ANITA INTERNATIONAL  versus TUNGABADRA SUGAR WORKS MAZDOOR SANGH - AND OTHERS
[2016] 6 S.C.R. 635, Supreme Court of India, 2016
Outcome: Dismissed (Dismissed)
Segment: Body
[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 
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[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 SANGH 
Kiran Singh v. Chaman Paswan 1955 (1) SCR 117; 
Sadashiv Prasad Singh v. Harendar Singh 2014 (1) SCR 
249 : (2015) 5 SCC 574; Jagmittar Sain Bhagat v. 
Director, Health Services, Haryana 2013 (8) SCR 77 : 
(2013) 10 sec 136 - held inapplicable. 
3. It is not' 'open, either to parties to a /is or to any third 
parties, to determine at their own, that an order passed by a Court 
is valid or void. A party to the /is or a third party, who considers 
an order passed by a Court as void or non est, must approach a 
Court of competent jurisdiction, to have the said order set aside, 
on such grounds as may be available in law. However, till an 
order passed by a competent Court is set aside, the same would 
have the force of law, and any act/action carried out in violation 
thereof, would be liable to be set aside. To conclude otherwise, 
may have disastrous consequences. Every cantankerous and 
quarrelsome litigant would be entitled to canvass, that in his 
wisdom, the judicial order detrimental to his interests, was void, 
voidable, or patently erroneous. And based on such plea, to avoid 
or disregard or even disobey the same. This course can· never 
be permitted. (Para 45) [699-D-H] 
Krishnadevi Malchand Kamathia 
v. 
Bombay 
637 
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Environmental Action Group 2011 (3) SCR 291 : (2011) 
. E 
3 SCC 363; Official Liquidator, Uttar Pradesh and 
Uttarakhand v. Allahabad Bank 2013 (4) SCR 207 : 
(2013) 4 SCC 381;
Jehal Tanti v. Nageshwar Singh 
I 
·' (2013) 14 sec 689 _; relied On 
4. It is not correct to say that the impugned sale dated 
11.8.2005, and its confirmation on 12.9.2005, should not be 
interfered with on the ground of equity, as the appellant had made 
the entire payment in 2005, and the Recovery Officer had ordered 
confirmation of the sale, as no objection had been raised against 
the same. The Official Liquidator, as well as, the workers' union 
had raised objections before the Recovery Officer at the very.initial 
stage. Even a former Director of the Company raised a challenge 
to the proceedings before the Recovery Officer by asserting, that 
the reserve price of Rs.IO crores fixed for the property being 
put to auction, was too low. The fact, that in the process of sale .of 
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the properties of the Company only two bids were received, has 
not been disputed. It is also not disputed, that whilst one of the 
bidders was the appellant, the other bidder was a sister company 
of the appellant. In sum and substa.nce therefore, there was only 
one bidder. For the above reasons, in additi<_Jn to those recorded 
by the High Court, it is not possible for the Court to accept the 
claim of the appellant on the ground of equity. [Para 471 (700-D-
G) 
5. It is also not correct to say that the sale conducted by 
the Rec9very Officer on 11.8.2005, and the order of confirmation 
thereof passed by the Recovery Officer on 12.9.2005, ou~ht to 
have been assailed only in proceedings under Section 30 of the 
Recovery of Debts Due to Banks and Financial Institutions Act, 
1993. There was sufficient justification for the parties to have 
approached the Company Court in the High Court at Madras, for 
the reason that they were seeking the enforcement of the order 
dated 10.3.2000, passed by the Company Court itself. The sale 
made by the Recovery Ofiicer and its confirmation were in utter 
violation of the order dated 10.3.2000, and therefore, the 
concerned parties were justified in approaching the High Court 
at Madras. [Para 48] [701-A-D) 
6. It also cannot be said that the order dated 10.3.2000 
passed by the Company Court, while disposing of Company 
Application Nos. 1251-1253 of 1999, filed by the
Bank, was not 
binding on the appellant as that order was an order in persomm1. 
In the application filed by the Bank, the prayer made was, thaf 
the Bank be permitted leave to proceed with recovery 
proceedings before the DRT. By the order dated 10.3.2000, the 
Company Court in the High Court at Madras, while granting 
leave, imposed two conditions. Firstly, the Official Liquidator would 
have to be impleaded by the bank in the recovery proceedings 
before the DRT. And secondly, no coercive steps would be taken 
against the assets of the company during or after the conclusion 
of the proceedings before the Tribu1.ial. It cannot be said that the 
aforesaid order passed by the High Court was an order in 
personam. The above order had a clear and binding effect on the 
proceedings permitted to be initiated before the DRT, and further, 
that it was equally binding on the Recovery Officer. And
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH 
accordingly, the same would also be binding on those claiming 
through sale proceedings conducted by the Recovery Officer. 
Thus, the order dated 10.3.2000 was also binding on the appellant 
before this Court. [Para 49) [701-D-H; 702-A-B) 
Allahabad Bank v. Canara Bank 2000 (2) SCR 1102 : 
(2000) 4 SCC 406; Andhra Bank v. Official Liquidator 
2005 (2) SCR 776 : (2005) 5 SCC 75; Rajasthan State 
Financial Corporation v. Official Liquidator 2005(3) 
Suppl. SCR 1073: (2005) 8 SCC 190; Industrial Credit 
and Investment Corporation of India Ltd. v. Srinivas 
Agencies 1996 (2) SCR 960 : (1996) 4 SCC 165; 
Dhurandhar Prasad Singh v. Jai Prakash University 
2001 (3) SCR 1129: (2001) 6 SCC 534; J Radhy Shyam 
v. Shyam Behari Singh AIR 1971 SC 2337 : 1971 (1) 
SCR 783; Navalkha and Sons v. Sri Ramanya Das 1970 
(3) SCR 1 : (1969) 3 SCC 537 - 1·eferred to. 
2000 (2) SCR 1102 
2008 (7) SCR520 
Case Law Reference 
referred to 
relied on 
2005 (2) SCR 776 
referred to 
Para6 
Para 13 
Para 15 
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2005 (3) Suppl. SCR 1073 
referred to 
Para 15 
E 
2013 (4) SCR 207 
relied on 
2014 (1) SCR 249 
held inapplicable 
1996 (2) SCR 960 
referred to 
Paras 15, 45 
Para 16 
Para20 
2011 (3) SCR 291 
relied on 
Para23 
F 
(2013) 14 sec 689 
relied on 
1955 (1) SCR 117 
held inapplicable 
2001 (3) SCR 1129 
2013 (8) SCR 77 
1971 (1 ) SCR 783 
1970 (3) SCR 1 
referred to 
held inapplicable 
referred to 
· referred to 
Para 25
Para 27 
Para 27 
Para 27 
Para 29 
Para 29 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6042-
6048of2011. 
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A 
From the Judgment and Order dated 17.09.2009 of the High Court 
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of Judicature at Madras in OSA Nos. 59, 61,62,63,76,77 & 82 of2009 
WITH 
C. A. Nos. 5501-5502 of2016. 
P. Chidambaram, Salman Khurshid, S. Ganesh, V. Giri, Sr. Advs., 
AlokAggarwal, Apoorv Kurup, Vikas Mehta, Varun Tikmani, Roh it Rathi, 
Gaurav Tanwar, Ms. Anushree Menon, Rajat Sehgal, Antony Julian, 
Manav Vohra, Ms. Garima Prashad, Advs. for the Appellants. 
Tushar Mehta, ASG, F. S. Nariman, C. A. Sundaram, Huzefa 
Ahmadi, Dr. Rajeev Dhawan, Sr. Advs.,Arunabh Chowdhury, Rahul 
Pratap, Amar Dev Unniyal, Ms. Rohini Musa, Zafar Inayat, Abhishek 
Gupta, Farrukh Rasheed, Amardev Uniyal, A. Raghunath, Sabheesh 
Mohanan, Mahesh Agarwal, Shashank Manish, Abhinav Agrawal, E. C. 
Agrawala, Mrs. Maneesha Dhir, Apoorve Karol, Vaibhav Tyagi, Gagan. 
Gupta, Bhaskar Vali, R. N. Keshwani, Shivaji M. Jadhav, Gaurav Goel, 
M.s. Pallavi Langar, Advs, for the Respondents. 
The Judgment of the Court was delivered by 
JAGDISH SINGH KHEHAR, J. I. Leave granted in Special 
Leave Petition (C) Nos. 7490-7491 of2014. 
2. Two company petitions, i.e., Company Petition Nos. 170 of 
I 995 and 35 of I 997 were filed by Videocon International Ltd. and Tapti 
Machines Pvt. Ltd., for winding up ofDeve Sugars Ltd. before the High 
Court of Judicature at Madras. Deve Sugars Ltd. was running a sugar 
factory in the State of Karnataka. Deve Sugars Ltd. was ordered to be 
wound
up on I 6.4.1999. An Official Liquidator was accordingly directed 
to take possession of the properties of the company- Deve Sugars Ltd .. 
The Official Liquidator took possession of the assets of the company 
situate at Harige (in District Shimoga, in the State of Karnataka), on 
28.9.1999. 
3. The State Bank of Mysore had also extended some loans to 
Deve Sugars Ltd.. When Deve Sugars Ltd. defaulted in the repayment 
of the loans, the State Bank of Mysore filed Original ApplicationNos. 
440 of I 997 and I 300 of I 997, before the Debts Recovery Tribunal, 
Bangalore, (hereinafter referred to as, the ORT, Bangalore) for the 
recovery of Rs.22,31,78,558.55. During the course of the instant
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
proceedings, the ORT, Bangalore issued a recovery certificate in the 
sum of Rs.8.40 crores. It would be relevant to mention, that the State 
Bank of Mysore also filed Company Application Nos.1251-1253of1999, 
in the pending Company Petition No.170of1995, before the High Court 
at Madras, seeking leave to proceed with the recovery proceedings before 
the ORT, Bangalore, under the Recovery of Debts Due to Banks and 
Financial Institutions Act, 1993 (hereinafter referred to as, the ROB 
Act). 
4. The Company Court in the High Court at Madras, while granting 
leave to the State Bank of Mysore, passed the following order on 
10.3.2000 (while disposing of Company Application Nos. 1251-1253 of 
1999): 
"This company application praying this Court to grant leave to the 
applicant Bank to proceed and prosecute further O.A. No.1300 
of 1997 filed by them against the respondent Company in the 
Debt Recovery Tribunal at Bangalore. 
Company Applications coming on this day before this Court for 
hearing in the presence of Mr. R. Varichandran advocate for the 
applicant, herein and the official liquidator, High Court, Madras, 
the respondent, appearing in person, and upon reading the Judges 
Summons and affidavit and report of the Official Liquidator filed 
herein, the Cou.rt made the following orders:-
Leave is granted subject to the condition that official liquidator is 
impleaded and no coercive
steps are taken against the assets.of 
the company during or after the conclusion of the proceedings 
before the Tribunal." 
(emphasis supplied) 
A perusal of the above order reveals, that leave was granted, 
subject to the condition that the Official Liquidator, was impleaded before 
the ORT, Bangalore, and further, that no coercive steps would be taken 
against the assets of the company - Deve Sugars Ltd., during or after 
the conclusion of proceedings before the DRT, Bangalore. 
5. On 1.8.2001, the workers' union of Deve Sugars Ltd. was 
granted the responsibility to overlook security arrangements of the 
establishment of Deve Sugars Ltd .. 
6. Immediately after the ORT, Bangalore, issued the recovery 
certificate, the State Bank of Mysore moved DCP No.1912 in Original 
Application No.440 of 1997, seeking the disposal of the assets of the 
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company in liquidation, at the hands of the Recovery Officer of the 
ORT, Bangalore (hereinafter referred to as, the Recovery Officer). 
Simultf!neously, the State Bank of Mysore being conscious of the order 
passed by the High Court at Madras on 10.3.2000, filed Company 
Application No.1300 of2003, with a prayer that it be permitted to seek 
execution of the recovery certificate dated 15.5.2002 (for recovering 
the amounts due to it, from out of the assets ofDeve Sugars Ltd.). It is 
relevant to mention, that the aforesaid Company Application No.1300 of 
2003 was not entertained by the Registry of the High Court at Madras. 
While declining to entertain Company Application No.1300 of2003, the 
Registry of the High Court at Madras, relied upon a judgment rendered 
by this Court in Civil Appeal No. 2536 of2000 (reported as Allahabad 
Bank v. Canara Bank 1). While not entertaining Company Application 
No.1300 of2003, the Registty of the High Court recorded the following 
endorsement: 
"ORDER 
As per order in Civil Appeal no.2536/00 as reported in 2000 (3) 
SCC 205. Leave is not necessary." 
7. Consequent upon the return of Company Application No.1300 
of2003, it came to be assumed by the State Bank of Mysore, that leave 
of the High Court, was not required for the sale of the assets of Deve 
Sugars Ltd.. Accordingly, the State Bank of Mysore approached the 
Recovery Officer, for the disposal of the assets
ofOeve Sugars Ltd., in 
continuation of the recovery certificate issued by the ORT dated 
15.5.2002. On the above prayer of the State Bank of Mysore, the 
Recovery Officer issued a proclamation of sale in Form-13, by following 
the procedure prescribed under the ROB Act. The auction of the 
properties of Oeve Sugars Ltd., in the first instance, was fixed for 
1.10.2014. 
8. At the instant juncture, the workers'. union (Tungabadra Sugar 
Works Mazdoor Sangh), of Oeve Sugars Ltd., approached the High 
Court of Karnataka, by filing Writ Petition No.3 7991 of2004. Through 
the above writ petition, the workers' union assailed the recovery 
proceedings initiated by the State Bank of Mysore, before the Recovery 
Officer. The workers' union also sought an interim direction from the 
High Court of Karnataka, to restrain the continuation· of the sale 
• (2000) 4 sec 406
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
proceedings, at the hands of the Recovery Officer, because their salary 
and provident fund dues, were still payable by Deve Sugars Ltd .. The 
aforesaid prayer was made by asserting, that the workers' union had a 
preferential claim, as against the claim of the State Bank of Mysore, 
under the provisions of the Companies Act. A learned single Judge of 
the High Court ofKarnataka, while issuing notice, directed that the sale 
made by the Recovery Officer would be subject to the final outcome of 
the writ petition. It would also be relevant to reiterate, that the Official 
Liquidator was authorized by the High Court at Madras, to take over 
possession of the properties of the company under liquidation. The Official 
Liquidator had accordingly taken over possession of the said properties 
on 28.9.1999. While permitting the State Bank of Mysore to pursue the 
recovery proceedings against Deve Sugars Ltd. before the ORT, the 
High Couti at Madras, had directed that the Official Liquidator be imp leaded 
as a respondent before the ORT. The Official Liquidator, had also raised 
objections to the purported sale by the Recovery Officer (in continuation 
of the recovery certificate dated 15.5.2002, issued by the ORT). The 
Official Liquidator sought deferment of the sale proceed in gs at the hands 
of the Recovery Officer, under Section 529A of the Companies Act. It 
would be relevant to mention,
that the objections raised by the workers' 
union and the Official Liquidator, were overruled by the Recovery Officer. 
9. It is also pertinent to mention, that the auction scheduled by the 
Recovery Officer for I. I 0.2004, could not be conducted. Accordingly, 
a fresh proclamation was issued, for the auction of the properties of 
Deve Sugars Ltd., fixing 11.8.2005 as the date for holding the auction. 
The rival parties were also permitted to bring their buyers, if there was 
anyone interested. The reserve price was fixed at Rs. IO crores. The 
auction was actually conducted on 11.8.2005. The highest bid was made 
by Anita International, the appellant before this Court. The bid of Anita 
International of Rs. I 0.25 crores was accepted. The bidder deposited 
the bid amount, within the stipulated period. No challenge was raised 
against the auction conducted on 11.8.2005, within the postulated period 
of 30 days, as is permissible in terms of the Rules framed under the 
ROB Act. The Recovery Officer ordered the confirmation of the sale of 
the auctioned property, after the expiry of statutory period, expressed in 
Rules 60, 61, and 62 of the Second Schedule of the Income Tax Act (as 
is applicable to proceedings, before Debts Recovery Tribunals), on 
12.9.2005. 
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IO. On 20.9.2005, the Recovery Officer appointed a Receiver, to 
take possession of the property, sold at the auction. The Court 
Commissioner allegedly took over possession of some of the properties, 
and handed over the same to the auction purchaser-Anita International. 
Atthe instant juncture, the appellant-Anita International, filed Company 
Application No.1811 of2005 before the High Court at Madras for removal 
of the security agency. At the said juncture, Videocon International Ltd. 
and Tapti Machines Pvt. Ltd. filed Writ Petition No.26564 of2005 before 
the High Court ofKarnataka. The above writ petition, and Writ Petition 
No.37991 of2004 (filed by the workers' union) were heard by a learned 
single Judge, wherein the auction purchaser-Anita International, raised 
a preliminary objection. It was submitted, that the petitioners before the 
High Court had an efficacious alternative remedy, under the ROB Act. 
It was accordingly prayed, that the petitioners be relegated to their 
alternative remedy. Company Application No.854 of 2006 was filed 
before the Company Court in the High Court at Madras, wherein a 
challenge was raised to the sale of the assets of Deve Sugars Ltd., at 
the hands of the Recovery Officer. It would be relevant to mention, that 
the above two writ petitions were disposed of by tlie High Court of 
Kamataka, by a common order dated 27.10.2006. The petitioners before 
the Karnataka
High Court were allowed to avail of their alternative 
remedy before the ORT, Bangalore. The above common order dated 
27.10.2006 was challenged, by filing Writ Appeal Nos.2050 and 2051 of 
2006. Both the above writ appeals were dismissed on 23 .2.2007. Liberty 
was, however, reserved with appellants, by permitting them to approach 
the ORT, Bangalore, by fit ing appeals. As a matter of abundant caution, 
the appellate Court ordered, that the ORT, Bangalore, would deal with 
the controversy, uninfluenced by the orders passed by the High Court. 
11. In compliance with, and in continuation of the outcome before 
the High Court ofKarnataka, the workers' union preferred AOR No.15 
of2006 and Videocon International Ltd. preferred AOR No.I of2007. 
In the above appeals, a challenge was raised to the order dated 12.9.2005 
passed by the Recovery Officer, whereby the sale of the properties of 
Deve Sugars Ltd. conducted on 11.8.2005, in favour of Anita International 
was confirmed. Simultaneously, one N. Ponnusamy, an ex-Director of 
· Deve Sugars Ltd., filed Company Application Nos.2740-2742 of2007 
before the Company Court in the High Court at Madras, and sought the 
setting aside of the auction sale dated 11.8.2005, as well as, the
ANITA INTERNATIONAL v. TUNGABAORA SUGAR WORKS 
MAZOOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
confinnation order dated 12.9.2005, after the payment of the consideration 
amount. The challenge raised by N. Ponnusamy was primarily on the 
ground that the reserve price of Rs. I 0 crore was too low. N. Ponnusamy, 
also sought transfer of the recovery proceedings, from the ORT, 
Bangalore, to the High Court at Madras. While entertaining the 
proceedings initiated by N. Ponnusamy, the High Court by its order dated 
24.10.2007, passed an ex parte interim order of stay. Anita International 
and State Bank of Mysore, filed detailed objections, to the applications 
filed by the Official Liquidator, as well as, by the aforementioned N. 
Ponnusamy. All the applications filed in C.A. No.18 I I of 2005 were 
taken up for consideration, collectively. By a common order dated 
3.3.2009, the application filed by the Official Liquidator was dismissed, 
by holding that the Official Liquidator was a party before the Karnataka 
High Court (in the proceedings which were disposed of by a common 
order dated 2 7. I 0 .2006), and in consonance with the above order, the 
Official Liquidator was obi iged to file an appeal, to challenge the auction 
sale (dated I 1.8.2005), as well as, the order of confirmation (dated 
12.9.2005) passed by the Recovery Officer. Likewise, the proceedings 
initiated by N. Ponnusamy, also did not yield any result. His claim was 
also rejected on the ground, that he too could
have availed of the remedy 
of filing an appeal, to assail the orders passed by the Recovery Officer. 
The other applications, which came up for hearingjointly were likewise 
dismissed, as the said applicants, had already availed of the appellate 
remedy, before the ORT, Bangalore. As against the above, the application 
filed by Anita International for possession of the property purchased by 
way of auction at the hands of the Recovery Officer, was allowed. 
12. Dissatisfied with the order passed by the Company Court, the 
applicants raised a challenge to the order dated 3.3 .2009 (passed in C.A. 
Nos.1811 of2005, 854 of2006 and 2740-2742 of2007 - in Company 
Petition No. 170 of 1995) by filing O.S.A. Nos. 59-63, 76, 77 and 82 of 
2009. The impugned order in the present appeals dated 17.9.2009, was 
passed by a Division Bench of the Company Court in the High Court at 
Madras. In arriving at its conclusions, the High Court took into 
consideration inter alia the following factors: 
Firstly, the Official Liquidator had raised objections before the 
Recovery Officer, in respect of the sale of the properties ofOeve Sugars 
Ltd .. There was nothing to indicate, that the said objections were ever 
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considered by the Recovery Officer. Conversely, the High Court also 
arrived at the conclusion, that the Official Liquidator who was the custodian 
of the properties of Deve Sugars Ltd. (consequent upon the Official 
Liquidator having taken possession of the assets of the company on 
28.9.1999), had failed to effectively protect the property of the company .. 
Secondly, no material had been placed before the High Cou11 to 
indicate, that the valuation report (dated 24.3 .2002) and the inventory 
(dated 25.11.2004) were prepared after giving notice to the Official 
Liquidator, who was undoubtedly in exclusive custody of the properties 
(which were subject matter of auction). 
Thirdly, even after the workers' union had raised objections before 
the Re~overy Officer, no material was placed before the High Court, 
that there was proper application of mind at the hands of the Recovery 
Officer, leading to the inference, that the objections were rejected in a 
casual and lackadaisical manner. 
Fourthly, the inspection of the properties of the company under 
winding up, by the intending purchasers (for the auction sale scheduled 
on 11.8.2005) was pennitted only on the day preceding the date of auction 
(namely, on I 0.8.2005), leading to the inference, that the entire process 
of auction was a mere fomrnlity. 
Fifthly, on the advertised date fixed for the auction (on 11.8.2005) 
the Recovery Officer received only
two bids. Despite the above, he 
closed the bid on 11.8.2005 itself. Insofar as the above two bids are 
concerned, it was felt, that there was for all intents and purposes only a 
singular bid; One of the bidders was Anita International- the appellant 
herein, and the other bid was by Synergy Steel Ltd. - a sister company 
of the appellant-Anita International. In sum and substance therefore, 
the Recovery Officer closed the bid, after receiving a singular bid. 
Sixthly, after holding the auction on 11.8.2005, the Recovery Officer 
confirmed the sale in favour of Anita International on 12.9.2005. This 
could not have been done, in view of the order dated I 0.3.2000 passed 
by the High Court at Madras, wherein it was directed, that no coercive 
steps would be taken against the assets of the company under liquidation, 
during or after the conclusion of the proceedings before the DRT, 
Bangalore. And as such, the State Bank of Mysore could not have 
proceeded with, the sale of the assets of Deve Sugars Ltd.
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDJSH SINGH KHEHAR, J.] 
13. While dealing with the proposition of law declared by this 
Court in the Allahabad Bank case1, wherein this Court had unambiguously 
concluded, that the provisions of the RDB Act required, Debts Recovery 
Tribunals alone, to decide applications for recovery of debts due to banks 
and financial institutions. And wherein, it was also held, that the aforesaid 
responsibility included, the adjudication of the liability of the debtor to 
banks and financial institutions, as well as, the execution of the recovery 
certificate by the Recovery Officer. In spite of the above, it was submitted, 
thatthe High Court by relying on the judgment in M.V. Janardhan Reddy 
v. Vijaya Bank\ and after taking note of the fact, that the State Bank of 
Mysore had applied to the Company Court of the High Court at Madras, 
for liberty to recover its dues from Deve Sugars Ltd., by filing Company 
Application Nos.1251-1253of1999 (in pending Company Petition No.170 
of 1995), and having obtained an order from the High Court dated 
I 0.3.2000, was bound by the same. The High Court also concluded, 
that the above order dated 10.3.2000 was binding, on the Recovery Officer 
of the ORT, Bangalore. The High Court also expressed the view, that 
the order dated I 0.3 .2000 had unambiguously directed, that no coercive 
steps would be taken against the assets of the company under winding 
up. Accordingly, the High Court
held, that the State Bank of Mysore 
could not take advantage of the sale of the assets of the company, or the 
.confirmation thereof at the hands of the Recovery Officer, as the same 
were in clear violation, of the order (dated I 0.3.2000) of the Company 
Court in the High Court at Madras.· Relying on the decision of th is Court 
in the M.V. Janardhan Reddy case2, the High Court while referring to 
the findings recorded in paragraph 28 of the above judgment concluded, 
that since the assets of the company under winding up were under the 
physical charge of the Official Liquidator, the Official Liquidator ought to 
have been associated with the auction proceedings, conducted by the 
Recovery Officer. Since the facts and circumstances of the present 
case reveal, that the Official Liquidator was not allowed to be associated 
with the auction proceedings, and even the valuation of the assets, was 
taken without the knowledge of the Official Liquidator, and further, the 
objections raised by the Official Liquidator were rejected without due 
consideration, the Company Court in the High Court at Madras concluded, 
that the sale of the properties of Deve Sugars Ltd. by the Recovery 
Officer on 11.8.2005, was liable to be set aside. So also, the confirmation 
of the sale, by the Recovery Officer on 12.9.2015, 
'(2008) 1 sec 738 
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14. Having concluded as above, the High Court vide the impugned 
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order dated 17.9.2009, directed as under: 
"Hence the followingjudgment is made: 
(i) The auction sale in question is set aside; 
(ii) The auction purchaser is entitled to refund of the monies paid 
by him towards the auction sale which is now set aside; 
· (iii) In the interest ofall the creditors and also the workers' union, 
a fresh sale is ordered to be made by the Recovery Officer after 
following the procedural formalities and after preparation of a 
fresh valuation done by the panel of valuers appointed by the 
Company Court with the association of the Official Liquidator 
and on acceptance of the same by the Company Court in order to 
ensure a proper price is fetched for the assets of the company in 
liquidation." 
15. While assailing the impugned order passed by the High Court 
dated 17.9.2009, it was the vehement contention of learned counsel for 
the appellant, that the Company Court in the High Court at Madras, had 
no jurisdiction in respect of the proceedings which fell within the legitimate 
domain of the ROB Act. To canvass the above proposition, learned 
counsel placed reliance on a number of judgments of this Court. The 
submissions advanced in this behalf, are being narrated hereunder: 
(i) Reliance was first placed on the Allahabad Bank case 1• It 
was pointed out, that the above judgment was rendered on I 0.4.2000. 
And in
the above view of the matter, the declared position of law was 
clear and explicit well before the controversy in hand was determined 
by the High Court at Madras. From the cited judgment, learned counsel 
for the appellant placed reliance on the following observations: 
"21. In our opinion, the jurisdiction of the Tribunal in regard to 
adjudication is exclusive. The ROB Act requires the Tribunal alone 
to decide applications for recovery of debts due to banks or 
financial institutions. Once the Tribunal passes an order that the 
debt is due, the Tribunal has to issue a certificate under Section 
19(22) [formerly under Section 19(7)] to the Recovery Officer 
for recovery of the debt specified in the certificate. The question 
arises as to the meaning of the word "recovery" in Section 17 of 
the Act. It appears to us that basically the Tribunal is to adjudicate
ANITA INTERNATIONAL v. TUNGABAORA SUGAR WORKS 
MAZOOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
the liability of the defendant and then it has to issue a certificate 
under Section 19(22). Under Section 18, the jurisdiction of any 
other court or authority which would otherwise have had jurisdiction 
but for the provisions of the Act, is ousted and the power to 
adjudicate upon the liability is exclusively vested in the Tribunal. 
(This exclusion does not however apply to the jurisdiction of the 
Supreme Court or ofa High Court exercising power under Articles 
226 or 227 of the Constitution.) This is the effect of Sections 17 
and 18 of the Act. 
22. We hold that the provisions of Sections 17 and 18 of the ROB 
Act are exclusive so far as the question of adjudication of the 
liability of the defendant to the appellant Bank is concerned. 
(ii) Execution of certificate by Recovery Officer: is his jurisdiction 
exclusive 
23. Even in regard to "execution". the jurisdiction of the Recovery 
Officer is exclusive. Now a procedure has been laid down in the 
Act for recovery of the debt as per the certificate issued by the 
Tribunal and this procedure is contained in Chapter V of the Act 
and is covered by Sections 2? to 30. It is not the intendment of the 
Act that while the basic liability of the defendant is to be decided 
by the Tribunal under Section 17, the banks/financial institutions 
should go to the civil court or the Company Court or some other 
authority outside the Act for the
actual realisation of the amount. 
The certificate granted under Section 19(22) has. in our opinion, 
to be executed only by the Recovery Officer. No dual jurisdictions 
at different stages are contemplated. Fmther, Section 34 of the 
Act gives overriding effect to the provisions of the ROB Act. 
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The provisions of Section 34( !) clearly state that the ROB Act 
overrides other laws to the extent of "inconsistency". In our 
opinion, the prescription of an exclusive Tribunal both for 
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adjudication and execution is a procedure clearly inconsistent with 
realisation of these debts in any other manner. 
24. There is one more reason as to why it must be held that the 
jurisdiction of the Recovery Officer is exclusive. The Tiwari 
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Committee which recommended the constitution of a Special 
Tribunal in 1981 for recovery of debts due to banks and financial 
institutions stated in its report that the exclusive jurisdiction of the 
Tribunal must relate not only in regard to the adjudication of the 
liability but also in regard to the execution proceedings. It stated 
in Annexure XI of its report that all "execution proceedings" must 
be taken up only by the Special Tribunal under the Act. In our 
opinion, in view of the special procedure for recovery prescribed 
in Chapter V of the Act, and Section 34, execution of the certificate 
is also within the exclusive jurisdiction of the Recovery Officer. 
xxx 
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Question of leave and control by the Company Court: 
30. Learned Attorney General has, in this connection, relied upon 
Damji Valji Shah v. LIC of India (1965) 3 SCR 665 to contend 
that for initiating and continuing proceedings under the ROB Act, 
D 
no leave of the Company Court is necessary under Section 446. 
In that case, a Tribunal was constituted under the Life Insurance 
Corporation Act, 1956. Question was whether under Section 446 
of the Companies Act, 1956, t~e said proceedings could be stayed 
and later be transferred to the Company Court and adjudicated in 
that Court. It was held that the said proceedings could not be 
E 
transferred. Section 15 of the Life Insurance Corporation Act, 
1956 -
which we may say, roughly corresponds
to Section 17 of 
the ROB Act- enabled Life Insurance Corporation of India to 
file a case before a Special Tribunal and recover various amounts 
from the erstwhile life insurance companies in certain respects. 
F 
Section 41 of the UC Act conferred exclusive jurisdiction on the 
said Tribunal just like Section 18 of the ROB Act, 1993. There the 
Company was ordered to be wound up by an order of the Company 
C_ourt passed under Section 446( I) on 9-1-1959. The claim was 
filed by LIC against the Company and its Directors before the 
Tribunal in 1962. The respondents before the Tribunal contended 
G 
that the claim could not have been filed in the Tribunal without the 
leave of the Company Court under Section 446( 1 ). This Court 
rejected the said contention and held that though the purpose of 
Section 446 was to enable the Company Court to transfer 
proceedings to itself and to dispose of the suit or proceedings so 
H 
transferred, unless the Company Court had jurisdiction to decide
ANITA INTERNATIONAL v. TUNGABAORA SUGAR WORKS 
651 
MAZOOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
the ~stions which were raised before the UC Tribunal. there 
A 
was no purpose of requiring leave of the Company Court or 
permitting transfer ..... . 
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31. It may a1so be noticed 'that in the UC Act of 1956, there was 
no provision like Section 34 of the ROB Act giving overriding 
effect to the provisions of the LIC Act. Still this Court upheld the 
exclusive jurisdiction of the LIC Tribunal ..... 
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71. But the point here is that the occasion for such a claim by a 
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secured creditor (here Canara Bank) against realisations by other 
creditors (like Allahabad Bank) under Section 529-A read with 
proviso (c) to Section 529( I) can arise before the Tribunal only if 
Canara Bank has stood outside winding-up and realised amounts 
and i.f it shows that out of the amounts privately realised by i.h 
g>me.n01:tion has been rateably taken away by the liquidator under 
0 
clauses (a) and (h) of the proviso to Section 529( I). It is only then 
that it can claim that it is to be reimbursed at the same level as a 
secured creditor with priority over the realisations of other creditors 
lying in the Tribunal. None of these conditions is satisfied by Canara 
Bank. Thus, Canara Bank does not belong to the class of secured 
E 
creditors covered by Section 529-A( I )(b ). 
xxx 
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73. If none of the conditions required forapplying Section 19( 19) 
and Section
529-A is; therefore, satisfied, then the claim of Canara 
Bank before the Tribunal can only be on the basis of principles 
underlying Section 73 CPC. There being no decree in its favour 
from any court or from any Tribunal, and the other conditions of 
Section 73 not having been satisfied, no dividend can be claimed 
out of monies realised at the instance of Allahabad Bank, even if 
Allahabad Bank is an unsecured creditor. 
xxx 
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76. The next question is whether the amounts realised under the 
ROB Act at the instance of the appellant can be straight away 
released in its favour. Now, even if Section 19( 19) read with 
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Section 529-A of the Companies Act does not help the respondent 
Canara Bank, the said provisions can still have an impact on the 
appellant Allahabad Bank which has no doubt a decree in its favour 
passed by the Tribunal. Its dues are unsecured. The "workmen's 
dues" have prioritv over all other creditors. secured and unsecured 
because of Section 529-A( !)(a). There is no material before us 
to hold that the workmen's dues of the defendant Company have 
all been paid. In view of the general principles laid down in National 
Textile Workers' Union v. P.R. Ramakrishnan (1983) I SCC 228 
there is an obligation resting on this Court to see that no secured 
or unsecured creditors including banks or financial institutions, 
are paid before the workmen's dues are paid. We are. therefore, 
unable to release any amounts in favour of the appellant Bank 
straight away." 
(emphasis supplied) 
Based on-the above decision, it was the contention of learned 
counsel for the appellant, that the Company Court in the High Court at 
Madras, had neither the jurisdiction to grant liberty to the State Bank of 
Mysore to recover its dues from Oeve Sugars Ltd. by initiating 
proceedings under the ROB Act, nor the jurisdiction to interfere with the 
recovery proceedings by directing that no coercive steps would be taken 
against Oeve Sugars Ltd., during or after the conclusion of the 
proceedings before the ORT, Bangalore. Stated
simply, learned counsel 
for the appellant was emphatic, that the order passed by the Company 
Court in the High Court at Madras (dated I 0.3.2000), was jurisdictionally 
and legally impermissible, and as such, was liable to be ignored. 
(ii) Reliance was also placed on Andhra Bank v. Official 
Liquidator3• The instant judgment was relied upon to support the 
conclusions drawn by learned counsel, while placing reliance on the 
Allahabad Bank case1• Learned counsel invited our attention to the 
position expressed in paragraph 19 of the cited judgment, which is 
extracted hereunder: 
"19. As regards Point (6), however, this Court at para 76 of the 
judgment held: 
"The next question is whether the amounts realised under the 
ROB Act at the instance of the appellant can be straight away 
H 
'(2005) s sec 75
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
released in its favour. Now, even if Section 19( 19) read with 
Section 529-A of the Companies Act does not help the respondent 
Canara Bank, the said provisions can still have an impact on the 
appellant Allahabad Bank which has no doubt a decree in its favour 
passed by the Tribunal. Its dues are unsecured. The 'workmen's 
dues' have priority over all other creditors, secured and unsecured 
· because of Section 529-A( I )(a). There is no material before us to 
hold that the workmen's dues of the defendant Company have all 
been paid. In view of the general principles laid down in National 
Textile Workers' Union v. P.R. Ramakrishnan (1983) I SCC 228 
there is an obligation resting on this Court to see that no secured 
or unsecured creditors including banks or financial institutions, 
are paid before the workmen's dues are paid. We are, therefore, 
unable to release any amounts in favour of the appellant Bank 
straight away."" 
(emphasis supplied) 
(iii) In chronological order, learned counsel next relied upon the 
judgment in Rajasthan State Financial Corporation v. Official Liquidator, 
and drew the Court's attention to the following: 
"15. In A.P. State Financial Corpn. v. Official Liquidator (2000) 7 
SCC 291 this Court held that the Company Judge, while permitting 
the financial corporation to stay outside the liquidation proceedings, 
rightly imposed conditions to ensure that the
Corporation would: 
(i) discharge its liability due to workers under Section 529-A of 
the Companies Act, (ii) inform the Official Liquidator in advance 
about the proposed sale of properties of the indebted companies, 
and (iii) would obtain the Court's permission before finalising the 
tenders. This Comt specifically overruled the view taken by the 
High Court that it was not necessary for the financial corporations 
to seek permission of the Company Court to stay outside the 
winding-up proceedings. It was held that Sections 529( I) and 529-
A of the Companies Act had overriding effect and the 1985 
amendment being later in point of time, the non obstante clause 
therein would prevail over the non obstante clause contained in 
Section 46-B of the SFC Act. 
16. In International Coach Builders Ltd. v. Karnataka State 
Financial Corpn (2003) I 0 SCC 482 this Court considered the 
correctness of the views expressed by the Karnataka High Court 
' (2005J s sec 190 
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and the Gujarat High Court. This Court held that a right is available 
to a financial corporation under Section 29 of the SFC Act against 
a debtor, if a company, only so long as there is no order of winding 
up. When the debtor is a company in winding up, the rights of 
financial corP.orations are affected by the provisions in Sections 
529 and 529-A of the Companies Act. It was also held that the 
proviso to Section 529 of the Companies Act creates a "pari passu" 
charge in favour of the workmen to the extent of their dues and 
makes the Liquidator the representative of the workmen to enforce 
such a charge. The decision of the Bombay High Court in 
Maharashtra State Financial Corpn. v. Official Liquidator was 
approved. The reference to a larger Bench was occasioned by 
the fact that the decision in Allahabad Bank v. Canara Bank was 
not adverted to in this decision. This decision recognises that, 
whether a creditor is standing outside the winding up or not, the 
distribution of the proceeds has to be in terms of Section 529 of 
the Companies Act read with Section 529-A of that Act in a ·case 
where the debtor is a company-in-liquidation. As far as we can 
see, there is no conflict on the question of the applicability of 
Section 529-A read with Section 529 of the Companies Act to 
cases where the debtor is a company and is in liquidation. The 
conflict. if any, is in the view that the Debts Recovery
Tribunal 
could sell the properties of the company in terms of the Recovery 
of Debts Act. This view was taken in Allahabad Bank v. Canara 
Bank in view of the Recovery of Debts Act being a subsequent 
legislation and being a special law which would prevail over the 
general law. the Companies Act. This argument is not available 
as far as the SFC Act is concerned, since Section 529-A was 
introduced by Act 35of1985 and the overriding provision therein 
would prevail over the SFC Act of 1951 as amended in 1956 and 
notwithstanding Section 46-B of the SFC Act. As regards 
distribution of assets, there is no conflict. It seems to us that 
whether the assets are realised by a secured creditor even if it be 
by proceeding under the SFC Act or under the Recovery of Debts 
Act. the distribution of the assets could only be in tenns of Section 
529-A of the Act and by recognising the right of the Liquidator to 
calculate the workmen's dues and collect it for distribution among 
them pari passu with the secured creditors. The Official Liquidator 
representing a ranked secured creditor working under the control
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH (JAGDISH SINGH KHEHAR, J.] 
of the Company Court cannot, therefore, be kept out of the 
process. 
17. Thus, on the authorities what emerges is that once a winding-
!!P proceeding has commenced and the Liquidator is put in charge 
of the assets of the company being wound up, the distribution of 
the proceeds of the sale of the assets held at the instance of the 
financial institutions coming under the Recovery of Debts Act or 
of financial corporations coming under the SFC Act. can only be 
with the association of the Official Liquidator and under the 
supervision of the Company Court. The right of a financial institution 
or of the Recovery Tribunal or that of a financial corporation or 
the court which has been approached under Section 3 I of the 
SFC Act to sell the assets may not be taken away, but the same 
stands restricted by the requirement of the Official Liquidator 
being associated with it, giving the Company Court the right to 
ensure that the distribution of the assets in terms ofSection 529-
A of the Companies Act takes place. In the case on hand, 
admittedly, the appellants have not set in motion any proceeding 
under the SFC Act. What we have is only a liquidation proceeding 
pending and the secured creditors, the financial corporations 
approaching the Company Court for permission to stand outside 
the winding up and to sell the properties of the company-in-
liquidation. The Company Court has
rightly directed that the sale 
be held in association with the Official Liquidator representing 
the workmen and that the proceeds will be held by the Official 
Liquidator until they are distributed in terms of Section 529-A of 
the Companies Act under its supervision. The directions thus, made, 
clearly are consistent with the provisions of the relevant Acts and 
the views expressed by this Court in the decisions referred to 
above. In this situation, we find no reason to interfere with the 
decision of the High Court. We clarify that there is no inconsistency 
between the decisions in Allahabad Bank v. Canara Bank and in 
International Coach Builders Ltd. v. Karnataka State Financial 
Corpn. in respect of the applicability of Sections 529 and 529-A 
of the Companies Act in the matter of distribution among the 
creditors. The right to sell under the SFC Act orunder the Recovery 
of Debts Act by a creditor coming within those Acts and standing 
outside the winding up, is different from the distribution of the 
proceeds of the sale of the securitv. The distribution in a case 
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where the debtor is a company in the process of being wound up. 
can only be in terms of Section 529-A read with Section 529 of 
the Companies Act. After all, the Liquidator represents the entire 
body of creditors and also holds a right on behalf of the workers 
to have a distribution pari passu with the secured creditors and 
the duty for further distribution of the proceeds on the basis of the 
preferences contained in Section 530 of the Companies Act under 
the directions of the Company Court. In other words, the 
distribution of the sale proceeds under the direction of the Company 
Court is his responsibility. To ensure the proper working out of the 
scheme of distribution, it is necessary to associate the Official 
Liquidator with the process of sale so that he can ensure, in the 
light of the directions of the Company Court. that a proper price is 
fetched for the assets of the company-in-liquidation. It was in 
that context that the rights of the Official Liquidator were discussed 
in Intemational Coach Builders Ltd. The Debts Recovery Tribunal 
and the District Court entertaining an application under Section 
31 of the SFC Act should issue notice to the Liquidator and hear 
him before ordering a sale, as the representative of the creditors 
in general. 
18. In the light of the discussion as above. we think it proper to 
sum up the legal position thus: 
(i)A Debts Recovery Tribunal acting under the
Recovery of Debts 
Due to Banks and Financial Institutions Act. 1993 would be entitled 
to order the sale and to sell the properties of the debtor, even ifa 
s;ompany-in-liquidation, through its Recovery Officer but only after 
notice to the Official Liquidatoror the Liquidator appointed by the 
Company Court and after hearing him. 
(ii)A District Court entertaining an application under Section 31 
of the SFC Act will have the power to order sale of the assets of 
a borrower company-in-liquidation. but only after notice to the 
Official Liquidator or the Liquidator appointed by the Company 
Court and after hearing him. 
(iii) If a financial corporation acting under Section 29 of the SFC 
Act seeks to sell or otherwise transfer the assets of a debtor 
company-in-liquidation, the said power could be exercised by it 
only after obtaining the appropriate permission from the Company 
Court and acting in terms of the directions issued by that court as 
regards associating the Official Liquidator with the sale, the fixing
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
· MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
ofthe upset price or the reserve price, confirmation of the sale, 
holding of the'sale proceeds and the distribution thereof among 
the creditors in terniS'of Section 529-A and Section 529 of the 
. Companies Act. 
(iv) In a case where proceedings under the Recovery of Debts 
Due to Banks and Financial Institutions Act, I 993 or the SFC Act 
are not set in motion, the creditor concerned is to approach the 
Company Court for appropriate directions regarding the realisation 
of its securities consistent with the relevant provisions of the 
Companies Act regarding distribution of the assets of the company-
in-liquidation." 
(emphasis supplied) 
Relyfng on the above judgment, learned counsel for the appellant 
emphatically pointed out, that the sale of the properties of a company in 
liquidation, should not be confused with the distribution of the sale 
proceeds of the company in liquidation amongst its creditors. It was 
submitted, that there could be no interference with the right of the 
Recovery Officer, to sell the assets of the company in liquidation, under 
the provisions of the ROB Act. But, that had nothing to do with the 
distribution of the proceeds of the sale. The distribution of the sale 
proceeds ought to be in consonance with the provisions of the Companies 
Act, wherein the debtor was a company in liquidation. 
(iv) Learned counsel then placed reliance on the M.V.
Janardhan 
Reddy case~. He invited the Court's attention to the following: 
"18. So far as the order passed by the learned Company Judge is 
concerned, it specifically and unequivocally stated that permission 
of the court should be obtained before sale is confirmed or finalised. 
That order was passed as early as on 13-8-1999. In an order 
dated 25-3-2005 also it was expressly mentioned that the sale 
was subject to confirmation of the court.. It was an express 
condition imposed by the Company Court and as such it was not 
open to the Recovery Officer to confirm the sale and such order, 
which was having no authority oflaw, was rightly set aside by the 
Company Judge and no grievance could be made. 
xxx 
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22. Our attention has been invited by the learned counsel to the 
relevant orders passed by the Company Court from time to time. 
So far as the order dated 13-8-1999 is concerned, permission to 
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sell the property was granted on certain terms and conditions. 
They read as under: 
(A) The Official Liquidator shall be allowed to have inspection of 
the properties and assets of the company in liquidation and to take 
inventory as and when required. 
(B) Certified copy of the judgment and decree passed by the 
Subordinate Judge, Bhongir in OS No. 57 of 1989 dated 24-7-
1993 shall be made available to the Official Liquidator without 
delay. 
(C) The certified copy of the order that would be passed by the 
Debts Recovery Tribunal, Bangalore shall be made available to 
the Official Liquidator without avoidable delay. 
(D) The petitioner Bank shall file the valuer's report in the cout1 
before the properties covered under the mortgage deed are put to 
sale. 
(E) Permission of this Court shall be obtained before the sale of 
the properties movable or immovable, is confirmed or finalised. 
(F) The petitioner Bank shall undertake to deposit and shall deposit 
the workmen's dues with the Official Liquidator as and when 
quantified by him as per the provisions of Section 529-A of the 
Companies Act. 
(G) Whatever surplus remains after the sale and realisation of the 
dues of the secured creditors and the workmen, as per law, the 
balance sale proceeds shall be made available to the Official 
Liquidator for being dealt with in accordance with the provisions 
of the Companies Act and the Rules. 
xxx 
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23.
An order dated 28-3-2005 in Company Application No. 187 of 
2005 was equally clear. It reads as under: 
"This is an application filed by the nationalised bank seeking 
permission of this court to receive the valuation report and also to 
permit the Bank to effect sale of the properties of the Company 
under liquidation through the Recovery Officer of the Debts 
Recovery Tribunal, in terms of the conditions of auction-sale notice 
dated 2-2-2005. 
· 
It is also stated that though sale notice was ordered, no sale was 
conducted as no permission was obtained from this court. The 
Official Liquidator also filed a report reporting that there is no 
objection as to the proposed auction and also the valuation report
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
as filed by the applicant Company. 
Under the above circumstances, the applicant Company is 
permitted to go ahead with the proposed sale of the assets of the 
Company under liquidation through public auction. But, however, 
the said sale, if any effected, shall be subject to the confirmation 
of this court. The applicant is accordingly granted permission to 
effect the sale, but the sale shall be required to be confirmed by 
this court. 
The application is accordingly disposed of." 
The above orders leave no room of duubt that the Bank was 
permitted to go ahead with the proposed sale of the assets of the 
Company under liquidation by way of auction but such sale was 
subject to confirmation by the Company Court. It is, therefore, 
. clear that all parties were aware about the condition as to 
confirmation of sale by the Company Court. It was, therefore, not 
open to the Recovery Officer to confirm sale. The order passed 
and action taken by the Recovery Officer was in clear violation 
of and inconsistent with the sgecific condition imgosed by the 
Company Court. In our considered opinion, therefore, the appell!.rn! 
cannot take any advantage of confirmation of sale by the Recovery 
Officer who did not gossess the power to confirm sale. 
xxx 
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27. It is true that when the Company Judge set aside the sale on 
17-3-2006, the order was reversed by the Division Bench of the 
High
Court since it was in breach of natural justice. That does 
not, however, mean that the Company Court could not pass fresh 
order after affording opportunity of hearing to the parties. 
28. In our opinion, the Company Court was right in passing fresh 
order after hearing the parties. If the Recovery Officer could not 
have confirmed the sale, obviously all actions taken in pursuance 
of confirmation of sale, such as, issuance of sale certificate, 
registration of documents, etc. would be of no consequence. Since 
the Company was in liquidation and Official Liquidator was in 
charge of the assets of the Company, he ought to have been 
associated with the auction proceedings, which was not done. 
This is also clear from the report submitted by the Official 
Liquidator and on that ground also, the auction-sale was liable to 
be set aside." 
(emphasis supplied) 
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Based on the conclusions drawn in the above judgment, it was 
submitted, that there can be no doubt, that in a matter where the Company 
Court had passed an order restraining the Recovery Officer confirming 
the sale, the sale made by the Recovery Officer in execution of the recovery 
certificate could only have been confirmed with the permission of th~ 
Cou1i. Here again, learned counsel has drawn a fine distinction. It was 
asserted, that even in the above judgment, this Court had not disputed 
nor disturbed the exclusive jurisdiction of the Recovery Officer fo 
executing a recovery certificate. 
(v) Last ofall learned counsel placed reliance on Official Liquidator, 
Uttar Pradesh and Uttarakhand v. Allahabad Bank;, and drew our 
attention to the following conclusions recorded therein: 
"23. From the aforesaid verdict, it is vivid that the larger Bench in 
Rajasthan State Financial Corpn. case approved the law laid down 
in Allahabad Bank. In fact, it is noticeable that the larger Bench 
has observed that in Allahabad Bank case, a view has been taken 
that the ROB Act being a subsequent legislation and being a special 
law would prevail over the general law, the 1956 Act, but the said 
argument is not available as far as the SFC Act is concerned. 
xxx 
xxx 
xxx 
24. From the aforesaid authorities, it clearly emerges that the sale 
has to be conducted by ORT with the association of the Official
Liquidator. We may hasten to clarify that as the present 
controversy only relates to the sale. we are not going to say 
anything with regard to the distribution. 
However, it is 
noticeable that under Section 19( 19) of the ROB Act. the legislature 
has clearly stated that distribution has to be done in accordance 
with Section 529-A of the 1956 Act. The purpose of stating so is 
that it is a complete code in itself and the Tribunal has the exclusive 
jurisdiction for the purpose of sale of the properties for realisation 
. of the dues of the banks and financial institutions. 
xxx 
xxx 
xxx 
31. The aforesaid analysis makes it luculent that ORT has 
exclusive jurisdiction to sell the properties in a proceeding instituted 
by the banks or financial institutions, but at the time of auction and 
sale, it is required to associate the Official Liquidator. The said 
principle has also been reiterated in Pravin Gada v. Central Bank 
oflndia (2013) 2 sec 101. 
'(2013) 4 sec 381
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
32. Once the Official Liquidator is associated, needless to say, he 
has a role to see that there is no irregularity in conducting the 
auction and appropriate price is obtained by holding an auction in 
a fair, transparent and non-arbitrary manner in consonance with 
the Rules framed under the ROB Act. 
xxx 
xxx 
xxx 
34. We have referred to the said passage from Delhi High Court 
Bar Assn. case, for the purpose of highlighting that an appeal lies 
to ORT challenging the action of the Recovery Officer. In the 
case at hand, the Official Liquidator was not satisfied with the 
manner in which the auction was conducted and he thought it 
apposite to report to the learned Company Judge who set aside 
the auction. Needless to emphasise, the Official Liquidator has a 
role under the 1956 Act. He protects the interests of the workmen 
and the creditors and, hence, his association at the time of auction 
and sale has been thought appropriate by this Court. To put it 
differently, he has been conferred locus to put forth his stand in 
the said matters. Therefore, anyone who is aggrieved by any act 
done by the Recovery Officer can prefer an appeal. Such a 
statutory mode is provided under the ROB Act, which is a special 
enactment. ORT has the powers under the ROB Act to make an 
enquiry as it deems fit and confirm, modify or set aside the order 
made by the Recovery Officer in exercise of
powers under 
Sections 25 to 28 (both inclusive) of the ROB Act. Thus, the 
auction, sale and challenge are completely codified under the ROB 
Act, regard being had to the special nature of the legislation." 
(emphasis supplied) 
16. In addition to the aforesaid submissions, Mr. S. Ganesh, Senior 
Advocate also assisted us in the matter. He supported the above 
contentions, but sought a little intervention by requiring us to also examine 
the scope of the controversy under consideration, by placing reliance on 
the judgment of this Court in Sadashiv Prasad Singh v. Harendar Singh6• 
Learned counsel invited our attention to the scope of interference with 
reference to a public auction, wherein third party rights have emerged, 
especially when the third parties are independent of the disputants, and 
also, with reference to seeking recourse to a statutory remedy available 
to a party against the impugned order. The conclusions recorded by this 
Court in the Sadashiv Prasad Singh case6, as were pointedly broughno 
'(2015) s sec 574 
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our notice, are being extracted hereunder: 
"23. At the time of hearing, we were thinking of remanding the 
matter to the Recovery Officer to investigate into the objection of 
Harender Singh under Rule 11 of the Second Schedule to the 
Income Tax Act, 1961. But considering the delay such a remand 
may cause, we have ourselves examined the objections of 
Harender Singh and rejected the objections for a variety of reasons: 
23.1. Firstly, the contention raised at the hands of the respondents 
before the High Court, that the facts narrated by Harender Singh 
[the appellant in Special Leave Petition (C) No. 26550 of 20 IO] 
were a total sham, as he was actually the brother of one of the 
judgment-debtors, namely, Jagmohan Singh. And that Harender 
Singh had created an unbelievable story with the connivance and 
help of his brother, so as to save the property in question. The 
claim of Harender Singh in his objection petition was based on an 
unregistered agreement to sell dated 10-1-1991. Not only that 
such an agreement to sell would not vest any legal right in his 
favour, it is apparent that it may not have been difficult for him to 
have had the aforesaid agreement to sell notarised in connivance 
with his brother, for the purpose sought to be achieved. 
23.2. Secondly, it is apparent from the factual position depicted in 
the foregoing paragraphs that Harender Singh, despite his having 
filed objections
before the Recovery Officer, had abandoned the 
contest raised by him by not appearing (and by not being 
represented) before the Recovery Officer after 26-10-2005, 
whereas, the Recovery Officer had passed the order of sale of 
the property by way of public auction more than two years 
thereafter, only on 5-5-2008. Having abandoned his claim before 
the Recovery Officer, it was not open to him to have reagitated 
the same by filing a writ petition before the High Court. 
23.3. Thirdly, a remedy of appeal was available to Harender Singh 
in respect of the order of the Recovery Officer assailed by him 
before the High Court under Section 30, which is being extracted 
herein to assail the order dated 5-5-2008: 
"30. Appeal against the order of Recovery Officer,-( I) 
Notwithstanding anything contained in Section 29, any person 
aggrieved by an order of the Recovery Officer made under 
this Act may, within thirty days from the date on which a copy 
of the order is issued to him, prefer an appeal to the Tribunal.
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
(2) On receipt ofan appeal under sub-section (1 ), the Tribunal 
may, after giving an opportunity to the appellant to be heard, 
and after making such inquiry as it deems fit, confirnr, modify 
or set aside the order made by the Recovery Officer in exercise 
of his powers under Sections 2? to 28 (both inclusive)." 
The High Court ought not to have interfered with in the matter 
agitated by Harender Singh in exercise of its writ jurisdiction. In 
fact, the learned Single Judge rightfully dismissed the writ petition 
filed by Harender Singh. 
23.4. Fourthly, Harender Singh could not be allowed to raise a 
challenge to the public auction held on 28-8-2008 because he had 
not raised any objection to the attachment of the property in 
question or the proclamations and notices issued in newspapers in 
connection with the auction thereof. 
23.5. All these facts cumulatively lead to the conclusion that after 
26-10-2005, Harender Singh had lost all interest in the property in 
question and had therefore, remained a silent spectator to various 
orders which came to be passed from time to time. He had, 
therefore, no equitable right in his favour to assail the auction-
purchase made by Sadashiv Prasad Sinha on 28-8-2008. 
23.6. Finally, the public auction under reference was held on 28-
8-2008. Thereafter the same was confirmed on 22-9-2008. 
Possession of the property was handed over to the
auction-
purchaser Sadashiv Prasad Sinha on 11-3-2009. The auction-
purchaser initiated mutation proceedings in respect of the property 
in question. Harender Singh did not raise any objections in the 
said mutation proceedings. The said mutation proceedings were 
also finalised in favourofSadashiv Prasad Sinha. Harender Singh 
approached the High Court through CW JC No. 16485 of 2009 
only on 27-11-2009. We are of the view that the challenged raised 
by Harender Singh ought to have been rejected on the grounds of 
delay and I aches, especially because third-party rights had emerged 
in the meantime. More so, because the auction-purchaser was a 
bona fide purchaser for consideration. having purchased the 
property in furtherance of a duly publicised public auction, 
interference by the High Court even on the ground of equity was 
clearly uncalled for. 
24. For the reasons recorded hereinabove, we are of the view 
thatthe impugned order dated 17-5-2010 passed by the High Court 
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allowing Letters Patent Appeal No. 844 of 20 I 0 deserves to be 
set aside. The same is accordingly set aside. The right of the 
appellant Sadashiv Prasad Sinha in Plot No. 2722, Exhibition Road, 
PS Gandhi Maidan, Patna, measuring 1289 sq ft is hereby 
confirmed. In the above view of the matter, while the appeal 
preferred by Sadashiv Prasad Sinha stands allowed, the one filed 
by Harender Singh is hereby dismissed." 
(emphasis supplied) 
Based on the conclusions recorded in the above judgment, it was 
contended, that the DRT, Bangalore, issued the recovery certificate on 
15 .5 .2002, thereupon the auction sale was conducted on 11.8.2005, and 
there having been no objection to the same, the auction sale .. was 
confi_rmed by the Recovery Officer on 12.9.2005. It was submitted, that 
after a lapse of more than a decade after all payments were made (and 
the sale was confirmed), there was no equitable justification to interfere 
with the same. 
17. Insofar as the submission pertaining to the availability of a 
statutory remedy against the impugned order is concerned, learned senior 
counsel referred to the directions issued by the High Court ofKarnataka, 
while disposing of Writ Petition No.26564 of2005 (GM-ORT) preferred 
by Videocon Iiiternational Ltd. and Tapti Machines Pvt. Ltd. and Writ 
Petition No.37991 of2004 (GM-ORT) preferred by Tungbhadra Sugar 
Works Mazdoor Sangh-the workers' union (referred to
in the narration 
of facts hereinabove), and drew our attention to the observations of the 
High Court in its order dated 27. I0.2006, which are being extracted 
hereunder: 
"20. In the circumstances, I am of the view that there is an alternate 
and efficacious remedy by way of an appeal under the Debts 
Recovery Act R/w Procedure for recovery of tax. The petitioner 
shall avail the alternate remedy within a period of six weeks from 
today. It is needless to say that the matter shall not be precipitated 
until the appeal filed by the petitioners is disposed of. All the 
contentions are left upon." 
(emphasis supplied) 
Based on the above, it was contended, that it was not open to the 
appellants to raise a challenge with reference to a third party sale, 
especially when the same was in the nature of a public auction conducted 
by a Recovery Officer, while giving effect to an order passed by the
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
Debts Recovery Tribunal, strictly within the jurisdiction of the provisions 
of the RDB Act. And also, the determination of this Court not to interfere 
lightly with the rights which came to be vested in such auction purchasers. 
Insofar as the appellate remedy of the contesting parties is concerned, 
reliance was placed on Section 30 of the RDB Act, which is extracted 
hereunder: 
"30. Appeal against the order of Recovery Officer.- (I) 
Notwithstanding anything contained in section 29, any person 
aggrieved by an order of the Recovery Officer made under this 
Act may, within thirty days from the date on which a copy of the 
order is issued to him, prefer an appeal to the Tribunal. 
(2) On receipt of an appeal under sub-section (I), the Tribunal 
may, after giving an opportunity to the appellant to be heard, and 
after making such inquiry as it deems fit, confirm, modify or set 
aside the order made by the Recovery Officer in exercise of his 
powers under Sections 25 to 28 (both inclusive)." 
Based on the above provision, it was the submission of learned 
senior counsel, that the wrong, if any, caused to the contesting respondents 
could have been set right only under Section 18 of the ROB Act. 
18. Mr. C.A. Sundaram, Senior Advocate, endeavoured to 
repudiate the submissions advanced at the hands of learned counsel for 
the appellants, by advancing three contentions. Firstly, an order
passed 
by a Court with jurisdiction having attained finality, was binding between 
the concerned parties, and was liable to be complied with under all 
circumstances. In reference to the instant submission, the assertion of 
learned counsel was, that the order dated I 0.3 .2000 passed by the High 
Court at Madras had been passed by a Court having jurisdiction. The 
said order had attained finality. And accordingly, there was no justification 
at the hands of any other party concerned, to wriggle out of the same. 
Secondly, even if an order is passed by a Court which has no jurisdiction 
with reference to a controversy, and as such, could be termed as a void 
order, the order of the Court would continue to remain enforceable in 
law, till the same is set aside and/or vacated by a subsequent order. 
Insofar as the instant aspect of the matter is concerned, it was submitted, 
that the order dated I 0.3.2000 having attained finality and having not 
been varied or vacated, was binding between the parties, and as such, 
its compliance was mandatory. Thirdly, any sale made within the teeth 
ofan injunction, was liable to be set aside. An injunction order, according 
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to learned senior counsel, as in the instant case (the order dated 
10.3.2000), which mandated that no coercive steps would be taken against 
the assets of Deve Sugars Ltd. " ... during or after the conclusion of the 
proceedings before the Tribunal ... ", namely the ORT, Bangalore, was 
binding. The auction sale conducted on 11.8.2005, and its subsequent 
confirmation on 12.9.2015, according to learned senior counsel, were 
not only beyond the jurisdiction of the Recovery Officer, but also beyond 
the jurisdiction of the Debts Recovery Tribunal. In the instant view of 
the matter, it was contended, that the impugned order dated 27.9.2009, 
passed by the High Court at Madras, ought not to be interfered with. 
19. While substantiating the first contention noticed in the foregoing 
paragraph, it was asserted, that for recovery of a debt due to a bank, it 
can file a winding up petition before a Company Court under the 
Companies Act, or alternatively, it can file a recovery petition before the 
jurisdictional Debts Recovery Tribunal, under the provisions of the RDB 
Act. Accordingly, it was pointed out, that a recovery suit could be 
withdrawn to a Company Comt, and the recovery of the debt sought by 
the bank, could be agitated before the Company Court. It was however 
pointed out, that the inverse was not permissible, inasmuch as, a winding 
up petition filed before the Company Court under the Companies
Act, 
could not be withdrawn to a Debts Recovery Tribunal, under the 
provisions of the ROB Act. It was therefore the contention of learned 
counsel for the respondents, that since the State Bank of Mysore cou Id 
seek recourse to the ORT, as well as the Company Court, as may be 
considered suitable or appropriate, the proceedings filed by the State 
Bank of Mysore, namely, Company Application Nos. 1250-1253of1999 
in pending Company Petition No.170 of 1995 (and Company Petition 
No.35 of 1997) had been filed by the State Bank of Mysore, before a 
Court havingjurisdiction. And therefore, a Court havingjurisdiction in 
the matter, at the instance of the State Bank of Mysore, had passed the 
order dated 10.3.2000. By the order dated I 0.3.2000, the Company 
Court in the High Court at Madras, allowed the prayer made by the 
State Bank of Mysore, to continue to proceed with the recovery 
proceedings initiated by it before the ORT, Bangalore. But while granting 
the above leave imposed two conditions, firstly, the Official Liquidator 
would be impleaded before the DRT, and secondly, no coercive steps 
would be taken against the assets of the Company (-Deve Sugars Ltd.) 
during or after the proceedings before the ORT. The said order was 
neither varied nor vacated. The same, according to learned counsel,
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
was binding between the parties. And therefore, it was contended, that 
the same could not have been ignored or overlooked. It was submitted, 
that even if the above order dated I 0.3.2000, was without jurisdiction 
and/or void, the same would be equally binding, till it was varied or set 
aside by a Court having competent jurisdiction. Based on the factual 
position noticed above, it was asserted, that the sale of the properties of 
Deve Sugars Ltd., was clearly in the teeth of the injunction order passed 
by the Company Court on I 0.3.2000, and as such, was liable to be set 
aside. 
20. In order to repudiate the submissions advanced at the hands 
of learned counsel for the appellant, based on the judgment rendered by 
this Court in the Allahabad Bank case 1, reliance was placed on Industrial 
Credit and Investment Corporation oflndia Ltd. v. Srinivas Agencies7, 
and the Court's attention was drawn to the factual and legal position 
expressed therein: 
"I. The extent of right of secured creditors to realise their debts 
from the assets of a company which is under winding up or has 
been wound up, by approaching fora other than the company court, 
is required to be spelt out in these appeals. We have also been 
called upon to decide as to when a pending suit or proceeding 
relating to realization of the debts by such a creditor should be 
transferred to itself by a company court seized
with the winding-
up proceeding. 
xxx 
xxx 
xxx 
4. A combined reading of the aforesaid provisions leads to the 
following results: 
(i)A winding-up court has jurisdiction, inter alia, to entertain or 
dispose ofany suit or proceeding by or against the company. even 
if such suit or proceeding had been instituted before an order for 
winding up had been made. This apart, the winding-up court has 
jurisdiction to transfer such a suit or proceeding to itselfand dispose 
of the same. These follow from sub-sections (2) and (3) of Section 
446. 
(ii) When a winding-up order has been made or the official 
liquidator has been appointed as provisional liquidator, no suit or 
other legal proceeding, even if pending at the date of the winding-
' (1996) 4 sec 165 
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up order, can proceed against the company, except by leave of 
the company court vi de sub-section (I) of Section 446. 
(iii)Any sale held, even without the leave of the winding-up 
court pursuant to order of a civil court on it being approached by 
a secured creditor to realise its debt will not ipso facto be void, in 
view of the holding in Ranganathan case that Section 537, dealing 
with voidness of sale, operates when the sale is pursuant to 
attachment of company court. This, however, would be the position 
where a company has not been wound up, but is in the process of 
being wound up. 
5. None of the parties has assailed the aforesaid propositions of 
law as well. The real bone of contention is as to when (i) leave of 
the winding-up court should be granted to a secured creditor to 
proceed with the suit after an order.of winding up has been made; 
and (ii) when should a winding-up court transfer to itself any suit 
or proceeding by or against the company during the pendency of 
the winding-up proceeding. 
6. The aforesaid questions arise because a secured creditor who 
has initiated a suit or proceeding in a civil court is interested in 
realisation of his debt only, whereas the company court looks after 
the interest of all the creditors; so too, the workmen's dues, which 
rank pari passu with debts due to secured creditors. This is brought 
home not only by Section 529-A, which was inserted by the
Companies (Amendment) Act, 1985, but also by the proviso to 
sub-section (I) of Section 529 inserted by the same Amendment 
Act. The winding-up court does these acts through a liquidator, 
who has been given wide powers by Section 457 of the Act. As 
against this, a receiver appointed by a civil court on being 
approached by secured creditor would basically look after the 
interest of that creditor, whose interest may in many cases be in 
conflict with that of the liquidator, as was acknowledged in 
Karamelli & Barnett Ltd., In re. We feel no difficulty in stating 
that in case of such conflict, the interest ofliquidator has to receive 
precedence over that of the receiver inasmuch as the former looks 
after the interest of a large segment of creditors along with that 
of workmen, whereas the latter confines his concern to the interest 
of the secured creditor on whose approach the receiver has been 
appointed. This view cannot also be, and has indeed not been,
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
contested by the learned counsel appearing for the appellants. 
xxx 
xxx 
xxx 
9. Shri Salve's entire submission had been that a working principle 
may be got evolved which would, on the one hand, protect the 
substantive right of a secured creditor, specially in view of large 
sums of money being advanced of late of such creditors and, on 
the other hand, not jeopardise the interest of other secured 
creditors. According to the learned counsel, these twin objects 
can be achieved ifthe company court were to grant leave wherever 
required as a rule, subject to reasonable conditions. This would 
preserve the integrity of the substantive right of the secured 
creditor. The terms to be imposed should facilitate, rather than 
obstruct, the realisation of security. Further, wherever a receiver 
has been appointed prior to the commencement of the winding-up 
proceedings, he should.be permitted to.continue in general run of 
cases. As to the suits to be filed after the winding-up proceeding 
has commenced, the learned counsel urged that such a permission 
should normally be granted by the winding-up court. On this being 
done, when the question of appointment of receiver would arise, 
the civil court would do so if a case for same were to be made out 
after hearing the liquidator, who would be a defendant in the suit. 
As regards transfer of the pending suit by the company court, the
submission was that convenience may not be the guiding factor; 
the preservation of integrity of the substantive right of the creditor 
should be the main consideration. 
I 0. To buttress his submission, Shri Salve has referred us to the 
Recovery of Debts due to Banks and Financial Institutions Act, 
1993, which was recently enacted because of the considerable 
difficulty being experienced by financial institutions in recovering 
loans and enforcement securities charged with them. Earlier, · 
recovery procedure used to block a significant portion of their 
funds in unproductive assets, the value of which deteriorates with 
the passage of time. An urgent need was, therefore, felt for 
successful implementation of the financial sector reforms, to work 
out a suitable mechanism through which dues to these institutions 
could be realised without delay. To achieve this purpose, the 
aforesaid Act visualises establishment of the Debts Recovery 
Tribunal(s) by the Central Government, with its own procedure 
which is speedy in nature. Section 18 of this Act has barred 
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jurisdiction of other courts, except the writ power of the higher 
courts, in relation to the matters specified in Section 17 -
the 
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13. We are, therefore, of the view that the approach to be adopted 
in this regard by the company court does not deserve to be put in 
a strait-focket fonnula. The discretion to be exercised in this regard 
has to depend on the facts and circumstances of each case. While 
exercising this power we have no doubt that the company court 
would also bear in mind the rationale behind the enactment of 
Recovery of Debts Due to the Banks and Financial Institutions 
Act, 1993, to which reference has been made above. We make 
the same observation regarding the terms which a company court 
should like to impose while granting leave. It need not be stated 
that the terms to be imposed have to be reasonable, which would, 
of course, vary from case to case. According to us, such an 
approach, would maintain the integrity of that secured creditor 
who had approached the civil court or desires to do so, and wou Id 
take care of the interest of other secured creditors as well which 
the company court is duty-bound to do. The company court shall 
also apprise itself about the fact whether dues of workmen are 
outstanding; if so, extent of the same. It would be seen whether 
after the assets of the company are allowed to be
used to satisfy 
the debt of the secured creditor, it would be possible to satisfy the 
workmen's dues pari passu." 
(emphasis supplied) 
21. On the jurisdictional aspect, learned senior counsel for the 
respondents placed reliance on clauses (I) and (2) of Section 446 of the 
Companies Act, 1956. The same are reproduced below: 
"446.· Suits stayed on winding up order. -(I) When a winding up 
order has been made or the Official Liquidator has been appointed 
as provisional liquidator, no suit or other legal proceeding shall be 
commenced, or if pending at the date of the winding up order, 
shall be proceeded with, against the company, except by leave of 
the (Tribunal) and subject to such terms as the (Tribunal) may 
impose. 
(2) (Tribunal) shall, notwithstanding anything, contained in any 
other law for the time being in force, have jurisdiction to entertain,
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
or dispose of-
(a) any suit or proceeding by or against the company; 
(b) any claim made by or against the company (including claims 
by or against any of its branches in India); 
(c) any application made under section 391 by or in respect of the 
company; 
(d) any question of priorities or any other question whatsoever, 
whether of law or fact, which may relate to or rise in course of 
the winding up of the company, 
whether such suit or proceeding has been instituted or is instituted 
or such claim or question has arisen or arises or such application 
has been made or is made before or after the order for the winding 
up of the company, or before orafter the commencement of the 
Companies (Amendment) Act, 1960 ..... " 
22. With reference to the judgment rendered in the Allahabad 
Bank case 1, it was asserted, that this Court had merely concluded, that 
it was not necessary for a bank or a financial institution to seek leave of 
Company Court before initiating proceedings against a debtor under the 
provisions of the ROB Act. It was therefore pointed out, that there was 
no dissimilarity of the conclusions drawn by this Court in the Allahabad 
Bank case1 and the Srinivas Agencies case'. 
23. In addition to the above, learned senior counsel for the 
• respondents, placed reliance on Krishnadevi Malchand Kamathia v. 
Bombay Environmental Action Group8, and placed reliance on the
following conclusions drawn therein: 
"16. It is a settled legal proposition that even if an order is void, it 
requires to be so declared by a competent forum and it is not 
permissible for any person to ignore the same merely because in 
his opinion the order is void. In State ofKerala v. M.K. Kunhikannan 
Nambiar Manjeri Manikoth Naduvil, Tayabbhai M. Bagasarwalla 
v. Hind Rubber Industries (P) Ltd., M. Meenakshi v. Metadin 
Agarwal and Sneh Gupta v. Devi Sarup, this Court held that 
whether an order is valid or void. cannot be determined by the 
parties. For setting aside such an order. even if void. the party has 
to approach the appropriate forum. 
17. In State of Punjab v. Gurdev Singh this Court held that a party 
aggrieved by the invaliditv of an order has to approach the court 
• <20.11) 3 sec 363 
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for relief of declaration that the order against him is inoperative 
and therefore, not binding upon him. While Jeciding the said case, 
this Court placed reliance upon the judgment in Smith v. East 
Elloe RDC, wherein Lord Radcliffe observed: (AC pp. 769-70) 
" ... An order, even if not made in good faith, is still an act capable 
of legal consequences. It bears no brand of invalidity [on) its 
forehead. Unless the necessary proceedings are taken at law to 
establish the cause of invalidity and to get it quashed or otherwise 
upset, it will remain as effective for its ostensible purpose as the 
most impeccable of orders." 
18. In Sultan Sadik v. Sanjay Raj Subba AIR 2004 SC 1377, this 
Court took a similar view observing that once a·n order is declared 
non est by the court only then the judgment ofnu llity would operate 
erga omnes i.e. for and against everyone concerned. Such a 
declaration is permissible ifthe comt comes to the conclusion that 
the author of the order lacks inherent jurisdiction/competence and 
therefore. it comes to the conclusion that the order suffers from 
patent and latent invalidity." 
19. Thus. from the above it emerges that even if the order/ 
notification is void/voidable, the party aggrieved by the same cannot 
decide that the said order/notification is not binding upon it. It has 
to approach the court for seeking such declaration. Tbe order 
may be hypothetically a nullity
and even ifits invalidity is challenged 
before the court in a given circumstance, the court may refuse to 
quash the same on various grounds including the standing of the 
petitioner or on the ground of delay or on the doctrine of waiver 
or any other legal reason. The order may be void for one purpose 
or for one person. it may not be so for another purpose or another 
12erson." 
(emphasis supplied) 
24. In addition to the above, reliance was placed on Order XXI 
Rule 58 of the Code of Civil Procedure, which is extracted below: 
"58. Adjudication of claims to, or objections to attachment ot: 
property. -(l) Where any claims preferred to, or any objection is 
made to the attachment of, any property attached in execution of 
a decree on the ground that such property is not I iable to such 
attachment, the Court shall proceed to adjudicate upon the claim
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
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MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
or objection in accordance with the provisions herein contained: 
Provided that no such claim or objection shall be entertained-
( a) where, before the claim is preferred or objection is made, the 
property attached has already been sold; or 
(b) where the Court considers that the claim or objection was 
designedly or unnecessarily delayed. 
(2)All questions (including questions relating to right, title or interest 
in the property attached) arising between the parties to a proceeding 
or their representatives under this rule and relevant to the 
adjudication of the claim or objection, shall be determined by the 
Court dealing with the claim or objection and not by a separate 
suit. 
(3) Upon the determination of the questions referred to in sub-
rule (2), the Court shall, in accordance with such determination,-
( a) allow the claim or objection and release the property from 
attachment either wholly or to such extent as it thinks fit; or 
(b) disallow the claim or objection; or 
(c) continue the attachment subject to any mortgage, charge of 
other interest in favour of any person; or 
(d) pass such order as in the circumstances of the case it deems 
fit. 
(4) Where any claim or objection has been adjudicated upon under 
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this rule, the order made thereon shall have the same force and · E 
be subject to the same conditions as to appeal or otherwise as if it 
were a
decree. 
(5) Where a claim or an objection is preferred and the Court, 
under the proviso to sub-rule (I), refuses to entertain it, the party 
against whom such order is made may institute a suit to establish 
the right which he claims to the property in dispute; but, subject to 
the result of such suit, if any, an order so refusing to entertain the 
claim or objection shall be conclusive." 
Based on the above provision, it was submitted, that a declaration 
of illegality could only be prospective. And therefore, what had to be 
decided was, whether the sale proceedings conducted on 11.8.2005 and 
the confirmation thereof on 12.9.2005, were valid? It was submitted, 
that even if, for arguments sake, the order dated 10.3.2000 passed by 
the Company Court of the High Court at Madras _was now to be set 
aside, the same would not validate the aforementioned illegality and 
unauthorized actions of the Recovery Officer, for giving effect to the 
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recovery certificate issued by the ORT. To support the aforementioned 
_ proposition, learned senior counsel placed reliance on th~ Official 
Liquidator, Uttar Pradesh and Uttarakhand case5, and drew the attention 
of this Court to the factual position recorded in paragraphs 2 and 3 thereof, 
which are reproduced hereunder: 
"2. Regard being had to the controversy involved which is in the 
realm of pure question of law, it is not necessary to exposit the 
facts in detail. Hence, the _necessitous facts are adumbrated herein. 
The respondent, Allahabad Bank, a secured creditor with whom 
certain properties were mortgaged, filed Original Application No. 
153 of 1999 under Section 9 of the ROB Act for recovery of a 
sum of Rs 39,93,47,701 with interest from the Company, namely, 
Mis Rajindra Pipes Ltd., which was decreed by the Debts 
Recovery Tribunal, Jabalpur (ORT) vide its order dated 7-3-2000. 
The debt recovery certificate being DRC No. 164 of 2000 was 
issued for recovery of the aforesaid amount which was 
subsequently transferred to ORT at Allahabad. Be it noted, 
Company Petition No. 113 of 1997 was filed before the learned 
Company Judge in the High Court of Judicature at Allahabad who, 
vide order dated 26-7-2000, had passed an order for winding up 
of the Company, as a consequence of which the Official Liquidator 
had taken over the possession of the assets of the Company on 
24-7-2002. After
receipt of the recovery certificate, the Recovery 
Officer attached the immovable properties of the wound-up 
company by order dated 29-8-2002. The movable properties of 
the company were attached as per order dated 23-12-2003. At 
this juncture, Allahabad Bank filed an application before the 
Company Court for imp leading it as a necessary party and protect 
its rights getting it out of the winding-up proceedings. A prayer 
was made before the Company Court to grant permission to 
proceed with the sale of the attached properties by the Recovery 
Officer, Debts Recovery Tribunal (ORT). The learned Company 
Judge, on 13-2-2004, granted permission for proceeding with the 
attachment and sale of the assets for recovery of the dues under 
the ROB Act. It is worth stating here that no condition was 
imposed. 
3. After auction and confirmation of sale by ORT, the auction-
purchaser filed an application before the learned Company Judge
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
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MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
for issuance ofa,direction to the Official Liquidator to give physical . A 
possession. The Company Court, by order.dated 4-4-2007, set 
aside the sale certificate on the ground that the Official Liquidator 
was neither heard in the matter nor was he given an opportunity 
to represent before the Recovery Officer for the purposes of 
representing the workmen's dues and a portion of the workmen's 
liability under Section 529-A of the 1956 Act. A dire~tion was 
issued to the Recovery Officer to proceed to sell the assets only 
after associating the Official Liquidator and after giving him hearing 
to represent the claims of the workmen." 
The aforementioned controversy was adjudicated and disposed 
of by this Court, after making a reference to the judgment in the Allahabad 
Bank case I by concluding as under: 
"35. It has been submitted by Mr Bane1ji, learned Senior Counsel, 
that ifthe Company Court as well as DRT can exercise jurisdiction 
in respect of the same auction or sale after adjudication by ORT, 
there would be duality of exercise of jurisdiction which the RDB 
Act does not envisage. By way of an example, the learned Senior 
Counsel has submitted that there are some categories of persons 
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who can go before DRT challenging the sale and if the Official 
Liquidator approaches the Company Court, then such a situation 
would only bring anarchy in the realm of
adjudication. The· 
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aforesaid submission of the learned Senior Counsel commends 
acceptance as the intendment of the legislature is that the dues of 
the banks and financial institutions are realised in promptitude. It 
is to be noted that when there is inflation in the economy. the 
value of the mortgaged property/assets depreciates with the effiux 
of time. If more time is consumed, it would be really difficult on 
the part of the banks and financial institutions to realise their dues. 
Therefore, this Court in Allahabad Bank case has opined that it is 
DRTwhich would have the exclusive jurisdiction when a matter 
is agitated before DRT. The dictum in the said cast has been 
approved by the three-Judge Bench in Rajasthan State Financial 
Corpn.-It is not a situation where the Official Liquidator can have 
a choice either to approach DRT or the Company Court. The 
language of the RDB Act. being clear. provides that any person 
aggrieved can prefer an appeal. The Official Liquidator whose 
association is mandatorily required can indubitably be regarded 
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as a person aggrieved relating to the action taken by the Recovery 
Officer which would include the manner in which the auction is 
conducted or the sale is confirmed. Under these circumstances, 
the Official Liquidator cannot even take recourse to the doctrine 
of election. It is difficult to conceive that there are two remedies. 
It is well settled in law that if there is only one remedy, the doctrine 
of election does not apply and we are disposed to think that the 
Official Liquidator has only one remedy i.e. to challenge the order 
passed by the Recovery Officer before DRT. Be it noted, an 
order passed under Section 30 of the RDB Act by DRT is 
appealable. Thus, we are inclined to conclude and hold that the 
Official Liquidator can only take recourse to the mode of appeal 
and further appeal under the RDB Act and not approach the 
Company Court to set aside the auction or confirmation of sale 
when a sale has been confirmed by the Recovery Officer under 
the RDB Act. 
36. We will be failing in our duty if we do not take notice of the 
decision in M.V. Janardhan Reddy wherein the sale was set aside 
by the Company Judge. It may be stated here that the Company 
Court had imposed a condition that the permission of the Company 
Court shall be obtained before the sale of the properties, immovable 
or movable, is confirmed or finalised. On the aforesaid basis, this 
Court opined that when the bank was
permitted to go ahead with 
the proposed sale of the assets of the company under liquidation 
by way of auction but such sale was subject to confirmation by 
the Company Court and all the parties were aware about the 
condition as to confirmation of sale by the Company Court, it was 
not open to the Recovery Officer to confirm the sale and, therefore, 
the sale was set aside by the Company Court, being in violation of 
the order. Thus, we find that the facts in the said case were 
absolutely different and further this Court did not deal with the 
jurisdiction of the Company Court vis-a-vis DRTas the said issue 
really did not arise. Hence, it is not an authority for the proposition 
that the Official Liquidator can approach the Company Court to 
set aside the auction or sale conducted by the Recovery Officer 
ofDRT. 
37. In view of the aforesaid analysis. we concur with the view 
expressed by the Division Bench and hold that the Official
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
Liquidator can prefer an appeal before DRT. As he was prosecuting 
the lis in all genuineness before the Company Court and defending 
the order before the Division Bench, we grant him four weeks' 
time to file an appeal after following the due procedure. On such 
an appeal being preferred, DRT shall deal with the appeal in 
accordance with law. DRT is directed to decide the appeal within 
a period of two months after offering an opportunity of hearing to 
all concerned. Till the appeal is disposed of, the interim order passed 
by this Court shall remain in force. We hasten to clarify that we 
have not expressed anything on the merits of the case." 
(emphasis supplied) 
25. Reliance was then placed on Order XXI Rule 54 of the Code 
of Civil Procedure, which is extracted hereunder: 
"54. Attachment of immovable property.- {I) Where the property 
is immovable, the attachment shall be made by an Order prohibiting 
the judgment debtor from transferring or charging the property in 
any way, and all persons from taking any benefit from such transfer 
or charge. 
(I )A The Order shall also require the judgment debtor to attend 
court on a specified date to take notice of the date to be fixed for 
settltng the terms of the proclamation of sale. 
(2) The Order shall be proclaimed at some place on or adjacent to 
such property by beat of drum or other customary mode, and a 
copy of the Order shall
be affixed on a conspicuous part of the 
property and then upon a conspicuous part of the court house, 
and also, where the property is land paying revenue to the 
government, in the office of the Collector of the District in which 
the land is situate and, where the property is land situate in village, 
also in the office of the Gram Panchayat, if any, havingjurisdiction 
over that village." 
To support the contention advanced at the hands ofleamed senior 
counsel representing the respondents, reliance was placed on Jehal Tanti 
v. Nageshwar Singh9• The following observations recorded therein, are 
of relevance: 
"JO. The nature and effect ofan alienation made in violation ofan 
order of injunction was considered in Tayabbhai M. Bagasarwalla 
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v. Hind Rubber Industries (P) Ltd. and the following propositions 
were laid down: 
"16. According to this section, if an objection is raised to the 
jurisdiction of the court at the hearing of an application for grant 
of, or for vacating, interim relief, the court should determine that 
issue in the first instance as a preliminary issue before granting or 
setting aside the relief already granted. An application raising 
objection to the jurisdiction to the court is directed to be heard 
with all expedition. Sub-rule (2), however, says that the command 
in sub-rule (I) does not preclude the com1 from granting such 
interim relief as it may consider necessary pending the decision 
on the question of jurisdiction. In our opinion, the provision merely 
states the obvious. It makes explicit what is implicit in law. Just 
because an objection to the jurisdiction is raised, the court does 
not become helpless forthwith-nor does it become incompetent 
to grant the interim relief. It can. At the same time, it should also 
decide the objection to jurisdiction at the earliest possible moment. 
This is the general principle and this is what Section 9·A reiterates. 
Take this very case. The plaintiff asked for temporary injunction. 
An addnterim injunction was granted. Then the defendants came 
forward objecting to the grant of injunction and also raising an 
objection to the jurisdiction of the court. The court
overruled the 
objection as to jurisdiction and made the interim injunction absolute. 
The defendants filed an appeal against the decision on the question 
of jurisdiction. While that appeal was pending, several other interim 
orders were passed both by the civil court as well as by the High 
Court. Ultimately, no doubt, the High Court has found that the 
civil court had no jurisdiction to entertain the suit but all this took 
about six years. Can it be said that orders passed by the civil 
·court and the High Court during this period of six years were all 
non est and that it is open to the defendants to flout them merrily. 
without fear of any· consequence. Admittedly, this could not be 
done until the High Court's decision on the question of jurisdiction. 
The question is whether the said decision of the High Court means 
that no person can be punished for flouting or disobeying the 
interim/interlocutory orders while they were in force i.e. for 
violatipns and disobedience committed prior to the decision of the 
High Court on the question of jurisdiction. Holding that by virtue
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
of the said decision of the High Court (on the guestion of 
jurisdiction), no one can be punished thereafter for disobedience 
or violation of the interim orders committed prior to the said 
decision of the High Court, would indeed be subversive of the 
rule oflaw and would seriously erode the dignity and the authority 
of the courts. We must repeat that this is not even a case where 
a suit was filed in the wrong court knowingly or only with a view 
to snatch an interim order. As pointed out hereinabove, the suit 
was filed in the civil court bona fide. We are of the opinion that in 
such a case the defendants cannot escape the conseguences of 
their disobedience and violation of the interim injunction committed 
by them prior to the High Court's decision on the guestion of 
jurisdiction. 
28. The correct principle, therefore, is the one recognised and 
reiterated in Section 9-A-:-to wit, where an objection to jurisdiction 
ofa civil court is raised to entertain a suit and to pass any interim 
orders therein, the Court should decide the question of jurisdiction 
in the first instance butthat does not mean that pending the decision 
on the question of jurisdiction, the Court has no jurisdiction to pass 
interim orders as may be called for in the facts and circumstances 
of the case. A mere objection to jurisdiction does not instantly 
disable the court from passing any interim orders. It
can yet pass 
appropriate orders. At the same time, it should also decide the 
guestion of jurisdiction at the earliest possible time. The interim 
orders so passed are orders within jurisdiction when passed and 
effective till the court decides that it has no jurisdiction to entertain 
the suit. These interim orders undoubtedly come to an end with 
the decision that this Court had no jurisdiction. It is open to the 
court to modify these orders while holding that it has no jurisdiction 
to try the suit. .... " 
(emphasis supplied) 
26. It was the emphatic contention of learned counsel for the 
respondents, that the sole purpose for requiring the Official Liquidator to 
participate in the proceedings before the ORT, was to keep the interest 
of the creditors before the Company Court (where winding up 
proceedings had been initiated by other creditors), secure. The interest 
of the creditors before the Company Court could be secure, only ifthe 
sale of the properties of the company under winding up was made by 
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conforming to the crystalised practices in getting the best price. Referring 
to the conclusions drawn in the impugned order, it was submitted, that 
the auction sale conducted by the Recovery Officer was farcical, as it 
was, with the sole object of extending benefits to the appellant -Anita 
International. It was therefore asserted, that the Division Bench of the 
High Court was fully justified in setting aside the order passed by the 
learned Single Judge. 
27. Mr. P. Chidambaram, learned senior counsel in rejoinder and 
in response to the three contentions advanced at the hands of the 
respondents, invited this Court's attention to Sections 18, 19 and 34 of 
the RDB Act. The same are extracted hereunder: 
"18. Bar of Jurisdiction.--On and from the appointed day, no court 
or other authority shall have, or be entitled to exercise, any 
jurisdiction, powers or authority (except the Supreme Court, and 
a High Court exercisingjurisdiction under articles 226 and 227 of 
the Constitution) in relation to tne matters specified in section 17. 
Provided that any proceedings in relation to the recovery of debts 
due to any multi-State co-operative bank pending before the date 
of commencement of the Enforcement of Security Interest and 
Recovery of Debts Laws (Amendment)Act, 2012 under the Multi-
State Co-operative Societies Act, 2002 (39 of 2002) shall be 
continued and nothing contained in this section shall,
after such 
commencement, apply to such proceedings. 
19.Application to the Tribunal.-(!) Where a bank or a financial 
institution has to recover any debt from any person, it may make 
an application to the Tribunal within the local limits of whose 
jurisdiction-
( a) the defendant, or each of the defendants where there are 
more than one, at the time of making the application, actually and 
voluntarily resides, or carries on business, or personally works for 
gain; or 
(b) any of the defendants, where there are more than one, at the 
time of making the application, actually and voluntarily resides, or 
carries on business, or personally works for gain; or 
(c)the cause ofaction, wholly or in part, arises:
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
Provided that the bank or financial institution may, with the 
permission of the Debts Recovery Tribunal, on an application made 
by it, withdraw the application, whether made before or after the 
Enforcement of Security Interest and Recovery of Debts Laws 
(Amendment) Act, 2004 for the purpose of taking action under 
the Securitisation and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002 (54 of 2002), if no 
such action had been taken earlier under that Act: 
Provided further that any application made under the first proviso 
for seeking permission from the Debts Recovery Tribunal to 
withdraw the application made under sub section (I) shall be dealt 
with by it as expeditiously as possible and disposed of within thirty 
days from the date of such application: 
Provided also that in case the Debts Recovery Tribunal refuses 
to grant permission for withdrawal of the application filed under 
this sub section, it shall pass such orders after recording the reasons 
therefor. 
(I A) Every bank being, multi~State co-operative bank referred to 
in sub-clause (vi) of clause (d) of section 2, may, at its option, opt 
to initiate proceedings under the Multi-State Co-operative Societies 
Act, 2002 (39 of 2002) to recover debts, whether due before or 
after the date of commencement of the Enforcement of the 
Security Interest and Recovery of Debts Laws (Amendment)
Act, 
2012 from any person instead of making an application under this 
Chapter. 
(I B) In case, a bank being, multi-State co-operative bank referred 
to in sub-clause (vi) ofclause (d) of section 2 has filed an application 
under this Chapter and subsequently opts to withdraw the 
application forthe purpose ofinitiating proceeding under the Multi-
State Co-operative Societies Act, 2002 (39 of 2002) to recover 
debts, it may do so with the permission of the Tribunal and every 
such application seeking permission from the Tribunal to withdraw 
the application made under sub-section (IA) shall be dealt with 
by it as expeditiously as possible and disposed of within thirty 
days from the date of such application: 
Provided that in casethe Tribunal refuses to grant permission for 
withdrawal of the application filed under this sub-section, it shall 
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pass such orders after recording the reasons therefor. 
(2) Where a bank or a financial institution, which has to recover 
its debt from any person, has filed an application to the Tribunal 
under sub-section (I) and against the same person another bank 
or financial institution also has a claim to recover its debt, then, 
the later bank or financial institution may join the applicant bank 
or financial institution at any stage of the proceedings, before the 
final order is passed, by making an application to that Tribunal. 
(3) Every application under sub-section (I) or sub-section (2) shall 
be in such form and accompanied by such documents or other 
evidence and by such fee as may be prescribed: 
Provided that the fee may be prescribed having regard to the 
amount of debt to be recovered: 
Provided further that nothing contained in this sub-section relating 
to fee shall apply to cases transferred to the Tribunal under sub-
section (I) of section 31. 
(3A) If any application filed before thi!Tribunal for recovery of 
any debt is settled prior to the commencement of the hearing 
before that Tribunal or at any stage of the proceedings before the 
final order is passed, the applicant may be granted refund of the 
fees paid by him at such rates as may be prescribed. 
(4) On receipt of the application under sub-section (I) or sub-
section (2), the Tribunal shall issue summons requiring the 
defendant to show
cause within thirty days of the service of 
summons as to why the relief prayed for should not be granted. 
(5) The defendant shall, within a period of thirty days from the 
date of service of summons, present a written statement of this 
defence: 
Provided that where the defendant fails to file the written statement 
within the said period of thirty days, the Presiding Officer may, in 
exceptional cases and in special circumstances to be recorded in 
writing, allow not more than two extensions to the defendant to 
file the written statement. 
(SA) After hearing of the application has commenced, it shall be 
continued from day-to-day until the hearing is concluded:
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
683 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
Provided that the Tribunal may grant adjournments if sufficient 
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cause is shown, but no such adjournment shall be granted more 
than three times to a party and where there are three or more 
parties, the total number of such adjournments shall not exceed 
six: 
Provided further that, the Presiding Officer may grant such 
B 
adjournments on imposing such costs as may be considered 
necessary. 
(6) Where the defendant claims to set-off against the applicant's 
demand any ascertained sum of money legally recoverable by 
him from such applicant, the defendant may, at the first hearing of. c 
the application, but not a.!terwards unless pennitted by the Tribunal, 
present a written statement containing the particulars of the debt 
sought to be set-off. 
(7) The written statement shall have the same effect as a plaint in 
a cross-suit so as to enable the Tribunal to pass a final order in 
o 
respect both of the original claim and of the set-off. 
(8) A defendant in an application may, in addition to his right of 
pleading a set-off under sub-section ( 6), set up, by way ofcounter-
claim againstthe claim of the applicant, any right or claim in respect 
of a cause of action accruing to the defendant against the applicant 
E 
either before or after the filing of the application but before the 
defendant has delivered his defence or before the time limited for 
delivering his defence has
expired, whether such counter-claim is 
in the nature of a claim for damages or not. 
(9) A counter-claim under sub-section (8) shall have the same 
effect as a cross-suit so as to enable the Tribunal to pass a final 
order on the same application, both on the original claim and on 
the counter-claim. 
(I 0) The applicant shall be at liberty to file a written statement in 
answer to the counter-claim of the defendant within such period 
as may be fixed by the Tribunal. 
( 11) Where the defendant sets up a counter-claim and the applicant 
contends that the claim the~eby raised ought not to be disposed of 
by way of counter-claim but in an independent action, the applicant 
may, at any time before issues are settled in relation to the 
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counter-claim, apply to the Tribunal for an order that such counter-
claim may be excluded, and the Tribunal may, on the hearing of 
such application, make such order as it thinks fit. 
(12) The Tribunal may make an interim order(whether by way of 
injunction or stay or attachment) against the defendant to debar . 
him from transferring, alienating or otherwise dealing with, or 
disposing of, any property and assets belonging to him without the 
prior permission of the Tribunal. 
(13)(A) Where, at any stage of the proceedings, the Tribunal is 
satisfied, by affidavit or otherwise, that the defendant, with intent 
to obstruct or delay or frustrate the execution of any order for the 
recovery of debt that may be passed against him, -
(i) is about to dispose of the whole or any part of his property; or 
(ii) is about to remove the whole or any part of his property from 
the local limits of the jurisdiction of the Tribunal; or 
(iii) is likely to cause any damage or mischief to the property or 
affect its value by misuse or creating third party interest, 
the Tribunal may direct the defendant, within a time to be fixed by 
it, either to furnish security, in such sum as may be specified in the 
order, to produce and place at the disposal of the Tribunal, when 
required, the said property or the value of the same, or such portion 
thereof as may be sufficient to satisfy the certificate for the 
recovery of debt,
or to appear and show cause why he shou Id not 
(urnish security. 
(8) Where the defendant fails to show cause why he should not 
furnish security, or fails to furnish the security required, within the 
time fixed by the Tribunal, the Tribunal may order the attachment 
of the whole or such portion of the properties claimed by the 
applicant as the properties secured in his favororotherwise owned 
by the defendant as appears sufficient to satisfy any certificate 
for the recovery of debt. 
(14) The applicant shall, unless theTribunal otherwise directs, 
specify the property required to be attached and the estimated 
value thereof. 
(IS) The Tribunal may also in the order direct the conditional
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.) 
attachment of the whole or any portion of the property specified 
under sub-section (14 ). 
( 16) If an order of attachment is made without complying with 
the pro-visions of sub-section ( 13), such attachment shall be void. 
(17) In the case of disobedience of an order made by the Tribunal 
under sub-sections (12), (13) and (18) or breach of any of the 
tenns on which the order was made, the Tribunal may order the 
properties of the person guilty of such disobedience or breach to 
be attached and may also order such person to be detained in the 
civil prison for a term not exceeding three months, unless in the 
meantime the Tribunal directs his release. 
(18) Where it appears to the Tribunal to be just and convenient, 
the Tribunal may, by order,-
( a) appoint a receiver of any property, whether before or after 
grant of certificate for recovery of debt; 
(b) remove any person from the possessionor custody of the 
property; 
(c) commit the same to the possession, custody or management 
of the receiver; 
(d) confer upon the receiver all such powers, as to bringing and 
defending suits in the courts or filing and defending application 
before the Tribunal and for the realization, management, protection, 
preservation and improvement of the property, the collection of 
the rents and profits thereof, the application and disposal of such 
rents and profits, and the execution of documents as
the owner 
himself has, or such of those powers as the Tribunal thinks fit; 
and 
( e) appoint a Commissioner for preparation of an inventory of the 
properties of the defendant or for the sale thereof. 
685 
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(19) Where a certificate of recovery is issued against a company 
G 
registered under the Companies Act, 1956 (I of 1956) the Tribunal 
may order the sale proceeds of such company to be distributed 
among its secured creditors in accordance with.the provisions of 
section 529A of the Companies Act, 1956 and to pay the surplus, 
if any, to the company. 
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(20) The Tribunal may, after giving the applicant and the defendant 
an opportunity of being heard, pass such interim or final order, 
including the order for payment of interest from the date on or 
before which payment of the amount is found due up to the date 
ofrealization or actual payment, on the application as it thinks fit 
to meet the ends of justice. 
(20A) Where it is proved to the satisfaction of the Tribunal that 
the claint of the applicant has been adjusted wholly or in part by 
any lawful agreement or compromise in writing and signed by the 
parties or where the defendant has repaid or agreed to repay the 
claim of the applicant, the Tribunal shall pass orders recording 
such agreement, compromise or satisfaction of the claim. 
(21) The Tribunal shall send a copy of every order passed by it to 
the applicant and the defendant. ' 
(22)· The Presiding Officer shall issue a certificate under his 
D 
signature on the basis of the order of the Tribunal to the Recovery 
Officer for recovery of the amount of debt specified in the 
certificate. 
'· 
(23) Where the Tribunal, which has issued a certificate of recovery, 
is satisfied that the property is situated within the local limits of 
E 
the jurisdiction of two or more Tribunals, it may send the copies of 
the certificate of recovery for execution to such other Tribunals 
where the property is situated: 
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Provided that in a case where the Tribunal to
which the certificate 
ofrecovery is sent for execution finds that it has no jurisdiction to 
comply with the certificate ofrecovery, it shall return the same to 
the Tribunal which has issued it. 
(24) The application made to the Tribunal under sub-section (I) 
or sub-section (2) shall be dealt with by it as expeditiously as 
possible and endeavor shall be made by it to dispose of the 
application finally within.one hundred and eighty days from the 
date ofreceipt of the application. 
(25) The Tribunal may make such orders and give such directions 
as may be necessary or expedient to give effect to its orders or to 
prevent abuse of its process or to secure the ends of justic~. 
xxx 
xxx 
xxx
ANITA INTERNATrONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.) 
34. Act to ha~e over-riding effect.-( I) Save as provided under 
sub-section (2), the provisions of thi.s Act shall have effect 
notwithstanding anything inconsistent therewith contained in any 
other law for the time being in f\)rce or in any instrument having 
effect ,by virtue nf any law other i:han this Act. 
(2) The provisions of this Act or the rules made thereunder shall 
be in addition to, and not in derogation of, the Industrial Finance 
Corporation Act, 1948 ( 15 of 1948), the State Financial 
Corporations Act, 1951 (63 ofl951), the UnitTrustoflndiaAct, 
1963 (52of1963), the Industrial Reconstruction Bank of India 
Act, 1984 (62of1984), the Sick Injustrial Companies (Special 
Provisions) Act, 1985 (I of 1986) and the Small Industries 
Development Bank of India Act, 1989 (39 of 1989)." 
Based on the aforesaid provisions, it was asserted, that the 
provisions of the ROB Act envisaged a complete ouster of the Company 
Court, and that neither the Company Court nor any other Court, could 
have exercised j1,1risdiction vested in the ROB A,ct. It was submitted, 
that the Official Liquidator has no participatory role. under the ROB Act. 
The Official Liquidator has jurisdictional c.ontrol, over the assets of a 
company under winding up, under the Companies Act. In this behalf, 
learned seniOr counsel for the appellant, placed reliance on Kiran Singh 
v. Chaman Paswan 10, and pointed
out to the following observations 
recorded therein: 
"6. The answer to these contentions must depend on what the 
position in law is when a court .entertains a suit or an appeal over 
which it has no jurisdiction, and what the effect of Section 11 of 
687 
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the Suits Valuation Act is on that position. It is a fundamental 
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principle well established that a decree passed by a court without 
jurisdiction is a nullity. and that its invalidity could be set up 
whenever and wherever it is sought to be enforced or relied upon. 
even at the stage of execution and even in collateral proceedings. 
A defect of jurisdiction. whether it is pecuniary or territorial. or ,_ 
whether it is in respect of the subject-matter of the action. strikes 
a· 
at the veiy authority of the court to pass any decree. and such a 
defect cannot be cyred even by consent of parties, If the questiop 
now underoonsideration fell to be determined only on the application 
of general principles governing the matter, there can be no doubt 
1'' 1955 (I) SCR 117 
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[2016) 6 S.C.R. 
A 
that the District Court of Monghyr was coram non judice, and 
that its judgment and decree would be nullities. The question is 
what is the effect of Section 11 of the Suits Valuation Act on this 
position." 
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(emphasis supplied) 
Reliance was also placed on Dhurandhar Prasad Singh v. Jai 
Prakash University 11 , and the Court's attention was drawn to the 
following observations: 
"20. de Smith, Woolf and Jowell in their treatise Judicial Review 
of Administrative Action, 5th Edn., para 5-044, have summarised 
the concept of void and voidable as follows: 
"Behind the simple dichotomy of void and voidable acts (invalid 
and valid until declared to be invalid) lurk terminological and 
conceptual problems of excruciating complexity. The problems 
arose from the premise that if an act, order or decision is ultra 
vires in the sense of outside jurisdiction, it was said to be invalid, 
or null and void. If it is intra vires it was, of course, valid. If it is 
flawed by an error perpetrated within the area of authority or 
jurisdiction, it was usually said to be voidable; that is, valid till set 
aside on appeal or in the past quashed by certiorari for error of 
law on the face of the record." 
21. Clive Lewis in his work Judicial Remedies in Public Law at p. 
131 has explained the expressions "void and voidable" as follows: 
"A challenge to the validity of an act may be by direct action or by 
way of collateral or
indirect challenge. A direct action is one where 
the principal purpose of the action is to establish the invalidity. 
This will usually be by way of an application for judicial review or 
by use of any statutory mechanism for appeal or review. Collateral 
challenges arise when the invalidity is raised in the course of some 
other proceedings, the purpose of which is notto establish invalidity 
but where questions of validity become relevant." 
Thereupon, reference was made to Jagmittar Sain Bhagat v. 
Director, Health Services, Haryana 
1
~. In order to canvass the proposition, 
that jurisdiction of courts/forums cannot be conferred by consent of 
· parties, or acquiescence or waiver. Reliance in this behalf was placed 
on the following conclusions drawn by this Court: 
11 <2001 > 6 sec 534 
1 ~ <2013) 10 sec 136
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
689 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
"9. Indisputably, it is a settled legal proposition that conferment of 
jurisdiction is a legislative function and it can neither be conferred 
with the consent of the parties nor by a superior court, and ifthe 
court passes a decree having no jurisdiction over the matter, it 
would amount to nullity as the matter goes to the root of the cause. 
Such an issue can be raised at any stage of the proceedings. The. 
finding of a court or tribunal becomes irrelevant and unenforceable/ 
inexecutable once the forum is found to have no jurisdiction. 
Similarly, if a court/tribunal inherently lacks jurisdiction, 
acquiescence of party equally should not be permitted to perpetrate 
and perpetuate defeating of the legislative animation. The court 
cannot derive jurisdiction apart from the statute. In such eventuality 
the doctrine of waiver also does not apply. (Vide United 
Commercial Bank Ltd. v. Workmen AIR 1951 SC 230; Nai Bahu 
v. Lala Ramnarayan AIR 1978 SC 22; Natraj Studios (P) Ltd. v. 
Navrang Studios (1981) 1 SCC 523; and Kondiba Dagadu Kadam 
v. Savitribai Sopan Gujar(l 9?9).3 SCC 722.) 
A 
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10. In Sushil Kumar Mehta v. Gobind Ram Bohra (1990) 1 SCC 
193, this Court, after placing reliance on a large number of its 
earlier judgments particularly in Premier Automobiles Ltd. v. 
Kamlekar Shantaram Wadke (1976) I SCC 496; Kiran Singh v. 
Chaman Paswan AIR 1954 SC 340; and
Chandrika Mi sir v. Bhaiya . 
Lal AIR 1973 SC 2391 held, that a decree without jurisdiction is a 
E 
nullity. It is a coram non judice; when a special statute gives a 
right and also provides for a forum for adjudication of rights, remedy 
has to be sought only under the provisions of that Act and the 
common law court has no jurisdiction; where an Act creates an 
obligation and enforces the performance in specified manner. 
"performance cannot be forced in any other manner". 
11. The law does not permit any court/tribunal/authority/forum to 
usurp jurisdiction on any ground whatsoever, in case, such an 
authority does not have jurisdiction on the subject-matter. For the 
reason that it is not an objection as to the place of suing; "it is an 
objection going to the nullity of the orderon the ground of want of 
jurisdiction". Thus. for assumption of jurisdiction by a court or a 
tribunal. existence of jurisdictional fact is a condition precedent. 
But once such jurisdictional fact is found to exist, the court or 
tribunal has power to decide on the adjudicatory facts or facts in 
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[2016] 6 S.C.R. 
issue. (Vide Setrucherla Ramabhadraraju v. Maharaja of Jeypore 
AIR 1919 PC 150; State of Gujarat v. Rajesh Kumar Chimanlal 
Barot AIR 1996 SC 2664; Harshad Chiman Lal Modi v. D.L.F. 
Universal Ltd. AIR 2005 SC 4446; and Carona Ltd. v. Parvathy 
Swaminathan & Sons AIR 2008 SC 187)." 
(emphasis supplied) · 
28. Whilst supplementing the above contentions, Mr. S. Ganesh, 
·learned senior counsel pointed out, that in the present controversy, the 
State Bank of Mysore had preferred an application b~fore the Company 
, Court under Section 446(1) of the Coll)panies Act. It was asserted, that 
the order passed by the High Court was an order in personam, and as 
such, the aforesaid order dated 10.3 .2000 could not be considered as 
binding on the,DRT, or for that matter, on the Recovery Officer of the 
ORT. For the above proposition, learned senior counsel placed reliance 
on the Andhra Bank case3, and drew the attention of this Court to the 
following conclusions recorded therein: 
"31. Section 446 of the Companies Act indisputably confers a 
wide power upon the Company Judge, but such a power can be 
exercised only upon consideration of the respective contentions 
of the parties raised in a suit or a proceei:ling or any claim made 
by or against the company. A question of determining the priorities 
would also fall for consideration ifthe parties claiming the same 
are before the court. Section 446 of the
Companies Act ipso facto 
confers no power upon the Court to pass interlocutory orders. 
The question as to whether the courts have inherent power to 
pass such orders, in our opinion, does not arise for consideration 
in this proceeding. Assuming such a power exists, it was imperative 
that the same should have been exercised on consideration of the 
factors laid down by this Court in M~rgan Stanley Mutual Fund v: 
Kartick Das (1994) 4 SCC 225. An unreasoned order does not 
subserve the doctrine of fair play. (See Mangalore Ganesh Beedi 
Works v. CIT (2005) 2 SCC 329). 
. 
(emphasis supplied) 
29. In order to make the final thrust, learned senior counsel 
representing the appellant submitted, that an auction sale of the nature, 
which is subject matter of consideration in the present controversy, was 
not liable to be set aside, merely on account of some trivial infirmities in 
the procedure adopted for the sale of the same. It was the submission 
of learned counsel, that only a material irregularity would persuade a
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
Court to interfere with such sale proceedings conducted in furtherance 
of statutory power conferred upon such authority. To support the above 
contention, reliance was placed by learned senior counsel firstly on the 
following observations in the decision rendered by this Court in Radhy 
Shyam v. Shyam Behari Singh". 
"7. There can be no doubt that an application underO. XXI, Rule 
90 to set aside an auction-sale concerns the rights of a person 
declared to be the purchaser. If the application is allowed, the 
sale is set aside and the purchaser is deprived of his right to have 
the sale confirmed by the Court under Rule 92. Such a right is a 
valuable right, in that, upon such confirmation the sale becomes 
absolute and the rights of ownership in the property so sold become 
vested in him. A decision in such a proceeding, therefore, must be 
said to be one determining the right of the auction-purchaser to 
have the sale confirmed and made absolute and of the judgment-
debtor conferred by Rule 90 to have it set aside and a resale 
ordered. In our view an order in a proceeding under Order XX!, 
Rule 90, is a 'judgment' inasmuch as such a proceeding raises a 
controversy between the parties therein affecting their valuable 
rights and the order allowing the application certainly deprives the 
purchaser ofrights accrued to him as a result of the auction-sale. 
We, therefore, agree with the
High Court that a letters patent 
appeal lay against the order of the learned single Judge. 
8. Rule 90 of 0. XXI of the Code, as amended by the Allahabad 
High Court, inter alia provides that no sale shall be set aside on 
the ground of irregularity or even fraud unless upon the facts 
proved the Court is satisfied that the applicant has sustained injury 
by reason of such irregularity or fraud. Mere proof of a material 
irregularity such as the one under Rule 69 and inadequacy of 
price realised in such a sale, in other words injury. is, therefore, 
not sufficient. What has to be established is that there was not 
only inadequacy of the price but that that inadequacy was caused 
by reason of the material irregularity or fraud. A connection has 
thus to be established between the inadequacy of the price and 
the material irregularity." 
(emphasis supplied) 
Additionally, reliance was placed on Navalkha and Sons v. Sri 
13 AIR 1971SC2337 
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SUPREME COURT REPORTS 
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Ramanya Das 14• And the Court's attention was drawn to the following 
observations: 
"7. In the present case the Division Bench has come to the 
conclusion that publicity was not as wide as originally proposed 
by the Commissioners in their affidavit. The publication was made 
in four dailies namely The Hindu, Indian Express, the Hindustan 
Times and The Statesman. There was no publication in the Times 
offndia. Further out of the four newspapers in which publication 
was made only in two there were two insertions and in the 
remaining two there was only one insertion. This was contrary to 
what the Commissioners have promised in their affidavit dated 
July 8, 1964. No doubt, other efforts were made for giving publicity 
but these efforts were not sufficient to attract more than one 
offer. When the case came for confirmation on December 24, 
1964 there was an application by Babu Khan that the property 
was of much higher value and that fresh offers must be invited 
again with wider publicity. There is also the affidavit of the State 
Government dated August 29, 1963 in which the value of the 
property was shown as Rs.13,40,000/-. Besides, on that very day, 
one Gopaldas Darak had come before the Court with a higher 
offer showing his bona fides and earnestness by depositing more 
than one lakh of rupees. He came with the complaint that there 
was not sufficient publicity as to attract people from the north
and 
that as soon as he came to know he gave his offer. In these 
circumstances the learned Single Judge was right in expressing 
his reluctance to confirm the offer of Navalkha & Sons. He 
therefore decided to have an open bid as between the appellant 
and Darak in the Court itself on that very day. The complaint of 
Padam Chand Agarwal is that the second step taken by the Single 
Judge of holding an auction without giving wide publicity was not 
justified in law. Rule 273 of the Companies (Court) Rules provides 
that all sales shall be made by public auction or by inviting sealed 
tenders or in such manner as the Judge may direct. It appears 
that on April 17, 1964 at the instance of the Official Liquidator 
and at the instance of a contributory the Court had approved of 
the terms and conditions of sale which provide calling of sealed 
tenders. On December 24, 1964 the learned Judge realised the 
inefficacy of this Course and decided to abandon the original 
"(1969) 3 sec 537
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
procedure and put the properties to auction. But having made up 
his mind to resort to auction the learned Judge confined the auction 
to only two persons namely the previous tenderer and the: fresh 
tenderer. The auction in question no doubt was conducted in a 
public place but it was not a public auction because it was not 
open to the ge~~ral public but was confined to two named persons. 
Secondly it was not held after due publicity. It was held immediately 
after it was decided upon. It is, therefore, obvious that the sale in 
question was not a public sale which implies sale after giving notice 
to the public wherein every member of the public is at liberty to 
participate. No doubt, the device resorted to considerably raised 
the previous bid yet it was not an adequate price having regard to 
the market value of the property to which reference has already 
been made. The denial of opportunity to purchase the property by 
persons who would have taken part in the auction bid but for 
want of notice is a serious matter. In our opinion the learned Judge 
having decided on December 24, 1964 that the property should be 
potto auction should have directed auction by public sale instead 
of confining it to two persons alone. Since there was want of 
publicity and there was lack of opportunity to the public to take 
part in the auction the acceptance of the highest bid by the learned 
Judge
was not a sound exercise of discretion. It is contended on 
behalf of the appellant that confirmation was discretionary with 
the Court and the Division Bench ought not to have interfered 
with the discretion exercised by the Company Judge. It is true 
that the discretion exercised by the Judge ought not to be interfered 
with unless the Judge has gone wrong on principle. As already 
pointed out the learned Company Judge having decided to put the 
property to auction went wrong in not holding the auction as a 
public auction after due publicity and this has resulted in prejudice 
to the Company and the creditors in that the auction did not fetch 
adequate price. The prejudice was inherent in the method adopted. 
The petition of Padam Chand Agarwal also suggests that want of 
publicity had resulted in prejudice. In these circumstances the 
Company Judge ought not to have confirmed the bid of the 
appellant in the auction held on December 24, 1964. We are 
accordingly of opinion that the Division Bench was right in holding 
that the order of the Company Judge dated February 19, I 965 
should be set aside and there should be fresh sale of the property 
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SUPREME COURT REPORTS 
[2016) 6 S.C.R. 
either by calling sealed tenders or by auction in accordance with 
law. The tender will be called or the auction will take place with 
the minimum offer or with the starting bid often lakh rupees." 
(emphasis supplied) 
30. Based on the legal position declared by this Court in the above 
judgments, it was asserted, that the validity of the auction sale held on 
11.8.2005 and the confirmation thereof on 12.9.2005 was natural and 
normal in the facts and circumstances of this case. In order to restore 
the aforestated validity, it was submitted, that the impugned order passed 
by the High Court deserved to be set aside. 
31. We have given our thoughtful consideration to the complicated 
sequence of facts projected before us, as also, the legal submissions 
advanced at the hands of learned counsel for the rival parties. We shall 
now endeavour to record our conclusions, with reference to the issues 
canvassed. 
32. In our considered view, the controversy projected for our 
consideration falls in a narrow compass. It is apposite, to crystalise the 
dimensions of the dispute. Oeve Sugars Ltd. was ordered to be wound 
up on 16.4.1999 (in Company Petition No.170 of 1995). The Official 
Liquidator took possession of the assets of Oeve Sugars Ltd. situated at 
Harige on 28.9.1999. The State Bank of Mysore filed Company 
Application Nos. 1251-1253 ofl 999, in thethen pending Company Petition 
No.170 of 1995. Through
the above applications, the State Bank of 
Mysore sought leave of the Company Court in the High Court at Madras, 
to pursue the recovery proceedings before the ORT, Bangalore .. On 
10.3.2000, the Company Court granted leave" ... subject to the condition 
t~at. .. no coercive steps are taken against the assets of the company 
during or after the conclusion of the proceedings before the Tribunal. .. " 
33. After the ORT, Bangalore issued the recovery certificate dated 
15.5.2002, the State Bank of Mysore filed Company Application No. 
1300 of2003, with a prayer that the bank be permitted to seek execution 
of the recovery certificate. It is not a matter of dispute, that the Company 
Court in the High Court at Madras, neither heard nor passed any order 
on the above application. The admitted position is, that the Registry of 
the High Court, at its own, returned the above Company Application 
No.1300 of2003, by recording an endorsement, that leave of the High 
Court was not necessary. The Recovery Officer thereafter proceeded 
with the sale of the properties ofOeve Sugars Ltd.
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
34. Tungabadra Sugar Works Mazdoor Sangha, the workers' union 
ofDeve Sugars Ltd., objected to the execution of the recovery certificate 
by the Recovery Officer. The Official Liquidator, who was ordered to be 
impleaded in the recovery proceedings initiated by the State Bank of 
Mysore, vide order dated 10.3.2000 (passed by the Company Court in 
the High Court at Madras), also filed objections. All the above objections 
were overruled by the Recovery Officer. 
35. The workers' union, then assailed the recovery proceedings, 
before the High Court of Karnataka, by fil irig Writ Petition No.3 7991 of 
2004. Videocon International Ltd. and Tapti Machines Pvt. Ltd. also 
filed WritPetition No.26564 of2005, before the High Court ofKarnataka. 
In the above writ petitions, the petitioners assailed the sale proceedings 
before the Recovery Officer. Based on a preliminarynbjection raised by 
the appellant-Anita International, the High Court ofKarnataka relegated 
the petitioners to their remedy under the ROB Act, by a common order 
dated 27.10 .2006. The above order was challenged through Writ Appeal 
Nos. 2050 and 2051 of2006 before the High Court ofKarnataka. The 
writ appeals were dismissed on 23.2.2007. 
36. The workers' union thereafter preferred AOR No. I 5 of2006 
and Videocon International Ltd. filed AOR No. I of2007. In both the 
above matters, a challenge .was raised to the order passed
by the 
Recovery Officer dated 12.9.2005, whereby the sale of properties of 
Deve Sugars Ltd. to Anita International, was con finned. 
~ 
37. It would be relevant to mention, that as against the reserve 
price of Rs. I 0 crores, Anita International - the appellant herein, made a 
bid of Rs. I 0.25 crores. The same was accepted by the Recovery Officer 
on I 1.8.2005, and confirmed on 12.9.2005. One N. Ponnusamy filed 
Company Application Nos. 2740-2742 of 2007, before the Company 
Court in the High Court at Madras, wherein he.assailed the sale and 
confinnation orders dated 11.8.2005 and 12.9.2005. In the above 
applications, it was inter a/ia asserted, that the reserve price of Rs. I 0 
crores was too low. The above company applications were dismissed 
on 3.3.2009. A challenge raised against the same, was also dismissed 
by the High Court at Madras. 
38. The applications filed by the Official Liquidator and others were 
considered collectively (with Company Application Nos. 2740-2742 of 
2007) and were rejected by a common order dated 3.3.2009, whereby 
all the applicants were relegated to their remedy of appeal under the 
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RDB Act. A challenge raised to the above order dated 3.3.2009, by 
way ofan intra-court appeal, was allowed by the High Court, on 17.9.2009. 
It is this order, which is subject matter of challenge before this Court. 
Stated concisely, the High Court expressed the view, that the proceedings 
before the Recovery Officer, including the sale of the properties ofDeve 
Sugars Ltd. on 11.8.2005 and the confirmation thereof on 12.9.2005, 
had been conducted in disregard of the order of the Company Court in 
the High Court at Madras, dated 10.3.2000 (in Company Application 
Nos. 1251-1253 of 1999). The sale and confirmation of the properties 
of Deve Sugars Ltd. in favour of Anita International were accordingly 
set aside. 
39. The principal debate raised before this Court, revolves around 
the cause and effect of the order dated I 0.3.2000, passed by the Company 
Court in the High Court at Madras. According to learned counsel for 
the appellants, the above 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 Deve Sugars 
Ltd. on 11.8.2005, and also, the confirmation thereof by the Recovery 
Officer on 12.9.2005. According to the respondents, who support the 
impugned order dated 17 .9.2009, the order dated 10.3 .2000 was valid, and 
had a binding effect. And because, the proceedings conducted
by the 
Recovery Officer were in total disregard of the order dated 10.3.2000, it 
was submitted, that the impugned order was well founded. 
40. In order to support their claim, it was submitted on behalf of 
the appellants, that jurisdiction in matters ofrecovery agitated by banks 
and financial institutions under the ROB Act, has been repeatedly 
expounded by this Court. The concerned Debts Recovery Tribunals, 
before whom recovery proceedings are initiated, have exclusive 
jurisdiction in the matter. It was also pointed out, .that this Court has 
clearly declared, that even the jurisdiction ofRecovery Officers, in matters 
of execution of recovery certificates, was likewise exclusive. It was 
the pointed contention oflearned counsel for the appellants, that in matters 
wherein banks and financial institutions approach a Debts Recovery 
Tribunal, which on due consideration issues a recovery certificate, the 
same can be executed only through a Recovery Officer. It was submitted, 
that a Company Court has no jurisdiction, in the matter. Learned counsel 
for the appellants, substantiated the above assertion on the basis of the 
decisions rendered by this Court in the Allahabad Bank1, the M.V.
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
697 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
Janardhan Reddy:, the Andhra Bank3, the Rajasthan State Financial 
A 
Corporation•, and the Official Liquidator, Uttar Pradesh and Uttarakhand5 
cases. 
41. According to learned counsel for the appellants, it was apparent, 
that the action of a Recovery Officer in conducting sale proceedings and 
ordering the confinnation thereof for executing a recovery certificate 
fell squarely within his jurisdiction under the RDBAct. And his jurisdiction 
being exclusive, as declared by this Court could not be interfered with or 
set aside. It is in the above context, that it was also the pointed assertion 
of learned counsel representing the appellant, that the order passed by 
the Company Court in the High Court at Madras dated 10.3 .2000 was 
without jurisdiction. Learned counsel representing the appellant however 
cautioned this Court, not to confuse the power of the Recovery Officer 
in executing recovery certificates (through sale of the debtor's properties), 
with the apportionment of the sale proceeds. It was urged, that the 
concern of the appellant-Anita International, was limited to the sale of 
the properties ofDeve Sugars Ltd., which it had purchased on 11.8.2005, 
which was confinned by the Recovery Officer on 12.9.2005. It was 
submitted, that the appellant -Anita International has no concern with 
the distribution of the sale proceeds, and as such, the issue of distribution 
of
the sale proceeds should not fall within the consideration of the present 
determination. 
42. It is not possible for us to accept the contentions advanced on 
behalf of the appellants. In this behalf, it would be relevant to mention, 
that in the M.V. Janardhan Reddy case:, the Company Court by an 
order dated 13.8.1999 required that its pennission should be obtained 
before the Recovery Officer finalized the sale. Thereafter, the Company 
Court by an order dated 25.3.2005, directed that sale by the Recovery 
Officer, was subject to confirmation by the Company Court. In the 
above sequence of facts, this Court clearly held, that the condition imposed 
by the Company Court could not be violated by the Recovery Officer. It 
was concluded, that the sale made by the Recovery Officer in violation 
of the orders passed by the Company Court, was without the authority 
of law, the same was accordingly set aside. The explanation tendered 
by learned senior counsel representing the appellants was, that even in 
the above judgment, this Court had not disturbed the exclusive jurisdiction 
of a Recovery Officer, in executing the recovery certificate. In our 
considered view, the above contention is immaterial to the issue under 
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consideration. The issue under consideration is, whether or not, an order 
passed by the Company Court (in the present case, the order dated 
10.3.2000) was binding on the Recovery Officer? Ana;·whether the 
proceedings conducted by the Recovery Officer, in violation of the above 
order, were sustainable in law? We have no hesitation irrconcluding, 
that fo the M.V. Janardhan ReQs!ycase~, an order passed by the Company 
Court was held to be binding on the Recovery Officer. Based on exactly 
the same consideration, we are of the view, that the acceptance of the 
.bid of Anita International by the Recovery Officer on 11.8.2005, and the 
confirmation of the sale in its favour on 12.9.2005, were clearly 
impermissible, and therefore, deserve to be set aside. 
43. In addition to the above, reference may be made to the judgment · .;; 
rendered by this Court in the Official Liquidator, Uttar Pradesh and 
Uttarakhand cases. In paragraph 36 of the above judgment (extracted 
in paragraph xxx 24 xxx hereinabove), this Court has taken due notice 
of the ·proposition, with reference to a case where an order, had been 
passed by the Company Court. The proposition dealt with was in a 
situation where, the Company Court had imposed a condition on the 
~ecovery Officer, that permission of the Company Court would be 
obtained, before the Recovery Officer conducted the sale and confirmation 
of the movable or immovable
properties, of the debtor. It was held, that the 
order passed by the Company Court, was binding on the Recovery Officer. 
In the above judgment it was concluded, that it was not open to the Recovery 
Officer to confirm the sale of the properties at his own, and such a sale and 
confirmation of movable or immovable properties made by the Recovery 
Officer, without the permission of the Company Court, were liable to be set 
aside. This Court while recording its above conclusion, also expressed, that 
the above issue had nothing to do with the proposition, whether an Official 
Liquidator can approach a Company Court, to seek the setting aside of the 
auction and the sale conduced by the Recovery Officer. It would be relevant 
to mention, that the judgments relied upon by learned counsel for the 
appellants, were duly taken into consideration in the Official Liquidator, Uttar 
Pradesh and Uttarakhand cases. In view of the above, we are of the 
considered view, that the pointed issue canvassed before us, at the hands of 
leamed counsel for the appellants, stands answered against the appellant in 
paragraph 36 of the above judgment. We endorse, and are obliged to follow, 
the view expressed by this Court, as noticed above. Accordingly, we find no 
merit in the first contention advanced at the hands ofleamed counsel for the 
appellants.
ANITA INTERNATIONAL v. TUNGABADRA SUGAR WORKS 
MAZDOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
44. Despite our above conclusion, it is imperative for us to notice, that 
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 beforethe 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. 
In view of the above, it is not possible for us to accept, as was suggested on 
behalf of the appellants, that the order passed by the Company Court in the 
High Court at Madras dated I 0.3.2000, lacked the jurisdictional authority. 
Since we have concluded that the Company Court which passed the order 
dated I 0.3.2000 did not lack jurisdiction, we hereby hold, that in the facts of 
this case, the above order dated 10.3.2000 was neither invalid nor void. 
45. We are also of the ~onsidered view, as held by the Court in the 
Krishnadevi Male hand Kamathia case8, that it is not open either to parties 
to a /is or to any third parties, to determine at their own, that an order 
passed by a Court is valid
or void. A party to the /is or a third party, who 
considers an order passed by a Court as void or 11011 est, must approach 
a Court of competent jurisdiction, to have the said order set aside, on 
such grounds as may be available in law. However, till an order passed 
by a competent Court is set aside, as was also held by this Court in the 
Official Liquidator, Uttar Pradesh and Uttarakhand5 and the Jehal Tanti9 
cases, the same would have the force of law, and any act/action carried 
out in violation thereof, would be liable to be set aside. We endorse the 
opinion expressed by this Court in the Jehal Tanti case9• In the above 
case, an earlier order of a Court was found to be without jurisdiction 
after six years. In other words, an order passed by a Court having no 
jurisdiction, had subsisted for six years. This Court held, that the said 
order could not have been violated_ while it subsisted. And further, that 
the violation of the order, before it is set aside, is liable to entail punishment, 
for its disobedience. For us to conclude otherwise, may have disastrous 
consequences. In the above situation, every cantankerous and 
quarrelsome litigant would be entitled to canvass, that in his wisdom, the 
judicial order detrimental to his interests, was void, voidable, or patently 
erroneous. And based on such plea, to avoid or disregard or even disobey 
the same. This course can never be permitted. 
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46. To be fair to learned counsel for the appel !ants, it needs to be 
noticed, that reliance was also placed on behalf of the appellants on the 
Kiran Singh 10, the Sadashiv Prasad Singh6, and the Jagmittar Sain 
Bhagat
1 ~ cases, to contend, that a decree passed by a Court without 
jurisdiction was a nullity, and that, its invalidity could not be corrected, 
even by the consent of the concerned parties. We are of the considered 
view, that the proposition debated and concluded in the judgments relied 
upon by learned counsel for the appellants (referred to above) are of no 
relevance, to the conclusions drawn in the foregoing paragraph. In our 
determination hereinabove, we have not held, that a void order can be 
legitimized. What we have concluded in the foregoing paragraph is, that 
while an order passed by a Court subsists, the same is liable to be complied 
with, till it is set aside. 
· 
4 7. The submission canvassed at the hands oflearned counsel for 
the appellants, that the impugned sale dated 11.8.2005, and its confirmation 
on 12.9.2005, should not be interfered with on the ground of equity, as 
the appellant had made the entire payment in 2005, and the Recovery 
Officer had ordered confirmation of the sale, as no objection had been 
raised against the same. We find it difficult to persuade ourselves to 
accept the above contention. In this behalf, one cannot lose sight of the 
factthat the
Official Liquidator, as well as, the workers' union had raised 
objections before the Recovery Officer at the very initial stage. Even a 
former Director ofDeve Sugars Ltd. - N. Ponnusamy raised a challenge 
to the proceedings before the Recovery Officer by asserting, that the 
reserve price of Rs. I 0 crores fixed for the property being put to auction, 
was too low. The fact, that in the process of sale of the properties of 
Deve Sugars Ltd. only two bids were received, has not been disputed. 
It is also not disputed, that whilst one of the bidders was the appellant-
Anita International, the other bidder was Synergy Steel Ltd. - a sister 
company of the appellant. In sum and substance therefore, there was 
only one bidder. For the above reasons, in addition to those recorded by 
the High Court (noticed in paragraph xxx 12 xxx, hereinabove), it is not 
possible for us to accept the claim of the appellant on the ground of 
equity. Reliance placed by learned counsel on the judgments rendered 
by this Court, in support of the instant contention, is also unacceptable, 
as the factual position in the judgments relied upon, are inapplicable to 
the facts and circumstances of this case. In view of the above, we find 
no merit in the contention advanced.
ANITA INTERNATIONAL v. TUNGABAORA SUGAR WORKS 
MAZOOOR SANGH [JAGDISH SINGH KHEHAR, J.] 
48. Jt was also submitted on behalf of the appellants, that the sale 
co11ducted by the Recovery Officer on I l.8.2005, and the order of 
confirmation thereof passed by the Recovery Officer on 12.9.2005, ought 
to have been assailed only in proceedings under Section 30 of the ROB 
Act. It was submitted, that since an efficacious alternative remedy was 
available to the parties, which had approached the Company Court in 
the High Court at Madras, the interference at the hands of the High 
Court was neither just nor proper. The instant submission is wholly 
do::void of substance and deserves to be rejected. We are of the considered 
view, that there was sufficient justification for the parties to have 
approached the Company Court in the High Court at Madras, for the 
reason that they were seeking the enforcement of the order dated 
10.3.2000, passed by the Company Court itself. The sale made by the 
Recgvery Officer on 11.8.2005, and its confirmation on 12.9.2005, were 
in utter violation of the order dated I 0.3.2000, and therefore, the 
concerned parties were justified in approaching the High Court at 
Madras. In the above view of the matter, we find no merit in the instant 
contention as well. 
49. Last of all, we may advert to the contention, that the order 
dated 10.3.2000 passed by the Company Court in th~ High Court at 
Madras, while disposing of Company Application Nos. 1251-1253
of 
1999, filed by the State Bank of Mysore, was not binding on the appellant. 
Insofar as the instant contention is concerned, it was submitted, that the 
said order passed by the High Court was an order in personam, and as , 
such, the aforesaid order could not be considered as an order binding on 
the appellant before this Court. We find no merit in the instant contention, 
as well. In this beha_lf, it would be relevant to mention, that in the , 
application filed by the State Bank of Mysore, the prayer made was, 
that the State Bank of Mysore be permitted, leave to proceed with 
recovery proceedings before the ORT, Bangalore. By the order dated 
I 0.3.2000, the Company Court in the High Court at Madras, while granting 
leave, imposed two conditions. Firstly, the Official Liquidator would have 
to be impleaded by the bank in the recovery proceedings before the 
DRT, Bangalore. And secondly, no coercive steps would be taken against 
the assets of the company during or after the conclusion of the proceedings 
before the Tribunal. It is not possible for us to accept, that the aforesaid 
order passed by the High Court was an order in personam. We are of 
the view, that the above order had a clear and binding effect on the 
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proceedings permitted to be initiated before the DRT, Bangalore, and 
further, that it was equally binding on the Recovery Officer. And . 
accordingly, in our view, the same would also be binding on those claiming 
through sale proceedings conducted by the Recovery Officer. In the 
above view of the matter, there can be no doubt, that the order dated 
I 0.3.2000 was also binding on the appellant before this Court. For the 
above reasons, we find no merit even in the last contention advanced by 
learned counsel for the appellants. 
50. For all the reasons recorded hereinabove, we find no merit in 
the instant appeals. The same are accordingly dismissed. While affirming 
the impugned order passed by the High Court, we confirm the setting 
aside of the sale made by the Recovery Officer in favour of the appellant 
-Anita International on 11.8.2005, and the confirmation thereof by the 
order of the Recovery Officer dated 12.9.2005. 
Kalpana K. Tripathy 
Appeals dismissed.