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2014 (11) TMI 1199 - TELANGANA AND ANDHRA PRADESH HIGH COURTAuction - mortgaged property - sale of the mortgaged property owned by private individuals - Whether the sale of the mortgaged property owned by private individuals can be brought before the learned Company Judge or in Writ Court for scrutiny? - HELD THAT:- Any transfer of assets of the company is effected in violation of Sections 531 & 531A is void altogether incurably, but it is void under Section 537 if it is done without leave of the Company Court - Here, admittedly, no leave of the Company Court was obtained. In this context, we examine the contentions of the learned Senior Counsel Mr. S. Ravi that no leave is required, as jurisdiction of Company Court is ousted in view of the provisions of Sections 13, 37 & 35 of the SARFAESI Act. Whether the Company Court can decide the question raised with regard to the invalidity of sale in view of provisions of the SARFAESI Act read with Recovery of Debts due to Banks and Financial Institutions Act, 1993? - HELD THAT:- It is true that Section 34 mentioned the words Civil Court (not apparently company court), but after winding up order is passed by virtue of the provisions of Section 446 (2) of the Companies Act, the Company Court exercises jurisdiction of the civil court. So, essentially, the company court becomes civil court. What is important is not the nomenclature of the Court, but power and functions exercised by that Court. In view of discussions above, accepting argument of Mr. S. Ravi and rejecting contention of the learned counsel for the respondent and Official Liquidator, we hold that the company court has no jurisdiction to deal with the issues arising out of action of secured creditor under Section 13 of SARFAESI Act. Whether the provisions of Sections 531, 531A & 537 of the Companies Act, 1956 have any manner of application with regard to sale of securities conducted under the SARFAESI Act? - HELD THAT:- It will appear from Section 13(1), as quoted above, it clearly provides that without intervention of the Court or Tribunal action can be taken for sale of securities, whereas the provisions of Section 537 of Companies Act requires leave of Company Court - this is apparent inconsistency in two competing provisions in two different Acts on the same subject - no leave is required under Section 537 of the Companies Act, moreover jurisdiction of the Company Court is also ousted. Whether the provisions of Section 531 & 531A of the Companies Act will be applied or not in this case? - HELD THAT:- It is clear from sub-section (6) the moment action taken under sub-section (4) by the secured creditor or any manager on his behalf of the secured creditor for transfer all rights shall vest in the transferee in relation to the secured assets. In other words, if action taken under Section 13(4) is found to be lawful and valid in accordance with SARFAESI Act, no other legal provision can invalidate it. Whereas Sections 531 & 531A provide otherwise if any transfer including sale is effected in violation thereof the same is invalid and void. Thus it appears that there has been glaring inconsistency naturally, we are constrained to hold that the provisions of Sections 531 & 531A have no manner of application and the same do not apply in case of valid sale undertaken under the SARFAESI Act and the Rules framed thereunder. Whether the sale can be held invalid because of the alleged non-compliance of the mandatory provisions of the Rules framed under the SARFAESI Act? - HELD THAT:- All materials namely advertisement, conditions of sale and other things are not produced before us also. Therefore we do not like to decide this issue conclusively nor do we accept such decision of the learned Trial Judge in absence of such materials and also for the reasons stated hereunder. Thus, granting relief to the auction purchaser as prayed for in the writ petition is not sustainable under the law - petition dismissed.
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