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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  2511      OF 2013 (Arising out of S.L.P. (C) No. 35627 of 2011)

The Official Liquidator, U.P. and  Uttarakhand      ... Appellant

Versus

Allahabad Bank and others                             ...Respondents

J U D G M E N T

Dipak Misra, J.

Leave granted.

2. The spinal  issue that  has  spiralled  to  this  Court  is  

whether  the  Company  Judge under  the  Companies  

Act, 1956 (for short “the 1956 Act”) has jurisdiction  

at the instance of the Official Liquidator to set aside  

the  auction  or  sale  held  by  the  Recovery  Officer  

under  the  Recovery  of  Debts  due  to  Banks  and  

Financial Institutions Act, 1993 (for brevity “the RDB

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Act”) or whether the Official Liquidator is required to  

follow the route as engrafted under the RDB Act by  

filing  an  appeal  assailing  the  auction  and  the  

resultant confirmation of sale.

3. Regard being had to the controversy involved which  

is  in  the  realm  of  pure  question  of  law,  it  is  not  

necessary to exposit the facts in detail.  Hence, the  

necessitous  facts  are  adumbrated  herein.   The  

respondent, Allahabad Bank, a secured creditor with  

whom  certain  properties  were  mortgaged,  filed  

Original Application No. 153 of 1999 under Section 9  

of  the  RDB  Act  for  recovery  of  a  sum  of  

Rs.39,93,47,701/-  with  interest  from  the  company,  

namely,  M/s.  Rajindra  Pipes  Limited,  which  was  

decreed  by  the  Debt  Recovery  Tribunal,  Jabalpur  

(DRT)  vide  its  order  dated  7.3.2000.   The  Debt  

Recovery Certificate being DRC No. 164 of 2000 was  

issued for  recovery  of  the aforesaid  amount  which  

was  subsequently  transferred  to  the  DRT  at  

Allahabad.  Be it noted, Company Petition No. 113 of  

1997 was filed before the learned Company Judge in  

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the High Court of Judicature at Allahabad who, vide  

order  dated  26.7.2000,  had  passed  an  order  for  

winding  up  of  the  company,  as  a  consequence  of  

which  the  Official  Liquidator  had  taken  over  the  

possession  of  the  assets  of  the  company  on  

24.7.2002.  After receipt of the Recovery Certificate,  

the  Recovery  Officer  attached  the  immoveable  

properties of the wound-up company by order dated  

29.8.2002.  The moveable properties of the company  

were attached as per order dated 23.12.2003.  At this  

juncture,  the  Allahabad  Bank  filed  an  application  

before  the  Company  Court  for  impleading  it  as  a  

necessary party and protect its rights getting it out of  

the  winding  up  proceedings.   A  prayer  was  made  

before  the  Company  Court  to  grant  permission  to  

proceed with the sale of the attached properties by  

the Recovery Officer, Debt Recovery Tribunal (DRT).  

The learned Company Judge, on 13.2.2004, granted  

permission for proceeding with the attachment and  

sale of the assets for recovery of the dues under the  

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RDB Act.  It is worth stating here that no condition  

was imposed.   

4. After auction and confirmation of sale by the DRT,  

the auction-purchaser filed an application before the  

learned Company Judge for issuance of a direction to  

the  Official  Liquidator  to  give  physical  possession.  

The  Company  Court,  by  order  dated  4.4.2007,  set  

aside  the  sale  certificate  on  the  ground  that  the  

Official  Liquidator  was  neither  heard  in  the  matter  

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.

5. As the facts  get  further  unfolded,  after  associating  

the Official Liquidator, the auction was held and the  

Recovery Officer proceeded with the confirmation of  

sale.  At that stage, the Official Liquidator filed his  

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objections pertaining to fixation of the reserve price,  

the non-inclusion of certain assets and the manner in  

which  the  auction  was  conducted.   The  Recovery  

Officer,  after  hearing  the  Bank  and  the  Official  

Liquidator, confirmed the sale and a date was fixed  

for  handing  over  the  possession  to  the  auction-

purchaser,  but the same could not be done as the  

Official  Liquidator  chose  not  to  remain  present.  

Thereafter, the auction-purchaser filed an application  

before  the  learned  Company  Judge  for  issue  of  a  

direction to the Official Liquidator to hand over the  

possession of the properties in respect of which the  

sale had been confirmed by the Recovery Officer of  

DRT.  Similar prayer was also made by the Allahabad  

Bank by  filing  another  application.   As  is  evincible  

from the factual narration, the Official Liquidator filed  

his report and the Company Court, on consideration  

of both the applications and the report of the Official  

Liquidator, by order dated 24.10.2009, set aside the  

auction and confirmation of sale dated 27.2.2009 on  

the  foundation  that  the  auction  had  not  been  

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properly held and directed the properties mortgaged  

with the Allahabad Bank to be auctioned after proper  

identification of the properties and obtaining of a fair  

valuation report from a Government approved valuer.

6. Being  dissatisfied  with  the  aforesaid  order,  the  

Allahabad Bank preferred Special Appeal No. 1815 of  

2009 before the Division Bench.  Apart from raising  

various contentions justifying the sale, a stand was  

put forth that the Company Court had no jurisdiction  

to  set  aside  the sale  held  by the Recovery Officer  

under the RDB Act.  The said submission of the Bank  

was resisted principally on the ground that it is the  

duty of the Official Liquidator and the Company Court  

to  watch  the  best  interest  of  the  company and  in  

exercise of such power of supervision, if there is any  

irregularity  in  conducting  the  auction  for  obtaining  

adequate price, the same is liable to be lancinated by  

the Company Court.  The Division Bench referred to  

the earlier orders passed by the Company Court, the  

provisions of the RDB Act, grant of permission by the  

Company  Court  to  the  Allahabad  Bank  to  remain  

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outside the winding up proceeding to realize the debt  

of the appellant by associating itself in the recovery  

proceeding  in  accordance  with  the  RDB  Act,  the  

direction  issued  to  the  Official  Liquidator  to  give  

access to the Recovery Officer to proceed with the  

recovery of legal and valid dues of the Bank and the  

non-imposition of any condition that the sale required  

prior  approval  of  the  learned  Company Judge  and,  

heavily  relying  on  the  decisions  rendered  in  

Allahabad Bank  v.  Canara  Bank and another1  

and  Rajasthan  State  Financial  Corpn.  and  

another  v.  Official Liquidator and another2 and  

distinguishing  the  decision  in  M.  V.  Janardhan  

Reddy v.  Vijaya Bank and others3, came to hold  

that  when  an  auction  is  conducted  and  there  is  

confirmation of  sale by the Recovery officer of the  

tribunal under the RDB Act, it is open to the Official  

Liquidator to file an appeal and raise his grievances  

before the Tribunal in accordance with the provisions  

of  the  RDB  Act  and  the  Company  Court  has  no  

1 (2000) 4 SCC 406 2 (2005) 8 SCC 190 3 (2008) 7 SCC 738

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jurisdiction to set aside the sale.  Being of this view,  

the Division Bench declined to express any opinion  

on the merits of the case and opined that it is open to  

the  Official  Liquidator  to  take  up  all  the  grounds  

available to him in appeal.  As a consequence of the  

aforesaid  conclusion,  the  order  passed  by  the  

Company  Judge  nullifying  the  confirmation  of  sale  

and  directing  fresh  auction  was  set  aside.   The  

defensibility of the said order is called in question by  

the Official Liquidator before this Court.

7. We have heard Mr. Ravindra Kumar, learned counsel  

for  the appellant,  Mr.  Debal  Banerji,  learned senior  

counsel for the respondent-Allahabad Bank, and Mr.  

Vivek Chaudhary, learned counsel for the respondent  

No. 2.

8. At the very inception, it is condign to state that there  

is no dispute over the facts as narrated hereinabove,  

for the only cavil relates to the issue of jurisdiction.  It  

is to be noted that the irregularity in the conduct of  

the auction or the manner in which the sale had been  

confirmed has not been addressed to by the Division  

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Bench  as  it  has  restricted  its  delineation  to  the  

jurisdictional  spectrum.   Therefore,  we  shall  only  

restrict  our  address  as  to  which is  the appropriate  

forum  for  the  Official  Liquidator  to  agitate  the  

grievance.   

9. It is apt to note that the RDB Act has been enacted in  

the backdrop that the banks and financial institutions  

had  been  experiencing  considerable  difficulties  in  

recovering  loans  and  enforcement  of  securities  

charged with them and the procedure for recovery of  

debts  due  to  the  banks  and  financial  institutions  

which  were  being  followed  had  resulted  in  a  

significant portion of the funds being blocked.  The  

Statement  of  Objects  and Reasons of  the RDB Act  

clearly emphasise the considerable difficulties faced  

by the banks and financial institutions in recovering  

loans  and  enforcement  of  securities  charged  with  

them.  Emphasis has been laid on blocking of funds in  

unproductive assets, the value of which deteriorates  

with the passage of time.  Reference has been made  

to  the  “Tiwari  Committee  Report”  which  had  

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suggested  for  setting  up  of  special  tribunals  for  

recovery  of  dues  of  the  banks  and  financial  

institutions by following a summary procedure.   

10. The purpose of  the  RDB Act,  as  is  evincible,  is  to  

provide for establishment of tribunals and Appellate  

Tribunals  for  expeditious adjudication and recovery  

of debts due to banks and financial institutions and  

for  matters  connected  therewith  or  incidental  

thereto.   Section  17  of  the  RDB  Act  deals  with  

jurisdiction, powers and authority of the tribunals.  It  

confers jurisdiction on the tribunal to entertain and  

decide  applications  from  the  banks  and  financial  

institutions for recovery of debts due to such banks  

and financial  institutions.   It  also  states  about  the  

powers of the Appellate Tribunal.  Section 18 creates  

a  bar  of  jurisdiction  stating  that  no  court  or  other  

authority shall  have, or be entitled to exercise any  

jurisdiction, powers or authority (except the Supreme  

Court, and a High Court exercising jurisdiction under  

Articles 226 and 227 of the Constitution) relating to  

the  matters  specified  in  Section  17.   Section  19  

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provides how an application of the tribunal is to be  

presented.   The  said  provision  deals,  

comprehensively,  with  all  the  aspects.   Section  

19(18)  confers  immense powers  on the  tribunal  to  

pass appropriate orders to do certain acts, namely,  

appoint  a  Receiver  of  any  property,  remove  any  

person from the possession, confer upon Receiver all  

such powers and appoint a Commissioner, etc.  Sub-

section (19) of the said Section provides that where a  

certificate of recovery is  issued against a company  

registered  under  the  Companies  Act,  1956  (1  of  

1956), the Tribunal may order the sale proceeds of  

such company to be distributed among its secured  

creditors in accordance with the provisions of Section  

529A of  the  Companies  Act,  1956  and  to  pay  the  

surplus, if any, to the company.  Section 20 provides  

an  appeal  to  the  Appellate  Tribunal;  Section  21  

provides for deposit of the amount of debt due on  

filing  appeal;  and  Section  22  deals  with  the  

procedure  and  powers  of  the  Tribunal  and  the  

Appellate Tribunal.  Chapter V of the RDB Act deals  

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with recovery of  debts determined by the tribunal.  

Section  25  provides  for  the  modes  of  recovery  of  

debts;  Section  26  stipulates  about  the  validity  of  

certificate and amendment thereof; Section 27 deals  

with the power of stay of proceeding under certificate  

and amendment or withdrawal thereof; and Section  

28 deals with the other methods of recovery.  It is  

worthy  to  note  that  Section  29  states  that  the  

provisions of the Second and Third Schedule of the  

Income-Tax  Act,  1961  and  the  Income-Tax  

(Certificate  Proceedings)  Rules,  1962,  as  in  force  

from  time  to  time  shall,  as  far  as  possible,  be  

applicable with necessary modifications as if the said  

provisions and the rules referred to the amount of  

debt due under the RDB Act instead of the Income-

Tax Act.  The defendant has been equated with an  

assessee.   Section  30  provides  that  any  person  

aggrieved by an order of the Recovery Officer made  

under the RDB 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.  It confers powers  

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on the tribunal to make such inquiry as it deems fit  

and confirm, modify or set aside the order made by  

the Recovery Officer in exercise of its powers under  

Sections 25 to 28 (both inclusive).

11. Section 34 lays down that the RDB Act would have  

overriding effect.  Section 34, being pertinent, is set  

out hereinbelow: -

“34. Act to have over-riding effect.  –  (1) Save as provided under sub-section (2),  the provisions of this Act shall have effect  notwithstanding  anything  inconsistent  therewith  contained  in  any  other  law for  the  time  being  in  force  or  in  any  instrument having effect by virtue of any  law other than this Act.

(2) The provisions of this Act or the rules  made thereunder  shall  be in  addition to,  and  not  in  derogation  of,  the  Industrial  Finance  Corporation  Act,  1948  (15  of  1948),  the  State  Financial  Corporations  Act,  1951 (63 of 1951),  the Unit Trust of  India Act, 1963 (52 of 1963), the Industrial  Reconstruction Bank of India Act, 1984 (62  of  1984),  the  Sick  Industrial  Companies  (special Provisions) Act, 1985 (1 of 1986)  and  the  Small  Industries  Development  Bank of India Act, 1989 (39 of 1989).”

We have referred to the Objects  and Reasons and  

the relevant provisions of the RDB Act to highlight that it  

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is  a  comprehensive  Code  dealing  with  all  the  facets  

pertaining to adjudication,  appeal  and realization of the  

dues payable to the banks and financial institutions.  

12. Presently,  we shall  advert  to  the  analysis  made in  

Allahabad  Bank’s  case.   In  the  said  case,  this  

Court was concerned with the issue relating to the  

impact  of  the  provisions  of  the  RDB  Act  on  the  

provisions  of  the  1956  Act.   Allahabad  Bank  had  

come to this Court against an order passed by the  

learned Company Judge under Sections 442 and 537  

of  the  1956  Act  whereby  the  Company  Court,  in  

winding up petition, had stayed the sale proceedings  

taken out by the Allahabad Bank before the Recovery  

Officer  under  the  RDB  Act.   The  stand  of  the  

Allahabad Bank was that the tribunal under the RDB  

Act  could  itself  deal  with  the  question  of  

appropriation of sale proceeds in respect of the sale  

of the company’s properties held at the instance of  

the Bank and the priorities.  After stating the facts,  

the  Court  posed the  questions  that  required  to  be  

adverted to: -

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“Questions  have  been  raised  by  the  respondent as to whether the Tribunal can  entertain  proceedings  for  recovery,  execution  proceedings,  and  also  for  distribution of monies realized by sales of  properties  of  a  company  against  which  winding-up  proceedings  are  pending,  whether  leave  is  necessary  and  as  to  which  court  is  to  distribute  the  sale  proceeds and according to what priorities  among various creditors.”

13. The two-Judge Bench, after referring to the dictionary  

provisions, especially the “debt” as defined in Section  

2(g), Sections 17, 18 and 19(22) and Section 31 of  

the  RDB  Act,  came  to  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 Allahabad Bank was concerned.  

Dealing  with  the  facet  of  the  execution  of  the  

certificate  by  the  Recovery  Officer,  the  Division  

Bench  referred  to  Section  34  of  the  RDB Act  and  

opined thus: -

“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  

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defendant is to be decided by the Tribunal  under  Section  17,  the  banks/financial  institutions should go to the civil court or  the  Company  Court  or  some  other  authority  outside  the  Act  for  the  actual  realization of the amount.  The certificate  granted under Section 19(22) has,  in our  opinion,  to  be  executed  only  by  the  Recovery Officer.  No dual  jurisdiction at  different stages are contemplated.”

[Emphasis supplied]

14. While  dealing  with  the  issue whether  the  RDB Act  

overrides  the  provisions  of  Sections  442,  446  and  

537  of  the  1956  Act,  after  analyzing  the  said  

provisions and delving into the concept of leave and  

control  by  the  Company Court,  the  learned Judges  

relied on the pronouncement in Damji Valji Shah v.  

LIC of India4 and came to hold that there is no need  

for the appellant bank to seek leave of the Company  

Court to proceed with the claim before the DRT or in  

respect  of  the  execution  proceedings  before  the  

Recovery Officer.  It was also categorically held that  

the  said  litigation  cannot  be  transferred  to  the  

Company  Court.   In  the  ultimate  eventuate,  the  

bench ruled that in view of Section 34 of the RDB Act,  

4 AIR 1966 SC 135

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the tribunal has exclusive jurisdiction and, hence, the  

Company Court cannot use its powers under Section  

442  of  the  1956  Act  against  the  tribunal/Recovery  

Officer and, therefore, Sections 442, 446 and 537 of  

the  1956  Act  could  not  be  applied  against  the  

tribunal.  Be it noted, emphasis was laid on speedy  

and  summary  remedy  for  recovery  of  the  amount  

which was due to the banks and financial institutions  

and  the  concept  of  special  procedure  as  

recommended  by  the  Tiwari  Committee  Report  of  

1981 was stressed upon.  It was concluded that the  

special provisions made under the RDB Act have to  

be applied.  The Court addressed itself to the special  

and general law and ruled that in view of Section 34  

of the RDB Act, it overrides the Companies Act to the  

extent there is  any thing inconsistent  between the  

Acts.   In  the  ultimate  analysis,  the  learned Judges  

stated thus: -

“For  the  aforesaid  reasons,  we hold  that  the  at  the  stage  of  adjudication under  Section 17 and execution of the certificate  under Section 25 etc. the provisions of the  RDB Act, 1993 confer exclusive jurisdiction  on the Tribunal and the Recovery Officer in  

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respect  of  debts  payable  to  banks  and  financial  institutions and there can be no  interference by the Company Court under  Section 442 read with Section 537 or under  Section 446 of the Companies Act,  1956.  In respect of the monies realized under the  RDB Act, the question of  priorities among  the  banks  and  financial  institutions  and  other creditors can be decided only by the  Tribunal  under  the  RDB  Act  and  in  accordance with Section 19(19) read with  Section 529-A of the Companies Act and in  no  other  manner.   The provisions  of  the  RDB  Act,  1993  are  to  the  above  extent  inconsistent  with  the  provisions  of  the  Companies  Act,  1956  and  the  latter  Act  has to yield to the provisions of the former.  This  position  holds  good  during  the  pendency  of  the  winding-up  petition  against the debtor Company and also after  a winding-up order is passed.  No leave of  the  Company  Court  is  necessary  for  initiating  or  continuing  the  proceedings  under the RDB Act, 1993.”

[Emphasis added]

15. While  dealing  with  the  claim  of  the  workmen,  the  

Bench proceeded to state that the “workmen’s dues”  

have  priority  over  all  other  creditors,  secured  and  

unsecured,  because  of  Section  529-A(1)(a)  of  the  

1956 Act.   Be it  noted,  this  has been so stated in  

paragraph 76 of the decision in  Allahabad Bank’s  

case.   The  correctness  of  this  statement  was  

doubted and the matter was referred to the larger  

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Bench.   A  three-Judge  Bench  in  Andhra  Bank  v.  

Official  Liquidator  and  another5 opined  that  it  

was only a stray observation as such a question did  

not  arise  in  the  said  case  as  Allahabad  Bank  was  

undisputably an unsecured creditor and, accordingly,  

the larger Bench opined that the finding of this Court  

in  Allahabad Bank’s case  to the aforesaid extent  

did not lay down the correct law.  The said exposition  

of law has further been reiterated in  Jitendra Nath  

Singh  v.  Official  Liquidator  and  others6.  We  

have  referred  to  the  aforesaid  decisions  only  to  

highlight that this part of the judgment in Allahabad  

Bank’s case has been overruled.

16. In  International  Coach  Builders  Ltd.  v.  

Karnataka State Financial Corpn.7, the question  

arose  whether  there  was  any  conflict  between the  

State  Financial  Corporation  Act,  1951  and  the  

Companies  Act,  1956  and,  in  that  context,  the  

learned Judges relied on the decision in  A.P. State  

5 (2005) 5 SCC 75 6 (2013) 1 SCC 462 7 (2003) 10 SCC 482

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Financial Corpn. v. Official Liquidator8 and came  

to  hold  that  there  is  no  conflict  between  the  

provisions of the SFC Act and the 1956 Act and even  

the rights under Section 29 of the SFC Act are not  

intended to operate in the situation of winding-up of  

a company.  It is further opined that even assuming  

that  there  is  a  conflict,  the  amendments  made  in  

Sections  529  and  529-A  of  the  1956  Act  would  

override and control the rights under Section 29 of  

the SFC Act.  The Division Bench proceeded to state  

that though the 1956 Act may be general law, yet the  

provisions introduced therein in 1985 were intended  

to confer special rights on the workers and pro tanto  

must  be  treated  as  special  law  made  by  the  

Parliament  and,  hence,  the  said  provisions  would  

override the provisions contained in Section 29 of the  

SFC Act, 1951.

17. In  Rajasthan  State  Financial  Corporation  and  

another (supra),  when  the  appeal  came  up  for  

hearing before the two learned Judges, a submission  

8 (2000) 7 SCC 291

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was put forth that there was a conflict between the  

decisions  in  Allahabad  Bank  (supra)  and  

International  Coach  Builders  Ltd. (supra)  and,  

taking note of the importance of the question of law  

involved, the matter was referred to a larger Bench.  

The three-Judge Bench analysed the ratio laid down  

in  Allahabad  Bank’s  case and  International  

Coach Builders Ltd.  (supra) and, after referring to  

various  authorities,  held  that  once  a  winding-up  

proceeding has commenced and the Liquidator is put  

in charge of the assets of the company being wound  

up, the distribution of the proceeds of the sale of the  

assets  held  at  the  instance  of  the  financial  

institutions coming under the RDB Act or of financial  

corporations coming under the SFC Act can only be  

with  the  association  of  the  Official  Liquidator  and  

under the supervision of  the Company Court.   The  

right  of  a  financial  institution  or  of  the  Recovery  

Tribunal or that of a financial corporation or the court  

which has been approached under Section 31 of the  

SFC Act to sell the assets may not be taken away, but  

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the same stands restricted by the requirement 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.   Thereafter,  the  

bench summed up the legal position.   The pertinent  

part of the said summation is reproduced below: -

(i) A  Debt  Recovery  Tribunal  acting  under the Recovery of Debts Due to Banks  and Financial Institutions Act, 1993 would  be entitled to order the sale and to sell the  properties  of  the  debtor,  even  if  a  company-in-liquidation,  though  its  Recovery  officer  but  only  after  notice  to  the  Official  Liquidator  or  the  Liquidator  appointed by the Company Court and after  hearing him.

xxx xxx xxx

(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 realization of  its  securities  consistent  with  the  relevant  provisions  of  the  Companies  Act  regarding  distribution  of  the assets of the company-in-liquidation.”

18. From the aforesaid verdict, it is vivid that the larger  

Bench  approved  the  law  laid  down  in  Allahabad  

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Bank (supra).  In fact, it is noticeable that the larger  

Bench has observed that in Allahabad Bank’s case,  

a  view  has  been  taken  that  the  RDB Act  being  a  

subsequent legislation and being a special law would  

prevail over the general law, the  1956 Act, but the  

said argument is not available as far as the SFC Act is  

concerned.

19. From  the  aforesaid  authorities,  it  clearly  emerges  

that the sale has to be conducted by the DRT with  

the association of  the Official  Liquidator.   We may  

hasten to clarify that as the present controversy only  

relates to the sale, we are not going to say anything  

with  regard  to  the  distribution.   However,  it  is  

noticeable that under Section 19(19) of the RDB Act,  

the legislature has clearly stated that distribution has  

to be done in accordance with Section 529-A of the  

1956 Act.  The purpose of stating so is that it is a  

complete  code  in  itself  and  the  tribunal  has  the  

exclusive jurisdiction for the purpose of sale of the  

properties for realization of the dues of the banks and  

financial institutions.  

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20.  Mr.  Revindra  Kumar,  learned  counsel  for  the  

appellant,  would contend that he, being an Official  

Liquidator, is liable to report to the Company Court  

and, therefore, the Company Court has jurisdiction to  

accept  or  reject  the  report  and,  hence  it  has  

jurisdiction to set aside the sale held by the Recovery  

Officer  under  the  RDB  Act.   The  learned  counsel  

would  submit  with  emphasis  that  the  role  of  a  

Company Court cannot be marginalized as it has the  

control over the assets of the company.  Per contra,  

Mr.  Debal  Banerji,  learned  senior  counsel  for  the  

Allahabad Bank, would submit that the jurisdiction of  

the  Company  Court  cannot  be  equated  with  the  

jurisdiction  exercised  by  the  High  Court  under  

Articles 226 and 227 of the Constitution of India.

21. To  appreciate  the  aforesaid  submission,  we  may  

fruitfully  refer  to  the  dictum  in  Jyoti  Bhushan  

Gupta and others  v.  The Banaras  Bank Ltd.9,  

wherein the learned Judges, while stating about the  

jurisdiction of the Company Court, have opined that  

9 AIR 1962 SC 403

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the jurisdiction is ordinary; it does not depend on any  

extraordinary action on the part of the High Court.  

The jurisdiction is also original in character because  

the  petition  for  exercise  of  the  jurisdiction  is  

entertainable  by the  High Court  as  a  court  of  first  

instance  and  not  in  exercise  of  its  appellate  

jurisdiction.  As the High Court adjudicates upon the  

liability of the debtor to pay the debts due by him to  

the Company, the jurisdiction is, therefore, civil.   It  

has been further observed that normally a creditor  

has to file a suit to enforce liability for payment of a  

debt  due to  him from his  debtor.   The Legislature  

has, by Section 187 of the 1956 Act, empowered the  

High Court  in  a  summary proceeding to  determine  

the liability and to pass an order for payment, but on  

that  account,  the  real  character  of  the  jurisdiction  

exercised  by  the  High  Court  is  not  altered.   After  

further analyzing, the four-Judge Bench proceeded to  

state thus: -

“The jurisdiction to deal with the claims of  companies  ordered  to  be  wound  up  is  conferred by the Indian Companies Act and  to  that  extent  the  letters  Patent  are  

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modified.  There is, however, no difference  in  the  character  of  the  original  civil  jurisdiction  which  is  conferred  upon  the  High  Court  by  Letters  Patent  and  the  jurisdiction  conferred  by  special  Acts.  When in exercise of its authority conferred  by a special statute the High Court in an  application  presented  to  it  as  a  court  of  first  instance  declares  liability  to  pay  a  debt,  the jurisdiction exercised is  original  and  civil  and  if  the  exercise  of  that  jurisdiction  does  not  depend  upon  any  preliminary  step  invoking  exercise  of  discretion  of  the  High  Court,  the  jurisdiction is ordinary.”

22. The aforesaid enunciation makes it  clear as crystal  

that while exercising jurisdiction under the 1956 Act,  

the High Court is exercising  ordinary jurisdiction and  

not  any  extraordinary  or  inherent  jurisdiction  and  

that  is  why,  the  legislature  has  appropriately  

postulated  that  the  jurisdiction  of  the  High  Court  

under Articles 226 and 227 of the Constitution would  

not be affected.   

23. The aforesaid analysis makes it luculent that the DRT  

has exclusive jurisdiction to sell the properties in a  

proceeding  instituted  by  the  banks  or  financial  

institutions, but at the time of auction and sale, it is  

required to associate the Official Liquidator.  The said  

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principle has also been reiterated in  Pravin Gada  

and  another v.  Central  Bank  of  India  and  

others10.   

24. Once the Official Liquidator is associated, needless to  

say, he has a role to see that there is no irregularity  

in  conducting  the  auction  and appropriate  price  is  

obtained by holding an auction in a fair, transparent  

and  non-arbitrary  manner  in  consonance  with  the  

Rules framed under the RDB Act.   

25. At this juncture, we may refer with profit to what a  

three-Judge  Bench,  while  dealing  with  the  

constitutional  validity of the RDB Act,  in  Union of  

India  and  another  v.  Delhi  High  Court  Bar  

Association  and  others11, had  the  occasion  to  

observe:-

“By  virtue  of  Section  29  of  the  Act,  the  provisions  of  the  Second  and  Third  Schedules  to  the  Income  Tax  Act,  1961  and  the  Income  Tax  (Certificate  Proceedings)  Rules,  1962,  have  become  applicable  for  the realization of  the dues  by  the  Recovery  Officer.   Detailed  procedure  for  recovery  is  contained  in  

10 (2013) 2 SCC 101 11 (2002) 4 SCC 275

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these  Schedules  to  the  Income  Tax  Act,  including provisions relating to arrest and  detention  of  the  defaulter.   It  cannot,  therefore,  be  said  that  the  Recovery  Officer would act in an arbitrary manner.  Furthermore, Section 30, after amendment  by the Amendment Act, 2000, gives a right  to any person aggrieved by an order of the  Recovery  Officer,  to  prefer  an  appeal  to  the Tribunal.  Thus now an appellate forum  has been provided against  any orders  of  the Recovery Officer which may not be in  accordance  with  the  law.   There  is,  therefore,  sufficient  safeguard  which  has  been provided in the event of the Recovery  Officer  acting  in  an  arbitrary  or  an  unreasonable manner.”

26. We have referred to the said passage for the purpose  

of  highlighting  that  an  appeal  lies  to  the  DRT  

challenging the action of the Recovery Officer.  In the  

case at hand, the Official Liquidator was not satisfied  

with the manner in which the auction was conducted  

and he thought it apposite to report to the learned  

Company Judge who set aside the auction.  Needless  

to emphasise, the Official Liquidator has a role under  

the  1956  Act.   He  protects  the  interests  of  the  

workmen  and  the  creditors  and,  hence,  his  

association at the time of auction and sale has been  

thought  appropriate  by  this  Court.   To  put  it  

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differently, he has been conferred locus to put forth  

his stand in the said matters.  Therefore, anyone who  

is aggrieved by any act done by the Recovery Officer  

can  prefer  an  appeal.   Such  a  statutory  mode  is  

provided  under  the  RDB  Act,  which  is  a  special  

enactment.  The 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.

27. It has been submitted by Mr. Banerji, learned senior  

counsel,  that  if  the Company Court  as  well  as  the  

DRT can exercise jurisdiction in respect of the same  

auction or sale after adjudication by the 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  

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the  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 counsel commends acceptance as the  

intendment of the legislature is that the dues of the  

banks  and  financial  institutions  are  realized  in  

promptitude.   It  is  to  be noted that  when there is  

inflation in the economy, the value of the mortgaged  

property/assets depreciates with the efflux of time.  If  

more time is consumed, it would be really difficult on  

the  part  of  the  banks  and  financial  institutions  to  

realize  their  dues.   Therefore,  this  Court  in  

Allahabad Bank’s  case has  opined that  it  is  the  

DRT  which  would  have  the  exclusive  jurisdiction  

when  a  matter  is  agitated  before  the  DRT.   The  

dictum in the said case has been approved by the  

three-Judge  Bench  in  Rajasthan  State  Financial  

Corporation  and  another (supra).   It  is  not  a  

situation  where  the  Official  Liquidator  can  have  a  

choice either to approach the DRT or the Company  

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Court.   The language of  the  RDB Act,  being clear,  

provides  that  any  person  aggrieved  can  prefer  an  

appeal.  The Official Liquidator whose association is  

mandatorily required can indubitably be regarded as  

a person aggrieved relating to the action taken by  

the Recovery Officer which would include the manner  

in  which  the  auction  is  conducted  or  the  sale  is  

confirmed.  Under these circumstances, the Official  

Liquidator cannot even take recourse to the doctrine  

of election.  It is difficult to conceive that there are  

two remedies.  It is well settled in law that if there is  

only one remedy, the doctrine of election does not  

apply and we are disposed to think that the Official  

Liquidator has only one remedy, i.e., to challenge the  

order passed by the Recovery Officer before the DRT.  

Be it noted, an order passed under Section 30 of the  

RDB Act  by  the  DRT is  appealable.   Thus,  we are  

inclined  to  conclude  and  hold  that  the  Official  

Liquidator  can  only  take  recourse  to  the  mode  of  

appeal and further appeal under the RDB Act and not  

approach the Company Court to set aside the auction  

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or  confirmation  of  sale  when  a  sale  has  been  

confirmed  by  the  Recovery  Officer  under  the  RDB  

Act.

28. We will be failing in our duty if we do not take notice  

of  the decision in  M.V. Janardhan Reddy (supra)  

wherein the sale was aside by the Company Judge.  It  

may  be  stated  here  that  the  Company  Court  had  

imposed  a  condition  that  the  permission  of  the  

Company Court shall be obtained before the sale of  

the  properties,  immoveable  or  moveable,  is  

confirmed or finalized.  On the aforesaid basis, this  

Court opined that when the bank was permitted to go  

ahead with  the proposed sale of  the assets of  the  

company  under  liquidation  by  way  of  auction  but  

such  sale  was  subject  to  confirmation  by  the  

Company Court 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  

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the said case were absolutely different  and further  

this  Court  did  not  deal  with  the  jurisdiction  of  the  

Company Court vis-à-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 the DRT.

29. 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 the  

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 such an appeal being preferred, the  

DRT shall  deal  with  the appeal  in  accordance with  

law.  The DRT is directed to decide the appeal within  

a period of two months after offering an opportunity  

of  hearing  to  all  concerned.   Till  the  appeal  is  

disposed of, the interim order passed by this Court  

shall remain in force.  We hasten to clarify that we  

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have not  expressed anything  on  the  merits  of  the  

case.

30. Consequently, the appeal is disposed of in the above  

terms  leaving  the  parties  to  bear  their  respective  

costs.

……………….…………….J. [H. L. Dattu]

………………………….….J.                                            [Dipak Misra]

New Delhi; March 12, 2013.

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