M/S ANITA INTERNATIONAL vs. TUNGABADRA SUGAR WORKS MAZ.SANGH .

Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 6042-6048 OF 2011 Anita International …. Appellant versus Tungabadra Sugar Works Mazdoor Sangh – and others …. Respondents with CIVIL APPEAL NOS. 5501-5502 OF 2016 (Arising out of SLP(C) Nos. 7490-7491 of 2014) Tungabadra Sugar Works Mazdoor Sangh …. Appellant versus Official Liquidator and others …. Respondents J U D G M E N T Jagdish Singh Khehar, J. 1. Leave granted in Special Leave Petition (C) Nos. 7490-7491 of 2014. JUDGMENT 2. Two company petitions, i.e., Company Petition Nos. 170 of 1995 and 35 of 1997 were filed by Videocon International Ltd. and Tapti Machines Pvt. Ltd., for winding up of Deve Sugars Ltd. before the High Court of Judicature at Madras. Deve Sugars Ltd. was running a sugar factory in the State of Karnataka. Deve Sugars Ltd. was ordered to be wound up on 16.4.1999. An Official Liquidator was accordingly directed to take possession of the properties of the company - Deve Sugars Ltd.. The Official Liquidator took possession of the assets of the company situate at Harige (in District Shimoga, in the State of Karnataka), on 28.9.1999. Page 1 2 3. The State Bank of Mysore had also extended some loans to Deve Sugars Ltd.. When Deve Sugars Ltd. defaulted in the repayment of the loans, the State Bank of Mysore filed Original Application Nos. 440 of 1997

Rs.22,31,78,558.55. During the course of the instant proceedings, the DRT, Bangalore issued a recovery certificate in the sum of Rs.8.40 crores. It would be relevant to mention, that the State Bank of Mysore also filed Company Application Nos.1251-1253 of 1999, in the pending Company Petition No.170 of 1995, before the High Court at Madras, seeking leave to proceed with the recovery proceedings before the DRT, Bangalore, under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as, the RDB Act). 4. The Company Court in the High Court at Madras, while granting leave to the State Bank of Mysore, passed the following order on 10.3.2000 JUDGMENT (while disposing of Company Application Nos. 1251-1253 of 1999): “This company application praying this Court to grant leave to the applicant Bank to proceed and prosecute further O.A. No.1300 of 1997 filed by them against the respondent Company in the Debt Recovery Tribunal at Bangalore. Company Applications coming on this day before this Court for hearing in the presence of Mr. R. Varichandran advocate for the applicant, herein and the official liquidator, High Court, Madras, the respondent, appearing in person, and upon reading the Judges Summons and affidavit and report of the Official Liquidator filed herein, the Court made the following orders:- Leave is granted subject to the condition that official liquidator is impleaded and no coercive steps are taken against the assets of the company during or after the conclusion of the proceedings before the Tribunal.” (emphasis supplied) Page 2 3 A perusal of the above order reveals, that leave was granted, subject to the condition that the Official Liquidator , was impleaded before the DRT, Bangalore, and further, that no coercive steps would be taken against the

5. On 1.8.2001, the workers’ union of Deve Sugars Ltd. was granted the responsibility to overlook security arrangements of the establishment of Deve Sugars Ltd.. 6. Immediately after the DRT, Bangalore, issued the recovery certificate, the State Bank of Mysore moved DCP No.1912 in Original Application No.440 of 1997, seeking the disposal of the assets of the company in liquidation, at the hands of the Recovery Officer of the DRT, Bangalore (hereinafter referred to as, the Recovery Officer). Simultaneously, the State Bank of Mysore being conscious of the order passed by the High JUDGMENT Court at Madras on 10.3.2000, filed Company Application No.1300 of 2003, with a prayer that it be permitted to seek execution of the recovery certificate dated 15.5.2002 (for recovering the amounts due to it, from out of the assets of Deve Sugars Ltd.). It is relevant to mention, that the aforesaid Company Application No.1300 of 2003 was not entertained by the Registry of the High Court at Madras. While declining to entertain Company Application No.1300 of 2003, the Registry of the High Court at Madras, relied upon a judgment rendered by this Court in Civil Appeal No. 2536 of Page 3 4 1 2000 (reported as Allahabad Bank v. Canara Bank ). While not entertaining Company Application No.1300 of 2003, the Registry of the High Court recorded the following endorsement:

7. Consequent upon the return of Company Application No.1300 of 2003, it came to be assumed by the State Bank of Mysore, that leave of the High Court, was not required for the sale of the assets of Deve Sugars Ltd.. Accordingly, the State Bank of Mysore approached the Recovery Officer, for the disposal of the assets of Deve Sugars Ltd., in continuation of the recovery certificate issued by the DRT dated 15.5.2002. On the above prayer of the State Bank of Mysore, the Recovery Officer issued a proclamation of sale in Form-13, by following the procedure prescribed under the RDB Act. The auction of the properties of Deve Sugars Ltd., in the first instance, was fixed for 1.10.2014. JUDGMENT 8. At the instant juncture, the workers’ union (Tungabadra Sugar Works Mazdoor Sangh), of Deve Sugars Ltd., approached the High Court of Karnataka, by filing Writ Petition No.37991 of 2004. Through the above writ petition, the workers’ union assailed the recovery proceedings initiated by the State Bank of Mysore, before the Recovery Officer. The workers’ union also sought an interim direction from the High Court of Karnataka, to restrain the continuation of the sale proceedings, at the hands of the 1 (2000) 4 SCC 406 Page 4 5 Recovery Officer , because their salary and provident fund dues, were still payable by Deve Sugars Ltd.. The aforesaid prayer was made by asserting, that the workers’ union had a preferential claim, as against the claim of the

directed that the sale made by the Recovery Officer would be subject to the final outcome of the writ petition. It would also be relevant to reiterate, that the Official Liquidator was authorized by the High Court at Madras, to take over possession of the properties of the company under liquidation. The Official Liquidator had accordingly taken over possession of the said properties on 28.9.1999. While permitting the State Bank of Mysore to pursue the recovery proceedings against Deve Sugars Ltd. before the DRT, the High Court at Madras, had directed that the Official Liquidator be impleaded as a respondent before the DRT. The Official Liquidator , had also raised objections to the purported sale by the Recovery Officer (in JUDGMENT continuation of the recovery certificate dated 15.5.2002, issued by the DRT). The Official Liquidator sought deferment of the sale proceedings at the hands of the Recovery Officer , under Section 529A of the Companies Act. It would be relevant to mention, that the objections raised by the workers’ union and the Official Liquidator , were overruled by the Recovery Officer . 9. It is also pertinent to mention, that the auction scheduled by the Recovery Officer for 1.10.2004, could not be conducted. Accordingly, a fresh proclamation was issued, for the auction of the properties of Deve Page 5 6 Sugars Ltd., fixing 11.8.2005 as the date for holding the auction. The rival parties were also permitted to bring their buyers, if there was anyone interested. The reserve price was fixed at Rs.10 crores. The auction was

International of Rs.10.25 crores was accepted. The bidder deposited the bid amount, within the stipulated period. No challenge was raised against the auction conducted on 11.8.2005, within the postulated period of 30 days, as is permissible in terms of the Rules framed under the RDB Act. The Recovery Officer ordered the confirmation of the sale of the auctioned property, after the expiry of statutory period, expressed in Rules 60, 61, and 62 of the Second Schedule of the Income Tax Act (as is applicable to proceedings, before Debts Recovery Tribunals), on 12.9.2005. 10. On 20.9.2005, the Recovery Officer appointed a Receiver, to take possession of the property, sold at the auction. The Court Commissioner JUDGMENT allegedly took over possession of some of the properties, and handed over the same to the auction purchaser – Anita International. At the instant juncture, the appellant – Anita International, filed Company Application No.1811 of 2005 before the High Court at Madras for removal of the security agency. At the said juncture, Videocon International Ltd. and Tapti Machines Pvt. Ltd. filed Writ Petition No.26564 of 2005 before the High Court of Karnataka. The above writ petition, and Writ Petition No.37991 of 2004 (filed by the workers’ union) were heard by a learned single Judge, Page 6 7 wherein the auction purchaser – Anita International, raised a preliminary objection. It was submitted, that the petitioners before the High Court had an efficacious alternative remedy, under the RDB Act. It was accordingly

the High Court at Madras, wherein a challenge was raised to the sale of the assets of Deve Sugars Ltd., at the hands of the Recovery Officer . It would be relevant to mention, that the above two writ petitions were disposed of by the High Court of Karnataka, by a common order dated 27.10.2006. The petitioners before the Karnataka High Court were allowed to avail of their alternative remedy before the DRT, Bangalore. The above common order dated 27.10.2006 was challenged, by filing Writ Appeal Nos.2050 and 2051 of 2006. Both the above writ appeals were dismissed on 23.2.2007. Liberty was, however, reserved with appellants, by permitting them to approach the DRT, Bangalore, by filing appeals. As a matter of abundant caution, the JUDGMENT appellate Court ordered, that the DRT, Bangalore, would deal with the controversy, uninfluenced by the orders passed by the High Court. 11. In compliance with, and in continuation of the outcome before the High Court of Karnataka, the workers’ union preferred AOR No.15 of 2006 and Videocon International Ltd. preferred AOR No.1 of 2007. In the above appeals, a challenge was raised to the order dated 12.9.2005 passed by the Recovery Officer , whereby the sale of the properties of Deve Sugars Ltd. conducted on 11.8.2005, in favour of Anita International was confirmed. Page 7 8 Simultaneously, one N. Ponnusamy, an ex-Director of Deve Sugars Ltd., filed Company Application Nos.2740-2742 of 2007 before the Company Court in the High Court at Madras, and sought the setting aside of the

raised by N. Ponnusamy was primarily on the ground that the reserve price of Rs.10 crore was too low. N. Ponnusamy, also sought transfer of the recovery proceedings, from the DRT, Bangalore, to the High Court at Madras. While entertaining the proceedings initiated by N. Ponnusamy, the High Court by its order dated 24.10.2007, passed an ex parte interim order of stay. Anita International and State Bank of Mysore, filed detailed objections, to the applications filed by the Official Liquidator , as well as, by the aforementioned N. Ponnusamy. All the applications filed in C.A. No.1811 of 2005 were taken up for consideration, collectively. By a common order dated 3.3.2009, the application filed by the Official Liquidator JUDGMENT was dismissed, by holding that the Official Liquidator was a party before the Karnataka High Court (in the proceedings which were disposed of by a common order dated 27.10.2006), and in consonance with the above order, the Official Liquidator was obliged to file an appeal, to challenge the auction sale (dated 11.8.2005), as well as, the order of confirmation (dated 12.9.2005) passed by the Recovery Officer . Likewise, the proceedings initiated by N. Ponnusamy, also did not yield any result. His claim was also rejected on the ground, that he too could have availed of the remedy of filing Page 8 9 an appeal, to assail the orders passed by the Recovery Officer . The other applications, which came up for hearing jointly were likewise dismissed, as the said applicants, had already availed of the appellate remedy, before the

the hands of the Recovery Officer , was allowed. 12. Dissatisfied with the order passed by the Company Court, the applicants raised a challenge to the order dated 3.3.2009 (passed in C.A. Nos.1811 of 2005, 854 of 2006 and 2740-2742 of 2007 – in Company Petition No.170 of 1995) by filing O.S.A. Nos. 59-63, 76, 77 and 82 of 2009. The impugned order in the present appeals dated 17.9.2009, was passed by a Division Bench of the Company Court in the High Court at Madras. In arriving at its conclusions, the High Court took into consideration inter alia the following factors: Firstly, the Official Liquidator had raised objections before the Recovery JUDGMENT Officer, in respect of the sale of the properties of Deve Sugars Ltd.. There was nothing to indicate, that the said objections were ever considered by the Recovery Officer . Conversely, the High Court also arrived at the conclusion, that the Official Liquidator who was the custodian of the properties of Deve Sugars Ltd. (consequent upon the Official Liquidator having taken possession of the assets of the company on 28.9.1999), had failed to effectively protect the property of the company. Page 9 10 Secondly, no material had been placed before the High Court to indicate, that the valuation report (dated 24.3.2002) and the inventory (dated 25.11.2004) were prepared after giving notice to the Official Liquidator , who

matter of auction). Thirdly, even after the workers’ union had raised objections before the Recovery Officer , no material was placed before the High Court, that there was proper application of mind at the hands of the Recovery Officer , leading to the inference, that the objections were rejected in a casual and lackadaisical manner. Fourthly, the inspection of the properties of the company under winding up, by the intending purchasers (for the auction sale scheduled on 11.8.2005) was permitted only on the day preceding the date of auction (namely, on 10.8.2005), leading to the inference, that the entire process of auction was a mere formality. JUDGMENT Fifthly, on the advertised date fixed for the auction (on 11.8.2005) the Recovery Officer received only two bids. Despite the above, he closed the bid on 11.8.2005 itself. Insofar as the above two bids are concerned, it was felt, that there was for all intents and purposes only a singular bid. One of the bidders was Anita International – the appellant herein, and the other bid was by Synergy Steel Ltd. – a sister company of the appellant – Anita International. In sum and substance therefore, the Recovery Officer closed the bid, after receiving a singular bid. Page 10 11 Sixthly, after holding the auction on 11.8.2005, the Recovery Officer confirmed the sale in favour of Anita International on 12.9.2005. This could not have been done, in view of the order dated 10.3.2000 passed by the

after the conclusion of the proceedings before the DRT, Bangalore. And as such, the State Bank of Mysore could not have proceeded with, the sale of the assets of Deve Sugars Ltd. 13. While dealing with the proposition of law declared by this Court in 1 the Allahabad Bank case , wherein this Court had unambiguously concluded, that the provisions of the RDB Act required, Debts Recovery Tribunals alone, to decide applications for recovery of debts due to banks and financial institutions. And wherein, it was also held, that the aforesaid responsibility included, the adjudication of the liability of the debtor to banks and financial institutions, as well as, the execution of the recovery JUDGMENT certificate by the Recovery Officer . In spite of the above, it was submitted, that the High Court by relying on the judgment in M.V. Janardhan Reddy v. 2 Vijaya Bank , and after taking note of the fact, that the State Bank of Mysore had applied to the Company Court of the High Court at Madras, for liberty to recover its dues from Deve Sugars Ltd., by filing Company Application Nos.1251-1253 of 1999 (in pending Company Petition No.170 of 1995), and having obtained an order from the High Court dated 10.3.2000, 2 (2008) 7 SCC 738 Page 11 12 was bound by the same. The High Court also concluded, that the above order dated 10.3.2000 was binding, on the Recovery Officer of the DRT, Bangalore. The High Court also expressed the view, that the order dated

the High Court held, that the State Bank of Mysore could not take advantage of the sale of the assets of the company, or the confirmation thereof at the hands of the Recovery Officer, as the same were in clear violation, of the order (dated 10.3.2000) of the Company Court in the High Court at Madras. Relying on the decision of this Court in the M.V. 2 Janardhan Reddy case , the High Court while referring to the findings recorded in paragraph 28 of the above judgment concluded, that since the assets of the company under winding up were under the physical charge of the Official Liquidator , the Official Liquidator ought to have been associated with the auction proceedings, conducted by the Recovery Officer. Since the JUDGMENT facts and circumstances of the present case reveal, that the Official Liquidator was not allowed to be associated with the auction proceedings, and even the valuation of the assets, was taken without the knowledge of the Official Liquidator, and further, the objections raised by the Official Liquidator were rejected without due consideration, the Company Court in the High Court at Madras concluded, that the sale of the properties of Deve Sugars Ltd. by the Recovery Officer on 11.8.2005, was liable to be set aside. So also, the confirmation of the sale, by the Recovery Officer on 12.9.2015. Page 12 13 14. Having concluded as above, the High Court vide the impugned order dated 17.9.2009, directed as under:

15. While assailing the impugned order passed by the High Court dated 17.9.2009, it was the vehement contention of learned counsel for the appellant, that the Company Court in the High Court at Madras, had no jurisdiction in respect of the proceedings which fell within the legitimate domain of the RDB Act. To canvass the above proposition, learned counsel placed reliance on a number of judgments of this Court. The submissions JUDGMENT advanced in this behalf, are being narrated hereunder: 1 (i) Reliance was first placed on the Allahabad Bank case . It was pointed out, that the above judgment was rendered on 10.4.2000. And in the above view of the matter, the declared position of law was clear and explicit well before the controversy in hand was determined by the High Court at Madras. From the cited judgment, learned counsel for the appellant placed reliance on the following observations: “21. In our opinion, the jurisdiction of the Tribunal in regard to adjudication is exclusive. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to banks or Page 13 14

(ii) Execution of certificate by Recovery Officer: is his jurisdiction exclusive 23. Even in regard to “ execution ”, the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the banks/financial institutions should go to the civil court or the Company Court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under Section 19(22) has, in our opinion, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, Section 34 of the Act gives overriding effect to the provisions of the RDB Act. ….. JUDGMENT xxx xxx xxx The provisions of Section 34(1) clearly state that the RDB Act overrides other laws to the extent of “inconsistency”. In our opinion, the prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner. 24. There is one more reason as to why it must be held that the jurisdiction of the Recovery Officer is exclusive. The Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to banks and financial institutions stated in its report that the exclusive jurisdiction of the Page 14 15 Tribunal must relate not only in regard to the adjudication of the liability but also in regard to the execution proceedings. It stated in Annexure XI of its report that all “execution proceedings” must be taken up only by the Special Tribunal under the Act. In our opinion, in view of the special procedure for recovery prescribed in Chapter V of the Act, and Section 34, execution of the certificate is also within the exclusive jurisdiction of the Recovery Officer. xxx xxx xxx Question of leave and control by the Company Court: 30. Learned Attorney General has, in this connection, relied upon Damji Valji Shah v. LIC of India (1965) 3 SCR 665 to contend that for initiating and continuing proceedings under the RDB Act, no leave of the Company Court is necessary under Section 446. In that case, a Tribunal was constituted under the Life Insurance Corporation Act, 1956. Question was whether under Section 446 of the Companies Act, 1956, the said proceedings could be stayed and later be transferred to the Company Court and adjudicated in that Court. It was held that the said proceedings could not be transferred. Section 15 of the Life Insurance Corporation Act, 1956 — which we may say, roughly corresponds to Section 17 of the RDB Act — enabled Life Insurance Corporation of India to file a case before a Special Tribunal and recover various amounts from the erstwhile life insurance companies in certain respects. Section 41 of the LIC Act conferred exclusive jurisdiction on the said Tribunal just like Section 18 of the RDB Act, 1993. There the Company was ordered to be wound up by an order of the Company Court passed under Section 446(1) on 9-1-1959. The claim was filed by LIC against the Company and its Directors before the Tribunal in 1962. The respondents before the Tribunal contended that the claim could not have been filed in the Tribunal without the leave of the Company Court under Section 446(1). This Court rejected the said contention and held that though the purpose of Section 446 was to enable the Company Court to transfer proceedings to itself and to dispose of the suit or proceedings so transferred, unless the Company Court had jurisdiction to decide the questions which were raised before the LIC Tribunal, there was no purpose of requiring leave of the Company Court or permitting transfer. ….. JUDGMENT xxx xxx xxx 31. It may also be noticed that in the LIC Act of 1956, there was no provision like Section 34 of the RDB Act giving overriding effect to the provisions of the LIC Act. Still this Court upheld the exclusive jurisdiction of the LIC Tribunal ….. xxx xxx xxx 71. But the point here is that the occasion for such a claim by a secured creditor (here Canara Bank) against realisations by other Page 15 16 creditors (like Allahabad Bank) under Section 529-A read with proviso ( c ) to Section 529(1) can arise before the Tribunal only if Canara Bank has stood outside winding-up and realised amounts and if it shows that out of the amounts privately realised by it, some portion has been rateably taken away by the liquidator under clauses ( a ) and ( b ) of the proviso to Section 529(1). It is only then that it can claim that it is to be reimbursed at the same level as a secured creditor with priority over the realisations of other creditors lying in the Tribunal. None of these conditions is satisfied by Canara Bank. Thus, Canara Bank does not belong to the class of secured creditors covered by Section 529-A(1)( b ). xxx xxx xxx 73. If none of the conditions required for applying Section 19(19) and Section 529-A is, therefore, satisfied, then the claim of Canara Bank before the Tribunal can only be on the basis of principles underlying Section 73 CPC. There being no decree in its favour from any court or from any Tribunal, and the other conditions of Section 73 not having been satisfied, no dividend can be claimed out of monies realised at the instance of Allahabad Bank, even if Allahabad Bank is an unsecured creditor. xxx xxx xxx 76. The next question is whether the amounts realised under the RDB Act at the instance of the appellant can be straight away released in its favour. Now, even if Section 19(19) read with Section 529-A of the Companies Act does not help the respondent Canara Bank, the said provisions can still have an impact on the appellant Allahabad Bank which has no doubt a decree in its favour passed by the Tribunal. Its dues are unsecured. The “workmen’s dues” have priority over all other creditors, secured and unsecured because of Section 529-A(1)( a ). There is no material before us to hold that the workmen’s dues of the defendant Company have all been paid. In view of the general principles laid down in National Textile Workers’ Union v. P.R. Ramakrishnan (1983) 1 SCC 228 there is an obligation resting on this Court to see that no secured or unsecured creditors including banks or financial institutions, are paid before the workmen’s dues are paid. We are, therefore, unable to release any amounts in favour of the appellant Bank straight away.” JUDGMENT (emphasis supplied) Based on the above decision, it was the contention of learned counsel for the appellant, that the Company Court in the High Court at Madras, had neither the jurisdiction to grant liberty to the State Bank of Mysore to Page 16 17 recover its dues from Deve Sugars Ltd. by initiating proceedings under the RDB Act, nor the jurisdiction to interfere with the recovery proceedings by directing that no coercive steps would be taken against Deve Sugars Ltd.,

order passed by the Company Court in the High Court at Madras (dated 10.3.2000), was jurisdictionally and legally impermissible, and as such, was liable to be ignored. 3 (ii) Reliance was also placed on Andhra Bank v. Official Liquidator . The instant judgment was relied upon to support the conclusions drawn by 1 learned counsel, while placing reliance on the Allahabad Bank case . Learned counsel invited our attention to the position expressed in paragraph 19 of the cited judgment, which is extracted hereunder: “19. As regards Point (6), however, this Court at para 76 of the judgment held: “The next question is whether the amounts realised under the RDB Act at the instance of the appellant can be straight away released in its favour. Now, even if Section 19(19) read with Section 529-A of the Companies Act does not help the respondent Canara Bank, the said provisions can still have an impact on the appellant Allahabad Bank which has no doubt a decree in its favour passed by the Tribunal. Its dues are unsecured. The ‘workmen’s dues’ have priority over all other creditors, secured and unsecured because of Section 529-A(1)(a). There is no material before us to hold that the workmen’s dues of the defendant Company have all been paid. In view of the general principles laid down in National Textile Workers’ Union v. P.R. Ramakrishnan (1983) 1 SCC 228 there is an obligation resting on this Court to see that no secured or unsecured creditors including banks or financial institutions, are paid before the workmen’s dues are paid. We are, therefore, unable to release any amounts in favour of the appellant Bank straight away.”” (emphasis supplied) JUDGMENT 3 (2005) 5 SCC 75 Page 17 18 (iii) In chronological order, learned counsel next relied upon the 4 judgment in Rajasthan State Financial Corporation v. Official Liquidator , and drew the Court’s attention to the following:

JUDGMENT 4 (2005) 8 SCC 190 Page 18 19

JUDGMENT Page 19 20 no inconsistency between the decisions in Allahabad Bank v. Canara Bank and in International Coach Builders Ltd. v. Karnataka State Financial Corpn. in respect of the applicability of Sections 529 and 529-A of the Companies Act in the matter of distribution among the creditors. The right to sell under the SFC Act or under the Recovery of Debts Act by a creditor coming within those Acts and standing outside the winding up, is different from the distribution of the proceeds of the sale of the security. The distribution in a case where the debtor is a company in the process of being wound up, can only be in terms of Section 529-A read with Section 529 of the Companies Act. After all, the Liquidator represents the entire body of creditors and also holds a right on behalf of the workers to have a distribution pari passu with the secured creditors and the duty for further distribution of the proceeds on the basis of the preferences contained in Section 530 of the Companies Act under the directions of the Company Court. In other words, the distribution of the sale proceeds under the direction of the Company Court is his responsibility. To ensure the proper working out of the scheme of distribution, it is necessary to associate the Official Liquidator with the process of sale so that he can ensure, in the light of the directions of the Company Court, that a proper price is fetched for the assets of the company-in-liquidation. It was in that context that the rights of the Official Liquidator were discussed in International Coach Builders Ltd. The Debts Recovery Tribunal and the District Court entertaining an application under Section 31 of the SFC Act should issue notice to the Liquidator and hear him before ordering a sale, as the representative of the creditors in general. 18. In the light of the discussion as above, we think it proper to sum up the legal position thus: ( i ) A Debts Recovery Tribunal acting under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would be entitled to order the sale and to sell the properties of the debtor, even if a company-in-liquidation, through its Recovery Officer but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. ( ii ) A District Court entertaining an application under Section 31 of the SFC Act will have the power to order sale of the assets of a borrower company-in-liquidation, but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. (iii) If a financial corporation acting under Section 29 of the SFC Act seeks to sell or otherwise transfer the assets of a debtor company-in-liquidation, the said power could be exercised by it only after obtaining the appropriate permission from the Company Court and acting in terms of the directions issued by that court as regards associating the Official Liquidator with the sale, the fixing of the upset JUDGMENT Page 20 21

(emphasis supplied) Relying on the above judgment, learned counsel for the appellant emphatically pointed out, that the sale of the properties of a company in liquidation, should not be confused with the distribution of the sale proceeds of the company in liquidation amongst its creditors. It was submitted, that there could be no interference with the right of the Recovery Officer, to sell the assets of the company in liquidation, under the provisions of the RDB Act. But, that had nothing to do with the distribution of the proceeds of the sale. The distribution of the sale proceeds ought to be in consonance with the provisions of the Companies Act, wherein the debtor JUDGMENT was a company in liquidation. (iv) Learned counsel then placed reliance on the M.V. Janardhan 2 Reddy case . He invited the Court’s attention to the following: “18. So far as the order passed by the learned Company Judge is concerned, it specifically and unequivocally stated that permission of the court should be obtained before sale is confirmed or finalised. That order was passed as early as on 13-8-1999. In an order dated 25-3-2005 also it was expressly mentioned that the sale was subject to confirmation of the court. It was an express condition imposed by the Company Court and as such it was not open to the Recovery Officer to confirm the sale and such order, which was having no authority of law, was rightly set aside by the Company Judge and no grievance could be made. Page 21 22 xxx xxx xxx 22. Our attention has been invited by the learned counsel to the relevant orders passed by the Company Court from time to time. So far as the order dated 13-8-1999 is concerned, permission to sell the property was granted on certain terms and conditions. They read as under:

( B ) Certified copy of the judgment and decree passed by the Subordinate Judge, Bhongir in OS No. 57 of 1989 dated 24-7-1993 shall be made available to the Official Liquidator without delay. (C) The certified copy of the order that would be passed by the Debts Recovery Tribunal, Bangalore shall be made available to the Official Liquidator without avoidable delay. (D) The petitioner Bank shall file the valuer’s report in the court before the properties covered under the mortgage deed are put to sale. (E) Permission of this Court shall be obtained before the sale of the properties movable or immovable, is confirmed or finalised. (F) The petitioner Bank shall undertake to deposit and shall deposit the workmen’s dues with the Official Liquidator as and when quantified by him as per the provisions of Section 529-A of the Companies Act. (G) Whatever surplus remains after the sale and realisation of the dues of the secured creditors and the workmen, as per law, the balance sale proceeds shall be made available to the Official Liquidator for being dealt with in accordance with the provisions of the Companies Act and the Rules. JUDGMENT xxx xxx xxx 23. An order dated 28-3-2005 in Company Application No. 187 of 2005 was equally clear. It reads as under: “This is an application filed by the nationalised bank seeking permission of this court to receive the valuation report and also to permit the Bank to effect sale of the properties of the Company under liquidation through the Recovery Officer of the Debts Recovery Tribunal, in terms of the conditions of auction-sale notice dated 2-2-2005. It is also stated that though sale notice was ordered, no sale was conducted as no permission was obtained from this court. The Official Liquidator also filed a report reporting that there is no objection as to the proposed auction and also the valuation report as filed by the applicant Company. Under the above circumstances, the applicant Company is permitted to go ahead with the proposed sale of the assets of the Company Page 22 23

xxx xxx xxx 27. It is true that when the Company Judge set aside the sale on 17-3-2006, the order was reversed by the Division Bench of the High Court since it was in breach of natural justice. That does not, however, mean that the Company Court could not pass fresh order after affording opportunity of hearing to the parties. 28. In our opinion, the Company Court was right in passing fresh order after hearing the parties. If the Recovery Officer could not have confirmed the sale, obviously all actions taken in pursuance of confirmation of sale, such as, issuance of sale certificate, registration of documents, etc. would be of no consequence. Since the Company was in liquidation and Official Liquidator was in charge of the assets of the Company, he ought to have been associated with the auction proceedings, which was not done. This is also clear from the report submitted by the Official Liquidator and on that ground also, the auction-sale was liable to be set aside.” JUDGMENT (emphasis supplied) Based on the conclusions drawn in the above judgment, it was submitted, that there can be no doubt, that in a matter where the Company Court had passed an order restraining the Recovery Officer confirming the sale, the sale made by the Recovery Officer in execution of the recovery certificate could only have been confirmed with the permission of the Court. Here Page 23 24 again, learned counsel has drawn a fine distinction. It was asserted, that even in the above judgment, this Court had not disputed nor disturbed the exclusive jurisdiction of the Recovery Officer in executing a recovery certificate.

5 Uttar Pradesh and Uttarakhand v. Allahabad Bank , and drew our attention to the following conclusions recorded therein:

JUDGMENT xxx xxx xxx 31. The aforesaid analysis makes it luculent that DRT 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 v. Central Bank of India (2013) 2 SCC 101. 32. Once the Official Liquidator is associated, needless to say, he has a role to see that there is no irregularity in conducting the auction and appropriate price is obtained by holding an auction in a fair, transparent and non-arbitrary manner in consonance with the Rules framed under the RDB Act. 5 (2013) 4 SCC 381 Page 24 25

(emphasis supplied) 16. In addition to the aforesaid submissions, Mr. S. Ganesh, Senior Advocate also assisted us in the matter. He supported the above contentions, but sought a little intervention by requiring us to also examine the scope of the controversy under consideration, by placing reliance on the JUDGMENT 6 judgment of this Court in Sadashiv Prasad Singh v. Harendar Singh . Learned counsel invited our attention to the scope of interference with reference to a public auction, wherein third party rights have emerged, especially when the third parties are independent of the disputants, and also, with reference to seeking recourse to a statutory remedy available to a party against the impugned order. The conclusions recorded by this Court 6 (2015) 5 SCC 574 Page 25 26 6 in the Sadashiv Prasad Singh case , as were pointedly brought to our notice, are being extracted hereunder:

JUDGMENT “30. Appeal against the order of Recovery Officer.—(1) Notwithstanding anything contained in Section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal. (2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside Page 26 27

JUDGMENT (emphasis supplied) Page 27 28 Based on the conclusions recorded in the above judgment, it was contended, that the DRT, Bangalore, issued the recovery certificate on 15.5.2002, thereupon the auction sale was conducted on 11.8.2005, and

more than a decade after all payments were made (and the sale was confirmed), there was no equitable justification to interfere with the same. 17. Insofar as the submission pertaining to the availability of a statutory remedy against the impugned order is concerned, learned senior counsel referred to the directions issued by the High Court of Karnataka, while disposing of Writ Petition No.26564 of 2005 (GM-DRT) preferred by Videocon International Ltd. and Tapti Machines Pvt. Ltd. and Writ Petition No.37991 of 2004 (GM-DRT) preferred by Tungbhadra Sugar Works Mazdoor Sangh – the workers’ union (referred to in the narration of facts hereinabove), and drew our attention to the observations of the High Court JUDGMENT in its order dated 27.10.2006, which are being extracted hereunder: “20. In the circumstances, I am of the view that there is an alternate and efficacious remedy by way of an appeal under the Debts Recovery Act R/w Procedure for recovery of tax. The petitioner shall avail the alternate remedy within a period of six weeks from today. It is needless to say that the matter shall not be precipitated until the appeal filed by the petitioners is disposed of. All the contentions are left upon.” (emphasis supplied) Based on the above, it was contended, that it was not open to the appellants to raise a challenge with reference to a third party sale, especially when the same was in the nature of a public auction conducted by a Recovery Officer, Page 28 29 while giving effect to an order passed by the Debts Recovery Tribunal, strictly within the jurisdiction of the provisions of the RDB Act. And also, the determination of this Court not to interfere lightly with the rights which

Section 30 of the RDB Act, which is extracted hereunder: “30. Appeal against the order of Recovery Officer.— (1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal. (2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under Sections 25 to 28 (both inclusive).” Based on the above provision, it was the submission of learned senior counsel, that the wrong, if any, caused to the contesting respondents could have been set right only under Section 18 of the RDB Act. JUDGMENT 18. Mr. C.A. Sundaram, Senior Advocate, endeavoured to repudiate the submissions advanced at the hands of learned counsel for the appellants, by advancing three contentions. Firstly, an order passed by a Court with jurisdiction having attained finality, was binding between the concerned parties, and was liable to be complied with under all circumstances. In reference to the instant submission, the assertion of learned counsel was, that the order dated 10.3.2000 passed by the High Court at Madras had been passed by a Court having jurisdiction. The said order had attained finality. And accordingly, there was no justification at the hands of any Page 29 30 other party concerned, to wriggle out of the same. Secondly, even if an order is passed by a Court which has no jurisdiction with reference to a controversy, and as such, could be termed as a void order, the order of the

matter is concerned, it was submitted, that the order dated 10.3.2000 having attained finality and having not been varied or vacated, was binding between the parties, and as such, its compliance was mandatory. Thirdly, any sale made within the teeth of an injunction, was liable to be set aside. An injunction order, according to learned senior counsel, as in the instant case (the order dated 10.3.2000), which mandated that no coercive steps would be taken against the assets of Deve Sugars Ltd. “… during or after the conclusion of the proceedings before the Tribunal …”, namely the DRT, Bangalore, was binding. The auction sale conducted on 11.8.2005, and its subsequent confirmation on 12.9.2015, according to learned senior counsel, JUDGMENT were not only beyond the jurisdiction of the Recovery Officer, but also beyond the jurisdiction of the Debts Recovery Tribunal. In the instant view of the matter, it was contended, that the impugned order dated 27.9.2009, passed by the High Court at Madras, ought not to be interfered with. 19. While substantiating the first contention noticed in the foregoing paragraph, it was asserted, that for recovery of a debt due to a bank, it can file a winding up petition before a Company Court under the Companies Act, or alternatively, it can file a recovery petition before the jurisdictional Page 30 31 Debts Recovery Tribunal, under the provisions of the RDB Act. Accordingly, it was pointed out, that a recovery suit could be withdrawn to a Company Court, and the recovery of the debt sought by the bank, could be agitated

Company Court under the Companies Act, could not be withdrawn to a Debts Recovery Tribunal, under the provisions of the RDB Act. It was therefore the contention of learned counsel for the respondents, that since the State Bank of Mysore could seek recourse to the DRT, as well as the Company Court, as may be considered suitable or appropriate, the proceedings filed by the State Bank of Mysore, namely, Company Application Nos. 1250-1253 of 1999 in pending Company Petition No.170 of 1995 (and Company Petition No.35 of 1997) had been filed by the State Bank of Mysore, before a Court having jurisdiction. And therefore, a Court having jurisdiction in the matter, at the instance of the State Bank of JUDGMENT Mysore, had passed the order dated 10.3.2000. By the order dated 10.3.2000, the Company Court in the High Court at Madras, allowed the prayer made by the State Bank of Mysore, to continue to proceed with the recovery proceedings initiated by it before the DRT, Bangalore. But while granting the above leave imposed two conditions, firstly, the Official Liquidator would be impleaded before the DRT, and secondly, no coercive steps would be taken against the assets of the Company (-Deve Sugars Ltd.) during or after the proceedings before the DRT. The said order was neither Page 31 32 varied nor vacated. The same, according to learned counsel, was binding between the parties. And therefore, it was contended, that the same could not have been ignored or overlooked. It was submitted, that even if the

having competent jurisdiction. Based on the factual position noticed above, it was asserted, that the sale of the properties of Deve Sugars Ltd., was clearly in the teeth of the injunction order passed by the Company Court on 10.3.2000, and as such, was liable to be set aside. 20. In order to repudiate the submissions advanced at the hands of learned counsel for the appellant, based on the judgment rendered by this 1 Court in the Allahabad Bank case , reliance was placed on Industrial Credit 7 and Investment Corporation of India Ltd. v. Srinivas Agencies , and the Court’s attention was drawn to the factual and legal position expressed therein: JUDGMENT “1. The extent of right of secured creditors to realise their debts from the assets of a company which is under winding up or has been wound up, by approaching fora other than the company court, is required to be spelt out in these appeals. We have also been called upon to decide as to when a pending suit or proceeding relating to realization of the debts by such a creditor should be transferred to itself by a company court seized with the winding-up proceeding. xxx xxx xxx 4. A combined reading of the aforesaid provisions leads to the following results: (i) A winding-up court has jurisdiction, inter alia, to entertain or dispose of any suit or proceeding by or against the company, even if such suit or proceeding had been instituted before an order for winding up had been made. This apart, the winding-up court has 7 (1996) 4 SCC 165 Page 32 33 jurisdiction to transfer such a suit or proceeding to itself and dispose of the same. These follow from sub-sections (2) and (3) of Section 446. (ii) When a winding-up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding, even if pending at the date of the winding-up order, can proceed against the company, except by leave of the company court vide sub-section (1) of Section 446. ( iii ) Any sale held, even without the leave of the winding-up court pursuant to order of a civil court on it being approached by a secured creditor to realise its debt will not ipso facto be void, in view of the holding in Ranganathan case that Section 537, dealing with voidness of sale, operates when the sale is pursuant to attachment of company court. This, however, would be the position where a company has not been wound up, but is in the process of being wound up. 5. None of the parties has assailed the aforesaid propositions of law as well. The real bone of contention is as to when ( i ) leave of the winding-up court should be granted to a secured creditor to proceed with the suit after an order of winding up has been made; and ( ii ) when should a winding-up court transfer to itself any suit or proceeding by or against the company during the pendency of the winding-up proceeding. 6. The aforesaid questions arise because a secured creditor who has initiated a suit or proceeding in a civil court is interested in realisation of his debt only, whereas the company court looks after the interest of all the creditors; so too, the workmen’s dues, which rank pari passu with debts due to secured creditors. This is brought home not only by Section 529-A, which was inserted by the Companies (Amendment) Act, 1985, but also by the proviso to sub-section (1) of Section 529 inserted by the same Amendment Act. The winding-up court does these acts through a liquidator, who has been given wide powers by Section 457 of the Act. As against this, a receiver appointed by a civil court on being approached by secured creditor would basically look after the interest of that creditor, whose interest may in many cases be in conflict with that of the liquidator, as was acknowledged in Karamelli & Barnett Ltd., In re. We feel no difficulty in stating that in case of such conflict, the interest of liquidator has to receive precedence over that of the receiver inasmuch as the former looks after the interest of a large segment of creditors along with that of workmen, whereas the latter confines his concern to the interest of the secured creditor on whose approach the receiver has been appointed. This view cannot also be, and has indeed not been, contested by the learned counsel appearing for the appellants. JUDGMENT xxx xxx xxx 9. Shri Salve’s entire submission had been that a working principle may be got evolved which would, on the one hand, protect the Page 33 34

JUDGMENT xxx xxx xxx 13. We are, therefore, of the view that the approach to be adopted in this regard by the company court does not deserve to be put in a strait-jacket formula. The discretion to be exercised in this regard has to depend on the facts and circumstances of each case. While exercising this power we have no doubt that the company court would also bear in mind the rationale behind the enactment of Recovery of Debts Due to the Banks and Financial Institutions Act, 1993, to which reference has been made above. We make the same observation Page 34 35 regarding the terms which a company court should like to impose while granting leave. It need not be stated that the terms to be imposed have to be reasonable, which would, of course, vary from case to case. According to us, such an approach, would maintain the integrity of that secured creditor who had approached the civil court or desires to do so, and would take care of the interest of other secured creditors as well which the company court is duty-bound to do. The company court shall also apprise itself about the fact whether dues of workmen are outstanding; if so, extent of the same. It would be seen whether after the assets of the company are allowed to be used to satisfy the debt of the secured creditor, it would be possible to satisfy the workmen’s dues pari passu.” (emphasis supplied) 21. On the jurisdictional aspect, learned senior counsel for the respondents placed reliance on clauses (1) and (2) of Section 446 of the Companies Act, 1956. The same are reproduced below: “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) (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 under section 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 …..” JUDGMENT Page 35 36 22. With reference to the judgment rendered in the Allahabad Bank 1 case , it was asserted, that this Court had merely concluded, that it was not necessary for a bank or a financial institution to seek leave of Company

1 the conclusions drawn by this Court in the Allahabad Bank case and the 7 Srinivas Agencies case . 23. In addition to the above, learned senior counsel for the respondents, placed reliance on Krishnadevi Malchand Kamathia v. Bombay 8 Environmental Action Group , and placed reliance on the following conclusions drawn therein: “16. It is a settled legal proposition that even if an order is void, it requires to be so declared by a competent forum and it is not permissible for any person to ignore the same merely because in his opinion the order is void. In State of Kerala v. M.K. Kunhikannan Nambiar Manjeri Manikoth Naduvil, Tayabbhai M. Bagasarwalla v. Hind Rubber Industries (P) Ltd., M. Meenakshi v. Metadin Agarwal and Sneh Gupta v. Devi Sarup, this Court held that whether an order is valid or void, cannot be determined by the parties. For setting aside such an order, even if void, the party has to approach the appropriate forum. 17. In State of Punjab v. Gurdev Singh this Court held that a party aggrieved by the invalidity of an order has to approach the court for relief of declaration that the order against him is inoperative and therefore, not binding upon him. While deciding the said case, this Court placed reliance upon the judgment in Smith v. East Elloe RDC, wherein Lord Radcliffe observed: (AC pp. 769-70) “… An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity [on] its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.” JUDGMENT 8 (2011) 3 SCC 363 Page 36 37 18. In Sultan Sadik v. Sanjay Raj Subba AIR 2004 SC 1377 , this Court took a similar view observing that once an order is declared non est by the court only then the judgment of nullity would operate erga omnes i.e. for and against everyone concerned. Such a declaration is permissible if the court comes to the conclusion that the author of the order lacks inherent jurisdiction/competence and therefore, it comes to the conclusion that the order suffers from patent and latent invalidity.” 19. Thus, from the above it emerges that even if the order/notification is void/voidable, the party aggrieved by the same cannot decide that the said order/notification is not binding upon it. It has to approach the court for seeking such declaration. The order may be hypothetically a nullity and even if its invalidity is challenged before the court in a given circumstance, the court may refuse to quash the same on various grounds including the standing of the petitioner or on the ground of delay or on the doctrine of waiver or any other legal reason. The order may be void for one purpose or for one person, it may not be so for another purpose or another person.” (emphasis supplied) 24. In addition to the above, reliance was placed on Order XXI Rule 58 of the Code of Civil Procedure, which is extracted below: “58. Adjudication of claims to, or objections to attachment of, property. - (1) Where any claims preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained: Provided that no such claim or objection shall be entertained— (a) where, before the claim is preferred or objection is made, the property attached has already been sold; or (b) where the Court considers that the claim or objection was designedly or unnecessarily delayed. (2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit. (3) Upon the determination of the questions referred to in sub-rule (2), the Court shall, in accordance with such determination,— (a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or (b) disallow the claim or objection; or JUDGMENT Page 37 38 (c) continue the attachment subject to any mortgage, charge of other interest in favour of any person; or (d) pass such order as in the circumstances of the case it deems fit.

Based on the above provision, it was submitted, that a declaration of illegality could only be prospective. And therefore, what had to be decided was, whether the sale proceedings conducted on 11.8.2005 and the confirmation thereof on 12.9.2005, were valid? It was submitted, that even if, for arguments sake, the order dated 10.3.2000 passed by the Company Court of the High Court at Madras was now to be set aside, the same would not validate the aforementioned illegality and unauthorized actions of the Recovery Officer, for giving effect to the recovery certificate issued by the JUDGMENT DRT. To support the aforementioned proposition, learned senior counsel placed reliance on the Official Liquidator, Uttar Pradesh and Uttarakhand 5 case , and drew the attention of this Court to the factual position recorded in paragraphs 2 and 3 thereof, which are reproduced hereunder: “2. Regard being had to the controversy involved which is in the realm of pure question of law, it is not necessary to exposit the facts in detail. Hence, the necessitous facts are adumbrated herein. The respondent, Allahabad Bank, a secured creditor with whom certain properties were mortgaged, filed Original Application No. 153 of 1999 under Section 9 of the RDB Act for recovery of a sum of Rs 39,93,47,701 with interest from the Company, namely, M/s Rajindra Page 38 39

JUDGMENT The aforementioned controversy was adjudicated and disposed of by this Court, after making a reference to the judgment in the Allahabad Bank 1 case by concluding as under: “35. It has been submitted by Mr Banerji, learned Senior Counsel, that if the Company Court as well as DRT can exercise jurisdiction in respect of the same auction or sale after adjudication by DRT, there would be duality of exercise of jurisdiction which the RDB Act does Page 39 40 not envisage. By way of an example, the learned Senior Counsel has submitted that there are some categories of persons who can go before DRT 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 realised 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 realise their dues. Therefore, this Court in Allahabad Bank case has opined that it is DRT which would have the exclusive jurisdiction when a matter is agitated before DRT. The dictum in the said case has been approved by the three-Judge Bench in Rajasthan State Financial Corpn. It is not a situation where the Official Liquidator can have a choice either to approach DRT or the Company Court. The language of the RDB 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 DRT. Be it noted, an order passed under Section 30 of the RDB Act by DRT 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 RDB 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 RDB Act. 36. We will be failing in our duty if we do not take notice of the decision in M.V. Janardhan Reddy wherein the sale was set 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, immovable or movable, is confirmed or finalised. 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 JUDGMENT Page 40 41 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-à-vis DRT 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 DRT. 37. In view of the aforesaid analysis, we concur with the view expressed by the Division Bench and hold that the Official Liquidator can prefer an appeal before DRT. As he was prosecuting the lis in all genuineness before the Company Court and defending the order before the Division Bench, we grant him four weeks’ time to file an appeal after following the due procedure. On such an appeal being preferred, DRT shall deal with the appeal in accordance with law. DRT is directed to decide the appeal within a period of two months after offering an opportunity of hearing to all concerned. Till the appeal is disposed of, the interim order passed by this Court shall remain in force. We hasten to clarify that we have not expressed anything on the merits of the case.” (emphasis supplied) 25. Reliance was then placed on Order XXI Rule 54 of the Code of Civil Procedure, which is extracted hereunder: “54. Attachment of immovable property .- (1) Where the property is immovable, the attachment shall be made by an Order prohibiting the judgment debtor from transferring or charging the property in any way, and all persons from taking any benefit from such transfer or charge. (1)A The Order shall also require the judgment debtor to attend court on a specified date to take notice of the date to be fixed for settling the terms of the proclamation of sale. (2) The Order shall be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode, and a copy of the Order shall be affixed on a conspicuous part of the property and then upon a conspicuous part of the court house, and also, where the property is land paying revenue to the government, in the office of the Collector of the District in which the land is situate and, where the property is land situate in village, also in the office of the Gram Panchayat, if any, having jurisdiction over that village.” JUDGMENT To support the contention advanced at the hands of learned senior counsel representing the respondents, reliance was placed on Jehal Tanti v. Page 41 42 9 Nageshwar Singh . The following observations recorded therein, are of relevance:

JUDGMENT 9 (2013) 14 SCC 689 Page 42 43

(emphasis supplied) JUDGMENT 26. It was the emphatic contention of learned counsel for the respondents, that the sole purpose for requiring the Official Liquidator to participate in the proceedings before the DRT, was to keep the interest of the creditors before the Company Court (where winding up proceedings had been initiated by other creditors), secure. The interest of the creditors before the Company Court could be secure, only if the sale of the properties of the company under winding up was made by conforming to the crystalised practices in getting the best price. Referring to the conclusions Page 43 44 drawn in the impugned order, it was submitted, that the auction sale conducted by the Recovery Officer was farcical, as it was, with the sole object of extending benefits to the appellant – Anita International. It was

27. Mr. P. Chidambaram, learned senior counsel in rejoinder and in response to the three contentions advanced at the hands of the respondents, invited this Court’s attention to Sections 18, 19 and 34 of the RDB Act. The same are extracted hereunder: “18. Bar of Jurisdiction.—On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17. Provided that any proceedings in relation to the recovery of debts due to any multi-State co-operative bank pending before the date of commencement of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012 under the Multi-State Co-operative Societies Act, 2002 (39 of 2002) shall be continued and nothing contained in this section shall, after such commencement, apply to such proceedings. 19. Application to the Tribunal. – (1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction- (a) the defendant, or each of the defendants where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of making the application, actually and voluntarily resides, or carries on business, or personally works for gain; or (c) the cause of action, wholly or in part, arises: JUDGMENT Provided that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, on an application made by it, withdraw the application, whether made before or after the Page 44 45

JUDGMENT Page 45 46

Provided that where the defendant fails to file the written statement within the said period of thirty days, the Presiding Officer may, in exceptional cases and in special circumstances to be recorded in writing, allow not more than two extensions to the defendant to file the written statement. (5A) After hearing of the application has commenced, it shall be continued from day-to-day until the hearing is concluded: Provided that the Tribunal may grant adjournments if sufficient cause is shown, but no such adjournment shall be granted more than three times to a party and where there are three or more parties, the total number of such adjournments shall not exceed six: Provided further that, the Presiding Officer may grant such adjournments on imposing such costs as may be considered necessary. (6) Where the defendant claims to set-off against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be set-off. (7) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Tribunal to pass a final order in respect both of the original claim and of the set-off. (8) A defendant in an application may, in addition to his right of pleading a set-off under sub-section (6), set up, by way of counter-claim against the claim of the applicant, any right or claim in respect of a cause of action accruing to the defendant against the applicant either before or after the filing of the application but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not. JUDGMENT Page 46 47

JUDGMENT Page 47 48

JUDGMENT Page 48 49

(25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. xxx xxx xxx 34. Act to have over-riding effect.—(1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. (2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, 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), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989).” JUDGMENT Based on the aforesaid provisions, it was asserted, that the provisions of the RDB Act envisaged a complete ouster of the Company Court, and that neither the Company Court nor any other Court, could have exercised jurisdiction vested in the RDB Act. It was submitted, that the Official Page 49 50 Liquidator has no participatory role under the RDB Act. The Official Liquidator has jurisdictional control, over the assets of a company under winding up, under the Companies Act. In this behalf, learned senior

“6. The answer to these contentions must depend on what the position in law is when a court entertains a suit or an appeal over which it has no jurisdiction, and what the effect of Section 11 of the Suits Valuation Act is on that position. It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities. The question is what is the effect of Section 11 of the Suits Valuation Act on this position.” (emphasis supplied) JUDGMENT Reliance was also placed on Dhurandhar Prasad Singh v. Jai Prakash 11 University , and the Court’s attention was drawn to the following observations: “20. de Smith, Woolf and Jowell in their treatise Judicial Review of Administrative Action, 5th Edn., para 5-044, have summarised the concept of void and voidable as follows: “Behind the simple dichotomy of void and voidable acts (invalid and valid until declared to be invalid) lurk terminological and conceptual problems of excruciating complexity. The problems arose from the premise that if an act, order or decision is ultra vires in the sense of outside jurisdiction, it was said to be invalid, or null and void. If it is 10 1955 (1) SCR 117 11 (2001) 6 SCC 534 Page 50 51

Thereupon, reference was made to Jagmittar Sain Bhagat v. Director, 12 Health Services, Haryana . In order to canvass the proposition, that jurisdiction of courts/forums cannot be conferred by consent of parties, or acquiescence or waiver. Reliance in this behalf was placed on the following conclusions drawn by this Court: “9. Indisputably, it is a settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes a decree having no jurisdiction over the matter, it would amount to nullity as the matter goes to the root of the cause. Such an issue can be raised at any stage of the proceedings. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Similarly, if a court/tribunal inherently lacks jurisdiction, acquiescence of party equally should not be permitted to perpetrate and perpetuate defeating of the legislative animation. The court cannot derive jurisdiction apart from the statute. In such eventuality the doctrine of waiver also does not apply. (Vide United Commercial Bank Ltd. v. Workmen AIR 1951 SC 230; Nai Bahu v. Lala Ramnarayan AIR 1978 SC 22; Natraj Studios (P) Ltd. v. Navrang Studios (1981) 1 SCC 523; and Kondiba Dagadu Kadam v. Savitribai Sopan Gujar (1999) 3 SCC 722.) 10. In Sushil Kumar Mehta v. Gobind Ram Bohra (1990) 1 SCC 193, this Court, after placing reliance on a large number of its earlier judgments particularly in Premier Automobiles Ltd. v. Kamlekar JUDGMENT 12 (2013) 10 SCC 136 Page 51 52 Shantaram Wadke (1976) 1 SCC 496; Kiran Singh v. Chaman Paswan AIR 1954 SC 340; and Chandrika Misir v. Bhaiya Lal AIR 1973 SC 2391 held, that a decree without jurisdiction is a nullity. It is a coram non judice ; when a special statute gives a right and also provides for a forum for adjudication of rights, remedy has to be sought only under the provisions of that Act and the common law court has no jurisdiction; where an Act creates an obligation and enforces the performance in specified manner, “performance cannot be forced in any other manner”. 11. The law does not permit any court/tribunal/authority/forum to usurp jurisdiction on any ground whatsoever, in case, such an authority does not have jurisdiction on the subject-matter. For the reason that it is not an objection as to the place of suing; “it is an objection going to the nullity of the order on the ground of want of jurisdiction”. Thus, for assumption of jurisdiction by a court or a tribunal, existence of jurisdictional fact is a condition precedent. But once such jurisdictional fact is found to exist, the court or tribunal has power to decide on the adjudicatory facts or facts in issue. (Vide Setrucherla Ramabhadraraju v. Maharaja of Jeypore AIR 1919 PC 150; State of Gujarat v. Rajesh Kumar Chimanlal Barot AIR 1996 SC 2664; Harshad Chiman Lal Modi v. D.L.F. Universal Ltd. AIR 2005 SC 4446; and Carona Ltd. v. Parvathy Swaminathan & Sons AIR 2008 SC 187).” (emphasis supplied) 28. Whilst supplementing the above contentions, Mr. S. Ganesh, learned senior counsel pointed out, that in the present controversy, the State Bank of Mysore had preferred an application before the Company JUDGMENT Court under Section 446(1) of the Companies Act. It was asserted, that the order passed by the High Court was an order in personam, and as such, the aforesaid order dated 10.3.2000 could not be considered as binding on the DRT, or for that matter, on the Recovery Officer of the DRT. For the above proposition, learned senior counsel placed reliance on the Andhra Bank 3 case , and drew the attention of this Court to the following conclusions recorded therein: “31. Section 446 of the Companies Act indisputably confers a wide power upon the Company Judge, but such a power can be exercised Page 52 53

(emphasis supplied) 29. In order to make the final thrust, learned senior counsel representing the appellant submitted, that an auction sale of the nature, which is subject matter of consideration in the present controversy, was not liable to be set aside, merely on account of some trivial infirmities in the procedure adopted for the sale of the same. It was the submission of learned counsel, that only a material irregularity would persuade a Court to interfere with such sale proceedings conducted in furtherance of statutory JUDGMENT power conferred upon such authority. To support the above contention, reliance was placed by learned senior counsel firstly on the following observations in the decision rendered by this Court in Radhy Shyam v. 13 Shyam Behari Singh . “7. There can be no doubt that an application under O. XXI, Rule 90 to set aside an auction-sale concerns the rights of a person declared to be the purchaser. If the application is allowed, the sale is set aside and the purchaser is deprived of his right to have the sale confirmed by the Court under Rule 92. Such a right is a valuable right, in that, upon such confirmation the sale becomes absolute and the rights of ownership in the property so sold become vested in him. A decision in 13 AIR 1971 SC 2337 Page 53 54

“7. In the present case the Division Bench has come to the conclusion that publicity was not as wide as originally proposed by the Commissioners in their affidavit. The publication was made in four dailies namely The Hindu, Indian Express, the Hindustan Times and The Statesman. There was no publication in the Times of India. Further out of the four newspapers in which publication was made only in two there were two insertions and in the remaining two there was only one insertion. This was contrary to what the Commissioners have promised in their affidavit dated July 8, 1964. No doubt, other efforts were made for giving publicity but these efforts were not sufficient to attract more than one offer. When the case came for confirmation on December 24, 1964 there was an application by Babu Khan that the property was of much higher value and that fresh offers must be invited again with wider publicity. There is also the affidavit of the State Government dated August 29, 1963 in which the value of the property was shown as Rs.13,40,000/-. Besides, on that very day, one Gopaldas Darak had come before the Court with a higher offer JUDGMENT 14 (1969) 3 SCC 537 Page 54 55

JUDGMENT Page 55 56

(emphasis supplied) 30. Based on the legal position declared by this Court in the above judgments, it was asserted, that the validity of the auction sale held on 11.8.2005 and the confirmation thereof on 12.9.2005 was natural and normal in the facts and circumstances of this case. In order to restore the aforestated validity, it was submitted, that the impugned order passed by the High Court deserved to be set aside. 31. We have given our thoughtful consideration to the complicated sequence of facts projected before us, as also, the legal submissions JUDGMENT advanced at the hands of learned counsel for the rival parties. We shall now endeavour to record our conclusions, with reference to the issues canvassed. 32. In our considered view, the controversy projected for our consideration falls in a narrow compass. It is apposite, to crystalise the dimensions of the dispute. Deve Sugars Ltd. was ordered to be wound up on 16.4.1999 (in Company Petition No.170 of 1995). The Official Liquidator took possession of the assets of Deve Sugars Ltd. situated at Harige on Page 56 57 28.9.1999. The State Bank of Mysore filed Company Application Nos. 1251-1253 of 1999, in the then pending Company Petition No.170 of 1995. Through the above applications, the State Bank of Mysore sought leave of

granted leave “…subject to the condition that… no coercive steps are taken against the assets of the company during or after the conclusion of the proceedings before the Tribunal…” 33. After the DRT, Bangalore issued the recovery certificate dated 15.5.2002, the State Bank of Mysore filed Company Application No. 1300 of 2003, with a prayer that the bank be permitted to seek execution of the recovery certificate. It is not a matter of dispute, that the Company Court in the High Court at Madras, neither heard nor passed any order on the above application. The admitted position is, that the Registry of the High Court, at its own, returned the above Company Application No.1300 of 2003, by JUDGMENT recording an endorsement, that leave of the High Court was not necessary. The Recovery Officer thereafter proceeded with the sale of the properties of Deve Sugars Ltd. 34. Tungabadra Sugar Works Mazdoor Sangha, the workers’ union of Deve Sugars Ltd., objected to the execution of the recovery certificate by the Recovery Officer . The Official Liquidator, who was ordered to be impleaded in the recovery proceedings initiated by the State Bank of Mysore, vide order dated 10.3.2000 (passed by the Company Court in the High Court at Page 57 58 Madras), also filed objections. All the above objections were overruled by the Recovery Officer . 35. The workers’ union, then assailed the recovery proceedings, before

Petition No.26564 of 2005, before the High Court of Karnataka. In the above writ petitions, the petitioners assailed the sale proceedings before the Recovery Officer . Based on a preliminary objection raised by the appellant –Anita International, the High Court of Karnataka relegated the petitioners to their remedy under the RDB Act, by a common order dated 27.10.2006. The above order was challenged through Writ Appeal Nos. 2050 and 2051 of 2006 before the High Court of Karnataka. The writ appeals were dismissed on 23.2.2007. 36. The workers’ union thereafter preferred AOR No.15 of 2006 and Videocon International Ltd. filed AOR No.1 of 2007. In both the above JUDGMENT matters, a challenge was raised to the order passed by the Recovery Officer dated 12.9.2005, whereby the sale of properties of Deve Sugars Ltd. to Anita International, was confirmed. 37. It would be relevant to mention, that as against the reserve price of Rs.10 crores, Anita International – the appellant herein, made a bid of Rs.10.25 crores. The same was accepted by the Recovery Officer on 11.8.2005, and confirmed on 12.9.2005. One N. Ponnusamy filed Company Application Nos. 2740-2742 of 2007, before the Company Court in the High Page 58 59 Court at Madras, wherein he assailed the sale and confirmation orders dated 11.8.2005 and 12.9.2005. In the above applications, it was inter alia asserted, that the reserve price of Rs.10 crores was too low. The above

38. The applications filed by the Official Liquidator and others were considered collectively (with Company Application Nos. 2740-2742 of 2007) and were rejected by a common order dated 3.3.2009, whereby all the applicants were relegated to their remedy of appeal under the RDB Act. A challenge raised to the above order dated 3.3.2009, by way of an intra-court appeal, was allowed by the High Court, on 17.9.2009. It is this order, which is subject matter of challenge before this Court. Stated concisely, the High Court expressed the view, that the proceedings before the Recovery Officer , including the sale of the properties of Deve Sugars Ltd. on 11.8.2005 and the confirmation thereof on 12.9.2005, had been conducted in disregard of JUDGMENT the order of the Company Court in the High Court at Madras, dated 10.3.2000 (in Company Application Nos. 1251-1253 of 1999). The sale and confirmation of the properties of Deve Sugars Ltd. in favour of Anita International were accordingly set aside. 39. The principal debate raised before this Court, revolves around the cause and effect of the order dated 10.3.2000, passed by the Company Court in the High Court at Madras. According to learned counsel for the appellants, the above order dated 10.3.2000 being wholly void and non est Page 59 60 could not have any bearing on the proceedings conducted by the Recovery Officer , including the sale of the properties of Deve Sugars Ltd. on 11.8.2005, and also, the confirmation thereof by the Recovery Officer on

because, the proceedings conducted by the Recovery Officer were in total disregard of the order dated 10.3.2000, it was submitted, that the impugned order was well founded. 40. In order to support their claim, it was submitted on behalf of the appellants, that jurisdiction in matters of recovery agitated by banks and financial institutions under the RDB Act, has been repeatedly expounded by this Court. The concerned Debts Recovery Tribunals, before whom recovery proceedings are initiated, have exclusive jurisdiction in the matter. It was also pointed out, that this Court has clearly declared, that even the jurisdiction of Recovery Officer s, in matters of execution of recovery JUDGMENT certificates, was likewise exclusive. It was the pointed contention of learned counsel for the appellants, that in matters wherein banks and financial institutions approach a Debts Recovery Tribunal, which on due consideration issues a recovery certificate, the same can be executed only through a Recovery Officer . It was submitted, that a Company Court has no jurisdiction, in the matter. Learned counsel for the appellants, substantiated the above assertion on the basis of the decisions rendered by 1 2 this Court in the Allahabad Bank , the M.V. Janardhan Reddy , the Andhra Page 60 61 3 4 Bank , the Rajasthan State Financial Corporation , and the Official 5 Liquidator, Uttar Pradesh and Uttarakhand cases. 41. According to learned counsel for the appellants, it was apparent,

squarely within his jurisdiction under the RDB Act. And his jurisdiction being exclusive, as declared by this Court could not be interfered with or set aside. It is in the above context, that it was also the pointed assertion of learned counsel representing the appellant, that the order passed by the Company Court in the High Court at Madras dated 10.3.2000 was without jurisdiction. Learned counsel representing the appellant however cautioned this Court, not to confuse the power of the Recovery Officer in executing recovery certificates (through sale of the debtor’s properties), with the apportionment of the sale proceeds. It was urged, that the concern of the appellant – Anita International, was limited to the sale of the properties of JUDGMENT Deve Sugars Ltd., which it had purchased on 11.8.2005, which was confirmed by the Recovery Officer on 12.9.2005. It was submitted, that the appellant –Anita International has no concern with the distribution of the sale proceeds, and as such, the issue of distribution of the sale proceeds should not fall within the consideration of the present determination. 42. It is not possible for us to accept the contentions advanced on behalf of the appellants. In this behalf, it would be relevant to mention, 2 that in the M.V. Janardhan Reddy case , the Company Court by an order Page 61 62 dated 13.8.1999 required that its permission should be obtained before the Recovery Officer finalized the sale. Thereafter, the Company Court by an order dated 25.3.2005, directed that sale by the Recovery Officer, was subject

not be violated by the Recovery Officer. It was concluded, that the sale made by the Recovery Officer in violation of the orders passed by the Company Court, was without the authority of law, the same was accordingly set aside. The explanation tendered by learned senior counsel representing the appellants was, that even in the above judgment, this Court had not disturbed the exclusive jurisdiction of a Recovery Officer, in executing the recovery certificate. In our considered view, the above contention is immaterial to the issue under consideration. The issue under consideration is, whether or not, an order passed by the Company Court (in the present case, the order dated 10.3.2000) was binding on the Recovery Officer ? And, JUDGMENT whether the proceedings conducted by the Recovery Officer, in violation of the above order, were sustainable in law? We have no hesitation in 2 concluding, that in the M.V. Janardhan Reddy case , an order passed by the Company Court was held to be binding on the Recovery Officer . Based on exactly the same consideration, we are of the view, that the acceptance of the bid of Anita International by the Recovery Officer on 11.8.2005, and the confirmation of the sale in its favour on 12.9.2005, were clearly impermissible, and therefore, deserve to be set aside. Page 62 63 43. In addition to the above, reference may be made to the judgment rendered by this Court in the Official Liquidator, Uttar Pradesh and 5 Uttarakhand case . In paragraph 36 of the above judgment (extracted in

the Company Court. The proposition dealt with was in a situation where, the Company Court had imposed a condition on the Recovery Officer, that permission of the Company Court would be obtained, before the Recovery Officer conducted the sale and confirmation of the movable or immovable properties, of the debtor. It was held, that the order passed by the Company Court, was binding on the Recovery Officer. In the above judgment it was concluded, that it was not open to the Recovery Officer to confirm the sale of the properties at his own, and such a sale and confirmation of movable or immovable properties made by the Recovery Officer, without the permission of the Company Court, were liable to be set aside. This Court while recording its above conclusion, JUDGMENT also expressed, that the above issue had nothing to do with the proposition, whether an Official Liquidator can approach a Company Court, to seek the setting aside of the auction and the sale conduced by the Recovery Officer. It would be relevant to mention, that the judgments relied upon by learned counsel for the appellants, were duly taken into consideration in the Official Liquidator, Uttar 5 Pradesh and Uttarakhand case . In view of the above, we are of the considered view, that the pointed issue canvassed before us, at the hands of learned counsel for the appellants, stands answered against the appellant in paragraph 36 of the Page 63 64 above judgment. We endorse, and are obliged to follow, the view expressed by this Court, as noticed above. Accordingly, we find no merit in the first contention advanced at the hands of learned counsel for the appellants.

financial institution, can legitimately initiate proceedings, by filing a winding up petition before the jurisdictional Company Court, or alternatively, intervene in a pending winding up petition. Since there is no bar restraining a bank or a financial institution from approaching a Company Court, by filing a winding up petition, it is not possible to conclude, that the jurisdictional Company Court, is not possessed with the determinative authority/competence to entertain a claim raised by such bank or financial institution. In view of the above, it is not possible for us to accept, as was suggested on behalf of the appellants, that the order passed by the Company Court in the High Court at Madras dated 10.3.2000, lacked the jurisdictional authority. Since we have concluded that the Company JUDGMENT Court which passed the order dated 10.3.2000 did not lack jurisdiction, we hereby hold, that in the facts of this case, the above order dated 10.3.2000 was neither invalid nor void. 45. We are also of the considered view, as held by the Court in the 8 Krishnadevi Malchand Kamathia case , that it is not open either to parties to a lis or to any third parties, to determine at their own, that an order passed by a Court is valid or void. A party to the lis or a third party, who considers an order passed by a Court as void or non est , must approach a Page 64 65 Court of competent jurisdiction, to have the said order set aside, on such grounds as may be available in law. However, till an order passed by a competent Court is set aside, as was also held by this Court in the Official

violation thereof, would be liable to be set aside. We endorse the opinion 9 expressed by this Court in the Jehal Tanti case . In the above case, an earlier order of a Court was found to be without jurisdiction after six years. In other words, an order passed by a Court having no jurisdiction, had subsisted for six years. This Court held, that the said order could not have been violated while it subsisted. And further, that the violation of the order, before it is set aside, is liable to entail punishment, for its disobedience. For us to conclude otherwise, may have disastrous consequences. In the above situation, every cantankerous and quarrelsome litigant would be entitled to canvass, that in his wisdom, the judicial order detrimental to his interests, JUDGMENT was void, voidable, or patently erroneous. And based on such plea, to avoid or disregard or even disobey the same. This course can never be permitted. 46. To be fair to learned counsel for the appellants, it needs to be noticed, that reliance was also placed on behalf of the appellants on the 10 6 12 Kiran Singh , the Sadashiv Prasad Singh , and the Jagmittar Sain Bhagat cases, to contend, that a decree passed by a Court without jurisdiction was a nullity, and that, its invalidity could not be corrected, even by the consent of the concerned parties. We are of the considered view, that the Page 65 66 proposition debated and concluded in the judgments relied upon by learned counsel for the appellants (referred to above) are of no relevance, to the conclusions drawn in the foregoing paragraph. In our determination

by a Court subsists, the same is liable to be complied with, till it is set aside. 47. The submission canvassed at the hands of learned counsel for the appellants, that the impugned sale dated 11.8.2005, and its confirmation on 12.9.2005, should not be interfered with on the ground of equity, as the appellant had made the entire payment in 2005, and the Recovery Officer had ordered confirmation of the sale, as no objection had been raised against the same. We find it difficult to persuade ourselves to accept the above contention. In this behalf, one cannot lose sight of the fact that the Official Liquidator, as well as, the workers’ union had raised objections before JUDGMENT the Recovery Officer at the very initial stage. Even a former Director of Deve Sugars Ltd. – N. Ponnusamy raised a challenge to the proceedings before the Recovery Officer by asserting, that the reserve price of Rs.10 crores fixed for the property being put to auction, was too low. The fact, that in the process of sale of the properties of Deve Sugars Ltd. only two bids were received, has not been disputed. It is also not disputed, that whilst one of the bidders was the appellant – Anita International, the other bidder was Synergy Steel Ltd. – a sister company of the appellant. In sum and Page 66 67 substance therefore, there was only one bidder. For the above reasons, in addition to those recorded by the High Court (noticed in paragraph xxx 12 xxx, hereinabove), it is not possible for us to accept the claim of the

is also unacceptable, as the factual position in the judgments relied upon, are inapplicable to the facts and circumstances of this case. In view of the above, we find no merit in the contention advanced. 48. It was also submitted on behalf of the appellants, that the sale conducted by the Recovery Officer on 11.8.2005, and the order of confirmation thereof passed by the Recovery Officer on 12.9.2005, ought to have been assailed only in proceedings under Section 30 of the RDB Act. It was submitted, that since an efficacious alternative remedy was available to the parties, which had approached the Company Court in the High Court at Madras, the interference at the hands of the High Court was neither just JUDGMENT nor proper. The instant submission is wholly devoid of substance and deserves to be rejected. We are of the considered view, that there was sufficient justification for the parties to have approached the Company Court in the High Court at Madras, for the reason that they were seeking the enforcement of the order dated 10.3.2000, passed by the Company Court itself. The sale made by the Recovery Officer on 11.8.2005, and its confirmation on 12.9.2005, were in utter violation of the order dated 10.3.2000, and therefore, the concerned parties were justified in Page 67 68 approaching the High Court at Madras. In the above view of the matter, we find no merit in the instant contention as well. 49. Last of all, we may advert to the contention, that the order dated

the State Bank of Mysore, was not binding on the appellant. Insofar as the instant contention is concerned, it was submitted, that the said order passed by the High Court was an order in personam , and as such, the aforesaid order could not be considered as an order binding on the appellant before this Court. We find no merit in the instant contention, as well. In this behalf, it would be relevant to mention, that in the application filed by the State Bank of Mysore, the prayer made was, that the State Bank of Mysore be permitted, leave to proceed with recovery proceedings before the DRT, Bangalore. By the order dated 10.3.2000, the Company Court in the High Court at Madras, while granting leave, imposed two conditions. JUDGMENT Firstly, the Official Liquidator would have to be impleaded by the bank in the recovery proceedings before the DRT, Bangalore. And secondly, no coercive steps would be taken against the assets of the company during or after the conclusion of the proceedings before the Tribunal. It is not possible for us to accept, that the aforesaid order passed by the High Court was an order in personam . We are of the view, that the above order had a clear and binding effect on the proceedings permitted to be initiated before the DRT, Bangalore, and further, that it was equally binding on the Recovery Officer . Page 68 69 And accordingly, in our view, the same would also be binding on those claiming through sale proceedings conducted by the Recovery Officer. In the above view of the matter, there can be no doubt, that the order dated

learned counsel for the appellants. 50. For all the reasons recorded hereinabove, we find no merit in the instant appeals. The same are accordingly dismissed. While affirming the impugned order passed by the High Court, we confirm the setting aside of the sale made by the Recovery Officer in favour of the appellant – Anita International on 11.8.2005, and the confirmation thereof by the order of the Recovery Officer dated 12.9.2005. ………………………………….J. (Jagdish Singh Khehar) JUDGMENT ………………………………….J. (Adarsh Kumar Goel) New Delhi; July 04, 2016. Page 69 70 JUDGMENT Page 70