Gujarat High Court
Himanshu Prafulchandra Varia vs M/S Varia Engineering Works Private ... on 25 November, 2022
Author: N.V.Anjaria
Bench: N.V.Anjaria, Bhargav D. Karia
C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 22832 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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HIMANSHU PRAFULCHANDRA VARIA
Versus
M/S VARIA ENGINEERING WORKS PRIVATE LIMITED
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Appearance:
MS NATASHA SUTARIA(7907) for the Petitioner(s) No. 1,2
HCLS COMMITTEE(4998) for the Respondent(s) No. 11
MR RITURAJ M MEENA(3224) for the Respondent(s) No. 10,2,3,4,5,6,7,8,9
MS NIDHI N PRAJAPATI(10572) for the Respondent(s) No. 1
TARUNA R MAKWANA(7255) for the Respondent(s) No. 11,4
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 25/11/2022
CAV JUDGMENT
Page 1 of 57
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C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1.Heard learned advocate Ms. Natasha Sutaria for the petitioners, learned advocate Ms. Nidhi Prajapati for respondent no.1, learned advocate Mr. Rituraj Meena for respondent nos. 2 to 10 and learned advocate Mr. Taruna Makwana for respondent no.11.
2.Rule returnable forthwith. Learned advocate Ms. Nidhi Prajapati waives service of notice of rule on behalf of respondent no.1, learned advocate Mr. Rituraj Meena waives service of notice of rule on behalf of respondent nos. 2 to 10 and learned advocate Mr. Taruna Makwana waives service of notice of rule on behalf of respondent no.11.
3.By this petition under Articles 226 and 227 of the Constitution of India, the petitioners have challenged order dated 28.11.2019 passed Page 2 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 by the Recovery Officer-II, DRT-I, Ahmedabad in Recovery Proceedings No. 694/2018 in Original Application No.184/2017 as well as pre-intimation notice dated 3.12.2019 for taking physical possession of the assets/properties of the petitioners. The petitioners have also prayed for quashing the entire process of recovery proceedings initiated by the respondent banks in the aforesaid Recovery Proceedings No. 694/2018 in Original Application No.184/2017.
4.Facts of the case are summarised as under:
4.1) The petitioners are the Directors of respondent no.1 M/s. Varia Engineering Works Private Limited. Respondent no.1 company availed financial assistance from respondent no.4 to respondent no.10 consortium of banks.
On failure of respondent no.1 company to pay the outstanding dues of the consortium of Page 3 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 banks, seven banks filed Original Application No.184/2017 before the Debt Recovery Tribunal-I at Ahmedabad (for short "DRT") under section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (For short "RDB Act") against the petitioners as well as respondent no.1 and one Shri Prafulchandra Punjalal Varia and Krish Tech Con Private Limited (herein after referred to as 'defendants'). 4.2) The petitioners along with other defendants filed counter claim against the banks for recovery of Rs.934.12 crores with interest from the date of filing of the counter claim upto realisation and the same was registered separately as No. 01 of 2017 the DRT.
4.3) The DRT by judgment and award dated 13.12.2018 allowed Original Application No.184/2017 after considering the loan and Page 4 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 security documents executed by respondent no.1 company, the petitioners and other guarantors in favour of the consortium of banks. The DRT passed the order to issue the Recovery Certificate for Rs.5,07,36,75,508.93 and the counter claim filed by the defendants was dismissed with cost in favour of the banks. The DRT passed the judgment and award ex-parte against the petitioners and other defendants as no written statement was filed by the defendants and right of the defendants stood closed vide order dated 21.08.2017. The DRT ordered to issue the Recovery Certificate with memo of cost under section 19(22) of the RDB Act together with details of the properties and the defendants were restrained by means of injunction from depleting, transferring, encumbering, alienating or in any way dealing with the properties/assets which are mortgaged with respondent nos. 4 to 10 consortium of banks without first paying Page 5 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 the claim of the banks.
4.4) Bank of Baroda also filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as "IBC") read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (herein after referred to as "the Rules") with a prayer to trigger Corporate Insolvency Resolution Process (CIRP) in respect of respondent no.1 before the National Company Law Tribunal, Ahmedabad (For short "NCLT")being CP No.(IB) 149/7/NCLT/AHM/2017. 4.5) NCLT passed an ex-parte order on 21.12.2017 as none appeared for respondent no.1 company. NCLT admitted the application under section 7(5) of the IBC and appointed interim Resolution Professional (For short "RP") under section 13(1)(c) of the IBC by Page 6 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 further ordering moratorium under section 13(1)(a) along with prohibitory order under section 14 of the IBC.
4.6) NCLT thereafter by order dated 22.07.2019 passed under section 33 of the IBC, allowed the interim application being IA No. 362 of 2018 in CP No.(IB) 149/7/NCLT/AHM/ 2017 filed by RP of respondent no.1 company and appointed liquidator for respondent no.1 company in absence of any Resolution Plan received by the RP.
4.7) Pursuant to the order dated 13.12.2018 passed by the DRT, the Recovery Proceeding being RP no. 694/2018 was registered as per the Recovery Certificate issued by the DRT. The Recovery Officer of DRT-I issued Demand Notice dated 6.03.2019 under sections 25 to 29 of the RDB Act read with Rule 2 of the Second Schedule of the Page 7 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 Income Tax Act, 1961 upon the petitioners, respondent no.1 and other defendants for recovery of Rs.5,07,36,75,508.93. The Recovery Officer also issued show cause notice dated 27.03.2019 under section 25A of the RDB Act upon the petitioners to appear in person before him to show cause as to why immovable properties of the petitioners mentioned in the said notice should not to be attached and sold subsequently to recover the certified dues.
4.8) The Recovery Officer also issued warrant of attachment of movable/immovable property of the petitioners, respondent no.1 and other defendants as per Rule 48 of the Second Schedule to the Income Tax Act, 1961 on 27.03.2019 followed by order of attachment of movable/immovable properties of the petitioners and other defendants. Page 8 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 4.9) It is the case of the petitioners that though e-auction/sale notice was issued by the Recovery Officer on 7.08.2019, the petitioners came to know about such sale notice on carrying out inspection on 23.09.2019 of the records of recovery proceedings and further came to know that the value of the properties are shown very less than actual value as per the valuation report prepared by Gajjar Techno Economic Consultants Pvt. Ltd. in the year 2014 upon advice of State Bank of India.
4.10) According to the petitioners, as the recovery proceedings was not going properly and legally, the petitioners filed objections in recovery proceedings which came to be numbered as IA Nos. 2353 of 2019 and 2354 of 2019 in R.P. No.694/2018.
4.11) The Recovery Officer heard the two Page 9 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 objections applications filed by the petitioners being IA Nos. 2353 of 2019 and 2354 of 2019 on 1.10.2019. During the course of hearing, learned advocate for the petitioners requested the Recovery Officer not to proceed further to take physical possession of the three attached properties as the petitioners have challenged the whole process right from issuance of Demand Notice till issuance of sale proclamation by raising objections. The Recovery Officer passed the following order on 1.10.2019 in I.A. Nos.2353 and 2354 of 2019 in R.P. No. 694/2018:
"2. In this matter, an order has been issued on 21.09.2019 to take physical possession of the 03 nos. of properties which were put on sale conducted on 27.09.2019. Just before that on 25.09.2019, the said CDs chose to appear in the matter and file the said objections. As objections were filed just before the auction date, it was not possible to defer or postpone the auction sale. Order for acquiring physical possession was given as the CDs did not co-operate in inspection of the property at Lot No. 3 on 20th Sep 2019. It is the contention of the CDs that they should have been given a fair Page 10 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 chance to represent its case before order for physical possession of their properties was issued. Mr. Dharmesh Gujjar, Advocate who is also a Court Commissioner in the matter along with ex-officio of the Bank submits that he has given a notice of 7 days only qua the property at Lot No. 3. Records reveal that order for physical possession is for all the 03 lots of properties.
3. In view of the fact of the case and in the Interest of Justice and without going into the merits of the case as brought out in their applications, following orders are being passed:
(a) The Court Commissioner would further give a notice of two weeks in writing to concerned CDs to be served by authorised modes of service before taking physical possession of the properties as ordered. The same be also affixed at conspicuous part of all the three properties (Lot Nos. 1-3). Before expiry of these two weeks, both the parties are directed to complete the hearing.
(b) CH Bank is directed to file its replies to all the objections as filed by CDs positively by next date with advance copy to CDs. Thereafter, arguments be completed.
List the matter for filing compliance of above order on 09.10.2019." 4.12) The State Bank of India filed reply Page 11 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 to the objections filed by the petitioners on 07.10.2019. No one appeared for the petitioners before the Recovery Officer on 9.10.2019 during the course of hearing of the objections filed in R.P. No.694/2018. The Recovery Officer, therefore, passed the following order after recording the absence of learned advocate for the petitioners:
"2. In view of the facts of the matter and when none appeared on behalf of CD Nos. 2 & 3 during the course of the proceedings of today, following orders are being passed:
(a) Ex-officio of the CH bank and the Advocate Court Commissioner are therefore directed to proceed further to take physical possession of the properties as ordered. They would be entitled to break open the locks if CDs do not hand over the peaceful physical possession of the properties-in-
question. All laid down procedures be followed while taking the said possession. Whole process be video graphed. Complete inventory of items in the property be also made. Proper Panchnama be drawn in the presence of at least two witnesses. Police assistance be taken as ordered earlier.
(b) CH Bank is directed to file reply to the application made by non- participating third party bidder (IA Page 12 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 No. 2430/2019) for refund of the EMD amount.
With above orders, the matter is adjourned to 18.10.2019."
4.13) Thereafter, on 22.10.2019 also, time was sought to file appearance on behalf of the petitioner no.1 by the advocate and therefore, the following order was passed by the Recovery Officer rejecting the objections raised by the petitioners for want of prosecution :
"Firstly, the officer of the CH Bank brought to the notice of this court that the Order which should have the date of 18.10.2019 has been erroneously has the date of 09.10.2019. The last order has been perused and the submission of the officer of the bank is found to be correct. Apart from error in date, I think that Para 5 along with two initial lines ought not to have been there in the facts & circumstances of the proceedings of that day. As the error so came to the notice of this Court are technical in nature (being typo or cut & paste error). It is directed that the same be rectified under my signature and If any copy of the same has already been given to any party then the same be recalled and be given to them after suitable rectification. Therefore, it is decided that the Order dated 18.10.2019 be read Page 13 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 with this order of today.
2. Now, coming to the main issue for which the matter is on today's board.
The matter was kept for today specifically on the request of the Ld. Counsel for CD No. 2 requesting that his client may be heard on her pending objection before proceeding further in the matter including the action to take physical possession of the attached mortgaged properties. However, the Ld. Counsel for CD No. 2 today files a 'Purshish' stating that he has got no instructions from his client after filing the 'Vakalatnama" and, therefore, he requests that appropriate order may be passed considering the said facts. On the other hand, Ld. Counsel for CH Bank submits that it is only a ploy to delay & derail the recovery process. Filing of objections and not pursuing the same is nothing but gross misuse of process of law by the CDs. It is his demand that heavy cost be imposed on them for their misadventure with the process of law.
3. The case file has been perused. Recovery Certificate in the matter was issued in Dec 2018 for more than 507.36 Crores in favour of 07 nos. of CH Banks. Not a single penny has been paid to the banks till date. After service of Demand Notice, it came to the notice of this Court that CD No. 1 Company has gone into 'Corporate Insolvency Resolution Process' and therefore, those properties which belong to it were excluded from auction process and only those properties which are belonging to corporate guarantors have been put on public sale vide Order dated 17.06.2019 & 07.08.2019 after Page 14 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 completing all laid down procedures. Two properties as mentioned at Lot Nos, 1 & 3 have been sold out in e-auction conducted on 27.09.2019. Thereafter, it has been observed that CD No. 2 & 3 have, though, filed their objections do not deem it proper to pursue their case. Two advocates have appeared for them but none proceeded with the matter on the ground that they have no Instructions from their clients. It seems that it is their ploy to delay & derail the recovery proceedings so as to defeat the recovery of certified dues. It is nothing but gross misuse of process of law and for this act of them they should be penalised.
4. In view of the above facts and circumstances of the case, the objections as filed by CD Nos. 2 & 3 are dismissed for want of prosecution. A cost of Rs. 10,000/- is being Imposed on each of them and only after deposit of the same; their further requests/applications In the matter would be entertained. However, it is placed on record that if any action of the CH Bank is found to be wanting in compliances of any order as per laid down procedures then that would be taken care of while confirming the sale.
5. CH Bank and the Court Commissioner are directed to take physical possession of attached mortgaged properties as directed earlier in light of Orders passed on 21.09.2019, 01.10.2019, 09.10.2019 & 18.10.2019. List the matter for filing compliance of above order on 20.11.2019." Page 15 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 4.14) The petitioners thereafter filed Interlocutory Application No. 2708 of 2019 in R.P. No. 694 of 2018 for recalling order dated 22.10.2019 which was also dismissed by the Recovery Officer vide order dated 28.11.2019 and sale was confirmed of the properties which were sold by e-auction on 27.09.2019.
4.15) The petitioners have challenged the impugned order dated 28.11.2019 passed by the Recovery Officer in R.P. No.694/2018 whereby sale of the following properties were ordered to be confirmed by the Recovery Officer: "1. Property No. 1:- Survey No: 619
Paiki, admeasuring about 24000 Sq. Meter of Mouje Bhayala, Taluka Bavla, Registration District Ahmedabad and Sub-District Dholka (The said property is in the name of Petitioner No.1)
2. Property No. 2: Flat no. D-802, 8th Floor, Block-D, Admeasuring about 347 Sq. Yds. i.e. 290.14 Sq. Mtr. in the scheme known as "Asavari Towers" of Democratic Co-Operative Housing Society Limited Part-2, Situation upon Non-
Agricultural Land hearing Final Plot Page 16 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 No. 161/1, 161/3, 161/4 and 163 in the Town Planning Scheme No. 6 of Mouje Jodhpur, Taluka Ahmedabad City-West, District Ahemdabad. (The said Property is jointly in the name of Petitioner No. 1 and 3)."
4.16) The Recovery Officer also appointed respondent nos. 2 and 3 officers of State Bank of India and Bank of Maharashtra as Joint Court Commissioners in view of application being I.A. No.2660 of 2019 filed by the Certificate Holder Banks i.e., respondent nos. 4 and 10.
4.17) The petitioners have come out with a case that the aforesaid property no.1 was sold to one Mr. Bhagwatsinh Gohil for Rs.1,00,40,000/- and property no.2 was sold to one Ms. Geeta Udaykant Pandya for Rs. 1,36,90,000/- at a price much less than the actual market value of the property. 4.18) The petitioners therefore, being Page 17 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 aggrieved and dissatisfied by the entire sale proceedings which took place by e-auction on 27.09.2019 and confirmation of the said sale by the Recovery Officer by way of impugned order dated 28.11.2019 and subsequent issuance of possession notice dated 3.12.2019 have preferred this petition.
5.Learned advocate Ms. Natasha Sutaria appearing for the petitioners submitted that entire recovery proceedings conducted by the Recovery Officer are not in accordance with law and as per the prescribed procedure for recovery of dues of the respondent nos. 4 to 10 consortium of banks.
5.1) It was submitted that the objections raised by the petitioners in I.A. No.2353 of 2019 and I.A. No.2354 of 2019 are not at all considered and properties of the petitioners are sold at undervalue i.e., lower than the Page 18 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 market value and therefore, the sale confirmation is required to be quashed and set aside.
5.2) It was submitted that the valuer of the State Bank of India in the year 2014 has carried out valuation and value of the property no.1 in the year 2014 was Rs. 480 lakhs and value of property no.2 was Rs. 172 lakhs. However, property no.1 is sold for Rs. 1,00,40,000/- and property no.2 is sold for Rs.1,36,90,000/- respectively in the recovery proceedings at a throw away price. 5.3) It was submitted that in the year 2018 similarly situated property was sold at Rs. 1,50,00,000/- and reliance was placed on a sale deed executed on 13.03.2018 in respect of flat No. D/902 of Ashawari Tower wherein property no.2 being flat No. D/802 is situated. It was therefore, submitted that Page 19 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 the recovery proceedings have resulted into the sale of the properties of the petitioners at much lower value than the market value and therefore, sale confirmed by the Recovery Officer is required to be quashed and set aside.
5.4) Learned advocate Ms. Sutaria submitted that though the respondent banks were aware about appointment of liquidator by the NCLT in the proceedings under the IBC and, even after appointment of liquidator of respondent no.1, recovery proceedings are continued against respondent no.1 company and therefore, entire recovery process is illegal and could not have been continued for recovery of the outstanding dues of the respondent banks from the respondent no.1 company and its guarantors. It was therefore, submitted that the recovery proceedings are challenged before this Court as the same are Page 20 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 without jurisdiction. It was also submitted that the respondent banks -Certificate Holders did not submit the interest certificate and, therefore, the amount for which the recovery is proceeded is not ascertained and in absence of interest certificate and lack of documents, sale of properties is illegal and liable to be quashed and set aside.
5.5) Learned advocate Ms. Sutaria submitted that the DRT passed the order dated 13.12.2018 in O.A.No.184/2017 after the NCLT passed the order dated 21.12.2017 admitting the application under section 7 of the IBC and appointing RP. It was submitted that as per the provisions of section 14 of the IBC, moratorium period of six months was also ordered and continuation of the pending proceedings against respondent no.1 company including execution of any judgment, decree, Page 21 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 or order in any Court of law, tribunal, arbitration panel or other authority was restrained. It was therefore, submitted that till the order of appointment of liquidator is passed by the NCLT on 22.07.2019, moratorium continued and therefore, the DRT could not have passed judgment and award on 13.12.2018 in favour of respondent banks by issuing Recovery Certificate under section 19 of the RDB Act. It was submitted that the petitioners, therefore, did not appear before the DRT as NCLT has already passed an order of moratorium in the year 2017 which was in the knowledge of the respondent banks. It was submitted that however respondent banks did not point out such facts before the DRT and obtained order in OA No.184/2017 by suppression of such facts of pending IBC proceedings initiated by Bank of Baroda before NCLT.
Page 22 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 5.6) It was submitted that further recovery proceedings based upon the judgment and award passed by the DRT during the moratorium period are also bad and same are liable to be quashed and set aside. 5.7) In support of her submissions, learned advocate Ms. Sutaria relied upon the following decisions:
1) Embassy Property Developments Pvt. Ltd.
v, State of Karnataka and others reported in 2019 (18) Scale 37, wherein it is held as under:
"13. What is recognized by Article 226 (1) is the power of every High Court to issue (i) directions, (ii) orders or (iii) writs. They can be issued to (i) any person or (ii) authority including the Government. They may be issued (i) for the enforcement of any of the rights conferred by Part III and (ii) for any other purpose. But the exercise of the power recognized by Clause (1) of Article 226, is restricted by the territorial jurisdiction of the Page 23 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 High Court, determined either by its geographical location or by the place where the cause of action, in whole or in part, arose. While the nature of the power exercised by the High Court is delineated in Clause (1) of Article 226, the jurisdiction of the High Court for the exercise of such power, is spelt out in both Clauses (1) and (2) of Article 226.
14. Traditionally, the jurisdiction under Article 226 was considered as limited to ensuring that the judicial or quasi judicial tribunals or administrative bodies do not exercise their powers in excess of their statutory limits. But in view of the use of the expression "any person" in Article 226 (1), courts recognized that the jurisdiction of the High Court extended even over private individuals, provided the nature of the duties performed by such private individuals, are public in nature. Therefore, the remedies provided under Article 226 are public law remedies, which stand in contrast to the remedies available in private law. As observed by this Court in Nilabati Behera @ Babita Behera vs. State of Orissa, 4 public law proceedings serve a different purpose than private law proceedings.
15. One of the well recognized exceptions to the selfimposed restraint of the High Courts, in cases where a statutory alternative Page 24 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 remedy of appeal is available, is the lack of jurisdiction on the part of the statutory/quasijudicial authority, against whose order a judicial review is sought.
Traditionally, English courts maintained a distinction between cases where a statutory/quasi- judicial authority exercised a jurisdiction not vested in it in law and cases where there was a wrongful exercise of the available jurisdiction. An "error of jurisdiction" was always distinguished from "in excess of jurisdiction", until the advent of the decision rendered by the House of Lords, by a majority of 3:2 in Anisminic Ltd. vs. Foreign Compensation Commission.5 After acknowledging that a confusion had been created by the observations made in 4 (1993) 2 SCC 746 5 (1969) 2 WLR 163 Reg. vs. Governor of Brixton Prison, Ex parte Armah 6 to the effect that if a Tribunal has jurisdiction to go right, it has jurisdiction to go wrong, it was held in Anisminic that the real question was not whether an authority made a wrong decision but whether they enquired into and decided a matter which they had no right to consider.
xxx
45. Therefore, in fine, our answer to the first question would be that NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Page 25 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice."
2) STI India Limited v. Oriental Bank of Commerce and others (judgment dated 20.11.2019 passed in Special Civil Application No.6129/2018).
3) Anand Rao Korada v. Varsha Fabrics (P) Ltd. and ors. reported in (2020) 12 SCC 198, wherein it is held as under:
"6. The IBC was published in the Gazette of India on 28.05.2016. It was framed as a complete code to consolidate and amend the laws relating to insolvency resolution of corporate entities, partnership firms, and individuals in a timebound manner, for maximisation of the value of the assets of such persons, and balance the interest of all the stakeholders. The Corporate Insolvency Resolution Process ("CIRP") could be initiated when a corporate debtor commits a default, either by a financial creditor, or an operational creditor, or the corporate debtor itself.Page 26 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022
C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 Section 12 of the IBC provides a time- frame to complete the CIRP.
As per Section 13 of the IBC, the Adjudicating Authority i.e. the National Company Law Tribunal ("NCLT") shall declare a moratorium for the purposes referred to in Section 14 of the IBC.
Section 14 provides that on the insolvency commencement date, the Adjudicating Authority shall by order, declare a moratorium prohibiting the institution of suits, or continuation of pending suits or "proceedings"
against the corporate debtor, including execution of any judgment, decree, or order in any court of law, tribunal, arbitration panel, or any other authority. Section 14 reads as follows :
"14. Moratorium. -
(1) Subject to provisions of sub-
sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority;Page 27 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022
C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022
(b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.
(3) The provisions of subsection (1) shall not apply to --
(a) such transaction as may be notified by the Central Government in consultation with any financial regulator;
(b) a surety in a contract of guarantee to a corporate debtor. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at Page 28 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under subsection (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be."
7. Section 238 gives an overriding effect to the IBC over all other laws. The provisions of the IBC vest exclusive jurisdiction on the NCLT and the NCLAT to deal with all issues pertaining to the insolvency process of a corporate debtor, and the mode and manner of disposal of its assets. Section 238 reads as follows :
"238. Provisions of this Code to override other laws. - The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law."
8. Section 231 of the IBC bars the jurisdiction of civil courts in respect of any matter in which the Adjudicating Authority i.e. the NCLT or the NCLAT is empowered by the Code to pass any Order. Section 231 is set out hereinbelow for ready reference :
"231. Bar of jurisdiction. - No civil court shall have Page 29 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority or the Board under this Code."
9. In view of the provisions of the IBC, the High Court ought not to have proceeded with the auction of the property of the Corporate Debtor - Respondent No. 4 herein, once the proceedings under the IBC had commenced, and an Order declaring moratorium was passed by the NCLT. The High Court passed the impugned Interim Orders dated 14.08.2019 and 05.09.2019 after the CIRP had commenced in this case.
The moratorium having been declared by the NCLT on 04.06.2019, the High Court was not justified in passing the Orders dated 14.08.2019 and 05.09.2019 for carrying out auction of the assets of the Respondent No. 4-Company i.e. the Corporate Debtor before the NCLT. The subject matter of the auction proceedings before the High Court is a vast chunk of land admeasuring about 330 acres, including Railway lines and buildings.
If the assets of the Respondent No. 4 - Company are alienated during the pendency of the proceedings under the IBC, it will seriously jeopardise the interest of all the stakeholders. Page 30 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 As a consequence, we set aside the impugned Interim Orders dated 14.08.2019 and 05.09.2019 passed by the Odisha High Court, as parallel proceedings with respect to the main issue cannot take place in the High Court. The sale or liquidation of the assets of Respondent No. 4 will now be governed by the provisions of the IBC."
4) Indian Overseas Bank v. RCM Infrastructure Ltd. and ors. reported in AIR 2022 SC 2687,wherein it is held as under :
"23. For appreciating the rival submissions, it will be apposite to refer to Section 14(1)(c) of the IBC:
"14. Moratorium.--(1) ......
(a) ......;
(b) .......;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
.........."
24. It is thus clear that after the CIRP is initiated, there is moratorium for any action to foreclose, recover or Page 31 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act. It is clear that once the CIRP is commenced, there is complete prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property. The words "including any action under the SARFAESI Act" are significant. The legislative intent is clear that after the CIRP is initiated, all actions including any action under the SARFAESI Act to foreclose, recover or enforce any security interest are prohibited.
25. It will also be relevant to refer to Section 238 of the IBC:
"238. Provisions of this Code to override other laws.--The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law."
26. It could thus be seen that the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
27. It has been consistently held by this Court that the IBC is a complete Code in itself and in view of the provisions of Section 238 of the IBC, Page 32 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 the provisions of the IBC would prevail notwithstanding anything inconsistent therewith contained in any other law for the time being in force. A reference in this respect could be placed on the judgments of this Court in the cases of Innoventive Industries Limited v. ICICI Bank and Another7, Principal Commissioner of Income Tax v. Monnet Ispat and Energy Limited 8 and 7 (2018) 1 SCC 407 8 (2018) 18 SCC 786 Ghanashyam Mishra and Sons Private Limited through the Authorised Signatory v. Edelweiss Asset Reconstruction Company Limited through the Director and Others.(2021) 9 SCC 657
28. It is the contention of the appellant Bank that the sale in question was complete on its confirmation on 13th December 2018 and as such, the admission of the petition on 3rd January 2019 by the learned NCLT would not affect the said sale. Relying on the provisions of Section 54 of the TP Act, the learned Solicitor General submitted that merely because a part of the payment was received subsequently after initiation of CIRP, it will not deprive the appellant Bank from receiving the said money in pursuance to the sale which has already been completed. A reliance in this respect is placed on various judgments of this Court.
29. Insofar as the judgment of this Court in the case of Vidhyadhar (supra) is concerned, no doubt that it has been held that even if the full price of the property has not been paid, the transaction of the sale will take Page 33 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 effect and the title would pass on that transaction. This Court has further held that the real test is the intention of the parties. It has been held that the parties must intend to transfer ownership of the property and that they must also intend that the price would be paid either in praesenti or in future. However, it is to be noted that in the said case, the defendant No.2 had not only executed the sale deed in favour of the plaintiff but had presented it for registration, admitted its execution before the SubRegistrar before whom the remaining part of the sale consideration was paid and thereafter, the document was registered."
5) Ram Kishun and ors. v. State of UP and ors. reported in (2012) 11 SCC 511, wherein it is held as under:
"(17.) In view of the above, it is evident that there must be an application of mind by the authority concerned while approving/accepting the report of the approved valuer and fixing the reserve price, as the failure to do so may cause substantial injury to the borrower/guarantor and that would amount to material irregularity and ultimately vitiate the subsequent proceedings.
DECISION TO SELL WHOLE OR PART OF THE SECURED ASSETS:
xxx (19.) Thus, in view of the above, it is Page 34 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 evident that law requires a proper valuation report, its acceptance by the authority concerned by application of mind and then fixing the reserve price accordingly and acceptance of the auction bid taking into consideration that there was no possibility of collusion of the bidders. The authority is also duty bound to decide as to whether sale of part of the property would meet the outstanding demand. Valuation is a question of fact and valuation of the property is required to be determined fairly and reasonably. SETTING ASIDE AUCTION SALE - AFTER CONFIRMATION:
(20.) In Narmada Bachao Andolan V/s. State Of Madhya Pradesh & Anr, AIR 2011 SC 1989 : 2011 (7) SCC 639 : 2011 (5) Scale 624 : JT 2011 (6) 379 : 2011 (6) SCR 443 , this Court while dealing with the confirmation of sale by Court, held that there must be a proper valuation report, which should be communicated to the judgment debtor and he should file his own valuation report and the sale should be conducted in accordance with law. After confirmation of sale, there should be issuance of sale certificate. Court cannot interfere unless it is found that some material irregularity in the conduct of sale has been committed. The Court further held that it should not be a forced sale. A valuer's report should be as good as the actual offer and the variation should be within limit. Such estimate should be done carefully. The Court further held that unless the Court is satisfied about the adequacy of the price the act of confirmation of the sale would not be a proper exercise of Page 35 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 judicial discretion. (See also: M/s. Kayjay Industries (P) Ltd. V/s. M/s. Asnew Drums (P) Ltd. & Ors., AIR 1974 SC 1331; Union Bank of India V/s. Official Liquidator High Court of Calcutta & Ors., AIR 2000 SC 3642; B. Arvind Kumar V/s. Govt. of India & Ors., (2007) 5 SCC 745 : (AIR 2007 SC (Supp) 1306); and M/s. Transcore V/s. Union of India & Anr., AIR 2007 SC
712).
21.) In Divya Manufacturing Co. (P) Ltd. & Anr. V/s. Union Bank of India & Ors., AIR 2000 SC 2346, this Court held that a confirmed sale can be set aside on the ground of material irregularity or fraud. The court does not become functus officio after the sale is confirmed. In Valji Khimji and Company V/s. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors.. (2008) 9 SCC 299 : (AIR 2009 SC (Supp)
776) the Court held that auction sale should be set aside only if there is a fundamental error in the procedure of auction e.g. not giving wide publication or on evidence that property could have fetched more value or there is somebody to offer substantially increased amount and not only a little over the auction price. Involvement of any kind of fraud would vitiate the auction sale."
6) Core Healthcare Ltd. v. Standard Chartered Bank and ors. (Judgment dated 23.01.2001 passed in Special Civil Application No. 131 of 2001), wherein it is Page 36 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 held as under:
"21. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.
26. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal Page 37 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 foundation". On a careful consideration and analysis of the various decisions cited before us we find that the following legal propositions emerge :
[1] An interlocutory order is also an order which is appealable under section 20 of the DRT Act.
[2] The power to issue a prerogative writ is plenary in nature.
[3] Such power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition or certiorari to ensure fundamental rights but also for "any other purpose".
[4] The High Court having regard to the facts of the case has discretion to entertain or not to entertain the petition depending upon various facts and circumstances special to individual cases.
[5] The High Court having imposed upon itself certain restrictive fetters one of which is availability of alternative and efficacious remedy, would not normally exercise jurisdiction.
[6] However, availability of alternative remedy per se does not operate as a bar in all contingencies. [7] Rule requiring exercise of alternative remedy is a rule of policy, convenience and discretion.
[8] The Court should exercise jurisdiction under Article 226/Article 32 taking note of legislative intent manifested by the provisions so as to be consistent with such provisions and Page 38 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 not to frustrate them.
[9] The Court should exercise jurisdiction to effectuate the regime of law as the power under Article 226 is meant to serve the ends of law and not to trangress the same."
6.On the other hand, learned advocate Mr. Rituraj Meena for the respondent nos. 2 to 10 consortium of banks referred to and relied upon the averments made in the affidavit in reply filed on behalf of the banks and submitted that this petition is not maintainable as the impugned order dated 28.11.2019 passed by the Recovery Officer and possession notice dated 3.12.2019 issued under section 25AA of the RDB Act are required to be challenged before DRT under section 30 of the RDB Act. It was submitted that the petitioners have an alternative efficacious remedy by preferring an appeal under section 30 of the RDB Act and therefore, the petitioners should be Page 39 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 relegated before the DRT.
6.1) It was further submitted that the petitioners have tried to mislead this Court by producing the valuation reports of the year 2014 inasmuch as it is common knowledge that value of property varies according to the market, position of the economy and various other factors and appreciates or depreciates accordingly. It was therefore, submitted that about five years old valuation report relied upon by the petitioners cannot be considered for the purpose of auction. 6.2) It was submitted that the petitioners did not participate in the hearing before the DRT proceedings nor the petitioners have remained present before the Recovery Officer after filing the objections and therefore, the petitioners cannot now raise objections with regard to public Page 40 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 auction held by the Recovery Officer based upon the valuation report dated 12.04.2019. It was submitted that there were two bids each for both the properties and after the contested bidding, the highest bidders were declared as successful auction purchasers and therefore, it cannot be said that the properties were sold at the value lesser value than the fair market value prevailing at the relevant time. It was also submitted that the petitioners always had the right of redemption of mortgage, however, the petitioners have failed to exercise such right and therefore, the petitioners are not justified to raise such objection after completion of e-auction.
6.3) Learned advocate Mr. Meena submitted that O.A. No. 184/2017 was filed by the consortium of banks before the DRT on 22.03.2017 for recovery of dues aggregating Page 41 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 to Rs.507.36 crore with further interest and cost. However, instead of defending the case before the DRT, a counter claim of Rs. 934.12 crore with interest and cost against the banks was filed on 27.11.2017 and thereafter due to non-appearance of the petitioners, the DRT passed the judgment and award dated 13.12.2018 and allowed the OA and dismissed the counter claim. It was therefore, submitted that the contention of the petitioners that they were not represented before the DRT is not tenable as it cannot be said that the petitioners were not provided with opportunity to represent the case before the DRT.
6.4) Learned advocate Mr. Meena further submitted that the Recovery Officer was in knowledge of the fact about appointment of RP in view of letter dated 11.03.2019 as observed in the order dated 17.06.2019 that Page 42 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 respondent no.1 company was under Corporate Insolvency Resolution Process (CIRP) by virtue of order dated 21.12.2017. It was also intimated by RP that the Committee of Creditors (CoC)in the meeting held on 12.09.2018 had decided for liquidation of the company and application in that regard was filed before the NCLT but order for liquidation was awaited at that time. In such circumstances, though the properties were mortgaged with Certificate Holder Banks have been attached in the recovery proceedings, the Recovery Officer did not deem it proper to order sale of properties belonging to the Corporate Debtors-the respondent no.1 company and sale order was issued for e-auction of the properties belonging to the petitioners mortgaged with the respondent banks other than the properties of the respondent No.1 company in liquidation. It was therefore, submitted that the Recovery Officer and DRT Page 43 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 have followed the prescribed procedure as required by the law.
6.5) Learned advocate Mr. Meena also referred to and relied upon the observations in paragraph no. 24 of the judgment and award dated 13.12.2018 passed by the DRT taking cognizance of the proceedings before NCLT in respect of respondent no.1 company while recording the arguments made on behalf of the respondent banks. It was therefore, submitted that the respondent banks have disclosed all material facts before the DRT pointing out that there is no extension of moratorium period by NCLT and no resolution could be arrived at in IBC proceedings and no order of liquidation of company was also passed by the competent Court and hence, judgment and award passed by DRT is legal, valid and in accordance with law.
Page 44 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 6.6) It was further submitted that the Recovery Officer has followed the prescribed procedure for recovery of debts due to respondent banks and therefore, even on merits, the petition is liable to be dismissed.
6.7) Respondent no.11, auction purchaser has also filed an affidavit in reply opposing the petition, wherein it is stated as under:
"5. It is submitted that if the petitioner have any grievance against the order dated 28/11/2019, the petitioner have liberty to file appeal before the Debt Recovery Tribunal u/s. 30 of the Recovery of Debt due to Banks and Financial Institutions Act, 1993 (RDDB Act)
6. It is submitted that the respondent no.11 herein has purchased the property bearing Flat NO.D/802, Ashavari Towers, Democratice Co- operative Housing Society Ltd., Part-2, Jodhpur, Satellite, Ahmedabad by e-auction dated 27 September, 2019 and accordingly the sale has been confirmed on 28 November, 2019 in recovery proceeding No.694/2018. Copy of Certificate of Sale dated 28/11/2019 is annexed herewith and marked as Annexure-RI.
7. It is submitted in response to the Page 45 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 para- 9, if the petitioners want to challenge the order dated 28/11/2019, should prefer an appeal before DRT or before DRAT- Mumbai. The petitioners filed this petition before this Hon'ble Court under writ jurisdiction, though the alternate remedies available to them. Hence the petitioners are not entitled to get any relief provided under Article- 226, and the interim relief granted by this Hon'ble Court.
8. It is submitted that thereafter on 12/12/2019, the Joint Court Commissioner wrote a letter to the deponent for remaining present at the place of the property on 16/12/2019 at 3.30 p.m for taking possession. Copy of letter dated 12/12/2019 is annexed herewith and marked as Annexure-R2.
9. It is submitted that demand notice was served upon the present petitioners, and If they have any objection regarding the demand, then the same should be presented before the Ld.DRT, the petitioner never raised any objection for the demand notice at any point of time before the Ld. DRT.
10. It is respectfully submitted that the deponent herein had paid the entire amount of purchase of the auction property, still didn't get peaceful possession of the property till date, therefore it is required to vacate the interim relief granted by this Hon'ble Court by order dated 26/12/2019 and continue till then by order dated 08/01/2020. The Deponent herein has wrote a letter to the bank for handing over possession of the property. Copy of letter dated 15/11/2020 is annexed Page 46 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 herewith and marked as Annexure-R3.
11. The deponent had paid the entire amount of sale by borrowing some money from the relatives and some of from his savings. Hence now the deponent has to face very critical financial situation due to this court proceedings."
7.Having heard the learned advocates for the respective parties and having considered the documents on record, it appears that the petition filed by the petitioners is nothing but adopting delay tactics for not permitting the respondent banks to recover the outstanding dues or to give effect to the sale confirmation made by the Recovery Officer by impugned order dated 28.11.2019.
8.It is not in dispute that the petitioners have not challenged the judgment and award dated 13.12.2018 passed by the DRT in OA No. 184/2017 before the Debts Recovery Appellate Tribunal as per the provisions of section 20 of the RDB Act and therefore, judgment and Page 47 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 award dated 13.12.2018 has achieved finality. The petitioners have not challenged the said judgment and award in this petition also. The petitioners have only challenged order dated 28.11.2019 of the Recovery Officer in R.P. No.694/2018 on the ground of no jurisdiction to conduct the recovery proceedings as judgment and award of the DRT was passed during the pendency of the insolvency proceedings before the NCLT under IBC. This contention of the petitioners cannot be accepted in view of facts emerging from the record to the effect that there is no order on record to show that moratorium period was extended by NCLT after passing of the order on 21.12.2017. The DRT passed order on 13.12.2018 and as per section 14 of the IBC, moratorium period is only for 180 days which would have been over in month of June 2018. In such circumstances, contention of the petitioners that judgment and award passed by Page 48 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 DRT is contrary to the provisions of IBC is required to be rejected in absence of challenge to such judgment and award by the petitioners. Consequential recovery proceedings before the recovery officer therefore, cannot be said to be without jurisdiction.
9.Section 30 of the RDB Act provides for an appeal against the order of Recovery Officer and reads as under:
"30. Appeal against the order of Recovery Officer. (1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty 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)."
10. As per the aforesaid provisions, Page 49 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 notwithstanding anything contained in section 29 of the RDB Act, any person aggrieved by an order of the Recovery Officer has to prefer an appeal before DRT within 30 days from the date on which a copy of the order is issued to him. Therefore, if the petitioners are aggrieved by the impugned order dated 28.11.2019 and consequential notice for possession dated 3.12.2019, are required to challenge the same before the presiding officer of the DRT as per the aforesaid provision of section 30 of the RDB Act.
11. Decisions relied upon by the petitioners are not applicable in facts of the case inasmuch as in decision of the Apex Court in case of Embassy Property Developments Pvt. Ltd.(supra) the Apex Court dealt with the question as to whether the High Court ought to interfere under Articles 226 and 227 of the Constitution with an order passed by the Page 50 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 National Company Law Tribunal in the proceedings under the IBC, ignoring the availability of a statutory remedy of appeal in facts of the said case. The Apex Court after considering the facts and Article 226 of the Constitution held that an "error of jurisdiction" was always distinguished from "in excess of jurisdiction", relying upon the decision rendered by the House of Lords, by a majority of 3:2 in Anisminic Ltd. v. Foreign Compensation Commission wherein it is observed that the real question was not whether an authority made a wrong decision but whether they enquired into and decided a matter which they had no right to consider. However, in the facts of the present case, admittedly when DRT passed the judgment and award, there was no order passed by the NCLT for extension of moratorium period. The impugned order passed by the Recovery Officer cannot be said to be order without Page 51 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 jurisdiction as the Recovery Officer has a passed the impugned order in recovery proceedings pursuant to the Recovery Certificate issued by the DRT.
12. Decision of Division Bench of this Court in case of STI India Limited(supra), would also be of no help to the petitioners as the issue before the Division Bench pertained to the proceedings before DRT during the pending proceedings before BIFR under the provisions of Sick and Industrial Companies (Special Provisions) Act, 1985 and Division Bench was called upon to consider the applicability of provisions of SICA and its legal effect on the proceedings before the DRT. The provisions of section 22 of SICA and provisions of section 14 of IBC are different and, in such circumstances, reliance placed on the said decision is not applicable in facts of the present case.
Page 52 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022
13. Decision of the Apex Court in case of Anand Rao Korada (supra) pertained to the provisions of section 14 of the IBC and section 238 of IBC giving overriding effect on all other laws was considered in light of the facts of the said case wherein the High Court passed the order during the pendency of moratorium. Admittedly, in facts of the present case, there was no order of extension of moratorium passed by NCLT and furthermore, order passed by the DRT is also not challenged by the petitioners. Therefore, subsequent and consequential order passed by the Recovery Officer cannot be challenged on the ground for want of jurisdiction. In the opinion of this Court, the petitioners are trying to overreach the process of law by challenging the order of Recovery Officer without challenging the order passed by the DRT on the ground of want of jurisdiction Page 53 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 which is nothing but an abuse of process of law.
14. Similarly the decision of Apex Court in case of Indian Overseas Bank(supra), was in relation to section 14 of the IBC vis-a-vis the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (For short "SARFAESI")after CIRP was initiated and moratorium was ordered. The Apex Court in facts of the case before it held that the provisions of Section 14(1)(c) of the IBC, which have an overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is prohibited. However, in facts of the present case, as per the provisions of section 14 of the IBC, NCLT did not pass any Page 54 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 order for extension of moratorium period and in absence of challenge to the order of the DRT relying upon the provisions of section 14 of the IBC is not tenable and the petitioners are, therefore, required to be relegated to avail alternative efficacious remedy under section 30 of the RDB Act.
15. Decision relied on behalf of the petitioners in case of Ram Kishun and ors. (supra) and in case of Core Healthcare Ltd. (supra) are also not applicable in the facts of the present case as in both the cases on facts, the Apex Court as well as this Court respectively have applied the settled legal position with regard to the applicability of other laws vis-a-vis the provisions of RDB Act. However, in the facts of the case as per the settled legal position, it cannot be said that the orders passed by the DRT as well as Recovery Officer are in any manner contrary Page 55 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 to the provisions of IBC more particularly when judgment and award passed by the DRT has achieved finality in absence of any challenge thereto.
16. In view of foregoing reasons, petition is not entertained and is accordingly dismissed. The petitioners are at liberty to challenge the impugned order dated 28.11.2019 and consequential notice dated 3.12.2019 before the Presiding Officer of the DRT as per the provisions of section 30 of the RDB Act on merits.
17. It is clarified that DRT in the event of challenge to the impugned order, without being influenced by any observations made by this Court, may consider such appeal on merits in accordance with law. Moreover, time spent by the petitioners before this Court to pursue this petition shall also be considered as bona fide while considering the question Page 56 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022 C/SCA/22832/2019 CAV JUDGMENT DATED: 25/11/2022 of delay in filing the appeal, if any, before the Presiding Officer of the DRT.
18. Rule is discharged. No order as to costs.
(N.V.ANJARIA, J) (BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 57 of 57 Downloaded on : Sat Dec 24 00:04:11 IST 2022