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2013 Supreme(AP) 347
High Court of Andhra Pradesh
N.R.L. NAGESWARA RAO, J.
M/s. United Steel Allied Industries Private Limited
Versus
M/s. Indian Bank, Corporate Office & Others
Writ Petition Nos.19297 of 2012 & 33655 of 2011 & COMP.A.Nos.1972 of 2011 & 421 of 2013 in C.P.No.215 of 2010
Decided On : 29-04-2013
For the Petitioner:E. Ajay Reddy, Advocate.
For the Respondents:R1 & R2, S. Ravi, Senior Counsel, R4, G.P. for Revenue, R3, M. Anil Kumar, R1, M. Narender Reddy, Advocates.
Headnote:
SARFAESI Act, 2002 - Section 17 - Companies Act, 1956 - Sections 531 and 531 (A) - Company Petition - Global Factors Limited has filed company petition for winding up as it is also a secured creditor and the petition was allowed and the Official Liquidator was appointed to take possession of the property - After the auction a letter was addressed by the auction purchaser to the effect that their participation in the auction - Held, So far as the auction purchaser is concerned, evidently, he is challenging the letter written by the Creditor Bank about the pressure for realization of the amount due under a void sale and the reasons given above clearly goes to show that the Creditor Bank cannot take advantage of the void sale and therefore, the necessary relief has to be granted to the auction purchaser restraining the Creditor Bank enforcing the liability - So far as it relates to the auction sale proceedings and the adjustment or payment, which has been realized by it, since substantial relief is granted in the Writ filed by the auction purchaser, the benefit of it cannot be denied in the application to set aside the sale - Therefore, for all the above reasons, Court hold that the sale as held by the Authorized Officer on behalf of the Creditor Bank is void and the right of the Official Receiver in the liquidation proceedings cannot be defeated and as the sale is void, it goes to the root of the obligations between the auction purchaser and the Authorized Officer and when once the sale is set aside as void, it is needless to say that the Creditor Bank cannot take advantage of the void sale and the auction purchaser shall be restored to the same position prior to the sale and any amount realized by the Creditor Bank cannot be retained by it - Writ Petition allowed. (Paras 25, 26)
1. All these matters arise out of a common issue. M/s. Laran Sponge & Minerals Private Limited (hereinafter called as borrower) has availed a loan with Indian Bank by hypothecation of the agricultural land and also machinery belonging to the company and also the guarantors, Smt. P. Latha and Sri P. Vara Prasada Raju, who are the Directors of the Company. A loan facility of Rs.12,00,00,000/- as M.T.L. loan and O.C.C. Limit of Rs.5,00,00,000/- and L.C. of Rs.5,00,00,000/- and B.G. Limit of Rs.40,00,000/- was availed in the year, 2008 and ad hoc Limit of Rs.3,50,00,000/- in the year, 2009. As there was default in repayment of the loan and the loan was classified as Non Performing Asset (N.P.A.) Account and the Indian Bank being a secured creditor under the provisions of SARFAESI Act, 2002, has taken possession of the property. A publication was given on 28.08.2010 for auction of the same. M/s. United Steel Allied Industries Private Limited (Auction Purchaser) participated in the auction on 29.09.2010 and 25% of sale price was deposited. Subsequently, on 01.01.2010 S.B.I. Global Factors Limited has filed company petition for winding up as it is also a secured creditor and the petition was allowed on 18.07.2011 and the Official Liquidator was appointed to take possession of the property. After the auction a letter dated 18.10.2010 was addressed by the auction purchaser to the effect that their participation in the auction is subject to the following conditions:-
1) “Satisfactory legal due diligence and clear marketable title over land, plant and machinery free from any lien, charge, encumbrances etc.,
2) Indemnity guarantee from the Indian Bank with respect to future litigation, what so ever in nature, if any,
3) Indian Bank shall put us in the peaceful possession and handling over the land, plant and machinery and smooth functioning without any obstructions, what so ever in nature, from any quarter.
In this connection, we would also like to mention that in your above referred letter you have mentioned that the total available land is about 20 acres, whereas the land available is only 16 acres. Further, the land available is not sufficient to meet the technical requirements of plant.
In view of the above, we have no option, except to reserve our right to with draw. We request the Bank to refund the initial bid amount (inclusive of EMD) of Rs.9.0 Crores deposited with the Bank at the earliest.”
2. It is also to be noted here that after the sale on 29.09.2010 after deposit of 25% of the sale price, the balance of 75% was not deposited within fifteenth day. Thereafter, on 24.11.2010 a letter is said to have been addressed by the auction purchaser for grant of loan and accordingly loan was granted on 07.01.2011 and the balance of sale consideration was adjusted from that loan and a sale certificate was issued on 18.01.2011. Thereafter, as contemplated under the tender agreement, the documents were sent for registration. At that stage, the Official Liquidator has addressed a letter on 20.09.2011 to the Sub Registrar, Hakundi Village, Ballari District, informing that the borrower company was wound up in C.P.No.215 of 2010 and he was appointed as Liquidator and the Sub Registrar was requested not to register any document with regard to the properties of the borrower. Subsequently, W.P.No.33655 of 2011 was filed on 14.12.2011 by the Indian Bank for a direction to the Sub Registrar to register the sale certificate with regard to the auctioned property. While, the Writ Petition was pending, the Bank also filed the COMP.A.No.1972 of 2011 on 27.12.2011 for a direction to the Official Receiver to clarify his letter, dated 20.09.2011 addressed to the Sub Registrar. While the matter stood thus as the auction purchaser claimed that the possession was not given as there was further claims with regard to the auctioned property and there were dues claimed by the authorities and as the property is not free from encumbrances and as the Ba
