2013 (10) TMI 1595 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the Company Court over the sale of secured assets.
2. Role of the Official Liquidator in approving settlement proposals.
3. Validity of orders passed by the Debt Recovery Tribunal (D.R.T.).
4. Appellant's challenge to the settlement proposal and order of the D.R.T.
5. Bona fide nature of the Appellant's proposal for settlement.

Analysis:

1. The appeal arose from a company application seeking to recall an earlier order of the Company court regarding the sale of secured assets. The Company Judge held that the Liquidator must follow D.R.T. orders for sale, as per the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Liquidator was directed to hold properties subject to D.R.T. orders, not independently sell them.

2. The Official Liquidator's role in approving settlement proposals was questioned by the Appellant, who argued that the Liquidator should have ensured the best price for the assets. The Appellant, a former Director and guarantor, had a personal interest in maximizing asset realization.

3. Orders passed by the D.R.T. permitting settlement proposals were upheld, emphasizing the D.R.T.'s exclusive jurisdiction in recovery proceedings. The Appellant's challenge to the D.R.T.'s order was dismissed for non-removal of objections, pending restoration application.

4. The Appellant's challenge to the settlement proposal and D.R.T. order was deemed outside the Company court's jurisdiction. The Company application was considered consequential to the D.R.T.'s order, and the Appellant was directed to address concerns through the DRAT, where the appeal was dismissed due to non-attendance.

5. The Appellant's proposal for settlement was scrutinized for lack of bona fides, offering an inadequate amount compared to the bank's substantial dues. The Court found the Appellant's proposal unacceptable, emphasizing the need for genuine and substantial settlement offers.

In conclusion, the High Court upheld the Company Judge's decision, dismissing the appeal and emphasizing the need for genuine settlement offers and adherence to D.R.T. orders in recovery proceedings.