PRAVIN GADA AND ANOTHERversusCENTRAL BANK OF INDIA AND OTHERS

                     [2012] 13 S.C.R. 611


               PRAVIN GADA AND ANOTHER                              A
                               v.
         CENTRAL BANK OF INDIA AND OTHERS
          (Civil Appeal Nos. 8658-8660 of 2012)
                    DECEMBER 03, 2012                               B
   [K. S. RADHAKRISHNAN AND DIPAK MISRA, JJ.]

      Auction Sale - Of the property of company under
liquidation - At the behest of the secured creditors - Auction
sale confirmed in favour of appellants for Rs. 2. 50 crores -       C
Set aside on being challenged - Further auction fetching Rs.
6.45 crores also set aside - Sale in favour of appellants
restored - On appeal, Supreme Court passing orders for fresh
auction - The highest bid was for Rs. 5.04 crores - Held: The
appellants had deposited Rs. 2.50 crores 6 year back and            D
already invested substantial amount in the property - The
highest offer came up to Rs. 5.04 crores at such a distance
of time - Including the interest component on the amount
deposited by the appellants, the total sum would came to Rs.
4. 75 crores - Therefore, sale directed to be confirmed in favour   E
of the appellants, subject to their depositing a further sum of
Rs. 50 lacs - In view of the concession of the appellants made
before High Court regarding their willingness to negotiate with
the workmen, High Court directed to deal with the rights of the
workmen in an apposite manner, and if required, monitor the         F
same - Corporate Law - Rights of workmen of company under
liquidation.

     Corporate Law - Company under liquidation - Official
Liquidator - Role of - Held: Role of Official Liquidator is not     G
restricted to participation at the stage of disbursement of dues
of the workmen, his participation is required a/so at the stage
of conducting of sale.

    The Company in question was declared sick by BIFR.
                        611                                         H
    612     SUPREME COURT REPORTS             [2012] 13 S.C.R.


A Official Liquidator was appointed. Debt Recovery Tribunal
  (ORT) allowed the application of the creditor-Bank of the
  Company for recovery of its dues against the Company.
  It further directed that on failure to repay the amount, the
  immovable property of the company would be sold and
B the sole proceeds would be paid to the applicant-Bank
  and respondent No.1-Bank in proportion to their
  respective charges.

      The immovable property of the company was sold in
c auction to the appellants for Rs. 2.50 crores. Respondent
  No. 1-Bank filed application for setting aside the sale
  alleging procedural irregularities and prayed for fresh
  auction. Official Liquidator had also filed its report before
  ORT stating that the workers of the company had
0 contended that the sale to the appellants was at a price
  which was neither fair nor reasonable.
       The Recovery Officer set aside the sale to the
  appellants and directed conduct of fresh auction in the
  presence of secured creditors, the Receiver and Official
E Liquidator, after notice. Fresh auction was conducted
  wherein original auction-purchasers (appellants) did not
  participate. The highest bid was for Rs. 6.45 crores.

      On the application of the appellants, the sale was set
F aside by ORT, directing the Recovery Officer to publish
  a public notice to determine as to whether the offers
  higher than the bid of Rs. 6.45 crores could be realized
  and if no further offers were received, accept the highest
  bid after inter-se bidding between the earlier bidders.
G       Appellants filed appeal, which was dismissed by
    DRAT. The order was challenged in writ court, who
    remanded the matter to DRAT. After remand, DRAT
    restored the sale in favour of the appellants. Workers'
    Union challenged this order and High Court again
H
    PRAVIN GADA v. CENTRAL BANK OF INDIA              613


remitted the matter to DRAT. After reconsidering the A
matter, DRAT restored the sale in favour of the appellants.

     The matter was challenged by secured creditors and
the workmen's Union. The appellants made a submission
before the Court that they were ready and willing to 8
negotiate with the workmen, but they were not in a
position to do so until the litigation by secured creditors
attained finality. High Court allowed the writ petition
directing public advertisement inviting bids for the sale
of the property. High Court also held that the opinion of C
ORAT that the power of Official Liquidator was restricted
to participation at the stage of disbursement of the dues
of the workmen, but not in conducting sale, was not
correct.

    The present appeals were filed by the appellants. D
This Court directed fresh auction. As the Court was not
satisfied with the auction, it directed further auction.
Pursuant thereto auction was conducted and the highest
bid was for Rs. 5.04 crores.
                                                         E
    Disposing of the appeals, the Court

     HELD: 1. As per order of this Court, the auction was
conducted and the highest offer in the auction that was
tendered was Rs. 5.04 crores. There has been no
grievance with regard to the proper publication of the F
notice for holding of auction. This Court had passed two
orders on different occasions to see that the sale is
conducted in a fair and transparent manner. Conditions
were also imposed so that speculative bids do not come
into the sphere of auction. Despite the best of efforts, the G
maximum price the property fetched was Rs.5.04 crores.
A sum of Rs. 2.50 crores was deposited by the present
appellants in October 2006 and in the meantime, six years
have elapsed. The interest component on the same, till
date would have come to rupees 2 crores 25 lacs and H
    614     SUPREME COURT REPORTS               (2012] 13 S.C.R.


A thereby the total sum would come to rupees 4 crores 75
  lacs. The possession was taken over by the appellants
  long back and they had already invested substantial
  amount. The highest offer in the auction came up to
  rupees 5.04 crores at such a distance of time. Regard
B being had to the totality of the circumstances, the sale
  should be confirmed subject to the appellants depositing
  a further sum of Rs. 50 lacs before the DRAT within a
  period of three months from the date of the judgment. The
  confirmation of sale as has been directed by this Court
c shall be treated to have attained finality. [Paras 16 and 18]
  [630-A-G; 632-A-B]

         2. The official liquidator had appeared before the
    recovery officer on number of dates. However, the ORT
    had returned a finding that he has a restricted role which
0   has been found fault with by the High Court. The finding
    of the High Court as regards the role of the official
    liquidator is correct. [Paras 17] [631-F-G]

         Rajasthan Financial Corpn. and Anr. v. Official Liquidator
E   and Anr. AIR 2006 SC 755: 2005 (3) Suppl. SCR 1073; A.P.
    State Financial Corporation v. Official Liquidator (2000) 7
    SCC 291: 2000 (2) Suppl. SCR 288; International Coach
    Builders v. State of Kamataka (2003) 10 SCC 482: 2003 (2)
    SCR 631 - relied on.
F
       3. Before the Division Bench, the workers union had
  also challenged the decision of the DRAT. The appellants
  submitted that while they were ready and willing to
  negotiate with the workmen, they were not in a position
  to do so until the litigation which was instituted by the
G secured creditors attained finality. Keeping in view the
  interest of the workmen and their rights, the High Court
  is directed to deal with the rights of the workmen regard
  being had to the submissions advanced by the
  appellants in an apposite manner and, if required,
H monitor the same. As concession was given before a
     PRAVIN GADA v. CENTRAL BANK OF INDIA                  615


particular Division Bench, the Chief Justice is requested         A
to place the matter before the same Bench and if it is not
possible, at least before the same presiding Judge. [Paras
19 and 20] (632-B-C, F; 633-A-C]

     4. The Interlocutory Applications which have been            B
filed for impleadment and withdrawal of the amounts that
have been deposited as earnest money are allowed and
the bidders who have deposited the money are allowed
to withdraw the same. [Para 21] (633-D]

                      Case Law Reference:                         C

     2005 (3) Suppl. SCR 1073       Relied on        Para 17

     2000 (2) Suppl. SCR 288        Relied on        Para 17

     2003 (2) SCR 631               Relied on        Para 17      D
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8658-8660 of 2012.
     From the Judgment & Order dated 20.09.2011 of the High
Court of Bombay in Writ Petition (C) No. 2689, 7488 and 7489
                                                                  E
of 2011.
   V.K. Chaudhary, B.S. Nagar, Rohitash S. Nagar, Rekha
Pandey for the Appellants.
    Jaideep Gupta, lndu Malhotra, Dinesh Mathur, Nishant
Menon, Priyanka Bharti (For Dua Associates), Saurabh Kirpal,      F
Sanjay Agarwal, G.K. Sarkar, Nikhil Jain, Sudarshan Singh
Rawat, R.S. Hegde, Chandra Prakash, Mohammed Nazar, A.
Ramakrishana, Rajeev Singh for the Respondents.
    The Judgment of the Court was delivered by
                                                                  G
    DIPAK MISRA, J. 1. Leave granted.
     2. The present appeals by special leave have been
preferred questioning the defensibility of the order dated 20th
September, 2011 passed by the Division Bench of the High
Court of Judicature at Bombay in Writ Petition Nos. 2689 of       H
   616      SUPREME COURT REPORTS               (2012] 13 S.C.R.


A 2011, 7488 of 2011 and 7489 of 2011 whereby the High Court
  has quashed the order dated 3rd March, 2011 passed by the
  Debt Recovery Appellate Tribunal (for short 'the ORAT') wherein
  the ORAT had set aside the order of the Debt Recovery Tribunal
  (for short 'the ORT') and restored the confirmation of sale
B conducted by way of public auction in favour of the
  respondents, who are the appellants herein.
       3. Shorn of unnecessary details, the facts which are
  essential to be stated for disposal of these appeals are that a
  company by the name of Jay Electric Wire Corporation Ltd.
C had a factory at Mysore situate on land admeasuring
  approximately 4.4 acres comprised in plots 44 and 47 in Serial
  Nos. 55 and 69 in the Industrial Area of village Habal and Serial
  No. 33 of Metagally, Hobla Kasba. The said company, which
  closed down in February, 1995, had about 149 workers. As
D dispute arose between the workmen and the management
  because of termination, the matter was referred to the Industrial
  Tribunal at Mysore after the reference made under Section 10
  of the Industrial Disputes Act, 1947 and the said tribunal, vide
  award dated 5th January, 2001, directed the employer to pay
E back wages to the workmen with effect from 6th February, 1995 ·
  and to continue payment during the subsistence of the
  relationship of employer and employee between the parties.
       4. As the facts are further unfurled, on 18th December,
  2006, a recovery certificate was issued by the Deputy Labour
F Commissioner at Bangalore for recovery of a sum of Rs.4.44
  crores towards the dues of the workmen under the award
  passed by the Industrial Tribunal. A proceeding was initiated
  before the Company Judge of the High Court of Bombay in
  1996 forming the subject-matter of Company Petition No. 336
G of 1996. Subsequently, on a reference made by the BIFR under
  Section 20(1) of the Sick Industrial Companies (Special
  Provisions) Act, 1985, the company court held that it was just
  and equitable for the company to be wound up. The official
  liquidator was appointed as provisional liquidator by order
H dated 6th October, 2005 to take charge of the books, assets
                                                              ·~·




       PRAVIN GADA v. CENTRAL BANK OF INDIA                      617
                 [DIPAK MISRA, J.]
 and business of the company and to exercise necessary                  A
 powers under the Companies Act, 1956. On 15th October,
 2008, the said order was made absolute. The official liquidator
 was commanded to proceed in the matter in accordance with
 law to deal with the assets of the company in liquidation.
       5. It is pertinent to state here that in the year 1999, the ICICI B
 Bank had instituted a suit before the High Court in its original
 side for recovery of its dues against the company. The learned
 single Judge, vide order dated 8th July, 1999, appointed a
 Receiver who was granted liberty to sell the assets by public
 auction or by private treaty and to apply the net sale proceeds C
 as between the ICICI Bank and the Central Bank of India which
 was impleaded as the second defendant to the suit in
 satisfaction of the respective charges on the immoveable
 property. The suit eventually stood transferred to the ORT and
 the ORT, by order dated 26th August, 2003, allowed the D
 application filed bt the ICICI Bank Ltd. for a sum of Rs.1.12
 crores together with. future interest at 12% per annum. It was
 further directed that on failure on the part of the borrower to
 repay the amount within six months, the immoveable property
 would be sold and the net sale proceeds would be paid to the E
 applicant bank and the Central Bank of India in proportion to
 their respective charges.
      6. In June, 2004, a public notice was issued for sale of the
 moveable and immoveable properties of the borrower and
 notice for the proposed sale was published in the newspapers.          F
 Though the movables of the borrower came to be sold, yet no
 proper offer was received for the sale of immoveable property.
 In a meeting dated 24th July, 2006, it was noted that two offers
 were received, one amounting to Rs.1.10 crores and the other
 Rs.80 lacs. The Central Bank of India stated that the offer was       G
 not acceptable to it. At that stage, the Standard Chartered Bank
·appeared before the Receiver stating that the ICICI Bank had
 assigned its debts to it. The meeting convened by the Receiver
 was adjourned to 9th August, 2006 and eventually, on 21st
 August, 2006, bidding took place inter se the two bidders who         H
   ... ____ _



   618          SUPREME COURT REPORTS           [2012] 13 S.C.R.

A submitted their offers when the first and second respondents
  enhanced their bid to Rs.2.50 crores. The meeting was
  adjourned to 5th September, 2006 and the successful bidder
  was directed to enhance the amount representing 25% of the
  offer by 28th August, 2006. In the said meeting, the
B representative of the Central Bank of India was not present. On
  29th September, 2006, a letter was addressed by the Receiver
  to the advocates of the two banks enclosing the report seeking
  the confirmation of sale. He also required the banks to send
  expression of interest in the property from two parties. On
c receipt of the letter, the Chief Manager of the Central Bank of
  India visited the office of the Receiver on 17th October, 2006
  and informed about the expression of interest of two other
  bidders who were willing to pay higher price.
       7. As is evincible from the Judgment of the High Court,
D certain meetings took place and the bank had difficulty in
  contacting the advocate. On 27th October, 2006, when both the
  bidders arrived at the office of the Receiver, they were informed
  that the sale had been confirmed in the morning. On 30th
  October, 2006, an application was filed by the Central Bank of
E India for setting aside the sale. Many a procedural irregularity
  was alleged including the one that it had no intimation of the
  proceeding until it received the letter dated 29th September,
  2006 of the Receiver stating that the property had been sold
  for a sum of Rs.2.50 crores and the sale had been confirmed
F on 27th October, 2006. It was contended by the Central Bank
  of India that in the absence of intimation, it had been unable to
  remain present when the bidding took place on 21st August,
  2006. A prayer for fresh auction and to consider the offers
  submitted by the two bidders who had expressed interest in the
G purchase of the property was made. It is apt to mention here
  that the official liquidator had filed report on 1st December,
  2006 before the ORT stating that an application had been
  received from the workers contending that the sale which had
  been confirmed in favour of the first and second respondents,
H the appellants herein, was at a price which was neither fair nor
     PRAVIN GADA v. CENTRAL BANK OF INDIA                      619
               [DIPAK MISRA, J.]
reasonable. A submission was put forth that no notice was sent        A
to the liquidator through the Registrar despite the mandate of
law.
     8. As is reflected from the proceedings of the fora below
and the order passed by the High Court, the Recovery Officer,
vide order dated 5th December, 2006, had set aside the                B
confirmation of the sale holding that it was obligatory to ensure
that a higher price was fetched for the property and the assets
of the company in liquidation, if the sale price offered by an
auction purchaser was inadequate. He ultimately set aside the
sale and directed for conduct of a fresh auction in the presence      C
of secured creditors, the Receiver and the official liquidator
after notice. In pursuance of the said order, on 5th December,
2006, a sale was conducted without making a fresh notification.
The Recovery Officer noted that the original auction purchasers
did not participate in the fresh bidding process, but the two bids    D
were received by the Recovery Officer and the highest bid
amounting to Rs.6.45 crores was offered by one Umrah
Developers. Regard being had to the said position, the
Recovery Officer directed the bid of Umrah Developers to be
accepted and the successful bidder was directed to pay the            E
purchase consideration. The said Umrah Developers deposited
the full consideration of Rs.6.45 crores on 10th November 2006
and 11th December, 2006. Taking note of the same, the
Recovery Officer declared them as the successful bidder.
     9. Being grieved by the aforesaid order, the first and           F
second respondents therein preferred an appeal before the
ORT which set aside the sale. Taking note of the facts in entirety,
it opined that there was something wrong on the part of the
valuer inasmuch as the offer of Rs.6.45 crores was received
when the bids were conducted only amongst a few persons and           G
not in the public realm and that was good enough indicative of
the fact that the property could fetch a higher value. The ORT
further opined that it would have been proper to issue a public
notice and invite fresh offers. Being of this view, it directed,
while retaining the offers which were received until 5th              H
    620     SUPREME COURT REPORTS                [2012) 13 S.C.R.

A December, 2006, that the Recovery Officer should publish a
  public notice to determine as to whether offers higher than the
  bid of Rs.6.45 crores of Umrah Developers could be realized
  and if no further offers were received, the Recovery Officer was
  directed to accept the highest bid after inter se bidding
8 between the earlier bidders.
       10. Being dissatisfied with the aforesaid, an appeal was
  preferred by the first respondent before the DRAT which
  granted stay on 26th February, 2007 as a consequence of
  which the entire process of holding a fresh auction came to a
c standstill. At this juncture, an application was filed by Umrah
  Developers to permit it to withdraw the amount which it had
  deposited. The application was rejected by the DRT which
  compelled the company to file an application before the tribunal
  to withdraw the amount and the company was allowed to
D withdraw 90% of the bid amount leaving the balance, i.e.,
  Rs.64.5 lacs in deposit before the Recovery Officer. Eventually,
  the DRAT dismissed the appeal by order dated 2nd July, 2008
  mainly on the foundation that offer of Rs.6.45 crores was higher
  than the offer of Rs.2.50 crores furnished by the first and
E second respondents. The said order came to be challenged
  before the writ court and during the pendency of the writ
  proceedings, an application was filed by Umrah Developers for
  refund of the balance sum which was allowed. The writ petition
  preferred by the first and second respondents was disposed
F of on 11th August, 2010 in terms of the agreed minutes. As
  per the agreed order, the matter stood remanded to DRAT for
  a fresh decision.
        11. As is demonstrable, on remand, the DRAT, by its order
   dated 15th October, 2010, allowed the appeal and directed
G restoration of the confirmation of sale in favour of the first and
   second respondents. The said order of the DRAT was assailed
   by the workers' union and the High Court remitted the matter
   to the DRAT for fresh consideration. The DRAT, considering.
 · the facts in entirety, allowed the appeal vide order dated 3rd
H March, 2011 and restored the confirmation of sale. The said
       PRAVIN GADA v. CENTRAL BANK OF INDIA                  621
                 [DIPAK MISRA, J.]
 order came to be assailed by the secured creditors and the          A
 workmen's union on the ground that the confirmation suffered
 from material irregularities. The High Court noticed that the
 ORAT had opined that the power of the official liquidator was
 restricted to participate at the stage of disbursement of the
 dues of the workmen but not in conducting of the sale. It did       B
 not agree with the said finding on the basis of the proposition
 of law laid down in Rajasthan Financial Corpn. and Anr. V.
 Official Liquidator & Anr. 1• While noting that aspect, the High
 Court proceeded to address the fundamental question whether
the procedure that was followed in the sale of the property was      c
fair and proper or whether there was any fraud and material
 irregularity. It adverted to the facts in a chronological manner
and came to hold that the manner in which the sale proceedings
 had been conducted was neither fair nor transparent as a
consequence of which the possible price that could be realized       0
had become an unfortunate casuality. It took note of the offer
made by Umrah Developers after a month of confirmation of
sale and opined that the proper price had not been realized.
The finding of the ORT that the Central Bank of India had
remained absent could not be a justification to sustain the          E
manner in which the sale had been conducted as it was
manifestly contrary to the basic concept of fairness and
transparency. The Court referred to number of authorities to
highlight the conception that in every case, the duty of the court
is to satisfy itself that the price offered is reasonable and the
said satisfaction is to be based on the bedrock of the prevalent     F
market value. Expressing the aforesaid view, the High Court
allowed the writ petition, set aside the order of the DRAT dated
3rd March, 2011 and proceeded to direct as follows: -
      'We direct that the Recovery Officer attached to the ORT G
      to issue a public advertisement which shall be published
      in at least two newspapers, one in English and another in
      Kannada having circulation in Mysore, inviting bids for the
      sale of the property. The terms and conditions governing
1.   AIR 2006 SC 755.                                                H
    622       SUPREME COURT REPORTS                [2012] 13 S.C.R.

A        the sale shall be laid down by the Recovery Officer of the
         ORT, and a fresh valuation shall be carried out on the basis
         of which the reserve price of the property shall be fixed.
       · We record the statement made on behalf of the Central
         Bank and the Standard Chartered Bank by their counsel
B        that both the Banks shall cooperate with the Recovery
         Officer and shall meet all the expenses of the sale,
         including towards newspaper advertisements. On the
         request of the two banks, we further clarify that if the Banks
         are ready and wtlling to meet the expenses for the issuance
c        of a publication in any additional newspapers, that shall
         also be permitted by the Recovery Officer at the expenses
         which have been agreed to be borne by the Banks. We
         direct the Recovery Officer to expedite the process of sale
         and to hold a meeting for fixing the terms and conditions
         within a period of three weeks from today. The sale
0
         process should be completed within a period of three
         months from the date on which an authenticated copy of
         this order is placed before the Recovery Officer."
        12. The said order has been assailed by the first and
E   second respondents before this Court, the successful bidders
    who had deposited Rs.2.50 crores in pursuance of the order
    passed by the ORT.
         13. At this juncture, it is worthy to note that this Court on
    27th March, 2012, after taking note of the High Court's
F   direction, had passed the following order: -
          "This Court while issuing notice on 25th November, 2011,
          had directed status quo to be maintained by the parties.
          When the matter was heard for some time it was submitted
          by Mr. C.A. Sundaram, learned senior counsel for the
G         petitioner that the High Court has grossly erred in directing
          the sale of the property by inviting bids despite the factum
          that public auction was not successful and eventually the
          sale was effected by the direction of the ORT and
          ultimately the offer of Rs.2.5 crores was accepted from the
H         petitioners herein. The learned senior counsel has urged
PRAVIN GADA v. CENTRAL BANK OF INDIA                   623
          [DIPAK MISRA, J.]
many other contentions which need not be referred to in       A   ·
prasenti having regard to the nature of directions which we
are going to pass today.
       It is worth noting that Mr. Jaideep Gupta, learned
senior counsel appearing for the Central Bank of India has
filed a chart of the amount due from the original buyer,      B
namely, Jay Electric Wire Corporation. We think it
apposite to reproduce the chart in toto:
       "1. Central Bank of India (Respondent No. 1):
       As per the Recovery Certificate dated 6.11.2003        C
       issued by the ORT an amount of Rs.10.99 cores is
       due and payable which as on 31.3.2012@ 12%
       per annum at quarterly rests amounts to Rs.42.41
       crores.
       2. Standard Chartered Bank (respondent No.             D
       2):
       As on 26.8.2003 an amount of Rs.1.12 crores is
       outstanding along with interest @ 12% per annum.
       3. Workmen through Offlclal Liquidator                 E
       (respondent No. 4) :
       As per the recovery certificate issudd by the Deputy
       Labour Commissioner on 18.12.2006 an amount of
       Rs.4.44 crores is due and payable as computed
       until 1999."                                           F
It is submitted by Mr. Gupta that in fitness of things and
regard being had to the concept of obtaining of the Highest
Price in Court sale, having of auction is the warrant and,
therefore, auction should be directed to be held. The         G
learned senior counsel further submitted that the property
is likely to fetch much more amount than that has been
deposited by the petitioners.
       Mr. Sundaram, learned senior counsel would contend
that the sale had been given effect to in the year 2006 on    H
    624       SUPREME COURT REPORTS                  [2012) 13 S.C.R.


A         acceptance of Rs.2.5 cores and with the efflux of time if
          there has been a price rise solely on the said base a
          public auction should not be directed.
               Be it noted that at one point of time, a third party had
          deposited Rs.6 crores to purchase the property but later
B         on he withdrew as the matter was litigated in the Court.
                Having heard learned counsel for the parties and
          regard being had to the totality of the circumstances, we
          issue the following directions:
c         (i) The property in question be put to auction by issuing a
          public advertisement in at least two newspapers one in
          English and another in Kannada language having wide
          circulation in the city of Mysore inviting bids for the sale of
          the property.
D         (ii) It shall be mentioned in the advertisement that the
          reserve price is Rs.3 crores and the same shall be
          deposited before the Recovery Officer of the DRT to
          enable one to participate in the bid.
          (iii) Any one who would not deposit the amount would not ·
E
          be permitted to participate in the auction as speculative
          bids are to be totally avoided.
          (iv) The newspaper publication shall be made within a
          period of two weeks stipulating that the deposit is a
F         condition precedent for participation in the auction which
          shall be made before the DRT within a week from the date
          of publication of the advertisement in the newspapers.
          (v) The auction shall be held within a period of two weeks
          from the issuance of the advertisement which shall state
G         the specified time and place for the auction.
          (vi) The petitioners without prejudice to the contentions to
          be raised and dealt with in these Special Leave Petitions
          shall participate in the bid without the deposit as they have
          purchased the property in the year 2006.
H
     PRAVIN GADA v. CENTRAL BANK OF INDIA                    625
               [DIPAK MISRA, J.]
     (vii) The bid shall not be finalized and the bid sheet shall    A
     be produced before this Court in a sealed cover.
           We reiterate at the cost of repetition that the above
     arrangements are subject to the result of the final
     adjudication in these Special Leave Petitions.
                                                                     B
           List the matter after five weeks."
    14. After the said order came to be passed, I.A. Nos. 4-6
of 2012 were preferred wherein the following order was
passed:
           "These applications were preferred by the Bank            C
     stating that going by the present valuation the property will
     fetch nearly Rs.10 crores whereas the order stipulates
     Reserve Price only Rs.3 crores. Hence, the Bank has
     sought modification of fhe upset price fixed by the Court.
                                                                     D
           Learned counsel for the Bank also submitted that as
     per the Debt Recovery Tribunal Act the time stipulated for
     auction is thirty days whereas the order directs to conduct
     the auction within two weeks. To this extent the respondent
     seeks modification of that direction also.
                                                                     E
           Learned counsel on the either side submitted that the
     auction should go on without any delay.
            Considering the facts and circumstances of the case
     we are inclined to dispose of these applications directing
     the Recovery Officer to go on with the auction within the       F
     time limit stipulated in the bid. The question as to whether
     the upset price has been correctly fixed or not will depend
     upon the bid amount offered by the bidders in the auction."
      15. After the said interlocutory applications were disposed G
of, the auction took place but this Court was not satisfied since
certain aspects were highlighted that caused impediments in
obtaining proper offers. This Court in IA 7-9 of 2012, after
hearing the learned counsel for the parties and referring to its
earlier orders, proceeded to pass the following order: -
                                                                  H
    626        SUPREME COURT REPORTS               (2012] 13 S.C.R.

A         "5. In the present application it has been asseverated that
          in compliance with the order dated 5.7.2012, the Recovery
          Officer of Debt Recovery Tribunal-I, Mumbai, ordered for
          publication of the notice in two newspapers which was
          published on 20. 7.2012 calling upon interested parties to
B         give their offer within seven days from the date of
          publication as directed by this Court vide order dated
          27.3.2012. Pursuant to the publication carried in English
          and Kannada newspapers no other offer whatsoever was
          received by the Recovery Officer and till 7th only the offer
c         of the petitioners, namely, Praveen Gada and Amarnath
          Singhla, was received.
          6.    When the matter was taken up, order dated
          30.8.2012 passed in R. P. No. 419 of 2003 was brought
          to our notice. The said order reads as under: -
D                "As per directions of the Hon'ble Supreme Court vide
          its orders dated 27.3.2012 & 5.7.2012, advertisement was
          published fixing reserve price at Rs. 3.00 Crores.
                 Only one bid of Shri Pravin Gada & Amarnath
E         Singhla has been received on 07.08.2012 as per public
          notice. His bid was opened at the scheduled date & time
          of the auction. He has given offer of Rs. 3 crores. As his
          participation in auction was without deposit as directed in
          above orders, there was no question of his depositing
          EMO.
F
                Relevant columns of Bid Sheet were accordingly filled
          in and the signature of the bidder has been obtained. As
          per the directions, the said bid sheet be submitted to the
          Hon'ble Supreme Court.
G               Apart from above, 3 offers in closed envelope were
          received today, but those are not opened & considered in
          view of the directions of the Hon'ble Supreme Court as per
          aforesaid orders.
                On the date of auction the above 3 closed envelops
H
PRAVIN GADA v. CENTRAL BANK OF INDIA                   627
          [DIPAK MISRA, J.]
containing offers have been received. This being new A
situation arisen at the time of auction, in my opinion it would
be appropriate to bring this fact to the kind notice of the
Hon'ble Supreme Court. Hence these 3 closed envelops
be also submitted to the Hon'ble Supreme Court.
     As per directions of the Hon'ble Supreme Court, the      B
Bid Sheet at Exh. 154 be submitted to the Hon'ble
Supreme in a sealed cover."
7. The bid sheets were opened before us and we find that
an offer amounting to Rs. 3,30,00,000/- by Kumar
Enterprises, Rs. 3,30,00,000/- by Riddishiddhi Bullions Ltd. C
and Rs. 3,30,00,000/- by Krishna Texturisers Pvt. Ltd. were
deposited by way of bank drafts on 29.08.2012 and
30.8.2012 respectively.
8. It is submitted by Mr. Sundaram, learned senior counsel
for the petitioners, that as the said offers were not in
                                                               0
accord, the same should not be considered and the
petitioners should be treated as the highest bidder in the
auction. Mr. Rohtagi and Mr. Gupta, learned senior counsel
for the Central Bank of India, per contra, submitted that the
price of the property as on today is worth more than Rs. E
10 crores and the reason for the offerees not coming is
that the petitioners are in possession and they have put
up a board indicating their name and status. It is urged by
them that it is one thing to say that the auction is conducted
by virtue of the order passed by this Court and the whole F
thing is subject to the pendency of the lis but it is another
thing to see at the entrance that the board is fixed and the
people are not allowed to survey the nature and character
of the assets. The photographs of the board that have been
put up are filed in Court and we have perused the same. G
Be it noted, the putting up of the said photographs is not
disputed.
9. Regard being had to the facts and circumstances, we
are of the considered opinion that there should be a re-
                                                              H
    628       SUPREME COURT REPORTS                   [2012) 13 S.C.R.


A         auction and we are inclined to modify the conditions
          incorporated in the earlier order. Keeping in view the
          totality of circumstances, we issue the following directions:-
                 (i) The property in question be put to auction by
                 issuing a public advertisement within two weeks in
B                at least two newspapers, one in English and
                 another in Kannada language, having wide
                 circulation in the city of Mysore inviting bids for the
                 sale of the property.
                 (ii) It shall be mentioned in the advertisement that
c                the reserved price is Rs. 5 crores and the same
                 shall be deposited by way of bank drafts drawn on
                 a nationalized bank before the Recovery Officer of
                 the ORT to enable one to participate in the bid. The
                 advertisement shall stipulate that the deposit of the
D                reserved price fixed by this Court is a condition
                 precedent for participation in the auction.
                 (iii) It shall be clearly stated in the advertisement that
                 the property would be available for inspection in
E                presence of the Registrar of Civil Court or any
                 equivalent officer nominated by the Principal District
                 and Session Judge, Mysore, and it is so done to
                 avoid the grievance from any quarter that the
                 property was not available for proper verification.
                 The inspection by any interested party shall be
F
                 done within one week from the date of
                 advertisement between 11.00 a.m. to 3.00 p.m.
                 (iv} During the entire period of inspection the
                 concerned officer deputed by the learned Principle
G                District and Sessions Judge, Mysore shall see to
                 it that the board that has been fixed is removed
                 from the site so that there can be inspection of the
                 plot without any kind of pre-conceived notion by the
                 perspective bidders.
H                 (v} The aforesaid reserved price shall be deposited
PRAVIN GAOA v. CENTRAL BANK OF INDIA                    629
          [OIPAK MISRA, J.]
       before the Recovery Officer of the ORT within ten       A
       days from the date of the advertisement. Any one
       who would not deposit the reserved price within the
       time limit, his bid shall not be considered
       (vi) The auction shall be held within a period of two
       weeks from the date of issuance of the                  B
       advertisement which shall state the specified time
       and place for the auction.
       (vii) The petitioners without prejudice to the
       contentions to be raised and dealt with in these        c
       Special Leave Petitions shall participate in the
       auction without the deposit as they have purchased
       the property in the year 2006.
       (viii) The offerees who have already given the bids
       shall deposit the balance amount to meet the            D
       reserved price before the Recovery Officer of the
       ORT failing which they shall be ineligible to
       participate in the bid.
       (ix) After the submission of the bids there shall be
       a public auction amongst the eligible offerees to get   E
       the maximum price.
       (x) The auction shall not be finalized and the bid
       sheet shall be produced before this Court in a
       sealed cover for issuance of further directions, if
                                                               F
       required.
10. We repeat at the cost of repetition that the above
arrangements are subject to the result of the final
adjudication to the Special Leave Petitions.
11. A copy of the order passed today be sent by fax, email     G
and speed-post to the Principal District Judge, Mysore by
the Registry of this Court.
12. List the matters on 1.11.2012."
16. After the aforesaid order was passed, the auction was      H
    630     SUPREME COURT REPORTS                [2012] 13 S.C.R.


A   conducted and the highest offer in the auction that was tendered
    was Rs. 5.04 crores. Learned counsel appearing for the said
    highest bidder filed an application for impleadment and
    impressed upon this Court for acceptance of the bid. Be it
    noted, there were other offers amounting to Rs. 3.30 crores and
B   slightly more, but there has been no grievance with regard to
    the proper publication of the notice for holding of auction. We
    have so stated as the High Court had set aside the sale
    essentially on the ground that the sale process was not fair and
    transparent. This Court had passed two orders on different
c   occasions to see that the sale is conducted in a fair and
    transparent manner. We had also imposed conditions so that
    speculative bids do not come into the sphere of auction.
    Despite the best of efforts, as we have seen, the maximum
    price the property has fetched is Rs.5.04 crores. It is submitted
D   by Mr. Sundaram and Mr. Choudhary, learned senior counsel,
    that a sum of Rs. 2.50 crores was deposited by the present
    appellants in October 2006 and in the meantime, six years have
    elapsed. It is urged by them that the said amount was kept with
    the bank and the bank must have dealt with the money as a
E   prudent financial commercial venture and thereby must have .
    earned interest at least at the rate of 15% per annum.
    Calculated on that basis, it is contended, the interest component
    by now would have come to rupees 2 crores 25 lacs and
    thereby the total sum would come to rupees 4 crores 75 lacs.
     It is also urged by them that the possession was taken over by
F   them long back and they have already invested substantial
    amount. As is noticeable, the highest offer in the auction has
    come up to rupees 5.04 crores at such a distance of time.
    Regard being had to the totality of the circumstances, we are
    disposed to think that the sale should be confirmed subject to
G   the appellants depositing a further sum of Rs. 50 lacs before
    the DRAT within a period of three months from today and we
    order accordingly.
        17. At this juncture, it is necessary to address whether the
H finding of the High Court as regards the role of the official
      PRAVIN GADA v. CENTRAL BANK OF INDIA                      631
                [DIPAK MISRA, J.]
liquidator is correct or not. In Rajasthan Financial Corpn.             A
(supra), while dealing with the role of official liquidator, a three-
Judge Bench referred to the pronouncements in A. P. State
Financial Corporatin v. Official Liquidator2 and International
Coach Builders v. State of Karnataka 3 and, in the ultimate
eventuate, summed its conclusions. The relevant conclusions             B
are reproduced below: -
            "(i) A Debts Recovery Tribunal acting under the
     Recovery of Debts Due to Banks and Financial Institutions
     Act, 1993 would be entitled to order the sale and to sell
     the properties of the debtor, even if a company-in-                C
     liquidation, through its Recovery Officer but only after notice
     to the Official Liquidator or the Liquidator appointed by the
     Company Court and after hearing him.
           xxx                      xxx               xxx
                                                                        D
      (iv) In a case where proceedings under the Recovery of
     Debts Due to Banks and Financial Institutions Act, 1993
     or the SFC Act are not set in motion, the creditor
     concerned is to approach the Company Court for
     appropriate directions regarding the realisation of its E
     securities consistent with the relevant provisions of the
     Companies Act regarding distribution of the assets of the
     company-in-liquidation."
      18. On a perusal of the record, it transpires that the official
liquidator had appeared before the recovery officer on number F
of dates. However, the ORT had returned a finding that he has
a restricted role which has been found fault with by the High
Court. In our opinion, the High Court is absolutely correct in its
analysis and we concur with the same, but, a pregnant one, the
fact remains that the High Court had set aside the sale on the G
foundation that a fair and transparent procedure had not been
adopted. Having given due respect to the same, this court had
passed orders on earlier occasions which we have reproduced
2. (2000) 1 sec 291.
3. (2003) 10 sec 482.                                                 H
    632       SUPREME COURT REPORTS                 (2012] 13 S.C.R.


A   hereinabove to get the auction conducted in a fair and
    transparent manner and recorded our conclusion. Therefore, the
    confirmation of sale as has been directed by us shall be treated
    to have attained finality.
                                   .
         19. Another important facet deserves to be mentioned.
B   Before the Division Bench, the workers union had also
    challenged the decision of the DRAT. The High Court, while
    dealing with their submission, has recorded as follows:-
          "During the course of the hearing of these proceedings,
          the Court has been informed that an effort has been made
c         by the First and Second Respondents to settle the
          outstanding dues of the workers through an out of Court
          settlement. Counsel appearing on behalf of the workmen
          submitted that the workmen would abide by the result of
          the Petitions which have been filed by the secured creditors
D         and it is only in the event that the Petitions filed by the
          Banks are dismissed that the workers would be inclined
          to enter into an out of Court settlement with the First and
          Second Respondents. Counsel for the First and Second
          Respondents stated that his clients would be able to
E         resolve the dispute with the workmen only if the Petitions
          filed by the secured creditors challenging the sale in favour
          of his clients fail. Counsel appearing on behalf of the First
          and Second Respondents submitted that while the First
          and Second Respondents are ready and willing to
F         negotiate with the workmen, they are no in a position to
          do so until the litigation which has been instituted by the
          secured creditors attains finality."
          20. T~e aforesaid submission has its own significance in
    law. We may hasten to clarify that we have confirmed the sale
G   as this Court has undertaken the exercise to have an auction
    conducted through the competent authority of ORT by adopting
    a fair, competitive and transparent procedure but that does not
    mean that the conclusion arrived at by the High Court in that
    regard is erroneous. Thus, while confirming the sale subject to
H   the conditions imposed hereinbefore, we are disposed to think
     PRAVIN GADA v. CENTRAL BANK OF INDIA                  633
               [DIPAK MISRA, J.]
that keeping in view the interest of the workmen and their rights, A
the High Court should deal with the rights of the workmen regard
being had to the submissions advanced by the first and second
respondents before it in an apposite manner and, if required,
monitor the same. As concession was given before a particular
Division Bench, we would request the learned Chief Justice to B
place the matter before the same Bench and if it is not possible,
at least before the learned presiding Judge. We have felt so
as such a submission was put forth before the Division Bench
which had categorically recorded the same and it is not
desirable thatthere should be any kind of deviation with regard c
to the statement made.
     21. Presently to the Interlocutory Applications which have
been filed for impleadment and withdrawal of the amounts that
have been deposited as earnest money. Regard being had to
the facts and circumstances of the case, all impleadment D
applications are allowed and the bidders who have deposited
the money are allowed to withdraw the same.
     22. The appeals are accordingly disposed of leaving the
parties to bear their respective costs.
                                                                  E
K.K.T.                                   Appeals disposed of.