Page 19 - Banking Finance April 2022

LEGAL UPDATE

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Why to go for costly for- general Tushar Mehta said since the and Reconstruction of Financial Assets
subject matter of arbitration was tech- and Enforcement of Security Interest
eign arbitration, asks SC nical in nature, it had requested the (Sarfaesi) Act, 2002, on request of a

Chief Justice N V Ramana, a protago- ICC for a three-member arbitral panel. secured creditor, the district magis-
nist of low cost resolution of litigation ICC had sought a response from AMR- trate (DM) or the chief metropolitan
through arbitration and mediation, BBB, which had agreed, but later with- magistrate (CMM) would take posses-
was shocked by the revelation that an drew from the arbitration process. sion of the secured assets of defaulted
arbitration under International Cham- Mehta said Bharat Coking Coal is ready borrowers and hand them over to the
ber of Commerce Paris required a pre- for arbitration but there should be a secured creditor.
deposit of more than Rs 5 crore. technical member on the panel. The Bombay HC had ruled that ap-

The dispute is between Bharat Coking Appearing for AMR-BBB, senior advo- pointment of advocates by the DM or
Coal, a PSU and subsidiary of Coal In- cate Mukul Rohatgi said that when ICC CMM for taking control of the secured
dia, and AMRBBB, a Consortium com- wanted a pre-deposit of $288,000 for assets for handing over to secured
prising AMR India Limited and Building a single member arbitration, the pri- creditors was illegal as advocates are
Business Bridges UK Limited (BBB), vate company had deposited $78,000 not subordinate to the court. But, the
AMR-BBB was awarded the contract while Bharat Coking Coal deposited HCs of Madras, Delhi and Kerala had
for development of Kapuria Block and only $5,000. When the request of the okayed decisions of DM/CMM to en-
extraction of coal for a minimum guar- PSU for a 3-member panel was ac- trust the task to advocates under
anteed production of 2 million ton per cepted, the ICC raised the pre-deposit Sarfaesi Act.
year on turnkey basis, for the amount to $688,000 (Rs 5.14 crore). Deciding a bunch of cross-appeals, a SC
of Rs 798.82 crores as capital cost for bench of Justices A M Khanwilkar and
development phase-I, and Rs 1427.25 Advocates can be told to C T Ravikmar said the DM or CMM can
crores as Revenue cost for phase-II.
Some disputes arose in execution of the control assets under appoint an advocate for taking posses-
contract. Sarfaesi Act: SC sion of secured assets of borrowers for
handing over to secured creditors as it
AMR-BBB approached ICC Paris for Brightening the lawyers' image in so- would be impractical for the judicial
arbitration under the contract, which ciety, the Supreme Court has ruled that officers to reach location of each and
purportedly permitted a single arbitra- advocates, as officers of the court, can every secured assets in busy financial
tor with the seat of arbitration at New be asked by district magistrate to take cities like Mumbai, Chennai, Kolkata or
Delhi. As a precursor, the parties were control of defaulting borrowers' assets Delhi.
asked to deposit $2,88,000 (Rs 2.15 for handing over to secured creditors Justice Khanwilkar said it would be im-
crore) as arbitration cost. under Sarfaesi Act.
practical, if not impossible, for a DM/
Bharat Coking Coal, through solicitor Under Section 14 of the Securitisation CMM to personally take possession of

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