Dismissed

Utter Pradesh State Industrial Development Authority (Upsida) v. Asset Reconstruction Company India Limited

DRAT6 Dec 2023REGULAR APPEAL/72/2023

Case brief

AI extract

What is this about?

The Debt Recovery Appellate Tribunal held that the successful auction purchaser cannot be asked to wait for the sale certificate issuance as the sale was subject to the Tribunal's ultimate decision. It refused to grant interim orders stalling the certificate, directing the Appellant to pursue its claim before the Recovery Officer while allowing time for replies.

What did the court decide?

High Court; No interim order was passed stalling the issuance of the sale certificate.

Utter Pradesh State Industrial Development Authority… — Company and Corporate | DRAT (2023)

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BEFORE THE DEBTS RECOVERY APPELLATE TRIBUNAL, AT: MUMBAI Present: Mr Justice Ashok Menon, Chairperson Appeal No. 72/2023

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Between

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Uttar Pradesh State Industrial Development Authority … Appellant/s V/s.

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Asset Reconstruction Company (India) Ltd. & Ors. …Respondent/s

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Mr Rohit Gupta along with Mr Vivek Phadke and Mr Tejas Girap, Advocate for Appellant.

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Mr Tushad Cooper, Senior Counsel along with Mr Bhalchandra Palav & Mr Aniket Dighe, i/b M/s Bhal & Co., Advocate for Respondents Nos. 1 & 2.

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Mr Barsha Parulekar, Advocate for Respondent No.3 Official Liquidator.

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Mr Rishabh Shah along with Mr Vivek Patil & Mr Sandesh Shukla, i/b M/s Vivek Patil & Associates., Advocate for Respondent No.4.

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-: Order dated: 06/12/2023:-

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The Uttar Pradesh State Development Industrial Authority (UPSDIA), the 6^th Respondent in Appeal (D) No. 2208 of 2023 on the files of the Debts Recovery Tribunal-II, Mumbai (D.R.T.) is the Appellant impugning the order dated 24.11.2023 setting aside the order of the Recovery Officer (R.O.) dated 19.10.2023 in Recovery Proceedings No. 2 of 2023 in Original Application (O.A.) No. 162 of 2002.

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The Appellant therein is the successful auction purchaser of the secured property in the auction held on 28.08.2023. Aggrieved by the order of the R.O. insofar as directions were given to the other interested auction purchasers to deposit 10% of the amount for considering their bids made subsequently, the auction purchaser filed an appeal under Sec. 30 of the

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Recovery of the Debts and Bankruptcy Act, 1993(‘RDB Act’, for short) challenging the order of the R.O. which would result in delay confirming the sale. The Appellant contended that it was the successful bidder and had deposited the entire sale consideration of ₹359.05 crores and the poundage fee of ₹3,59,06,000/- as early as 30.09.2023. The sale certificate was not yet issued. Respondent Nos. 4 & 6 had failed to submit their bids before the cut-off date and 5^th Respondent had not participated in the auction that was held on 28.08.2023. The Ld. R.O. had earlier issued a suo moto corrigendum inviting fresh bids on the postponement of the aforesaid auction. The Ld. Presiding Officer intervened and set aside that order of corrigendum inviting fresh bids.

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The Appellant herein is the 6^th Respondent in the appeal before the Ld. P.O. and was aware of the entire proceedings from the beginning as the lessor of the subject property. It was the leasehold right of the 3^rd Respondent Daewoo Motors India Ltd. which was put on auction for the debts due to the first Respondent Asset Reconstruction Company (India) Ltd. (ARCIL) and the 2^nd Respondent Stressed Assets Stabilisation Fund. 4. The Appellant herein had come up with an application before R.O. putting forth a claim that the leasee is due to pay outstanding arrears of ₹477.84 crores as of 31.03.2023 and therefore, the property could only be sold subject to the said encumbrance. In the alternative, the Appellant has stated that the property could be brought back on paying 10% more than the reserve price and therefore, the sale ought to be cancelled.

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There are also auction purchasers intending to purchase the property for which they had offered a better price.

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Since the orders of the R.O. resulted in protracted issuance of the sale certification to the successful bidder, the order was challenged before the Ld. Presiding Officer under Sec. 30 of the RDB Act. The impugned

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order of the Ld. Presiding Officer sets aside the R.O.’s order which would now result in the issuance of a sale certificate in favour of the successful bidder. The Appellant is aggrieved and hence, in appeal.

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Mr Rohit Gupta the Ld. Counsel appearing for the Appellant vehemently argued that the claim of the Appellant needs to be decided before the sale is confirmed. Hence, the impugned order of the Ld. Presiding Officer would now facilitate the issuance of the sale certificate without the claim of the Appellant being entertained.

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After hearing the Ld. Senior Counsel Mr Tushar Copper appearing for the first Respondent ARCIL and Mr Rajesh Nagory the Ld. Counsel appearing for the successful bidder as also the other counsel appearing for the interested parties, this Tribunal finds that the impugned order does not enter a finding on the claim put forth by the Appellant herein. The action taken by the R.O. amounts to the creation of an obstacle in the issuance of the sale certificate in favour of the successful bidder and hence, that obstacle was removed by the order of the Ld. Presiding Officer. The Appellant has no reason to be aggrieved by that as long as its claim before the R.O. is pending determination. Whatever the order of the R.O., the Appellant would still get a right to challenge it before the Ld. P.O. Mr Rohit Gupta submits that a direction may be given to the R.O. to consider the claim put forth by the Appellant herein before issuance of the sale certificate.

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On considering the entire facts and circumstances of this case which has checkered history, would indicate that there has been constant obstruction throughout to complete the auction sale of the subject property. The property was attempted to be sold several times with no bidders available, resulting in the postponement of the sale. Now there is flooding of the auction purchasers who were vying to buy the property.

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Every court auction takes place by rules within specified time limits for each action. Late entrants cannot participate in the auction. Unless there is sanctity in conducting public auctions, the very purpose of a court sale would stand defeated. The Appellant had ample opportunity to either purchase the property or put forth a claim for the purported arrears of the rent. No action was taken till recently. Intending buyers had approached this Tribunal as well as the Hon’ble High Court with various claims. Those appeals are pending and it was decided at the interlocutory stage and in the Writs that the sale would be subject to the ultimate decision of this Tribunal.

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The successful bidder having deposited the entire sale consideration cannot be asked to wait for issuance of the sale certificate. Since it has already been made clear that the sale is subject to the ultimate decision of this Tribunal, there is no prejudice caused to anyone.

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The claim of the Appellant has been specifically mentioned as an encumbrance in the sale notice of which the successful bidder is aware. Hence, I find no reason to grant any interim orders stalling the issuance of the sale certificate. The remedy of the Appellant is pursuing the application filed before the R.O. and it does not impede proceeding with that claim. Under the circumstances, no interim orders are passed. The Respondents herein are at liberty to file their detailed replies to this appeal which shall be listed on 13.02.2024.

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Sd/Chairperson

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mks-02

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Utter Pradesh State Industrial Development Authority (Upsida) v. Asset Reconstruction Company India Limited

Case brief

What is this about?

What did the court decide?

Utter Pradesh State Industrial Development Authority (Upsida) v. Asset Reconstruction Company India Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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