BANGALORE: A Division Bench of the Karnataka High Court on Wednesday upheld the single judge bench decision of refusing to interfere with the action initiated by the consortium of banks for taking possession of ‘Kingfisher House’, a prime property at Mumbai owned by Kingfisher Airlines Ltd (KAL).
A Division Bench comprising Justice Dilip B Bhosale and Justice B Manohar passed the order while dismissing the appeal filed by KAL question December 11, 2013 order of a single judge bench.
The Bench said that the single judge had rightly held that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002 override the provisions of the Companies Act.
The Bench also made it clear that the Sarfaesi Act is not an alternate to the winding up petitions, and the banks could chose to stand outside the winding up process, in seeking to enforce the secured interests, and simultaneously prefer a company petition too seeking winding up of the company in respect of the balance of the debt not covered by such security. KAL had challenged the application, filed by the SBICAP Trustee Company Ltd, on behalf of the consortium, before the Chief Metropolitan Magistrate, Esplanade at Mumbai, to take possession of Kingfisher House, which is pledged to the banks to rise loan.
I-T Dept claim
Though the High Court’s orders have favoured the banks, the Income Tax authorities, who have attached this property as KAL failed to remit crores of rupees tax deducted at source to the Government, have claimed that Department has primary claim over this property as amount due to the Government under any statute and, in this case, under the provisions of IT Act, 1961, will have priority over other debts.