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TMI Blog2016 (7) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... t at Madras dated 10.3.2000, lacked the jurisdictional authority. Since we have concluded that the Company Court which passed the order dated 10.3.2000 did not lack jurisdiction, we hereby hold, that in the facts of this case, the above order dated 10.3.2000 was neither invalid nor void. The submission canvassed at the hands of learned counsel for the appellants, that the impugned sale dated 11.8.2005, and its confirmation on 12.9.2005, should not be interfered with on the ground of equity, as the appellant had made the entire payment in 2005, and the Recovery Officer had ordered confirmation of the sale, as no objection had been raised against the same. We find it difficult to persuade ourselves to accept the above contention. In this behalf, one cannot lose sight of the fact that the Official Liquidator, as well as, the workers union had raised objections before the Recovery Officer at the very initial stage. Even a former Director of Deve Sugars Ltd. N. Ponnusamy raised a challenge to the proceedings before the Recovery Officer by asserting, that the reserve price of ₹ 10 crores fixed for the property being put to auction, was too low. The fact, that in the process o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o binding on the appellant before this Court. For the above reasons, we find no merit even in the last contention advanced by learned counsel for the appellants. - CIVIL APPEAL NOS. 6042-6048 OF 2011 with CIVIL APPEAL NOS. 5501-5502 OF 2016 (Arising out of SLP(C) Nos. 7490-7491 of 2014) - - - Dated:- 4-7-2016 - JAGDISH SINGH KHEHAR AND ADARSH KUMAR GOEL, JJ For the Petitioner : MS. GARIMA PRASHAD For the Respondent : MR. RAHUL PRATAP JUDGMENT JAGDISH SINGH KHEHAR, J. 1. Leave granted in Special Leave Petition (C) Nos. 7490-7491 of 2014. 2. Two company petitions, i.e., Company Petition Nos. 170 of 1995 and 35 of 1997 were filed by Videocon International Ltd. and Tapti Machines Pvt. Ltd., for winding up of Deve Sugars Ltd. before the High Court of Judicature at Madras. Deve Sugars Ltd. was running a sugar factory in the State of Karnataka. Deve Sugars Ltd. was ordered to be wound up on 16.4.1999. An Official Liquidator was accordingly directed to take possession of the properties of the company - Deve Sugars Ltd.. The Official Liquidator took possession of the assets of the company situate at Harige (in District Shimoga, in the State of Karnataka), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to overlook security arrangements of the establishment of Deve Sugars Ltd.. 6. Immediately after the DRT, Bangalore, issued the recovery certificate, the State Bank of Mysore moved DCP No.1912 in Original Application No.440 of 1997, seeking the disposal of the assets of the company in liquidation, at the hands of the Recovery Officer of the DRT, Bangalore (hereinafter referred to as, the Recovery Officer). Simultaneously, the State Bank of Mysore being conscious of the order passed by the High Court at Madras on 10.3.2000, filed Company Application No.1300 of 2003, with a prayer that it be permitted to seek execution of the recovery certificate dated 15.5.2002 (for recovering the amounts due to it, from out of the assets of Deve Sugars Ltd.). It is relevant to mention, that the aforesaid Company Application No.1300 of 2003 was not entertained by the Registry of the High Court at Madras. While declining to entertain Company Application No.1300 of 2003, the Registry of the High Court at Madras, relied upon a judgment rendered by this Court in Civil Appeal No. 2536 of 2000 (reported as Allahabad Bank v. Canara Bank (2000) 4 SCC 406). While not entertaining Company Application No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial Liquidator, had also raised objections to the purported sale by the Recovery Officer (in continuation of the recovery certificate dated 15.5.2002, issued by the DRT). The Official Liquidator sought deferment of the sale proceedings at the hands of the Recovery Officer, under Section 529A of the Companies Act. It would be relevant to mention, that the objections raised by the workers union and the Official Liquidator, were overruled by the Recovery Officer. 9. It is also pertinent to mention, that the auction scheduled by the Recovery Officer for 1.10.2004, could not be conducted. Accordingly, a fresh proclamation was issued, for the auction of the properties of Deve Sugars Ltd., fixing 11.8.2005 as the date for holding the auction. The rival parties were also permitted to bring their buyers, if there was anyone interested. The reserve price was fixed at ₹ 10 crores. The auction was actually conducted on 11.8.2005. The highest bid was made by Anita International, the appellant before this Court. The bid of Anita International of ₹ 10.25 crores was accepted. The bidder deposited the bid amount, within the stipulated period. No challenge was raised against the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliance with, and in continuation of the outcome before the High Court of Karnataka, the workers union preferred AOR No.15 of 2006 and Videocon International Ltd. preferred AOR No.1 of 2007. In the above appeals, a challenge was raised to the order dated 12.9.2005 passed by the Recovery Officer, whereby the sale of the properties of Deve Sugars Ltd. conducted on 11.8.2005, in favour of Anita International was confirmed. Simultaneously, one N. Ponnusamy, an ex-Director of Deve Sugars Ltd., filed Company Application Nos.2740-2742 of 2007 before the Company Court in the High Court at Madras, and sought the setting aside of the auction sale dated 11.8.2005, as well as, the confirmation order dated 12.9.2005, after the payment of the consideration amount. The challenge raised by N. Ponnusamy was primarily on the ground that the reserve price of ₹ 10 crore was too low. N. Ponnusamy, also sought transfer of the recovery proceedings, from the DRT, Bangalore, to the High Court at Madras. While entertaining the proceedings initiated by N. Ponnusamy, the High Court by its order dated 24.10.2007, passed an ex parte interim order of stay. Anita International and State Bank of Mysore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty of the company. Secondly, no material had been placed before the High Court to indicate, that the valuation report (dated 24.3.2002) and the inventory (dated 25.11.2004) were prepared after giving notice to the Official Liquidator, who was undoubtedly in exclusive custody of the properties (which were subject matter of auction). Thirdly, even after the workers union had raised objections before the Recovery Officer, no material was placed before the High Court, that there was proper application of mind at the hands of the Recovery Officer, leading to the inference, that the objections were rejected in a casual and lackadaisical manner. Fourthly, the inspection of the properties of the company under winding up, by the intending purchasers (for the auction sale scheduled on 11.8.2005) was permitted only on the day preceding the date of auction (namely, on 10.8.2005), leading to the inference, that the entire process of auction was a mere formality. Fifthly, on the advertised date fixed for the auction (on 11.8.2005) the Recovery Officer received only two bids. Despite the above, he closed the bid on 11.8.2005 itself. Insofar as the above two bids are concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, or the confirmation thereof at the hands of the Recovery Officer, as the same were in clear violation, of the order (dated 10.3.2000) of the Company Court in the High Court at Madras. Relying on the decision of this Court in the M.V. Janardhan Reddy case, the High Court while referring to the findings recorded in paragraph 28 of the above judgment concluded, that since the assets of the company under winding up were under the physical charge of the Official Liquidator, the Official Liquidator ought to have been associated with the auction proceedings, conducted by the Recovery Officer. Since the facts and circumstances of the present case reveal, that the Official Liquidator was not allowed to be associated with the auction proceedings, and even the valuation of the assets, was taken without the knowledge of the Official Liquidator, and further, the objections raised by the Official Liquidator were rejected without due consideration, the Company Court in the High Court at Madras concluded, that the sale of the properties of Deve Sugars Ltd. by the Recovery Officer on 11.8.2005, was liable to be set aside. So also, the confirmation of the sale, by the Recovery Officer on 12.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Under Section 18, the jurisdiction of any other court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. (This exclusion does not however apply to the jurisdiction of the Supreme Court or of a High Court exercising power under Articles 226 or 227 of the Constitution.) This is the effect of Sections 17 and 18 of the Act. 22. We hold that the provisions of Sections 17 and 18 of the RDB Act are exclusive so far as the question of adjudication of the liability of the defendant to the appellant Bank is concerned. (ii) Execution of certificate by Recovery Officer: is his jurisdiction exclusive 23. Even in regard to execution , the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the banks/finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Tribunal and recover various amounts from the erstwhile life insurance companies in certain respects. Section 41 of the LIC Act conferred exclusive jurisdiction on the said Tribunal just like Section 18 of the RDB Act, 1993. There the Company was ordered to be wound up by an order of the Company Court passed under Section 446(1) on 9-1-1959. The claim was filed by LIC against the Company and its Directors before the Tribunal in 1962. The respondents before the Tribunal contended that the claim could not have been filed in the Tribunal without the leave of the Company Court under Section 446(1). This Court rejected the said contention and held that though the purpose of Section 446 was to enable the Company Court to transfer proceedings to itself and to dispose of the suit or proceedings so transferred, unless the Company Court had jurisdiction to decide the questions which were raised before the LIC Tribunal, there was no purpose of requiring leave of the Company Court or permitting transfer. .. xxx xxx xxx 31. It may also be noticed that in the LIC Act of 1956, there was no provision like Section 34 of the RDB Act giving overriding effect to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions, are paid before the workmen s dues are paid. We are, therefore, unable to release any amounts in favour of the appellant Bank straight away. (emphasis supplied) Based on the above decision, it was the contention of learned counsel for the appellant, that the Company Court in the High Court at Madras, had neither the jurisdiction to grant liberty to the State Bank of Mysore to recover its dues from Deve Sugars Ltd. by initiating proceedings under the RDB Act, nor the jurisdiction to interfere with the recovery proceedings by directing that no coercive steps would be taken against Deve Sugars Ltd., during or after the conclusion of the proceedings before the DRT, Bangalore. Stated simply, learned counsel for the appellant was emphatic, that the order passed by the Company Court in the High Court at Madras (dated 10.3.2000), was jurisdictionally and legally impermissible, and as such, was liable to be ignored. (ii) Reliance was also placed on Andhra Bank v. Official Liquidator (2005) 5 SCC 75. The instant judgment was relied upon to support the conclusions drawn by learned counsel, while placing reliance on the Allahabad Bank case. Learned counsel invited our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein would prevail over the non obstante clause contained in Section 46-B of the SFC Act. 16. In International Coach Builders Ltd. v. Karnataka State Financial Corpn (2003) 10 SCC 482 this Court considered the correctness of the views expressed by the Karnataka High Court and the Gujarat High Court. This Court held that a right is available to a financial corporation under Section 29 of the SFC Act against a debtor, if a company, only so long as there is no order of winding up. When the debtor is a company in winding up, the rights of financial corporations are affected by the provisions in Sections 529 and 529-A of the Companies Act. It was also held that the proviso to Section 529 of the Companies Act creates a pari passu charge in favour of the workmen to the extent of their dues and makes the Liquidator the representative of the workmen to enforce such a charge. The decision of the Bombay High Court in Maharashtra State Financial Corpn. v. Official Liquidator was approved. The reference to a larger Bench was occasioned by the fact that the decision in Allahabad Bank v. Canara Bank was not adverted to in this decision. This decision recognises that, whether a creditor is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement of the Official Liquidator being associated with it, giving the Company Court the right to ensure that the distribution of the assets in terms of Section 529-A of the Companies Act takes place. In the case on hand, admittedly, the appellants have not set in motion any proceeding under the SFC Act. What we have is only a liquidation proceeding pending and the secured creditors, the financial corporations approaching the Company Court for permission to stand outside the winding up and to sell the properties of the company-in-liquidation. The Company Court has rightly directed that the sale be held in association with the Official Liquidator representing the workmen and that the proceeds will be held by the Official Liquidator until they are distributed in terms of Section 529-A of the Companies Act under its supervision. The directions thus, made, clearly are consistent with the provisions of the relevant Acts and the views expressed by this Court in the decisions referred to above. In this situation, we find no reason to interfere with the decision of the High Court. We clarify that there is no inconsistency between the decisions in Allahabad Bank v. Canara Bank and in Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. (iii) If a financial corporation acting under Section 29 of the SFC Act seeks to sell or otherwise transfer the assets of a debtor company-in-liquidation, the said power could be exercised by it only after obtaining the appropriate permission from the Company Court and acting in terms of the directions issued by that court as regards associating the Official Liquidator with the sale, the fixing of the upset price or the reserve price, confirmation of the sale, holding of the sale proceeds and the distribution thereof among the creditors in terms of Section 529-A and Section 529 of the Companies Act. (iv) In a case where proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or the SFC Act are not set in motion, the creditor concerned is to approach the Company Court for appropriate directions regarding the realisation of its securities consistent with the relevant provisions of the Companies Act regarding distribution of the assets of the company-in-liquidation. (emphasis supplied) Relying on the above judgment, learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court shall be obtained before the sale of the properties movable or immovable, is confirmed or finalised. (F) The petitioner Bank shall undertake to deposit and shall deposit the workmen s dues with the Official Liquidator as and when quantified by him as per the provisions of Section 529-A of the Companies Act. (G) Whatever surplus remains after the sale and realisation of the dues of the secured creditors and the workmen, as per law, the balance sale proceeds shall be made available to the Official Liquidator for being dealt with in accordance with the provisions of the Companies Act and the Rules. xxx xxx xxx 23. An order dated 28-3-2005 in Company Application No. 187 of 2005 was equally clear. It reads as under: This is an application filed by the nationalised bank seeking permission of this court to receive the valuation report and also to permit the Bank to effect sale of the properties of the Company under liquidation through the Recovery Officer of the Debts Recovery Tribunal, in terms of the conditions of auction-sale notice dated 2-2-2005. It is also stated that though sale notice was ordered, no sale was conducted as no permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside. (emphasis supplied) Based on the conclusions drawn in the above judgment, it was submitted, that there can be no doubt, that in a matter where the Company Court had passed an order restraining the Recovery Officer confirming the sale, the sale made by the Recovery Officer in execution of the recovery certificate could only have been confirmed with the permission of the Court. Here again, learned counsel has drawn a fine distinction. It was asserted, that even in the above judgment, this Court had not disputed nor disturbed the exclusive jurisdiction of the Recovery Officer in executing a recovery certificate. (v) Last of all learned counsel placed reliance on Official Liquidator, Uttar Pradesh and Uttarakhand v. Allahabad Bank (2013) 4 SCC 381, and drew our attention to the following conclusions recorded therein: 23. From the aforesaid verdict, it is vivid that the larger Bench in Rajasthan State Financial Corpn. case approved the law laid down in Allahabad Bank. In fact, it is noticeable that the larger Bench has observed that in Allahabad Bank case, a view has been taken that the RDB Act being a subsequent legislation and being a special law would p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mode is provided under the RDB Act, which is a special enactment. DRT has the powers under the RDB Act to make an enquiry as it deems fit and confirm, modify or set aside the order made by the Recovery Officer in exercise of powers under Sections 25 to 28 (both inclusive) of the RDB Act. Thus, the auction, sale and challenge are completely codified under the RDB Act, regard being had to the special nature of the legislation. (emphasis supplied) 16. In addition to the aforesaid submissions, Mr. S. Ganesh, Senior Advocate also assisted us in the matter. He supported the above contentions, but sought a little intervention by requiring us to also examine the scope of the controversy under consideration, by placing reliance on the judgment of this Court in Sadashiv Prasad Singh v. Harendar Singh (2015) 5 SCC 574. Learned counsel invited our attention to the scope of interference with reference to a public auction, wherein third party rights have emerged, especially when the third parties are independent of the disputants, and also, with reference to seeking recourse to a statutory remedy available to a party against the impugned order. The conclusions recorded by this Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal. (2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside the order made by the Recovery Officer in exercise of his powers under Sections 25 to 28 (both inclusive). The High Court ought not to have interfered with in the matter agitated by Harender Singh in exercise of its writ jurisdiction. In fact, the learned Single Judge rightfully dismissed the writ petition filed by Harender Singh. 23.4. Fourthly, Harender Singh could not be allowed to raise a challenge to the public auction held on 28-8-2008 because he had not raised any objection to the attachment of the property in question or the proclamations and notices issued in newspapers in connection with the auction thereof. 23.5. All these facts cumulatively lead to the conclusion that after 26-10-2005, Harender Singh had lost all interest in the property in question and had therefore, remained a silent spectator to various orders which came to be passed from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions issued by the High Court of Karnataka, while disposing of Writ Petition No.26564 of 2005 (GM-DRT) preferred by Videocon International Ltd. and Tapti Machines Pvt. Ltd. and Writ Petition No.37991 of 2004 (GM-DRT) preferred by Tungbhadra Sugar Works Mazdoor Sangh the workers union (referred to in the narration of facts hereinabove), and drew our attention to the observations of the High Court in its order dated 27.10.2006, which are being extracted hereunder: 20. In the circumstances, I am of the view that there is an alternate and efficacious remedy by way of an appeal under the Debts Recovery Act R/w Procedure for recovery of tax. The petitioner shall avail the alternate remedy within a period of six weeks from today. It is needless to say that the matter shall not be precipitated until the appeal filed by the petitioners is disposed of. All the contentions are left upon. (emphasis supplied) Based on the above, it was contended, that it was not open to the appellants to raise a challenge with reference to a third party sale, especially when the same was in the nature of a public auction conducted by a Recovery Officer, while giving effect to an order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the parties, and as such, its compliance was mandatory. Thirdly, any sale made within the teeth of an injunction, was liable to be set aside. An injunction order, according to learned senior counsel, as in the instant case (the order dated 10.3.2000), which mandated that no coercive steps would be taken against the assets of Deve Sugars Ltd. during or after the conclusion of the proceedings before the Tribunal , namely the DRT, Bangalore, was binding. The auction sale conducted on 11.8.2005, and its subsequent confirmation on 12.9.2015, according to learned senior counsel, were not only beyond the jurisdiction of the Recovery Officer, but also beyond the jurisdiction of the Debts Recovery Tribunal. In the instant view of the matter, it was contended, that the impugned order dated 27.9.2009, passed by the High Court at Madras, ought not to be interfered with. 19. While substantiating the first contention noticed in the foregoing paragraph, it was asserted, that for recovery of a debt due to a bank, it can file a winding up petition before a Company Court under the Companies Act, or alternatively, it can file a recovery petition before the jurisdictional Debts Recovery Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by this Court in the Allahabad Bank case, reliance was placed on Industrial Credit and Investment Corporation of India Ltd. v. Srinivas Agencies (1996) 4 SCC 165, and the Court s attention was drawn to the factual and legal position expressed therein: 1. The extent of right of secured creditors to realise their debts from the assets of a company which is under winding up or has been wound up, by approaching fora other than the company court, is required to be spelt out in these appeals. We have also been called upon to decide as to when a pending suit or proceeding relating to realization of the debts by such a creditor should be transferred to itself by a company court seized with the winding-up proceeding. xxx xxx xxx 4. A combined reading of the aforesaid provisions leads to the following results: (i) A winding-up court has jurisdiction, inter alia, to entertain or dispose of any suit or proceeding by or against the company, even if such suit or proceeding had been instituted before an order for winding up had been made. This apart, the winding-up court has jurisdiction to transfer such a suit or proceeding to itself and dispose of the same. These follow f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... segment of creditors along with that of workmen, whereas the latter confines his concern to the interest of the secured creditor on whose approach the receiver has been appointed. This view cannot also be, and has indeed not been, contested by the learned counsel appearing for the appellants. xxx xxx xxx 9. Shri Salve s entire submission had been that a working principle may be got evolved which would, on the one hand, protect the substantive right of a secured creditor, specially in view of large sums of money being advanced of late of such creditors and, on the other hand, not jeopardise the interest of other secured creditors. According to the learned counsel, these twin objects can be achieved if the company court were to grant leave wherever required as a rule, subject to reasonable conditions. This would preserve the integrity of the substantive right of the secured creditor. The terms to be imposed should facilitate, rather than obstruct, the realisation of security. Further, wherever a receiver has been appointed prior to the commencement of the winding-up proceedings, he should be permitted to continue in general run of cases. As to the suits to be filed after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f course, vary from case to case. According to us, such an approach, would maintain the integrity of that secured creditor who had approached the civil court or desires to do so, and would take care of the interest of other secured creditors as well which the company court is duty-bound to do. The company court shall also apprise itself about the fact whether dues of workmen are outstanding; if so, extent of the same. It would be seen whether after the assets of the company are allowed to be used to satisfy the debt of the secured creditor, it would be possible to satisfy the workmen s dues pari passu. (emphasis supplied) 21. On the jurisdictional aspect, learned senior counsel for the respondents placed reliance on clauses (1) and (2) of Section 446 of the Companies Act, 1956. The same are reproduced below: 446. Suits stayed on winding up order. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the (Tribunal) and subject to such term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of declaration that the order against him is inoperative and therefore, not binding upon him. While deciding the said case, this Court placed reliance upon the judgment in Smith v. East Elloe RDC, wherein Lord Radcliffe observed: (AC pp. 769-70) An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity [on] its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders. 18. In Sultan Sadik v. Sanjay Raj Subba AIR 2004 SC 1377, this Court took a similar view observing that once an order is declared non est by the court only then the judgment of nullity would operate erga omnes i.e. for and against everyone concerned. Such a declaration is permissible if the court comes to the conclusion that the author of the order lacks inherent jurisdiction/competence and therefore, it comes to the conclusion that the order suffers from patent and latent invalidity. 19. Thus, from the above it emerges that even if the order/notification is void/voida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce and be subject to the same conditions as to appeal or otherwise as if it were a decree. (5) Where a claim or an objection is preferred and the Court, under the proviso to sub-rule (1), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute; but, subject to the result of such suit, if any, an order so refusing to entertain the claim or objection shall be conclusive. Based on the above provision, it was submitted, that a declaration of illegality could only be prospective. And therefore, what had to be decided was, whether the sale proceedings conducted on 11.8.2005 and the confirmation thereof on 12.9.2005, were valid? It was submitted, that even if, for arguments sake, the order dated 10.3.2000 passed by the Company Court of the High Court at Madras was now to be set aside, the same would not validate the aforementioned illegality and unauthorized actions of the Recovery Officer, for giving effect to the recovery certificate issued by the DRT. To support the aforementioned proposition, learned senior counsel placed reliance on the Official Liquidator, Uttar Pradesh and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter nor was he given an opportunity to represent before the Recovery Officer for the purposes of representing the workmen s dues and a portion of the workmen s liability under Section 529-A of the 1956 Act. A direction was issued to the Recovery Officer to proceed to sell the assets only after associating the Official Liquidator and after giving him hearing to represent the claims of the workmen. The aforementioned controversy was adjudicated and disposed of by this Court, after making a reference to the judgment in the Allahabad Bank case by concluding as under: 35. It has been submitted by Mr Banerji, learned Senior Counsel, that if the Company Court as well as DRT can exercise jurisdiction in respect of the same auction or sale after adjudication by DRT, there would be duality of exercise of jurisdiction which the RDB Act does not envisage. By way of an example, the learned Senior Counsel has submitted that there are some categories of persons who can go before DRT challenging the sale and if the Official Liquidator approaches the Company Court, then such a situation would only bring anarchy in the realm of adjudication. The aforesaid submission of the learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and all the parties were aware about the condition as to confirmation of sale by the Company Court, it was not open to the Recovery Officer to confirm the sale and, therefore, the sale was set aside by the Company Court, being in violation of the order. Thus, we find that the facts in the said case were absolutely different and further this Court did not deal with the jurisdiction of the Company Court vis- -vis DRT as the said issue really did not arise. Hence, it is not an authority for the proposition that the Official Liquidator can approach the Company Court to set aside the auction or sale conducted by the Recovery Officer of DRT. 37. In view of the aforesaid analysis, we concur with the view expressed by the Division Bench and hold that the Official Liquidator can prefer an appeal before DRT. As he was prosecuting the lis in all genuineness before the Company Court and defending the order before the Division Bench, we grant him four weeks time to file an appeal after following the due procedure. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to be heard with all expedition. Sub-rule (2), however, says that the command in sub-rule (1) does not preclude the court from granting such interim relief as it may consider necessary pending the decision on the question of jurisdiction. In our opinion, the provision merely states the obvious. It makes explicit what is implicit in law. Just because an objection to the jurisdiction is raised, the court does not become helpless forthwith-nor does it become incompetent to grant the interim relief. It can. At the same time, it should also decide the objection to jurisdiction at the earliest possible moment. This is the general principle and this is what Section 9-A reiterates. Take this very case. The plaintiff asked for temporary injunction. An ad interim injunction was granted. Then the defendants came forward objecting to the grant of injunction and also raising an objection to the jurisdiction of the court. The court overruled the objection as to jurisdiction and made the interim injunction absolute. The defendants filed an appeal against the decision on the question of jurisdiction. While that appeal was pending, several other interim orders were passed both by the civil cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction when passed and effective till the court decides that it has no jurisdiction to entertain the suit. These interim orders undoubtedly come to an end with the decision that this Court had no jurisdiction. It is open to the court to modify these orders while holding that it has no jurisdiction to try the suit .. (emphasis supplied) 26. It was the emphatic contention of learned counsel for the respondents, that the sole purpose for requiring the Official Liquidator to participate in the proceedings before the DRT, was to keep the interest of the creditors before the Company Court (where winding up proceedings had been initiated by other creditors), secure. The interest of the creditors before the Company Court could be secure, only if the sale of the properties of the company under winding up was made by conforming to the crystalised practices in getting the best price. Referring to the conclusions drawn in the impugned order, it was submitted, that the auction sale conducted by the Recovery Officer was farcical, as it was, with the sole object of extending benefits to the appellant Anita International. It was therefore asserted, that the Division Bench of the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recovery Tribunal to withdraw the application made under sub-section (1) shall be dealt with by it as expeditiously as possible and disposed of within thirty days from the date of such application: Provided also that in case the Debts Recovery Tribunal refuses to grant permission for withdrawal of the application filed under this sub-section, it shall pass such orders after recording the reasons therefor. (1A) Every bank being, multi-State co-operative bank referred to in sub-clause (vi) of clause (d) of section 2, may, at its option, opt to initiate proceedings under the Multi-State Co-operative Societies Act, 2002 (39 of 2002) to recover debts, whether due before or after the date of commencement of the Enforcement of the Security Interest and Recovery of Debts Laws (Amendment) Act, 2012 from any person instead of making an application under this Chapter. (1B) In case, a bank being, multi-State co-operative bank referred to in sub-clause (vi) of clause (d) of section 2 has filed an application under this Chapter and subsequently opts to withdraw the application for the purpose of initiating proceeding under the Multi-State Co-operative Societies Act, 2002 (39 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendant to file the written statement. (5A) After hearing of the application has commenced, it shall be continued from day-to-day until the hearing is concluded: Provided that the Tribunal may grant adjournments if sufficient cause is shown, but no such adjournment shall be granted more than three times to a party and where there are three or more parties, the total number of such adjournments shall not exceed six: Provided further that, the Presiding Officer may grant such adjournments on imposing such costs as may be considered necessary. (6) Where the defendant claims to set-off against the applicant's demand any ascertained sum of money legally recoverable by him from such applicant, the defendant may, at the first hearing of the application, but not afterwards unless permitted by the Tribunal, present a written statement containing the particulars of the debt sought to be set-off. (7) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Tribunal to pass a final order in respect both of the original claim and of the set-off. (8) A defendant in an application may, in addition to his right of plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the certificate for the recovery of debt, or to appear and show cause why he should not furnish security. (B) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Tribunal, the Tribunal may order the attachment of the whole or such portion of the properties claimed by the applicant as the properties secured in his favor or otherwise owned by the defendant as appears sufficient to satisfy any certificate for the recovery of debt. (14) The applicant shall, unless the Tribunal otherwise directs, specify the property required to be attached and the estimated value thereof. (15) The Tribunal may also in the order direct the conditional attachment of the whole or any portion of the property specified under sub-section (14). (16) If an order of attachment is made without complying with the provisions of sub-section (13), such attachment shall be void. (17) In the case of disobedience of an order made by the Tribunal under sub-sections (12), (13) and (18) or breac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal shall send a copy of every order passed by it to the applicant and the defendant. (22) The Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer for recovery of the amount of debt specified in the certificate. (23) Where the Tribunal, which has issued a certificate of recovery, is satisfied that the property is situated within the local limits of the jurisdiction of two or more Tribunals, it may send the copies of the certificate of recovery for execution to such other Tribunals where the property is situated: Provided that in a case where the Tribunal to which the certificate of recovery is sent for execution finds that it has no jurisdiction to comply with the certificate of recovery, it shall return the same to the Tribunal which has issued it. (24) The application made to the Tribunal under sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and endeavor shall be made by it to dispose of the application finally within one hundred and eighty days from the date of receipt of the application. (25) The Tribunal may make such orders and gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities. The question is what is the effect of Section 11 of the Suits Valuation Act on this position. (emphasis supplied) Reliance was also placed on Dhurandhar Prasad Singh v. Jai Prakash University (2001) 6 SCC 534, and the Court s attention was drawn to the following observations: 20. de Smith, Woolf and Jowell in their treatise Judicial Review of Administrative Action, 5th Edn., para 5-044, have summarised the concept of void and voidable as follows: Behind the simple dichotomy of void and voidable acts (invalid and valid until declared to be invalid) lurk terminological and conceptual problems of excruciating complexity. The problems arose from the premise that if an act, order or decision is ultra vires in the sense of outside jurisdiction, it was said to be invalid, or null and void. If it is intra vires it was, of course, valid. If it is flawed by an error perpetrated within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance on a large number of its earlier judgments particularly in Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke (1976) 1 SCC 496; Kiran Singh v. Chaman Paswan AIR 1954 SC 340; and Chandrika Misir v. Bhaiya Lal AIR 1973 SC 2391 held, that a decree without jurisdiction is a nullity. It is a coram non judice; when a special statute gives a right and also provides for a forum for adjudication of rights, remedy has to be sought only under the provisions of that Act and the common law court has no jurisdiction; where an Act creates an obligation and enforces the performance in specified manner, performance cannot be forced in any other manner . 11. The law does not permit any court/tribunal/authority/forum to usurp jurisdiction on any ground whatsoever, in case, such an authority does not have jurisdiction on the subject-matter. For the reason that it is not an objection as to the place of suing; it is an objection going to the nullity of the order on the ground of want of jurisdiction . Thus, for assumption of jurisdiction by a court or a tribunal, existence of jurisdictional fact is a condition precedent. But once such jurisdictional fact is found to exist, the court or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was the submission of learned counsel, that only a material irregularity would persuade a Court to interfere with such sale proceedings conducted in furtherance of statutory power conferred upon such authority. To support the above contention, reliance was placed by learned senior counsel firstly on the following observations in the decision rendered by this Court in Radhy Shyam v. Shyam Behari Singh AIR 1971 SC 2337. 7. There can be no doubt that an application under O. XXI, Rule 90 to set aside an auction-sale concerns the rights of a person declared to be the purchaser. If the application is allowed, the sale is set aside and the purchaser is deprived of his right to have the sale confirmed by the Court under Rule 92. Such a right is a valuable right, in that, upon such confirmation the sale becomes absolute and the rights of ownership in the property so sold become vested in him. A decision in such a proceeding, therefore, must be said to be one determining the right of the auction-purchaser to have the sale confirmed and made absolute and of the judgment-debtor conferred by Rule 90 to have it set aside and a resale ordered. In our view an order in a proceeding under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, on that very day, one Gopaldas Darak had come before the Court with a higher offer showing his bona fides and earnestness by depositing more than one lakh of rupees. He came with the complaint that there was not sufficient publicity as to attract people from the north and that as soon as he came to know he gave his offer. In these circumstances the learned Single Judge was right in expressing his reluctance to confirm the offer of Navalkha Sons. He therefore decided to have an open bid as between the appellant and Darak in the Court itself on that very day. The complaint of Padam Chand Agarwal is that the second step taken by the Single Judge of holding an auction without giving wide publicity was not justified in law. Rule 273 of the Companies (Court) Rules provides that all sales shall be made by public auction or by inviting sealed tenders or in such manner as the Judge may direct. It appears that on April 17, 1964 at the instance of the Official Liquidator and at the instance of a contributory the Court had approved of the terms and conditions of sale which provide calling of sealed tenders. On December 24, 1964 the learned Judge realised the inefficacy of this Course and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Division Bench was right in holding that the order of the Company Judge dated February 19, 1965 should be set aside and there should be fresh sale of the property either by calling sealed tenders or by auction in accordance with law. The tender will be called or the auction will take place with the minimum offer or with the starting bid of ten lakh rupees. (emphasis supplied) 30. Based on the legal position declared by this Court in the above judgments, it was asserted, that the validity of the auction sale held on 11.8.2005 and the confirmation thereof on 12.9.2005 was natural and normal in the facts and circumstances of this case. In order to restore the aforestated validity, it was submitted, that the impugned order passed by the High Court deserved to be set aside. 31. We have given our thoughtful consideration to the complicated sequence of facts projected before us, as also, the legal submissions advanced at the hands of learned counsel for the rival parties. We shall now endeavour to record our conclusions, with reference to the issues canvassed. 32. In our considered view, the controversy projected for our consideration falls in a narrow compass. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Karnataka relegated the petitioners to their remedy under the RDB Act, by a common order dated 27.10.2006. The above order was challenged through Writ Appeal Nos. 2050 and 2051 of 2006 before the High Court of Karnataka. The writ appeals were dismissed on 23.2.2007. 36. The workers union thereafter preferred AOR No.15 of 2006 and Videocon International Ltd. filed AOR No.1 of 2007. In both the above matters, a challenge was raised to the order passed by the Recovery Officer dated 12.9.2005, whereby the sale of properties of Deve Sugars Ltd. to Anita International, was confirmed. 37. It would be relevant to mention, that as against the reserve price of ₹ 10 crores, Anita International the appellant herein, made a bid of ₹ 10.25 crores. The same was accepted by the Recovery Officer on 11.8.2005, and confirmed on 12.9.2005. One N. Ponnusamy filed Company Application Nos. 2740-2742 of 2007, before the Company Court in the High Court at Madras, wherein he assailed the sale and confirmation orders dated 11.8.2005 and 12.9.2005. In the above applications, it was inter alia asserted, that the reserve price of ₹ 10 crores was too low. The above company ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of Recovery Officers, in matters of execution of recovery certificates, was likewise exclusive. It was the pointed contention of learned counsel for the appellants, that in matters wherein banks and financial institutions approach a Debts Recovery Tribunal, which on due consideration issues a recovery certificate, the same can be executed only through a Recovery Officer. It was submitted, that a Company Court has no jurisdiction, in the matter. Learned counsel for the appellants, substantiated the above assertion on the basis of the decisions rendered by this Court in the Allahabad Bank, the M.V. Janardhan Reddy, the Andhra Bank3, the Rajasthan State Financial Corporation4, and the Official Liquidator, Uttar Pradesh and Uttarakhand5 cases. 41. According to learned counsel for the appellants, it was apparent, that the action of a Recovery Officer in conducting sale proceedings and ordering the confirmation thereof for executing a recovery certificate fell squarely within his jurisdiction under the RDB Act. And his jurisdiction being exclusive, as declared by this Court could not be interfered with or set aside. It is in the above context, that it was also the pointed assert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, an order passed by the Company Court was held to be binding on the Recovery Officer. Based on exactly the same consideration, we are of the view, that the acceptance of the bid of Anita International by the Recovery Officer on 11.8.2005, and the confirmation of the sale in its favour on 12.9.2005, were clearly impermissible, and therefore, deserve to be set aside. 43. In addition to the above, reference may be made to the judgment rendered by this Court in the Official Liquidator, Uttar Pradesh and Uttarakhand case5. In paragraph 36 of the above judgment (extracted in paragraph xxx 24 xxx hereinabove), this Court has taken due notice of the proposition, with reference to a case where an order, had been passed by the Company Court. The proposition dealt with was in a situation where, the Company Court had imposed a condition on the Recovery Officer, that permission of the Company Court would be obtained, before the Recovery Officer conducted the sale and confirmation of the movable or immovable properties, of the debtor. It was held, that the order passed by the Company Court, was binding on the Recovery Officer. In the above judgment it was concluded, that it was not open to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia case8, that it is not open either to parties to a lis or to any third parties, to determine at their own, that an order passed by a Court is valid or void. A party to the lis or a third party, who considers an order passed by a Court as void or non est, must approach a Court of competent jurisdiction, to have the said order set aside, on such grounds as may be available in law. However, till an order passed by a competent Court is set aside, as was also held by this Court in the Official Liquidator, Uttar Pradesh and Uttarakhand5 and the Jehal Tanti9 cases, the same would have the force of law, and any act/action carried out in violation thereof, would be liable to be set aside. We endorse the opinion expressed by this Court in the Jehal Tanti case9. In the above case, an earlier order of a Court was found to be without jurisdiction after six years. In other words, an order passed by a Court having no jurisdiction, had subsisted for six years. This Court held, that the said order could not have been violated while it subsisted. And further, that the violation of the order, before it is set aside, is liable to entail punishment, for its disobedience. For us to conclude otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster company of the appellant. In sum and substance therefore, there was only one bidder. For the above reasons, in addition to those recorded by the High Court (noticed in paragraph xxx 12 xxx, hereinabove), it is not possible for us to accept the claim of the appellant on the ground of equity. Reliance placed by learned counsel on the judgments rendered by this Court, in support of the instant contention, is also unacceptable, as the factual position in the judgments relied upon, are inapplicable to the facts and circumstances of this case. In view of the above, we find no merit in the contention advanced. 48. It was also submitted on behalf of the appellants, that the sale conducted by the Recovery Officer on 11.8.2005, and the order of confirmation thereof passed by the Recovery Officer on 12.9.2005, ought to have been assailed only in proceedings under Section 30 of the RDB Act. It was submitted, that since an efficacious alternative remedy was available to the parties, which had approached the Company Court in the High Court at Madras, the interference at the hands of the High Court was neither just nor proper. The instant submission is wholly devoid of substance and deser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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