The Above Applications Have Been ... vs "Document No.3290/95

P.JYOTHIMANI,J.

The above applications have been filed by the Administrator, who was subsequently appointed as Provisional Liquidator of the applicant company under liquidation (for brevity, "the company"), invoking the powers under Sections 125,450,457,441,446 and 537 of the Companies Act, 1956 (for brevity, "the Act") to annul the sale of schedule mentioned properties belonging to the applicant company to respondents 2 to 4 by the first respondent/Bank in execution of a decree passed by the Debts Recovery Tribunal, Chennai in O.A.No.1589 of 1998 and to set aside the sale certificates dated 13.6.2000 issued by the Recovery Officer of the Debts Recovery Tribunal, Chennai in favour of the first respondent/Bank, with regard to the schedule of properties as under:

"DOCUMENT NO.3290/95 All that piece and parcel of agricultural land admeasuring an extent of 0.90 Acres in Survey No.242/2A and 1.09 Acres in Survey No.239/4A, all totalling to 1.99 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3291/95 All that piece and parcel of agricultural land admeasuring an extent of 0.43 Acres in Survey No.239/3 and 1.30 Acres in Survey No.269/1A, all totalling to 1.73 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3289/95 All that piece and parcel of agricultural land admeasuring an extent of 0.52 Acres in Survey No.243/3 and 1.09 Acres in Survey No.239/4B, all totalling to 1.61 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4445/95 All that piece and parcel of agricultural land admeasuring an extent of 1.95 Acres in Survey No.241/3 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3665/95 All that piece and parcel of agricultural land admeasuring an extent of 2.55 Acres in Survey No.235/2 and 0.13 Acres in Survey No.260/1A, and 0.12 Acres in Survey No.260/1B all totalling to 2.80 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3667/95 All that piece and parcel of agricultural land admeasuring an extent of 0.50 Acres in Survey No.274/2 and 0.55 Acres in Survey No.274/1, and 0.60 Acres in Survey No.274/2 and 0.55 Acres in Survey No.274/4, all totalling to 2.20 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.2016/95 All that piece and parcel of agricultural land admeasuring an extent of 0.57 Acres in Survey No.262/1A situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.779/95 All that piece and parcel of agricultural land admeasuring an extent of 1.85 Acres in Survey No.273/1 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.7267/95 All that piece and parcel of agricultural land admeasuring an extent of 0.12.0 Hectares (0.30 Acres) in Survey No.262/5 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.7268/95 All that piece and parcel of agricultural land admeasuring an extent of 0.33.0 Hectares (0.82 Acres) in Survey No.268/1 and 0.03.5 Hectares (0.09 Acres) in Survey No.268/2B, and 0.30.5 Hectares (0.75 Acres) in Survey No.268/3, all totalling to 0.67.0 Hectares (1.66 Acres) situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.6452/95 All that piece and parcel of agricultural land admeasuring an extent of 0.32.0 Hectares (0.79 Acres) in Survey No.236/2 and 0.78.0 Hectares (1.93 Acres) in Survey No.240/1, all totalling to 1.10 Hectares (2.72 Acres) situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.6451/95 All that piece and parcel of agricultural land admeasuring an extent of 0.61.0 Hectares (1.50 Acres) in Survey No.271/2 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.172/96 All that piece and parcel of agricultural land admeasuring an extent of 0.87 Acres in Survey No.233/3 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3668/95 All that piece and parcel of agricultural land admeasuring an extent of 3.68 Acres in Survey No.235/1 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3669/95 All that piece and parcel of agricultural land admeasuring an extent of 0.39 Acres in Survey No.286/1 and 1.80 Acres in Survey No.234/3, and 1.56 Acres in Survey No.234/2, all totalling to 3.75 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3292/95 All that piece and parcel of agricultural land admeasuring an extent of 0.33 Acres in Survey No.233/1 and 0.73 Acres in Survey No.287/2, and 0.59 Acres in Survey No.233/2, all totalling to 1.65 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4448/95 All that piece and parcel of agricultural land admeasuring an extent of 2.53 Acres comprising of 1.46 Acres in Survey No.265/2B and 1.07 Acres in Survey No.266/1 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4439/95 All that piece and parcel of agricultural land admeasuring an extent of 0.65 Acres in Survey No.240/2B situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4447/95 All that piece and parcel of agricultural land admeasuring an extent of 2.15 Acres comprising of 1.04 Acres in Survey No.276/1A and 1.11 Acres in Survey No.276/1B, situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4450/95 All that piece and parcel of agricultural land admeasuring an extent of 0.80 Acres in Survey No.280/6 and 0.65.5 in Survey No.240/2A, and in Survey No.269/3, Acre 1.54, all totalling to 2.995 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3875/95 All that piece and parcel of agricultural land admeasuring an extent of 2.07 Acres comprising of 1.08 Acres in Survey No.269/2A1 and 0.99 Acres in Survey No.269/2A2 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4449/95 All that piece and parcel of agricultural land admeasuring an extent of 2.53 Acres comprising of 0.96 Acres in Survey No.267/2A and 0.10 Acres in Survey No.266/2, and 1.47 Acres in Survey No.267/1, Acre 1.54 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4444/95 All that piece and parcel of agricultural land admeasuring an extent of 1.37 Acres in Survey No.242/1 and 0.31 Acres in Survey No.243/4, totalling to an extent of 1.68 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4441/95 All that piece and parcel of agricultural land admeasuring an extent of 1.27 Acres in Survey No.272/2 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4440/95 All that piece and parcel of agricultural land admeasuring an extent of 0.93 Acres in Survey No.241/2 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4438/95 All that piece and parcel of agricultural land admeasuring an extent of 0.40 Acres in Survey No.241 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4443/95 All that piece and parcel of agricultural land admeasuring an extent of 1.70 Acres in Survey No.233/4 out of 3.40 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3874/95 All that piece and parcel of agricultural land admeasuring an extent of 2.99 Acres comprising of 2.18 Acres in Survey No.270/1 and 0.81 Acres in Survey No.270/2 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4446/95 All that piece and parcel of agricultural land admeasuring an extent of 2.07 Acres in Survey No.269/2B situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.4442/95 All that piece and parcel of agricultural land admeasuring an extent of 1.70 Acres in Survey No.233/4 out of 3.40 Acres situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

DOCUMENT NO.3844/95 All that piece and parcel of agricultural land admeasuring an extent of 1.50 Acres in Survey No.271/1 situate at Chengadu Village, Sriperumpudur Taluk, Chingleput District, situate within the Registration Sub-District of Sriperumpudur and Registration District of Chingleput.

2. The first respondent/ICICI Bank has taken over the assets and liabilities of the erstwhile Bank of Madura Limited under a scheme of amalgamation and therefore, for the conduct of the Bank of Madura Limited, the first respondent has taken up the responsibility under the scheme of amalgamation. It is the case of the applicant/company that the company has availed certain loan facilities from the Bank of Madura Limited to the extent of ` 1.50 Crores sanctioned on 1.12.1995, by execution of a Deed of Hypothecation and creating a charge in respect of certain imported equipment and the charge was also registered with the Registrar of Companies.

3. The said company, against which Company Petition in C.P.No.57 of 1998 is filed for winding up on 24.2.1998, was incorporated with the main object of acquiring by purchase, lease, concession, grant, licence or otherwise lands and cultivate, grow, produce or deal in any plantation, agricultural crops, vegetables, fruits and fruit products, trees of all kinds and own, manage and sell the same both in India and abroad; selling land with or without trees, plants, agricultural, floricultural and horticultural produce in all its forms and selling trees, plants, agricultural, horticultural, floricultural produce with or without lands, fell, harvest and remove partially or fully and market the same either in wholesale or retail in India or abroad; assisting any person in procuring land and rendering all services as lessees, managers, agents, consultants and advisors and to develop them to make suitable for cultivation of agricultural crops, plantations, forestry, horticultural and floricultural and to render services to any person in procuring finance from banks, financial institutions, provide all types of management services for developing the land and operating farms; and acting as an export house for all kinds of produce, including agricultural, horticultural and floricultural, dairy, poultry and farm products, including food grains, cereals, seeds, oil, oil seeds, plant, flowers, vegetables, fruits and edible oils, meat, fish, eggs and food and food products and preparation of any nature.

4. The company is stated to have brought during the course of its business within its possession approximately 20000 Acres of land and thousands of customers have invested in the plantations and they in turn have been given piece of land and the company undertook to maintain the land by entering into separate maintenance agreements with the customers.

5. The petitioner in C.P.No.57 of 1998, M/s.EPC Industries Limited, Mumbai, with whom the company is stated to have entered into an agreement for supply of Drip Irrigation System and which is stated to have sold the pipes to the company, raised a bill for ` 2,22,96,465.54, out of which ` 1,70,93,353.60 is stated to have been paid and there is a balance amount of ` 52,01,910.26 payable and when the petitioner in C.P.No.57 of 1998 issued a statutory notice on 2.12.1997, the letter came to be returned as the company is stated to have closed its registered office at Karumuthu Centre, Chennai. It was in those circumstances, the above company petition came to be filed for winding up.

6. Pending admission of the said company petition, Mr.K.Alagiriswami, learned Senior Counsel was appointed as an Administrator of the company on 12.2.2001 and subsequently, by an order dated 6.2.2006 passed in C.A.No.353 of 1998, he came to be appointed as a Provisional Liquidator.

7. In the meantime, the company petition which was filed on 24.2.1998 came to be admitted by this Court on 14.2.2003 with a direction to effect publication in "India Today" and "Makkal Kural", while dispensing with gazette notification. However, the Official Liquidator was not appointed as Provisional Liquidator and the assets of the company were not taken over by the Official Liquidator.

8. Originally, even after filing of the company petition in the year 1998 and when it was not admitted, the company was represented by a counsel and during that time a scheme of revival by the unsecured creditors came to be filed before this Court for approval in C.A.No.63 of 2001 and it was in that application the Administrator came to be appointed on 12.2.2001 and after the Administrator took charge, he has been overseeing the functions of the Board of Directors of the company and has been taking steps to protect the interest of various creditors of the company. It is stated that the said scheme did not go through at all. In the meantime, it is seen that another scheme was placed before this Court in C.P.No.119 of 2007, in supersession of the scheme in C.A.No.63 of 2001 and that came to be rejected in the dismissal of the said company petition by this Court on 5.3.2008, against which Original Side Appeal is stated to have been filed.

9. On a perusal of the books and records of the company, it was found that no mortgage was created in respect of 71 Acres of land at Sengadu Village, Sriperumpudur, for which the company has given an undertaking to create equitable mortgage regarding the payment of the said loan amount and no charge was also registered with the Registrar of Companies as required under the Act. Therefore, on the ground that the mortgage alleged to have been created in favour of the first respondent is void, this application is filed by the Provisional Liquidator stating that the lands belonging to the company were brought to sale by the first respondent unauthorisedly.

10. On a communication by the Provisional Liquidator to the first respondent/Bank, the first respondent/Bank in the letter dated 20.12.2007 has replied stating that the applicant company has extended the loan facility to the extent of ` 1.50 Crores from the Bank of Madura and a Deed of Hypothecation was executed in respect of certain imported equipment and that the company by a letter dated 6.12.1995 has undertaken to create equitable mortgage of 71 Acres of land at Sengadu Village, Sriperumpudur.

11. The applicant company was sanctioned ` 1.50 Crores by Bank of Madura Limited by way of sanction of credit facility on 2.12.1995 repayable in 10 quarterly instalments after a holiday period of six months with 21% interest and tax, subject to the following conditions:

"1. Hypothecation of various Imported equipments, Plants, irrigation systems, computerised control heads for orchards and vegetables imported from M/s.Comtex, COM., AG. East Limited, Comtec, Israel valued Rs.265.43 Lakhs (landed Cost).

2. Hypothecation of irrigation related assets to be created at the model farm at Sengadu Valued Rs.17.21 Lakhs.

3. Hypothecation of various superstructures put up by the company at the Sengadu Model Farms valued around Rs.14.09 Lakhs.

4. Equitable mortgage of 71 acres of R. & D. Lands of the model farm of the company located at Sengadu Village near Tandalam, Sriperumpudur valued around Rs.60.35 Lakhs. (Land should be mortgaged after completion of formalities for transferring the lands from various vendors)."

12. It is seen that the Board of Directors of the applicant company passed a resolution on 9.11.1995 and resolved as under, apart from many other resolutions:

"RESOLVED to avail of a Secured Term Loan of Rs.150.00 lakhs from Bank of Madura Limited as per the terms and conditions to be finalised with the Bank."

"4. Equitable mortgage of 71 Acres of R & D Lands of the Model Farm of the Company located at Sengadu Village near Tandalam, Sriperumbudur valued approximately Rs.60.35 Lakhs (Land to be mortgaged after completion of formalities for transferring the lands from various vendors)."

13. In addition to that, by a letter dated 6.12.1995, the Financial Controller and Divisional Manager of the applicant company have written to Bank of Madura Limited as follows, undertaking to create equitable mortgage:

"We refer to your sanction letter dated 2nd December, 1995, regarding creation of equitable mortgage of R & D land of the Model Farm of the Company located at Sengadu Village, Sriperumpudur.

We undertake to create the equitable mortgage of our R & D land in favour of the Bank as soon as the formalities for transferring the land from various vendors are completed.

All other documentation that are required in connection with the said credit facility, has been executed by us."

14. By a subsequent letter dated 20.8.1996 addressed to the Bank of Madura, the applicant company through its Divisional Manager has given the following undertaking, agreeing to create equitable mortgage by 7.9.1996:

"With reference to the term loan of Rs.150.00 lakhs sanctioned for our R&D Project at Sengadu Village, the Company has given an undertaking to create equitable mortgage and deposit of title deeds over the lands at Sengadu Village. We are in the process of creating sale deeds and the documents which are numbering over fifty, it has taken considerable time to complete the registration formalities.

We undertake that the deposit of title deeds and creation of equitable mortgage will be completed and the documents will be handed over to your bank latest by September 7, 1996.

Though there has been a delay, we regret for the inconvenience caused to you. We assure that all the formalities will be completed before the date as indicated above."

15. On 7.2.1997, it appears that the applicant company along with three other persons/entities, viz., R.Subramanian, P.Saravanan and Maxworth Educational Research Development Society have handed over 30 original sale deeds pertaining to lands measuring 57.99 Acres with the Bank of Madura, stated to have been handed over with an intention to create mortgage for securing ` 1.50 Crores. It appears that since the applicant has failed to repay the amount, the Bank of Madura Limited, after issuing notice of demand on 17.7.1998, has approached Debts Recovery Tribunal, Chennai by filing O.A.No.1589 of 1998 in October, 1998, for a direction against the applicant company and others to pay an amount of ` 2,08,91,627/- with interest at the rate of 21% per annum and interest tax at the rate of 2% on the gross interest accruals by issuance of a recovery certificate and on failure to direct sale of the properties stated to have been mortgaged to the extent of 57.99 Acres, etc.

16. It is seen that on 30.10.1998, the Debts Recovery Tribunal has passed an order of injunction against the applicant company and others from encumbering or alienating the said lands and the said application came to be filed under Section 24 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (for brevity, "the Financial Institutions Act, 1993").

17. In the meantime, as stated above, as against the applicant company, C.P.No.57 of 1998 came to be filed by a creditor of the company for winding up on 24.2.1998, in which, as stated above, the Administrator came to be appointed on 12.2.2001 and thereafter, he was appointed as Provisional Liquidator on 6.2.2006 in C.A.No.353 of 1998 and the company petition came to be admitted by the Company Court on 14.2.2003, however the Official Liquidator was not appointed as Provisional Liquidator and the assets of the company were not taken over by the Official Liquidator.

18. Since, in spite of the notice issued by the Debts Recovery Tribunal, Chennai, the applicant company has not chosen to appear, a decree came to be passed by the Tribunal on 24.6.1999, declaring as follows:

"6. In the result it is declared that:

(a) The applicant bank is entitled to a recovery certificate against the defendants for a sum of Rs.2,08,91,627/- with future interest @ 14% p.a. simple interest from the date of plaint till the date of realisation with costs which also includes advocate fees as per the rules prevailing in the State.

(b) It is further declared that in case of default of payment by the defendants the applicant bank is at liberty to sell the plaint schedule properties and to adjust the sale proceeds towards the amount due.

(c) If the sale proceeds shall not be sufficient after defraying the expenses of such sale for the payment of all such amount, the 2nd defendant is personally liable to pay the amount of such deficiency with interest mentioned above until realisation.

7. Issue Recovery Certificate accordingly. Communicate copy of the Order to the parties concerned."

19. In spite of the decree having been passed, the applicant company has not paid the amount and therefore, the Debts Recovery Tribunal, Chennai has issued a certificate in DRC.No.186 of 1999 on 1.12.1999 restraining the applicant from transferring or charging the immovable properties to the extent of 57.99 Acres which are subject matter of these applications. Thereafter, the Debts Recovery Tribunal effected publication based on the said certificate and conducted sale on 12.4.2000 by fixing the upset price at ` 1 Crore in respect of the said properties and it is seen that the Bank of Madura Limited, which was the only applicant for purchase by paying the earnest money deposit amount of ` 10 Lakhs, itself was declared to be a successful bidder for ` 1,00,10,000/- and thereafter, the sale certificate has been issued by the Debts Recovery Tribunal-I, Chennai in favour of the first respondent, who has got the Bank of Madurai Limited merged under the scheme of amalgamation, as stated above, and the certificate of sale of immovable property issued under Sections 26 to 30 of the Financial Institutions Act, 1993 came to be registered in the Office of the Sub Registrar, Sriperumbudur executed on 2.6.2006 and registered on 25.8.2006 as Document No.6787/A1/02.

20. It is the case of the first respondent/Bank that after the sale notice was issued, when the Bank Officials visited on 22.9.2000 they found that moveables hypothecated to the Bank were missing and a letter was written to the company on 11.10.2000 to make good the loss. It was after receiving the said letter from the first respondent/Bank dated 20.12.2007, the Provisional Liquidator of the applicant company has filed the present applications to set aside the sales to the first respondent as well as the subsequent sale of the said properties by the first respondent to respondents 2 to 4 on the ground that the first respondent/Bank has approached the Debts Recovery Tribunal, Chennai with false representation as if a mortgage was created in respect of the immovable property in respect of the loan obtained by the applicant company, whereas such mortgage has never been created and therefore, certain fraud is stated to have been played by the first respondent/Bank on the Debts Recovery Tribunal in getting the sale confirmed in its own name, while there is absolutely no right on the first respondent over the immovable properties, since no valuable security has been created either in favour of the Bank of Madura Limited or the first respondent.

21. It is the case of the Provisional Liquidator that there was absolutely no intention on the part of the applicant company to create equitable mortgage and it is his contention that under Section 125 of the Act, any such charge created in respect of the company's property has to be registered with the Registrar of Companies and in the absence of any particulars as to how the sale was effected by the Debts Recovery Tribunal and how many bidders have participated and in the circumstance that the first respondent was itself a bidder, being the person who lent money, these applications are filed to set aside the sale deeds and for an order of injunction, more so on the ground that respondents 2 to 4, on the basis of the subsequent purchases, are attempting to put up superstructures and alienate the properties.

22.1. In the counter affidavit filed by the first respondent/Bank, a preliminary objection has been raised on the ground that the Administrator having been appointed as Provisional Liquidator, who has filed the present application on behalf of the company, cannot exercise the powers of Provisional Liquidator under the Act, which is vested only with the Official Liquidator and therefore, according to the first respondent, the appointment of Provisional Liquidator other than the Official Liquidator is contrary to the provisions of the Act.

22.2. It is further stated that the Company Court has no jurisdiction to set aside the recovery certificate or sale certificate issued by the Debts Recovery Tribunal and if the applicant company so desires, it can only proceed under the provisions of the Financial Institutions Act, 1993. It is stated that the provisions of the Act, especially Sections 442,446 and 537, are not applicable to the proceedings before the Debts Recovery Tribunal. It is also stated that the provisions of Sections 456,457,477 and 536 of the Act are not applicable to the facts of the present case, since the company has not been wound up and the petition is not maintainable on the ground that the Provisional Liquidator has not been appointed in accordance with the provisions of Section 450 of the Act.

22.3. That apart, it is stated by the first respondent that the Bank of Madura Limited, which has since been merged with ICICI Bank Limited, has sanctioned Secured Term Loan of ` 1.50 Crores to the applicant company on 1.12.1995 and the loan was secured by hypothecation of certain imported equipment and creation of equitable mortgage by deposit of title deeds of 57.99 Acres of land situate at Sengadu Village, Sriperumbudur. It is stated that the applicant company has agreed to deposit the title deeds of 71 Acres of land on 6.12.1995. It is stated that on 7.2.1997, the applicant company along with three other persons/ entities, viz., R.Subramanian, P.Saravanan and Maxworth Educational Research Development Society had deposited original 30 sale deeds pertaining to 57.99 Acres of land with the first respondent, out of which 21.75 Acres belonged to the applicant company and there was also a Board resolution passed by the applicant company intending to create an equitable mortgage by deposit of title deeds to secure the repayment of the Term Loan.

22.4. Since the amount has not been repaid by the applicant company, the first respondent filed recovery proceedings before the Debts Recovery Tribunal, Chennai against the applicant and three others by filing O.A.No.1589 of 1998 to recover ` 2,08,91,627/- with interest at the rate of 21% per annum and an exparte decree was passed by the Debts Recovery Tribunal on 24.6.1999 for ` 2,08,91,627/- with interest at the rate of 14% per annum and costs and the Tribunal has also passed an order on 26.10.1998 restraining the applicant herein and other defendants in O.A.No.1589 of 1998 from alienating the properties.

22.5. Even after the recovery certificate was issued by the Debts Recovery Tribunal on 16.8.1999, the applicant and other defendants failed to pay the amount and thereafter, based on the order of attachment and recovery certificate, the property was brought for sale by public auction on 12.4.2000. Since there were no bidders, the first respondent Bank, with the leave of the Tribunal, bid for the said property and the sale in favour of the first respondent was confirmed on 13.6.2000 for a consideration of ` 1,00,10,000/-.

22.6. On 22.9.2000, when the first respondent has visited the premises of the applicant company, it was found that the hypothecated equipment were missing. Thereafter, the first respondent has sold the properties on 31.7.2006 to respondents 2 to 4. It is stated that the appointment of a Senior Advocate as Provisional Liquidator by the Company Court on 6.2.2006 is against Section 450 of the Act and consequently, he has no power to act as a Liquidator on behalf of the company. It is also stated that the applicant company has not been wound up and therefore, the application to set aside the sale certificates issued by the Debts Recovery Tribunal is misconceived. Even otherwise it is stated that the challenge to the Debts Recovery Tribunal proceedings has been made after the lapse of 8 to 9 years and in any event, the application is not maintainable inasmuch as Sections 446 and 537 of the Act are not applicable for the proceedings before the Debts Recovery Tribunal. It is also stated that Sections 18 and 34 of the Financial Institutions Act, 1993 bars the jurisdiction of all other Courts and authorities with regard to the proceedings under the said Act.

22.7. It is also stated that even after realising the amount from the sale proceedings, the applicant company is liable to pay an amount of ` 3,47,92,023/-. As per the Financial Institutions Act, 1993, it is the Debts Recovery Tribunal which is the authority entitled to decide the issues and the priority of debts can also be decided by the Debts Recovery Tribunal as per the provisions contained in Section 529A of the Act. It is stated that the applicant company or the Provisional Liquidator cannot challenge the sale in the collateral proceedings under the Act, ignoring the provisions of the Financial Institutions Act, 1993.

22.8. It is stated that the equitable mortgage by deposit of title deeds has been created by the conduct of the applicant company in depositing the original documents as a security for repayment of the amount already lent by the Bank of Madura Limited, which has subsequently merged with the first respondent. It is stated that the applicant company and other defendants before the Debts Recovery Tribunal have wantonly failed to appear before the Debts Recovery Tribunal, which has resulted in passing of decree and the same is valid in law and therefore, it is stated that all the applications are misconceived and are liable to be dismissed.

23.1. Respondents 2 to 4, who are the subsequent purchasers from the first respondent of the same property, while reiterating what all is stated by the first respondent, stated that they are bonafide purchasers of the properties, purchased on perusal of the order passed by the Debts Recovery Tribunal. It is also stated that the provisions of the Act which are invoked by the Provisional Liquidator are not applicable to the proceedings under the Financial Institutions Act, 1993.

23.2. It is also stated that inasmuch as the mortgage by deposit of title deeds has been created by the conduct of the applicant company as a security for the repayment of loan availed by it from the first respondent, the proceedings before the Debts Recovery Tribunal are valid in law.

24.1. It is the contention of Mr.K.Alagiriswami, learned Provisional Liquidator that the issue to be decided is as to whether by the conduct of the first respondent/Bank in bringing the property for sale when the immovable properties belonging to the applicant company have never been given as security for repayment will amount to suppression before the Debts Recovery Tribunal, in which event the first respondent cannot be permitted to argue the technicality of maintainability of application, which will be detrimental to the interest of the creditors of the applicant company in liquidation.

24.2. It is his submission that even though in respect of the applicant company no final order of winding up has been passed, inasmuch as winding up proceedings are pending, the petition having been filed as early as 24.2.1998, as per the provisions of the Act the winding up order shall have the effect from the date of filing of the petition and the subsequent proceedings initiated before the Debts Recovery Tribunal are to be declared void. Therefore, it is his submission that it is basically the misrepresentation and fraud which vitiates the entire proceedings before the Debts Recovery Tribunal.

24.3. It is also his submission that even now the first respondent or other respondents have not stated as to how the sale was effected before the Debts Recovery Tribunal and as to the manner of publications effected, especially in the circumstance that the first respondent has stated that there were no bidders, with the result the first respondent itself has been declared to be a successful bidder.

24.4. It is his submission that the fact as to whether the first respondent/Bank is secured creditor or not has to be decided only by the Company Court under Section 446 of the Act and in this regard, he would rely upon the judgment of the Supreme Court in Nahar Industrial Enterprises Limited v. Hong Kong and Shanghai Banking Corporation, [2009] 8 SCC 646.

24.5. He would also rely upon the judgment of the Division Bench of this Court reported in S.V.Subramaniam v. Cypress Semiconductor Technology India Private Limited and others, 2008 (1) CTC 471 to drive home the principle that Section 17 of the Financial Institutions Act, 1993 is not a total bar of a Civil Court for any other relief and Sections 17 and 18 of the Financial Institutions Act, 1993 apply only in cases of banks and financial institutions for recovery of its debts.

24.6. It is also his submission that when it is proved that fraud has been played by the first respondent/Bank, the issue has to be decided by the Company Court which is seized of the matter, since the winding up petition has been filed. He would rely upon the judgment in Indian Bank v. ABS Marine Products (P) Ltd., [2006] 5 SCC 72 in support of his above contention.

24.7. It is his submission that when the value of the property is more than ` 3 Crores, it has been knocked down by the first respondent for a sum of ` 1,00,10,000/- and that should be treated as one of the instances of fraud. In order to support his contention that under Section 125 of the Act any charge such has to be registered with the Registrar of Companies, he would refer to the Company (Central Government) Rules, 1956.

24.8. He also would rely upon the judgment in Tungabadra Sugar Works Mazdoor Sangh v. Subhash Kathuria & other, 2009-5-LW-173 and submit that in that case the Division Bench of the High Court in the appeal has set aside the sale effected by the bank on the basis of fraud.

24.9. He would also submit that Rule 9 of the Companies (Court) Rules, 1959 gives discretion to the Company Court to appoint Administrator and the Senior Advocate has been appointed as Administrator, which post he continues to hold even as on date. It is his further contention that the Company Court's powers are wider under Section 446 of the Act.

25.1. On the other hand, it is the contention of Mr.A.L.Somayajee, learned Senior Counsel appearing for the first respondent/Bank that the applications have been filed by the Senior Advocate not as an Administrator but as a Provisional Liquidator and that is not maintainable in law, especially when the company has not been wound up as on date.

25.2. He has referred to various provisions of the Act to state that even though before winding up order of the company has been passed by the Company Court, during the interregnum period of filing of the company petition till the winding up order has been passed, the Company Court can appoint a Senior Advocate as an Administrator, such Administrator cannot be appointed as a Provisional Liquidator.

25.3. To substantiate his contention that the Company Court has no jurisdiction in respect of the amount due to the bank under the Financial Institutions Act, 1993, he would rely upon the judgment in Allahabad Bank v. Canara Bank, AIR 2000 SC 1535.

25.4. It is his submission that inasmuch as the company has not been wound up, there is no applicability of Section 446 of the Act and the sale cannot be set aside and that the jurisdiction under the Act lies only with the Debts Recovery Tribunal, by relying upon the judgment in Rajasthan State Financial Corpn. v. Official Liquidator, [2005] 8 SCC 190.

25.5. It is stated that the sale effected by the Debts Recovery Tribunal is pursuant to the attachment order passed by it at the time of filing of the Original Application and he would also refer to the provisions of the Income Tax Act, especially Sections 29,30 and 31A and the Rules to show that the proceedings before the Recovery Officer are executive in nature.

25.6. It is also his submission that inasmuch as there is no prayer to set aside the decree passed by the Debts Recovery Tribunal, the decree has become final and it is submission that the validity of the Financial Institutions Act, 1993 has been upheld by the Supreme Court in Union of India and another v. Delhi High Court Bar Association and others, [2002] 4 SCC 275.

25.7. It is his submission that even if there is no mortgage, when once the property has been attached before judgment by the Debts Recovery Tribunal, there is no illegality of impropriety in bringing such property for sale as long as such sale was in the open court. It is his submission that so long as the borrowing of the applicant company with the first respondent/Bank is not disputed and the decree passed by the Debts Recovery Tribunal stood unchallenged and sale has been effected in furtherance to the attachment ordered by the Tribunal, there is no illegality in the sales effected.

25.8. It is his submission that the conduct of the company in passing a resolution agreeing to hand over the documents and subsequent conduct of the company in handing over the documents should be treated as an intention to create security for the borrowal which was effected earlier from the bank and therefore, it should be treated as a mortgage by deposit of title deeds under Section 69(f) of the Transfer of Property Act. In this regard he would rely upon the judgment in K.J.Nathan v. S.V.Maruty Reddy, AIR 1965 SC 430.

25.9. It is his submission that the first respondent being the financial institution cannot have any fraudulent intention. Merely because as a lender the first respondent/Bank has brought the property for sale and recovered the amount due, which is only a part of the total amount due, it cannot be said to be fraud. It is his further submission that fraud has to be pleaded and proved and in the absence of anything to that effect, the Company Court should not interfere with the same.

25.10. It is his submission that the inherent powers of the Company Court under Rule 9 of the Companies (Court) Rules, 1959 are not available when there are specific powers available under the Financial Institutions Act, 1993 and he would insist that the Provisional Liquidator, in any event, has no locus standi to maintain these applications, inasmuch as the winding up order has not been passed.

25.11. He would also submit that under Section 125 of the Act not all transactions can become void, especially when there is no evidence produced by the applicant company to prove the fact of fraud against the first respondent.

25.12. To substantiate his contention that in collateral proceedings like one filed in these applications, the Provisional Liquidator cannot challenge the sale effected under the Financial Institutions Act, 1993, he would rely upon the judgment in Indian Bank v. Official Liquidator, Chemmeens Exports (P) Ltd. and others, [1998] 5 SCC 401.

26.1. Mr.N.R.Chandran, learned Senior Counsel appearing for respondents 2 to 4, who are subsequent purchasers from the first respondent, in addition to the submissions made by Mr.A.L.Somayajee, learned Senior Counsel, would submit that respondents 2 to 4 are bonafide purchasers for valuable consideration and their right cannot be affected by whatever reasons assigned in these applications. It is his submission that the conduct of the applicant company shows that it has created an equitable mortgage by deposit of title deeds.

26.2. In respect of the powers under Section 125 of the Act, he would also rely upon the judgment in Indian Bank v. Official Liquidator, Chemmeens Exports (P) Ltd. and others, [1998] 5 SCC 401.

26.3. He would also reiterate that Sections 446,537 and 442 of the Act have no application to the Debts Recovery Tribunal proceedings. By placing reliance on the decision in AIR 2000 SC 535, it is his submission that the jurisdiction in that regard is exclusively with the Debts Recovery Tribunal and it is his submission that it is not in issue as to whether the certificate issued by the Debts Recovery Tribunal is a decree or not.

26.4. He would also reiterate that the Provisional Liquidator cannot be equated with an Official Liquidator, inasmuch the Official Liquidator is the authority under the Act to act as a Liquidator and the Administrator cannot be assigned the functions of the Official Liquidator.

26.5. It is his submission that even before the Debts Recovery Tribunal proper trial took place and after evidence was adduced, the Tribunal has passed the decree.

27. I have heard Mr.K.Alagiriswami, learned Provisional Liquidator, apart from Mr.A.L.Somayajee, learned Senior Counsel for the first respondent and Mr.N.R.Chandran, learned Senior Counsel appearing for respondents 2 to 4 and given my anxious thought to the issue involved in this case.

28. The facts that the company petition for winding up has been filed on 24.2.1998; that the Senior Advocate, Mr.K.Alagariswami was appointed as Administrator of the company on 12.2.2001; that after taking over as Administrator he has taken enormous efforts for tracing out various records and to find out the historical nature of issues involved in the administration and identified large extent of lands situated in Andhra Pradesh belonging to the company, either by purchase in its name or through the names of its employees as Power Agents, which fact stood admitted as per the affidavit filed by them and thereafter, fenced the properties which are flooded with the grown up orchards; that the company petition itself came to be admitted on 14.2.2003 by effecting publication, even though the Official Liquidator was not appointed as Provisional Liquidator; and that it was by an order dated 6.2.2006 passed by this Court in C.A.No.353 of 1998, the learned Senior Advocate came to be appointed as Provisional Liquidator and is accordingly administering the company's properties, are all unassailable facts and borne out of records.

29. The history, as it has been revealed by the learned Administrator, shows the way in which the hard earned money of common men desirous of developing their livelihood by investment with fond hope and good faith and invested with the company on various lands in order to have the yields of orchards, have been fraudulently misused by persons of vested interest by clandestinely entering into various transactions detrimental to the mass of investors. I am of the considered view that it is in that background one has to look into for the purpose of ultimately rendering justice to the affected persons, who are the creditors, contributories, investors, etc., of course subject to the celebrated principles of law and equity, wherever the statutory principles are either not available or inadequate for rendering such protection.

30. The main contention raised on behalf of the first respondent/ Bank and also the subsequent purchasers from the Bank, through the sale from the Debts Recovery Tribunal, Chennai, is about the maintainability of the applications by the learned Senior Advocate as Provisional Liquidator of the Company under Sections 446,450,456 and 457 Act, apart from Section 537 of the Act.

31. On fact, it is also clear that while the Provisional Liquidator was appointed on 6.2.2006, the sales which are sought to be set aside have been completed under various sale deeds executed pursuant to the sale completed by the Debts Recovery Tribunal on 12.4.2000.

32. Section 450 of the Act, which is as follows:

"Section: 450. Appointment and powers of provisional liquidator.

(1) At any time after the presentation of a winding up petition and before the making of a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally.

(2) Before appointing a provisional Liquidator, the Court shall give notice to the company and give a reasonable opportunity to it to make its representations, if any, unless, for special reasons to be recorded in writing, the Court thinks fit to dispense with such notice.

(3) Where a provisional liquidator is appointed by the Court, the Court may limit and restrict his powers by the order appointing him or by a subsequent order, but otherwise he shall have the same powers as a liquidator.

(4) The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made."

enables the Court to appoint Provisional Liquidator apart from his powers. By a bare reading of the said provision it is clear that at the stage of filing or presentation of the petition for winding up, before the winding up order is passed, it is the discretion of the Court to appoint Official Liquidator as a Provisional Liquidator. When once such discretion is exercised by the Court in appointing the Official Liquidator to be the Provisional Liquidator, the Court is entitled to limit or restrict his powers and such restriction can be imposed at any time before passing of the final order of winding up. This means that every such act of the Provisional Liquidator is under the direct control and supervision of the Company Court. When once the Company Court after going through the entire procedures and formalities required under the Act passes the order of winding up, the discretion of the Company Court in appointing the Official Liquidator to be a Provisional Liquidator comes to an end, since by operation of law, viz., under Section 450(4) of the Act, the Official Liquidator thus appointed as Provisional Liquidator shall cease to be a Provisional Liquidator and he becomes a Liquidator of the company, in respect of whom the provision applicable is Section 451 of the Act, which is as follows:

"Section: 451. General provisions as to liquidators.

(1) The liquidator shall conduct the proceedings in winding up the company and perform such duties in reference thereto as the Court may impose.

(2) Where the Official liquidator becomes or acts as liquidator, there shall be paid to the Central Government out of the assets of the company such fees as may be prescribed.

(3) The acts of a liquidator shall be valid, notwithstanding any defect that may afterwards be discovered in his appointment or qualification:

Provided that nothing in this sub-section shall be deemed to give validity to acts done by a liquidator after his appointment has been shown to be invalid."

33. It is thereafter the duty of the Ex-Directors of the company to file a statement of affairs and within the time stipulated under Section 455 of the Act, the Official Liquidator has a duty to file a preliminary report to the Court and under Section 457(1) of the Act, the Liquidator shall have the following powers:

"(a) to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;

(b) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company;

(c) to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels;

(d) to raise on the security of the assets of the company any money requisite;

(e) to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets."

apart from the powers conferred under Section 457(2) of the Act, which are as follows:

"(i) to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts, and other documents, and for that purpose to use, when necessary, the company' s seal;

(ia) to inspect the records and returns of the company on the files of the Registrar without payment of any fee;

(ii) to prove, rank and claim in the insolvency of any contributory, for any balance against his estate, and to receive dividends in the Insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateably with the other separate creditors;

(iii) to draw, accept, make and endorse any bill of exchange, hundi or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if the bill, hundi, or note had been drawn, accepted, made or endorsed by or on behalf of the company in the course of its business;

(iv) to take out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the liquidator to take out the letters of ad- ministration or recover the money, be deemed to be due to the liquidator himself:

Provided that nothing herein empowered shall be deemed to affect the rights, duties and privileges of any Administrator- General;

(v) to appoint an agent to do any business which the liquidator is unable to do himself."

Under the said provision, the exercise of power by the Liquidator after winding up order is again under the control of the Court with liberty to the creditors and contributories to apply to the Court with respect to the exercise of the powers by the Liquidator.

34. While the power of the Company Court to appoint the Administrator before passing of the order of winding up is not in dispute, the major objection raised on behalf of the respondents is that such Administrator cannot act as a Provisional Liquidator and according to the learned Senior Counsel appearing for the respondents, under Section 450(1) of the Act, even before the winding up order is passed and after filing of the petition for winding up, if the Company Court desires to appoint Provisional Liquidator, only the Official Liquidator can be appointed and not any other person.

35. Under Rule 9 of the Companies (Court) Rules, 1959, which is as follows:

"Rule 9. Inherent powers of Court.-

Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court"

the Company Court has inherent powers to issue directions to meet the ends of justice or to prevent abuse of the process of the Court.

36. The contention of the learned Senior Counsel, who has been appointed as Administrator and also Provisional Liquidator by this Court, is that the Company Court in exercise of its discretion and taking note of the voluminous work which had to be executed, especially when the company has purchased vast extent of 20000 Acres of land in Andhra Pradesh, to prevent the abuse of process by various individuals in usurping the company's properties to the detriment of the interest of the creditors and contributories, has appointed the Senior Advocate as Provisional Liquidator, but still he continues to be an Administrator under the direct control of the Company Court obtaining orders at every point of time and therefore, according to him, such appointment cannot be questioned on the technical ground which will only result in perpetuation of illegality by the usurpers. He has also brought to the notice of this Court that on innumerable occasions he has filed various applications before this Court in order to protect the company's properties by obtaining the injunction order, taking steps to effect publication of the order throughout the State of Andhra Pradesh, visiting the place concerned and fencing of the lands after obtaining necessary orders from this Court and these things were achieved as per the wisdom of the Company Court and on its directions and supervision continuously.

37. It is relevant to point out that under Section 446 of the Act, when a winding up order has been passed 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 winding up order, shall not be proceeded without the leave of the Court. A combined reading of Section 446(1) of the Act, which is as follows:

"Section 446. (1) 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 Court and subject to such terms as the Court may impose."

and Section 450(1) of the Act, as elicited above, and reproduced again for the purpose of brevity:

"Section 450. (1) At any time after the presentation of a winding up petition and before the making of a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally."

makes it clear that such restriction in respect of the legal proceedings are possible when final order of winding up is passed, in which event the Official Liquidator has to be mandatorily appointed as a Liquidator or in cases where the company petition for winding up is presented and during such course, the Company Court exercises its discretion of appointing Official Liquidator as a Provisional Liquidator. But the fact remains that the said provisions are to be construed in the light of a more effective and important provision, which, in my considered view, is to be considered as nucleus of the concept of winding up, which is Section 441 of the Act, which reads as follows:

"Section: 441. Commencement of winding up by Court.-

(1) Where, before the presentation of a petition for the winding up of a company by the Court, a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the Court, on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.

(2) In any other case, the winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up."

and which gives effect to the order of winding up which may be passed subsequently after following various procedures, to the date of filing of the original petition for winding up. This only exposes the obvious intention of the lawmakers to prevent abuse during the course of pendency of winding up petition and before passing of such order, by the intermeddlers in dealing with the properties and assets of the company through other legal proceedings which may be ultimately detrimental to the interest of the creditors, for the effect of winding up order and further proceedings. Section 447 of the Act acts in favour of the creditors and contributories, which is as follows:

"Section: 447. Effect of winding up order. An order for winding up a company shall operate in favour of all the creditors and of all the contributories of the company as if it had been made on the joint petition of a creditor and of a contributory."

Therefore, the ultimate goal of the entire proceedings of winding up commencing from the filing, ending with the final order and the subsequent proceedings till the dissolution, is to protect the assets of the company in liquidation for the benefit of the creditors.

38. Moreover, the appointment of the Administrator as Provisional Liquidator, which came into effect from 6.2.2006 remains unchallenged. Inasmuch as the exercise of discretion by this Court under Rule 9 of the Companies (Court) Rules, 1959 can not been challenged in these collateral proceedings, wherein the Administrator appointed as Provisional Liquidator challenges the sales effected by the first respondent/Bank by exercising its powers under the Financial Institutions Act, 1993 and the subsequent sales effected by the Bank to respondents 2 to 4 as fraudulent, in the context of protecting the interest of the creditors and contributories of the company, I am of the considered view that such objection cannot be raised.

39. Moreover, it is well settled that the powers of the Company Court under Section 446 of the Act are wide, as viewed by the Apex Court in Andhra Bank v. Official Liquidator and another, [2005] 5 SCC 75. While deciding about the priorities of claims between the secured creditors and the workmen's dues, the Apex Court held that claims of secured creditors would rank pari passu with those of the workmen under Section 529A of the Act.

40. Even in cases where certain proceedings are avoided statutorily, as seen under Section 536 of the Act, which is as follows:

"Section:536. Avoidance of transfers, etc., after commencement of winding up.-

(1) In the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator and any alteration in the status of the members of the company made after the commencement of the winding up, shall be void.

(2) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall unless the Court otherwise orders, be void."

it has been a well settled principle that such statutory declaration under Section 536 of the Act does not automatically declare all transactions as void, but are subject to scrutiny of the Company Court and ultimately, whether it is the disposition of the property or transfer effected, the same are effectively under the control of the Company Court, which can even otherwise decide that certain dispositions remain valid for the reason of genuineness of such transactions which can be for the purpose of maintaining the best interest of the company and its business or for reviving or rehabilitating the company, which are the views enumerated in the hierarchy of judgments of various Courts in India, on a harmonious construction of various provisions of the Act.

41. I am, therefore, of the considered view that on the facts and circumstances of the case, especially taking note of the seriousness of the allegations made against the sale effected by the first respondent/Bank through the Debts Recovery Tribunal, such technical constructions shall not stand in the way of this Court in deciding the issue in the best interest of the company and therefore, I am of the firm opinion that the applications filed cannot be just thrown out on the ground that the same have been filed by a Provisional Liquidator appointed by the Company Court, who does not happen to be the Official Liquidator. In any event, in cases of this nature, where enormous extent of lands belonging to the applicant company are involved, in the interest of the company, for proper maintenance of its assets and also in the larger interest of the creditors, in my considered opinion, in all fairness, in addition to the utilization of the services of the learned Senior Counsel as Administrator, the Official Liquidator should be entrusted with the assets of the company.

42. The next interesting point raised on behalf of the respondents, which is relevant to be considered, is about the jurisdiction of the Company Court in deciding the validity or otherwise of the sale effected by the Debts Recovery Tribunal in accordance with the powers conferred on it under the Financial Institutions Act, 1993.

43. On the factual matrix, it is the case of the applicant that while the applicant/company has borrowed ` 150 Lakhs from the first respondent bank, of course from Bank of Madura Limited which has subsequently merged with the first respondent, the properties which are sold at the instance of the first respondent/Bank through the Debts Recovery Tribunal, which are immovable properties subject matter of these applications, were never given as security for the repayment of the said borrowal and therefore, invoking of the powers by the first respondent through the Debts Recovery Tribunal for sale of the properties is not permissible and the Tribunal constituted under the Financial Institutions Act, 1993 has no jurisdiction.

44. That apart, it is the case of the applicant/Company, through its Provisional Liquidator, that even assuming that such charge has been created either by deposit of title deeds or by an equitable mortgage in respect of the immovable property of the company, such charge having not been registered with the Registrar of Companies, as required under Section 125 of the Act, it becomes void as against the creditors and Liquidator and therefore, such void charge cannot be the basis for the first respondent/Bank for invoking the powers of the Tribunal under Financial Institutions Act, 1993.

45. On the other hand, it is the contention of the respondents, as submitted by the learned Senior Counsel, that there has been an express intention on the part of the applicant/company in creating a security for repayment of loan already received by it by the subsequent conduct of handing over or deposit of title deeds relating to the property and therefore, it is an equitable mortgage valid under the provisions of the Transfer of Property Act.

46. When once such valid equitable mortgage has been created, the jurisdiction of dealing with such property for recovery of loan shifts exclusively with the Debts Recovery Tribunal on the basis of the jurisdiction conferred under the Financial Institutions Act, 1993. This is the crux of the contention raised by both the sides.

47. On facts, it is clear that the loan to the extent of ` 150 Lakhs was obtained by the applicant/company from the Bank of Madura Limited in December, 1995, of course subject to the condition that the company should create an equitable mortgage in respect of the lands and there is no difficulty to conclude that by virtue of the resolution passed by the applicant/company even in November, 1995, the applicant/company has made out its intention to create an equitable mortgage relating to 71 Acres of land. It is also not in dispute that the title deeds relating to an extent of 57.99 Acres have been handed over by the applicant/company through three other persons/entities, viz., R.Subramanian, P.Saravanan and Maxworth Educational Research Development Society on 7.2.1997. Therefore, on fact it could be construed that the conduct of the applicant/company and its Directors in handing over the original documents relating to the company after the loan was received by it, based on a resolution passed by the company, is with an intention to create a security of the immovable properties regarding the repayment of loan. But, Section 125 of the Act imposes a duty for registering such charge relating to company's property, which includes mortgage as per Section 124 of the Act, with the Registrar of Companies and in the absence of such registration, the charge remains void against the Liquidator and the creditors of the company and the charge applies to all immovable properties wherever they are situated. At this juncture, it is relevant to extract Section 125 of the Act, which is as follows:

"Section: 125. Certain charges to be void against liquidator or creditors unless registered. -

(1) Subject to the provisions of this Part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the Registrar for registration in the manner required by this Act within thirty days after the date of its creation:

Provided that the Registrar may allow the particulars and instrument or copy as aforesaid to be filed within thirty days next following the expiry of the said period of thirty days on payment of such additional fee not exceeding ten times the amount of fee specified in Schedule X as the Registrar may determine, if the company satisfies the Registrar that it had sufficient cause for not filing the particulars and instrument or copy within that period.

(2) Nothing in subsection (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge.

(3) When a charge becomes void under this section, the money secured thereby shall immediately become payable.

(4) This section applies to the following charges:-

(a) a charge for the purpose of securing any issue of debentures;

(b) a charge on uncalled share capital of the company;

(c) a charge on any immovable property, wherever situate, or any interest therein;

(d) a charge on any book debts of the company;

(e) a charge, not being a pledge, on any movable property of the company;

(f) a floating charge on the undertaking or any property of the company including stock- in- trade;

(g) a charge on calls made but not paid;

(h) a charge on a ship or any share in a ship;

(i) a charge on goodwill, on a patent or a licence under a patent, on a trade mark, or on a copyright or a licence under a copyright.

(5) In the case of a charge created out of India and comprising solely property situate outside India, thirty days after the date on which the instrument creating or evidencing the charge or a copy thereof could, in due course of post and if despatched with due diligence, have been received in India, shall be substituted for thirty days after the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be filed with the Registrar.

(6) Where a charge is created in India but comprises property outside India, the instrument creating or purporting to create the charge under this section or a copy thereof verified in the prescribed manner, may be filed for registration, notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situate.

(7) Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not, for the purposes of this section, be treated as a charge on those book debts.

(8) The holding of debentures entitling the holder to a charge on immovable property shall not, for the purposes of this section, be deemed to be an interest in immovable property."

48. The Companies (Central Government's) General Rules and Forms, 1956, as per Rule 6, which is as follows:

6. a) The prescribed particulars together with copy of the instrument creating the charge or modification thereof or satisfaction of charge shall be filed with the Registrar in Form 8, or Form 10, or Form 17 as the case may be, in triplicate.

(b) A copy of every instrument evidencing any charge or modification of charge and required to be filed with the Registrar in pursuance of sections 125,127,128 or 135 shall be verified as follows :

(i) Where the instrument or deed relates solely to property situate outside India, a copy shall be verified by a certificate either under the seal of the company, or under the hand of a responsible officer of the company, or under the hand of some person interested in the mortgage or charge on behalf of any person other than the company, stating that it is a true copy.

(ii) Where the instrument or deed relates, whether wholly or partly, to property situate in India, the copy shall be verified by a certificate of a responsible officer of the company stating that it is true copy or by a certificate of public officer given under and in accordance with the provisions of section 76 the Indian Evidence Act, 1872.

(c) Form 13 shall be filed in triplicate, along with the relevant Form 8 or Form 10, or Form 17, as the case may be, with a fee of rupees ten.

(d) Form 8, or Form 10, or Form 13, or Form 17, as the case may be, shall be signed on behalf of the company and the charge-holder.

(e) For the purposes of section 132, the Registrar shall affix stamp on the relative Forms and accompanying instruments with the word 'Registered' under his signature with date and a copy thereof be delivered to the company and the charge-holder.

(f) The register kept in pursuance to sub-section (3) of section 130 shall be open for inspection by any person on payment of a fee of rupees ten for each inspection."

provides for a mechanism for effecting registration of such charges. Form No.8 annexed to the Rules provides a format for modification of charges, while Form No.13 provides for a register of charges with various particulars required under Section 125 of the Act authenticated by the Registrar of Companies. Form No.17 contemplates a memorandum of complete satisfaction of charge as required under Section 138 of the Act, after making full satisfaction of the amount due by the company and therefore, it is clear that a complete method and mechanism has been provided for the purpose of registration of such charge under the Act as well as the Rules, as stated above.

49. As stated supra, on filing of the Original Application in O.A.No.1589 of 1998 by first respondent/Company before the Debts Recovery Tribunal, the Tribunal has passed a decree on 24.6.1999. As per Section 19(22) of the Financial Institutions Act, 1993, on an application filed by the Bank or financial institution for recovery of debts from any person, the Presiding Officer of the Tribunal issues a certificate of recovery on the basis of the order of the Tribunal specifying the amount in the certificate, which is as follows:

"Section: 19(22). The Presiding Officer shall issue a certificate under his 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."

The Tribunal is also having jurisdiction to pass interim order of attachment under Section 19(12) of the Financial Institutions Act, 1993, which is as follows:

"Section: 19(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."

and in fact, on the facts of the present case, such interim order has also been passed on 26.10.1998.

50. Section 19(19) of the Financial Institutions Act, 1993, which is as follows:

"Section: 19(19). Where a certificate of recovery is issued against a company registered under the Companies Act, 1956 (1 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."

protects the interest of the claims of the workmen of the company, including secured creditors, by enabling the Tribunal to order the sale proceeds to be distributed.

51. The power of the Tribunal to pass final orders is under Section 19(20) of the Financial Institutions Act, 1993, which is as follows:

"Section: 19(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 of realization or actual payment, on the application as it thinks fit to meet the ends of justice."

52. The exclusive power of the Tribunal in respect of the claim of the financial institutions or banks for recovery under the Financial Institutions Act, 1993 has been upheld by the Apex Court in Allahabad Bank v. Canara Bank, AIR 2000 SC 1535 = [2000] 4 SCC 406. While holding that the jurisdiction of the Tribunal relating to the adjudication of the claim of the bank or financial institution is exclusive under the Financial Institutions Act, 1993; and that under Section 18 of the Financial Institutions Act, 1993, the jurisdiction of any other Court or authority which would have otherwise got jurisdiction but for the provisions of the Financial Institutions Act, 1993 stands ousted, it was held by the Apex Court that even in respect of the execution, the jurisdiction of the Recovery Officer is exclusive. By referring to Section 34 of the Financial Institutions Act, 1993, which is as follows:

Section: 34. Act to have over-riding effect. (1) Save as provided under subsection (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than 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 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989).", it was held by the Apex Court that the Financial Institutions Act, 1993 will have overriding effect over the Companies Act, 1956 to the extent of inconsistency between the two Acts, by holding that while both the Acts are special laws, the Financial Institutions Act, 1993, being a later Act, would prevail.

53. While deciding the overriding effect of the Financial Institutions Act, 1993 and the powers of the Tribunal under the said Act to decide the priorities under Section 19(19) of the Financial Institutions Act, 1993 read with Section 529A of Act, the Supreme Court in Allahabad Bank v. Canara Bank, supra, by framing the following points, viz., Point Nos.2 and 3:

"(2) Whether for initiation of various proceedings by the banks and financial institutions under the Financial Institutions Act, 1993, leave of the Company Court is necessary under Section 537 before a winding-up order is passed against the company or before provisional liquidator is appointed under Section 446(1) and whether the Company Court can pass orders of stay of proceedings before the Tribunal, in exercise of powers under Section 442?

(3) Whether after a winding-up order is passed under Section 446(1) of the Companies Act or a provisional liquidator is appointed, whether the Company Court can stay proceedings under the Financial Institutions Act, 1993, transfer them to itself and also decide questions of liability, execution and priority under Section 446(2) and (3) read with Sections 529,529-A and 530 etc. of the Companies Act or whether these questions are all within the exclusive jurisdiction of the Tribunal?"

has held as follows:

"49. For the aforesaid reasons, we hold that at the stage of adjudication under Section 17 and execution of the certificate under Section 25 etc. the provisions of the Financial Institutions Act, 1993 confer exclusive jurisdiction on the Tribunal and the Recovery Officer in respect of debts payable to banks and financial institutions and there can be no interference by the Company Court under Section 442 read with Section 537 or under Section 446 of the Companies Act, 1956. In respect of the monies realised under the Financial Institutions Act, 1993, the question of priorities among the banks and financial institutions and other creditors can be decided only by the Tribunal under the RDB Act and in accordance with Section 19(19) read with Section 529-A of the Companies Act and in no other manner. The provisions of the Financial Institutions Act, 1993 are to the above extent inconsistent with the provisions of the Companies Act, 1956 and the latter Act has to yield to the provisions of the former. This position holds good during the pendency of the winding-up petition against the debtor Company and also after a winding-up order is passed. No leave of the Company Court is necessary for initiating or continuing the proceedings under the Financial Institutions Act, 1993. Points 2 and 3 are decided accordingly in favour of the appellant and against the respondents."

54. Again, while deciding about the following two points, viz., Point Nos.4 and 5:

"(4) Whether, in case it is decided that the distribution of monies is to be done only by the Tribunal, the provisions of Section 73 CPC and sub-sections (1) and (2) of Section 529, Section 530 of the Companies Court also apply  apart from Section 529-A  to the proceedings before the Tribunal under the Financial Institutions Act, 1993?

(5) Whether in view of provisions in Sections 19(2) and 19(19) as introduced by Ordinance 1 of 2000, the Tribunal can permit the appellant Bank alone to appropriate the entire sale proceeds realised by the appellant except to the limited extent restricted by Section 529-A? Can the secured creditors like Canara Bank claim under Section 19(19) any part of the realisations made by the Recovery Officer and is there any difference between cases where the secured creditor opts to stand outside the winding up and where he goes before the Company Court?

the Supreme Court, in the decision supra, has held as follows:

"50. We have already held that the adjudication, execution and distribution of the sale proceeds and working out priorities as between banking and financial institutions and other creditors of the defendant Company  so far as the monies realised under the Financial Institutions Act, 1993 are concerned  has to be done only by the Tribunal and not by the Company Court. The next question is as to the manner of distribution of these monies between the banks or financial institutions on the one hand and the other creditors, secured or unsecured of the company under winding-up. This question depends upon the effect of Section 19(19) of the Financial Institutions Act, 1993 as introduced by Ordinance 1 of 2000.

51. Before we go to Section 19(19), we would like to dispose of another minor point raised by the respondent on the basis of Section 19(2). That sub-section permits other banks or financial institutions to be impleaded in the main application filed under Section 19(1) by a bank or a financial institution. Question is whether Canara Bank can be impleaded in the main application under Section 19 at this stage. We may point out that Section 19(2) permits such impleadment at any stage of the proceedings before a final order is passed. The final order here is the order of adjudication under Section 19(1) as to whether the debt is due or not. In the present case, the adjudication order in respect of the debt has already been made long back and therefore Section 19(2) does not permit any impleadment in the main application under Section 19(1) at this stage. Hence, this relief for impleadment cannot be granted.

53. We shall now go into the effect of Section 19(19) of Ordinance 1 of 2000.

(a) Case where defendant company is not ordered to be wound up

54. Where the defendant company is a company against which no winding-up order is passed, the company, in our view, is like any other defendant and if in such a situation a question of priority arises before the Tribunal, in respect of any monies realised under the Financial Institutions Act, 1993, as between the bank or financial institutions on the one hand and the other creditors on the other, it will, in our opinion, be necessary for the Tribunal to decide such questions of priority bearing in mind principles underlying Section 73 of the Code of Civil Procedure. Section 22 of the Financial Institutions Act, 1993, in our view, gives sufficiently wide powers to the Tribunal and the Appellate Tribunal to decide such questions of priorities, subject only to the principles of natural justice. This Court has explained that the powers under Section 22 are wider than those of civil courts and the only restriction on its powers is that principles of natural justice have to be followed. See Industrial Credit and Investment Corpn. of India Ltd. v. Grapco Industries Ltd., [1999] 4 SCC 710: [1999 AIR SCW 1664 : AIR 1999 SC 1975] and Allahabad Bank v. Radha Krishna Maity, [1999] 6 SCC 755 : [1999 AIR SCW 3407 : AIR 1999 SC 3426]."

55. In these circumstances, it is relevant to reiterate that at the time when the sale was effected under the Financial Institutions Act, 1993 through the Debts Recovery Tribunal, which was on 12.4.2000, even though the company petition for winding up was pending before the Company Court, which was filed on 24.2.1998, the Administrator came to be appointed much later on 12.2.2001 and the company petition itself was admitted only on 14.2.2003 and ultimately, the Administrator was appointed as Provisional Liquidator only on 6.2.2006. Therefore, there was no occasion for the Provisional Liquidator to be consulted by the Debts Recovery Tribunal while pursuing its jurisdiction under the Financial Institutions Act, 1993.

56. The Apex Court in Nahar Industrial Enterprises Limited v. Hong Kong and Shanghai Banking Corporation, [2009] 8 SCC 646, while construing the provisions of the Financial Institutions Act, 1993 based on the preamble of the said Act, concluded that the Tribunal constituted under the Financial Institutions Act, 1993 was empowered to have exclusive power only in respect of the claim made by the bank or financial institutions and it has no jurisdiction to decide any independent proceedings initiated by debtor and such powers continue to lie with the Civil Court, in the following words:

"96. The Tribunal was constituted with a specific purpose as is evident from its Statement of Objects. The Preamble of the Act also is a pointer to that too. We have also noticed the scheme of the Act. It has a limited jurisdiction. Under the Act, as it originally stood, did not even have any power to entertain a claim of set off or counter-claim. No independent proceedings can be initiated before it by a debtor.

97. A debtor under the common law of contract as also in terms of the loan agreement may have an independent right. No forum has been created for endorsement of that right. Jurisdiction of a civil court as noticed hereinbefore is barred only in respect of the matters which strictly come within the purview of Section 17 thereof and not beyond the same. The Civil Court, therefore, will continue to have jurisdiction."

and ultimately, held that the cases of counter claim or any other independent claims by third parties cannot confer jurisdiction on the Tribunal created under the Financial Institutions Act, 1993, under Sections 17 and 18 of the Financial Institutions Act, 1993 as follows:

"106. It is furthermore difficult to accept the contentions of the respondents that the statutory provisions contained in Sections 17 and 18 of the DRT Act have ousted the jurisdiction of the civil court as the said provisions clearly state that the jurisdiction of the civil court is barred in relation only to applications from banks and financial institutions for recovery of debts due to such banks and financial institutions.

107. A civil court is entitled to decide the respective claims of the parties in a suit. It must come within the purview of the hierarchy of courts as indicated in Section 3 of the Code. It will have jurisdiction to determine all disputes of civil nature unless the same is barred expressly by a statute or by necessary implication.

108. Although some arguments have been advanced before us whether having regard to the provisions of Sections 17 and 18 of the Act the civil court jurisdiction is completely ousted, we are of the view that the jurisdiction of the civil court would be ousted only in respect of the matters contained in Section 18 which has a direct co-relation with Section 17 thereof, that is to say that the matter must relate to a debt payable to a bank or a financial institution. The application before the Tribunal would lie only at the instance of the bank or the financial institution for the recovery of its debt. It must further be noted in this respect that had the jurisdiction of the civil courts been barred in respect of counterclaim also, the statute would have said so and Sections 17 and 18 would have been amended to introduce the provision of counterclaim."

57. Therefore, it is clear by the judicial dictum that the independent claims by the debtors or any other third parties cannot come within the jurisdiction of the Debts Recovery Tribunal under the Financial Institutions Act, 1993 and it is well established that the jurisdiction of the Tribunal under the Financial Institutions Act, 1993 is exclusive only in respect of the claims made by the financial institutions and banks and insofar as it relates to the claims made by such financial institutions and banks, it is fairly well settled that except in respect of deciding the priority of the secured creditors, especially under Section 529A of the Act, there is no other circumstance or impediment for the Tribunal under the Financial Institutions Act, 1993 under any of the provisions of the Companies Act. The Financial Institutions Act, 1993, being a special Act like that of the Companies Act, by virtue of its later enactment and having overriding powers under Section 34, certainly will prevail over the various provisions of the Companies Act and consequently, the powers of the Company Court too.

58. There is one another aspect which is relevant to be considered for the purpose of this case. It is the contention of the learned Senior Counsel appearing for the respondents that even if a valid mortgage has not been created by the applicant/company in favour of the first respondent/Bank, and even if it is taken as a money claim by the first respondent/Bank for recovery, inasmuch as it is on fact clear that the Debts Recovery Tribunal by exercising its powers under Sections 19(12) of the Financial Institutions Act, 1993 has in fact passed an interim order of attachment and a final decree having been passed for recovery of money, for recovery of money the lands of the applicant company which were earlier attached were brought for sale and even in the absence of a creation of a valid mortgage, it cannot be said that the sale effected through the Debts Recovery Tribunal is invalid in law. Again, these are matters which are in the exclusive domain and jurisdiction of the Tribunal constituted under the Financial Institutions Act, 1993 and not for the Company Court as long as the claim of the first respondent/Bank is against the applicant company by virtue of the powers conferred under the Financial Institutions Act, 1993.

59. While the jurisdiction of the Tribunal is exclusive regarding the claim made by the financial institutions and banks, as stated above, certainly it is incidental that the Tribunal has powers to decide the validity or otherwise of such steps taken by the Bank, including the allegation of fraud, if the same is committed by the Bank in making a claim.

60. Now, it is relevant to refer to the powers of the Appellate Tribunal under the Financial Institutions Act, 1993. Section 20 of the Financial Institutions Act, 1993 which provides for an appeal to the Appellate Tribunal is as follows:

"Section: 20. Appeal to the Appellate Tribunal.(1) Save as provided in sub-section (2), any person aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an appeal to an Appellate Tribunal having jurisdiction in the matter.

(2) No appeal shall lie to the Appellate Tribunal from an order made by a Tribunal with the consent of the parties.

(3) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made, or deemed to have been made, by the Tribunal is received by him and it shall be in such form and be accompanied by such fee as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

(4) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Tribunal.

(6) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal."

61. Even though the applicant company has not chosen to appear before the Debts Recovery Tribunal, it is not as if the applicant company has no right to approach the Appellate Tribunal as per its powers under Section 20 of the Financial Institutions Act, 1993. The crucial point which is raised by the Provisional Liquidator, which certainly touches the conscience of the Company Court and which relates to the conduct of the first respondent/Bank, is no doubt a forbidden point to be answered by this COurt. If the averments made by the Provisional Liquidator against the first respondent/Bank, especially treating the conduct as fraudulent in nature, is true, certainly the sale effected through the Debts Recovery Tribunal by the first respondent/Bank is detrimental to the interest of the creditors, depositors and contributories of the applicant company.

62. It is also astonishing to note that there are no particulars available as to how the publications have been effected for the sale effected by the first respondent Bank through the Debts Recovery Tribunal and how many applications were received, except stating that there was no bidder to offer before the Tribunal on the date fixed in the advertisement. Such advertisements are also not placed before this Court. It is stated that in the absence of any bidder, with the leave of the Debts Recovery Tribunal, the first respondent Bank itself has offered to purchase the property for ` 1,00,10,000/- and that came to be straight-away accepted by the Debts Recovery Tribunal and subsequently, certificate has been issued.

63. As correctly pointed out by the learned Provisional Liquidator, the Debts Recovery Tribunal is only concerned about the recovery of money due to the first respondent/Bank from the applicant company and it has no jurisdiction to decide about the larger interest of the creditors and contributories of the company, even though by judicial dictum when it relates to the secured creditors deciding about the priorities of claims, especially with reference to Section 529A of the Act, the Official Liquidator has to be associated in cases where the company has been ordered to be wound up.

64. On the other hand, the powers of the Company Court under the Act are not mainly intended in securing money by way of sale of the assets of the company under liquidation, but such sale must be in the best interest of the creditors and contributories of the company and that is the reason why the Company Court, at the first instance, ascertains the proper valuation of the assets of the company rather than deciding about the amount of the claim made by the petitioning creditor, who has filed a petition for winding up. When once any of the creditors files a petition for winding up against the company, the Company Court takes up the entire assets of the company not for the benefit of the person who has filed the company petition alone, but it takes into consideration the interest of other persons who are involved in the company's affairs through the statutory provision contained under the Act, by making the Official Liquidator as a Liquidator of the company and so on and therefore, one cannot expect the nature of sale which is effected by the Company Court by virtue of the provisions of the Act to be followed by the Tribunals which are invested with particular powers regarding the claims of the banks and financial institutions.

65. It is equally shocking to note that the first respondent/Bank having purchased the property in such auction before the Debts Recovery Tribunal has chosen to sell the same property to respondents 2 to 4 for an enhanced price and it is not known as to how the bidders were not available before the Debts Recovery Tribunal when the property was originally brought for sale. It is further relevant, as submitted by the learned Provisional Liquidator, that the Provisional Liquidator himself has sold various parts of the lands in and around the schedule mentioned property for a value which is much more and there are records to show that he had sold some of the lands in the same area for a price which is stated to be around ` 3 Crores and the sale of such vast extent of land for a meagre price would detrimentally affect the interest of the creditors.

66. It is also stated that when the machinery, which were stated to be imported machines valued around ` 3 Crores, were hypothecated as security, it is not known as to whether the first respondent/Bank has taken steps for effecting sale of the machines before bringing the immovable property for auction through the Debts Recovery Tribunal.

67. However, by virtue of the categoric judicial precedents, the Debts Recovery Tribunal has exclusive jurisdiction to decide about the claims made by the first respondent/Bank for recovery of money and therefore, it is not possible to accept the contention of the learned Provisional Liquidator for setting aside the sales effected through the Debts Recovery Tribunal to the first respondent and the subsequent sale deeds executed by the first respondent in favour of respondents 2 to 4. As correctly submitted by the learned Senior Counsel for the respondents, the applicant company has certainly got a remedy available by approaching the Debts Recovery Appellate Tribunal under Section 20 of the Financial Institutions Act, 1993, which is certainly an adequate and efficacious remedy.

For the foregoing reasons, I am unable to accept the contention of the learned Provisional Liquidator and accordingly, the following orders are passed:

(i) C.A.Nos.884 to 886 of 2009 in C.P.No.57 of 1998 stand dismissed, however with liberty to the applicant company to work out its remedy by way of filing an appeal to the Debts Recovery Appellate Tribunal under the provisions of the Financial Institutions Act, 1993;

(ii) in continuation of the order dated 6.2.2006 passed in C.A.No.353 of 1998 in C.P.No.57 of 1998 appointing the Administrator as Provisional Liquidator and in deference of the same, the Official Liquidator attached to this Court is appointed as a Provisional Liquidator of the applicant company, who shall take charge of the assets of the company;

(iii) the learned Administrator appointed by this Court by an order dated 12.2.2001 shall continue to be the Administrator of the company on the same terms and conditions of appointment made by this Court and perform his functions in association with the Official Liquidator; and

(iv) the Official Liquidator shall take necessary steps against various orders of the Debts Recovery Tribunal passed by virtue of the powers conferred under Section 19 of the Financial Institutions Act, 1993, by filing appeals as provided under the Financial Institutions Act, 1993 to the Appellate Tribunal, bringing forth the various averments made by the learned Provisional Liquidator in these applications and it is made clear that in the event of the Official Liquidator filing such appeals, the Appellate Tribunal under the Financial Institutions Act, 1993, while entertaining such appeals shall take into consideration the pendency of these proceedings before this Court for the purpose of considering the period of limitation.

17.9.2010 Index : Yes Internet : Yes Note: Issue order copy on 20.9.2010 sasi P.JYOTHIMANI,J.

[sasi] C.A.Nos.884 to 886 of 2009 in C.P.No.57 of 1998 17.9.2010