9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 339 - HC - Indian LawsE-auction - Power of the petitioner or its Recovery Officer to lift the corporate veil - maintainability of appeal - Held that - Piercing of corporate veil, even if permitted to the petitioner / its Recovery Officer, has to be in public interest. It is of the view that it is not in the larger public interest to stall any further the auction scheduled for today by the respondent no.1 Bank.It cannot be lost sight of that the dues for recovery whereof the respondent no.1 Bank is proceeding to auction the properties aforesaid are also public dues and the said auction has been stalled at the instance of the petitioner for the last nearly five years. The petitioner even now has merely attached the properties and if were to proceed with the sale of the property, it may take another five years or so and of which there is no certainty also as of now. On the contrary, the respondent no.1 Bank is on the threshold of selling the property and realization of sale proceeds thereof. It is not deemed appropriate to at this stage interfere with such sale. The petitioner if aggrieved from the measures taken by the respondent no.1 Bank under the SARFAESI Act had the remedy available of approaching the Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act and which the petitioner has again failed to do. It is a well settled principle that jurisdiction under Article 226 will not be exercised when an alternative efficacious remedy is available. Reference in the said regard can be made to the recent judgment of the Supreme Court in Joshi Technologies International Inc. Vs. Union of India (2015 (5) TMI 521 - SUPREME COURT ). Liberty is however given to the petitioner to, if is able to make out a case and if permitted in law, make a claim against the respondent no.1 Bank with respect to the sale proceeds of the aforesaid two properties. To the said extent, none of the observations contained in this order shall come in the way of the petitioner.
Issues Involved:
1. Validity of the E-Auction Sale Notice dated 20th April, 2016. 2. Petitioner's claim of a charge over the auctioned properties due to Provident Fund (PF) dues. 3. Authority of the petitioner to lift the corporate veil. 4. Public interest considerations in stalling the auction. 5. Availability of alternative remedies under the SARFAESI Act. Issue-wise Detailed Analysis: 1. Validity of the E-Auction Sale Notice dated 20th April, 2016: The petition challenges the E-Auction Sale Notice issued by Vijaya Bank for auctioning properties at Noida, belonging to two companies that stood as guarantors for financial assistance provided to a third company. The petitioner claims a charge over these properties due to PF dues owed by the third company. 2. Petitioner's claim of a charge over the auctioned properties due to PF dues: The petitioner, Assistant Provident Fund Commissioner, asserts a charge on the properties being auctioned due to PF dues owed by the third company. The Bank's previous attempts to sell the properties since 2011 were obstructed by the petitioner's objections. The Court previously ruled that the three companies involved are separate juridical entities, and the assets of the guarantor companies cannot be used to recover PF dues of the third company. The petitioner’s contention that the companies are the same entity was rejected, and no proceedings were initiated to establish this claim. 3. Authority of the petitioner to lift the corporate veil: The Recovery Officer of the petitioner issued a notice to lift the corporate veil, claiming all three companies operated from the same properties, had the same management, and aimed to defraud revenue under social legislation. The Court questioned the petitioner's authority to lift the corporate veil, as neither the PF Act nor the provisions of the Income-tax Act explicitly empower the petitioner to do so. The Court noted that lifting the corporate veil involves adjudication of facts, which the petitioner is not empowered to perform. 4. Public interest considerations in stalling the auction: The Court emphasized the importance of public interest in deciding whether to stall the auction. It noted that the Bank's dues are also public dues and that the auction had been delayed for nearly five years due to the petitioner's objections. The Court expressed concern that further delaying the auction would not benefit any party and might waste the property. 5. Availability of alternative remedies under the SARFAESI Act: The Court highlighted that the petitioner had an alternative remedy available under Section 17 of the SARFAESI Act to approach the Debt Recovery Tribunal (DRT), which the petitioner failed to utilize. The Court reiterated the principle that jurisdiction under Article 226 of the Constitution of India should not be exercised when an alternative efficacious remedy is available. Conclusion: The petition was dismissed, with the Court granting liberty to the petitioner to make a claim against the Bank regarding the sale proceeds of the auctioned properties if permitted by law. The Court emphasized that its observations should not hinder any future claims by the petitioner. The petition was dismissed without costs.
|
