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2019 (5) TMI 1075 - HC - Companies LawJurisdiction - Power of official liquidator is required to approach the Debts Recovery Tribunal - validity of sale taking place - official liquidator was not issued with any notice - HELD THAT - The official liquidator representing the company in liquidation is required to challenge the irregularity or otherwise of a sale made under the SARFAESI Act, before the Debts Recovery Tribunal. If the borrower is aggrieved by the sale proceedings carried out under the provisions of the SARFAESI Act, appeal has to be filed within a period of 45 days under section 17 of the said Act. Since, in the present case, as the sale was alleged to have been carried out without notice to the official liquidator, counsel appearing for the first respondent-asset reconstruction company, and counsel appearing for implead petitioner in I. A. Nos. 2 and 3 and the petitioner in C. A. No. 277 of 2018, on instructions, would submit that their clients would not raise the plea of limitation for filing of appeal under section 17 of the SARFAESI Act, and thereby the said plea may be treated to have been waived, and that this court may direct the official liquidator to file appeal within reasonable time. The official liquidator is directed to file appeal before the Debts Recovery Tribunal within a period of two weeks from the date of receipt of a copy of this order, and on filing of such appeal, the Tribunal shall dispose of the same in accordance with law, after giving notice and opportunity of hearing to all the parities, within a period of twelve weeks thereafter. Till the disposal of the appeal, the interim order granted by this court on May 2, 2018 shall continue. The official liquidator is permitted to incur expenditure with respect to the court fee and other legal expenditure including counsel's fee, by moving appropriate application before the Tribunal.
Issues Involved:
1. Direction to prevent the sale of assets under the SARFAESI Act. 2. Joint survey and demarcation of land. 3. Setting aside the sale of assets conducted under the SARFAESI Act. 4. Legal expenses incurred by the official liquidator. 5. Impleadment of a third party as respondent. 6. Higher offer for the purchase of the auctioned land. 7. Confirmation of sale to the auction purchaser. Detailed Analysis: Prevention of Sale of Assets under SARFAESI Act: The company in liquidation sought directions to prevent the first respondent from proceeding with the sale of its assets under the SARFAESI Act. The court had earlier issued an interim order on May 2, 2018, restraining the respondents from selling the property, which was extended until further orders. Joint Survey and Demarcation of Land: The applicant requested a joint survey with the Government Surveyor to demarcate the land into two lots—one mortgaged to the first respondent and the other to the second respondent. This was to ensure clarity on the extent of land mortgaged to each creditor. Setting Aside the Sale of Assets: The official liquidator argued that the sale of assets by the first respondent was conducted without notifying the official liquidator, as mandated by the Supreme Court in previous judgments (Official Liquidator, U.P. and Uttarakhand v. Allahabad Bank and Pegasus Assets Reconstruction P. Ltd. v. Haryana Concast Ltd.). The liquidator contended that the sale should be set aside due to this procedural lapse. Legal Expenses Incurred by the Official Liquidator: The official liquidator sought directions for the respondents to bear the legal expenses incurred in challenging the sale before the Debts Recovery Tribunal (DRT). Impleadment of a Third Party: An application was filed by a third party, seeking to be impleaded as a respondent in the case, and offering to purchase the land at a higher price than the auctioned amount. Higher Offer for the Purchase of Auctioned Land: The third party offered to purchase the land for ?4,66,00,000, which was higher than the auction price of ?3,42,00,000. The official liquidator received offers ranging from ?3,90,00,000 to ?5,00,00,000, and thus argued that the third party's offer was not substantially higher. Confirmation of Sale to Auction Purchaser: The auction purchaser, who had deposited 25% of the bid amount, sought confirmation of the sale and was ready to pay the remaining balance. He argued that his funds were stuck in the process, causing hardship and loss. Judgment Summary: The court, after hearing all parties, directed the official liquidator to approach the Debts Recovery Tribunal to challenge the sale under the SARFAESI Act. The court emphasized that the official liquidator must be informed at every stage of the sale process, as established by the Supreme Court. The court also noted that the official liquidator must challenge the sale before the DRT, as per the SARFAESI Act and relevant judgments. The court granted the official liquidator two weeks to file an appeal before the DRT, with the assurance from the respondents that they would not raise the plea of limitation. The DRT was directed to dispose of the appeal within twelve weeks, and the interim order preventing the sale was to continue until the appeal's disposal. The official liquidator was permitted to incur legal expenses by moving an appropriate application before the Tribunal. The court disposed of all related applications and closed any pending interlocutory applications. No costs were awarded.
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