w w w . L a w y e r S e r v i c e s . i n



Supreme Alloys Ltd. & Another v/s Golden Rathi Star Industries Ltd. & Another


Company & Directors' Information:- STAR INDIA PRIVATE LIMITED [Active] CIN = U72300MH1994PTC076485

Company & Directors' Information:- THE SUPREME INDUSTRIES LIMITED [Active] CIN = L35920MH1942PLC003554

Company & Directors' Information:- T S ALLOYS LIMITED [Active] CIN = U27109OR2004PLC009683

Company & Directors' Information:- GOLDEN RATHI STAR INDUSTRIES LIMITED [Active] CIN = U74999DL1999PLC100884

Company & Directors' Information:- SUPREME & COMPANY PRIVATE LIMITED [Active] CIN = U24116WB1978PTC031466

Company & Directors' Information:- SUPREME ALLOYS LIMITED [Under Liquidation] CIN = U74899DL1989PLC037969

Company & Directors' Information:- SUPREME COMPANY LIMITED [Active] CIN = U70101DD1995PLC001973

Company & Directors' Information:- RATHI INDUSTRIES LIMITED [Active] CIN = L74899DL1991PLC046570

Company & Directors' Information:- B P ALLOYS LIMITED [Active] CIN = L27107PB1987PLC007827

Company & Directors' Information:- G. K. ALLOYS PRIVATE LIMITED [Active] CIN = U74999PN2020PTC193107

Company & Directors' Information:- A TO Z ALLOYS PRIVATE LIMITED [Active] CIN = U27100MH2006PTC160869

Company & Directors' Information:- V S L ALLOYS (INDIA) PRIVATE LIMITED [Active] CIN = U74899DL1991PTC046396

Company & Directors' Information:- G. M. ALLOYS PRIVATE LIMITED [Active] CIN = U74120DL2007PTC169855

Company & Directors' Information:- C M ALLOYS PRIVATE LIMITED [Active] CIN = U27110MH1999PTC122729

Company & Directors' Information:- STAR INDUSTRIES PRIVATE LIMITED [Active] CIN = U24100MH1981PTC025046

Company & Directors' Information:- RATHI PRIVATE LIMITED [Active] CIN = U27106DL2005PTC141836

Company & Directors' Information:- R D ALLOYS PVT LTD [Active] CIN = U27320WB1971PTC027983

Company & Directors' Information:- A K ALLOYS PVT LTD [Active] CIN = U27101PB1989PTC009860

Company & Directors' Information:- RATHI INDIA LIMITED [Active] CIN = U24111RJ1972PLC001847

Company & Directors' Information:- H B S ALLOYS PRIVATE LIMITED [Active] CIN = U27100GJ2012PTC071516

Company & Directors' Information:- K L ALLOYS PRIVATE LIMITED [Active] CIN = U99999PB1989PTC008964

Company & Directors' Information:- B R ALLOYS PVT LTD [Active] CIN = U27101WB1995PTC075793

Company & Directors' Information:- B. N. RATHI INDUSTRIES PRIVATE LIMITED [Active] CIN = U45209TG2012PTC082486

Company & Directors' Information:- P D ALLOYS PRIVATE LIMITED [Active] CIN = U27100PB2004PTC027669

Company & Directors' Information:- K M U ALLOYS PRIVATE LIMITED [Active] CIN = U74899DL1994PTC059238

Company & Directors' Information:- M. R. ALLOYS PRIVATE LIMITED [Active] CIN = U27106PB1990PTC010461

Company & Directors' Information:- GOLDEN INDUSTRIES PRIVATE LIMITED. [Active] CIN = U74899DL1990PTC042249

Company & Directors' Information:- S N ALLOYS PVT LTD [Active] CIN = U27101WB1993PTC059587

Company & Directors' Information:- M J ALLOYS PVT LTD [Active] CIN = U27106WB1985PTC038633

Company & Directors' Information:- S A ALLOYS PRIVATE LIMITED [Active] CIN = U27310DL1996PTC081185

Company & Directors' Information:- P. B. ALLOYS PRIVATE LIMITED [Active] CIN = U28910UP2010PTC039384

Company & Directors' Information:- H. P. ALLOYS PRIVATE LIMITED [Active] CIN = U74999MH2012PTC230070

Company & Directors' Information:- M K ALLOYS PVT LTD [Active] CIN = U27109PB1992PTC012515

Company & Directors' Information:- R AND J ALLOYS PRIVATE LIMITED [Strike Off] CIN = U27106MH1997PTC110781

Company & Directors' Information:- G S M ALLOYS PRIVATE LIMITED [Active] CIN = U27205HR2009PTC039242

Company & Directors' Information:- K K ALLOYS PRIVATE LIMITED [Active] CIN = U27106PB1996PTC018111

Company & Directors' Information:- P C ALLOYS PRIVATE LIMITED [Active] CIN = U27106CH1990PTC010828

Company & Directors' Information:- S. B. ALLOYS PVT LTD [Strike Off] CIN = U27101PB1990PTC010324

Company & Directors' Information:- STAR COMPANY LIMITED [Strike Off] CIN = U67120WB1927PLC005620

Company & Directors' Information:- G A ALLOYS PRIVATE LIMITED [Active] CIN = U45400DL2008PTC175934

Company & Directors' Information:- L C ALLOYS PVT LTD [Strike Off] CIN = U27107WB1978PTC031690

Company & Directors' Information:- J S S R ALLOYS PRIVATE LIMITED [Strike Off] CIN = U27100CT2011PTC022720

Company & Directors' Information:- S G ALLOYS PRIVATE LTD. [Active] CIN = U74899DL1985PTC021870

Company & Directors' Information:- S P ALLOYS PVT LTD [Active] CIN = U27106PB1990PTC010856

Company & Directors' Information:- N. P. ALLOYS PRIVATE LIMITED [Active] CIN = U27101PB1995PTC016862

Company & Directors' Information:- C K ALLOYS PRIVATE LIMITED [Active] CIN = U27101DL1998PTC095554

Company & Directors' Information:- M M ALLOYS PVT LTD [Strike Off] CIN = U27101RJ1983PTC002780

Company & Directors' Information:- N I ALLOYS PVT LTD [Strike Off] CIN = U27109PB1987PTC007643

Company & Directors' Information:- D R ALLOYS PRIVATE LIMITED [Strike Off] CIN = U27101MH1999PTC118474

Company & Directors' Information:- A N ALLOYS PVT LTD [Strike Off] CIN = U27106PB1994PTC015052

Company & Directors' Information:- R A ALLOYS PVT LTD [Strike Off] CIN = U27106PB1995PTC016101

Company & Directors' Information:- S B ALLOYS PVT LTD [Strike Off] CIN = U27106CH1990PTC010538

Company & Directors' Information:- STAR GOLDEN INDIA LIMITED [Active] CIN = U70102TN2014PLC098074

Company & Directors' Information:- S J ALLOYS PRIVATE LIMITED [Strike Off] CIN = U27101PB1995PTC015964

Company & Directors' Information:- S U ALLOYS PVT LTD [Strike Off] CIN = U27104WB1988PTC044767

Company & Directors' Information:- M R ALLOYS INDUSTRIES PVT LTD. [Strike Off] CIN = U27209WB1989PTC046899

Company & Directors' Information:- S S R ALLOYS PVT LTD [Strike Off] CIN = U27101WB1974PTC029161

Company & Directors' Information:- S K R S ALLOYS PRIVATE LIMITED [Strike Off] CIN = U28113HR2011PTC042687

Company & Directors' Information:- T R ALLOYS PVT LTD [Strike Off] CIN = U27106PB1990PTC010906

Company & Directors' Information:- STAR T V PRIVATE LIMITED [Strike Off] CIN = U51395UP1985PTC007023

Company & Directors' Information:- G C ALLOYS PVT LTD [Strike Off] CIN = U27101PB1995PTC015760

Company & Directors' Information:- R K ALLOYS PVT LTD [Strike Off] CIN = U27104HP1986PTC006641

Company & Directors' Information:- STAR OF INDIA LIMITED. [Strike Off] CIN = U99999CH1946PLC001119

Company & Directors' Information:- K R ALLOYS PVT LTD [Strike Off] CIN = U27101HR1981PTC011733

Company & Directors' Information:- B R N ALLOYS PRIVATE LIMITED [Strike Off] CIN = U27101KA1982PTC004759

Company & Directors' Information:- D AND L ALLOYS PRIVATE LIMITED [Active] CIN = U27310RJ2006PTC023316

Company & Directors' Information:- A. S. STAR PRIVATE LIMITED [Active] CIN = U74999RJ2016PTC056637

Company & Directors' Information:- E & J GOLDEN INDIA PRIVATE LIMITED [Strike Off] CIN = U45400DL2012PTC241828

Company & Directors' Information:- STAR O & M PRIVATE LIMITED [Active] CIN = U74999DL2015PTC281303

Company & Directors' Information:- R. M. ALLOYS PRIVATE LIMITED [Active] CIN = U37100DL2016PTC302431

Company & Directors' Information:- A M ALLOYS PRIVATE LIMITED [Strike Off] CIN = U27310GJ2014PTC078387

Company & Directors' Information:- SUPREME INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U29248GJ2014PTC078517

Company & Directors' Information:- K. D. STAR PRIVATE LIMITED [Active] CIN = U45201GJ2011PTC067973

Company & Directors' Information:- SUPREME INDIA PVT LTD [Strike Off] CIN = U36991RJ1985PTC003261

Company & Directors' Information:- STAR LTD. [Dissolved] CIN = U99999MH1921PTC000957

    Appeal Nos. 337 of 2014 & 300 of 2013

    Decided On, 26 June 2015

    At, Debts Recovery Appellate Tribunal at Delhi

    By, THE HONOURABLE MR. JUSTICE RANJIT SINGH
    By, CHAIRPERSON

    For the Appearing Parties: Rajeeve Mehra, A.K. Matta. Senior Advocates, Arjun Singh Bhatti, Raghav Kapoor, Pallav Saxena, S.L. Gupta, Ravi Data, Rajesh Sharma, Shruti Aggarwal, Advocates.



Judgment Text

1. These two appeals are filed by M/s. Supreme Alloys Ltd. and M/s. Invent Assets Securitization and Reconstruction Pvt. Ltd. (IASR) to challenge the order passed by the Tribunal below allowing S.A. 228/2009 filed by M/s. Golden Rathi Star Industries Ltd. (respondent No. 1).

2. IASR is an assignee of J&K Bank Ltd., which had advanced the credit facilities to respondent No 1 M/s. Supreme Alloys Ltd. is the auction purchaser of the property put to auction by the lending J&K Bank. The Tribunal below has set aside the sale of the property of borrower respondent No. 1 while allowing the S.A. Aggrieved against the said order, the auction purchaser as well as IASR has filed these two separate appeals to impugn the order passed by the Tribunal below.

3. Respondent No. 1 had filed this S.A. to impugn the sale notice dated 25.7.2009 issued by J&K Bank and prayed for restoring the possession of the premises, machinery and stocks taken in possession by the respondent Bank. Subsequently, respondent No. 1 also filed an application for quashing the subsequent sale, which was held on 19.10.2010.

4. The facts noticed, in brief, are that the respondent company had taken CC Limit ofRs. 25 crore and an ad hoc limit ofRs. 2 crore. Besides, the company had also taken a car loan ofRs. 13,75,000/-. Once these facilities were obtained, a family dispute arose between directors when two directors, Mr. Ombir Singh and Mr. Vivek Sharma, were on one side and another director Mr. Mahesh Kumar on the opposite side. This dispute resulted in murder of Mr. Ombir Singh and Mr. Vivek Sharma for which an FIR was registered leading to arrest of Mr. Mahesh Kumar. On account of this, the respondent company remained closed from 7.10.2008 to December, 2008 Family members and LRs of the directors later approached the Bank for revival of the company when they learnt about the legal action initiated by the Bank for putting the property of the company to sale.

5. Respondent Bank had initiated action under the SARFAESI Act by issuing notice under Section 13(2) of the Act on 7.1.2009, calling upon the borrower and its guarantors to pay a sum ofRs. 28,49,66,074/- with interest @15% on CC Limit and @18.5% on ad hoc Limit and further @ 13.5% on car loan with monthly rests w.e.f. 1.1.2009. Through this notice, the Bank had also informed the borrower that secured assets situated at Plot No. 575-57G, measuring 43241 sq. yds under Khasra Nos. 58, 62-66, 569-571, 573-577. village Bisnoli, Dujana Road, Dadri, Distt. Gautam Budh Nagar, Noida belonging to Mr. Ombir Singh would also put to sale for recovery of the dues of the Bank. The respondent/borrower company replied to this notice which received a response from the Bank on 28.2.2009. It is alleged that the statement of accounts did not disclose rate of interest which was charged.

6. It is alleged that account was declared NPA within six months of grant of additional limit ofRs. 2 crore. The family members of Mr. Ombir Singh were under tremendous shock due to his murder and were unable to recover therefrom. The Bank had affixed possession notice dated 11 7.2009. The Bank had forwarded sale notice dated 25.7.2009 by post on 30.7.2009. The respondent/borrower company would allege that Bank had wilfully violated mandatory requirement of law while issuing the sale notice proposing to sell the factory, land and building situated at Noida. The respondent had also alleged that the Bank had not disclosed whether any inventory was prepared in terms of Rule 4(2) of Security Interest (Enforcement) Rules, 2002 (for short, the Rules) while taking possession of the assets. As per the respondent/borrower, no notice of 30 days as required under Rules 6(2) and 8(6) of the Rules was served on the borrower in respect of the proposed sale.

7. The Bank had fixed the reserve price of the property atRs. 3467 crore. The borrower would dispute this valuation of the property by pointing out that on 22.3.2007 the property was valued at 35.70 crore and machinery was valued at Rs. 15.77 crore. Thus, fixing the reserve price of plant, machinery, land and building atRs.34.67 crore was termed as unreasonable and on very low side. The respondent has alleged that the Bank had charged interest at the exorbitant rates in violation of law laid down by the Apex Court inCentral Bank of India v. Ravindra & Ors., I (2002) BC 150 (SC) : VII (2001) SLT 400 : IV (2001) CLT 127 (SC) : AIR 2001 SC 3095. The borrower had even alleged that the Bank had failed to provide the latest valuation report of the property in terms of Rule 8(5) of the Rules The borrower company had also alleged violation of Rules 5(2), 8(6), 9(1) of the Rules besides pleading that stocks worth crores which were lying in the factory were not taken into consideration while making inventory.

8. While pointing out to the violation of the rules which are now held to be mandatory, the borrower company would urge that requirement of 30 days notice was not compiled with by serving notice on the company but the notice was affixed at the factory premises, which would show violation of Rule 8(7) of the Rules. It was also alleged that no notice was served on the directors of the borrower company personally or by registered post and has thus alleged that the appellant assignee had transferred the property by way of sale without following mandatory requirement of the rules. It was also urged that the borrower company had been deprived of their right to file objection to reserve price fixed by the Bank regarding this property as the valuation report was never supplied to the borrower company.

9. In response to the notice issued in the S.A., the Bank had put in appearance. The auction purchaser also filed reply to pleading that the S.A., filed was nothing but abuse of process of law, and was bereft of any valid ground of challenge besides highlighting that the Bank's dues wereRs. 28.50 crore

10. The Bank in its reply has pointed out that since later part of the year 2008 there was no transaction in the account of the borrower company and so the account was declared as NPA. Notice under Section 13(2) of the SARFAESI Act was issued on 7.1.2009 followed by possession notice under Section 13(4) of the Act on 11.7.2009. The Bank in its reply had disclosed that it had found the factory premises virtually abandoned when it took possession of the same. As per the Bank, there was no employee or any person in .the premises when it took possession of the factory. Bank statedly employed security guards when it found no employee working in the premises Justifying its action, the Bank has urged that the account of the respondent borrower was rightly declared NPA and as there was no concrete proposal for payment of the dues and so the action under the SARFAESI Act was initiated. The Bank had accordingly pleaded that there was no merit in the S.A.

11. The respondent borrower company filed rejoinder reiterating its assertion made in its S.A. and denying the averments made in its written statement. The respondent company also pointed out that the Bank had assigned the debt in favour of IASR on 4.10.2010, 3.11.2010 and on 15.10.2010, but had failed to disclose how the sale certificate dated 19.10.2010 was issued by it in respect of the factory premises including plant and machinery, stock, etc. within 15 days of the said assignment. Respondent No. 1 borrower had even questioned the mode of sale while pleading that the auction purchaser/appellant Supreme Alloys Ltd., had purchased this property by obtaining credit facility ofRs. 55 crore from Punjab National Bank against the same property within two months from the date of issue of sale certificate. The borrower had also revealed that one of the directors of the auction purchaser company had signed as witness on the assignment deed in favour of the appellant IASR. It was further alleged in the rejoinder that the market value of movable and immovable assets of the borrower was not less thanRs. 100 crore whereas the property was sold forRs. 20.31 crore against the earlier reserve price ofRs. 34.6 crore. The borrower company, therefore, would allege that this was done by the Bank to give benefit to its own known persons with vested personal interest and had done so by reducing the reserve price fromRs. 34.67 crore toRs. 19.50 crore within a short period of 6-7 months. The appellant assignee company had sold the property by way of private treaty. On this basis, the Counsel for the respondent company while making submission in the present appeal has alleged fraud on the part of the appellant by pointing out to various telltale signs in which this property was sold by way of private treaty.

12. Respondent IASR had filed application (I.A. No. 70/2011) claiming that the debt had been assigned to it by J&K Bank. The appellant/applicant IASR had disclosed in this application that it had issued sale certificate in favour of the appellant M/s. Supreme Alloys Ltd. on 19.10.2010 with respect to the factory, plant and machinery for sum ofRs. 21.30 crore. This sale in fact was impugned by the borrower company pleading that this was done in violation of the rules contained in the Security Interest (Enforcement) Rules, as the sale was conducted without giving 30 days notice. IASR had even not obtained any latest valuation of the property as was required in terms of Rule 8(5) of the Rules.

13. The borrower company would point out to the collusion between IASR and the appellant M/s Supreme Alloys Ltd., as one of the directors of the appellant M/s. Supreme Alloys Ltd. had signed as witness in the alleged deed of assignment dated 4.10.2010. Even mode of payment by M/s. Supreme Alloys Ltd. to IASR had not been disclosed. It was accordingly alleged that the authorised officer had played fraud on the borrower while issuing sale certificate on 19.10.2010

14. The Tribunal, after considering the pleadings, evidence and other material on record, formulated the points which required adjudication and has ultimately allowed the S.A., directing the appellant to issue a fresh sale notice after taking proper valuation of the plant and machinery and to put the property to re-auction in accordance with the provisions of the SARFAESI Act. While allowing the S.A., the Tribunal has also allowed the status quo order granted by this Tribunal to continue in regard to the residential property bearing No. C-1/9, Sukhchain Marg, DLF, Phase-I, Gurgaon, Haryana (referred to as C-9/1, Sukhchain Marg, DLF City, Phase-I, Gurgaun, Haryana in some documents). This order is accordingly impugned in the present appeal.

15. I have heard the Counsel for the parties, who have made submissions during lengthy hearings spilling over to number of days. A number of precedents have been placed before me. Efforts were made to place on record some additional documents which prayer was considered and rejected by this Tribunal on 20.3.2015. However, the prayer to place on record certain documents which were part of pleadings before the Tribunal below was allowed when this prayer was not objected to by the Counsel for the non-applicant/appellant.

16. Let us first have a look on undisputed facts respondent No. 1 company had obtained credit facilities for which it had pledged industrial plot at Noida. The company was shut, as stated in the S.A. due to internal feud leading to murder of two directors. Company could not make any payment and the account was declared NPA on 6.1.2009. The creditor-J&K Bank had issued notice under Section 13(2) of the SARFAESI Act on 7.1.2009 for recovery ofRs.28,49,66,074/- with interest. Respondent/borrower company filed an objection on 28.2.2009. The Bank had rejected the objections on 6.3.2009. The borrower company had addressed certain communication to the Bank on 7.3.2009 and 20.3.2009 and had even prayed for bringing a better buyer. From here onwards the parties enter into controversies about the factual and legal position.

17. The appellant would allege that the borrower had abandoned the factory in January 2009 and the Bank took its physical possession on 11.7.2009. The Bank had issued a sale notice on 25.7.2009 keeping the reserve price of the property atRs. 34.67 crore when the borrower company filed S.A. in August 2009. The appellant would allege that sale notice was duly received by respondent No. 1 and its director, but none of them came forward to pay the dues or to redeem the property. The Bank has maintained that it was fully entitled to proceed with sale when the respondent/borrower company failed to get any interim relief. The Tribunal below, however, on 17.9.2009, had restored the possession of the residential property of the respondent on payment ofRs. 1 crore. This payment was never made by the respondent borrower. The property was put to auction sale by fixing the reserve price atRs. 34.67 crore. The Bank claims that it did not get a buyer at the reserve price ofRs.34.67 crore.

18. The appellant would urge that when the Bank did not get any buyer at the reserve price ofRs. 34.67 crore fixed in July 2009, the assets were got revalued and was assessed atRs. 2601.44 lac as realizable value andRs. 2210.60 lac as distress value. As per the appellant, this valuation was never challenged. Fresh sale notice was accordingly issued on 1.1.2010. Notices were also sent to respondent No 1 calling upon it to depositRs.26 crore to redeem the property. As per the Bank, it could not find any buyer at this value as well. Soon thereafter, on 23.2.2010, the Bank got a fresh valuation of the property done from the authorised valuer The property was now valued atRs.1951.17 lac on revaluation The Bank issued afresh sale notice on 15.3.2010 By this time, the outstanding debt had accumulated toRs. 34.50 crore

19. When this auction fixed on 15.7.2010 failed, the Bank states to have issued a notice to respondent No. 1 and its director intimating that the Bank had decided to assign the entire debt in favour of IASR. Still, the borrower took no action to redeem the property. The Bank had then entered into an assignment agreement with IASR on 4.10.2010 for assignment of this debt for a consideration ofRs.20 crore. A correction deed statedly was executed on 3.11.2010. A separate assignment deed in respect of collateral security (the house) was subsequently signed on 15.12.2010. On 19.10.2010, IASR sold the factory land, plant and machinery forRs. 20.31 crore to the appellant M/s. Supreme Alloys Ltd. The appellant IASR would plead that it was fully empowered to deal with the property on assignment in its favour. Certificate of sale was issued on 19.10.2010. In this manner, both the appellants have tried to justify their action being legal which, as per them, would not reveal any violation of any of the provisions of law.

20. One of the issues considered by the Tribunal below and on which there was considerable debate is in regard to the manner of challenge raised by the borrower to the sale of the property. The appellants have contested the manner in which the borrower company has impugned this sale by moving an application Plea by the appellant before the Tribunal below and before this Tribunal is that the appellant ought to have challenged the sale either by amending the S.A. or by filing separate S.A. Whether the borrower was required to file a fresh S.A to challenge the subsequent sale conducted during the pendency of its earlier S.A. which was filed to challenge the possession notice and notice of sale thus would be question requiring consideration. The Tribunal below has struck this as one of the issues in the case and has rejected the challenge made on this count.

21. The case set up by the respondent/borrower company on this issue is that when the initial sale of the mortgaged property pursuant to notice dated 25.7.2009 had failed, the property was sold by the assignee company on 19.10.2010. The respondent company had then filed an application challenging the sale dated 19.10.2010 by private treaty in July 2011 to which the Bank as well as the assignee company and the auction purchaser had filed their objection to challenge the maintainability of the said application. The objection by the assignee company was that the borrower company was required to file a separate securitization application (S.A.) after paying requisite Court fee.

22. The response by the respondent company was that it had already filed an S.A. challenging the action of the Bank and the sale conducted on 19.10.2010 was challenged by way of interim application for which cause of action was continuing and thus the respondent was not required to file or challenge each failed sale by filing a separate S.A. on each occasion when such auctions failed. The respondent company has relied on the judgment in the case ofIndian Overseas Bank v. Ashok Saw Mills, III (2009) BC 640 (SC) : VI (2009) SLT 10 : 2009(8) SCC 366, where the Court has observed that the Tribunal below has jurisdiction to interfere with the action taken by the secured creditor even after the stage contemplated under Section 13(4) of the Sarfaesi Act and the Tribunal can not only set aside the action but can even restore status quo ante The Tribunal below has held that there was no need for the borrower to file separate S.A. by paying Court fee which would unnecessarily multiply litigation. While taking this view, the Tribunal below has observed that as per the law laid down m Ashok Saw Mills case (supra), the borrower is given liberty to approach the Tribunal for every sale successful or unsuccessful. It is noticed that the borrower in this case had approached the Tribunal against the first auction fixed on 25.7.2009, which had remained unsuccessful. Thereafter, there were two unsuccessful moves to auction the property, leading to a final sale by way of private treaty on 19.10.2010. This, as per the Tribunal below, gave fresh cause to the borrower to challenge the same by pointing out irregularities, if any, in the sale. Even after recording these observations, the Tribunal below has gone on to hold that once the party has approached the Tribunal against the first cause of action, it need not file separate petition for subsequent cause which is continuing cause. It is held that the party can approach the Tribunal against subsequent sale by amending the S.A. or by filing application as litigation is pending between the same parties.

23. Even as per the observation made by the Tribunal below, sale by private treaty conducted on 19.10.2010 gave a fresh cause of action. If that be so, more appropriate course to challenge such sale, which is a fresh cause, would be to file fresh S.A. or to seek permission to amend the S.A. already filed. The ground of challenge and the irregularities, if any, are required to be pleaded to which the auction purchaser as well as the Bank has a right to file response. The person in whose favour this sale is held obviously would not be a party to the S.A. filed prior to such sale. If the purchaser is not made a party, it may reveal violation of principles of natural justice. More appropriate course, therefore, for the borrower would he to either amend the S.A. or file a fresh S.A. to challenge the same. Challenging the said sale by filing an application may not appear to be an appropriate course to which the Tribunal below has accorded its acceptance by treating it to be a continuing cause. This aspect, however, may not be of much material in the present case because of the ground of challenge raised by the borrower company to this sale, alleging fraud and collusion between the Bank and the purchaser. These allegations are made by pointing out various circumstances and the manner in which the property was sold by way of private treaty.

24. Would it be fair to ignore serious lurking doubts in the manner and conduct of this sale on this hyper-technical ground that the borrower has not made the challenge in a proper manner in strict terms of procedural law? Procedure is a handmade of justice and cannot be allowed to outweigh the serious illegalities and irregularities in the conduct of this sale. These cannot be ignored and would call for being examined to see if such a sale can be sustained. The want of procedural need can get a clear answer from the provisions of Section 22 of the RDDBFI Act which would certainly come into play. This section would liberate the Tribunal from following the strict procedural provisions of the CPC. The relevant guide is the principle of natural justice and the provisions of the Act and the Rules. Thus, the plea of illegalities and procedural irregularities pointed out on behalf of respondent company cannot be ignored or glossed over on such a technical objection. Ignoring this plea, therefore, I would proceed to deal with the submissions made by the Counsel for the parties on these aspects of sale.

25. The main ground of attack by the Counsel for the appellant has been in regard to the finding returned by the Tribunal below so far as violation of the provision of rule laying down requirement of serving 30 days notice before the property is sold. The Tribunal below, after taking note of Rules 8(1), 8(6) and Rule 8(7) of the Rules has held that it would be mandatory for the authorised officer to give 30 days clear notice to the borrower and such sale notice is also required to be affixed at a conspicuous part of the immovable property. Rule 8 of the Rules reads as under:

"8.Sale of immovable secured assets

(1) Where the secured asset is an immovable property, the Authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix-IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.

(2) The possession notice as referred to in Sub-rule (1) shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer.

(3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as an owner of ordinary prudence would, under the similar circumstances, take of such property.

(4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of.

(5) Before effecting safe of the immovable property referred to in Sub-rule (1) of Rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods-

(a) by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets: or

(b) by inviting tenders from the public,

(c) by holding public auction, or

(d) by private treaty.

(6) the authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under Sub-rule (5).

Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers; one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include-

(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor,

(b) the secured debt for recovery of which the property is to be sold,

(c) reserve price, below which the property may not be sold,

(d) time and place of public auction or the time after which sale by any other mode shall be completed,

(e) depositing earnest money as may be stipulated by the secured creditor,

(f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property.

(7) Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorised officer deems it fit, put on the web-site of the secured creditor on the Internet."

26. Rule 8(6) of the Rules clearly provides that the authorised officer shall serve to the borrower a notice of 30 days for sale of immovable secured assets. Sub-rule (5) of Rule 8 provides that before effecting sale of immovable property referred to in Sub-rule (1) of Rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the by different methods as noted above. Rule 8 (7) of the Rules then talks of affixing every sale notice on a conspicuous part of the immovable property and if the authorised officer deems it fit, putting on the website of the secured creditor on the Internet.

27. Rule 9(1) of the Rules stipulates that no sale of immovable property under these rules shall take place before the expiry of 30 days from the date on which public notice of sale is published in newspapers as referred to in the in the proviso to Sub-rule (6) or notice of sale has been served to the borrower.

28. Sub-rule (6) of the Rule (8) is with the proviso which lays down that if the sale of the secured asset is being effected by either inviting tenders or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale which shall include details given in proviso. This rule reads thus:

"(6) the authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under Sub-rule (5):

Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two loading newspapers, one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include-

(a) the description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor,

(b) the secured debt for recovery of which the property is to be sold,

(c) reserve price, below which the properly may not be sold,

(d) time and place of public auction or the time after which sale by any other mode shall be completed,

(e) depositing earnest money as may be stipulated by the secured creditor,

(f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property.

29. Since the Bank had got the property valued and put the same by way of public auction, the provisions of these rules were required to be meticulously followed, The perusal of the rules would further show that the authorised officer will have to serve a notice giving 30 days to the borrower for sale of immovable property and in case of conducting sale by way of inviting tender or by holding public auction the sale notice is required to be published in the newspaper as well. The submission made by the Counsel for the appellant that 30 days notice had been given while holding the sale by way of public auction and urging that this was not needed when the subsequent sale was conducted cannot be accepted in view of the position of law laid now cleared by the Hon'ble Supreme Court inMathew Varghese v. M. Amritha Kumar & Ors., III (2014) BC 657 : VII (2014) SLT 17 : 2014 (2) SCALE 331. The Hon'ble Supreme Court in this case has held as under:

"49. We, therefore, hold that unless and until a clear 30 days notice is given to the borrower, no sale or transfer can be resorted to by a Secured Creditor. In the event of any such sale properly notified after giving 30 days clear notice to the borrower did not take place as scheduled for reasons which cannot be solely attributable to the borrower, the Secured Creditor cannot effect the sale or transfer of the SECURED ASSET on any subsequent date by relying upon the notification issued earlier. In other words, once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice issued earlier would lapse. In that (expect, the only other provision to be noted is Sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender con be on such terms is may be settled between the parties in writing. As far as Sub-rule (8) is concerned, the parties referred to can only relate to the Secured Creditor and the bur rower. It is therefore, imperative that for the sale to be effected under Section 13(8), the procedure prescribed under Rule 8 read along with 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read with Section 29 and Rule 15. In our considered view any other construction will be doing violence to the provisions of the Sarfaesi Act, in particular Section 13(1) and (8) of the said Act."

Reference here may be made to the observation of the Court in regard to Rules 8 and 9 of the Rules, which is:

"28. Once the said legal position is ascertained, the statutory prescription contained in Rules 8 and 9 have also got to be examined as the said rules prescribe as to the procedure to be followed by a Secured Creditor while resorting to a sale after the issuance of the proceedings under Section 13(1) to (4) of the Sarfaesi Act. Under Rule 9(1), it is prescribed that no sale of an immovable property under the rules should take place before the expiry of 30 days from the date on which the public notice of sale is published in the newspapers as referred to in the proviso to Sub-rule (6) of Rule 8 or notice of sale has been served to the borrower Sub-rule (6) of Rule 8 again stales that the authorised officer should serve to the borrower a notice of 30 days for the sale of the immovable Secured Assets. Reading Sub-rule (6) of Rule 8 and Sub-rule (1) of Rule 9 together, the service of individual notice to the borrower, specifying clear 30 days' time-gap for effecting any sale of immovable Secured Asset is a statutory mandate. It is also stipulated that no sale should be affected before the expiry of 30 days from the date on which the public notice of sale published in the newspapers. Therefore, the requirement under Rule 8(6) and Rule 9(1) contemplates a clear 30 days individual notice to the borrower and also a public notice by way of publication in the newspapers. In other words, while the publication in newspaper should provide for 30 days clear notice, since Rule 9(1) also states that such notice of sale is to be in accordance with proviso to Sub-rule (1) of Rule 8,30 days clear notice to the borrower should also be ensured as stipulated under Rule 8(6) as well. Therefore, the use of the expression 'or' in Rule 9(1) should be read as 'and' as that alone would be in consonance with Section 13(8) of the Sarfaesi Act."

30. What would thus emerge from the above finding is that 30 days clear notice is a mandatory requirement and it is required to be followed in case of a fresh sale as the notice earlier issued would lapse. This being the legal position, it may have now to be seen whether the sale conducted by the assignee company soon after assignment of the assets on 1.10.2010 would satisfy the mandatory requirement of the rules or not.

31. The agreement of assignment was made on 4.10.2010. Even two supplementary deeds were executed one on 3.11.2010 and another on 15.12.2010. The assignee company, however, sold this asset by private treaty on 19.10.2010 within 15 days of the assignment in its favour. The plea by the appellant that this sale would not be in violation of the mandatory provisions of the rules, as the assignee company had stepped into the shoes of the Bank and had continued with the action in progress, cannot be accepted. The notice, if any, by the Bank for sale was by way of public auction. The last notice for sale by public auction was issued by the Bank on 15.3.2010 calling for tenders by 19.4.2010. This sale also failed. The Bank states to have issued notice to respondent No. 1 and its Directors, their legal heirs by Registered Post on 15.7.2010, informing them that since the sale process had failed, the Bank had decided to assign the debt to IASR and that the borrower could redeem the property, the Bank had then entered into agreement with IASR for assignment of debt for a consideration ofRs. 20 crores. One correction deed was executed on 3.11.2010 and a separate assignment deed in regard to collateral securities situated at DLF, Gurgaon was signed on 15.12.2010. IASR sold this property by way of private treaty on 19.10.2010 to appellant M/s. Supreme Alloys Ltd. Thus, sale has been conducted by the assignee company in this manner by way of private treaty.

32. For conducting sale by way of private treaty, the provisions of Rule 8(8) of the Rules would also come into play. This rule clearly provides that the sale by any method other than public auction or public tender, shall be on such terms as may be settled between the parties in writing. Nothing is pointed out before me if any such terms were settled between the parties while conducting sale in favour of the appellant M/s. Supreme Alloys Ltd. by way of private treaty, Hon'ble Supreme Court has in the case of Mathew Varghese (supra) has clearly held that parties concerned referred in Sub-rule (8) of Rule 8 can only relate to the secured creditor and the borrower. That being the legal position on the basis of law laid down by the Supreme Court, the appellants to justify this sale are required to show that IASR had settled the terms with the respondent borrower. The sale has to be on terms settled, that too in writing, while conducting sale of property other than public auction or public tender. There is nothing on record to show compliance of Rule 8(8) of the rules. The Tribunal below has rightly held that the requirement of serving 30 days notice is a mandate of statute which is mandatorily required to be followed and the violation thereof would render the sale bad in law. Thus, sale would be bad on account of violation of Rule 8(8) of the rules as well. If there is any doubt in this regard, the same is fully settled by the Hon'ble Supreme Court in the case of Mathew Varghese (supra). The Supreme Court has not only held this to be mandatory requirement but has further held that each fresh sale would require a fresh notice giving a period of 30 days for putting the property to sale.

33. The conduct of the assignee company and that of the auction purchaser contains too many uncomfortable details which cannot be ignored and which would give rise to apprehension in the mind of any fair-minded person or authority to entertain doubt for the sale to be bona fide and free from collusion. The assignee company not only violated the mandate of the statute by selling this property within 15 days of the agreement/assignment but has sold the property at a far less value than it was evaluated by the Bank through approved evaluators. The Counsel for the borrower company has pointed out to the documents on record where the market value of the land and structure at the time of granting the facilities was assessed atrs. 35,70,68,000/-. The Counsel would point out to the fact that the property was measuring 43241.00 sq. yds. having a covered area of 30,100.00 sq. ft. The market value of the residential property was assessed atRs. 6,03,43,250/-. The value of the plant and machinery was in addition to this, which was separately assessed atL15 crore. At the time of auction, the Bank had got the property valued atRs. 34.67 crore. The Counsel would raise question in regard to the action of the Bank in getting the property evaluated reducing the same toRs. 26 crore This drop in the value of the properly by 25% within a few months is advocated as unreasonable. The drastic reduction in the value by 25% certainly is such which cannot be termed as reasonable. If this was not enough to raise doubt, then what followed would certainly lead to cement the doubts arising in the case. When the second auction failed in January 2010, the property statedly lost its value by 25% more within just one month as it was got revalued atRs.19.50 crore within two months. Between July 2009 and March 2010. i.e., within a period of 8 months, the value of the property got reduced by 50%. A question may arise if this loss was real or was made up one to help out someone. One may expect that when an auction fails, the Bank would be justified in attempting sale at some reduced value but generally such reduction cannot be to the extent of one-fourth of the value in one go. Not only that, within a gap of just two months the value of the property is reduced to one half. It is too steep a fall to accept it to be a real and authentic too. If this was not enough to make it look doubtful, the Bank assigns the assets and loan to a reconstruction company which at super speed offers it on platter to the appellant M/s. Supreme Alloys Ltd. while violating all the legal provisions held to be mandatory. Agreement of assignment is done on 4.10.2010 and property is sold by private treaty on 19.10.2010 just within 15 days when even the assignment deed is corrected on 3.11.2010. These facts and acts are too uncomfortable to leave an easy feeling for being accepted as genuine act of sale in a fair, just and reasonable manner. While drastically reducing the value of the property in this manner, the assignee company had handed over this property to the auction purchaser, that too, by violating the mandate of statute. This would appear to be suspicious to leave any feeling of comfort. The property has been sold at the half price of the value which was assessed by the valuer of Bank.

34. The matter does not end even here. There is yet another fact which may render this sale to be indicative of intrigue. One of the directors of the purchaser company was witness to the assignment deed. The allegations of connivance are thus made by the respondent. These, in my view, fly thick and hard and cannot be taken lightly as is the plea made by the appellant. One could still have ignored all these infirmities if the sale at the reduced value would have been by way of public auction or by inviting tender. A serious doubt would arise regarding this sale conducted by way of private treaty without following the mandate of statute where even the terms were not settled or induced into writing as required by law. The infirmities and telltale signs seem to be an unending process A property which is sold at this reduced price was soon got valuated by the appellant purchaser company atRs. 55 crore for obtaining loan from Punjab National Bank against the same property How would the Bank or the assignee company or for that matter the purchaser justify the value of the property atRs. 1950 crore and the sale thereby atRs. 20 odd crores. There are too many telltale signs which would go to raise serious doubts about the sale to be bona fide. It is too unsafe to sustain this sale done in the manner with so much of glaring and staring circumstances peeping out making this sale totally uncomfortable to sustain.

35. The Counsel for the appellants in both the appeals have tried hard to justify the sale but, in my view, they could not succeed in removing the doubts arising from the manner and method of sale. The Counsel for the respondent borrower, on the other hand, has strongly urged that this sale was fraudulent and would seek setting aside of the same on this ground alone The Counsel pleads that fraud, if any, would in itself be enough to vitiate the sale and would need to be corrected de hors any technicalities. This, says the Counsel, is also essential to ensure unpolluted delivery of justice.

36. Undoubtedly, any judgment which is based on fraud has to be treated as nullity. Chief Justice Edward Coke has proclaimed that "fraud avoids all judicial acts ecclesiastical or temporal fraud is an extrinsic, collateral act which vitiates the most solemn proceedings of Courts of justice". The Counsel for the respondent would make reference to the caseS.P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by LRs. & Ors., II (1994) BC 546 (SC) : (1994) 1 SCC 1, where Court has held that judgment or a decree obtained by playing fraud on the Court is a nullity and non est in the eyes of law. The Court in this case has also observed that:

"property-grabbers, tax-evaders, Bank loan-dodgers and other unscrupulous persons from all walks of life find the Court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, whose case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of litigation."

37. The Counsel has then made reference to the case ofNani Gopal Paul v. T. Prasad Singh & Ors., 1995 (SLT Soft) 501 : AIR 1995 SC 1971, where the Hon'ble Supreme Court, while taking suo motu judicial notice of the illegalities pointed out by the Division Bench in its order, as was committed by the Single Judge of the High Court, has viewed that the circumstances would be sufficient to vitiate the validity of sale conducted by the Court Receiver, which was approved by the Single Judge, Auction sale of hypothecated property in this case was conducted by the Receiver. The Division Bench, while dealing with the case, had deprecated the way Single Judge had taken up the matter on various dates subsequent to the passing of the decree relating to the sale of the property in favour of intending purchaser when there were other offers in the field of higher denomination and magnitude. It is observed that if there were other offers in the field, the Court would have been vigilant enough to scrutinise such an offer whatever they were worth. When this order of the Division Bench was challenged by way of SLP before the Supreme Court, it has made the above noted observation to hold that the illegalities were sufficient to vitiate the validity of sale conducted by the Court Receiver. The Court accordingly set aside the sale and confirmation of the same and remanded the case to the High Court to proceed to conduct the sale in accordance with law by open auction after duo publication of the sale so that all the intending bidder would have opportunity to participate in the sale. The Counsel for the appellant would rely upon the ratio of law emerging from this case to plead that the present Tribunal in the appeal can suo motu take note of the infirmities and illegalities in the conduct of sale by way of private treaty and such a sale could be set aside even if there is want of proper challenge to the said sale. As per the Counsel, this would be necessary to ensure the flow of unpolluted justice and to check the mischievous manner in which the sale of the property has been allowed in favour of the auction purchaser by way of private treaty.

38. The Counsel has then relied upon the case ofBajaranglal Shivchandrai Ruia v. Shashikant N. Ruia & Ors., II (2004) CLT 160 (SC) : III (2004) SLT 434 : (2004) 3 SCR 373, in regard to the scope of the appellate Court in terms of Order41, Rule33. On the basis of law laid down inK. Muthuswami Gounder v. N. Palaniappa Gounder, VII (1998) SLT 258 : IV (1998) CLT 117 (SC) : (1998) 7 SCC 327, the Court has observed that Order41, Rule33enables the appellate Court to pass any decree or order which ought to have been made and to make such further order or decree as the case may be in favour of all or any of the parties even though the appeal is as to part only of the decree and such party or parties may not have filed an appeal. It is observed that even bare reading of Order41, Rule33is sufficient to convince anyone that wide wording was intended to empower the appellate Court to make whatever order it thinks fit, not only as between the appellant and the respondent but also as between a respondent and a respondent. See inPannalal v. State of Bombay & Ors., 1963 (SLT Soft) 116 : (1964) 1 SCR 980. The Counsel would accordingly contend that this Court which has even wider power than those provided in the CPC would always have power to make whatever order it thinks fit as per the need of the case.

39. Reference is made to the judgment of the Delhi High Court in the case ofMr. A.K. Jain v. Canara Bank & Ors., WP(C) No. 6575/2006, decided on 14.9.2007. where the Division Bench has declined to interfere with the order passed by the Appellate Tribunal cancelling the auction and directing the Recovery Officer to put the property for sale, as exercise of discretionary jurisdiction under Article 226 of the Constitution of India was not in public interest. The Counsel would accordingly plead the public interest aspect before this Tribunal to sustain the order passed by the Tribunal below as was done by the High Court in the case relied upon by the Counsel.

40. To plead that absence of specific pleading is a mere irregularity which results in no prejudice, the Counsel has sought support from the case ofNagubai Ammal & Ors. v. B. Shama Rao & Ors., 1956 (SLT Soft) 17 : AIR 1956 SC 593. The Court in this case has observed that there is a fundamental distinction between a proceeding which is collusive and one which is fraudulent. Collusion in the judicial proceeding is a secret arrangement between two person that the one should institute a suit against the other in order to obtain the decision of a judicial Tribunal for some sinister purpose. In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties. When a proceeding is alleged to be fraudulent, what is meant is that the claim made therein untrue, but that the claimant has managed to obtain the verdict of the Court in his favour and against his opponent by practising fraud on the Court, In this case, although no specific plea against sale in favour of the respondent was raised in the pleading by plaintiff, no specific issue was directed to that question. The defendants went to trial with full knowledge that the question of lis pendens was in issue, had ample opportunity to adduce their evidence thereon which they availed. Under these circumstances, the absence of specific pleading was found a mere irregularity The Counsel would accordingly plead that there being a challenge made to the sale by way of private treaty without putting the appellant to notice though not raising a specific challenge by amending S.A. or by filing fresh S.A. would be a mere irregularity.

41. There would not be much need to go into the allegations of fraud once this Tribunal has decided to go into the validity of sale otherwise conducted in this case being in violation of the statutory and mandatory provisions contained in the rules. As already noticed, there are large number of very uncomfortable circumstances staring directly at the appellants in this case to vitiate the sale not only on account of violation of rules but also on account of these circumstances which the appellants are unable to explain or justify.

42. The Tribunal below while allowing the S.A. has directed the appellant to issue a fresh sale notice after taking proper valuation of plant and machinery and to put the property to auction in accordance with the provisions of the Act. Two months' time was allowed to complete this action. As noticed, the Tribunal below has directed status quo to continue as was granted by this Tribunal in respect of residential property of the borrower bearing No. C-1/9, Sukhchain Marg, DLF, Phase-1, Gurgaon, Haryana. The Counsel for the appellant assignee company has made a grievance against this part of the order whereby the Tribunal while disposing of the SA No. 228/2009 has passed an order in respect of residential property which was not a subject matter of challenge made in this S.A. The perusal of the notice issued under Section 13(2) of the Act which was made subject matter of challenge in the S.A. No 228/2009 would show that the Bank had made mention to all the properties including the residential property. The possession notice issued on 11.7.2009 made a mention to the factory premises situated at Plot No. 575-576, Village Bisnoli, Dujana Road, Dadri, Distt. Gautam Budh Nagar, Noida (U.P.) and did not contain any reference lo the residential property. The sale notice was also in regard to factory building and land along with plant and machinery lying in this plot and not in regard to the residential property. Since the respondent company had challenged the possession notice and had subsequently raised a challenge to the sale notice in respect of this property, the issue of residential property accordingly was not found raised in the S.A.

43. However, the LRs of Mr. Ombir Singh had filed an application in the S.A. for their discharge from guarantee obligations and release of their residential property No. C9/1, Sukhchain Marg, DLF city, Phase-1, Gurgaon. The grievance made in this application was that the assets of the company had been given to M/s. Supreme Alloys Ltd. without information to the applicants. They accordingly sought their discharge from the guarantee obligation. The prayer in this application, accordingly, was to direct the Bank and M/s. Supreme Alloys Ltd. to file details of transfer of assets and valuation of the company's property disposed/transferred and to discharge the applicants of their obligation to the Bank in its entirety. The applicants also sought release of their residential property referred to above. Alternative prayer was to cancel transfer of company's property to M/s. Supreme Alloys Ltd. and permit the applicants to bring a buyer for the said property at market price within a reasonable time. It is also noticed that the respondent company had filed another S.A. (No. 318/2009). The Tribunal, on 1.11.2012, passed an order in both the S. As and also dealt with the applications filed by the assignee company and the Bank to permit them to take possession of the immovable property' bearing No. C1/9, Sukhchain Marg, DLF, Phase-1, Gurgaon. The Tribunal, on 17.9.2009, had directed the respondent company to depositRs. 1 crore while granting interim order restraining Bank from taking possession of the residential property. The Bank had even alleged that Mr. Saurabh Sharma, Director of the respondent company had produced an invalid FDR dated 2.8 9.2007 for a sum ofRs. 1 crore. As per the Bank, the said FDR was valid only for one month and thus could not be encashed. The Bank had even prayed for initiating proceedings for forgery against Mr. Saurabh Sharma. It was also pointed out that the proceeds of this FDR had been credited to the account of the respondent company. The Counsel for the respondent company had raised objection in regard to the assignment in favour of the assignee company.

44. After taking notice of the above facts that the Tribunal had ordered restoration of possession of residential property in question on deposit of security money ofRs. 1 crore and also the direction vide which the borrower was required to depositRs. 1.5 crore which had not been complied with the Tribunal below allowed the application for substitution and vacated the interim order due to non-deposit of the amount as directed. On this basis, the Counsel for the appellant would contend that there was no issue so far as the residential property is concerned in the S.A. 228/2009.

45. In an appeal filed against the order passed by the Tribunal below, the Counsel for the assignee company had undertaken not to proceed qua the secured assets and accordingly the appeal was disposed of. Thus, it is urged that the issue of residential property could not have been considered and decided by the Tribunal below and accordingly the Counsel has impugned the direction given in Para 64 of the impugned order in regard to this property being beyond the scope of adjudication of this S.A.

46. I see substance in this submission made by the Counsel for the appellant. It would clearly emerge that the assignee company had given an undertaking not to proceed against the residential property which was in any case not an issue and this issue arose only due to the application which the LRs of late Mr. Ombir Singh filed for their discharge and release of the said property. The Tribunal below, therefore, was not justified in passing direction so far as the residential property is concerned. This part of the direction contained in the impugned order would deserve to be set aside. If any fresh action is taken against the said residential property by the appellant assignee company, the respondent company would be at liberty to raise any challenge in accordance with law.

47. Otherwise, no interference in the impugned order passed by the Tribunal allowing the S.A. is called for. Needless to mention that if the appellant decides to initiate action to hold fresh auction of the property in accordance with law, the respondent company would be at liberty and entitled to raise all the objections available to it under law. Since the order setting aside the sale in favour of the appellant M/s. Supreme Alloys Ltd. has been upheld, there would not be much need to go into the alleged violations raised by the respondent company in regard to the assignment, valuation of the property, etc., as now the appellant assignee company would have to initiate fresh process which, of course, shall remain open to challenge by the respondent company in accordance with law.

48. The present appeals are dismissed subject to the finding recorded in regard to the residential property.

Appeals dismissed.