M/S BHARATH GOLD MINES LTD vs. THE STATE BANK OF MYSORE

IN THE HIGH COURT OF KARNATAKA, BANGALORE

DATED THIS THE 22ND DAY OF FEBRUARY, 2013

B E F O R E

THE HON'BLE MR.JUSTICE ARAVIND KUMAR

C.A.NO.1040/2007 IN CO.P.NO.180/2000

BETWEEN:

M/s.Bharath Gold Mines Ltd., Oorgaum Post K.G.F Karnataka State Represented by its Chairman- Cum-Managing Director.

..Applicant

(By Sri.T.Rajaram, Advocate for RSBG Law Firm)

AND: The State Bank of Mysore Branch at K.G.F Oorgaum Post, Kolar District.

..Respondent

This company application is filed under Rule 6 read with Rule 9 of the Companies (Court) Rules 1959 praying that for the reasons stated therein this Hon'ble Court may be pleased to:

2 Stay the operation of order dated 6th December 2006 in O.A.No.383/2003 and further notice of demand to the defendant issued under Rule 2 of the Second Schedule of Income Tax Act of 1961 and Section 25 of the Recovery of Debts due to Banks under Financial Institution Act, 1993 issued by Recovery Officer, Debt Recovery Tribunal, Bangalore dated 2.2.2007 claiming total amount of `14,23,96,901/- along with interest at 21.75%.

This Company Application coming on for Orders, this day, the Court made the following:

O R D E R

M/s.Bharat Gold Mines Limited has filed this application under Rule 6 read with Rule 9 of Companies (Court) Rules, 1959 seeking for stay of the operation of order dated 06.12.2006 passed in O.A.383/2003 and also stay of notice of demand issued under Rule 2 of II Schedule of Income Tax Act, 1961 and Section 25 of the Recovery of debts due to Banks and Financial Institutions Act, 1993 by Recovery Officer, DRT Bangalore dated 02.02.2007. It is the contention of Sri.Rajaram, learned counsel appearing for applicant that recovery officer of DRT has already initiated action

3 after passing of the order by DRT on 06.12.2006 in O.A.383/2003 for recovery of the amount due from the applicant pursuant to recovery certificate issued by DRT and the accumulated loss of M/s.Bharat Gold Mines Limited as on 31.03.1992 is `94.09 crores as against the net worth of `47.03 crores (made up of paid capital of `46.64 crores and free reserve of `0.39 crores. The company has incurred cash losses of `23.31 crores during the year ending 31.03.1992, `43 crores for the year ending 31.03.92 and `34 crores for the year ending 31.03.93 and at the end of 31.03.2005 accumulated losses has reached `1003.63 crores as per finding recorded by BIFR. On the basis of said opinion winding up of the applicant company has been registered by this court and on the recommendation made by Board for Industrial and Financial Reconstruction (BIFR for short) and this court after registering the said reference made by BIFR in COP 180/2000 is examining as to why the applicant company should not be wound up under

4 section 20(2) of Sick Industrial Companies Act. He submits that in view of Section 537 of the Companies Act respondent bank should be restrained from recovering the amount during the pendency of the proceedings. Records would indicate that no objections have been filed to this application by respondent as on date.

5 made by BIFR is to be accepted and orders are to be passed is under consideration by this court in the present COP 180/2000. Section 537 of the Companies Act mandates that any attachment, distress or execution to recover amounts due from the company in question cannot be made without leave of the court. In the instant case respondent in order to have the fruits of the decree namely to recover the amount as ordered by DRT by issuance of recovery certificate is attempting to execute the said decree as evidenced from the certificate issued by recovery officer, DRT, Bangalore dated 02.02.2007. No material is placed to indicate that the creditor has obtained the leave of this court to proceed with the recovery proceedings. In that view of the matter prayer deserves to be granted and accordingly C.A.1040/2007 stands allowed.

Sd/-

JUDGE SBN