TMI Blog2008 (8) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... Company’s assets for the purposes of the auction sale, under Section 30 of the RDDB Act, having full knowledge of the fact that the final order of the DRT, Chandigarh, could not be challenged in such appeal. The steps taken by the respondent No.1, Company were far from bona fide and were only aimed at stalling the auction sale. Even at the time of auction of the company’s assets, no attempt was made by the Respondent No.1-Company to secure a bid higher than that of the appellant. Appeal allowed. - C.A. 5225 OF 2008 - - - Dated:- 25-8-2008 - C.K. THAKKER, J. JUDGMENT 1. Leave granted. 2. The present appeal raises a question of great public importance having farreaching consequences. The appeal is filed by KSL Industries Ltd. ( appellant for short) against final judgment and order passed by the Division Bench of High Court of Delhi on February 23, 2006 in Writ Petition (Civil) Nos. 2041-42 of 2006. By the said judgment, the High Court, set aside the order passed by the Debt Recovery Appellate Tribunal, Delhi ( DRAT for short) and held that in view of the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 15, 2003, therefore, an ex-parte final order in favour of IDBI (SAFS) for recovery of Rs.25,26,60,836/- along with interest @ 7.8% p.a. was passed by DRT. 5. The Tribunal in operative part of the order stated; The application for recovery of a sum Rs.25,26,60,836.00 is decreed against defendant company and the defendant company is ordered to pay:- i. A sum of Rs.25,26,60,836.00 alongwith pendent elite and future interest @ 7.8% per annum with half yearly rests jointly and severally from the date of filing of the suit till realization; ii. Pay the cost of litigation; iii. Pay the said amount within 30 days from the date of receipt of this order. 2. In the event of failure on the part of defendants to pay the above amount within the stipulated period, the applicant bank shall be entitled to recover the said amount from the sale of mortgaged properties of the defendants. Even if the said amount is not so realized, it shall be recovered from the sale of personal properties of the defendants. 3. Copy of the judgment be sent to the defendants and the recovery certificate be issued accordingly. 4. Parties to appear before the Recovery Officer, DRT, Chandigarh on 22.8.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to DRT praying for acceptance of the bank guarantee in lieu of payment of the remaining amount of 75% and also by refunding the amount deposited (25%). DRT dismissed the said application and the appellant-auction purchaser, on the same day, i.e. November 11, 2004 deposited the balance amount of 75% of the purchase money i.e. Rs.9,39,00,000/- by a Bank draft. On December 13, 2004, the receiver lodged a First Information Report (FIR) and filed an affidavit before DRT complaining that the agent of the Company had forcibly dispossessed him by using criminal force. On December 15, 2004, the Company moved an application for setting aside ex-parte final order passed on July 15, 2003 by DRT, Chandigarh which was registered as M.A. No. 103 of 2004. The appellant filed an application objecting the prayer of the Company with an added prayer to implead it in Appeal No. 52 of 2004 as also in M.A. No. 103 of 2004. The DRT allowed the impleadment application of the appellant vide order dated December 17, 2004. On March 28, 2005, the appellant filed an application for hearing preliminary issue as to maintainability of appeal filed by the Company (Appeal No. 52 of 2004). On April 8, 2005, a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order be given dasti to all the parties. A copy of this order be also sent to the Recovery Officer, DRT Chandigarh for necessary action and information. RC file be also sent immediately back to the DRT Chandigarh by special messenger along with copy of this order. File be consigned to records . 9. The Company, objecting the conditions imposed by DRT, filed an appeal against the said order to the DRAT, Delhi being Appeal No. 167 of 2005. The appellant also filed an appeal being aggrieved by the setting aside the sale. DRAT stayed operation of the order dated July 26, 2005 which had set aside ex-parte order passed by DRT. It also directed refund of sale amount to the appellant. Appeals were then heard and the judgment was reserved. 10. Meanwhile, on December 21, 2005, the Company filed a Reference before the Board of Industrial Finance Reconstruction ( BIFR for short) under SICA which was registered as BIFR Case No. 4 of 2006. On February 10, 2006, DRAT dismissed the appeal filed by the Company and allowed the appeal of the appellant and confirmed auction-sale in favour of the appellant on depositing the sale price. DRAT, in the operative part of the order stated; In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter was, thereafter, adjourned from time to time. It was ordered to be heard finally. For completion of record, it may be stated that on April 3, 2006, the BIFR rejected the Reference of the Company. The Company preferred an appeal against the said order which is pending before the Appellate Authority for Industrial Financial Reconstruction (AAIFR). On September 15, 2006, second Reference was filed by the Company which has been registered as BIFR Case No. 18 of 2006. On February 22, 2007, the BIFR declared the Company as a sick Company and appointed LSAS, respondent No. 5 as the Operating Agency to prepare Rehabilitation Scheme. Submissions of the appellant 13. The Court has heard the learned counsel for the parties. Learned counsel for the appellant raised several contentions. He urged that the High Court has committed an error of law in holding that the proceedings were barred by Section 22 of the SICA and DRAT was wrong in issuing directions. The proceedings were neither covered by the first part nor by the second part of Section 22 and the High Court ought to have decided the case on merits. It was also submitted that Section 34 of RDDB Act has an overriding eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments advanced by the learned counsel for the appellant. Submissions of respondent 16. The learned counsel for the Company, on the other hand, supported the order passed by the High Court. According to him, no doubt the High Court was exercising powers under Article 226 of the Constitution. But in exercising constitutional powers, the Court would undoubtedly keep in mind statutory provisions of SICA and precisely that has been done by the Court. If the proceedings could not have been initiated or continued in view of bar of Section 22 of SICA, it cannot be said that the High Court was wrong in passing the impugned order. No grievance, hence, can be made against such order. As to ex-parte final order said to have been passed by DRT, it was submitted that no opportunity of hearing was afforded to the Company and the order was violative of principles of natural justice and fair play. The appeal filed by the Company against fixation of reserve price before DRT was maintainable under Section 30 of the RDDB Act as the appeal lies against an order of the Recovery Officer made under the Act and an order of fixation of reserve price is also an order within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court that the proceedings were barred under Section 22 of SICA is not well-founded and the decision of the High Court on that point deserves to be set aside. SICA Ambit and scope 20. So far as SICA is concerned, it has been stated in the Preamble that the Act has been enacted in public interest with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto . While interpreting various provisions of the Act, the said object has to be kept in mind by Courts. Section 2 is in the form of declaration and declares that the Act has been enacted for giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution. Section 3 defines various terms used in the Act. Chapter II relates to establishment of Board and Appellate Authority, term of office, conditions of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act. (2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of section 72A of the Income-tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company. RDDB Act Ambit and scope 23. The RDDB Act (Recovery of Debts Due to Banks and Financial Institutions Act, 1993) has been enacted with a view to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tante clause in Section 34 of RDDB Act, which is a subsequent legislation will operate and recovery could not have been suspended, stalled or arrested. Interpretation of statutes 25. The question, therefore, is whether the High Court was right in holding that the proceedings were barred under Section 22 of SICA. I have extracted the relevant part of the said section. It has two limbs. The first part enacts that no proceeding for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. The second part which is independent of the first part declares that no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. The two parts use two different expressions; (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Third Schedules to the Income Tax Act, 1961 had been followed. Reserve price was fixed. Sale-proclamation was published. Auction was held. The appellant was found to be the highest bidder and its bid was accepted. Necessary amount was deposited. All actions were thus in conformity with law. If the Company felt aggrieved by auction sale, it ought to have proceeded in accordance with Rules 60 to 62 of the Rules in the Second Schedule. Rule 60 permits a person adversely affected by the sale to apply to the Tax Recovery Officer within thirty days from the date of sale to set aside such sale on his depositing the entire amount with interest thereon and penalty. Admittedly, the Company did not avail the said remedy. Rule 61 allows an application to set aside sale of immovable property on the ground of non-service of notice or material irregularity in publishing or conducting the sale. The said rule also provides for deposit of amount recoverable under the Certificate. The Company failed to do so. Under Rule 62, sale can be set aside when defaulter has no saleable interest. No such case had been put forward by the Company by applying under Rule 62. The Company, therefore, could not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. The provisions of Sections 25 and 28 are, therefore, not bad in law 33. I express no opinion one way or the other on the controversy. As noted earlier, the High Court allowed the petitions filed by the Company only on the ground of bar of Section 22 of SICA. Since I am of the view that the High Court was not right in coming to that conclusion, the matter must go back to the High Court for deciding all points not dealt and decided. 34. The learned counsel for the Company emphatically argued that Section 32 of SICA is explicitly clear and uses non-obstante clause ( Notwithstanding anything inconsistent therewith contained in any other law ). It was urged that SICA is a self-contained Code and makes detailed and exhaustive provisions in respect of sick companies. It is also a special law and effect must be given to the provisions of the Act. The argument of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easures it should take with respect to the sick industrial company. The expression 'proceedings' in Section 22(1), therefore, cannot be confined to legal proceedings understood in the narrow sense of proceedings in a Court of law or a legal tribunal for attachment and sale of the debtor's property. 38. In Deputy Commercial Tax Officer Ors. v. Corromandal Pharmaceuticals Ors., (1997) 10 SCC 649, this Court held that the embargo under Section 22(1) would not apply to payment of tax collected by the sick industrial company after the date of the sanctioned scheme and legitimately belonged to the Revenue. Any other construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect amounts due to the Revenue and withhold it indefinitely and unreasonably. Such a construction which is unfair, unreasonable and against the spirit of the statute in a business sense, should be avoided. (emphasis supplied) 39. Justice Jeevan Reddy was much more emphatic. In a concurrent judgment, His Lordship stated; Looking at the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 [the Act], I was wondering how out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices. The ultimate prejudice to public monies should not be overlooked in the process of promoting industrial progress. We are quite sure that the Government is fully alive to the situation and are equally certain that they must be thinking of necessary modifications in the Act. These few observations are meant merely to record the need for changes in the Act. (emphasis supplied) 40. In Real Value Appliances Ltd. v. Canara Bank Ors., (1998) 5 SCC 554, a contention was advanced on behalf of the creditors that the conduct of the Company was far from satisfactory and highly objectionable. It suppressed several facts from the Court. Contradictory and inconsistent pleas were taken and fraud was practised on the Court. 41. This Court agreed with what was submitted and observed; This conduct of the appellant, in our view, was certainly very unfair to the High Court and, therefore, the High Court had rightly depreciated the same. In our view, there was a clear attempt to keep the Court in the dark 42. The Court, however, proceeded to state that on that count reference-application to the BIFR would not become bad and if the Company was entitled to the benefit of SICA, it could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts would also try to reconcile both Acts by adopting harmonious interpretation and applying them in their respective fields so that both may operate without coming into conflict with each-other. In resolving the clash, the Court may further examine whether one of the two enactments is special and the other one is general . There can also be a situation in law where one and the same statute may be held to be a special statute vis- -vis one legislation and general statute vis- -vis another legislation. On the basis of one or more tests, the Court will try to salvage the situation by giving effect to non obstante clause in both the legislations. 48. Let me consider some of the decisions of this Court on this vexed issue. 49. In Shri Ram Narain v. Simla Banking Industrial Co. Ltd., 1956 SCR 603, two competing statutes came up for consideration before this Court being the Banking Companies Act, 1949 (as amended by Act 52 of 1953) and the Displaced Persons (Debt Adjustment) Act, 1951. Section 45-A of the Banking Companies Act (introduced by the amending Act of 1953) and Section 13 of the Displaced Persons Act, 1951 both contained a non-obstante clause stating that certain pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority under the Slum Clearance Act. 52. Speaking for the Court Chandrachud, J. (as His Lordship then was) observed: For resolving such inter se conflicts, one other test may also be applied though the persuasive force of such a test is but one of the factors which combine to give a fair meaning to the language of the law. That test is that the later enactment must prevail over the earlier one. Section 14A and Chapter IIIA having been enacted with effect from December 1, 1975 are later enactments in reference to Section 19 of the Slum Clearance Act which, in its present form, was placed on the statute book with effect from February 28, 1965 and in reference to Section 39 of the same Act, which came into force in 1956 when the Act itself was passed. The legislature gave overriding effect to Section 14A and Chapter IIIA with the knowledge that Sections 19 and 39 of the Slum Clearance Act contained non obstante clauses of equal efficacy. Therefore the later enactment must prevail over the former . (emphasis supplied) 53. In Sanwarmal Kejriwal v. Vishwa Co-operative Housing Society Ltd Ors., (1990) 2 SCC 288, this Court applied the test as to general and special Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer points of law. In law, we have a cosmos of relativity not absolutes-so too in life . (emphasis supplied) 57. It was, therefore, concluded that ID Act was a special statute devoted only to investigation and settlement of industrial disputes and since LIC Act was a general statute, in cases of disputes between an employer and employee, ID Act would have primacy over LIC Act. 58. In Maharashtra Tubes Ltd., a conflict between provisions of two special statutes, viz. (1) the State Financial Corporation Act, 1951 and (2) the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was highlighted. Both contained non-obstante clause. The conflict was resolved by this Court by giving overriding effect to SICA on the ground that SICA was a subsequent enactment (1985) and non-obstante clause therein would prevail over the non-obstante clause in the State Financial Corporation Act (1951). 59. The Court, speaking through Ahmadi, J. (as His Lordship then was), observed: Having reach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Financial Corporations Act, 1951 and (ii) the Companies Act, 1956 in A.P. State Financial Corporation v. Official Liquidator, (2000) 7 SCC 291. The Court treated 1951 Act as a special Act for grant of financial assistance to the industrial concerns with a view to boost up industrialization and also recovery of financial assistance if it becomes bad. Likewise, the Companies Act dealt with Companies including winding up of such Companies. The Court, however, held that the proviso to sub-section (1) of Section 529 and Section 529-A being a subsequent enactment, the non-obstante clause in Section 529-A would prevail over Section 29 of the 1951 Act. Highlighting the underlying object of nonobstante clause in Section 529-A of the Companies Act and a social purpose underlying therein to ensure payment of dues to the workmen in priority over all other debts, the Court concluded that if conditions are not imposed to protect the right of the workmen, there is every possibility that the secured creditor may frustrate the above pari passu right of the workmen . 61. In Allahabad Bank v. Canara Bank Anr., (2000) 4 SCC 406, a similar question was raised before this Court. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under: "13. Act to have overriding effect. 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, or in any decree or order of any court, tribunal or other authority." 64. The Court then stated; This Court has laid down in no uncertain terms that in such an event it is the later Act which must prevail . The Court referred to a decision rendered by a Special Court in Bhoruka Steel Ltd. vs. Fairgrowth Financial Services Ltd., [(1997) 89 Comp Cas 547] wherein the Special Court stated: "Where there are two special statues which contain non-obstante clauses the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier legislation and its non-obstante clause. If the Legislature still confers the later enactment with a non-obstante clause it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to prevail then it could and would provide in the later enactment that the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and the Urban Land Ceiling Act is not excluded. Legal position 66. From the above discussion, in my judgment, the law is fairly well settled. A provision beginning with non-obstante clause ( notwithstanding anything inconsistent contained therein in any other law for the time being in force ) must be enforced and implemented by giving effect to the provisions of the Act and by limiting the provisions of other laws. But, it cannot be gainsaid that sometimes one may come across two or more enactments containing similar non-obstante clause operating in the same or similar direction. Obviously, in such cases, the Court must attempt to find out the intention of the Legislature by examining the nature of controversy, object of the Act, proceedings initiated, relief sought and several other relevant considerations. From the case-law referred to above, it is clear that Courts have applied several workable tests. They, inter alia, include to keep in view whether the Act is general or special , whether the Act is a subsequent legislation, whether there is reference to the former law and the nonobstante clause therein. The above tests are merely illustrative and by no means the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial institutions (Preamble of the Act). All other laws, therefore, whether general or special, prior or subsequent, must, in my considered view, be interpreted and applied keeping in view the above object of enacting 1993 Act. I have, therefore, no hesitation in holding that even though both the conflicting statutes, (SICA of 1985 and RDDB Act of 1993) contain non-obstante clause, in case of conflict, RDDB Act, 1993 will prevail over SICA, 1985 so far as recovery of public revenue is concerned. Final Order 69. For the aforesaid reasons, I hold that the High Court has committed an error of law in invoking and applying provisions of Section 22 of SICA and in dropping proceedings against the Company. The order of the High Court, therefore, deserves to be set aside and I do accordingly. The matter is remitted to the High Court to decide it afresh on all points including the conduct of the Company after hearing the parties. All contentions of all parties are kept open. 70. Before parting with the matter, I may clarify that any observation on merits which might have been made in this judgment is only for the purpose of deciding the preliminary question as to maintainability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Application No.1368 of 2001 in the Debts Recovery Tribunal, Chandigarh, (hereinafter referred to as DRT, Chandigarh ) on 20.12.2001, for recovery of Rs.25,26,60,836/-, under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDB Act ). Despite service of notice of the said proceedings, the respondent No.1 Company remained unrepresented before the DRT and on 15.7.2003 an ex-parte final order was passed in favour of IDBI for recovery of Rs.25,26,60,836/- together with interest at the rate of 7.8% per annum and a Recovery Certificate was also issued against the respondent No.1-Company. 5. In keeping with Section 29 of the RDDB Act, the Recovery Officer issued a composite demand notice to the respondent No.1-Company on 9.9.2003 under Rule 2 of the Second Schedule to the Income Tax Act, 1961, demanding payment of Rs. 28,60,87,384/-. A separate direction was given to the Company to appear before the Recovery Officer on 23.10.2003 for settling terms and conditions relating to the proclamation of sale and for disclosure of its movable and immovable assets. 6. A Valuation Report was also obtained from the Local Commissioner, appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 8.4.2005 M/s Roland Exports filed a suit for permanent injunction against the respondent No.1-Company in the Civil Court at Tarantaran, District Amritsar, wherein an order of status-quo with regard to possession was passed. 8. On 26.7.2005, DRT-I, Delhi, allowed Appeal No.52 of 2004 and set aside the auction sale subject to the Company fulfilling certain terms and conditions laid down in the order. One of the conditions imposed by the Tribunal was that the Company would have to pay 5% of the amount deposited by the auction purchaser within 10 days as penalty in terms of Rule 60 of the Second Schedule of the Income Tax Act, 1961. Objecting to the said terms and conditions imposed by the DRT the Company filed an appeal with DRAT, Delhi, being Appeal No.167 of 2005. The appellant herein also filed an appeal against the setting aside of the auction sale. The DRAT stayed the operation of the order dated 26.7.2005 by which the DRT-I, Delhi, had allowed Appeal No.52 of 2004 and had set aside the auction sale. The DRAT also directed refund of the sale amount to the appellant. 9. While the matter was pending before the DRAT, the respondent-Company filed a Reference before the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter on merits. It was also submitted on behalf of the appellant that Section 34 of the RDDB Act had an overriding effect over the provisions of SICA and that the High Court should have decided the matter on merits on such grounds as well. It was further contended that the appeal preferred by the respondent-Company under Section 30 of the RDDB Act, against the order of the Recovery Officer fixing the reserve price at Rs.12.5 crores, was not maintainable and ought not to have been entertained by the DRT-I,Delhi. 14. As has been indicated by my learned Brother in his judgment, it had been forcefully contended on behalf of the appellant that when the respondent- Company had invoked the discretionary and equitable jurisdiction of the High Court under Article 226 of the Constitution, the High Court should have taken into account the overall conduct of the party as the respondent-Company had not come to the writ court with clean hands. Not only had it not repaid the loan amount, but it did not appear before the DRT inspite of service of summons and the ex-parte final order was, therefore, rightly passed on the Original Application filed by the IDBI. The respondent- Company also filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RDDB Act in relation to Section 22 of SICA, the same is reproduced hereinbelow to consider the effect thereof : 34. Act to have over-riding effect-(1) Save as otherwise provided in 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 have 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 Companie (Special Provisions) Act, 1985 and the Small Industries Development Bank of India Act, 1989. 18. My learned Brother has relied on the non-obstante provision contained in Subsection (1) of Section 34 in arriving at a finding that the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, would have an overriding effect over other enactments. Since the Sick Industrial Companies (Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Recovery Officer issued a demand notice under Rule 2 of the Second Schedule of the Income Tax Act, 1961, to the respondent-Company for payment of a sum of Rs.25,26,60,836/- as directed by the DRT, Chandigarh, in its final order. It is only after the Recovery Officer fixed the reserve price for the auction sale of the Company s assets that the respondent-Company filed an appeal before the DRT on 18.10.2004 under Section 30 of the RDDB Act against the said order of the Recovery Officer. It has also to be noted that on 27.10.2004 the DRT allowed the auction sale to proceed but directed that the sale should not be confirmed until further orders. 24. The next relevant date is 30.10.2004 when the auction was concluded and the appellant was declared to be the highest bidder and the entire sale price was deposited by the appellant auction purchaser on 11.11.2004. 25. It is significant to note that in the appeal, being Appeal No.52 of 2004 under Section 30 of the RDDB Act, an application was moved by the respondent- Company on 15.12.2004 for setting aside the ex-parte final order passed on 15.7.2003 and the appellant also filed an application for impleadment to enable it to oppose t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. This brings us to the next question regarding the applicability of Section 22 of SICA in the proceedings initiated by IDBI for recovery of its dues under the provisions of the RDDB Act, 1993. 32. As will be seen from what has been indicated hereinabove, the final order was passed on 15.7.2003 by DRT, Chandigarh, at a point of time when no Reference had at all been made by the respondent-Company to the BIFR for being declared a sick company . The auction was held and concluded on 30.10.2004, again before a Reference had been made by the respondent- Company to the BIFR. It is only on 21.12.2005 that the Company filed a Reference before the BIFR which was rejected on 3.4.2006. In between, the appeal preferred by the respondent-Company (No.52 of 2004) before the DRT under Section 30 of the RDDB Act was allowed and the auction sale was set aside, but the final order passed by DRT, Chandigarh, remained untouched. The appeal preferred by the appellant herein against the order of the DRT allowing Appeal No.52 of 2004 was subsequently decided in favour of the appellant on 10.2.2006 and the auction sale was confirmed in favour of the appellant with a direction upon the Recovery Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f in favour of the appellant herein. 37. The order passed by the DRAT on 10.2.2006 confirming the sale in favour of the appellant was made long before the respondent-Company was declared to be a sick company on 22.2.2007. The High Court was, therefore, in error in applying the provisions of Section 22 of the SICA when the sale had already been confirmed in favour of the appellant and the purchase price had already been deposited. Furthermore, the first Reference made by the respondent- Company was also rejected by the BIFR on 3.4.2006. 38. Apart from the above, even on merits, the conduct of the respondent No.1- company leaves much to be desired. Without challenging the final order passed by the DRT, Chandigarh, allowing the Bank s claim of Rs.25,26,60,836/- together with interest @ 7.8% per annum, the said respondent questioned the order of the Recovery Officer, fixing the reserve price of the Company s assets for the purposes of the auction sale, under Section 30 of the RDDB Act, having full knowledge of the fact that the final order of the DRT, Chandigarh, could not be challenged in such appeal. The steps taken by the respondent No.1, Company were far from bona fide and we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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