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TMI Blog2008 (5) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the auction proceedings, which was not done. This is also clear from the report submitted by the Official Liquidator and on that ground also, the auction sale was liable to be set aside. - CIVIL APPEAL NO. 3201 OF 2008 - - - Dated:- 2-5-2008 - C.K. THAKKER AND D.K. JAIN, JJ. JUDGMENT C.K. Thakker, J. - Leave granted. 2. The present appeal is filed by the appellant herein against the judgment and order dated October 18, 2006 passed by the High Court of Andhra Pradesh in Original Side Appeal No. 44 of 2006. By the said order, the Division Bench of the High Court dismissed the appeal and confirmed the order, dated September 8, 2006 passed by the Single Judge of that Court in Company Application No. 73 of 2006. 3. To appreciate the controversy raised in the present appeal, few relevant facts may be stated. 4. Vijaya Bank-Respondent No. 1 herein ( Bank for short) filed Original Suit No. 57 of 1989 in the Court of Subordinate Judge, Bhongir against Messrs Kran Organics Chemicals (P.) Ltd. (in liquidation) ( Company for short) for recovery of Rs. 94,50,524 as also another Suit being Original Suit No. 61 of 1989 in the same Court for recovery of Rs. 6,43, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of Rs. 67,50,000 at a public auction held on 19-12-2005. Full amount of the sale consideration was paid on 3-1-2006. 9. It was then stated; "Accordingly, the said sale is hereby confirmed". 10. According to the appellant, on 23-2-2006, the Official Liquidator submitted a report to the Hon ble Court wherein he also stated that there was no impediment in confirming the sale. Sale certificate was issued in favour of the appellant on 2-3-2006. The sale was registered on 16-3-2006. On 17-3-2006, however, the Company Judge set aside the sale without issuing notice and without affording an opportunity of hearing to the appellant observing that the sale was not properly conducted and was confirmed without an order from the Court. The sale was, therefore, set aside. 11. It appears that an application was made by the appellant to recall the said order. Meanwhile, the Company Judge issued direction to the Official Liquidator to sell the property. Notice was issued by the Official Liquidator for sale of property. The appellant, however, approached the Division Bench of the High Court by filing Original Side Appeal No. 28 of 2006 complaining that an order passed by the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no impediment in confirming the sale. Hence, even on that ground, the Company Judge was not justified in setting aside the sale. The counsel stated that at an earlier occasion also, an order was passed by the Company Judge setting aside the sale without issuing notice and giving opportunity of hearing to the appellant. Fortunately, however, the said order was set aside by the Division Bench. But again the Company Judge set aside the sale and the Division Bench confirmed the said order. The counsel submitted that after confirmation of sale, sale certificate was issued in favour of the appellant on 2-3-2006, sale deed was registered on 16-3-2006 and the appellant had paid an amount of Rs. 4 lakhs towards stamp duty. All these had caused serious prejudice to the appellant. The entire amount of Rs. 67.50 lakhs was paid in the beginning of 2006 and if at this stage, the order of the High Court is not interfered with, irreparable injury and loss would be caused to the appellant. He, therefore, submitted that the order passed by the High Court deserves to be set aside by restoring confirmation of sale in favour of the appellant and by directing the respondents to take consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d even physical and actual possession of the property was given to respondent No. 3. The third respondent also obtained necessary permission and certificates from the Authorities so as to enable it to start unit. It had incurred substantial expenditure of about Rs. 1.50 crores and also taken steps for recruitment of staff. If at this stage, the order passed by the High Court is set aside, great prejudice would be caused to the said respondent. 19. Having heard the learned counsel for the parties and having given anxious consideration to the facts and circumstances in their entirety, in our opinion, it cannot be said that by setting aside sale, either the learned Company Judge or the Division Bench has committed any illegality which deserves interference in exercise of discretionary power under Article 136 of the Constitution. 20. Our attention has been invited by the learned counsel to the relevant orders passed by the Company Court from time to time. So far as the order dated 13-8-1999 is concerned, permission to sell the property was granted on certain terms and conditions.They read as under : A.The Official Liquidator shall be allowed to have inspection of the properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accordingly disposed of." 22. The above orders leave no room of doubt that the Bank was permitted to go ahead with the proposed sale of the assets of the Company under liquidation by way of auction but such sale was subject to confirmation by the Company Court. It is, therefore, clear that all parties were aware about the condition as to confirmation of sale by the Company Court. It was, therefore, not open to Recovery Officer to confirm sale. The order passed and action taken by the Recovery Officer was in clear violation of and inconsistent with the specific condition imposed by the Company Court. In our considered opinion, therefore, the appellant cannot take any advantage of confirmation of sale by the Recovery Officer who did not possess the power to confirm sale. 23. So far as confirmation of sale is concerned, the principles are well-settled. It is, therefore, not necessary to consider various decisions on that point. We may, however, refer to Navalkha Sons v. Sri Ramanya Das [1969] 3 SCC 537. 24. In that case, speaking for the Court, Ramaswami, J. stated : "6. The principles which should govern confirmation of sales are well-established. Where the acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the sale in favour of the appellant. But as we have already noted, in view of condition imposed by the Company Court, Recovery Officer did not have the power to confirm sale. An order passed by an officer having no authority of law has no effect. It neither creates any right in favour of a party for whom such order is made nor imposes any obligation on the opposite party against whom it was passed. 26. In Sikander Khan v. Radha Kishan [2002] 9 SCC 405, auction sale of agricultural land was confirmed by. the Collector. The judgment-debtor filed an application under Order 21, Rule 90 of the Code of Civil Procedure, 1908 contending that the Collector had no jurisdiction to confirm the sale and his action, therefore, was null and void . 27. Upholding the contention and setting aside the sale, this Court said: "Learned counsel appearing for the appellants urged that the view taken by the High Court that the Collector had jurisdiction to confirm the auction-sale was patently erroneous. In other words, what the learned counsel contends is that under section 71 of the Code read with Order 21 Rule 92, CPC, the Collector is only authorised to hold and conduct the auc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted. In the auction held on December 19, 2005, the appellant was the highest bidder. His bid of Rs. 67.50 lakhs was accepted and he paid the earnest money. Sale was confirmed albeit illegally, by the Recovery Officer on February 13, 2006 and he paid the remaining amount. The appellant thus paid the entire amount of Rs. 67.50 lakhs. The sale was confirmed, sale certificate was issued and sale deed was registered in his favour. It is the case of the appellant that he had paid stamp duty of Rs. 4 lakhs. Taking into consideration all these factors, in our opinion, ends of justice would be met if respondent No. 3 M/s. MSN Organics (P.) Ltd., who has purchased the property for Rs. 1.80 crores is directed to pay an amount of Rs. 20,00,000 (rupees twenty lakhs only) to the appellant herein. In our judgment, payment of this amount to the appellant (auction-purchaser) would work as some solatium for his trouble and disappointment for the loss of that which is, perhaps, a good bargain Chundi Charan v. Bankey Behary [1899] 26 Cal. 449 (FB). 31. For the foregoing reasons, the appeal deserves to be partly allowed and is accordingly allowed to the extent indicated above. - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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