LexANITA INTERNATIONAL versus TUNGABADRA SUGAR WORKS MAZDOOR SANGH - AND OTHERS
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[2016] 6 S.C.R. 635 ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS MAZDOOR SANGH - AND OTHERS (Civil Appeal Nos. 6042-6048 of201 I) JULY04, 2016 [JAGDISH SINGH KHEHAR AND ADARSH KUMAR GOEL, JJ.) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Recovery proceedings under - Propriety of - Company ordered to be wound up by Company Court - Possession of the assets thereof taken by Official Liquidator - Lender-Bank sought permission of the Company Court by filing application in the pending company petition, to pursue the recovery proceedings against the Company under the 1993 Act - Company court by order dated 10.3.2000 granted the permission subject to the condition that no coercive steps are taken against the assets of the company during or after the conclusion of the proceedings before the Debt Recovery Tribunal - Recovery certificate was issued by the Tribunal - Recovery Officer thereupon proceeded with the sale of the properties of the Company - Objections thereto raised by the Workers ' Union of the Company and by the Official Liquidator were overruled by the Recovery Officer - Jn Writ Petitions challenging recovery proceedings, the High Court asked the writ petitioners to approach the Debt Recovery Tribunal - Recovery Officer sold the property in auction - Company applications were filed challenging the auction sale of the property by Recovery Officer - Ex Director of the Company also filed company application seeking setting aside of the auction sale - The applications were dismissed by the Company Court - The appeal against the order of the company Judge was allowed setting aside the auction sale and confirmation thereof - On appeal, held: The order dated 10.3.2000 passed by the Company Court, was having jurisdiction to pass the same and hence was binding on the Recovery Officer - The condition imposed by the Company Court could not have been violated by the Recovery Officer - Thus the sale made by the Recovery Officer was in violation of 635 A B c D E F G H 636 A B c D E F G H SUPREME COURT REPORTS [2016] 6 S.C.R. the order dated 10.3.2000 - The order is equally binding on the auction-purchaser. Judgment/Order - An order/judgment, until set aside by a competent court, would have the force of law - It is not open to the parties to the lis or third parties to disobey the order/judgment considering it, on their own, as void or non-est. Dismissing the appeals, the Court HELD: 1. The condition imposed by the Company Court could not be violated by the Recovery Officer. The sale made by the Recovery Officer in violation of the orders passed by the Company Court, was without the authority of law. Therefore, it is not correct to say that the order dated 10.3.2000 being wholly void and non est could not have any bearing on the proceedings conducted by the Recovery Officer, including the sale of the properties of the Company under liquidation and also, the confirmation thereof by the Recovery Officer. The acceptance of the bid of appellant-auction purchaser by the Recovery Officer and the confirmation of the sale in its favour were clearly impermissible, and therefore, deserve to be set aside. [Paras 39, 42) [696-D; 697- F-G; 698-B) M V. Janardhan Reddy v. Vijaya Bank 2008 (7) SCR 520 : (2008) 7 SCC 738; Official Liquidator, Uttar Pradesh and Uttarakhand v. Allahabad Bank 2013 (4) SCR 207 : (2013) 4 SCC 381 - relied on. 2. For recovery of a debt due to a bank or a financial institution, the concerned bank or financial institution, can legitimately initiate proceedings, by filing a winding up petition before the jurisdictional Company Court, or alternatively, intervene in a pending winding up petition. Since there is no bar restraining a bank or a financial institution from approaching a Company Court, by filing a winding up petition, it is not possible to conclude, that the jurisdictional Company Court, is not possessed with the determinative authority/competence to entertain a claim raised by such bank or financial institution. It cannot be said that the order passed by the Company Court in the High Court at Madras dated 10.3.2000, lacked the jurisdictional authority. Since the Company Court which passed the order dated 10.3.2000 did not lack jurisdiction in the facts of this case, the order dated 10.3.2000 was neither invalid nor void. [Para 44) (699-A-C] ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS MAZDOOR
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