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2016 (5) TMI 982 - HC - Indian LawsDebt Recovery order - sale of property was ordered to be cancelled and was set aside - Held that - No question of limitation arises either. Article 127 of the Limitation Act is premised on the case falling under Order 21 Rr 89-91 of the Code of Civil Procedure, 1908. Those provisions are inapplicable to a case where a sale has been set aside on account of a default on the part of the purchaser in complying with the terms and conditions of the sale. Further, it appears to us that the sale would be governed primarily by Clause 21 of the Terms and Conditions read with Rule 57 of the Second Schedule to the Income Tax Act, 1961. The issues about non-disclosure of UPSDIC dues and the consequences of a workers agitation are, to our mind, nothing but a diversion. The sale terms are clear. It was on an as is where is and as is what is basis, coupled with a no complaint and no recourse condition. Clause 25 of the approved Terms and Conditions of sale made it the absolute and sole obligation of the Petitioner to obtain UPSIDC consent and to clear all dues. The sale was sanctioned in favour of the Petitioner on 16th October 2007. For the next five years, till 18th February 2011, the Petitioner failed to clear those dues. It can hardly be heard to complain now. The fact that there were several workmen of Daewoo was also known to all. Those workmen had intervened in the Appeals filed by unsuccessful bidders before the Presiding Officer of the DRT. They supported at first the Petitioner s offer. This finds mention in the order of 28th September 2009. We must observe that this does not appear to us to have been attempt to revive the unit or a genuine offer to rehabilitate the unit and provide employment to the workmen of Daewoo. It appears to us to have been little more than an attempt to get possession and control of a huge tract of land and turn it to real estate development. The record indicates that at no point was any attempt made to run the plant. The existing facilities were totally gutted, down to the wiring and window frames being removed and the entire structure being stripped bare and rendered unusable. Significant too is the fact that the Petitioner sought change of user from industrial to residential, another factor that is not brought out in the Petition at all. The Petitioner took the property under an order of a Court, without then questioning it. It took it subject to terms and conditions. It accepted those conditions. It sought time, repeatedly, to fulfil those conditions. It did not. It says that Consent Terms filed in that very Court were binding, but also now says that that very Court had no jurisdiction ab initio. If there is an estoppel, it must run against the Petitioner, not in its favour. In the facts and circumstances of the case, we believe we would be utterly remiss in our duty if we failed to impose costs in a matter such as this. We cannot escape the finding, established by this voluminous record, that the Petitioner has played fast and loose not only with the Recovery Officer, the DRT and the DRAT but also with this Court. The Petition is wanting in candour. Wholly incorrect statements were made include about the issuance of the necessary debentures and about the property being kept insured, as also of the so-called investment made by the Petitioner in the unit. What emerges from this is a picture of the Petitioner trying by every means possible to grab this enormous tract of land, turn it to a residential development project, no doubt at a huge profit to itself, without satisfying workers dues or the dues of UPSIDC and without satisfying the Recovery Certificate in execution of which the sale was conducted in the first place. The atempt seems to have been to get this land at nothing but the initial upfront price. We believe it is about time that litigants learnt the price of dishonesty in court, and learnt, too, that the days when this Court would, for whatever reason, take a lenient view are very firmly in the past. We have our eyes to the future. That includes the economic, financial and developmental future of the country. That concern is ill-served by litigants who clog up the courts and consume judicial time pursuing false cases. There is no merit in the Petition. It deserves to be dismissed, and it is. It also deserves to be visited with costs, and it is. These costs quantified at ₹ 10 lakhs payable to ARCIL. This is over and above the costs payable to Mr. Talekar.
Issues Involved:
1. Jurisdiction of the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT) over the sale. 2. Validity of the sale under the SARFAESI Act. 3. Compliance with the terms and conditions of the sale. 4. Allegations of fraud and material irregularity. 5. Impact of the Consent Terms on the sale. 6. Limitation period for challenging the sale. 7. Conduct of the Petitioner and allegations of mala fide actions. Issue-wise Detailed Analysis: 1. Jurisdiction of the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT) over the sale: The Petitioner argued that the DRT and DRAT lacked jurisdiction over the sale, claiming it was a private treaty sale under the SARFAESI Act. However, the court found that the sale was conducted under the supervision of the Recovery Officer, following orders from the DRT and DRAT. The sale was not purely private but a court-directed sale involving multiple bidders. The court concluded that the DRT and DRAT had jurisdiction over the sale and its terms. 2. Validity of the sale under the SARFAESI Act: The Petitioner contended that the SARFAESI Act did not apply to the sale, as it was a conditional sale without security creation. The court rejected this argument, noting that the sale was conducted under the DRT's supervision, and the SARFAESI Act did not oust the DRT's jurisdiction in such cases. The court emphasized that the sale was valid and within the DRT's jurisdiction. 3. Compliance with the terms and conditions of the sale: The Petitioner repeatedly sought extensions to comply with the sale terms, including payment of balance consideration and issuance of debentures. The court found that the Petitioner failed to fulfill these obligations, including non-payment of dues to UPSIDC and non-insurance of the property. The court held that the sale was conditional, and the Petitioner’s non-compliance justified setting aside the sale. 4. Allegations of fraud and material irregularity: The Petitioner argued that ARCIL did not allege fraud or material irregularity, which are necessary grounds for setting aside a sale. The court found that the sale was set aside due to the Petitioner’s non-compliance with the sale terms, not fraud or irregularity. The court held that the Recovery Officer had the authority to set aside the sale for non-compliance. 5. Impact of the Consent Terms on the sale: The Petitioner claimed that the Consent Terms filed with the DRT barred ARCIL from seeking to set aside the sale. The court found that the Consent Terms required compliance with the sale terms, which the Petitioner failed to meet. The court held that the Consent Terms did not prevent ARCIL from seeking cancellation of the sale due to the Petitioner’s non-compliance. 6. Limitation period for challenging the sale: The Petitioner argued that any challenge to the sale was time-barred under Article 127 of the Limitation Act. The court found that the sale was conditional, and the limitation period did not apply as the challenge was based on the Petitioner’s non-compliance with the sale terms. The court held that the challenge was not time-barred. 7. Conduct of the Petitioner and allegations of mala fide actions: The court found that the Petitioner’s conduct was obstructive and non-cooperative, with repeated delays and false statements about compliance. The court noted that the Petitioner’s actions suggested an attempt to gain control of the property for real estate development rather than fulfilling the sale obligations. The court imposed costs on the Petitioner for its conduct and dismissed the Petition. Conclusion: The court dismissed the Petition, upholding the jurisdiction of the DRT and DRAT over the sale, affirming the validity of the sale under the SARFAESI Act, and finding the Petitioner in non-compliance with the sale terms. The court imposed costs on the Petitioner for its obstructive conduct and false statements.
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