TMI Blog2013 (4) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... he sequence of events that have led to the filing of the above application, can be summarised in the chronological order as follows: (a) M/s. Easun Engineering Co. Ltd., was the sole and absolute owner of two pieces of land, one measuring 52,507 sq. ft. (21 grounds and 2,107 sq. ft.) and another measuring 6,360 sq. ft. (2 grounds and 1,560 sq. ft.), both bearing Municipal Door No. Old No. 35/5 and New No. 476, Anna Salai, Nandanam, Chennai-600 035; (b) Out of the aforesaid land to the total extent of 58,867 sq. ft. (24 grounds and 1,267 sq. ft.), the original owner M/s. Easun Engineering Co. Ltd., granted a lease in respect of small extents, out of one portion measuring about 9 grounds in favour of different lessees, with a view to enable all of them to jointly put up a multi storied complex, known as Temple Towers/Meenakshi Plaza; (c) By a registered lease dated March 30, 1990 (registered as document No. 3256 of 1990 in the office of the District Registrar of Madras South), M/s. Easun Engineering Co. Ltd., granted a lease of an extent of 354 sq. ft. of land, out of the greater extent of 9 grounds, forming part of the whole extent, to and in favour of Sethuraman Thiayag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 1996, when clause (1) of the lease deed indicated a conveyance only in present and did not record as though the lease had already been orally created even before the date of execution of the deed; (h) In pursuance of the said deed of transfer of lease dated January 30, 1997, lessee M. Lakshmi Narayana Choudhary, who is the applicant in the above application, also entered into a builder's agreement with M/s. R.K. Investments on April 17, 1997. Actually, there was already a builder's agreement between the company in liquidation and R.K. Investments for putting up a construction of a built up area of 1,297 sq. ft. with reference to the land to the extent of 354 sq. ft. and that builder's agreement was dated April 9, 1990. Yet, after the transfer of the leasehold rights by the company in liquidation to the applicant herein, the applicant entered into a second builder's agreement dated April 17, 1997, for constructing an office space of 2,648 sq. ft. in the very same fifth floor of the proposed complex, namely, Temple Towers. Interestingly, the builder's agreement between the applicant and R.K. Investments dated April 17, 1997, was solely on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Notice Board and also served on the company in liquidation and on the Registrar of Companies. However, publication was not ordered; (iii) on February 15, 1996, advertisement was ordered; (iv) on April 23, 1996, R. Jayasimha Babu J. passed an order to the following effect: Counsel for the company says that the assets belonging to the company is in the process of being sold; that the bank has also agreed in principle to set apart a portion of the sale proceeds for being paid to the petitioner herein. The respondent shall not sell the assets of the company without the permission of this court. The matter is adjourned to second week of June, 1996 ; and (v) Subsequently, on December 10, 1999, the order for winding up was passed; (m) Therefore, it is clear that an interim order prohibiting the company in liquidation from alienating its assets was passed on April 23, 1996. This appears to be reason why the company in liquidation executed a deed of transfer of lease on January 30, 1997, in favour of the applicant, with retrospective effect from April 1, 1996; (n) After the company was ordered to be wound up, the official liquidator wrote a letter dated May 4, 2000, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 24, 2009. After seeing the auction notice, the applicant filed an affidavit of protest with the Recovery Officer of the Debts Recovery Tribunal. In the affidavit of protest, the applicant made certain claims. Those claims are to be noted at this stage, before proceeding further. They were as follows: (i) that he got the transfer of leasehold rights from the company in liquidation under the deed dated January 30, 1997, in respect of the land measuring 354 sq. ft. with a right to put up a construction in the first floor; (ii) that he entered into a builders agreement to construct 2,648 sq. ft.; (iii) that he had thereafter become the absolute owner of the commercial space measuring 2,697 sq. ft. in the fifth floor; (iv) that for the above land and building, he had paid a total amount of ₹ 30 lakhs to the State Bank of India for the release of the mortgage and also paid ₹ 7,44,088 to the builder R.K. Investments and further paid a sum of ₹ 2,68,080 towards the lease rentals to the company in liquidation, totalling to an amount of ₹ 40,13,168.21; and (v) that he had let out the property to Philips India and also started receiving a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also prayed for a mandatory injunction to direct the bank to return the original lease deed dated March 30, 1990. The relief prayed in paragraph 20(c) of the suit C.S. No. 531 of 2010, should be taken note of, as it has something to do with the stand now taken by the applicant. The relief sought in the said paragraph is for a mandatory injunction to direct the bank to return the original lease deed dated March 30, 1990, entered into between M/s. Easun Engineering Co. Ltd., and the company in liquidation. The suit was actually filed on May 11, 2010; (aa) It appears that as per the auction notice dated March 19, 2010, the successful bidder was obliged to remit 25 per cent of the bid amount (less EMD) immediately on the sale being knocked down. The balance amount, in addition to poundage fee, was to be paid within 15 days. This condition could be found at serial No. 3 in the auction notice dated March 19, 2010; (ab) However, it appears that the fourth respondent herein paid only a sum of ₹ 39 lakhs till July 8, 2010 and the Recovery Officer passed an order on July 8, 2010, calling upon the fourth respondent to pay the amount immediately and threatening to cancel the auct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Fast Track Court in O.S. No. 7532 of 2010; (ah) It is only after filing an application for leave to sue under clause 12 and obtaining the leave on November 24, 2010, that the applicant herein moved the Fast Track Court with an application in I.A. No. 148 of 2010 under Order 23, rule 1(3) of the Code of Civil Procedure, 1908, for leave to withdraw the first suit with liberty to file the next suit. This application was actually filed on November 25, 2010, after obtaining leave to institute the second suit; (ai) When the application for leave to withdraw the first suit with liberty was actually pending before the Fast Track Court, the applicant moved an application for injunction in the second suit C.S. No. 970 of 2010. In that application for injunction O.A. No. 1239 of 2010, a learned judge of this court granted an injunction restraining the bank, the Recovery Officer and the auction purchaser from confirming the sale. This order was passed on December 2, 2010. But, by then, the sale had already been confirmed on November 11, 2010; (aj) It is only after the applicant obtained an interim injunction in the second suit C.S. No. 970 of 2010 on December 2, 2010, that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in Appeal No. 7 of 2010 to the file of this court. Thereafter, I heard arguments in the transferred appeal (Tr. Company Application No. 511 of 2013) also. By a separate order the transferred appeal is also being disposed of today. 5. Mr. T.K. Seshadri, learned senior counsel appearing for the applicant, formulated his contentions broadly under four foundations. They are: (i) A transaction entered into by a company facing liquidation proceedings, after the filing of the petition for winding up, is not always void, but can be ratified by the court in view of the express language used in section 536(2) of the Companies Act, 1956 and in view of the interpretation given by various courts, including the Supreme Court. All that the court should see while considering an application for ratification of the transaction is whether the transaction was entered into in the ordinary course of business of the company and whether it was a bona fide transaction. Again, the question of bona fides has to be tested only from the point of view of the transferee and not from the point of view of the company in liquidation. The official liquidator has not only omitted to challenge the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , namely, August 18, 1993, in terms of section 441, all the assets and liabilities of the company shall be deemed to be in the custody of this court even from the said date, in terms of section 456(2), making the transaction in question invalid; (iii) that since the proceedings for winding up commenced on August 18, 1993 and the transaction in question happened only on January 30, 1997, it is null and void under section 536; (iv) that in an application filed by the third respondent-bank in Company Application No. 1445 of 2009, this court allowed the applicant to get impleaded and thereafter, passed an order on November 26, 2009, permitting the bank to proceed before the Debts Recovery Tribunal and also allowing the applicant to work out his remedies before the Debts Recovery Tribunal and hence, the applicant cannot now come before this court; (v) in any case, the present prayer for ratification made in the year 2011, was not made when this court allowed Company Application No. 1445 of 2009, permitting the bank to proceed with the sale through the Debts Recovery Tribunal; and (vi) that the applicant has already filed a civil suit as well as an appeal before the Debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action, but only voidable under section 536(2)? (iii) Whether the mortgage in favour of the State Bank of India is a valid mortgage, when the original title deeds were not allegedly deposited with them? (iv) Whether the discrepancies in the description of the property, would make the mortgage as well as the sale invalid? and (v) Whether the failure of the auction purchaser to remit the balance sale consideration within the time stipulated in the auction notice, would make the sale invalid? Issue of limitation 10. Since the State Bank of India, which is the third respondent herein, has raised the issue of limitation, it is necessary to consider the same in the first instance, before dealing with the merits of the case. It is the contention of Mr. M. Devarajan, learned counsel for the State Bank of India, that in terms of article 137 of the Schedule to the Limitation Act and the decision in Rathnam P.V. v. Official Liquidator, High Court of Bombay [2011] 168 Comp Cas 168 (Bom), the application filed by the applicant is barred by limitation and hence, liable to be dismissed outright. 11. However, it is contended by Mr. T.K. Seshadri, learned senior counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer is not hit by section 536(2); (h) On August 30, 2004, the Debts Recovery Tribunal passed a final order leading to the issue of a certificate of recovery in D.R.C. No. 148 of 2004 on November 1, 2004; (i) On January 5, 2007, the Recovery Officer of Debts Recovery Tribunal ordered the attachment of the property in question; (j) In 2009, the bank came up with an application in Company Application No. 1445 of 2009 before this court seeking permission to sell the property through the Debts Recovery Tribunal, in pursuance of the certificate of recovery issued by the Debts Recovery Tribunal. During the pendency of the said application, the applicant came up with an application in Company Application No. 1694 of 2009 seeking to implead himself as a party to the application Company Application No. 1445 of 2009. That impleading application was allowed on November 26, 2009 and the applicant came on record and objected to the sale; (k) On November 26, 2009, I allowed Company Application No. 1445 of 2009, in the presence of the applicant and after hearing his counsel, permitting the sale of the property through the Debts Recovery Tribunal and leaving it open to the imple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) makes a similar declaration in respect of any disposition of property, in the case of winding up by the court. In other words, sub-section (1) deals with voluntary winding up and the declaration contained therein is confined only to transfer of shares and alteration in the status of the members of the company. Sub-section (2) relates to winding up by the court and it covers any disposition of property as well as transfer of shares or alteration in the status of its members. 17. What is important to be noted is that section 536 does not prescribe any procedure either for a declaration of a transaction to be void or for the declaration of a transaction to be valid. Though, in practice, applications are filed by the official liquidator in terms of section 536(2) for declaring certain transactions to be void, and though similar applications are also filed by transferees for a positive declaration that the transactions are valid, section 536, by itself, does not provide for any such procedure, either for an application by the official liquidator or for an application by a transferee. However, rule 9 of the Companies (Court) Rules, 1959, confers inherent powers upon the company cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch period were prescribed by the Schedule. Sub-section (3) of section 29 excludes any suit or other proceeding under any law relating to marriage and divorce, from the application of the provisions of the Limitation Act. 22. Article 137 in the Schedule to the Limitation Act, 1963, contains a residuary clause. It prescribes three years as the period of limitation for any application for which no period of limitation is provided elsewhere in that division. But, time would begin to run only from the date on which the right to apply accrues. Therefore, in so far as matters covered by special enactments are concerned, the period of limitation prescribed for initiating any proceeding, under those enactments, are covered by section 29(2). 23. By virtue of section 29(2) of the Limitation Act, the provisions of sections 4 to 24 are applicable, for the purpose of determining the period of limitation, in so far as proceedings under any special or local law are concerned, provided these provisions are not expressly excluded by such special or local law. The Companies Act does not exclude the provisions of the Limitation Act, 1963, either expressly or impliedly. 24. But, generally, tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on . Therefore, it can be inferred that section 3 of the Limitation Act would come into operation, only when the special or local law (the Companies Act, in this case) prescribes a period of limitation, for the proceeding in question. If no period of limitation is prescribed for a particular action under the special or local law, the invocation of section 3 of the Limitation Act becomes doubtful. If the applicability of section 3 is doubtful, the computation of the period by applying sections 4 to 24 would also become doubtful. 30. Coining to article 137, it actually corresponds to article 181 of the Indian Limitation Act, 1908. Article 181 of the Schedule to the Indian Limitation Act, 1908, was held by courts to apply only to applications under the Code of Civil Procedure, on the principle of ejusdem generis. This is, in view of the fact that the wording of article 181 of the 1908 Act was as follows: Application for which no period of limitation is provided elsewhere in this Schedule or by section 48 of the Code of Civil Procedure, 1908. 31. But, article 137 of the Schedule to the 1963 Act reads as follows: Any other application for which no period of limitation is provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, there must be a legally enforceable debt on the date of commencement of winding up proceedings. The court made it clear that section 458A would not resurrect a time barred debt or claim, which was not enforceable on the date of winding up. 35. In Best and Crompton Engineering Ltd. v. Official Liquidator [1995]82 Comp Cas 77; AIR 1995 Mad 20, a Full Bench of this court approved the ratio laid down by a Division Bench in Official Liquidator, Radel Services P. Ltd. v. Southern Screws P. Ltd. [1988] 63 Comp Cas 749 (Mad), to the effect that article 137 of the Limitation Act is not the article that could be applied in all cases. The passage found in the decision of the Division Bench, which was quoted with approval by the Full Bench is as follows (page 764 of 63 Comp Cas): If the claim could have formed the subject-matter of a normal application in a, regular court or if the application is filed under any specific provision of the Companies Act, then the corresponding article in the Limitation Act will have to be applied, and if no other specific article is applicable, the residuary article 137 would have to be applied. 36. From the above observations, it is clear that artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1958 SC 1; (ii) Sankar Ram and Co. v. Kasi Naicker, AIR 2003 SC 4156; (iii) Official Assignee of Madras v. Valliappa Chetti, AIR 1922 Mad 144; (iv) Mercantile Bank of India Ltd. v. Official Assignee, Madras ILR 1916 39 Mad 250; (v) Chetan K. Singh v. Citi Bank N.A. [2009]150 Comp Cas 409 (P H); (vi) Travancore Rayons Ltd. v. Registrar of Companies [1988] 64 Comp Cas 819 (Ker); (vii) Escorts Finance Ltd. v. Fidelity Industries Ltd. [2003] 117 Comp Cas 282 (Mad); (viii) Administrator, MCC Finance Ltd. v. Ramesh Gandhi [2005] 127 Comp Cas 85 (Mad); and (ix) Archean Granites P. Ltd. v. R.P.S. Benefit Fund Ltd.: [2007] 139 Comp Cas 191 (Mad). 40. From a careful perusal of the above decisions cited by learned senior counsel, the following propositions of law emerge: (a) the discretion is granted to this court under section 536(2) not to hold a transaction to be void, if it passes the test of bona fides; (b) the bona fides of a transferee cannot be impeached solely on account of the dishonesty of the transferor; (c) for finding out if a transferee is a bona fide transferee or not, the test of honesty is more important than the test of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of the proposed complex of an extent of about 1,279 sq. ft.; (c) On January 30, 1991, the company in liquidation deposited the documents of title, with the State Bank of India, with a view to create a charge on the property for the loan availed from the bank; (d) On December 31, 1991, the company in liquidation also files necessary form, namely, Form 8, with the Registrar of Companies, in terms of sections 125 and 135, since they had already created a charge over other properties. The charge was registered with Registration No. 6945 on January 29, 1992; (e) On August 18, 1993, the company petition for winding up was presented before this court; (f) On September 3, 1993, the company petition for winding up was admitted by this court and notices were directed to be issued to the company as well as to the Registrar of Companies; (g) On April 23, 1996, this court passed an order directing the company in liquidation not to sell its assets without the permission of this court. Subsequently, on December 10, 1999, the company was ordered to be wound up; (h) On January 30, 1997, a deed of transfer of leasehold rights, for a period of 993 years was executed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is court on April 23, 1996. Otherwise, there is no rhyme or reason for the deed of transfer dated January 30, 1997, to take effect retrospectively from April 1, 1996. It must be noted that the company in liquidation was aware of the interim prohibitory order. It was passed in their presence. Therefore, the applicant, as a transferee, cannot reap the benefit of a transaction that was entered into in total violation of an order of injunction and whose sole purpose was to make the injunction infructuous; (m) I am not able to think that the applicant is ignorant of the injunction order passed on April 23, 1996. If he was so innocent, he would have probed as to why the deed of transfer dated January 30, 1997, registered on April 17, 1997, chose the date of coming into force of the lease as April 1, 1996, when the more appropriate choice would have been the date April 1, 1997; (n) There could not have been an oral lease on April 1, 1996, since the lease in this case was for a period of 993 years and was for a consideration of more than ₹ 2 lakhs. Therefore, an oral transfer is prohibited by the provisions of the Transfer of Property Act, 1882. Hence, even if I go out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and once clause 1 of the deed states The transferor do by these presents grant... , there is no question of any retrospective effect to the lease from April 1, 1996. This also I have already pointed out. 45. After having stated in clause 1 of the deed of transfer that the sale consideration was ₹ 2,68,080.21 the transferor and transferee declared the mortgage value of the property conveyed to be only ₹ 1,18,000 towards the end of the deed of transfer. I am not trying to make that as an issue. 46. After stating the consideration for the deed of transfer to be around ₹ 2.68 lakhs, the applicant stated the consideration payable under the builder's agreement to be ₹ 7,44,088. Therefore, the total consideration for acquiring the leasehold rights and putting up a construction is claimed to be only around ₹ 10 lakhs. 47. But, the applicant claims to have made payment of about ₹ 30 lakhs to the State Bank of India for clearing the charge over the property in question. If this is true, the total consideration agreed to between the parties should have been more than ₹ 40 lakhs. It is not reflected to be so anywhere. 48. While as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by Henkel Spic India Ltd., purportedly towards advance for the fifth floor in the complex Temple Towers; (ii) The cheques were not even handed over to the State Bank of India by Henkel Spic India Ltd., through the applicant. The cheques were handed over to the company in liquidation, as seen from the name of the addressee contained in the memo dated April 17, 1997, of Henkel Spic India Ltd.; and (iii) Therefore, it is clear that neither the money was routed through the applicant, nor the money belonging to the applicant routed through anybody else to the State Bank of India. The memo and the cheques disclose that the money paid to the State Bank of India was that of Henkel Spic India Ltd. It was perhaps paid on behalf of the company in liquidation. It was not even paid on behalf of the applicant. Going by the consideration reflected in the deed of transfer of lease and the builder's agreement, which totals to a mere ₹ 10.12 lakhs, this payment of ₹ 30 lakhs to the bank could not be taken to be by or on behalf of the applicant. 52. There is only one link between the payment of ₹ 30 lakhs to the State Bank of India and the applicant. The link i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant's conduct to see if he is a bona fide purchaser. I find that by no stretch of imagination, the applicant could be termed as a bona fide purchaser. Hence, the second issue is answered accordingly. Issue of validity of the mortgage in favour of the State Bank of India 56. According to the applicant, the State Bank of India cannot have any right over the property and that they cannot be treated as a mortgagee. This, according to learned senior counsel for the applicant, is due to the fact that the original title deeds relating to the property were not deposited by the company in liquidation with the bank. 57. At the outset, I should point out that the applicant is not competent to raise this objection, once it is found that he is not a bona fide transferee. If the mortgage in favour of the bank fails, the property will go to the common kitty of the official liquidator and will enure to the benefit of the large body of unsecured creditors. But, the applicant cannot stand to benefit. Despite such a position, I would consider whether this contention is correct or not. 58. The claim of the applicant that the original title deeds were not deposited with the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts by various persons, the original is not available as such the certified copy of the lease deed would be given. 63. All that the bank has stated is that the original is not available with them due to the handling of the documents by various persons. The bank has not stated that the originals were never deposited with them. If originals had been deposited and if mortgage had been created, the fact that the bank lost possession of those documents subsequently, would not mean that the mortgage itself is invalid. The applicant could have sustained his plea if the bank had agreed that the original documents were never deposited. It is one thing to say that the originals are not available as on date. It is another thing to say that the originals were never deposited. The contention of the applicant loses sight of this fine distinction. 64. There is no dispute about the fact that on this property, a charge was created in terms of section 125 of the Companies Act. Form 8 has admittedly been filed and the register reflects the creation of a charge. Therefore, it is not open to a person like the applicant, whom I have found to be not a bona fide purchaser, to raise such an issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nveyed by the company in liquidation to the applicant under the deed of transfer dated January 30, 1997, was 354 sq. ft. This is indicated in Schedule C to the deed of transfer dated January 30, 1997. There is no discrepancy about this. 70. As per the builder's agreement dated April 17, 1997, entered into by the applicant with M/s. R.K. Investments, the office space to be constructed on the fifth floor was 2,648 sq. ft., as seen from Schedule D to the builder's agreement. Schedule C to the builder's agreement indicated the extent of land only to be 354 sq. ft. 71. In Schedule A to the plaint filed by the bank in C.S. No. 2117 of 1995, the extent of land is indicated as 354 sq. ft. and the building is indicated to be about 2,967 sq. ft. Therefore, in the sale notice issued by the Recovery Officer of the Debts Recovery Tribunal, the extent of land was indicated as 354 sq. ft. and the office space was indicated as 2,967 sq. ft. 72. However, in Schedule D to the builder's agreement that the company in liquidation entered into on April 9, 1990, with M/s. R.K. Investments, the built up area of the office space was indicated as 1,279 sq. ft. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while doing so, the applicant committed a mistake. In Schedule C to the builder's agreement dated April 17, 1997, the applicant did not show both these extents, namely (i) 167 sq. ft. obtained directly from M/s. Easun Engineering Co. Ltd., on August 14, 1995; and (ii) 354 sq. ft. obtained from the company in liquidation on January 30, 1997. In the builder's agreement dated April 17, 1997, the applicant chose to show only 354 sq. ft. in Schedule C and got the built up area mentioned as 2,967 sq. ft. in Schedule D , without reference to 167 sq. ft., which he already had. Therefore, this is something for which the applicant has to blame himself. If cumulatively taken, the transfer deed dated January 30, 1997, showing only 354 sq. ft. of land and the builder's agreement dated April 17, 1997, showing the same extent of land for the construction of 2,967 sq. ft., it will be clear that the applicant cannot now take advantage of any alleged discrepancy. Therefore, the fourth issue is also answered against the applicant. 75. It must be pointed out that in all places, the bank had mentioned 2,967 sq. ft. as a built up area. In Form 8 filed with the Registrar of Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now whether the sale in favour of the fourth respondent is liable to be set aside for non payment of the bid amounts within the time stipulated in condition No. 3 of the auction notice or not. Primarily, there is no dispute about the fact that the terms and conditions stipulated in the auction notice, prescribed a period of 15 days from the date of auction, for payment of the balance sale consideration, namely, 75 per cent after remitting 25 per cent of the amount on the date of the auction. There is no dispute about the fact that the successful bidder paid the balance amount over a period of four months, thereby, violating condition No. 3 stipulated in the auction notice. Therefore, the question that arises for consideration is as to whether the non-payment of the amount as per the terms and conditions of auction would disentitle the highest bidder from claiming confirmation of sale. 79. Section 25 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, prescribes the attachment and sale of immovable and movable properties of the defendant, by the Recovery Officer, as one of the modes of recovery of debts. Section 29 makes the provisions of the Second and Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Second Schedule to the Income-tax Act. 83. In M.V. Janardhan Reddy v. Vijaya Bank [2008] 144 Comp Cas 1 : [2008] 7 SCC 738, the Supreme Court pointed out that if the confirmation of sale by the Recovery Officer was made in violation of an order passed by the company court, the order of confirmation has no validity in law and that it creates no right in favour of the party in whose favour the sale was confirmed. The same logic would hold good, even when there is a violation of the statutory prescription. 84. The only case in which the Supreme Court put a real of approval on the deposit of 25 per cent of the bid amount on the date following the date of auction sale was in V. Rosali v. TAICO Bank [2009J 17 SCC 690. In the said case, the Supreme Court interpreted the word immediately appearing in Order 21, rule 84 of the CPC should be construed to mean within reasonable time . But that was a case where the auction was concluded at 4 p.m. on a particular date and the court permitted the auction purchaser to deposit the money on the next day, as the banks had been closed at that time. But, the principle behind the said case cannot be invoked to the benefit of the fourth r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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