M.V. JANARDHAN REDDYversusVIJAYA BANK & ANR.

                          [2008] 7 S.C.R. 520

                                                                        ,,._
A                    M.V. JANARDHAN REDDY
                                   V.
                        VIJAYA BANK & ANR.
                  (Civil Appeal No. 3201 of 2008)
                             MAY 2, 2008
B
              [C.K. THAKKER AND D.K. JAIN, JJ.]

        Companies Act, 1956 - Company in liquidation - Sale
  of properties by way of auction - Grant of permission, subject
c to confirmation by company court - Auction sale -
  Confirmation of, by Recovery Officer- Held: Not correct - Order
                                                                  •
  passed by officer having no authority of law has no effect - It
  does not create any right in favour of a party for whom such
  order is made nor imposes any obligation on the opposite
  party against whom it was passed - Parties were aware about
D
  the condition that sale was subject to confirmation by court -
                                                                                j
  Thus, Recovery Officer could not confirm the sale - He did               ... ••
  not have power - Action taken by him was in violation of the
  condition imposed by court - A/so actions taken in pursuance
  to confirmation of sale, of no effect - Furthermore, Official
E Liquidator in charge of the assets of the Company, was not
  associated with the auction proceedings - Thus, Company
  Court as a/so Division Bench of High Court did not commit
  any illegality in setting aside the sale - However, in the interest
  of justice, new auction purchaser to whom property was sold
F after setting aside of the sale, directed to pay Rs. 20 lakhs to
  auction purchaser as solatium - Auction.
       The Company KOC was in liquidation. Respondent
  No.1-Bank filed recovery suits against the Company. The
  suits were decreed. Bank filed execution applications and
G the Recovery Certificates were issued in its favour to
  execute the decree. However, the matter was pending in
  the Company Court. The Official Liquidator was
  appointed. Bank filecf,application before the Company
  Court for grant of leave to proceed with the sale of the
H                             520                                              ,_
                                                                               II
  M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.             521


property of the Company. The permission was granted             A
by order dated 13.8.1999. Bank took steps for the sale of
the property. The valuation report was prepared. Bank then
filed application before the Company Court for
acceptance of the valuation report and permission to sell
the property by auction throu.gh the Recovery Officer, ORT.     B
The application was allowed by order dated 28.3.2005.
Bank published a notice fixing date of sale. Public notice
was issued. Reserve price was fixed at Rs.45 lakhs. No
bidder came forward in the Auction sales held thrice.
Thereafter, in the subsequent auction, the appellant            c
offered Rs.67.50 lakhs. It was accepted being the highest.
Bank filed an application before the Company Court to
allow the Recovery Officer of tribunal to confirm the sale
in favour of appellant and permit him to issue sale
certificate. Recovery Officer confirmed the sale. The           D
Official Liquidator also submitted a report to the court that
the sale be confirmed. Sale certificate was issued in favour
of the appellant. Sale was registered. However, the
Company Court set aside the sale without issuing notice
and giving opportunity of hearing on the ground that
auction sale was not properly conducted and was                 E
confirmed without order of the Court. Meanwhile, the
Company Judge issued direction to the Official Liquidator
to sell the property. The Official Liquidator issued notice
for sale of the property. Auction took place. Respondent
No.3's bid for Rs.1.80 crores being the highest was             F
accepted. Appellant filed appeal challenging the order of
the Company Judge setting aside the sale and the same
was allowed. The matter was again placed before the
Company Judge for passing order in accordance with law.
The Company Judge set aside the sale in favour of the           G
appellant and directed refund of the amount deposited
by the appellant. In appeal, the Division Bench of High
Court upheld the order of the Company Judge setting
aside the sale. Hence, the present appeal.
                                                                H
    522       SUPREME COURT REPORTS               [2008] 7 S.C.R.


A         Partly allowing the appeal, the Court
       HELD : 1. On facts and in the circumstances of the
  case, it cannot be said that by setting aside sale, either
  the Company Judge or the Division Bench of High Court
  committed any illegality which deserves interference in
B exercise of discretionary power under Article 136 of the          .,
  Constitution. (Para 19) [529-F, G]
       2.1 The orders of the Company Court dated 13.8.1999
  and order dated 28.3.2005 leave no room of doubt that
c the Bank was permitted to go ahead with the proposed
  sale of the assets of the Company under liquidation by
  way of auction but such sale was subject to confirmation
  by the Company Court. Therefore, it is clear that all parties
  were aware about the condition as to confirmation of sale
  by the Company Court. Therefore, it was not open to
D                                                                   ....
  Recovery Officer to confirm sale. The order passed and                   '

  action taken by the Recovery Officer was in clear violation
  of and inconsistent with the specific condition imposed
  by the Company Court. Therefore, the appellant cannot
  take any advantage of confirmation of sale by the
E Recovery Officer who did not possess the power to
  confirm the sale. An order passed by an officer having no
  authority of law has no effect. It neither creates any right
  in favour of a party for whom such order is made nor
  imposes any obligation on the opposite party against
F whom it was passed. (Paras 22 and 25) [531-F, G; 532-A;
  533-E]
         Mis Navalakha & Sons v. Sri Ramanya Das & Ors. (1970)
    2 SCR 77: (1969) 3 SCC 537; Sikander Khan v. Radha Kishan
    (2002) 9 SCC 405: JT 2001 (10) SC 29 - referred to.
G
        2.2 When the Company Judge set aside the sale on
  March 17, 2006, the order was reversed by the Division
  Bench of the High Court since it was in breach of natural
  justice. However, that does not mean that the Company
H Court    could not pass fresh order after affording
        M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.            523

A

       opportunity of hearing to the parties. The Company Court A
     . was right in passing fresh order after hearing the parties.
       If the Recovery Officer could not have confirmed the sale,
       obviously all actions taken in pursuance of confirmation
       of sale, such as, issuance of sale certificate, registration
       of documents, etc., would be of no consequence. Since B
       the Company was in liquidation and Official Liquidator was
"'
       in charge of the assets of the Company, he ought to have
       been·associated with the auction proceedings, which was
       not done. This is also clear from the report submitted by
       the Official Liquidator and on that ground also, the auction
       sale was liable to be set aside. Thus, taking into account
                                                                     c
       overall circumstances, it cannot be said that by setting
       aside the sale, any illegality had been committed by the
       Court or the appellant had suffered. (Paras 28 and 29)
       [534-F, G; 535-A, B]
                                                                     D
             2.3 In the auction held on December 19, 2005, the
       appellant was the highest bidder. His bid of Rs.67 .50 lakhs
       was accepted and he paid the earnest money. Sale was
       confirmed albeit illegally, by the Recovery Officer on .
       February 13, 2006 and he paid the remaining amount. The
                                                                     E
       appellant thus paid the entire amount of Rs.67.50 lakhs.
       The sale was confirmed, sale certificate was issued and
       sale deed was registered in his favour. It is the case of the
       appellant that he had paid stamp duty of Rs.4 lakhs.
       Taking into consideration all these factors, ends of justice
       would be met if respondent No.3 who has purchased the F
>

       property for Rs.1.80 crores is directed to pay an amount
       of Rs.20,00,000/- (twenty lakhs only) to the appellant.
       Payment of this amount to the appellant-auction-
       purchaser would work as 'some solatium for his trouble
       and disappointment for the loss of that which is, perhaps, G
       a good bargain' (Para 30) [535-C, D, E, F]
           Chundi Charan v. BankeyBehary, (1899) 26 Cal 449 (FB)
      - referred to.
           CIVIL APPELLATE JURISDICTION : Civil Appeal No.          H
    524       SUPREME COURT REPORTS                  [2008] 7 S.C.R.


A 3201 of 2008.
          From the Judgment and Order dated 1.8.10.2006 of the
    High Court of Judicature Andhra Pradesh at Hyderabad in
    O.S.A. No. 44/2006 in C.A. No. 73/2006 in C.A. No. 187/2005
    in C.A. No. 219/1996 in C.P. No. 18/1990.
B
          L. Nageshwar Rao, M.N. Rao, Jayanth Muth Raj, C.K.
    Sasi, S. Prasad, M. Srinivas R. Rao, Abid Ali Beeran P, Sudha
    Gupta, Sridhar Potaraju, D. Julius Riameifor the appearing
    parties.
C         The Ju<;lg·ment of the Court was delivered by.
          c:K. THAKKER, J. 1. Leave granted.
       2. The present appeal is filed by the appellant herein
  against the judgment and order dated October 18, 2006 passed
D by the High Court of Andhra Pradesh in Original Side Appeal
  No. 44 of 2006. By the said order, the Division Bench of the
  High Court dismissed the appeal and confirmed the order, dated
  September 8, 2006 passed by the Single Judge of that Court in
  Company Application No. 73 of 2006.
E      3. To appreciate the controversy raised in tlie present
    appeal, few relevant facts may be stated;
        4. Vijaya Bank-Respondent No.1 herein ('Bank' for short)
  filed Original Suit No. 57 of 1989 in the Court of Subordinate
F Judge, Bhongir against Messrs Kran Organics Chemicals (P)
  Ltd (in liquidation) ('Company' for short) for recovery of
  Rs.94,50,524/- as also another Suit being Original Suit No. 61
  of 1989 in the same Court for recovery of Rs.6,43,962/-. Both
  the suits were decreed by a common judgment dated July 24,
G 1993. The Bank filed execution applications which were
  transferred to Debts Recovery Tribunal on establishl'lent of the
  Tribunal under Recovery of Debts due to Banks and Financial
  Institutions Act, 1993. Recovery certificates were issued in
  favour of the Bank and the Bank was allowed to execute the
  decree.
H
      M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.               525
                  [C.K. THAKKER, J.]

          5. Since the matter was pending in the Company Court A
    and Official Liquidator was appointed, the Bank made an
    application, being Company Application No. 219 of 1996 in
    Company Petition No. 18 of 1990 in accordance with the
    provisions of Section 446 of the Companies Act, 1956
    (hereinafter referred to as 'the Act') read with Rule 117 of the B
    Companies (Court) Rules, 1959 (hereinafter referred to as 'the
    Rules') for granting leave to proceed with the sale of the property
    of the Company.

        6. The Company Court, vide its order, dated August 13,
    1999 granted the permission.                                     C
          7. The Bank then took steps for sale of land and building
    of the Company. It got valuation report from approved valuer,
    assessed market value and realizable value, submitted copies
    of judgment, recovery certificate and valuation report, etc. to D
    the Official Liquidator. It made an application being Company
    Application No. 187 of 2005 to the Company Court under
    Sections 446 and 457 of the Act read with Rule 9 of the Rules
    praying for acceptance of the Valuation Report and permit the
    Bank to sell the property by conducting auction through Recovery E
    Officer, Debt Recovery Tribunal, Hyderabad.
         8. On February 2, 2005, the Bank published a notice fixing
    date of sale as March 13, 2005. A public notice was issued in
    'Vaartha' on February 9, 2005. Reserve price was fixed at Rs.45
    lakhs. No bidder, however, came forward and auction could not F
>
    be effected. Same thing was repeated in auction sales
    scheduled to be held on May 29, 2005, July 8, 2005 and
    September 14, 2005. In an auction held on December 19, 2005,
    the appellant had offered Rs. 67.50 lakhs which was the highest
    bid and it was accepted. The Bank made an application in G
    January, 2006, being Company Application NO. 73of 2006
    requesting the Company Court to allow the Recovery Officer of
    the Tribunal to confirm the sale in favour of the appellant and to
    permit him to issue sale certificate. On February 13, 2006,
    Recovery Officer confirmed the sale. It was stated in the said H
    526        SUPREME COURT REPORTS                     [2008] 7 S.C.R.


A   order that the purchasers had purchased the property for a sum
    of Rs.67,50,000/- at a public auction held on December 19,
    2005. Full amount of the sale consideration was paid on January
    3, 2006.
          9. It was then stated;
B
          "Accordingly, the said sale is hereby confirmed".

        10. According to the appellant, on February 23, 2006, the
  Official Liquidator submitted a report to the Hon'ble Court
  wherein he also stated that there was no impediment in
C confirming the sale. Sale certificate was issued in favour of the
  appellant on March 2, 2006. The sale was registered on March
  16, 2006. On March 17, 2006, however, the Company Judge
  set aside the sale without issuing notice and without affording
  an opportunity of hearing to the appellant observing that the sale
D was not properly conducted and was confirmed without an order
  from the Court. The sale was, therefore, set aside.
        11. It appears that an application was made by the appellant
  to recall the said order. Meanwhile, the Company Judge issued
E direction to the Official Liquidator to sell the property. Notice
  was issued by the Official Liquidator for sale of property. The
  appellant, however, approached the Division Bench of the High
  Court by filing Original Side Appeal No. 28 of 2006 complaining
  that an order passed by the Company Judge setting aside the
  sale, was illegal, unlawful, violative of principles of natural justice
F and fair play inasmuch as no notice was issued and no
  opportunity of hearing was afforded before passing the said
  order, which adversely affected the appellant. The Division
  Bench upheld the contention of the appellant, allowed the appeal
  filed by him and set aside the order passed by the Company
G Judge. The matter was again ordered to be placed before the
  learned Company Judge for passing an appropriate order in
  accordance with law.
        12. The learned Company Judge, thereafter, heard the
H parties and by an order dated September 8, 2006, set aside

                                                                            •
      M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.                   527
                  [C.K. THAKKER, J.]

    the sale which was in favour of the appellant and ordered that A
    the amount deposited by the appellant be refunded to him. The
    appellant approached the Division Bench of the High Court but
    the Division Bench also dismissed the appeal. The said order
    is challenged in the present appeal.
          13. On February 12, 2007, notice was issued by this Court.       B
    The matter thereafter appeared on the board from time to time.
    Status quo was also granted. Parties were permitted to file
    replies and a direction was issued to the Registry to place the
    matter for final hearing on a non-miscellaneous day and that is
    how the matter has been placed before us.                              C
         14. We have heard learned counsel for the parties.

           15. The learned counsel for the appellant contended that
    the auction was held in accordance with law by the authorities.
    and upset price was fixed as Rs.45 lakhs. The appellant was·           D
    the highest bidder on December 19, 2005 and his bid was for
    Rs.67.50 lakhs. The said bid was accepted and the entire
    amount was paid by him and the sale was confirmed. The sale,
    therefore, could not have been interfered with and set aside by
    the Court. It was also submitted that after confirmation of sale,      E
    no order setting aside the sale could have been passed by the
    Court. The learned counsel submitted that once the sale was
    confirmed, it could be set aside only on certain grounds such
    as fraud or irregularity in conducting sale, etc. Since no such
>
    ground was there, the order setting aside sale was illegal and         F
    was of no effect. It was also submitted that remarks of the Official
    Liquidator were called and Official Liquidator vide his report
    dated February 23, 2006 stated that as against the upset price
    of Rs.45 lakhs, the highest bid was of Rs.67.50 lakhs by the
    appellant and there was no impediment in confirming the sale.          G
    Hence, even on that ground, the Company Judge was not
    justified in setting aside the sale. The counsel stated that at an
    earlier occasion also, an order was passed by the Company
    Judge setting aside the sale without issuing notice and giving
    opportunity of hearing to the appellant. Fortunately, however, the     H
    528       SUPREME COURT REPORTS                  [2008] 7 S.C.R.


A said order was set aside by the Division Bench. But again the
  Company Judge set aside the sale and the Division Bench
  confirmed the said order. The counsel submitted that after
  confirmation of sale, sale certificate was issued in favour of the
  appellant on March 2, 2006, sale deed was registered on March
B 16, 2006 and the appellant had paid an amount of Rs.4 lakhs
  towards stamp duty. All these had caused serious prejudice to
  the appellant. The entire amount of Rs.67.50 lakhs was paid in
  the beginning of 2006 and if at this stage, the order of the High
  Court is not interfered with, irreparable injury and loss would be
C caused to the appellant. He, therefore, submitted that the order
  passed by the High Court deserves to be set aside by restoring
  confirmation of sale in favour of the appellant and by directing
  the respondents to take consequential action.
        16. The learned counsel for respondent Nos. 1 and 2, on
D the other hand, supported the order passed by the learned
  Company Judge and confirmed by the Division Bench. It was
  submitted that the Recovery Officer had no power, authority or
  jurisdiction to confirm sale and an order of confirming sale
  passed by him on February 13, 2006 was, therefore, without
E power or authority. Moreover, Company proceedings were
  pending before the learned Company Judge. The Company was
  ordered to be wound up. Official Liquidator was appointed who
  was in charge of the assets of the Company. He was not taken
  in confidence, nor was he associated with the auction of assets
F and properties of the Company in liquidation and an action had
  been taken by the Recovery Officer which was contrary to law.
  Even the report submitted by the Official Liquidator expressly
  stated;
           "Since Official Liquidator was not associated with the
G         proceedings of sale, he has no comments to offer".
          17. So far as the order passed by the learned Company
    Judge is concerned, it specifically and unequivocally stated that
    permission of the court should be obtained before sale is
    confirmed or finalized. That order was passed as early as on
H
                      M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.                 529
                                  [C.K. THAKKER, J.]
          '"'       August 13, 1999. In an order, dated March.25, 2005 also, it was A
                    expressly mentioned that the sale was subject to confirmation
                    of the Court. It was an express condition imposed by the
                    Company Court and as such it was not open to the Recovery
                    Officer to confirm the sale and such order, which was having no
                    authority of law, was rightly set aside by the Company Judge B
                    and no grievance could be made. Finally, it was submitted that
                    the Court was wholly justified in observing that the property would
                    have fetched much more than Rs. 6?:50 lakhs. In fact, in a
                    subsequent auction, the highest bid was of Rs.1,80,00,000 i.e.
                    almost three times than the highest bid of the appellant. In the
"                   circumstances, it could not be said that any illegality had been
                                                                                        c
                    committed by the Court in setting aside the sale or there was
                    miscarriage of justice. It was, therefore, submitted that the
                    appeal deserves to be dismissed.
                           18. On behalf of respondent No. 3, an affidavit in reply is D
    .   _,._
                    filed and it is stated that after the bid of respondent No. 3 was
                    accepted for Rs. 1.80 crores, it had paid the said amount in
                    November, 2006. The sale was confirmed by the Company Court
                    in its favour, sale deed was executed and even physical and
                    actual possession of the property was given to respondent No.
                                                                                       E
                    3. The third respondent also obtained necessary permission
                    and certificates from the Authorities so as to enable it to start
                    unit. It had incurred substantial expenditure of about Rs. 1.50
                    crores and also taken steps for recruitment of staff. If at this
"                   stage, the order passed by the High Court is set aside, great
               ,.   prejudice would be caused to the said respondent.                  F

                          19. Having heard the learned counsel for the parties and
                    having given anxious consideration to the facts and
                    circumstances in their entirety, in our opinion, it cannot be said
                    that by setting aside sale, either the learned Company Judge G
                    or the Division Bench has committed any illegality which
                    deserves interference in exercise of discretionary power under
          "<        Article 136 of the Constitution.
                          20. Our attention has been invited by the learned counsel
                    to the relevant orders passed by the Company Court from time       H
    530        SUPREME COURT REPORTS                  (2008] 7 S.C.R.


A   to time. So far as the order dated August 13, 1999 is concerned,
    permission to sell the property was granted on certain terms
    and conditions. They read as under;
          A)   The Official Liquidator shall be allowed to have
               inspection of the properties and assets of the
B              company in liquidation and to take inventory as and
               when required.

          B)   Certified copy of the Judgment and decree passed
               by the Subordinate Judge, Bhongir in O.S. No.57/89
c              dt. 24.7.1993 shall be made available to the official
                                                                              >
               Liquidator without delay.
          C)   The certified copy of the order that would be passed
               by the Debt Recovery Tribunal, Bangalore shall be
               made available to the official Liquidator without
D              avoidable delay.
          D)   The petitioner-Bank shall file the valuer's report in
               the court before the properties covered under the
               mortgage deed are put to sale.

E         E)   Permission of this court shall be obtained before
               the sale of the properties movable or immovable,
               is confirmed or finalized.
          F)   The petitioner-Bank shall undertake to deposit and
               shall deposit the workmen dues with the official              ,.
F              Liquidator as and when quantified by him as per the
               provisions of Section 529(A) of the Indian Companies
               Act.
          G)   Whatever surplus remains after the sale and
G              realization of the dues of the secured creditors and
               the workmen, as per law, the balance sale proceeds
               shall be made available to the official Liquidator for
               being dealt with in accordance with the provisions of
               the companies Act and the Rules.
                                                                        ..
H                                              (emphasis supplied)
              M.V. JANARDHAN REDDY v VIJAYA BANK &ANR.                  531
                          [C.K. THAKKER, J.]

                 21. An order, dated March 28, 2005 in Company                 A
            Application No. 187 of 2005 was equally clear. It read ~s under;
                  "This is an application filed by the Nationalized Bank
                  seeking permission of this Court to receive the valuation
               .. report cind also to permit the bank to effect sale of the .
                  properties of the Company under liquidation through the B
                  Recovery Officer of the Debts Recovery Tribunal, in terms
                  of the conditions of auction sale notice dated 2.2.2005.
                  It is also stated that though sale notice was ordered, no
                  sale was conducted as no permission was obtained from        c
                  this Court. The Official Liquidator also filed a report
                  reporting that there is no objection as to the proposed
                · auction and also the valuation report as filed by the
                  applicant Company.
                 Under the above circumstances, the applicant company D
                 is permitted to go ahead with the proposed sale of the
                 assets of the Company under Liquidation through public
                 auction. But, however, the said sale, if any effected, shall
                 be subject to the confirmation of this Court. The applicant
                 is accordingly granted permission to effect the sale, but E
                 the sale shall be required to be confirmed by this
                 Court.
                 The application is accordingly disposed of." (emphasis
                 supplied)
                                                                               F
                  22. The above orders leave no room of doubt that the Bank
            was permitted to go ahead with the proposed sale of the assets
            of the Company under liquidation by way of auction bu.t such
            sale was subject to confirmation by the Company .Court. It is,
            therefore, clear that all parties were aware about the condition G
            as Jo confirmation of sale by the Company Court. It was,
            therefore, not open to Recovery Officer to confirm sale. The
' -t·       order passed and action taken by the Recovery Officer was in
            clear violation of and inconsistent with the ·specific condition
        /   imposed by the Company Court. In our considered opinion, H
    532        SUPREME COURT REPORTS                      [2008] 7 S.C.R.


A   therefore, the appellant cannot take any advantage of
    confirmation of sale by the Recovery Officer who did not possess
    the power to confirm sale.

         23. So far as confirmation of sale is concerned, the
    principles are well-settled. It is, therefore, not necessary to
8   consider various decisions on that point. We may, however, refer
    to Mis Nava/akha & Sons v. Sri Ramanya Oas & Ors., (1970)
    2 scR 77: (1969) 3 sec 537.
         24. In that case, speaking for the Court, Ramaswami, J.
c   stated;
          "The principles which should govern confirmation of sales
          are well-established. Where the acceptance of the offer
          by the Commissioners is subject to confirmation of
          the Court the offerer does not by mere acceptance
D         get any vested right in the property so that he may
          demand automatic confirmation of his offer. The
          condition of confirmation by the Court operates as a
          safeguard against the property being sold at inadequate
          price whether or not it is a consequence of any irregularity
E         or fraud in the conduct of the sale. In every case it is the
          duty of the Court to satisfy itself that having regard to the
          market value of the property the price offered is
          reasonable. Unless the Court is satisfied about the
          adequacy of the price the act of confirmation of the sale
F         would not be a proper exercise of judicial discretion. In
          Gordhan Das Chuni Lal v. S. Sriman Kanthimathinatha
          Pillai, it was observed that where the property is authorised
          to be sold by private contract or otherwise it is the duty of
          the Court to satisfy itself that the price fixed is the best that
          could be expected to be offered. That is because the
G
          Court is the custodian of the interests of the Company and
          its creditors and the sanction of the Court required under
          the Companies Act has to be exercised with judicial
          discretion regard being had to the interests of the
          Company and its creditors as well. This principle was
H
            M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.                    533
     ~-
                        [C.K. THAKKER, J.]

               followed in Rathnaswami Pillai v. Sadapathi Pillai and S. A
               Soundarajan v. Roshan & Co. In A. Subbaraya Muda/iar
               v. K. Sundarajan, it was pointed out that the condition of
               confirmation by the Court being a safeguard against the
               property being said at an inadequate price, it will be not
               only proper but necessary that the Court in exercising the B
               discretion which it undoubtedly has of accepting or refusing
               the highest bid at the auction held in pursuance of its
               orders, should see that the price fetched at the auction is
               an adequate price even though there is no suggestion of
               irregularity or fraud. It is well to bear in mind the other       c
               principle which is equally well-settled namely that once the
               Court comes to the conclusion that the price offered is
               adequate, no subsequent higher offer can constitute a
               valid ground for refusing confirmation of the sale or offer
               already received". (See the decision of the Madras High
                                                                            D
               Court in Roshan & Co's case (supra)].
""              25. It is true that the Recovery Officer confirmed the sale in
J         favour of the appellant. But as we have already noted, in view of
          condition imposed by the Company Court, Recovery Officer did
          not have the power to confirm sale. An order passed by an officer      E
          having no authority of law has no effect. It neither creates any
          right in favour of a party for whom such order is made nor
          imposes any obligation on the opposite party against whom it
          was passed.

                26. In Sikander Khan v. Radha Kishan, (2002) 9 SCC               F
          405 : JT 2001 (10) SC 29, auction -sale of agrieultural land
          was confirmed by the Collector. The judgrnent..cfebtor filed an
          application under Order 21, Rule 90 of the Code of Civil
          Procedure, 1908 contending that the Collector had no
          jurisdiction to confirm the sale and his action, therefore, was        G
     •    null and void .
                27. Upholding the contention and setting aside the sale,
          this Court said;
               "Learned counsel appearing for the appellants urged that          H
    534       SUPREME COURT REPORTS                      [2008] 7 S.C.R.
                                                                             ,_


A         the view taken by the High Court that the Collector had
          jurisdiction to confirm the auction-sale was patently
          erroneous. In other words, what the learned counsel
          contends is that under Section 71 of the Code read with
          Order 21 Rule 92 CPC, the Collector is only authorised to
B         hold and conduct the auction-sale but he has no power to
          confirm the sale. According to him, the confirmation of
          auction-sale can only be done by the civil court after
          deciding the objections, if filed. We find substance in the
          argument. Order 21 Rule 92 of the Code of Civil Procedure
c         provides that the civil court shall have power to make an
          order confirming the sale and thereupon the sale shall
          become absolute. What Section 71 of the Code provides
          is that where the execution of the decree is passed by the
          competent civil court, which cannot be satisfied and
          requires sale of the agricultural holding of a pakka tenant,
D
          the auction-sale of such land shall be conducted by the
          Collector on fulfilment of certain conditions. It is, therefore,        ,..
                                                                                  ~




          crystal clear that only the auction-sale of an agricultural
          land is to be held and conducted by the orders of the
                                                                                  \.
          Collector and not the confirmation of such sale. In view of
E         the fact that in the present case the auction-sale of the
          appellants' land was not confirmed by the civil court, the
          auction-sale was a nullity and the executing court was
          right when it set aside the impugned auction-sale".

F       28. It is true that when the Company Judge set aside the
  sale on March 17, 2006, the order was reversed by the Division
  Bench of the High Court since it was in breach of natural justice.
  That does not, however, mean that the Company Court could
  not pass fresh order after affording opportunity of hearing to the
  parties. In our opinion, the Company Court was right in passing
G
  fresh order after hearing the parties. If the Recovery Officer could
                                                                              l
  not have confirmed the sale, obviously all actions taken in
  pursuance of confirmation of sale, such as, issuance of sale
  certificate, registration of documents, etc., would be of no
  consequence. Since the Company was in liquidation and Official
H
  M.V. JANARDHAN REDDY v. VIJAYA BANK & ANR.                 535
              [C.K. THAKKER, J.)

Liquidator was in charge of the assets of the Company, he ought     A
to have been associated with the auction proceedings, which
was not done. This is also clear from the report submitted by
the Official Liquidator and on that ground also, the auction sale
was liable to be set aside.
     29. Thus, taking into account overall circumstances, it        B
cannot be said that by setting aside the sale, any illegality had
been committed by the. Court or the appellant had suffered. The
grievance voiced by the appellant, therefore, is not well founded
and cannot be upheld.
                                                                    c
      30. One thing, however, may be noted. In the auction held
on December 19, 2005, the appellant was the highest bidder.
His bid of Rs.67 .50 lakhs was accepted and he paid the earnest
money. Sale was confirmed albeit illegally, by the Recovery
Officer on February 13, 2006 and he paid the remaining amount.
                                                                    0
The appellantthus paid the entire amount of Rs.67~50 lakhs.
The sale was confirmed, sale certificate wa~ isst1ed and sate
deed was registered in his favour. It is the case c:!'ftheappertant
that he had paid stamp duty of Rs.4 lakhs. Taking into
consideration all these factors, in our opinion, ends .9f justice
would be met if respondentNo.~M/s MSN Organies.(P}Ltd~. E
                                                       .'  .
who has purchased the property for Rs.1.80 crore.s f5 .directed
to pay an amount of Rs.20,00,000/- (twenty lakhs only) to the
appellant herein. In our judgment, payment of this amounttothe
appellant (auction-purchaser) would wor!< .a~; 'some $Ofatium
for his trouble and disappointment for th~· loss oHhatwhrch·is, F
perhaps, a good bargain' [Chundi Charan v. Bankey Behary,
(1899) 26 Cal 449 (FB)].
      31. For the foregoing reasons, the appeal deserves to be
partly allowed and is accordingly allowed to the extent indicated   G
above.
N.J.                                     Appeal partly allowed.