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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NOS.     8658-8660     OF     2012   (Arising out of S.L.P. (Civil) Nos. 30894-30896 of 2011)

Pravin Gada and another       ... Appellants

Versus

Central Bank of India and others         ... Respondents

J     U     D     G     M     E     N     T       

Dipak     Misra,     J.   

Leave granted.

2. The present appeals by special leave have been  

preferred questioning the defensibility of the order  

dated 20th September, 2011 passed by the Division  

Bench of the High Court of Judicature at Bombay in  

Writ Petition Nos. 2689 of 2011, 7488 of 2011 and

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7489 of 2011 whereby the High Court has quashed the  

order dated 3rd March, 2011 passed by the Debt  

Recovery Appellate Tribunal (for short ‘the DRAT’)  

wherein the DRAT had set aside the order of the Debt  

Recovery Tribunal (for short ‘the DRT’) and restored  

the confirmation of sale conducted by way of public  

auction in favour of the respondents, who are the  

appellants herein.

3. Shorn of unnecessary details, the facts which are  

essential to be stated for disposal of these appeals are  

that a company by the name of Jay Electric Wire  

Corporation Ltd. had a factory at Mysore situate on  

land admeasuring approximately 4.4 acres comprised  

in plots 44 and 47 in Serial Nos. 55 and 69 in the  

Industrial Area of village Habal and Serial No. 33 of  

Metagally, Hobla Kasba.  The said company, which  

closed down in February, 1995, had about 149  

workers.  As dispute arose between the workmen and  

the management because of termination, the matter  

was referred to the Industrial Tribunal at Mysore after  

the reference made under Section 10 of the Industrial  

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Disputes Act, 1947 and the said tribunal, vide award  

dated 5th January, 2001, directed the employer to pay  

back wages to the workmen with effect from 6th  

February, 1995 and to continue payment during the  

subsistence of the relationship of employer and  

employee between the parties.   

4. As the facts are further unfurled, on 18th December,  

2006, a recovery certificate was issued by the Deputy  

Labour Commissioner at Bangalore for recovery of a  

sum of Rs.4.44 crores towards the dues of the  

workmen under the award passed by the Industrial  

Tribunal.  A proceeding was initiated before the  

Company Judge of the High Court of Bombay in 1996  

forming the subject-matter of Company Petition No.  

336 of 1996.  Subsequently, on a reference made by  

the BIFR under Section 20(1) of the Sick Industrial  

Companies (Special Provisions) Act, 1985, the  

company court held that it was just and equitable for  

the company to be wound up.  The official liquidator  

was appointed as provisional liquidator by order dated  

6th October, 2005 to take charge of the books, assets  

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and business of the company and to exercise  

necessary powers under the Companies Act, 1956.  On  

15th October, 2008, the said order was made absolute.  

The official liquidator was commanded to proceed in  

the matter in accordance with law to deal with the  

assets of the company in liquidation.

5. It is pertinent to state here that in the year 1999, the  

ICICI Bank had instituted a suit before the High Court  

in its original side for recovery of its dues against the  

company.  The learned single Judge, vide order dated  

8th July, 1999, appointed a Receiver who was granted  

liberty to sell the assets by public auction or by private  

treaty and to apply the net sale proceeds as between  

the ICICI Bank and the Central Bank of India which  

was impleaded as the second defendant to the suit in  

satisfaction of the respective charges on the  

immoveable property.  The suit eventually stood  

transferred to the DRT and the DRT, by order dated  

26th August, 2003, allowed the application filed by the  

ICICI Bank Ltd. for a sum of Rs.1.12 crores together  

with future interest at 12% per annum.  It was further  

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directed that on failure on the part of the borrower to  

repay the amount within six months, the immoveable  

property would be sold and the net sale proceeds  

would be paid to the applicant bank and the Central  

Bank of India in proportion to their respective charges.

6. In June, 2004, a public notice was issued for sale of  

the moveable and immoveable properties of the  

borrower and notice for the proposed sale was  

published in the newspapers.  Though the movables of  

the borrower came to be sold, yet no proper offer was  

received for the sale of immoveable property.  In a  

meeting dated 24th July, 2006, it was noted that two  

offers were received, one amounting to Rs.1.10 crores  

and the other Rs.80 lacs.  The Central Bank of India  

stated that the offer was not acceptable to it.  At that  

stage, the Standard Chartered Bank appeared before  

the Receiver stating that the ICICI Bank had assigned  

its debts to it.  The meeting convened by the Receiver  

was adjourned to 9th August, 2006 and eventually, on  

21st August, 2006, bidding took place inter se the two  

bidders who submitted their offers when the first and  

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second respondents enhanced their bid to Rs.2.50  

crores.  The meeting was adjourned to 5th September,  

2006 and the successful bidder was directed to  

enhance the amount representing 25% of the offer by  

28th August, 2006.  In the said meeting, the  

representative of the Central Bank of India was not  

present.  On 29th September, 2006, a letter was  

addressed by the Receiver to the advocates of the two  

banks enclosing the report seeking the confirmation of  

sale.  He also required the banks to send expression of  

interest in the property from two parties.    On receipt  

of the letter, the Chief Manager of the Central Bank of  

India visited the office of the Receiver on 17th October,  

2006 and informed about the expression of interest of  

two other bidders who were willing to pay higher price.  

7. As is evincible from the Judgment of the High Court,  

certain meetings took place and the bank had difficulty  

in contacting the advocate.  On 27th October, 2006,  

when both the bidders arrived at the office of the  

Receiver, they were informed that the sale had been  

confirmed in the morning.  On 30th October, 2006, an  

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application was filed by the Central Bank of India for  

setting aside the sale.  Many a procedural irregularity  

was alleged including the one that it had no intimation  

of the proceeding until it received the letter dated 29th  

September, 2006 of the Receiver stating that the  

property had been sold for a sum of Rs.2.50 crores and  

the sale had been confirmed on 27th October, 2006.  It  

was contended by the Central Bank of India that in the  

absence of intimation, it had been unable to remain  

present when the bidding took place on 21st August,  

2006.  A prayer for fresh auction and to consider the  

offers submitted by the two bidders who had expressed  

interest in the purchase of the property was made.  It  

is apt to mention here that the official liquidator had  

filed report on 1st December, 2006 before the DRT  

stating that an application had been received from the  

workers contending that the sale which had been  

confirmed in favour of the first and second  

respondents, the appellants herein, was at a price  

which was neither fair nor reasonable.  A submission  

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was put forth that no notice was sent to the liquidator  

through the Registrar despite the mandate of law.   

8. As is reflected from the proceedings of the fora below  

and the order passed by the High Court, the Recovery  

Officer, vide order dated 5th December, 2006, had set  

aside the confirmation of the sale holding that it was  

obligatory to ensure that a higher price was fetched for  

the property and the assets of the company in  

liquidation, if the sale price offered by an auction  

purchaser was inadequate.  He ultimately set aside the  

sale and directed for conduct of a fresh auction in the  

presence of secured creditors, the Receiver and the  

official liquidator after notice.  In pursuance of the said  

order, on 5th December, 2006, a sale was conducted  

without making a fresh notification.  The Recovery  

Officer noted that the original auction purchasers did  

not participate in the fresh bidding process, but the  

two bids were received by the Recovery Officer and the  

highest bid amounting to Rs.6.45 crores was offered by  

one Umrah Developers.  Regard being had to the said  

position, the Recovery Officer directed the bid of  

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Umrah Developers to be accepted and the successful  

bidder was directed to pay the purchase consideration.  

The said Umrah Developers deposited the full  

consideration of Rs.6.45 crores on 10th November 2006  

and 11th December, 2006.  Taking note of the same,  

the Recovery Officer declared them as the successful  

bidder.

9. Being grieved by the aforesaid order, the first and  

second respondents therein preferred an appeal before  

the DRT which set aside the sale.  Taking note of the  

facts in entirety, it opined that there was something  

wrong on the part of the valuer inasmuch as the offer  

of Rs.6.45 crores was received when the bids were  

conducted only amongst a few persons and not in the  

public realm and that was good enough indicative of  

the fact that the property could fetch a higher value.  

The DRT further opined that it would have been proper  

to issue a public notice and invite fresh offers.  Being  

of this view, it directed, while retaining the offers which  

were received until 5th December, 2006, that the  

Recovery Officer should publish a public notice to  

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determine as to whether offers higher than the bid of  

Rs.6.45 crores of Umrah Developers could be realized  

and if no further offers were received, the Recovery  

Officer was directed to accept the highest bid after  

inter se bidding between the earlier bidders.

10. Being dissatisfied with the aforesaid, an appeal was  

preferred by the first respondent before the DRAT  

which granted stay on 26th February, 2007 as a  

consequence of which the entire process of holding a  

fresh auction came to a standstill.  At this juncture, an  

application was filed by Umrah Developers to permit it  

to withdraw the amount which it had deposited.  The  

application was rejected by the DRT which compelled  

the company to file an application before the tribunal  

to withdraw the amount and the company was allowed  

to withdraw 90% of the bid amount leaving the  

balance, i.e., Rs.64.5 lacs in deposit before the  

Recovery Officer.  Eventually, the DRAT dismissed the  

appeal by order dated 2nd July, 2008 mainly on the  

foundation that offer of Rs.6.45 crores was higher than  

the offer of Rs.2.50 crores furnished by the first and  

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second respondents.  The said order came to be  

challenged before the writ court and during the  

pendency of the writ proceedings, an application was  

filed by Umrah Developers for refund of the balance  

sum which was allowed.  The writ petition preferred by  

the first and second respondents was disposed of on  

11th August, 2010 in terms of the agreed minutes.  As  

per the agreed order, the matter stood remanded to  

DRAT for a fresh decision.   

11. As is demonstrable, on remand, the DRAT, by its order  

dated 15th October, 2010, allowed the appeal and  

directed restoration of the confirmation of sale in  

favour of the first and second respondents.  The said  

order of the DRAT was assailed by the workers’ union  

and the High Court remitted the matter to the DRAT  

for fresh consideration.  The DRAT, considering the  

facts in entirety, allowed the appeal vide order dated  

3rd March, 2011 and restored the confirmation of sale.  

The said order came to be assailed by the secured  

creditors and the workmen’s union on the ground that  

the confirmation suffered from material irregularities.  

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The High Court noticed that the DRAT had opined that  

the power of the official liquidator was restricted to  

participate at the stage of disbursement of the dues of  

the workmen but not in conducting of the sale.  It did  

not agree with the said finding on the basis of the  

proposition of law laid down in Rajasthan Financial  

Corpn. and Anr. V. Official Liquidator & Anr.1.  

While noting that aspect, the High Court proceeded to  

address the fundamental question whether the  

procedure that was followed in the sale of the property  

was fair and proper or whether there was any fraud  

and material irregularity.  It adverted to the facts in a  

chronological manner and came to hold that the  

manner in which the sale proceedings had been  

conducted was neither fair nor transparent as a  

consequence of which the possible price that could be  

realized had become an unfortunate casuality.  It took  

note of the offer made by Umrah Developers after a  

month of confirmation of sale and opined that the  

proper price had not been realized.  The finding of the  

DRT that the Central Bank of India had remained  1 AIR 2006 SC 755

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absent could not be a justification to sustain the  

manner in which the sale had been conducted as it  

was manifestly contrary to the basic concept of  

fairness and transparency.  The Court referred to  

number of authorities to highlight the conception that  

in every case, the duty of the court is to satisfy itself  

that the price offered is reasonable and the said  

satisfaction is to be based on the bedrock of the  

prevalent market value.  Expressing the aforesaid view,  

the High Court allowed the writ petition, set aside the  

order of the DRAT dated 3rd March, 2011 and  

proceeded to direct as follows: -

“We direct that the Recovery Officer  

attached to the DRT to issue a public  

advertisement which shall be published in  

at least two newspapers, one in English and  

another in Kannada having circulation in  

Mysore, inviting bids for the sale of the  

property.  The terms and conditions  

governing the sale shall be laid down by the  

Recovery Officer of the DRT, and a fresh  

valuation shall be carried out on the basis  

of which the reserve price of the property  

shall be fixed.  We record the statement  

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made on behalf of the Central Bank and the  

Standard Chartered Bank by their counsel  

that both the Banks shall cooperate with  

the Recovery Officer and shall meet all the  

expenses of the sale, including towards  

newspaper advertisements.  On the request  

of the two banks, we further clarify that if  

the Banks are ready and willing to meet the  

expenses for the issuance of a publication in  

any additional newspapers, that shall also  

be permitted by the Recovery Officer at the  

expenses which have been agreed to be  

borne by the Banks.  We direct the Recovery  

Officer to expedite the process of sale and to  

hold a meeting for fixing the terms and  

conditions within a period of three weeks  

from today.  The sale process should be  

completed within a period of three months  

from the date on which an authenticated  

copy of this order is placed before the  

Recovery Officer.”

12. The said order has been assailed by the first and  

second respondents before this Court, the successful  

bidders who had deposited Rs.2.50 crores in  

pursuance of the order passed by the DRT.

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13. At this juncture, it is worthy to note that this Court on  

27th March, 2012, after taking note of the High Court’s  

direction, had passed the following order: -

“This Court while issuing notice on 25th  

November, 2011, had directed status quo to  

be maintained by the parties.  When the  

matter was heard for some time it was  

submitted by Mr. C.A. Sundaram, learned  

senior counsel for the petitioner that the  

High Court has grossly erred in directing  

the sale of the property by inviting bids  

despite the factum that public auction was  

not successful and eventually the sale was  

effected by the direction of the DRT and  

ultimately the offer of Rs.2.5 crores was  

accepted from the petitioners herein.  The  

learned senior counsel has urged many  

other contentions which need not be  

referred to in prasenti having regard to the  

nature of directions which we are going to  

pass today.

It is worth noting that Mr. Jaideep  

Gupta, learned senior counsel appearing for  

the Central Bank of India has filed a chart  

of the amount due from the original buyer,  

namely, Jay Electric Wire Corporation.  We  

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think it apposite to reproduce the chart in  

toto:

“1. Central Bank of India  (Respondent No. 1):

As per the Recovery Certificate  

dated 6.11.2003 issued by the DRT an  

amount of Rs.10.99 cores is due and  

payable which as on 31.3.2012 @ 12%  

per annum at quarterly rests amounts  

to Rs.42.41 crores.

2. Standard Chartered Bank  (respondent No. 2) :

As on 26.8.2003 an amount of  

Rs.1.12 crores is outstanding along  

with interest @ 12% per annum.

3. Workmen through Official  Liquidator (respondent No. 4) :

As per the recovery certificate  

issued by the Deputy Labour  

Commissioner on 18.12.2006 an  

amount of Rs.4.44 crores is due and  

payable as computed until 1999.”

It is submitted by Mr. Gupta that in  

fitness of things and regard being had to the  

concept of obtaining of the Highest Price in  

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Court sale, having of auction is the warrant  

and, therefore, auction should be directed to  

be held.  The learned senior counsel further  

submitted that the property is likely to fetch  

much more amount than that has been  

deposited by the petitioners.

Mr. Sundaram, learned senior counsel  

would contend that the sale had been given  

effect to in the year 2006 on acceptance of  

Rs.2.5 cores and with the efflux of time if  

there has been a price rise solely on the said  

base a public auction should not be  

directed.

Be it noted that at one point of time, a  

third party had deposited Rs.6 crores to  

purchase the property but later on he  

withdrew as the matter was litigated in the  

Court.

Having heard learned counsel for the  

parties and regard being had to the totality  

of the circumstances, we issue the following  

directions:  

(i) The property in question be put to  

auction by issuing a public advertisement in  

at least two newspapers one in English and  

another in Kannada language having wide  

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circulation in the city of Mysore inviting  

bids for the sale of the property.

(ii) It shall be mentioned in the  

advertisement that the reserve price is Rs.3  

crores and the same shall be deposited  

before the Recovery Officer of the DRT to  

enable one to participate in the bid.

(iii) Any one who would not deposit the  

amount would not be permitted to  

participate in the auction as speculative  

bids are to be totally avoided.

(iv) The newspaper publication shall be  

made within a period of two weeks  

stipulating that the deposit is a condition  

precedent for participation in the auction  

which shall be made before the DRT within  

a week from the date of publication of the  

advertisement in the newspapers.

(v) The auction shall be held within a  

period of two weeks from the issuance of the  

advertisement which shall state the  

specified time and place for the auction.

(vi) The petitioners without prejudice to  

the contentions to be raised and dealt with  

in these Special Leave Petitions shall  

participate in the bid without the deposit as  

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they have purchased the property in the  

year 2006.

(vii) The bid shall not be finalized and the  

bid sheet shall be produced before this  

Court in a sealed cover.

We reiterate at the cost of repetition  

that the above arrangements are subject to  

the result of the final adjudication in these  

Special Leave Petitions.

List the matter after five weeks.”

14. After the said order came to be passed, I.A. Nos. 4-6 of  

2012 were preferred wherein the following order was  

passed:

“These applications were preferred by  

the Bank stating that going by the present  

valuation the property will fetch nearly  

Rs.10 crores whereas the order stipulates  

Reserve Price only Rs.3 crores.  Hence, the  

Bank has sought modification of the upset  

price fixed by the Court.

Learned counsel for the Bank also  

submitted that as per the Debt Recovery  

Tribunal Act the time stipulated for auction  

is thirty days whereas the order directs to  

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conduct the auction within two weeks.  To  

this extent the respondent seeks  

modification of that direction also.

Learned counsel on the either side  

submitted that the auction should go on  

without any delay.

Considering the facts and  

circumstances of the case we are inclined to  

dispose of these applications directing the  

Recovery Officer to go on with the auction  

within the time limit stipulated in the bid.  

The question as to whether the upset price  

has been correctly fixed or not will depend  

upon the bid amount offered by the bidders  

in the auction.”

15. After the said interlocutory applications were disposed  

of, the auction took place but  this Court was not satisfied  

since certain aspects were highlighted that caused  

impediments in obtaining proper offers.  This Court in IA 7-

9 of 2012, after hearing the learned counsel for the parties  

and referring to its earlier orders, proceeded to pass the  

following order: -

“5. In the present application it has been  

asseverated that in compliance with the order  

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dated 5.7.2012, the Recovery Officer of Debt  

Recovery Tribunal-I, Mumbai, ordered for  

publication of the notice in two newspapers  

which was published on 20.7.2012 calling upon  

interested parties to give their offer within seven  

days from the date of publication as directed by  

this Court vide order dated 27.3.2012.  Pursuant  

to the publication carried in English and  

Kannada newspapers no other offer whatsoever  

was received by the Recovery Officer and till 7th  

only the offer of the petitioners, namely, Praveen  

Gada and Amarnath Singhla, was received.   

6. When the matter was taken up, order dated  

30.8.2012 passed in R. P. No. 419 of 2003 was  

brought to our notice.  The said order reads as  

under: -

“As per directions of the Hon’ble  

Supreme Court vide its orders dated  

27.3.2012 & 5.7.2012, advertisement was  

published fixing reserve price at Rs. 3.00  

Crores.

Only one bid of Shri Pravin Gada &  

Amarnath Singhla has been received on  

07.08.2012 as per public notice.  His bid  

was opened at the scheduled date & time  

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of the auction.  He has given offer of Rs. 3  

crores.  As his participation in auction  

was without deposit as directed in above  

orders, there was no question of his  

depositing EMD.

Relevant columns of Bid Sheet were  

accordingly filled in and the  signature of  

the bidder has been obtained.  As per the  

directions, the said bid sheet be  

submitted to the Hon’ble Supreme Court.

Apart from above, 3 offers in closed  

envelope were received today, but those  

are not opened & considered in view of  

the directions of the Hon’ble Supreme  

Court as per aforesaid orders.

On the date of auction the above 3  

closed envelops containing offers have  

been received.  This being new situation  

arisen at the time of auction, in my  

opinion it would be appropriate to bring  

this fact to the kind notice of the Hon’ble  

Supreme Court.  Hence these 3 closed  

envelops be also submitted to the Hon’ble  

Supreme Court.  

As per directions of the Hon’ble  

Supreme Court, the Bid Sheet at Exh.  

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154 be submitted to the Hon’ble Supreme  

in a sealed cover.”

7. The bid sheets were opened before us and  

we find that an offer amounting to Rs.  

3,30,00,000/- by Kumar Enterprises, Rs.  

3,30,00,000/- by Riddishiddhi Bullions Ltd.  and  

Rs. 3,30,00,000/- by Krishna Texturisers Pvt.  

Ltd. were deposited by way of bank drafts on  

29.08.2012 and 30.8.2012 respectively.  

8. It is submitted by Mr. Sundaram, learned  

senior counsel for the petitioners, that as the said  

offers were not in accord, the same should not be  

considered and the petitioners should be treated  

as the highest bidder in the auction.  Mr. Rohtagi  

and Mr. Gupta, learned senior counsel for the  

Central Bank of India, per contra, submitted that  

the price of the property as on today is worth  

more than Rs. 10 crores and the reason for the  

offerees not coming is that the petitioners are in  

possession and they have put up a board  

indicating their name and status.  It is urged by  

them that it is one thing to say that the auction  

is conducted by virtue of the order passed by this  

Court and the whole thing is subject to the  

pendency of the lis but it is another thing to see  

at the entrance that the board is fixed and the  

people are not allowed to survey the nature and  

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character of the assets.  The photographs of the  

board that have been put up are filed in Court  

and we have perused the same.  Be it noted, the  

putting up of the said photographs is not  

disputed.

9. Regard being had to the facts and  

circumstances, we are of the considered opinion  

that there should be a re-auction and we are  

inclined to modify the conditions incorporated in  

the earlier order.  Keeping in view the totality of  

circumstances, we issue the following directions  

:-  

(i) The property in question be put to  

auction by issuing a public advertisement  

within two weeks in at least two  

newspapers, one in English and another  

in Kannada language, having wide  

circulation in the city of Mysore inviting  

bids for the sale of the property.  

(ii) It shall be mentioned in the  

advertisement that the reserved price is  

Rs. 5 crores and the same shall be  

deposited by way of bank drafts drawn on  

a nationalized bank before the Recovery  

Officer of the DRT to enable one to  

participate in the bid.  The advertisement  

shall stipulate that the deposit of the  

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reserved price fixed by this Court is a  

condition precedent for participation in  

the auction.  

(iii) It shall be clearly stated in the  

advertisement that the property would be  

available for inspection in presence of the  

Registrar of Civil Court or any equivalent  

officer nominated by the Principal District  

and Session Judge, Mysore, and it is so  

done to avoid the grievance from any  

quarter that the property was not  

available for proper verification.  The  

inspection by any interested party shall  

be done within one week from the date of  

advertisement between 11.00 a.m. to  

3.00 p.m.

(iv) During the entire period of  

inspection the concerned officer deputed  

by the learned Principle District and  

Sessions Judge, Mysore shall see to it  

that the board that has been fixed is  

removed from the site so that there can  

be inspection of the plot without any kind  

of pre-conceived notion by the perspective  

bidders.  

(v) The aforesaid reserved price shall be  

deposited before the Recovery Officer of  

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the DRT within ten days from the date of  

the advertisement.  Any one who would  

not deposit the reserved price within the  

time limit, his bid shall not be considered  

(vi) The auction shall be held within a  

period of two weeks from the date of  

issuance of the advertisement which shall  

state the specified time and place for the  

auction.

(vii) The petitioners without prejudice to  

the contentions to be raised and dealt  

with in these Special Leave Petitions shall  

participate in the auction without the  

deposit as they have purchased the  

property in the year 2006.

(viii) The offerees who have already given  

the bids shall deposit the balance  

amount to meet the reserved price before  

the Recovery Officer of the DRT failing  

which they shall be ineligible to  

participate in the bid.  

(ix) After the submission of the bids  

there shall be a public auction amongst  

the eligible offerees to get the maximum  

price.  

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(x) The auction shall not be finalized  

and the bid sheet shall be produced  

before this Court in a sealed cover for  

issuance of further directions, if required.

10. We repeat at the cost of repetition that the  

above arrangements are subject to the result of  

the final adjudication to the Special Leave  

Petitions.  

11. A copy of the order passed today be sent by  

fax, email and speed-post to the Principal District  

Judge, Mysore by the Registry of this Court.

12. List the matters on 1.11.2012.”     

16. After the aforesaid order was passed, the auction was  

conducted and the highest offer in the auction that was  

tendered was Rs. 5.04 crores.  Learned counsel appearing  

for the said highest bidder filed an application for  

impleadment and impressed upon this Court for acceptance  

of the bid.   Be it noted, there were other offers amounting  

to Rs. 3.30 crores and slightly more, but there has been no  

grievance with regard to the proper publication of the notice  

for holding of auction.  We have so stated as the High Court  

had set aside the sale  essentially on the ground that the  

sale process was not fair and transparent.  This Court had  

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passed two orders on different occasions to see that the sale  

is conducted in a fair and transparent manner.  We had  

also imposed conditions so that speculative bids do not  

come into the sphere of auction.  Despite the best of efforts,  

as we have seen, the maximum price the property has  

fetched is Rs.5.04 crores.  It is submitted by Mr. Sundaram  

and Mr. Choudhary, learned senior counsel, that a sum of  

Rs. 2.50 crores was deposited by the present appellants in  

October 2006 and in the meantime, six years have elapsed.  

It is urged by them that the said amount was kept with the  

bank and the bank must have dealt with the money as a  

prudent financial commercial venture and thereby must  

have earned interest at least at the rate of 15% per annum.  

Calculated on that basis, it is contended, the interest  

component by now would have come to rupees 2 crores 25  

lacs and thereby the total sum would come to rupees 4  

crores 75 lacs.  It is also urged by them that the possession  

was taken over by them long back and they have already  

invested substantial amount.    As is noticeable, the highest  

offer in the auction has come up to rupees 5.04 crores at  

such a distance of time.   Regard being had to the totality of  

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the circumstances, we are disposed to think that the sale  

should be confirmed subject to the appellants depositing a  

further sum of Rs. 50 lacs before the DRAT within a period  

of three months from today and we order accordingly.   

17. At this juncture, it is necessary to address whether the  

finding of the High Court as regards the role of the official  

liquidator is correct or not.   In Rajasthan Financial  

Corpn. (supra), while dealing with the role of official  

liquidator, a three-Judge Bench referred to the  

pronouncements in A. P. State Financial Corporatin v.  

Official Liquidator2 and International Coach Builders v.  

State of Karnataka3 and, in the ultimate eventuate,  

summed its conclusions.  The relevant conclusions are  

reproduced below: -

“(i) A Debts 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, through  

its Recovery Officer but only after notice  

2 (2000) 7 SCC 291 3 (2003) 10 SCC 482

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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 realisation of its securities  

consistent with the relevant provisions of  

the Companies Act regarding distribution  

of the assets of the company-in-

liquidation.”

18. On a perusal of the record, it transpires that the  

official liquidator had appeared before the recovery officer  

on number of dates.  However, the DRT had returned a  

finding that he has a restricted role which has been found  

fault with by the High Court.  In our opinion, the High  

Court is absolutely correct in its analysis and we concur  

with the same, but, a pregnant one, the fact remains that  

the High Court had set aside the sale on the foundation that  

a fair and transparent procedure had not been adopted.  

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Having given due respect to the same, this court had passed  

orders on earlier occasions which we have reproduced  

hereinabove to get the auction conducted in a fair and  

transparent manner and recorded our conclusion.  

Therefore, the confirmation of sale as has been directed by  

us shall be treated to have attained finality.   

19. Another important facet deserves to be mentioned.  

Before the Division Bench, the workers union had also  

challenged the decision of the DRAT.  The High Court, while  

dealing with their submission, has recorded as follows:-      

“During the course of the hearing of these  

proceedings, the Court has been informed  

that an effort has been made by the First  

and Second Respondents to settle the  

outstanding dues of the workers through  

an out of Court settlement.  Counsel  

appearing on behalf of the workmen  

submitted that the workmen would abide  

by the result of the Petitions which have  

been filed by the secured creditors and it  

is only in the event that the Petitions filed  

by the Banks are dismissed that the  

workers would be inclined to enter into  

an out of Court settlement with the First  

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and Second Respondents.  Counsel for  

the First and Second Respondents stated  

that his clients would be able to resolve  

the dispute with the workmen only if the  

Petitions filed by the secured creditors  

challenging the sale in favour of his  

clients fail.  Counsel appearing on behalf  

of the First and Second Respondents  

submitted that while the First and  

Second Respondents are ready and  

willing to negotiate with the workmen,  

they are no in a position to do so until  

the litigation which has been instituted  

by the secured creditors attains finality.”

20. The aforesaid submission has its own significance in  

law.  We may hasten to clarify that we have confirmed the  

sale as this Court has undertaken the exercise to have an  

auction conducted through the competent authority of DRT  

by adopting a fair, competitive and transparent procedure  

but that does not mean that the conclusion arrived at by  

the High Court in that regard is erroneous.  Thus, while  

confirming the sale subject to the conditions imposed  

hereinbefore, we are disposed to think that keeping in view  

the interest of the workmen and their rights, the High Court  

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should deal with the rights of the workmen regard being  

had to the submissions advanced by the first and second  

respondents before it in an apposite manner and, if  

required, monitor the same.   As concession was given  

before a particular Division Bench, we would request the  

learned Chief Justice to place the matter before the same  

Bench and if it is not possible, at least before the learned  

presiding Judge.  We have felt so as such a submission was  

put forth before the Division Bench which had categorically  

recorded the same and it is not desirable that there should  

be any kind of deviation with regard to the statement made.  

21. Presently to the Interlocutory Applications which have  

been filed for impleadment and withdrawal of the amounts  

that have been deposited as earnest money.  Regard being  

had to the facts and circumstances of the case, all  

impleadment applications are allowed and the bidders who  

have deposited the money are allowed to withdraw the  

same.  

22. The appeals are accordingly disposed of leaving the  

parties to bear their respective costs.

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    ……………………...........J.      [K. S. Radhakrishnan]

……………………………….J. [Dipak Misra]

New Delhi; December 03, 2012.

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