all the current assets but not all the fixed assets by way of first charge of the Bombay and Madras units of the respondent No. 1 or against hypothecation of all the current assets of the Calcutta Plant but not all fixed assets of the Calcutta Plant by way of second charge subject to the first charge in favour of the respondent No. 4 as alleged.”

The denial of and dispute over the creation of the personal guarantee covering the present and future indebtedness and liabilities of the defendant company as the defendant No. 1 created by the defendant Nos. 2 and 3 in favour of the applicant Bank has also been found present.

21. The paragraph No. 6 of the said written statement appears to be more or less the reproduction of what have been stated and contained in paragraph No. 4, paragraph No. 5 of the said written statement. At paragraph No. 8 there has been found an admission of the sanction by the applicant Bank of several facilities to the defendant No. 1; but that paragraph contains in itself an allegation being more or less similar to the allegation already mentioned, raised by the defendants against the applicant Bank. At paragraph No. 9 it has been, again, contended the defendants have not committed any default in paying the instalments on behalf of the defendant No. 1 which has to pay under the various credit facilities enjoyed till March, 1994, they allege in that paragraph: the latter half of 1994 has witnessed the non-cooperation from the applicant Bank, as a result of which the business run by the defendant No. 1 has been bound to suffer substantially, resulting in reducing the regular account maintained by the defendant No. 1 with the applicant Bank into an irregular one. In that paragraph the repeated requests made by the defendant company to the applicant Bank for the enhancement of the credit facilities for the reason of getting rid of the acute financial difficulties as met by itself have been found expressly whispered; but without no result. The enjoyment of the overall limit of Rs. 138 lakhs on and from December 20, 1990. by the defendant No. 1 has also been disputed. Instead, the defendant No. 1, it has been claimed, started to enjoy those facilities, which were sanctioned in or about October 1990, from the year 1992. At paragraph No. 10 the allegation of the signing of the several purported blank Banking documents being the Annexures D, D1 to D6 has also been expressly made against the applicant Bank. So far as the allegation of signing of the blank Banking documents is concerned this Tribunal is quoting further the words of the defendants:

“At the time the said documents were made to be executed by the respondent Nos. 2 and 3 for and on behalf of the respondent No. 1 the dates and figures were not mentioned in the documents.”

Not only that, the filling up of those blank Banking documents by the officials of the applicant Bank was alleged to be made in their absence, to perpetuate the interest of such Bank in an unlawful and illegal manner.

22. At paragraph No. 11, it has been alleged clearly that the execution by the defendants of the purported documents dated December 20, 1990 being the Annexure ‘D7’ has been intended to be used illegally against those defendants, because the said document does not contain or bear any date or particulars in it. The filing of the said blank documents by the officials of the Bank in their absence has also been raised in that paragraph. In the paragraph No. 12 the specific denials of mortgage, hypothecation, the creation of first charge over its assets of the Bombay and Madras units have been found present.

23. For the purpose of convenience, the entire paragraph No. 12 of the said written statement is being reproduced below—

“with reference to paragraph v(8) of the said application it is denied that the first respondent hypothecated or mortgaged or charged by way of first charge all its assets of the Bombay and Madras Units or hypothecated or mortgaged or created any charge by way of first charge over the current states or create any second charges over the fixed assets of the Calcutta Unit as alleged. As far as the purported revival letters 1 and 2 both dated 9th December 1993 are concerned, it is stated and submitted that the said purported revival letters in Form 1 and 2 were signed by the respondent Nos. 2 and 3 and in blank. When the said purported revival letters were signed by the respondent Nos. 2 and 3 the said revival letters were in blank. It now appears that the dates and figures in the said revival letters had been subsequently inserted by the officials of the applicant. Thus, the said revival letters cannot be used against the respondent No. 1. It is denied that the said purported revival letters show any indebtedness to the tune of Rs. 138 lakhs as alleged. It is denied that the said purported revival letters can be regarded as letters of acknowledgement as alleged.”

24. The fact that the defendants have resisted strongly the allegation of the account maintained by the defendant company (in liquidation) with the applicant Bank to become irregular being occasioned by the non-observance of the terms and conditions by the said defendants shall become evident, if paragraph No. 13 of the said written statement is read as a whole. In the paragraph Nos. 14, 15, 17, 19 of the said written statement, those defendants have vehemently challenged that a sum of Rs. 1,19,21,270.28 p. has never become due and payable by those defendants to the applicant Bank; they have further challenged the Bank's entitlement to any order for payment of the said sum and they have clearly disputed and denied the allegation of any evasion of payment of the sum mentioned above. As mentioned earlier, those defendants have declined to adduce evidence to support what have been expressly said by themselves in the said written statement, though they did jointly prefer one application on January 30, 1996 for adducing the evidence which was statutorily rejected by the erstwhile learned Transferring Tribunal.

25. This Tribunal is seriously affording to give the due weightage to each of the nine questions which has been put for replies to Shri Arun Kumar Bhattacharya, the witness offered on November 16, 1995 by the applicant Bank for the purpose of cross-examination.

26. While making a reply, to the question before the learned Presiding Officer of the erstwhile Tribunal, the said witness gave a straight cut but bold reply to the allegation of obtaining the signatures of the defendant Nos. 2 and 3 on blank formats. The allegation of filling of the blank formats was denied in unequivocal words by the said witness. Let me quote the said witness:

“Tushar Bose was a staff of the Bank of Shyam Bazaar Branch at the relevant time. Respondent Nos. 2 and 3 were present when Tushar Bose at their request filled in the formats.”

According to the said witness, the filling up of the formats was done in the conspicuous presence of the defendant Nos. 2 and 3. Such has been more or less echoed in paragraph Nos. 9 and 10 of the evidence-on-affidavit filed on November 9, 1995 on behalf of the said Bank.

27. The allegation of a fabricated and inflated claim had been denied by the said witness, while making a prompt reply to the question No. 6 like whether Bank has raised a fabricated false claim against those defendants. The question No. 6, being specifically put that day to the said witness for reply, deserves the due attention to be given by such adjudicating body, because the reply made in this regard is suggesting an admission of the debt liability by those defendants. In that question, the allegation of not giving the proper opportunities to the defendant Nos. 2 and 3 to “repay the loan” was also raised against the applicant Bank. Through such question a clear-cut admission as to the debt liability to the extent of the sum of Rs. 1,19,21,270.28 p. as claimed by the applicant Bank is coming out. It may be reasonably presumed on the basis of such relevant fact that those defendants have confirmed, accepted and acknowledged the debt liability, but they have not been given the sufficient time to pay back such money to the applicant Bank.

28. By raising such allegation the defendants intended to establish before such judicial body that in case they were given sufficient time and opportunities, they would have been able to clear off such debt; and being consequent upon such payment, there would be no claim case against themselves. It was perhaps the clear intention of the maker of the above question. Same intention has been more or less retained by those defendants while putting the question No. 9 to the said witness for making the reply. In response to such question, the reply made has been in the ‘negative form’, namely,

“Last enhancement was made in 1990 and, as such, I told that sufficient opportunity was given to the respondent Nos. 1 to 3.”

Even if that question is taken for granted, the defendants ought to have shown meanwhile the equity and good conscience to the applicant Bank. But unfortunately this has not happened here, which shall appear evident from the record maintained in TA/86 of 2002 previously being OA/130 of 1995.

29. To this extent the interplay between the applicant Bank and the defendant Nos. 1 to 3 has been given a precise description—after leaving another fact or aspect of such case open for determination. So far as the impleadment of the defendants is concerned, the crystally patent feature of TA/86/2002 (which previously was OA/30 of 1995) has already emerged from the pleading of the applicant Bank and has been that the defendant Nos. 1 to 3 are the private defendants making an application to the applicant Bank for the very purpose of enjoying the different types of facilities, whereas the other defendants, namely, the defendant Nos. 4 to 8 are either the financial institutions or a foreign Banking company (being the unincorporated company as far as the provisions of Companies Act and the Present Act are concerned).

30. At the beginning of such judgment, it has been pointed out on the basis of the pleading of the applicant Bank that whether the impleadment of the defendant Nos. 4 to 8 has been highly necessary in view of the fact that those defendants have on several days and dates made enquiries with such Banks for the purpose of granting the proposed loan to the defendant Nos. 1 to 3. The latter group of defendants needs further the classification of themselves. Of such five defendant's, the defendant Nos. 5 and 6 are in the character of the financial institutions to be covered by Section 2(h)(i) of the Present Act read along with Section 4-A of the Companies Act, 1956. Such classification has been founded on the other-law regulating all financial institutions as well as the present special enactment conferring necessarily the competence of entertaining any application to be preferred by either of such typical suitors upon the Tribunal to be constituted under the said Act and barring the jurisdiction of any Court including the. High Court (but excluding the High Court under Articles 226 and 227 of the Constitution of India)—which has been clearly enunciated by the Hon'ble High Court at Kerala in the case of Industrial Credit and Investment Corporation of India Ltd. v. Vanjinad Leathers Ltd., II (1997) BC 501 : AIR 1997 Ker. 273, at page 275. The other classes are 10 be covered expressly by Section 5 of the Banking Regulation Act read along with Section 6 of itself and the defendant No. 8 being only a company incorporated under the Companies Act, 1956 to carry on business from its registered office being situated at 11 and 16, Shakespeare Sarani, Calcutta-700071. As mentioned earlier, the defendant No. 8 has filed the written statement which has been discussed earlier.

31. For the reason of dealing with and determining the issue like, whether the impleadment of defendant Nos. 5 and 6 has been just and lawful, this Tribunal is also endeavouring to go through the specific pleadings (the written statements of those defendants). After an examination of such written statements, the following are emerging out:

1. Both the defendant Nos. 5 and 6 are the financial institutions incorporated under the provisions of the two separate Acts, namely, Industrial Development Bank of India Act, 1964 and Industrial Reconstruction Bank of India Act, 1984 (LXII of 1984).

2. So far as the defendant No. 5 is concerned, an agreement has already been entered into on September 26, 1991 between the said defendant and the defendant No. 1 whereby the former has agreed to sanction a loan to the defendant No. 1 not exceeding Rs. 90 lakhs on the terms and conditions set out expressly in the loan agreement. Such loan was sanctioned by the defendant No. 5 to the defendant No. 1, while making a response to the proposal as made by the defendant No. 1 as a borrower to set up pilot plan??? scale facility for development of technology for micro-encapsulation of perfumes and cosmetic oils at Vandalur, Chengalput District, the State of Tamil Nadu.

3. In or about 1991, the defendant No. 1 approached the defendant No. 6 for assistance to be provided under Equipment Finance Scheme being shortened as “EFS”. By a letter dated June 10, 1991 which was claimed to have been received by the defendant No. 1, the defendant No. 6 sanctioned the defendant company (in liquidation) a term loan of Rs. 64 lakhs under the said scheme. The term loan agreements in both the occasions contained the terms and conditions to be compulsorily carried out by the defendant No. 1 amongst which may be mentioned of an exclusive first charge in favour of the defendant No. 6 by way of hypothecation of the equipment and machinery “purchased/to be purchased out of loan, together with its spares, tools and other accessories installed/to be installed”, at the borrower's factory at 37/1; Velachery Main Roads Madras-600042, State of Tamil Nadu.

32. By a deed of hypothecation dated August 2, 1994 executed by the defendant No. 1 in favour of the defendant No. 5, the former hypothecated by way of an exclusive charge the machinery, more particularly described in the Schedule to the said deed of hypothecation together with machinery, spare parts, tools and accessories—present and future pertaining to the said machinery, as security for the payment to itself Of the particular loan amount together with further interest to the latter. In respect of the loan to be had from the defendant No. 5 a deed of guarantee executed on September 26, 1991 by the defendant No. 2 in favour of the said defendant was also found present. For the reason of enabling the defendant company to enjoy the sanction under the “EFS” from the defendant No. 5, the defendant No. 2 executed further a deed of guarantee on August 2, 1994. Not only that, the charge created by the defendant company in favour of the said defendant was duly registered with the registrar of Companies, West Bengal, Kolkata in Form No. VIII and Form No. XIII, the account position of the defendant No. 1 stood as on June 26, 1995 in respect or the said loan in the following manner:

“Rs. 100.27 lakhs as well as Rs. 163.01 lakhs

because the said defendant claimed in its written statement that an amount of Rs. 90 lakhs in respect of the loan sanctioned under Venture Capital Fund Scheme and a sum of Rs. 150 lakhs in respect of the Equipment Finance Scheme was sanctioned and disbursed to the defendant company.”

33. Like the defendant No. 5, the defendant No. 6 has also been placed in the character of a secured creditor by the said company. Like the previous one, the execution of the Deed or Guarantee was caused to be executed on July 31, 1991 by the defendant No. 2 in favour or the defendant No. 6. Pursuant to the deeds and documents, the defendant No. 6 disbursed a sum of Rs. 64 lakhs in favour of the defendant No. 1 which also purchased the equipments, machinery out of the said loan granted by the above defendant—thus, witnessing the fullest utilisation of the lent amount. As on May 31, 1995, the defendant No. 6 became lawfully entitled to recover the under mentioned sum of money from, the defendant No. 1:

Rs. 55,33,555/-

34. In both the cases, the defendant No. 2 was also claimed to be liable as the guarantor to pay the above debt moneys. For the purpose of recovery of the said amount, the said defendant has expressed its intention in its written statement the two parallel courses of legal action, namely, one to file an application against the defendant No. 1 before the Hon'ble High Court at Kolkata under Section 40 of the Industrial Reconstruction Bank of India Act, 1984 as well as to file a claim application under Sub-section (1) of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against the same respondent; both to arise for the enforcement of claim by the above defendant as the Reconstruction Bank.

35. In the paragraph No. 5 of its written statement the defendant No. 5 makes and raises a bold claim that all the-assets and properties of the defendant No. 1 mentioned in the Deed of Hypothecation dated August 2, 1994 have been hypothecated in favour of such defendant by way of the first paramount and exclusive charge; and no other creditor of the defendant No. 1 including even the applicant Bank has any charge, whatsoever, on the same. The same has been repeated more or less in paragraph Nos. 7 and 9 of its written statement. At paragraph No. 10, the said defendant has been found emphatic in claiming that—

“the applicant is not entitled to any order whatsoever regarding the assets and properties of the respondent No. 1 which are mentioned in the said Deed of Hypothecation dated 2nd August, 1994 being annexure ‘D’ hereto in as much as the said assets and properties are hypothecated in favour of IDBI by way of first, paramount and exclusive charge and no other creditor of the respondent No. 1, including the applicant herein has any charge whatsoever on the same. The certificate issued against the respondent No. 1 herein is, therefore, required to be suitably modified so as to make it clear that the Recovery Officer would not take any steps whatsoever regarding the assets and properties of the respondent No. 1 which are mentioned in the said Deed of Hypothecation dated 2nd August, 1994 being Annexure ‘C’ hereto.”

36. Like the defendant No. 5 the defendant No. 6 has raised the same claim, if regard be had to the paragraph Nos. 7, 9, 10 and 11 of its written statement.

37. This Tribunal has taken into its minute consideration the application of the applicant Bank and the written statements of the defendant Nos. 5 and 6; and thereafter it has been able to find out that the defendant Nos. 1 to 3 are the common borrowers of both the Bank and the defendant Nos. 5 and 6. This Tribunal has further taken judicially the notice of that those defendant Nos. 1 to 3 shall have to pay compulsorily a sum of Rs. 1,19,21,270.28 p. to the applicant Bank; they shall pay further a sum of Rs. 263.28 lakhs to the defendant No. 5 and a sum of Rs. 55,33,555.00 to the defendant No. 6 because all those sums have been statutorily defrayed by the applicant Bank as well as the defendant No. 5 and 6 for the betterment of the defendant Nos. 1 to 3. In short, a sky-scrapping amount of Rs. 4,37,82,825.28p. has been substantially and evidently involved herein such amount has no limit of its own because the due amount to be recovered by the defendant No. 4 has not been added to the above sum total, for the reason of that this Tribunal has not been able to say exactly what the amount to be made payable by the defendant Nos. 1, 2, 3 has been.

38. The defendant Nos. 1, 2, 3 shall have to pay respectively the first-mentioned sum to the applicant Bank as well as the second-mentioned amount and the third one to the defendant Nos. 5 and 6 because those sums shall be in a legal way recoverable from the defendant Nos. 1 to 3 on the ground of the specific marked judicial admission as being revealed through the written statement of the said defendants which has already been on record.

39. There is no doubt that the defendant Nos. 4, 5 and 6 have not initiated any action before this Tribunal nor they have joined with the applicant Bank in TA/86 of 2002 “in which they have been impleaded as the defendants”, in view of the latter portion of Sub section (2) of Section 19 of the Present Act which laid down the following:

“…..the latter Bank or financial institution may join the Bank or financial institution at any stage of the proceedings, before the final order is passed, by making an application to that Tribunal.”

Upon a simple reading of the language, originally used in the above legal provision it appears that a right of enforcing a claim against a debtor or debtors has been given and vested in a Bank or a financial institution irrespective of the fact that such Bank or financial institution has been impleaded in an action instituted or commenced either by a Bank or a financial institution against any person being the debtor.

40. For the reason of adjudicating the respective claims of the Bank and of the defendant Nos. 4, 5 and 6 this Tribunal is specifically affording to set at rest the controversy over the ranking of charge. Inasmuch as the ranking of charge amongst a number of creditors is concerned, a judicial body should first determine and decide the day and date when such charge has been created in favour of a particular creditor. Such determination of charge shall apply only when there may be a number of creditors existing as well as conflicting with each other and the very issue: who shall be given the first charge out of such creditors or which or whose charge shall be first satisfied. It has been tentatively said with regard to the general or other creditors, from which the secured creditors are, it is well settled, distinct and separate as a class. In a nutshell, Section 73 of the Code of Civil Procedure, 1908, (Act No. V of 1908) deals with such complex situation, full of controversies, regarding the satisfaction of the different claims between a number of creditors/decree holders. Section 73 applies no doubt, to an execution proceeding of a decree commenced to be executed by a Court which has already passed and drawn it under Section 33 of the said Code read alongwith Order XX of the First Schedule to the said Code. Section 73 has been, in a word, related to the lawful distribution of assets, of belonging to the common/judgment-debtor or judgment-debtors among a number of decree holders. Accordingly, Section 73 has been necessarily entitled as—

Distribution of Assets

“73. Proceeds of execution-sale to be rateably distributed among decree-holders,”

Sub-section “3 has been with the object of controlling perfectly the entire scenario when the rateable distribution of assets held by a Court shall demand from itself such distribution among a number of persons. In that Section the right of the Government has been necessarily assigned the paramount importance as the creditor; that section describes and prescribes under Sub-section (3) of itself, the right of a Government as a class to be compulsorily read as different and distinct from other classes who shall have right of such distribution. Such may be understood, if the following language used in Sub-section (3) of Section 73:

“Nothing in this section affects any right of the Government”

is read and conceived.

41. Such has been apt to be laid down or prescribed by Sub-sections (2) and (3) of Section 178 of the Income Tax Act, 1961 (Act No. XLIII of 1961) because an assessee company and its assets are liable to satisfy any tax amount lying in arrear and payable by such company to the exclusion of their other claimants/creditors. Section 178 of the said Act has been in a word, meant for prescribing and fixing the liability of any person either appointed the liquidator of any company (in liquidation) which has been ordered to be wound up, whether under the orders of a company Court or otherwise, and a person appointed the Receiver of any assets of the Company to give notice within thirty days from his appointment as such to the Assessing Officer who has been statutorily entitled to assess the income of such company. In view of Sub-section (6) of Section 178 the legal provision for the enforcement of the revenue dues has been given the overriding enforcement character.

42. It may be mentioned that the above one has been discussed here as an example.

43. Sections 529 and 529-A of the Companies Act, 1956(Act No. 1 of 1956) have been, after their incorporation, consolidating in nature, because those sections deal in detail with who shall be the secured creditors, and the overriding preferential payments in between such creditors. Section 529-A of the said Act may, therefore, be designated as a legal provision entitled as the overriding p-referential payments. Section 529-A of the said Act lays down the following:

“Section 529-A. Overriding preferential payments.—(1) Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company—

(a) workmen's dues; and

(b) debts due to secured creditors to the extent such debts rank under Clause (c) of the proviso to Sub-section (I) of Section 529 pari passu with such dues shall be paid in priority to all other debts.

(2) The debts payable under Clause (a) and Clause (b) of Sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.”

Besides filing the written statement, the defendant Nos. 5 and 6 have not joined with the applicant Bank in TA/86/2002 and have not raised their claims before this Tribunal. Beside the defendant No. 6 has expressed its intention through the written statement of itself that it may choose to file one application before the Hon'ble High Court at Kolkata for the enforcement of its, claim against the defendant Nos. 1 to 3 under Section 40 of the Act of 1984. But the defendant Nos. 5 and 6 ought to have borne in mind Sub-section (2) of Section 34 as well as Sub-section (19) of Section 19 of the Present Act.

44. Sub-section (2) of Section 34 has been clear and unambiguous in its application. Such legal provision indicates that the entire Act of 1993 and the Rules made thereunder shall never be in derogation of; but shall be in addition to the Industrial Finance Corporation Act, 1948 and the other Acts specifically mentioned in its body. Accordingly, Sub-section (2) of Section 34 is being quoted below:

“…..the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984) and the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries. Development Bank of India Act, 1989 (39 of 1989).”

In addition it may be safely said that the defendant Nos. 4, 5 and 6 shall necessarily find their forums in this Tribunal in view of the defendant No. 1 being already ordered to go into liquidation by an order of the Hon'ble High Court at Kolkata and the official liquidator having been appointed the official liquidator for the defendant No. 1—which may be treated and accepted as the aftermath, relevant facts to indicate substantially the change in the existing fact situation, which may be treated from all angles as a fit case for the scrupulous application of the provisions contained in Sub-section (19) of Section 19, reading as follows:

“Where a certificate of recovery is issued against a company registered under the Companies Act, 1956 (1 of 1956), the Tribunal may order the sale proceeds of such company to be distributed among its secured creditors in accordance with the provisions of Section 529-A of the Companies Act, 1956 (1 of 1956), and to pay the surplus, if any, to the company;” and

the specific and unassailable distribution of assets held by itself to be made amongst the applicant Bank, defendant Nos. 4, 5 and 6 and others in accordance with the provisions of Section 529-A of the Companies Act, discussed earlier. The above finding has been perhaps founded on the existing legal system. In its recent decision in the case of Allahabad Bank v. Canara Bank, I (2000) BC 627 (SC) : IV (2000) SLT 325 : III (2000) CLT 129 (SC) : (2000) 4 SCC 406 : AIR 2000 SC 1535, the Supreme Court noted that the recommendations of the Tiwari Committee that priorities in the matter of distribution of sale proceeds of a debtor company's assets should be worked out by the Tribunal were brought into the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 under Section 19(19) (inserted by Amendment Ordinance, No. 1 of 2000). “Sub-section (19) is clearly inconsistent With Section 446 and other provisions of the Companies Act. Only Section 529-A of the Companies Act” (overriding preferential payments) “is attracted to proceedings before the Tribunal; on the questions of adjudication and execution, and working out priorities, the special provisions in the Recovery of Debts Due to Banks and Financial Institutions Act have to be applied (at paragraph No. 37, page 426, per M. Jagannadha Rao, J.)”.

45. Thus, His Lordship has further observed the following:

“Special Law v. General Law

38. At the same time, some High Courts have rightly held that the Companies Act is a general Act and does not prevail under the RDB Act. They have relied upon Union of India v. India Fisheries (P) Ltd.”.

46. As mentioned earlier, Section 34 of the Act of 1993 keeps intact the Acts mentioned and named in the body of itself; and it hinders or obstructs or limits in no way the operation and application of those named enactments. Factually speaking, the charge or the hypothecation which had been created in favour of the applicant Bank had been, from point of time, created earlier than those created in favour of the defendant Nos. 5 and 6. Such material finding has been arrived at by this Tribunal after a test which has been formulated in the preceding paragraph of the present discussion, has been applied. So far as the defendant No. 4 is concerned as also a secured creditor in relation to the defendant Nos. 1 to 3, the applicant Bank has admitted in its application in clear words that it has “second charge over fixed assets over its Calcutta Unit the first charge being of respondent No. 4 and on payment of its claims the applicant will have its first charge”. After relying on the case of Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of India, (1993) 2 SCC 144 (per Ahmadi, J.) laying down the following—

the Sick Industrial Companies (Special Provisions) Act, 1985 “…being a subsequent enactment, non obstante clause therein would ordinarily prevail over the non obstante clause in Section 46-8…..” of the said Financial Corporations Act, 1951 (63 of 1951); and the case of Allahabad Bank v. Canara Bank (supra), it may be safely held that the Act of 1993 overrides the earlier Special Acts to the extent that there is anything inconsistent between the Acts; and such has been highly necessary for the purpose of satisfying the secured claims of the applicant Bank, defendant Nos. 4, 5, 6 and 8 each of which has been no doubt the “secured creditor” before itself.

47. Accordingly, if the defendant Nos. 4, 5 and 6 have taken over the possession of the assets of the defendant company for the reason of enforcement of their respective claims or debts, they should have refrained themselves from parting with in whatsoever manner those properties that have been taken possession of by themselves until a leave from this Tribunal is obtained by them. Such observation has been made in view of the supervening situation that has already taken place. Similar view may be held in relation to the Official Liquidator, High Court at Kolkata, for the defendant company (in liquidation).

48. At the outset of this judgment, this Tribunal has been pleased suo motu to frame an issue whether the impleadment of the defendant Nos. 4 to 8 has been just and in accordance with the provision of Order Nos. 1, 9 and 10(2) of the First Schedule to the Code of Civil Procedure, 1908 which reads as follows:

“10(2) Court may strike out or add parties.—The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added”.

to be read alongwith Section 2(g) of the Act of 1993 which this Tribunal is, for all purposes, regarding as not only the definitional section but also a legal provision, that necessarily prescribes the essential requirements of impleadment by a Bank or a financial institution when such Bank or financial institution shall file an application under Sub-section (1) of Section 19 of the said Act for recovery of its dues from any debtor or debtors.

49. For the purpose of dealing with such issue each of the pleadings has been exhaustively dealt with and scrutinised carefully by this Tribunal; and thereafter it has been well able to find, out that such impleadment has not been necessary for the purpose of any mere ‘misjoinder’ or ‘non-joinder’; but it has been, moreover, necessary for the broader purpose and cause, and lastly, such impleadment by the applicant Bank of the defendant Nos. 4 to 8 has been, in a word, beneficial to the latter parties. Unless those parties are brought on record, it shall be well-nigh impossible for such Tribunal to determine the liability of the defendant Nos. 1 to 3 and thereafter to distribute the assets of those defendants amongst those parties and others.

50. Besides filing the written statement and conducting the cross-examination of the Bank's witness, the defendant Nos. 1 to 3 have actually done nothing. After considering all the facts and circumstances inseparably involved hereinabove, this Tribunal has been well satisfied with the mode of action, taken so far by the applicant Bank; and this Tribunal is necessarily and factually arriving at a conclusive finding that such Bank has been able to prove its case against the defendant Nos. 1 to 3. Again, on a careful examination of the materials on record, it is being further held that the applicant Bank has no claim against either of the defendant Nos. 4 to 8; and the defendant Nos. 4 to 8 have no claim against the applicant Bank.

Hence, it is being ordered that the application preferred by the applicant Bank on June 16, 1995 for a recovery of a sum of Rs. 1,19,21,270.28 p. from the defendant Nos. 1 to 3 is being allowed and the said application is not being allowed against the defendant Nos. 4, 5, 6, 7 and 8; and

hence, it is being further ordered that the defendant Nos. 1 to 3 shall pay jointly or severally the above sum alongwith an interest at the rate of six percent per annum from the date of filing till realization to the applicant Bank within a period of sixty days from the date of communication of such Order, failing which, there shall be issued a Certificate of Recovery to be issued under Sub-section (22) of Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act No. LI of 1993) against those defendants, the draft copy of which the learned Registrar-in-charge of this Tribunal is being directed to place before me after the expiry of such period for correction and issuance; and

hence, it is being further ordered that the defendant Nos. 2 and 3 are being injuncted from alienating or parting with or transferring in any manner either by themselves or through their men or agents or assignees their respective personal properties; and the defendant Nos. 4 to 6 shall either raise their respective claims before this Tribunal against the defendant Nos. 1 to 3 within a month from the date of communication of this Order and shall also apprise this Tribunal within the said time limit the material fact whether they have taken possession of any of the properties, movable or immovable, of the defendant Nos. 1, 2 and 3 and shall file a report within such period before this Tribunal; and

it is being further ordered that the Official Liquidator. Hon'ble High Court, Kolkata appointed the Liquidator for M/s. Business Forms Ltd. (in liquidation) being the defendant No. 1 shall submit a report of all movable and immovable properties of such defendant company which have been taken possession of by such Liquidator and list of creditors, if filed with such Liquidator, within a period of one month from the date of communication of such Order.

Ordered accordingly.