OFFICIAL LIQUIDATOR SPARK PLUGS Vs. BANK OF INDIA

JUDGEMENT

(1.) THE applicant -company M/s. Spark Plugs (I.) Ltd. through the official liquidator filed the present application for quashing the order dated October 7, 2005, passed by the Recovery Officer, DRT -1, Delhi. The applicant -company was ordered to be wound up by this Court vide order dated August 6, 2004, on the recommendation of the BIFR. The official liquidator took possession of the land, building, plant and machinery, etc., situated at Matsaya Industrial Area, village Guleta, District Alwar. The Debts Recovery Tribunal -1 allowed the recovery application filed by the Bank of India. The Recovery Officer issued order on February 10, 2005, restraining the applicant -bank from transferring or charging the properties of company in liquidation. The Recovery Officer also issued notice under rule 83 of the Second Schedule of the Income -tax Act read with Sections 25 -28 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short '1993 Act'). Thereafter, vide notice dated March 28, 2005, the Recovery Officer informed that May 17, 2005, has been fixed for drawing up the proclamation of sale and settling the terms thereof. The official liquidator submitted reply to the notice. The Recovery officer allowed the request of the Bank of India vide its order dated October 7, 2005, for putting the property on public auction and rejecting the written objections filed by the official liquidator. The order of the Recovery Officer is based on the judgment delivered by the apex court in Allahabad Bank v. Canara Bank [2000] 101 Comp Cas 64 : [2004] 4 SCC 406. The Recovery Officer fixed the reserve price of Rs. 2.10 crores and earnest money of Rs. 25 lakhs. The official liquidator was allowed 15 days time to bring offer for the property more than the above reserve price with 10 per cent, deposit of affront money. The Recovery Officer observed in the order that the sale proceeds shall be distributed amongst the respondent -bank and other defendants Nos. 4 to 8 who were the secured creditors on pari passu basis.

(2.) ON February 20, 2006, M/s. Pravesh Builders Pvt. Ltd. filed application for modification dated February 8, 2006, passed by this Court in the above application. On May 12, 2006, the application for impleadment of M/s. Pravesh Builders Pvt. Ltd. was allowed. M/s. Pravesh Builders Pvt. Ltd. submitted in the application that the respondent -bank published a notice for auction of property of M/s. Spark Plug India in the newspaper Rajas -than Patrika dated December 4, 2006. It was also submitted in the application that M/s. Anupam Securities Pvt. Ltd. filed an objection against the order dated October 7, 2005, for restraining the auction of the property on the ground that a part of the said property has been already purchased by the company, i.e., M/s. Anupam Securities Pvt. Ltd. on December 20, 2003, in a public auction conducted by Jaipur Vidyut Vitaran Nigam Ltd. The Recovery Officer postponed the auction and vide order dated January 30, 2006, passed order for the auction of the property of M/s. Spark Plug India Ltd., and fixed the date for auction on February 3, 2006. M/s. Parvesh Builders contacted the court auctioner and applied for necessary and relevant forms. M/s. Pravesh Builders was found eligible and was allowed to participate in the said auction. They have also furnished EMD by draft dated February 2, 2006, for Rs. 25,00,000 (twenty -five lakhs). M/s. Pravesh Builders made a highest bid of Rs. 3.45 crores. Their offer was accepted by the court auctioner and under the direction of the Recovery Officer they have made payment of 25 per cent. of the bid amount through various drafts. In this manner M/s. Parvesh Builders paid a total amount of Rs. 86,25,000 (rupees eighty -six lakhs and twenty -five thousand only) with respect to the above auction of property of Ms/. Spark Plug India. M/s. Pravesh Builders submitted that counsel of the official liquidator before the Recovery Officer on February 15, 2006, filed copy of the order of this Court dated February 8, 2006, that the status quo with respect to the property of M/s. Spark Plug India be maintained for the aforesaid property. M/s. Pravesh Builders submitted that the official liquidator was directed by the Recovery Officer on January 30, 2006, to provide all necessary assistance to the court auctioner for conducting the auction. M/s. Pravesh Builders submitted that the circumstances clearly show that the order passed by this Court directing status quo directly affected the applicant as they have paid an amount of Rs. 86,25,000 for the property of M/s. Spark Plug India Ltd.

(3.) FOLLOWING points emerge from the arguments raised by the parties: