The main legal point established in the judgment is the resolution of conflict between the SARFAESI Act and the Companies Act through harmonious construction of statutes, and the direction to associate the Official Liquidator with the auction process.

MANMOHAN, J.

1. Present two applications have been filed by the auction purchaser – M/s. Mohan Tractors (P) Ltd. and by M/s. Kotak Mahindra Bank Ltd. for desealing the premises i.e. plot no.1297 ad measuring 502.33 sq. yards situated at Sector MIE, Bahadurgarh, Haryana and for handing over possession of the same to the auction purchaser -M/s. Mohan Tractors (P) Ltd.

2. Mr. Chetan Sharma, learned senior counsel appearing for the auction purchaser submits that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, “the SARFAESI Act”) override the provisions of the Companies Act because the former is a special and specific legislation. He further submits that the role of the liquidator arises only when the claims of workmen are pending adjudication before the Official Liquidator. In this connection, he places reliance on Sub-section (9) of Section 13 of the SARFAESI Act. He further states that in the present case, the Secured Creditor M/s. Kotak Mahindra Bank Ltd. had not only appointed a valuer but had also published the auction notice in national dailies.

3. Mr. Shahzad Khan, learned counsel appearing for M/s. Kotak Mahindra Bank Ltd. adopts the arguments of Mr. Chetan Sharma.

4. On the other hand, Mr. Sanjay Katyal, learned counsel for the Official Liquidator submits that Punjab and Haryana High Court in Haryana State Industrial & Infrastructure Development Corporation vs. Haryana Concast Limited, Hisar and another, (2010) ILR 2 P&H 284 has held that a Secured Creditor is entitled to conduct an auction under the SARFAESI Act only after associating the Official Liquidator at all stages. He states that as in the present case the Provisional Liquidator had been appointed on 3rd August, 2011, the auction conducted by the Secured Creditor, namely, M/s. Kotak Mahindra Bank Ltd. on 24th August, 2011 without involving the Liquidator was bad in law. He further states that since no claims have been invited in the present case by the Official Liquidator, it cannot be said that there are no claims payable to the workmen under Section 529A of the Companies Act.

5. Mr. Chetan Sharma, learned senior counsel submits in rejoinder that the judgment of the Punjab and Haryana High Court is per incuriam as it has relied on the observations of the Supreme Court in Rajasthan Financial Corporation v. Official Liquidator A.I.R. 2006 S.C. 755 which is actually a case under the State Financial Corporations Act, 1951 and not under the SARFAESI Act. According to him the judgment of Allahabad Bank vs. Canara Bank and Anr., (2000) 4 SCC 406 is applicable in the present case.

6. In rejoinder, Mr. Shahzad Khan, learned counsel appearing for M/s. Kotak Mahindra Bank Ltd. states that notice for conducting the auction had been published on 23rd July, 2011.

7. Having perused the aforesaid judgments and having heard learned counsel for the parties, this Court is of the view that the issue of conflict between the SARFAESI Act and the Companies Act has been resolved by the Punjab and Haryana High Court by following the principle of harmonious construction of two overlapping Statutes. In fact, this Court is of the opinion that the Punjab and Haryana High Court has not merely followed the judgment rendered by the Hon’ble Supreme Court in the case of Rajasthan Financial Corporation (supra) but has also decided the issue of conflict between the SARFAESI Act and the Companies Act. The relevant portion of Haryana State Industrial & Infrastructure Development Corporation (supra) is reproduced below:

“26. The aforesaid detailed arguments would lead us to the following two questions of law:-

(A) Whether the Company Court enjoys jurisdiction to issue supervisory direction to a securitisation company/secured creditor in connection with a company in liquidation or under winding up in the face of Section 13 of the SARFAESI Act or securitisation company opting to stand outside the winding up