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2008(7) Supreme 520
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
C.K. Thakker and D.K. Jain, JJ.
M.V. Janardhan Reddy — Appellant
versus
Vijaya Bank & Anr. — Respondents
Appeal (civil) 3201 of 2008
Arising out of Special Leave Petition (Civil) No. 2189 of 2007
Decided on : 02-05-2008
(1970) 2 SCR 77: (1969) 3 SCC 537; (2002) 9 SCC 405: JT 2001 (10) SC 29 – Relied upon.
(b) Judicial Review – When an order is reversed being in breach of natural justice and remitted back, it does not, however, mean that a fresh order after could not be passed affording opportunity of hearing to the parties. (Para 28)
(c) Judicial Review – Appellant purchasing the property in auction sale and paid stamp duty of rupees four lakhs which he lost on account of cancellation of the sale – Present purchaser directed to pay rupees twenty lakhs to appellant which would work as some solatium for his trouble and disappointment.
(1899) 26 Cal 449 (FB) – Referred with approval.
Facts of the case :
1. Vijaya Bank-Respondent No.1 herein filed Original Suit in the Court of Subordinate Judge, Bhongir against Messrs Kran Organics Chemicals (P) Ltd (in liquidation) for recovery of Rs.94,50,524/- as also another Suit in the same Court for recovery of Rs.6,43,962/-.
2. Both the suits were decreed by a common judgment dated July 24, 1993. The Bank filed execution applications which were transferred to Debts Recovery Tribunal. Recovery certificates were issued in favour of the Bank and the Bank was allowed to execute the decree.
3. Since the matter was pending in the Company Court and Official Liquidator was appointed, the Bank made an application, for granting leave to proceed with the sale of the property of the Company.
4. The Company Court, vide its order, dated August 13, 1999 granted the permission.
5. In an auction held on December 19, 2005, the appellant had offered Rs. 67.50 lakhs which was the highest bid and it was accepted. The Bank made an application in January, 2006, requesting the Company Court to allow the Recovery Officer of the Tribunal to confirm the sale in favour of the appellant and to permit him to issue sale certificate. On February 13, 2006, Recovery Officer confirmed the sale.
6. According to the appellant, on February 23, 2006, the Official Liquidator submitted a report to the Hon’ble Court wherein he also stated that there was no impediment in confirming the sale. Sale certificate was issued in favour of the appellant on March 2, 2006. The sale was registered on March 16, 2006.
7. On March 17, 2006, however, the Company Judge set aside the sale without issuing notice and without affording an opportunity of hearing to the appellant observing that the sale was not properly conducted and was confirmed without an order from the Court.
8. An application was made by the appellant to recall the said order.
9. Meanwhile, the Company Judge issued direction to the Official Liquidator to sell the property. The appellant, however, approached the Division Bench of the High Court, whereafter the learned Company set aside the sale which was in favour of the appellant and ordered that the amount deposited by the appellant be refunded to him. The appellant approached the Division Bench of the High Court but the Division Bench also dismissed the appeal.
Findings of the Court :
The confirmation of sale by Recovery Officer being without jurisdiction, the Company Judge as well as the High Court did not commit any illegality in setting it aside.
Result : Appeal partly allowed.
JUDGMENT
C.K. Thakker, J. —
1. Leave granted.
2. The present appeal is filed by the appellant herein against the judgment and order dated October 18, 2006 passed by the High Court of Andhra Pradesh in Original Side Appeal No. 44 of 2006. By the said order, the Division Bench of the High Court dismissed the appeal and confirmed the order, dated September 8, 2006 passed by the Single Judge of that Court in Company Application No. 73 of 2006.
3. To appreciate the controversy raised in the present appeal, few relevant facts may be stated;
4. Vijaya Bank-Respondent No.1 herein (‘Bank’ for short) filed Original Suit No. 57 of 1989 in the Court of Subordinate Judge, Bhongir against Messrs Kran Organics Chemicals (P) Ltd (in liquidation) (‘Company’ for short) for recovery of Rs.94,50,524/- as also another Suit being Original Suit No. 61 of 1989 in the same Court for recovery of Rs.6,43,962/-. Both the suits were decreed by a common judgment dated July 24, 1993. The Bank filed execution applications which were transferred to Debts Recovery Tribunal on establishment of the Tribunal under Recovery of Debts due to Banks and Financial Institutions Act, 1993. Recovery certificates were issued in favour of the Bank and the Bank was allowed to execute the decree.
5. Since the matter was pending in the Company Court and Official Liquidator was appointed, the Bank made an application, being Company Application No. 219 of 1996 in Company Petition No. 18 of 1990 in accordance with the provisions of Section 446 of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) read with Rule 117 of the Companies (Court) Rules, 1959 (hereinafter referred to as ‘the Rules’) for granting leave to proceed with the sale of the property of the Company.
6. The Company Court, vide its order, dated August 13, 1999 granted the permission.
7. The Bank then took steps for sale of land and building of the Company. It got valuation report from approved valuer, assessed market value and realizable value, submitted copies of judgment, recovery certificate and valuation report, etc. to the Official Liquidator. It made an application being Company Application No. 187 of 2005 to the Company Court under Sections 446 and 457 of the Act read with Rule 9 of the Rules praying for acceptance of the Valuation Report and permit the Bank to sell the property by conducting auction through Recovery Officer, Debt Recovery Tribunal, Hyderabad.
8. On February 2, 2005, the Bank published a notice fixing date of sale as March 13, 2005. A public notice was issued in ‘Vaartha’ on February 9, 2005. Reserve price was fixed at Rs.45 lakhs. No bidder, however, came forward and auction could not be effected. Same thing was repeated in auction sales scheduled to be held on May 29, 2005, July 8, 2005 and September 14, 2005. In an auction held on December 19, 2005, the appellant had offered Rs. 67.50 lakhs which was the highest bid and it was accepted. The Bank made an application in January, 2006, being Company Application NO. 73 of 2006 requesting the Company Court to allow the Recovery Officer of the Tribunal to confirm the sale in favour of the appellant and to permit him to issue sale certificate. On February 13, 2006, Recovery Officer confirmed the sale. It was stated in the said order that the purchasers had purchased the property for a sum of Rs.67,50,000/- at a public auction held on December 19, 2005. Full amount of the sale consideration was paid on January 3, 2006.
9. It was then stated;
“Accordingly, the said sale is hereby confirmed”.
10. According to the appellant, on February 23, 2006, the Official Liquidator submitted a report to the Hon’ble Court wherein he also stated that there was no impediment in confirming the sale. Sale certificate was issued in favour of the appellant on March 2, 2006. The sale was registered on March 16, 2006. On March 17, 2006, however, the Company Judge set aside the sale without issuing notice and without affording an opportunity of hearing to th
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