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SUPREME COURT OF INDIA
VIKRAMAJIT SEN, SHIVA KIRTI SINGH, JJ.
Pegasus Assets Reconstruction P. Ltd. – Appellant
Versus
M/s. Haryana Concast Limited & Anr. – Respondents
Civil Appeal No. 3646 of 2011 With Civil Appeal No. 14736 of 2015 (Arising out of SLP(C) No. 7074 of 2010) Civil Appeal Nos.14737-14738 of 2015 (Arising out of SLP(C) Nos. 117-118 of 2011) and Civil Appeal Nos. 9293-94 of 2014
Decided on : 29-12-2015
Facts of the case:
Central issue involved in each of the matters, it may be useful to notice that Civil Appeal No. 3646 of 2011 preferred by Pegasus Assets Reconstruction Private Limited (for brevity, ‘Pegasus’), which has been heard as the lead matter, arises out of a Division Bench judgment of Punjab and Haryana High Court dated 15.12.2009 whereby the Division Bench upheld the judgment of Company Court and approved of certain fetters placed upon M/s. Pegasus Assets Reconstruction Pvt. Ltd., while allowing it to exercise its powers as a secured creditor under the SARFAESI Act and proceed with the sale of the secured assets. Since the judgment of Division Bench disallowed the appeal of Haryana State Infrastructure and Industrial Development Corporation (for brevity ‘HSIIDC’) against the order of Company Judge allowing Pegasus to stay outside the winding up proceeding of the respondent Haryana Concast Limited, HSIIDC is also before this Court through SLP (C) No. 7074 of 2010.
The secured asset in the form of approximately 36 acres of land of Haryana Concast Ltd. was subjected to auction by Pegasus in association and collaboration with the Official Liquidator as per order of the company judge and was ultimately sold for Rs.32 crores in favour of M/s. Venus Realcon Pvt. Ltd. One Vinod Rajaliwala challenged the orders of the company judge confirming sale in favour of M/s. Venus Realcon Pvt. Ltd. by preferring a company appeal and also through a public interest litigation (a writ petition). Both were dismissed by the Division Bench. Those orders have been challenged by Mr. Vinod Rajaliwala through Special Leave Petition (C) Nos.117-118 of 2011. The three matters indicated above thus relate to secured assets of the same company under Liquidation, M/s. Haryana Concast Limited.
The fourth matter, C.A. No. 9293-94 of 2014 preferred by Megnostar Telecommunications Private Limited (for brevity, ‘Megnostar’) arises out of a Division Bench Judgment of Delhi High Court dated 17.9.2012. By this order the Delhi High Court has differed with the views taken by the Punjab and Haryana High Court in the judgment assailed by Pegasus in Civil Appeal No.3646 of 2011. According to Delhi High Court, the company judge or the official liquidator cannot have any say in the sale of secured assets by the secured creditors under the SARFAESI Act. The Companies Act cannot be used to put any fetters on the sale by secured creditors because a secured creditor under Section 13 of the SARFAESI Act has been granted a right to enforce the security interest “without the intervention of the court or tribunal” in accordance with the provisions of the SARFAESI Act
Findings of the Court: Powers under the Companies Act cannot be wielded by the Company Judge to interfere with proceedings by a secured creditor to realize its secured interests as per provisions of the SARFAESI Act.
Result of the Case: (1) Civil Appeal No. 3646 of 2011 allowed only for declaration of law without interfering with the sale of the secured assets which has not been challenged by Pegasus. (2) Civil Appeal No.---------/2015 (Arising out of SLP(C) No. 7074 of 2010) dismissed. (3) Civil Appeal Nos. ------------/2015 (Arising out of SLP(C) Nos. 117-118 of 2011) dismissed. The amount of Rs.50 crores deposited by the intervener M/s. Himalayan Infra Projects Private Limited shall be refunded to it forthwith alongwith interest accrued thereupon. (4) Civil Appeal Nos. 9293-94 of 2014 dismissed. The judgment and order of the Delhi High Court affirmed.
JUDGMENT :
Shiva Kirti Singh, J.
1. A common issue of law: Whether a Company Court, directly or through an Official Liquidator, can wield any control in respect of sale of a secured asset by a secured creditor in exercise of powers available to such creditor under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity ‘the SARFAESI Act’), arises in all these matters which have been heard together and shall be governed by this common judgment.
2. In order to understand the central issue involved in each of the matters, it may be useful to notice that Civil Appeal No. 3646 of 2011 preferred by Pegasus Assets Reconstruction Private Limited (for brevity, ‘Pegasus’), which has been heard as the lead matter, arises out of a Division Bench judgment of Punjab and Haryana High Court dated 15.12.2009 whereby the Division Bench upheld the judgment of Company Court and approved of certain fetters placed upon M/s. Pegasus Assets Reconstruction Pvt. Ltd., while allowing it to exercise its powers as a secured creditor under the SARFAESI Act and proceed with the sale of the secured assets. Since the judgment of Division Bench disallowed the appeal of Haryana State Infrastructure and Industrial Development Corporation (for brevity ‘HSIIDC’) against the order of Company Judge allowing Pegasus to stay outside the winding up proceeding of the respondent Haryana Concast Limited, HSIIDC is also before this Court through SLP (C) No. 7074 of 2010.
3. The secured asset in the form of approximately 36 acres of land of Haryana Concast Ltd. was subjected to auction by Pegasus in association and collaboration with the Official Liquidator as per order of the company judge and was ultimately sold for Rs.32 crores in favour of M/s. Venus Realcon Pvt. Ltd. One Vinod Rajaliwala challenged the orders of the company judge confirming sale in favour of M/s. Venus Realcon Pvt. Ltd. by preferring a company appeal and also through a public interest litigation (a writ petition). Both were dismissed by the Division Bench. Those orders have been challenged by Mr. Vinod Rajaliwala through Special Leave Petition (C) Nos.117-118 of 2011. The three matters indicated above thus relate to secured assets of the same company under Liquidation, M/s. Haryana Concast Limited.
4. The fourth matter, C.A. No. 9293-94 of 2014 preferred by Megnostar Telecommunications Private Limited (for brevity, ‘Megnostar’) arises out of a Division Bench Judgment of Delhi High Court dated 17.9.2012. By this order the Delhi High Court has differed with the views taken by the Punjab and Haryana High Court in the judgment assailed by Pegasus in Civil Appeal No.3646 of 2011. According to Delhi High Court, the company judge or the official liquidator cannot have any say in the sale of secured assets by the secured creditors under the SARFAESI Act. The Companies Act cannot be used to put any fetters on the sale by secured creditors because a secured creditor under Section 13 of the SARFAESI Act has been granted a right to enforce the security interest “without the intervention of the court or tribunal” in accordance with the provisions of the SARFAESI Act. It goes without saying that if the view taken by the Punjab and Haryana High Court in the matter of Pegasus is approved and the Civil Appeal No. 3646 of 2011 is dismissed, then the Delhi High Court’s view will stand disapproved and Civil Appeal No. 9293-94 of 2014 will have to be allowed.
5. In order to decide the issue indicated above, it is not necessary to go into factual details relating to either the case of Pegasus or to that of Megnostar. Only the broad features necessary for appreciation of rival submissions in respect of these matters have been taken note of.
C.A.No.3646 of 2011
6. M/s. Haryana Concast Ltd., respondent no.1 suffered a winding up order of the Company Judge of Punjab & Haryana High Court in 1999. The only secured creditor, the Bank of India obtained a recovery certificate aga
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