THE OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHANDversusALLAHABAD BANK AND ORS.

                    [2013) 4 S.C.R. 207


THE OFFICIAL LIQUIDATOR, U.P. AND UTIARAKHAND                    A
                              v.
              ALLAHABAD BANK AND ORS.
              (Civil Appeal No. 2511 of 2013)
                     MARCH 12, 2013.
                                                                 B
          [H.L. DATIU AND DIPAK MISRA, JJ.]

      Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 - s.30 - Auction/sale by Recovery
Officer t.mder 1993 Act - In a winding-up proceedings, C
appointment of Official Liquidator by Company Court - Officia!
Liquidator's challenge to the auction/sale before Company
Court - Jurisdiction of Company Court to entertain the
challenge - Held: 1993 Act is a complete code in itself and
the tribunal (ORT) has exclusive jurisdiction for the purpose o
of sale of the properties for realization of the dues to the Banks
and financiql institutions - But at the time of auction/sale, it
 is required to associate the Official Liquidator - 1993 Act
 clearly provides- that any person aggrieved by the act of
 Recovery Officer can prefer an appeal - The Official E
 Liquidator whose association is mandatorily required can be
 regarded as person aggrieved by the action taken by
 Recovery Officer - In view of the fact that 1993 is a special
 legislation, appeal thereunder is the only remedy, and
 Company Court has no jurisdiction in such matter - Doctrine F
 of Election is also not applicable in this case - Thus Official
 Liquidator can take recourse only to the mode of appeal under
  1993 Act and cannot approach the Company Court -
  Companies Act, 1956 - Jurisdiction - Doctrine - Doctrine of
  Election.
                                                                   G
     High Court - Jurisdiction of - Under Companies Act -
Nature of- Held: Jurisdiction of High Court under Companies
Act is ordinary in nature and not extraordinary or inherent.

                              207                                 H
     208        SUPREME COURT REPORTS          [2013] 4 S.C.R.


 A     The question for consideration in the present appeal
  was whether the Company Judge under the Companies
  Act, 1956 has jurisdiction at the instance of the Official
  Liquidator to set aside the auction or sale held by the
  Recovery Officer under the Recovery of Debts ·due to
B Banks and Financial Institutions Act, 1993 or whether the
  Official Liquidator was required to follow the route as
  engrafted under the 1993 Act by filing an appeal assailing
  the auction and the resultant confirmation of sale.

         Disposing of the appeal, the Court
c
       HELD: 1. The Recovery of Debts due to Banks and
  Financial Institutions Act, 1993 is a comprehensive Code
  dealing with all the facets pertaining to adjudication,
  appeal and realization of the dues payable to the banks
D and financial institutions and the tribunal (ORT) has the
  exclusive jurisdiction for the purpose of sale of the
  properties for realization of the dues of the banks and
  financial institutions. [Paras 11 and 19] [218-A-B; 223-F]

E       Damji Valji Shah v. L/C of India AIR 1966 SC 135: 1965
     SCR 665 - relied on.
            \



       Andhra Bank v. Official Liquidator and Anr. (2005) 5 SCC
  75: 2005(2) SCR 776; Jitendra Nath Singh v. Official
  Liquidator and Ors. (2013) 1 SCC 462; International Coach
F Builders Ltd. v. Kamataka State Financial Corpn. (2003) 10
  SCC 482: 2003 (2) SCR 631; A.P. State Financial Corpn.
  v. Official Liquidator (2000) 7 SCC 291: 2000 (2) Suppl.
   SCR 288 - referred to.
G      2. While exercising jurisdiction under the Companies
  Act, the High Court exercises ordinary jurisdiction and not
  any extraordinary or inherent jurisdiction and that is why,
  the legislature has appropriately postulated that the
  jurisdiction of the High Court under Articles 226 and 227
H of the Constitution would not be affected. Thus, the ORT
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 209
         ALLAHABAD BANK AND ORS.
has exclusive jurisdiction to sell the properties in a A
proceeding instituted by the banks or financial
institutions, but at the time of auction and sale, it is
required to associate the Official Liquidator. Once the
Official Liquidator is associated, he has a role to see that
there is no irregularity in conducting the auction and B
appropriate price is obtained by holding an auction in a
fair, transparent and non-arbitrary manner in consonance
with the Rules framed under the 1993 Act. [Paras 22 - 24]
[225-B-F]

     Jyoti Bhushan .Gupta and Ors. v. The Banaras Bank Ltd. C
AIR 1962 SC 403: 1962 Suppl. SCR 73; Pravin Gada and
Anr. v. CentralBank of India and Ors. (2013) 2 SCC 101 -·
relied on.

     3. An appeal lies to the ORT challenging the action D
of the Recovery Officer. In the ins~ant case, the Official
Liquidator was not satisfied with the manner in which the
auction was conducted and he thought it apposite to
report to the Company Judge who set aside the auction.
The Official Liquidator has been conferred locus to put E
forth his· stand in the said matters. Therefore, anyone
who is aggrieved by any act done by the Recovery Officer
can prefer an appeal. Such a statutory mode is provided
under the 1993 Act, which is a special enactment. The
ORT has the powers under the 1993 Act to make an F
enquiry as it deems fit and confirm, modify or set aside
the order made by the Recovery Officer in exercise of
powers u/ss. 25 to 28 (both inclusive) of the 1993 Act.
Thus, the auction, sale and challenge are completely
codified under the 1993 Act, regard being had to the G
special nature of the legislation. [Para 26] [226-0-E, F-H;
227-A]

     Union of lnclia and Anr. v. Delhi High Court Bar
Association and Ors. (2002) 4 SCC 275: 2002 (2) SCR 450 -
relied on.                                                  H
    210      SUPREME COURT REPORTS              [2013] 4 S.C.R.


A       4. The intendment of the legislature while enacting
   1993 Act, is that the dues of the banks and financial,
   institutions are realized in promptitude. It is not a situation
   where the Official Liquidator can have a choice either to
   approach the ORT or the Company Court. The language
B ·of the 1993 Act, being clear, provides that any person
   aggrieved can prefer an appeal. The Official Liquidator
   whos.e association is mandatorily required can
   indubitably be regarded as a person aggrieved relating
   to the action taken by the Recovery Officer which would
c include the manner in which the auction is conducted or
  the sale is confirmed. Under these circumstances, the
  Official Liquidator cannot even take recourse to. the
  doctrine of election. It is difficult to conceive that there are
  two remedies. If there i~ only one· remedy, the doctrine
  of election does not apply. An order passed under
0
  Section 30 of the 1993 Act by the ORT is appealable.
  Thus, the Official Liquidator can only take recourse to the
  mode of appeal and further appeal under the 1993 Act and
  not approach the Company Court to set aside the auction
  or confirmation of sale when a sale has been confirmed
E by the Recovery Officer under the 1993 Act. [Para 27] [227-
  0, F-H; 228-A-C]

      Rajasthan State Financial Corpn. and Anr. v. Official
  Liquidator and Anr. (2005) 8 SCC 190: 2005 (3) Suppl.
F SCR 1073; Allahabad Bank v. Canara Bank and Anr. (2000)
  4 sec 406: 2000 (2) SCR 1102 - relied on.

        M. V. Janardhan Reddy v. Vijaya Bank and Ors. (2008)
    7 SCC 738: 2008 (7) SCR 520 - distinguished.
G                       Case Law Reference:
     2000 (2) SCR 1102             relied on          Para 6
     2005 (3) Suppl. SCR 1073 relied on               Para 6
H    2008 (7) SCR 52               distinguished      Para 6
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 211
         ALLAHABAD BANK AND ORS.
  1965 SCR 665                    relied on           Para 14        A
  2005 (2) SCR 776                referred to         Para 15
  (2013) 1 sec 462                referred to         Para 15
  2003 (2) SCR 631                referred to         Para 16
                                                                     B
  2000 (2) Suppl. SCR 288 referred to                 Para 16
  1962 Suppl. SCR 73              relied on           Para 21
  (2013) 2 sec 101                relied on           Para 23
  2002 (2) SCR 450                relied on           Para 25
                                                                     c
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2511 of 2013.

      From the Judgment & Order dated 11.11.2010 of the High         D
Court of Judicature at Allahabad in Special Appeal No. 1815
·of 2009.

    Ravindra Kumar for the Appellant.

    Debal Banerji, C. Mukund, Ashok Jain, Pankaj Jain, Bijoy         E
Kumar Jain, Vivek Chaudhary, Pankaj Bhatia (for Dr. Kailash
Chand) for the Respondents.

    The Judgment of the Court was delivered by

     DIPAK MISRA, J. 1. Leave granted.                               F

      2. The spinal issue that has spiralled to this Court is
whether the Company Judge under the Companies Act, 1956
(for short "the 1956 Act") has jurisdiction at the instance of the
Official Liquidator to set aside the auction or sale held by the     G
Recovery Officer under the Recovery of Debts due to Banks
and Financial Institutions Act, 1993 (for brevity "the ROB Act")
or whether the Official Liquidator is required to follow the route
as engrafted under the ROB Act by filing an appeal assailing
the auction and the resultant confirmation of sale.                  H
     212      SUPREME COURT REPORTS                (2013] 4 S.C.R.


A        3. Regard being had to the controversy involved which is
    in the realm of pure question of law, it is not necessary to
   exposit the facts in detail. Hence, the necessitous facts are
   adumbrated herein. The respondent, Allahabad Bank, a
   secured creditor with whom certain properties were mortgaged,
B filed Original Application No. 153 of 1999 under Section 9 of
  the ROB Act for recovery of a sum of Rs.39,93,47,701/- with
   interest from the company, namely, M/s. Rajindra Pipes Limited,
  which was decreed by the Debt Recovery Tribunal, Jabalpur
   (ORT) vide its order dated 7.3.2000. The Debt Recovery
  Certificate being DRC No. 164 of 2000 was issued for
C recovery of the aforesaid amount which was subsequently
  transferred to the ORT at Allahabad. Be it noted, Company
  Petition No. 113 of 1997 was filed before the learned Company
  Judge in the High Court of Judicature at Allahabad who, vide
  order dated 26.7.2000, had passed an order for winding up of
D the company, as a consequence of which the Official Liquidator
  had taken over the possession of the assets of the company
  on 24.7.2002. After receipt of the Recovery Certificate, the
  Recovery Officer attached the immoveable properties of the
  wound-up company by order dated 29.8.2002. The moveable
E properties of the company were attached as per order dated
  23.12.2003. At this juncture, the Allahabad Bank filed an
  application before the Company Court for impleading it as a
  necessary party and protect its rights getting it out of the winding
  up proceedings. A prayer was made before the Company
F Court to grant permission to proceed with the sale of the
  attached properties by the Recovery Officer, Debt Recovery
  Tribunal (ORT). The learned Company Judge, on 13.2.2004,
  granted permission for proceeding with the attachment and sale
  of the assets for recovery of the dues under the ROB Act. It is
G worth stating here that no condition was imposed.

       4. After auction and confirmation of sale by the ORT, the
  auction-purchaser filed an application before the learned
  Company Judge for issuance of a direction to the Official
H Liquidator to give physical possession. The Company Court,
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 213
 ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
by order dated 4.4.2007, set aside the sale certificate on the        A
ground that the Official Liquidator was neither heard in the
matter nor was he given an opportunity to represent before the
Recovery Officer for the purposes of representing the
workmen's dues and a portion of the workmen's li~bility under
Section 529-A of the 1956 Act. A direction was issued to the          B
Recovery Officer to proceed to sell the assets only after
associating the Official Liquidator and after giving him hearing
to represent the claims of the workmen.

     5. As the facts get further unfolded, after associating the
Official Liquidator, the auction was held and the Recovery            C
Officer proceeded with the confirmation of sale. At that stage,
the Official Liquidator filed his objections pertaining to fixation
of the reserve price, the non-inclusion of certain assets and the
manner in which the auction was conducted. The Recovery
Officer, after hearing the Bank and the Official Liquidator,          D
confirmed the sale and a date was fixed for handing over the
possession to the auction-purchaser, but the same could not
be done as the Official Liquidator chose not to remain present.
Thereafter, the auction-purchaser filed an application before the
learned Company Judge for issue of a direction to the Official        E
Liquidator to hand over the possession of the properties in
respect of which the sale had been confirmed by the Recovery
Officer of DRT. Similar prayer was also made by the Allahabad
Bank by filing another application. As is evincible from the
factual narration, the Official Liquidator filed his report and the   F
Company Court, on consideration of both the applications and
the report of the Official Liquidator, by order dated 24.10.2009,
set aside the auction and confirmation of sale dated 27 .2.2009
on the foundation that the auction had not been properly held
and directed the properties mortgaged with the Allahabad              G
Bank to be auctioned after proper identification of the
properties and obtaining of a fair valuation report from a
Government approved valuer.
     6. Being dissatisfied with the aforesaid order, the
Allahabad Bank preferred Special Appeal No. 1815 of 2009              H
    214         SUPREME COURT REPORTS               [2013] _4 S.C.R.

A before the Division Bench. Apart" fror:n raising various
     contentions justifying the sale, a stand was put forth that the
     Company Court had no jurisdiction to set aside the sale held
     by the Recovery Officer under the ROB Act. The said
     submission of the Bank was resisted principally on the ground
B tnat it is the duty of the Official Liquidator and the Company
     Court to watch the best interest of the company and in exercise
     of such power of supervision, if there is any irregularity in
     conducting the auction for obtalr1ing adequate price, the same
     is liable to be lancinat~d by the Company Court: The Division
C Bench referred to ·the earlier orders passed by the Company
     Court, the provisions of the ROB Act, grant of permission by
     the Company Court to the Allahabad Bank to remain outside
     the winding up proceeding to realize the .debt of the appellant
     by associating itself in the recovery proceeding in accordance
     with the ROB Act, the direction issued to the Official Liquidator
0
     to give access to the -Recovery Officer to proceed with the
     recovery of legal and valid dues of the Bank and the non.:.
     imposition of any condition that the sale required prior approval
    .of the learned Company Judge and, heavily relying on the
E decisions rendered in Allahabad .Bank v. Canara Bank and
     Another1 and Rajasthan State Financial Corpn. ,and Another
   . v. Official Liquidator and Another and distinguishing the
  ·· decision in M. V. Janardhan Reddy v. .Vijaya Bank and
     Others; 3 came to hold that when an auction is conducted and
     there is confirmation of sale by the Recovery officer of the
F tribunal under the ROB Act,·it is open to the Official Liquidator
  . to file an appeal and raise his grievances before the Tribunal
     jn accordance with the provisions of the .ROB Act and the
     Company Court has no jurisdiction to set aside the sale. Being
     of this view, the Division Bench declined to express any opinion
G on the merits ·of the case and opined that it is.·open to the
     Official Liquidator to take up all the grounds available to him in
     appeal. As a consequence of the aforesaid conclusion, the
    1.   c2000) 4 sec 406.
    2.   (2005) 8 sec 1eo. .
H   3.   c2008) 1 sec 738.
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 215
 ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
order passed by the Company Judge nullifying the confirmation           A
of sale and directing fresh auction was set aside. The
defensibility of the said order is called in question by the Official
Liquidator before this Court.

      7. We have heard Mr. Ravindra Kumar, learned counsel              B
for the appellant, Mr. Debal Banerji, learned senior counsel for
the respondent-Allahabad Bank, and Mr. Vivek Chaudhary,
learned counsel for the respondent No. 2.

     8. At the very inception, it is condign to state that there is
no dispute over the facts as narrated hereinabove, for the only C
cavil relates to the issue of jurisdiction. It is to be noted that the
irregularity in the conduct of the auction or the manner in which
the sale had been confirmed has not been addressed to by the
Division Bench as it has restricted its delineation to the
jurisdictional spectrum. Therefore, we shall only restrict our D
address as to which is the appropriate forum for the Official
Liquidator to agitate the grievance.
      9. It is apt to note that the ROB Act has been enacted in
the backdrop that the banks and financial institutions had been
experiencing considerable difficulties in recovering loans and· E
enforcement of securities charged with them and the procedure
for recovery of debts due to the banks and financial institutions
which were being followed had resulted in a significant portion
of the funds being blocked. The Statement of Objects and
Rea:;ons of the ROB Act clearly emphasise the considerable F
difficulties faced by the banks and financial institutions in
recovering loans and enforcement of securities charged with
them. Emphasis has been laid on blocking of funds in
unproductive assets, the value of which deteriorates with the
passage of time. Reference has been made to the "Tiwari G
Committee Report" which had suggested for setting up of
special tribunals for recovery of dues of the banks and financial
institutions by following a summary procedure.

     10. The purpose of the ROB Act, as is evincible, is to             H
     216       SUPREME COURT REPORTS                  [2013] 4 S.C.R.


A     provide for establishment of tribunals and Appellate Tribunals
     for expeditious adjudication and recovery of debts due to banks
      and financial institutions and for matters connected therewith
      or incidental thereto. Section 17 of the ROB Act deals with
     jurisdiction, powers and authority of the tribunals. It confers
B    jurisdiction on the tribunal to entertain and decide applications
     from the banks and financial institutions for recovery of debts
     due to such banks and financial institutions. It also states about
     the powers of the Appellate Tribunal. Section 18 creates a bar
     of jurisdiction stating that no court or other authority shall have,
C    or be entitled to exercise any jurisdiction·, powers or authority
     (except the Supreme Court, and a High Court exercising
     jurisdictio_n under Articles 226 and 227 of the Constitution)
     relating to the matters specified in Section 17. Section 19
     provides how an application of the tribunal is to be presented.
     The said provision deals, comprehensively, with all the aspects.
0
     Section 19(18) confers immense powers on the tribunal to pass
     appropriate orders to do certain acts, namely, appoint a
     Receiver of any property, remove any person from the
     possession, confer upon Receiver all such powers and appoint
     a Commissioner, etc. Sub-section (19) of the said Section
E    provides that 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
F    Companies Act, 1956 and to pay the surplus, if any, to the
     company. Section 20 provides an appeal to the Appellate
     Tribunal; Section 21 provides for deposit of the amount of debt
     due on filing appeal; and Section 22 deals with the procedure
     and powers of the Tribunal and the Appellate Tribunal. Chapter
·G   V of the ROB Act deals with recovery of debts determined by
     the tribunal. Section 25 provides for the modes of recovery of
     debts; Section 26 stipulates about the validity of certificate and
     amendment thereof; Section 27 deals with the power of stay
     of proc~ding under certificate and amendment or withdrawal
H    thereof; and Section 28 deals with the other methods of
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 217
 ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
recovery. It is worthy to note that Section 29 states that the        A
provisions of the Second and Third Schedule of the lncome-
:rax Act, 1961 and the Income-Tax (Certificate Proceedings)
 Rules, 1962, as in force from time to time shall, as far as
possible, be applicable with necessary modifications as if the
said provisions and the rules referred to the amount of debt due      B
 under the ROB Act instead of the Income-Tax Act. The
 defendant has been equated with an assessee. Section 30
 provides that any person aggrieved by an order of the Recovery
 Officer made under the ROB Act may, within. thirty days from
 the date on which a copy of the order is issued to him, prefer       c
 an appeal to the Tribunal. It confers powers on the tribunal to
 make such inquiry as it deems fit and confirm, modify or set
 aside the order made by the Recovery Officer in exercise of
 its powers under Sections 25 to 28 (both inclusive).

     11. Section 34 lays down that the ROB Act would have             D
overriding effect. Section 34, being pertinent, is set out
hereinbelow: -:

      "34. Act to have over-riding effect. - (1) Save as
    . provided under sub-section (2), the provisions of this Act      E
    . 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 thi.s Act.           ·            ·

   : (2) The provisions of this Act or the rules made thereunder      F
   i shall be in addition to, and noun 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       G
       Sick Industrial Companies (special Provisions) Act, 1985
       (1 of 1986) and the Small Industries Development Bank
       of India Act, 1989 (39 of 1989)."

     We have referred to the Objects and Reasons and the              H
    218        SUPREME COURT REPORTS               [2013] 4 S.C.R.


A relevant provisions of the RDB Act to highlight that it is a
  comprehensive Code dealing with all the facets pertaining to
  adjudication, appeal and realization of the dues payable to the
  banks and financial institutions.

B      12. Presently, we shall advert to the analysis made in
  Allahabad Bank's case. In the said case, this Court was
  concerned with the issue relating to the impact of the provisions
  of the RDB Act on the provisions of the 1956 Act. Allahabad
  Bank had come to this Court against an order passed by the
  learned Company Judge under Sections 442 and 537 of the
C 1956 Act whereby the Company Court, in winding up petition,
  had stayed the sale proceedings taken out by the Allahabad
  Bank before the Recovery Officer under the RDB Act. The
  stand of the Allahabad Bank was that the tribunal under the
  RDB Act could itself deal with the question of appropriation of
D sale proceeds in respect of the sale of the company's
  properties held at the instance of the Bank and the priorities.
  After stating the facts, the Court posed the questions that
  required to be adverted to: -

E         "Questions have been raised by the respondent as to
          whether the Tribunal can entertain proceedings for
          recovery, execution proceedings, and also for distribution
          of monies realized by sales of properties of a company
          against which winding-up proceedings are pending,
F         whether leave is necessary and as to which court is to
          distribute the sale proceeds and according to what
          priorities among various creditors."

        13. The two-Judge Bench, after referring to the dictionary
  provisions, especially the "debt" as defined in Section 2(g),
G Sections 17, 18 and 19(22) and Section 31 of the RDB Act, ·
  came to hold that the provisions of Sections 17 and 18 of the
  RDB Act are exclusive so far as the question of adjudication
  of the liability of the defendant to the Allahabad Bank was
  concerned. Dealing with the facet of the execution of the
H certificate by the Recovery Officer, the Division Bench referred
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 219
 ALLAHABAD BANK AND ORS. [DIPAK Ml~RA, J.]
to Section 34 of the ROB Act and opined thus: -                       A
     "Even in regard to "execution", the jurisdiction of the
     Recovery Officer is exclusive. Now a procedure has been
     laid down in the Act for recovery of the debt as per the
     certificate issued by the Tribunal and this procedure is
                                                                      8
     contained in Chapter V of the Act and is covered by
     Sections 25 to 30. It is not the intendment of the Act that
     while the basic liability of the defendant is to be decided
     by the Tribunal under Section 17, the banks/financial
     institutions should go to the civil court or the Company         C
     Court or some other authority outside the Act for the actual
     realization of the amount. The certificate granted under
     Section 19(22) has. in our opinion. to be executed only by
     the Recovery Officer. No dual jurisdiction at different stages
     are contemplated."
                                                                      D
                                            [Emphasis supplied]

      14. While dealing with the issue whether the ROB Act
overrides the provisions of Sections 442, 446 and 537 of the
1956 Act, after analyzing the said provisions and delving into        E
the concept of leave and control by the Company Court, the
learned Judges relied on the pronouncement in Damji Valji
Shah v. L/C of lndia4 and came to hold that there is no need
for the appellant bank to seek leave of the Company Court to
proceed with the claim before the ORT or in respect of the
execution proceedings before the Recovery Officer. It was also        F
categorically held that the said litigation cannot be transferred
to the Company Court. In the ultimate eventuate, the bench ruled
that in view of Section 34 of the ROB Act, the tribunal has
exclusive jurisdiction and, hence, the Company Court cannot
use its powers under Section 442 of the 1956 Act against the          G
tribunal/Recovery Officer and, therefore, Sections 442, 446 and
537 of the 1956 Act could not be applied against the tribunal.
Be it noted, emphasis was laid on speedy and summary

4.   AIR 1966 SC 135.                                                 H
       220    SUPREME COURT REPORTS               [2013] 4 S.C.R.


  A remedy for recovery of the amount which was due to the banks
    and financial institutions and the concept of special procedure
    as recommended by the Tiwari Committee Report of 1981 was
    stressed upon. It was concluded that the special provisions
    made under the ROB Act have to be applied. The Court
  B addressed itself to the special and general law and ruled that
    in view of Section 34 of the ROB Act, it overrides the
    Companies Act to the extent there is any thing inconsistent
    between the Acts. In the ultimate analysis, the learned Judges
    stated thus: -
  c       "For the aforesaid reasons, we hold that the at the stage
          of adjudication under Section 17 and execution of the
          certificate under Section 25 etc. the provisions of the ROB
          Act, 1993 confer exclusive jurisdiction on the Tribunal and
         the Recovery Officer in respect of debts payable to banks
.. D
         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 realized under the ROB Act,
         the question of priorities among the banks and financial -
  E      institutions and other creditors can be decided only by the
         Tribunal under the ROB 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 ROB Act. 1993
         are to the above extent inconsistent with the provisions of
  F      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
  G      initiating or continuing the proceedings under the ROB Act,
         1993."

                                                [Emphasis added]

       15. While dealing with the claim of the workmen, the Bench
 H proceeded to state that the "workmen's dues" have priority over
OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 221
 ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]

all other creditors, secured and unsecured, because of Section       A
529-A(1)(a) of the 1956 Act. Be it noted, this has been so stated
in paragraph 76 of the decision in Allahabad Bank's case. The
correctness of this statement was doubted and the matter was
referred to the larger Bench. A three-Judge Bench in Andhra
Bank v. Official Liquidator and Another6 opined that it was only     B
a stray observation as such a question did not arise in the said
case as Allahabad Bank was undisputably an unsecured
creditor and, accordingly, the larger Bench opined that the
finding of this Court in Allahabad Bank's case to the aforesaid
extent did not lay down the correct law. The said exposition of      c
law has further been reiterated in Jitendra Nath Singh v. Official
Liquidator and Others6 • We have referred to the aforesaid
decisions only to highlight that this part of the judgment in
Allahabad Bank's case has been overruled.

       16. In International Coach Builders Ltd. v. Kamataka State D
Financial Corpn., 7 the question arose whether there was any
conflict between the State Financial Corporation Act, 1951 and
the Companies Act, 1956 and, in that context, the learned
Judges relied on the decision in A.P. State Financial Corpn.
v. Official Liquidato~ and came to hold that there is no conflict E
between the provisions of the SFC Act and the 1956 Act and
even the rights under Section 29 of the SFC Act are not
intended to operate in the situation of winding-up of a company.
It is further opined that even assuming that there is a conflict,
the amendments made in Sections 529 and 529-A of the 1956 F-
Act would override and control the rights under Section 29 6f
the SFC Act. The Division Bench proceeded to state that
though the 1956 Act may be general law, yet the provisions
introduced therein in 1985 were intended to confer special rights
on the workers and pro tanto must be treated as special law G
made by the Parliament and, hence, the said provisions would
5.   c2oos) 5 sec 75.
6.   (2013) 1 sec 462.
1.   c2003) 10 sec 482.
8.   c2000) 1 sec 291.                                               H
    222        SUPREME COURT REPORTS               (2013] 4 S.C.R.


A override the provisions contained in Section 29 of the SFC Act,
  1951.

          17. In Rajasthan State Financial Corporation and another
    (supra), when the appeal came up for hearing before the two
B   learned Judges, a submission was put forth that there was a
    conflict between the decisions in Allahabad Bank (supra) and
    International Coach Builders Ltd. (supra) and, taking note of
    the importance of the question of law involved, the matter was
    referred to a larger Bench. The three-Judge Bench analysed
C   the ratio laid down in Allahabad Bank's case and International
    Coach Builders Ltd. (supra) and, after referring to various
    authorities, held that once a winding-up proceeding has
    commenced and the Liquidator is put in charge of the assets
    of the company being wound up, the distribution of the
    proceeds of the sale of the assets held at the instance of the
D   financial institutions coming under the ROB Act or of financial
    corporations coming under the SFC Act can only be with the
    association of the Official Liquidator and under the supervision
    of the Company Court. The right of a financial institution or of
    the Recovery Tribunal or that of a financial corporation or the
E   court which has been approached under Section 31 of the SFC
    Act to sell the assets may not be taken away, but the same
    stands restricted by the requirement of the Official Liquidator
    being associated with it, giving the Company Court the right to
    ensure that the distribution of the assets in terms of Section
F   529-A of the Companies Act takes place. Thereafter, the bench
    summed up the legal position. The pertinent part of the said
    summation is reproduced below: -

          (i) A Debt Recovery Tribunal acting under the Recovery of
          Debts Due to Banks and Financial Institutions Act, 1993
G
          would be entitled to order the sale and to sell the
          properties of the debtor, even if a company-in-liquidation,
          though its Recovery officer but only after notice to the
          Official Liquidator or the Liquidator appointed by the
          Company Court and after hearing him.
H
 OFFICIAL LIQUIDATOR, U.P. AND UTIARAKHAND v. 223
  ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
           xxx                      xxx                xxx               A
     (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                      B
     appropriate directions regarding the realization of its
     securities consistent with the relevant provisions of the
     Companies Act regarding distribution of the assets of the
     company-in-liquidation."

      18. From the aforesaid verdict, it is vivid that the larger        C
Bench approved the law laid down in Allahabad Bank (supra).
In fact, it is noticeable that the larger Bench has observed that
in Allahabad Bank's case, a view has been taken that the ROB
Act being a subsequent legislation and being a special law
would prevail over the general law, the 1956 Act, but the said           D
argument is not available as far as the SFC Act is concerned.

      19. From the aforesaid authorities, it clearly emerges that
the sale has to be conducted by the ORT with the association
of the Official Liquidator. We may hasten to clarify that as the         E
present controversy only relates to the sale, we are not going
to say anything with regard to the distribution. However, it is
noticeable that under Section 19(19) of the ROB Act, the
legislature has clearly stated that distribution has to be done
in accordance with Section 529-A of the 1956 Act. The purpose
of stating so is that it is a complete code in itself and the tribunal   F
has the exclusive jurisdiction for the purpose of sale of the
properties for realization of the dues of the banks and financial
institutions.

     20. Mr. Revindra Kumar, learned counsel for the appellant,          G
would contend that he, being an Official Liquidator, is liable to
report to the Company Court and, therefore, the Company
Court has jurisdiction to accept or reject the report and, hence
it has jurisdiction to set aside the sale held by the Recovery
Officer under the ROB Act. The learned counsel would submit              H
    224        SUPREME COURT REPORTS                 [2013] 4 S.C.R.


A with emphasis that the role of a Company Court cannot be
  marginalized as it has the control over the assets of the
  company. Per contra, Mr. Debal Banerji, learned senior counsel
  for the Allahabad Bank, would submit that the jurisdiction of the
  Company Court cannot be equated with the jurisdiction
B exercised by the High Court under Articles 226 and 227 of the
  Constitution of India.

          21. To appreciate the aforesaid submission, we may
    fruitfully refer to the dictum in Jyoti Bhushan Gupta and Others
     v. The Banaras Bank Ltd., 9 wherein the learned Judges, while
C   stating about the jurisdiction of the Company Court, have
    opined that the jurisdiction is ordinary; it does not depend on
    any extraordinary action on the part of the High Court. The
    jurisdiction is also original in character because the petition for
    exercise of the jurisdiction is entertainable by the High Court
D   as a court of first instance and not in exercise of its appellate
    jurisdiction. As the High Court adjudicates upon the liability of
    the debtor to pay the debts due by him to the Company, the
    jurisdiction is, therefore, civil. It has been further observed that
    normally a creditor has to file a suit to enforce liability for
E   payment of a debt due to him from his debtor. The Legislature
    has, by Section 187 of the 1956 Act, empowered the High
    Court in a summary proceeding to determine the liability and
    to pass an order for payment, but on that account, the real
    character of the jurisdiction exercised by the High Court is not
F   altered. After further analyzing, the four-Judge Bench proceeded
    to state thus: -

          "The jurisdiction to deal with the claims of companies
          ordered to be wound up is conferred by the Indian
          Companies Act and to that extent the letters Patent are
G
          modified. There is, however, no difference in the character
          of the original civil jurisdiction which is conferred upon the
          High Court by Letters Patent and the jurisdiction conferred
          by special Acts. When in exercise of its authority conferred
H   9.   AIR 1962 SC 403.
OFFICIAL LIQUIDATOR, U.P. AND UTIARAKHAND v. 225
 ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
    by a special statute the High Court in an application             A
    presented to it as a court of first instance declares liability
    to pay a debt, the jurisdiction exercised is original and civil
    and if the exercise of that jurisdiction does not depend
    upon any preliminary step invoking exercise of discretion
    of the High Court, the jurisdiction is ordinary."                 B

     22. The aforesaid enunciation makes it clear as crystal that
while exercising jurisdiction under the 1956 Act, the High Court
is exercising ordinary jurisdiction and not any eXtraordinary or
inherent jurisdiction and that is why, the legislature has
appropriately postulated that the jurisdiction of the High Court      C
under Articles 226 and 227 of the Constitution would not be
affected.

      23. The aforesaid anaJysis makes it luculent that the ORT
has exclusive jurisdiction to sell the properties in a proceeding     D
instituted by the banks or financial institutions, but at the time
of auction and sale, it is required to associate the Official
Liquidator. The said principle has also been reiterated in Pravin
Gada and Another v. Central Bank of India and Others. 10
                                                                      E
     24. Once the Official Liquidator is associated, needless
to say, he has a role to see that there is no irregularity in
conducting- the auction and appropriate price is obtained by
holding an auction in a fair, transparent and non-arbitrary
manner in consonance with the Rules framed under the ROB
Act.                                                                  F

    25. At this juncture, we may refer with profit to what a three-
Judge Bench, while dealing with the constitutional validity of the
ROB Act, in Union of India and Another v. Delhi High Court
Bar Association and Others, 11 had the occasion to observe:-          G

     "By virtue of Section 29 of the Act, the provisions of the
     Second and Third Schedules to the Income Tax Act, 1961
10. c2013) 2 sec 101.
11. (2002) 4 sec 275.                                                 H
    226        SUPREME COURT REPORTS                 [2013] 4 S.C.R.


A         and the Income Tax (Certificate Proceedings) Rules, 1962,
          have become applicable for the realization of the dues by
          the Recovery Officer. Detailed procedure for recovery is
          contained in thes·e Schedules to the Income Tax Act,
          including provisions relating to arrest and detention of the
B         defaulter. It cannot, therefore, be said that the Recovery
          Officer would act in an arbitrary manner. Furthermore, ~
          Section 30, after amendment by the Amendment Act,
          2000, gives a right to any person aggrieved by an order
          of the Recovery Officer, to prefer an appeal to the Tribunal. .
c         Thus now an appellate forum has been provided against
          any orders of the Recovery Officer which may not be in
          accordance with the law. There is, therefore, sufficient
          safeguard which has been provided in the event of the
          Recovery Officer acting in an arbitrary or an unreasonable
          manner."
D
       26. We have referred to the said passage for the purpose
  of highlighting that an appeal lies to the ORT challenging the
  action of the Recovery Officer. In the case at hand, the Official
  Liquidator was not satisfied with the manner in which the auctio~
E was conducted and he thought it apposite to report to the
  learned Company Judge who set aside the auction. Needless
  to emphasise, the Official Liquidator has a role under the 1956
  Act. He protects the interests of the workmen and the creditors
  and, hence, his association at the time of auction and sale has
F been thought appropriate by this Court. To put it differently, he
  has been conferred locus to put forth his stand in the said
  matters. Therefore, anyone who is aggrieved by any act done
  by the Recovery Officer can prefer an appeal. Such a statutory
  mode is provided under the ROB Act, which is a special
G enactment. The ORT has the powers under the ROB Act to
  make an enquiry as it deems fit and confirm, modify or set
  aside the order made by the Recovery Officer in exercise of
  powers under Sections 25 to 28 (both inclusive) of the ROB
  Act. Thus, the auction, sale and challenge are completely
H
OFFICIAL LIQUIDATOR, U.P. AND UTIARAKHAND v. 227
 ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
codified under the ROB Act, regard being had to the special              A
nature of the legislation.

      27. It has been submitted by Mr. Banerji, learned senior
counsel, that if the Company Court as well as the ORT can
exercise jurisdiction in respect of the same auction or sale after       B
adjudication by the ORT, there would be duality of exercise of
jurisdiction which the ROB Act does not envisage. By way of
an example, the learned senior counsel has submitted that
there are some categories of persons who can go before the
 ORT challenging the sale and if the Official Liquidator                 C
approaches the Company Court, then such a situation would
only bring anarchy in the realm of adjudication. The aforesaid
submission of the learned senior counsel commends
 acceptance as the intendment of the legislature is that the dues
 of the banks and financial institutions are realized in
 promptitude. It is to be noted that when there is inflation in the      D
economy, the value of the mortgaged property/assets
 depreciates with the efflux of time. If more time is consumed, it
would be really difficult on the part of the banks and financial
 institutions to realize their dues. Therefore, this Court in
 Allahabad Bank's case has opined that it is the ORT which               E
would have the exclusive jurisdiction when a matter is agitated
 before the ORT. The dictum in the said case has been
 approved by the three-Judge Bench in Rajasthan State
 Financial Corporation and Another (supra). It is not a situation
where the Official Liquidator can have a choice either to                F
 approach the ORT or the Company Court. The language of the
 ROB Act, being clear, p~ovides that any person aggrieved can
 prefer an appeal. The Official Liquidator whose association is
 mandatorily required can indubitably be regarded as a person
 aggrieved relating to the action taken by the Recovery Officer          G
 which would include the manner in which the auction is
 conducted or the'sale is confirmed. Under these circumstances,
 the Official Liquidator cannot even take recourse to the doctrine
 of election. It is difficult to conceive that there are two remedies.
 It is well settled in law that if there is only one remedy, the         H
    228      SUPREME COURT REPORTS                 [2013] 4 S.C.R.


A doctrine of election does not apply and we are disposed to think
  that the Official Liquidator has only one remedy, i.e., to
  challenge the order passed by the Recovery Officer before the
  ORT. Be it noted, an order passed under Section 30 of the
  ROB Act by the ORT is appealable. Thus, we are inclined to
B conclude and hold that the Official Liquidator can only take
  recourse to the mode of appeal and further appeal under the
  ROB. Act and not approach the Comp~ny Court to set aside
  the auction or confirmation of sale when a sale has been
  confirmed by the Recovery Officer under the ROB Act.
c         28. We will be failing in our duty ifwe do not take notice
    of the decision·in M. V. Janardhan Reddy (supra) wherein the
    sale was aside by the Company Judge. It may be stated here
    that the Company Court had imposed a condition that the
    permission of the Company Court shall be obtained before the
o· sa~ of the properties, immoveable or moveable, is confirmed
    or finalized. On the aforesaid basis, this Court opined that when
   the bank was permitted to go ahead with the proposed sale of
   the assets of the company under liquidation by way of auction
    but such sale was subject to confirmation by the Company Court
E and all the parties were aware about the condition as to
   confirmation of sale by the Company Court, it was not open to
   the Recovery Officer to confirm the sale and, therefore, the sale
   was set aside by the Company Court, being in violation of the
   order. Thus, we find that the facts in the said case were
F absolutely different and further this Court 9id not deal with the
   jurisdiction of the Company Court vis-a-vis ORT as the said
   issue really did not arise. Hence, it is not an authority for the
   proposition that the Official Liquidator can approach the
   Company Court to set aside the auction or sale conducted by
G the Recovery Officer of the ORT.
         29. In view of the aforesaid analysis, we concur with the
    view expressed by the Division Bench and hold that the Official
    Liquidator can prefer an appeal before the ORT. As he was
    prosecuting the lis in all genuineness before the Company
H
 OFFICIAL LIQUIDATOR, U.P. AND UTTARAKHAND v. 229
  ALLAHABAD BANK AND ORS. [DIPAK MISRA, J.]
Court and defending the order before the Division Bench, we A
grant him four weeks' time to file an appeal after following the
due procedure. On such an appeal being preferred, the ORT
shall deal with the appeal in accordance with law. The ORT is
directed to decide the appeal within a period of two months
after offering an opportunity of hearing to all concerned. Till the B
appeal is disposed of, the interim order passed by this Court
shall remain _in force. We hasten to clarify that we have not
expressed anything on the merits of the case.

    30. Consequently, the appeal is disposed of in the above
terms leaving the parties to bear their respective costs.          C
K.K.T.                                    Appeal disposed of.