The main legal point established in the judgment is that under the SARFAESI Act and the Recovery of Debts Due to Banks and Financial Institutions Act, a bank can sell a property in association with the official liquidator to safeguard the rights of secured creditors.

1. This application is filed by the Bank seeking permission to sell the property under the SARFAESI Act or through Debt Recovery Tribunal by virtue of the recovery certificate.

2. The perusal of the records would reveal that the applicant is one of the secured creditors, having obtained equitable mortgage by depositing title deeds in favour of the applicant bank in respect of a property at Pondicherry, owned by the respondent company under liquidation, in addition to hypothecation of its machinery as security for the amount advanced by the applicant along with other creditors. As the respondent co. failed and neglected to pay the amount, the applicant filed O.A.168 of 2003 before the Debts Recovery Tribunal for recovery of the amount and on the failure of either the respondent company or its guarantor, the Debts Recovery tribunal is pleased to pass a decree on 18.2.2008 and on the strength of the decree so made, recovery certificate made on 19.6.2008 is issued in favour of the applicant by the Recovery Officer.

3. While so, the respondent company is ordered to be wound up and the Official Liquidator is appointed by this court and the Official Liquidator sold some of the properties of the respondent company and the sale proceeds are now lying in the hands of the official liquidator. The applicant being the leader of Consortium Member Banks, made a claim before the official Liquidator for the decree amount to the turn of Rs.71,51,93,815.05 and as there was delay in making claim in Form 66 before the official Liquidator, the application to condone the delay is filed before this court and the delay in filing the Form 66 is condoned and the official Liquidator is directed to adjudicate the claim of the applicant and to pay the adjudicated sum to the applicant. In pursuance of the same, the Official Liquidator allowed the applicant’s claim to the tune of Rs.29,70,21,428/- and rejected the balance claim of Rs.41,84,72,387/- and the applicant is hence entitled to recover the allowed portion of the claim from and out of the sale proceeds.

4. Pending such claim, the Official Liquidator filed appropriate application before this court permitting him to sell the mortgaged property of the company under liquidation in Pondicherry to settle the dues of both the secured and unsecured creditors and the official Liquidator is permitted to do so and the property is brought for sale. Whereas, the sale is challenged by third party, who is in possession of the property by filing OSA No.129 of 2008 and the appeal is, after contest, dismissed and the person in possession of the property is directed to hand over the property to the official liquidator and the official liquidator is directed to bring the property for sale. However, inspite of best efforts taken by the Official Liquidator, there were no bidders to purchase the mortgaged property for the upset price fixed by this court and the sale was cancelled. Pending further steps be taken by the official liquidator for sale of mortgaged property, the applicant – Nationalised Bank has come forward with this application to permit them to sell the property under SARFAESI Act or through Debts Recovery Tribunal by virtue of the Recovery Certificate.

5. It is contended by the learned counsel for the applicant that though the loan was sanctioned on the strength of equitable mortgage, the present applicant bank is, as per inter se agreement dated 6.7.2000, authorized by other creditors bank to perform all acts and things on the understanding to share the securities created by the respondent company on pari pasu basis as even after the decree and recovery certificate obtained during 2008, the amount could not be realized till 2012, in view of the fact that the company is under liquidation and any further delay in realizing the securities is likely to result in greater prejudice to the creditors Nationalised banks. It is further contended by the bank that in the event of the applicant be permitted