TMI Blog2022 (12) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... ium period is only for 180 days which would have been over in month of June 2018. In such circumstances, contention of the petitioners that judgment and award passed by DRT is contrary to the provisions of IBC is required to be rejected in absence of challenge to such judgment and award by the petitioners. Consequential recovery proceedings before the recovery officer therefore, cannot be said to be without jurisdiction. If the petitioners are aggrieved by the impugned order dated 28.11.2019 and consequential notice for possession dated 3.12.2019, are required to challenge the same before the presiding officer of the DRT as per the aforesaid provision of section 30 of the RDB Act. In the facts of the case as per the settled legal position, it cannot be said that the orders passed by the DRT as well as Recovery Officer are in any manner contrary to the provisions of IBC more particularly when judgment and award passed by the DRT has achieved finality in absence of any challenge thereto. The petition is not entertained and is accordingly dismissed. - R/SPECIAL CIVIL APPLICATION NO. 22832 of 2019 - - - Dated:- 25-11-2022 - honourable mr. justice n.v. anjaria and honourabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with other defendants filed counter claim against the banks for recovery of Rs.934.12 crores with interest from the date of filing of the counter claim upto realisation and the same was registered separately as No. 01 of 2017 the DRT. 4.3) The DRT by judgment and award dated 13.12.2018 allowed Original Application No.184/2017 after considering the loan and security documents executed by respondent no.1 company, the petitioners and other guarantors in favour of the consortium of banks. The DRT passed the order to issue the Recovery Certificate for Rs.5,07,36,75,508.93 and the counter claim filed by the defendants was dismissed with cost in favour of the banks. The DRT passed the judgment and award ex-parte against the petitioners and other defendants as no written statement was filed by the defendants and right of the defendants stood closed vide order dated 21.08.2017. The DRT ordered to issue the Recovery Certificate with memo of cost under section 19(22) of the RDB Act together with details of the properties and the defendants were restrained by means of injunction from depleting, transferring, encumbering, alienating or in any way dealing with the properties/assets which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dants. 4.9) It is the case of the petitioners that though e-auction/sale notice was issued by the Recovery Officer on 7.08.2019, the petitioners came to know about such sale notice on carrying out inspection on 23.09.2019 of the records of recovery proceedings and further came to know that the value of the properties are shown very less than actual value as per the valuation report prepared by Gajjar Techno Economic Consultants Pvt. Ltd. in the year 2014 upon advice of State Bank of India. 4.10) According to the petitioners, as the recovery proceedings was not going properly and legally, the petitioners filed objections in recovery proceedings which came to be numbered as IA Nos. 2353 of 2019 and 2354 of 2019 in R.P. No.694/2018. 4.11) The Recovery Officer heard the two objections applications filed by the petitioners being IA Nos. 2353 of 2019 and 2354 of 2019 on 1.10.2019. During the course of hearing, learned advocate for the petitioners requested the Recovery Officer not to proceed further to take physical possession of the three attached properties as the petitioners have challenged the whole process right from issuance of Demand Notice till issuance of sale proclamat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of CD Nos. 2 3 during the course of the proceedings of today, following orders are being passed: (a) Ex-officio of the CH bank and the Advocate Court Commissioner are therefore directed to proceed further to take physical possession of the properties as ordered. They would be entitled to break open the locks if CDs do not hand over the peaceful physical possession of the properties-in-question. All laid down procedures be followed while taking the said possession. Whole process be video graphed. Complete inventory of items in the property be also made. Proper Panchnama be drawn in the presence of at least two witnesses. Police assistance be taken as ordered earlier. (b) CH Bank is directed to file replyto the application made by nonparticipating third party bidder (IA No. 2430/2019) for refund of the EMD amount. With above orders, the matter is adjourned to 18.10.2019. 4.13) Thereafter, on 22.10.2019 also, time was sought to file appearance on behalf of the petitioner no.1 by the advocate and therefore, the following order was passed by the Recovery Officer rejecting the objections raised by the petitioners for want of prosecution : Firstly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedures. Two properties as mentioned at Lot Nos, 1 3 have been sold out in e-auction conducted on 27.09.2019. Thereafter, it has been observed that CD No. 2 3 have, though, filed their objections do not deem it proper to pursue their case. Two advocates have appeared for them but none proceeded with the matter on the ground that they have no Instructions from their clients. It seems that it is their ploy to delay derail the recovery proceedings so as to defeat the recovery of certified dues. It is nothing but gross misuse of process of law and for this act of them they should be penalised. 4. In view of the above facts and circumstances of the case, the objections as filed by CD Nos. 2 3 are dismissed for want of prosecution. A cost of Rs. 10,000/- is being Imposed on each of them and only after deposit of the same; their further requests/applications In the matter would be entertained. However, it is placed on record that if any action of the CH Bank is found to be wanting in compliances of any order as per laid down procedures then that would be taken care of while confirming the sale. 5. CH Bank and the Court Commissionerare directed to take physical posses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners submitted that entire recovery proceedings conducted by the Recovery Officer are not in accordance with law and as per the prescribed procedure for recovery of dues of the respondent nos. 4 to 10 consortium of banks. 5.1) It was submitted that the objections raised by the petitioners in I.A. No.2353 of 2019 and I.A. No.2354 of 2019 are not at all considered and properties of the petitioners are sold at undervalue i.e., lower than the market value and therefore, the sale confirmation is required to be quashed and set aside. 5.2) It was submitted that the valuer of the State Bank of India in the year 2014 has carried out valuation and value of the property no.1 in the year 2014 was Rs. 480 lakhs and value of property no.2 was Rs. 172 lakhs. However, property no.1 is sold for Rs. 1,00,40,000/- and property no.2 is sold for Rs.1,36,90,000/- respectively in the recovery proceedings at a throw away price. 5.3) It was submitted that in the year 2018 similarly situated property was sold at Rs. 1,50,00,000/- and reliance was placed on a sale deed executed on 13.03.2018 in respect of flat No. D/902 of Ashawari Tower wherein property no.2 being flat No. D/802 is situated. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84/2017 by suppression of such facts of pending IBC proceedings initiated by Bank of Baroda before NCLT. 5.6) It was submitted that further recovery proceedings based upon the judgment and award passed by the DRT during the moratorium period are also bad and same are liable to be quashed and set aside. 5.7) In support of her submissions, learned advocate Ms. Sutaria relied upon the following decisions: 1) Embassy Property Developments Pvt. Ltd. v, State of Karnataka and others reported in 2019 (18) Scale 37, wherein it is held as under: 13. What is recognized by Article 226 (1) is the power of every High Court to issue (i) directions, (ii) orders or (iii) writs. They can be issued to (i) any person or (ii) authority including the Government. They may be issued (i) for the enforcement of any of the rights conferred by Part III and (ii) for any other purpose. But the exercise of the power recognized by Clause (1) of Article 226, is restricted by the territorial jurisdiction of the High Court, determined either by its geographical location or by the place where the cause of action, in whole or in part, arose. While the nature of the power exercised by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute Supplemental Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice. 2) STI India Limited v. Oriental Bank of Commerce and others (judgment dated 20.11.2019 passed in Special Civil Application No.6129/2018). 3) Anand Rao Korada v. Varsha Fabrics (P) Ltd. and ors. reported in (2020) 12 SCC 198, wherein it is held as under: 6. The IBC was published in the Gazette of India on 28.05.2016. It was framed as a complete code to consolidate and amend the laws relating to insolvency resolution of corporate entities, partnership firms, and individuals in a timebound manner, for maximisation of the value of the assets of such persons, and balance the interest of all the stakeholders. The Corporate Insolvency Resolution Process ( CIRP ) could be initiated when a corporate debtor commits a default, either by a financial creditor, or an operational creditor, or the corporate debtor itself. Section 12 of the IBC provides a timeframe to complete the CIRP. As per Section 13 of the IBC, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. 7. Section 238 gives an overriding effect to the IBC over all other laws. The provisions of the IBC vest exclusive jurisdiction on the NCLT and the NCLAT to deal with all issues pertaining to the insolvency process of a corporate debtor, and the mode and manner of disposal of its assets. Section 238 reads as follows : 238. Provisions of this Code to override other laws. The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 8. Section 231 of the IBC bars the jurisdiction of civil courts in respect of any matter in which the Adjudicating Authority i.e. the NCLT or the NCLAT is empowered by the Code to pass any Order. Section 231 is set out hereinbelow for ready reference : 231. Bar of jurisdiction. No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered by, or under, this Code to pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It is clear that once the CIRP is commenced, there is complete prohibition for any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property. The words including any action under the SARFAESI Act are significant. The legislative intent is clear that after the CIRP is initiated, all actions including any action under the SARFAESI Act to foreclose, recover or enforce any security interest are prohibited. 25. It will also be relevant to refer to Section 238 of the IBC: 238. Provisions of this Code to override other laws.- The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 26. It could thus be seen that the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 27. It has been consistently held by this Court that the IBC is a complete Code in itself and in view of the provisions of Section 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixing the reserve price, as the failure to do so may cause substantial injury to the borrower/guarantor and that would amount to material irregularity and ultimately vitiate the subsequent proceedings. DECISION TO SELL WHOLE OR PART OF THE SECURED ASSETS: xxx (19.) Thus, in view of the above, it is evident that law requires a proper valuation report, its acceptance by the authority concerned by application of mind and then fixing the reserve price accordingly and acceptance of the auction bid taking into consideration that there was no possibility of collusion of the bidders. The authority is also duty bound to decide as to whether sale of part of the property would meet the outstanding demand. Valuation is a question of fact and valuation of the property is required to be determined fairly and reasonably. SETTING ASIDE AUCTION SALE - AFTER CONFIRMATION: (20.) In Narmada Bachao Andolan V/s.State Of Madhya Pradesh Anr, AIR 2011 SC 1989 : 2011 (7) SCC 639 : 2011 (5) Scale 624 : JT 2011 (6) 379 : 2011 (6) SCR 443 , this Court while dealing with the confirmation of sale by Court, held that there must be a proper valuation report, which should be commun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. 26. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation . On a careful consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, position of the economy and various other factors and appreciates or depreciates accordingly. It was therefore, submitted that about five years old valuation report relied upon by the petitioners cannot be considered for the purpose of auction. 6.2) It was submitted that the petitioners did not participate in the hearing before the DRT proceedings nor the petitioners have remained present before the Recovery Officer after filing the objections and therefore, the petitioners cannot now raise objections with regard to public auction held by the Recovery Officer based upon the valuation report dated 12.04.2019. It was submitted that there were two bids each for both the properties and after the contested bidding, the highest bidders were declared as successful auction purchasers and therefore, it cannot be said that the properties were sold at the value lesser value than the fair market value prevailing at the relevant time. It was also submitted that the petitioners always had the right of redemption of mortgage, however, the petitioners have failed to exercise such right and therefore, the petitioners are not justified to raise such objection after completion of e-auction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no extension of moratorium period by NCLT and no resolution could be arrived at in IBC proceedings and no order of liquidation of company was also passed by the competent Court and hence, judgment and award passed by DRT is legal, valid and in accordance with law. 6.6) It was further submitted that the Recovery Officer has followed the prescribed procedure for recovery of debts due to respondent banks and therefore, even on merits, the petition is liable to be dismissed. 6.7) Respondent no.11, auction purchaser has also filed an affidavit in reply opposing the petition, wherein it is stated as under: 5. It is submitted that if the petitioner have any grievance against the order dated 28/11/2019, the petitioner have liberty to file appeal before the Debt Recovery Tribunal u/s. 30 of the Recovery of Debt due to Banks and Financial Institutions Act, 1993 (RDDB Act) 6. It is submitted that the respondent no.11 herein has purchased the property bearing Flat NO.D/802, Ashavari Towers, Democratice Co- operative Housing Society Ltd., Part-2, Jodhpur, Satellite, Ahmedabad by e-auction dated 27 September, 2019 and accordingly the sale has been confirmed on 28 November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enged the judgment and award dated 13.12.2018 passed by the DRT in OA No. 184/2017 before the Debts Recovery Appellate Tribunal as per the provisions of section 20 of the RDB Act and therefore, judgment and award dated 13.12.2018 has achieved finality. The petitioners have not challenged the said judgment and award in this petition also. The petitioners have only challenged order dated 28.11.2019 of the Recovery Officer in R.P. No.694/2018 on the ground of no jurisdiction to conduct the recovery proceedings as judgment and award of the DRT was passed during the pendency of the insolvency proceedings before the NCLT under IBC. This contention of the petitioners cannot be accepted in view of facts emerging from the record to the effect that there is no order on record to show that moratorium period was extended by NCLT after passing of the order on 21.12.2017. The DRT passed order on 13.12.2018 and as per section 14 of the IBC, moratorium period is only for 180 days which would have been over in month of June 2018. In such circumstances, contention of the petitioners that judgment and award passed by DRT is contrary to the provisions of IBC is required to be rejected in absence of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided a matter which they had no right to consider. However, in the facts of the present case, admittedly when DRT passed the judgment and award, there was no order passed by the NCLT for extension of moratorium period. The impugned order passed by the Recovery Officer cannot be said to be order without jurisdiction as the Recovery Officer has a passed the impugned order in recovery proceedings pursuant to the Recovery Certificate issued by the DRT. 12. Decision of Division Bench of this Court in case of STI India Limited(supra), would also be of no help to the petitioners as the issue before the Division Bench pertained to the proceedings before DRT during the pending proceedings before BIFR under the provisions of Sick and Industrial Companies (Special Provisions) Act, 1985 and Division Bench was called upon to consider the applicability of provisions of SICA and its legal effect on the proceedings before the DRT. The provisions of section 22 of SICA and provisions of section 14 of IBC are different and, in such circumstances, reliance placed on the said decision is not applicable in facts of the present case. 13. Decision of the Apex Court in case of Anand Rao Korada (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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