CANARA BANK Vs. KAKATI KARSHAK INDUSTRIES PVT. LTD.

JUDGEMENT

(1.) This Application was filed by the applicant Canara Bank (hereinafter referred to as 'the bank secured creditor') of M/s Lakshman Paper Mills Private Limited (hereinafter referred to as 'the company in liquidation') seeking confirmation of the sale of the property i.e. land and building, plant and machinery and other fixed assets, current assets in Survey No. 152/1, 153 and 152/2 situated at Z. Medapau, Mandapet Mandal, East Godavari District to the highest bidder M/s Lakshmi Engineering Enterprises.

(2.) The undisputed facts for the purpose of disposal of the Application, in brief, are that:

(3.) The 2nd respondent company under liquidation was registered under the provisions of the Companies Act, 1956 and the same was directed to be wound up at the instance of the creditor in Company Petition No. 187 of 2012 vide orders of this Court dated 21.02.2013. The applicant bank had sanctioned term loan, on two occasions, of Rs.315 lacs and Rs.512 lacs in January 2009 and the company in liquidation had offered its plant and machinery along with land as collateral security and mortgaged the immovable properties in favour of the applicant bank apart from providing other securities and properties of the company and the promoters of the company in liquidation had also offered their private properties as security by creating equitable mortgage thereon. Subsequently, the company in liquidation became a sick unit and their operations finally, came to a stand still. The account of the company in liquidation therefore, became a non-performing asset (NPA) and thus, proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) came to be initiated on 29.12.2013 and possession of the immovable properties was taken over on 05.02.2013, after following the necessary procedure prescribed therefor. In Company Application No. 820 of 2014, the applicant bank sought leave of the High Court under Rule 9 of the Companies (Court) Rules, 1959 to remain outside the winding up proceedings and to exercise the rights conferred on the securities of the properties as a secured creditor of the company in liquidation. The said Application came to be allowed on 11.08.2014 and the applicant bank was permitted to sell the properties in association with the Official Liquidator. The efforts made by the applicant between 2014 and 2018 were not successful and finally, pursuant to the auction notice issued on 23.10.2018, the 3rd respondent engaged in similar kind of business of the company in liquidation became the successful bidder by quoting Rs.7.01 crores as against the reserved price of Rs. 7 crores. The applicant had issued the sale confirmation letter on 26.11.2018 and the successful bidder - the 3rd respondent had deposited 25% of the bid amount on the even date and thereafter, the balance amount was also paid on 11.12.2018, thus, complying with the auction conditions in all respects. Inasmuch as the auction was conducted, the properties are required to be delivered to the successful bidder / auction purchaser and necessary documentation is required to be carried out to enable the latter to take possession of the property. Hence, the present Application was filed to permit the applicant to receive the balance sale consideration, appropriate the same and thereafter, register the sale certificate in favour of the highest bidder i.e. the 3rd respondent.