PRAVIN GADA AND ANOTHER versus CENTRAL BANK OF INDIA AND OTHERS

Citation: [2012] 13 S.C.R. 611 · Decided: 03-12-2012 · Supreme Court of India · Bench: K.S. RADHAKRISHNAN · Disposal: Disposed off

Judgment (excerpt)

[2012] 13 S.C.R. 611 
PRAVIN GADA AND ANOTHER 
v. 
CENTRAL BANK OF INDIA AND OTHERS 
(Civil Appeal Nos. 8658-8660 of 2012) 
DECEMBER 03, 2012 
[K. S. RADHAKRISHNAN AND DIPAK MISRA, JJ.] 
A 
B 
Auction Sale - Of the property of company under 
liquidation - At the behest of the secured creditors - Auction 
sale confirmed in favour of appellants for Rs. 2. 50 crores -
C 
Set aside on being challenged - Further auction fetching Rs. 
6.45 crores also set aside - Sale in favour of appellants 
restored - On appeal, Supreme Court passing orders for fresh 
auction - The highest bid was for Rs. 5.04 crores - Held: The 
appellants had deposited Rs. 2.50 crores 6 year back and 
D 
already invested substantial amount in the property - The 
highest offer came up to Rs. 5.04 crores at such a distance 
of time - Including the interest component on the amount 
deposited by the appellants, the total sum would came to Rs. 
4. 75 crores - Therefore, sale directed to be confirmed in favour 
E 
of the appellants, subject to their depositing a further sum of 
Rs. 50 lacs - In view of the concession of the appellants made 
before High Court regarding their willingness to negotiate with 
the workmen, High Court directed to deal with the rights of the 
workmen in an apposite manner, and if required, monitor the 
F 
same - Corporate Law - Rights of workmen of company under 
liquidation. 
Corporate Law - Company under liquidation - Official 
Liquidator - Role of - Held: Role of Official Liquidator is not G 
restricted to participation at the stage of disbursement of dues 
of the workmen, his participation is required a/so at the stage 
of conducting of sale. 
The Company in question was declared sick by BIFR. 
611 
H 
612 
SUPREME COURT REPORTS 
[2012] 13 S.C.R. 
A Official Liquidator was appointed. Debt Recovery Tribunal 
(ORT) allowed the application of the creditor-Bank of the 
Company for recovery of its dues against the Company. 
It further directed that on failure to repay the amount, the 
immovable property of the company would be sold and 
B the sole proceeds would be paid to the applicant-Bank 
and respondent No.1-Bank in proportion to their 
respective charges. 
The immovable property of the company was sold in 
c auction to the appellants for Rs. 2.50 crores. Respondent 
No. 1-Bank filed application for setting aside the sale 
alleging procedural irregularities and prayed for fresh 
auction. Official Liquidator had also filed its report before 
ORT stating that the workers of the company had 
0 contended that the sale to the appellants was at a price 
which was neither fair nor reasonable. 
The Recovery Officer set aside the sale to the 
appellants and directed conduct of fresh auction in the 
presence of secured creditors, the Receiver and Official 
E Liquidator, after notice. Fresh auction was conducted 
wherein original auction-purchasers (appellants) did not 
participate. The highest bid was for Rs. 6.45 crores. 
On the application of the appellants, the sale was set 
F aside by ORT, directing the Recovery Officer to publish 
a public notice to determine as to whether the offers 
higher than the bid of Rs. 6.45 crores could be realized 
and if no further offers were received, accept the highest 
bid after inter-se bidding between the earlier bidders. 
G 
H 
Appellants filed appeal, which was dismissed by 
DRAT. The order was challenged in writ court, who 
remanded the matter to DRAT. After remand, DRAT 
restored the sale in favour of the appellants. Workers' 
Union challenged this order and High Court again 
PRAVIN GADA v. CENTRAL BANK OF INDIA 
613 
remitted the matter to DRAT. After reconsidering the A 
matter, DRAT restored the sale in favour of the appellants. 
The matter was challenged by secured creditors and 
the workmen's Union. The appellants made a submission 
before the Court that they were ready and willing to 8 
negotiate with the workmen, but they were not in a 
position to do so until the litigation by secured creditors 
attained finality. High Court allowed the writ petition 
directing public advertisement inviting bids for the sale 
of the property. High Court also held that the opinion of C 
ORA T that the power of Official Liquidator was restricted 
to participation at the stage of disbursement of the dues 
of the workmen, but not in conducting sale, was not 
correct. 
The present appeals were filed by the appellants. D 
This Court directed fresh auction. As the Court was not 
satisfied with the auction, it dir

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