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Judgment
Vilas V. Afzulpurkar, J.
C.O.M.P.A. No. 525 of 2013:
This application is filed by the Official Liquidator on behalf of the company in liquidation seeking to set aside the sale of the land, buildings, plant and machinery etc. of the company in liquidation by the State Bank of India (S.B.I.) in favour of third respondent and for direction to the S.B.I. to hand over the entire auctioned assets to the Official Liquidator. It is stated in the affidavit filed by the Official Liquidator that C.P. No. 171 of 2011 seeking winding up of the petitioner company was allowed on 09.11.2012 and the Official Liquidator was appointed as the Liquidator of the company. The Official Liquidator, accordingly, took steps to secure possession of all assets of the company. The company''s office cum factory, which is subject matter of the present application, is said to be located at, I.D.A. Gazulamandyam, Renigunta, Chittoor District hereinafter referred to as ''asset''. It is stated that S.B.I. is one of the secured creditors of the company in liquidation and that S.B.I. along with other secured creditors exercised their rights under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (S.A.R.F.A.E.S.I. Act) and took physical possession of the entire asset of the company in liquidation and deployed their security to protect it. Thereafter, the secured creditor had auctioned the property on 13.10.2012 under the S.A.R.F.A.E.S.I. Act and the highest bid of the third respondent was accepted.
In the meantime, the Official Liquidator made spot inspection of the asset comprising of an extent of Ac. 27.63 cents with plant, machinery and building and took photographs and affixed a copy of the winding up order on the aid factory premises but he could not take physical possession. The second unit of the company is situated at B-29, SIPCOT Industrial Complex, Gumidipoondi, Tiruvalluru District, Tamil Nadu. On 29.01.2013, the Official Liquidator reached the second unit to take possession where the officials of the secured creditor were present and in their presence, the Official Liquidator is stated to have taken possession of that unit and appointed security guards of M/s. National Security Agency, Chennai.
The sale conducted by S.B.I. under the S.A.R.F.A.E.S.I. Act in favour of the third respondent to the extent of unit I of the company in liquidator at Renigunta, Chittoor District, is, therefore, questioned in the present application on the ground that in terms of Section 456 of the Companies Act, all assets, records and books of the company under winding up proceedings vest with the Court and on winding up order, being passed, the same binds all the creditors. Thus, the S.B.I., which has auctioned the company''s asset during the pendency of the winding up proceedings is wholly unauthorized and contrary to the mandate of Section 456 read with Section 536 of the Companies Act, as the said secured creditor had not obtained any leave of the company Court to stay outside the winding up proceedings. It is also stated that winding up petition was filed on 07.07.2011 and the winding up order, which is ultimately passed on 09.11.2012, relates back to the date of the presentation of the petition and as such, the sale of the said assets by S.B.I. under the S.A.R.F.A.E.S.I. Act, being without reference to the company Court, is sought to be declared as void. Pending consideration of this C.O.M.P.A. No. 525 of 2013, this Court, by order dated 30.04.2013 in C.O.M.P.A. No. 315 of 2013, directed status quo to be maintained.
The aforesaid application is strongly contested by the S.B.I. as well as the third respondent/auction purchaser by filing separate counter affidavits.
S.B.I. filed a counter wherein they have traced the manner in which the loans were availed by the company in liquidation from the bank and the equitable mortgage of its immovable property created in favour of the bank including that of the property, in question. The bank further states that it has invoked the provisions of the S.A.R.F.A.E.S.I. Act against the company in liquidation by initiating proceedings under Sections 13(2) and 13(4) of the S.A.R.F.A.E.S.I. Act, which was challenged by the company in liquidation before the Debt Recovery Tribunal, Hyderabad in S.A. No. 149 of 2012. By order of the D.R.T. dated 07.03.2012, the bank was permitted to proceed with the sale, however, confirmation thereof was stayed subject to the applicant depositing five installments of Rs. 10 crores each, as per the schedule fixed therein. The order also made it clear that in case of default, the bank shall be free to confirm the sale. It is stated that without complying with the said order, the applicant therein filed WP. No. 21374 of 2012, which was dismissed by this Court on 13.07.2012.
The bank, further, states that that it had conducted sale on 13.10.2012 and the highest bid offered viz. third respondent''s offer was accepted and the possession of the unit was delivered to the said auction purchaser on 28.03.2012 in the presence of the Tahsildar, Renigunta and that the auction purchaser had already paid the entire amount. The counter affidavit by the bank places strong reliance upon Section 35 of the S.A.R.F.A.E.S.I. Act, which gives an overriding effect to the S.A.R.F.A.E.S.I. Act and based on the decision of Supreme Court in Pravin Gada and Another Vs. Central Bank of India and Others, , it is contended that the sale is valid and consequently, this application filed by the Official Liquidator be dismissed.
C.O.M.P.A. No. 597 of 2013 in C.O.M.P.A. No. 525 of 2013:
The third respondent/auction purchaser filed the present application to declare the auction conducted on 13.10.2012 by S.B.I. as valid and direct the Official Liquidator to allow the applicant to continue in possession.
The present application is filed by the auction purchaser, inter alia, on the ground that S.B.I. was competent to sell the property u/s 13(4) of the S.A.R.F.A.E.S.I. Act. The auction purchaser, being the highest bidder, has paid the entire consideration to S.B.I. and the sale having been confirmed and property delivered to him, the sale is required to be declared as valid. The auction purchaser, therefore, seeks vacation of the order of status quo passed by this Court in C.O.M.P.A. No. 315 of 2013. The auction purchaser has placed strong reliance upon a decision of the Supreme Court in The Official Liquidator, U.P. and Uttarakhand Vs. Allahabad Bank and Others, and submits that the application filed by the Official Liquidator is liable to be rejected and the auction deserves to be upheld.
C.O.M.P.A. No. 572 of 2013:
This application is filed by an unsecured creditor seeking to set aside the sale conducted by S.B.I. under the S.A.R.F.A.E.S.I. Act. The said applicant states that the sale price was grossly undervalued, though the unit is on national highway. It is further stated that the National Highways Authority of India have acquired Ac. 1.35 cents of land from respondent No. 1 and paid Rs. 75 lakhs per acre as compensation.
C.O.M.P.A. No. 573 of 2013:
This application is filed by the Official Liquidator for direction against the S.B.I. not to allow it to remove, shift or transfer the assets of unit I of the company viz. unit at Renigunta, Chittoor District and to direct the S.B.I. to continue the security and protect the assets.
C.O.M.P.A. No. 1083 of 2013:
Another creditor of the company has filed this application seeking impleadment in C.O.M.P.A. No. 525 of 2013. The said application is filed by a third party creditor on the ground that his properties, which were entrusted to the company in liquidation, were also sold in the auction sale conducted by S.B.I. The said impleadment was, however, ordered on 31.12.2013.
The said applicant states that he had entered into a memorandum of understating dated 27.07.2009 with the company in liquidation and has let out his immovable property worth Rs. 12 crores for a period of five years, which were in turn mortgaged with the Indian Overseas Bank, Chennai. The applicant states that when the unit of the company in liquidation was sold by S.B.I. under the S.A.R.F.A.E.S.I. Act, the property of the applicant was also sold treating it as an immovable property of the company in liquidation. The applicant, therefore, states that his properties could not have been sold in the said auction and on account of substantial injury and hardship to his rights, the applicant seeks delivery of the property given by him to the company in liquidation. In the lease documents annexed therewith, is an annexure to the memorandum of understanding dated 27.07.2009 showing lease of 23 machines, equipments and infrastructure. The said annexure is signed by the Director of company in liquidation as well as the Chief Executive Officer of the applicant.
The Official Liquidator has filed a report on the said application in which the alleged irregularities in holding and conducting of sale by S.B.I. under the S.A.R.F.A.E.S.I. Act is highlighted. However, nothing is stated about the third party applicant''s claim.
S.B.I., however, filed a counter to the said application of the third party stating that the claim of the applicant to the said machinery is incorrect, as confirmed by the Director of the company in liquidation while transferring of the loan account from the Andhra Bank to S.B.I. In that also, it was specifically confirmed that the machinery under the memorandum of understanding dated 27.07.2009 belong to the ''company in liquidation and valuation report was also furnished. S.B.I., therefore, disputed the claim of ownership of the said machinery by the third party applicant.
I have heard Mr. M. Anil Kumar, learned counsel appearing for the Official Liquidator; Mr. M. Narender Reddy, learned senior counsel appearing for S.B.I.; Mr. N. Subba Reddy, learned senior counsel appearing for the auction purchaser and Mr. Ch. Ramesh Babu, learned counsel for the impleaded third party.
While the learned counsel for the Official Liquidator has pointed out several irregularities in the sale conducted by S.B.I., he also raised a contention that the sale is undervalued. The said contention of the Official Liquidator is also supported by Mr. Ch. Ramesh Babu by highlighting the manner in which the land, buildings, plant and machinery were delivered to the auction purchaser and highhanded removal of substantial part of the plant and machinery by the auction purchaser is also highlighted. Learned counsel placed strong reliance upon a decision of the Supreme Court in M.V. Janardhan Reddy Vs. Vijaya Bank and Others, .
Learned senior counsel for S.B.I. and learned senior counsel for the auction purchaser have made submissions on the maintainability of these applications keeping in view the ratio of the decision of the Supreme Court in Allahabad Bank''s case (supra) and contended that the sale having been conducted under the S.A.R.F.A.E.S.I. Act without intervention of the Court, the only remedy available to the Official Liquidator is to approach the D.R.T. u/s 17 of the S.A.R.F.A.E.S.I. Act and that Court alone is competent to go into all the questions. It is also contended that the S.A.R.F.A.E.S.I. Act, being a special enactment to enable the banks to expeditiously proceed against and recover their dues and the S.A.R.F.A.E.S.I. Act being a later Act passed by the Parliament together with an overriding effect given thereunder, the jurisdiction of the company Court to set aside sale has to yield to the S.A.R.F.A.E.S.I. Act and the machinery provided therein. In other words, both the learned senior counsel submit that the sale having been held under the S.A.R.F.A.E.S.I. Act, the Official Liquidator cannot approach and seek intervention of this Court for setting aside the sale and that he must approach only the D.R.T. u/s 17 of the S.A.R.F.A.E.S.I. Act.
The issue so raised by the learned senior counsel is sought to be supported by the decision of the Supreme Court in Allahabad Bank''s case (supra) and also supported by a Division Bench decision of the Delhi High Court in Kotak Mahindra Bank Ltd. Vs. Megnostar Telecommunications pvt. Ltd. and Another, .
On the rival contentions aforesaid, the following points emerge for consideration:
Whether application C.O.M.P.A. No. 525 of 2013 is maintainable?
If maintainable, whether the sale is vitiated?
MAINTAINABILITY:
Since the legal issue aforesaid on maintainability of the aforesaid application arises, I shall first deal with the objection raised by the learned senior counsel with regard to the maintainability of the application filed by the Official Liquidator.
The facts, in this case, which are, briefly, mentioned above, show that the company petition for winding up was presented to this Court on 07.07.2011 and the winding up order was passed on 09.11.2012. It also appears that the secured creditor invoked the S.A.R.F.A.E.S.I. Act and obtained possession of the asset on 04.02.2012. S.B.I. has, thereafter, put the property to sale through open auction on 13.10.2012. It is also evident that the sale certificate was issued to the purchaser on 27.03.2012 and the possession of the property was handed over on 28.03.2013. It is also admitted that while the winding up petition was pending before this Court from 07.07.2011, S.B.I. never approached this Court nor sought any leave to stay outside the winding up proceedings and realize the security. The relevant provisions of the Companies Act and Section 35 of the S.A.R.F.A.E.S.I. Act are extracted hereunder for the sake of convenience:
Section 442 - Power of Court to stay or restrain proceedings against company - At any time after presentation of a winding up petition and before a winding up order has been made, the company, or any creditor or contributory, may -
(a) where any suit or proceeding against the company is pending in the Supreme Court or in any High Court, apply to the Court in which the suit or proceeding is pending for a stay of proceeding therein; and
(b) where any suit or proceeding is pending against the company in any other Court, apply to the Court having jurisdiction to wind up the company, to restrain further proceedings in the suit or proceedings;
and the Court to which application is so made may stay or restrain the proceedings accordingly, on such terms as it thinks fit.
Section 446 - Suits stayed on winding up order
(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the [Tribunal] and subject to such terms as the [Tribunal] may impose.
(2) The [Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of--
(a) any suit or proceeding by or against the company;
(b) any claim made by or against the company (including claims by or against any of its branches in India);
(c) any application made u/s 391 by or in respect of the company;
(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or rise in course of the winding up of the company;
whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).]
(3) [***]
(4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.
Section 537 (Prior to its substitution by the Companies (Second Amendment) Act, 2002 -
537 - Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of the Court -
(1) Where any company is being wound up by or subject to the supervision of the Court -
(a) any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement;
shall be void.
(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government.
OBJECTS OF S.A.R.F.A.E.S.I. ACT - The financial sector has been one of the key drivers in India''s efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices, there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on the 21st June, 2002 to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise long-term assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction.
S.A.R.F.A.E.S.I. ACT - 35 - The provisions of this Act to override other laws. - The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
In the above factual background, the contention as to maintainability raised by the learned senior counsel is required to be appreciated.
The decision of the Supreme Court in Allahabad Bank''s case (supra) is slightly distinguishable inasmuch as in the said decision, the creditor had sought and obtained leave of the company Court to realize the security through the Recovery of Debts Due to Banks and Financial Institutions Act (R.D.B. Act). The present case, therefore, relates to sale under the S.A.R.F.A.E.S.I. Act.
The Supreme Court has, however, considered the issue of jurisdiction of the company Court vis-�-vis the sale and recovery made under the R.D.B. Act and specifically considered and answered the question holding that appropriate forum for the Official Liquidator to agitate his grievance is before the D.R.T. The Supreme Court has noticed Section 34 of the R.D.B. Act, which gives an overriding effect to that Act. The following relevant paras of the said decisions may, therefore, be noticed:
While dealing with the issue whether the R.D.B. Act overrides the provisions of Sections 442, 446 and 537 of the 1956 Act, after analyzing the said provisions and delving into the concept of leave and control by the Company Court, the learned Judges in Allahabad Bank Vs. Canara Bank and Another, relied on the pronouncement in Damji Valji Shah and Another Vs. Life Insurance Corporation of India and Others, and came to hold that there is no need for the Appellant bank to seek leave of the Company Court to proceed with the claim before the D.R.T. or in respect of the execution proceedings before the Recovery Officer. It was also categorically held that the said litigation cannot be transferred to the Company Court. In the ultimate eventuate, the bench ruled that in view of Section 34 of the R.D.B. Act, the tribunal has exclusive jurisdiction and, hence, the Company Court cannot use its powers u/s 442 of the 1956 Act against the tribunal/Recovery Officer and, therefore, Sections 442, 446 and 537 of the 1956 Act could not be applied against the tribunal. Be it noted, emphasis was laid on speedy and summary remedy for recovery of the amount which was due to the banks and financial institutions and the concept of special procedure as recommended by the Tiwari Committee Report of 1981 was stressed upon. It was concluded that the special provisions made under the R.D.B. Act have to be applied. The Court addressed itself to the special and general law and ruled that in view of Section 34 of the R.D.B. Act, it overrides the Companies Act to the extent there is any thing inconsistent between the Acts.
From the aforesaid verdict, it is vivid that the larger Bench in Rajasthan State Financial Corpn. approved the law laid down in Allahabad Bank Vs. Canara Bank and Another, . In fact, it is noticeable that the larger Bench has observed that in Allahabad Bank''s case, a view has been taken that the R.D.B. Act being a subsequent legislation and being a special law would prevail over the general law, the 1956 Act, but the said argument is not available as far as the S.F.C. Act is concerned.
The aforesaid analysis makes it luculent that the D.R.T. has exclusive jurisdiction to sell the properties in a proceeding instituted by the banks or financial institutions, but at the time of auction and sale, it is required to associate the Official Liquidator. The said principle has also been reiterated in Pravin Gada and Another Vs. Central Bank of India and Others, .
It has been submitted by Mr. Banerji, learned senior counsel, that if the Company Court as well as the D.R.T. can exercise jurisdiction in respect of the same auction or sale after adjudication by the D.R.T., there would be duality of exercise of jurisdiction which the R.D.B. Act does not envisage. By way of an example, the learned senior counsel has submitted that there are some categories of persons who can go before the D.R.T. challenging the sale and if the Official Liquidator approaches the Company Court, then such a situation would only bring anarchy in the realm of adjudication. The aforesaid submission of the learned senior counsel commends acceptance as the intendment of the legislature is that the dues of the banks and financial institutions are realized in promptitude. It is to be noted that when there is inflation in the economy, the value of the mortgaged property/assets depreciates with the efflux of time. If more time is consumed, it would be really difficult on the part of the banks and financial institutions to realize their dues. Therefore, this Court in Allahabad Bank''s case has opined that it is the D.R.T. which would have the exclusive jurisdiction when a matter is agitated before the D.R.T. The dictum in the said case has been approved by the three-Judge Bench in Rajasthan Financial Corporation and Another Vs. The Official Liquidator and Another, . It is not a situation where the Official Liquidator can have a choice either to approach the D.R.T. or the Company Court. The language of the R.D.B. Act, being clear, provides that any person aggrieved can prefer an appeal. The Official Liquidator whose association is mandatorily required can indubitably be regarded as a person aggrieved relating to the action taken by the Recovery Officer which would include the manner in which the auction is conducted or the sale is confirmed. Under these circumstances, the Official Liquidator cannot even take recourse to the doctrine of election. It is difficult to conceive that there are two remedies. It is well settled in law that if there is only one remedy, the doctrine of election does not apply and we are disposed to think that the Official Liquidator has only one remedy, i.e., to challenge the order passed by the Recovery Officer before the D.R.T. Be it noted, an order passed u/s 30 of the R.D.B. Act by the D.R.T. is appealable. Thus, we are inclined to conclude and hold that the Official Liquidator can only take recourse to the mode of appeal and further appeal under the R.D.B. Act and not approach the Company Court to set aside the auction or confirmation of sale when a sale has been confirmed by the Recovery Officer under the R.D.B. Act.
We will be failing in our duty if we do not take notice of the decision in M.V. Janardhan Reddy (supra) wherein the sale was aside by the Company Judge. It may be stated here that the Company Court had imposed a condition that the permission of the Company Court shall be obtained before the sale of the properties, immoveable or moveable, is confirmed or finalized. On the aforesaid basis, this Court opined that when the bank was permitted to go ahead with the proposed sale of the assets of the company under liquidation by way of auction but such sale was subject to confirmation by the Company Court and all the parties were aware about the condition as to confirmation of sale by the Company Court, it was not open to the Recovery Officer to confirm the sale and, therefore, the sale was set aside by the Company Court, being in violation of the order. Thus, we find that the facts in the said case were absolutely different and further this Court did not deal with the jurisdiction of the Company Court vis-�-vis D.R.T. as the said issue really did not arise. Hence, it is not an authority for the proposition that the Official Liquidator can approach the Company Court to set aside the auction or sale conducted by the Recovery Officer of the D.R.T.
It is noteworthy that the decision in M.V. Janardhan Reddy Vs. Vijaya Bank and Others, referred to by the Supreme Court in the above paragraph was relied upon, in the present case, by the Official Liquidator. As noticed in the above paragraphs, the said decision is distinguished.
In the present case, we are concerned with same question but so far as the Companies Act and the S.A.R.F.A.E.S.I. Act are concerned. The difference between the R.D.B. Act and the S.A.R.F.A.E.S.I. Act may be immediately noticed inasmuch under the S.A.R.F.A.E.S.I. Act, the security is realized by the secured creditor without intervention of the Court whereas under the R.D.B. Act, a recovery officer of D.R.T. sells assets of debtor to recover dues, as certified by D.R.T.
In this context, the decision of the Delhi High Court in Kotak Mahindra Bank Ltd.''s case (supra) is relevant to be noticed where an identical issue fell for consideration. In that case also, it was answered by holding that the Official Liquidator will have to approach the D.R.T. u/s 17 of the S.A.R.F.A.E.S.I. Act, if he seeks to challenge the sale held by the secured creditor u/s 13(4) of the S.A.R.F.A.E.S.I. Act. The Delhi High Court has also noticed the decision of the Supreme Court in Allahabad Bank''s case (supra) and it has further analysed the provisions of the S.A.R.F.A.E.S.I. Act. The following paragraphs from the said decision may, therefore, be relevant:
Though sale of the secured asset by the secured creditor under the S.A.R.F.A.E.S.I. Act is without the intervention of the Court but a safety valve preserving the rights of the debtor/borrower/mortgagor or for that matter any other person (see United Bank of India Vs. Satyawati Tondon and Others, ) aggrieved from the measures taken by the Bank/Financial Institution u/s 13(4) of the Act is provided in Section 17 of the Act. The legislature in making the sale under the S.A.R.F.A.E.S.I. Act without the intervention of the Court, constituted D.R.T. only as the forum for redressal of grievances. We are of the view that if the debtor/borrower/mortgagor himself/herself/itself has not been given any right of participation in the sale except in the manner provided in Section 17 of the Act, the question of our interpreting the provisions in a manner vesting such right in the Official Liquidator who is but a successor-in-interest of the debtor/borrower/mortgagor and also representing the interest of the workmen and other creditors of such debtor/borrower/mortgagor, does not arise. Significantly, the legislature in enumerating in Section 31 the cases/situations in which the provisions of the S.A.R.F.A.E.S.I. Act are not to apply, did not choose to list the case/situation where the debtor/borrower/mortgagor is a company in liquidation.
Though the language of Section 17 of the S.A.R.F.A.E.S.I. Act suggests that the right to appeal thereunder is only against the measures u/s 13(4) of the Act but the Supreme Court in Authorized Officer, Indian Overseas Bank and Another Vs. Ashok Saw Mill, has held that the remedy u/s 17 is not confined to the stage contemplated u/s 13(4) but is available qua action taken by the secured creditor after the stage contemplated u/s 13(4) also. The scrutiny by the D.R.T. u/s 17 is thus not confined only to whether the measures u/s 13(4) are in accordance with the S.A.R.F.A.E.S.I. Act and the Rules framed thereunder but also extends to the actions of the secured creditor under Sections 13(5) to (13). It is thus not as if the debtor/borrower/mortgagor or for that matter, in the case of such a debtor/borrower/mortgagor being in liquidation, the liquidator is without any remedy or that the sale is merely at the whim and fancy of the secured creditor and his Authorized Officer. Not only are the modalities of sale prescribed but a forum for redressal of grievances with respect thereto is also provided in the form of D.R.T. The Official Liquidator, thus if of the view that appropriate price is not being or has not been fetched or relating to issues of distribution, has the remedy before the D.R.T.
If it were to be held that the Official Liquidator (who acts under the dictates of the Company Court) is to be also associated with the sale, it will naturally open up the fora of the Company Court also for entertaining matters relating to such sale and which as aforesaid is not only likely to lead to conflicts but is also contrary to the spirit of the S.A.R.F.A.E.S.I. Act of sale being without the intervention of the Court.
The remedies of the Official Liquidator with respect to such a sale are only before the D.R.T. in accordance with Section 17 of the S.A.R.F.A.E.S.I. Act and not before the Company Court. S.A.R.F.A.E.S.I. Act being a latter legislation to the incorporation of Section 529A in the Companies Act thus prevails over the Companies Act and sale as provided for under the S.A.R.F.A.E.S.I. Act holds good during the pendency of winding up petition against the debtor/borrower/mortgagor and also after a winding up order is made and remains unaffected therefrom.
The decision of the Supreme Court in Pravin Gada''s case (supra) was also a decision relating to the sale of assets of a company in liquidation by the Debt Recovery Tribunal and the ratio of the said decision is similar to that of the decision of the Supreme Court in Allahabad Bank''s case (supra). In view of the ratio of the decisions, referred to above, the view of the Delhi. High Court commends acceptance. In view of the answer to the question of maintainability, under point No. 1 above, against the applicant, it is not necessary to deal with the factual aspects and the grounds for setting aside the sale, as urged by the applicants under point No. 2.
In view of above, therefore, C.O.M.P.A. No. 525 of 2013 filed by the Official Liquidator cannot be considered by this Court and is accordingly dismissed. However, in view of the fact that the Official Liquidator was bonafide pursuing the remedy before this Court, the Official Liquidator is granted four (4) weeks time to approach the Debt Recovery Tribunal by way of an appropriate application u/s 17 of the S.A.R.F.A.E.S.I. Act. Status quo with respect to the ''asset'', as referred to above, shall be maintained by all the parties for a period of four (4) weeks, within which time the Official Liquidator may secure appropriate interim relief from the D.R.T. Consequently, since the main application is dismissed, C.O.M.P.A. Nos. 572 and 573 are also dismissed. C.O.M.P.A. No. 597 of 2013, filed by the auction purchaser for upholding the sale, is also dismissed. All the parties are relegated to the process of D.R.T., as directed above.