2013 (10) TMI 1586 - HC - Indian Laws

Summary

Issues Involved:

1. Jurisdiction of the Recovery Officer to auction the property of a sick company under SICA.
2. Conflict between SICA and RDDB Act regarding recovery proceedings.
3. Finality and challenge to the DRT-I's order dated 01.04.2004.
4. Whether RFC could object to the recovery proceedings after accepting the DRT-I's order.

Detailed Analysis:

1. Jurisdiction of the Recovery Officer to Auction Property:

The primary issue was whether the Recovery Officer had the jurisdiction to auction the property of the respondent company, which was a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The BIFR had earlier directed the sale of the company's assets under Section 20(4) of SICA. The Appellate Tribunal held that the Recovery Officer lacked jurisdiction, as the property was under the purview of BIFR's orders. However, the High Court found that the Recovery Officer's actions were not without jurisdiction, as the DRT-I had issued a recovery certificate, which was not appealed against, thus attaining finality.

2. Conflict Between SICA and RDDB Act:

The judgment addressed the conflict between SICA and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act). Both statutes contain non obstante clauses giving them overriding effects over other laws. The court noted that while SICA aims to rehabilitate sick companies, the RDDB Act focuses on expeditious recovery of debts. The court concluded that once BIFR has determined that a company should be wound up, the RDDB Act can be applied to recover debts, as the rehabilitation process under SICA is no longer active.

3. Finality and Challenge to DRT-I's Order:

The DRT-I's order dated 01.04.2004, which issued a recovery certificate, was not appealed by RFC, making it final. The court emphasized that RFC could not challenge the recovery proceedings after accepting the DRT-I's decision. The court distinguished this case from those where a tribunal lacked inherent jurisdiction, noting that the DRT was established specifically for recovering debts due to banks and financial institutions and had the jurisdiction to adjudicate such matters.

4. RFC's Objection to Recovery Proceedings:

RFC's objection to the jurisdiction of the Recovery Officer was raised late in the proceedings, and the court found that RFC had accepted the DRT-I's order by not appealing it. The court held that the DRT-I did not lack inherent jurisdiction, and thus, RFC could not challenge the proceedings initiated under the RDDB Act. The court rejected RFC's reliance on precedents where tribunals acted outside their jurisdiction, affirming that the DRT had jurisdiction under the RDDB Act.

Conclusion:

The High Court allowed the writ petitions, setting aside the Appellate Tribunal's order. It held that the Recovery Officer's proceedings were within jurisdiction, and the DRT-I's order, having attained finality, could not be challenged by RFC. The court emphasized the separate objectives of SICA and the RDDB Act, allowing the latter to proceed in recovering debts once the rehabilitation process under SICA was deemed unfeasible.