M.V. JANARDHAN REDDY versus VIJAYA BANK & ANR.

Citation: [2008] 7 S.C.R. 520 · Decided: 02-05-2008 · Supreme Court of India · Bench: C.K. THAKKER · Disposal: Case Partly allowed

Judgment (excerpt)

[2008] 7 S.C.R. 520 
A 
M.V. JANARDHAN REDDY 
,,._ 
V. 
VIJAYA BANK & ANR. 
(Civil Appeal No. 3201 of 2008) 
B 
MAY 2, 2008 
[C.K. THAKKER AND D.K. JAIN, JJ.] 
Companies Act, 1956 - Company in liquidation - Sale 
of properties by way of auction - Grant of permission, subject 
c to confirmation by company court -
Auction sale -
Confirmation of, by Recovery Officer- Held: Not correct - Order 
• 
passed by officer having no authority of law has no effect - It 
does not create any right in favour of a party for whom such 
order is made nor imposes any obligation on the opposite 
D party against whom it was passed - Parties were aware about 
the condition that sale was subject to confirmation by court -
Thus, Recovery Officer could not confirm the sale - He did 
... 
j •• 
not have power - Action taken by him was in violation of the 
condition imposed by court - A/so actions taken in pursuance 
to confirmation of sale, of no effect - Furthermore, Official 
E Liquidator in charge of the assets of the Company, was not 
associated with the auction proceedings - Thus, Company 
Court as a/so Division Bench of High Court did not commit 
any illegality in setting aside the sale - However, in the interest 
of justice, new auction purchaser to whom property was sold 
F after setting aside of the sale, directed to pay Rs. 20 lakhs to 
auction purchaser as solatium - Auction. 
The Company KOC was in liquidation. Respondent 
No.1-Bank filed recovery suits against the Company. The 
G 
suits were decreed. Bank filed execution applications and 
the Recovery Certificates were issued in its favour to 
execute the decree. However, the matter was pending in 
the Company Court. The Official Liquidator was 
appointed. Bank filecf,application before the Company 
Court for grant of leave to proceed with the sale of the 
H 
520 
,_ 
II
M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR. 
521 
property of the Company. The permission was granted A 
by order dated 13.8.1999. Bank took steps for the sale of 
the property. The valuation report was prepared. Bank then 
filed application before the Company Court for 
acceptance of the valuation report and permission to sell 
the property by auction throu.gh the Recovery Officer, ORT. 
B 
The application was allowed by order dated 28.3.2005. 
Bank published a notice fixing date of sale. Public notice 
was issued. Reserve price was fixed at Rs.45 lakhs. No 
bidder came forward in the Auction sales held thrice. 
Thereafter, in the subsequent auction, the appellant c 
offered Rs.67.50 lakhs. It was accepted being the highest. 
Bank filed an application before the Company Court to 
allow the Recovery Officer of tribunal to confirm the sale 
in favour of appellant and permit him to issue sale 
certificate. Recovery Officer confirmed the sale. The D 
Official Liquidator also submitted a report to the court that 
the sale be confirmed. Sale certificate was issued in favour 
of the appellant. Sale was registered. However, the 
Company Court set aside the sale without issuing notice 
and giving opportunity of hearing on the ground that 
auction sale was not properly conducted and was E 
confirmed without order of the Court. Meanwhile, the 
Company Judge issued direction to the Official Liquidator 
to sell the property. The Official Liquidator issued notice 
for sale of the property. Auction took place. Respondent 
No.3's bid for Rs.1.80 crores being the highest was 
F 
accepted. Appellant filed appeal challenging the order of 
the Company Judge setting aside the sale and the same 
was allowed. The matter was again placed before the 
Company Judge for passing order in accordance with law. 
The Company Judge set aside the sale in favour of the G 
appellant and directed refund of the amount deposited 
by the appellant. In appeal, the Division Bench of High 
Court upheld the order of the Company Judge setting 
aside the sale. Hence, the present appeal. 
H 
522 
SUPREME COURT REPORTS 
[2008] 7 S.C.R. 
A 
Partly allowing the appeal, the Court 
HELD : 1. On facts and in the circumstances of the 
case, it cannot be said that by setting aside sale, either 
the Company Judge or the Division Bench of High Court 
B committed any illegality which deserves interference in 
exercise of discretionary power under Article 136 of the 
., 
Constitution. (Para 19) [529-F, G] 
2.1 The orders of the Company Court dated 13.8.1999 
and order dated 28.3.2005 leave no room of doubt that 
c the Bank was permitted to go ahead with the proposed 
sale

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