LexPEGASUS ASSETS RECONSTRUCTION P. LTD. versus M/S. HARYANACONCAST LIMITED &ANR.
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[2015] 15 S.C.R. 102 A PEGASUSASSETS RECONSTRUCTION P. LTD. B v. M/S. HARYANACONCAST LIMITED &ANR. (Civil Appeal No. 3646 of 2011) DECEMBER 29, 2015 [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.] Securitization and Reconstruction of Financial Assets C and Enforcement of Security Interest Act, 2002 - ss. 9, 13, 17 and 18 - Sale of secured asset by a secured creditor under the SARFAESI Act- Whether can be controlled by company court either directly or through an official liquidator - Held: There is no lacuna or ambiguity in the SARFAESI Act so as D to borrow anything from Companies Act - The required provisions of the Companies Act have been incorporated in the SARFAESI Act for harmonizing this Act with the Companies Act - Therefore, there is no reason to take recourse to any provisions of the Companies Act and permit E interference in the proceedings under the SARFAESI Act either by the Company Judge or the liquidator:- Companies Act, 1956 - Security & Interest (Enforcement) Rules, 2002. Auction - Auction-sale - Of secured asset - Confirmation of, by the court - Challenged on the ground F that the consideration money did not reflect the correct value of secured assets - Held: No illegality or irregularity was established against the conduct of auction - Once it is found that the offer was fair in a competitive bid conducted fairly and the same was accepted and sale confirmed, it would not G be proper for Supreme Court to undermine the value of such auction sale .. H Disposing of the appeals, the Court HELD: 1.1 There is no lacuna or ambiguity in the 102 PEGASUS ASSETS RECONSTRUCTION P. LTD. v. 103 MIS. HARYANACONCAST LTD. SARFAESI Act to warrant reading something more into A it. For the purpose it has been enacted, it is a complete code. There is nothing lacking in the Act so as to borrow anything from the Companies Act till the stage the secured assets are ·sold by the secured creditors in accordance with the provisions in the SARFAESI Act and B . the Rules. At the post sale stage, the rights of the persons · or parties having any stake in the sale proceeds are also taken care of by sub-section (9) of Section 13 and its five provisos (not numbered). As per sub-section (9) a sort of consensus is required amongst the secured C creditors, if they are more than one, for the exercise of rights available under sub-section (4). If borrower is a company in liquidation, the sale proceeds have to be distributed in accordance with the provisions of Section D 529A of the Companies Act even where the company is being wound up after coming into force of the SARFAESI Act, if the secured creditor of such company opts to stand out of the winding up proceedings, it is entitled to retain the sale proceeds of its secured assets after E depositing the workmen's dues with the liquidator in accordance with the provi~ions of Section 529A of the Companies A9t. [Para 24] [123-G-H; 124-A-D] 1.2 Thus, it is evid~t that the required provisions F of the Companies Act have been incorporated in the · SARFAESI Act for harmonizing this Act with the Companies Act in respect of dues of workmen and their protection under Section 529A of the Companies Act. In view of such exercise already done by the legislature, G there is no plausible reason as to take recourse to any provisions of the Companies Act and permit interference in the proceedings under the SARFAESI Act either by the Company Judge or the liquidator. [Para 24] [124-F- H] H 104 SUPREME COURT REPORTS [2015] 15S.C.R. . A 1.3 The Official Liquidator as a representative of the B borrower company under winding up has to be associated, not for supplying any omission in the SARFAESI Act but because of express provisions therein as well as in the Rules. [Para 24] (124-H; 125-A] 1.4 The clear intention of the Parliament is expressed in Section 13 of the SARFAESI Act that a secured creditor has the right to enforce its security interest without the intervention of the court or tribunal. C At the same time, this Act takes care that in case of grievance, the borrower, which in the case of a company under liquidation would mean the liquidator, will have the right of seeking redressal under Sections 17 and 18 of the SARFAESl.Act. [Para 25] (125-C·D] D 1.5 The appellant was entitled not only to stay outside the winding up proceeding in view of provisions of SARFAESI Act which is a special and later Act but was also e
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