Disposed

The Official Liquidator M s Maxworth orchards India Ltd. v. Icicic Bank Ltd. and 3 Ors.

DRAT16 Oct 2025MISC APPEAL/191/2011

Case brief

AI extract

What is this about?

This disposal order addresses the maintainability of an appeal filed before the Debts Recovery Appellate Tribunal (DRAT) challenging a recovery Officer's sale certificate. The tribunal held that under Section 30 of the RDB Act, appeals lie before the DRT. Acting on this, it remitted the matter to the DRT for proper disposal.

What did the court decide?

Appeal disposed by remitting the matter to DRT-III, Chennai for disposal with a hearing.

The Official Liquidator M s Maxworth orchards India… — Civil Procedure and Limitation | DRAT (2025)

¶1

IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI Dated the 16^th of October, 2025

¶2

PRESENT: Hon’ble Mr. Justice G. Chandrasekharan

¶3

CHAIRPERSON

¶4

M.A 191/2011

¶5

(OA 1589/1998 before DRT-I, Chennai)

¶6

BETWEEN

¶7

The Official Liquidator, High Court, Madras As Provisional Liquidator of M/s. Maxworth Orchards (India) Ltd. No. 1A, Akbarabad First Street, Kodambakkam, Chennai – 600 024.

¶8

…Appellant

¶9

AND

¶10

ICICI Bank Limited CBG-CMA, ICICI Bank Towers,

¶11

93, Santhome High Road,

¶12

Chennai 600 028

¶13

N. Vijayakumar

¶14

No. 197/2 Green Field Apartment R30 A TNHB HIG FLAT Anna Nagar West Chennai 600 101

¶15

N. Jothishmathi W/o. N. Vijayakumar No. 197/2 Green Field Apartment R30 A TNHB HIG FLAT Anna Nagar West Chennai 600 101

¶16

Sarasamma

¶17

No. 197/2 Green Field Apartment R30 A TNHB HIG FLAT

¶18

Anna Nagar West Chennai 600 101

¶19

….Respondents Counsel for Appellant : M/s. H. Karthik Seshadri Counsel for Respondent 1 : M/s. Shivakumar & Suresh Counsel for R2 to R4 : Mr. T Sundar Rajan

¶20

¶21

ORDER

¶22

This Appeal is filed as directed by the order passed by Hon’ble High Court of Madras in Company Application Nos. 884 to 886/2008 in Company Petition No.57/1998.

¶23

The case of the Appellant in brief is that, the Company Application Nos. 884 to 886/2008 in Company Petition No.57/1998 were filed by the Administrator/Provisional Liquidator of the Appellant Company namely M/s. Maxworth Orchards (India) Limited invoking the powers under Sections 125, 450, 457, 441, 446, 537 of the Companies Act, 1956, with a view to annul the sale of the schedule properties belonging to the Appellant that were wrongly and illegally brought to sale by the first Respondent in execution of Recovery Certificate in DRC No.186/1999, by Debts Recovery Tribunal (in short DRT), Chennai in OA 1589/1998. 21.75 acres of schedule property owned by Appellant company and balance lands are owned by others like P. Saravanan, R. Subramanian and M/s. Maxworth Educational Research Development Society. Appellant

¶24

¶25

availed the loan facility as Secured Terms Loan for Rs.1.50 Crores. It was secured by execution of deed of hypothecation in respect of certain imported equipment and to that effect, charge was registered with the Registrar of Companies. The Company had undertaken to create equitable mortgage in respect of 71 acres of land at Sengadu village, Sriperambadur. On a perusal of the books and records of the Appellant company, it is evident that no mortgage was created in respect of this property and no charge has been registered with Registrar of Companies as required under law. Administrator was appointed to exercise of the powers of Provisional Liquidator on 06.02.2006. By letter dated 02.11.2007, the Provisional Liquidator sought certain clarification from Respondent No.1 and no reply was received. Another letter dated 10.12.2007 was sent to the 1^st Respondent and in response to this letter, 1^st Respondent gave a reply through letter dated 20.12.2007 giving certain details along with certain documents. The perusal of the reply dated 20.12.2007 and documents show that there was no mortgage created on 07.02.1997. First Respondent made false allegation that

¶26

¶27

there was a mortgage of the schedule property and filed OA

¶28

1589/1998 and obtained ex parte order. The Company Petition was filed as early as in February, 1998 and there were 14 winding up Petition was pending as of 2000, when the sale took place in execution of Recovery Certificate. It is apparent that fraud had been played by the Bank before DRT in obtaining ex parte order and in selling the land and properties. After purchase, 1^st Respondent sold the property to Respondent Nos.2 to 4 and they are putting up construction and attempted to alienate the property. When this matter was brought to the notice of Hon’ble High Court of Madras in Company Application Nos. 884 to 886/2008 in CP No. 57/1998, Hon’ble High Court, by an order dated 17.09.2010, directed the Official Liquidator to take necessary steps against various orders of DRT by virtue of powers conferred under Section 19 of Financial Institutions Act, 1993, by filing Appeals in the Appellate Tribunal. There was also direction to consider the pendency of the proceedings pending before Hon’ble High Court for the purpose of considering the period of limitation, and that is

¶29

¶30

how this Appeal is filed by Official Liquidator as Provisional Liquidator of the M/s. Maxworth Orchards (India) Ltd.

¶31

Learned Counsel for Appellant submitted that unmortgaged property is shown as mortgaged property in getting ex parte order in OA 1589/1998 and attachment order was passed after commencement of winding up proceedings. Sale was held without following the necessary procedures like proper publication of sale notice, obtaining valuation report, etc. No details regarding sales as to how many bidders participated in the bid and what is the bid offered by them, is provided. First Respondent was declared as the successful bidder on the ground that there was no bidder, however, there is no details of auction proceedings produced to show the participation of other bidders, their offers, etc. There is gross violation of sale and the property worth about multiple crores, was sold for low price at Rs.1,00,10,000/-. The Hon’ble High Court has recorded a finding on fact that the property was sold for a meagre price. Though there were documents produced for creation of mortgage, in reality, no mortgage was created, no charge

¶32

¶33

was created and registered with Registrar of Companies. No documents were produced to show actual creation of mortgage. The date of sale was on 12.04.2000 but it was signed only on 11.10.2000 and sale certificate was issued only on 13.06.2000. On 31.07.2006, the Bank sold the property to Respondents 2 to 4. There is no detail available with regard to hypothecated movables as to whether they are sold or not, what is the price it fetched, in case it was sold. The alleged sale of hypothecated goods is not proved by necessary evidence. When the matter was heard before Hon’ble High Court, Learned Counsel appearing for the Respondents submitted that the Appellant has got remedy before DRAT. Only on the basis of this submission, Hon’ble High Court directed the Appellant to approach DRAT. The winding up proceedings have been initiated long back and thus time spent in prosecuting before Hon’ble High Court has to be condoned for computing the limitation in filing the Appeal as required under Section 14 of the Limitation Act.

¶34

In reply, Learned Counsel for 1^st Respondent

¶35

submitted that the prayer in the Appeal is to set aside the

¶36

¶37

sale certificate. No Appeal would lie against the issuance of sale certificate because it is only an administrative action. Order of Recovery Officer is not an order of the Tribunal. The property was sold in auction by Recovery Officer and sale certificate was issued by him. Any person aggrieved by order passed by Recovery Officer, has to file an Appeal before Debts Recovery Tribunal (DRT) as required under Section 30 of RDB Act, 1993. Therefore, without filing an Appeal before DRT, filing this Appeal directly before Debts Recovery Appellate Tribunal (DRAT) is not maintainable. The Appellant should have filed an Appeal against the order passed in Original Application (OA) in DRAT under Section 20 of RDB Act, 1993 or should have filed an Appeal against the order of Recovery Officer under Section 30 of RDB Act, 1993, before DRT. Therefor the Appeal filed against the order of Recovery Officer, challenging the sale and issuance of Sale Certificate, cannot be filed before DRAT. Even now, the Appellant has not challenged the order passed in OA. The RDB Act, 1993 is a special Act, and it overrides the Company Law. There was no bar for the secured creditor to participate in the auction proceedings. Since there was no

¶38

¶39

bidder, 1^st Respondent participated in the bid and it was declared as the successful bidder. Without challenging the final order passed in Original Application, sale proceedings and issuance of Sale Certificate cannot be challenged.

¶40

He relied on the decision in ICICI Bank Limited Vs.

¶41

Aburubam and Company and Ors., reported in ( 2018) 15 SCC 267 , for the proposition that there is no bar for secured creditor to participate in the auction, and the decision in the case of Indian Bank Vs. Official Liquidator, Chemmeens Exports (P) Ltd. I Ors., reported in (1998) 5 SCC 401 , with regard to effect of registration/non registration of charge. The decision of Hon’ble Supreme Court in Standard Chartered Bank Vs. MSTC Ltd. , reported in (2020) 13 SCC 618 , is produced to show that the effect of 2000 amendment and the limitation. Thus, it is submitted by Learned Counsel for 1^st Respondent that this Appeal is filed beyond the period of limitation, and filed without challenging the order passed in Original Application and filed directly before DRAT, without any challenge to the order passed by

¶42

¶43

Recovery Officer before DRT. Thus, this Appeal is not maintainable and prays for dismissal of this Appeal.

¶44

Learned Counsel for Respondent No.2 and 4 mostly adopted the submissions of Learned Counsel for 1^st Respondent. It is reiterated that the Appeal before DRAT can be maintained in a challenge against the order passed by DRT. Hon’ble High Court, only directed the Appellant to file an Appeal against the order passed by DRT under Section 19 of the RDB Act, 1993, that means, the Appeal ought to have been filed challenging the final order passed in the Original Application. Therefore, the Appeal filed against the sale and issuance of Sale Certificate before this Appellate Tribunal, is not maintainable. At the time of filing this Appeal, no pre deposit as required under Section 21 of the RDB Act, 1993 was made, and without the Waiver Application, this Appeal cannot be entertained. There is huge delay and delay cannot be condoned. Respondents 2 to 4 are the bonafide purchasers. The Appellant owns only 21.75 acres and remaining portions are owned by other Defendants. The sale in respect of 57.99 acres in favour of

¶45

¶46

Respondents 2 to 4 cannot be set aside. The Respondents had developed the property and running a Nursing College, B.Ed and Maritime course. Encumbrance certificate shows that there is no encumbrance prior to purchase. Therefore, bonafide purchasers’ right has to be protected.

¶47

Learned Counsel for Auction Purchasers relied on the decision in State Bank of India Vs. P. K. Janardhanan and Ors., reported in 2021 AIR(Mad) 297, for the proposition that the sale held long back can no longer be touched and sale ought to have been challenged only as per II Schedule to the Income Tax At, 1961. The decision in International

¶48

Asset Reconstruction Company of India Ltd. Vs. The Official Liquidator of Aldrich Pharmaceuticals Ltd and

¶49

Ors., r eported in ( 2017) 10 SCR 199, for the proposition that RDB Act is a special law. The Application of Section 5 of the Limitation Act by resort to Section 29 (2) of Limitation Act 1963, does not arise, and therefore, the delay cannot be condoned. The decision in Indian Bank Vs. the Official

¶50

Liquidator, Chemmeens Exports (P) Ltd. , reported in CDJ

¶51

1998 SC 303, is relied for the proposition that though as a

¶52

¶53

consequence of non-registration of charge on the part-V of the Companies Act, a creditor may not be able to enforce the charge against the properties of the company as a secured creditor in the event of the liquidation of the company as the charge becomes void against the Liquidator and the creditor, yet he will be entitled to recover the debt due by the Company on par with other unsecured creditors. The decisions in Tarlok Singh and Anr. Vs. Chief Settlement Commissioner and Ors. , reported in 2016 Supreme (P&H) 1582 and in Crystal Developers and Ors. Vs. Asha Lata Ghosh (Dead) through LRs and Ors., reported in 2004 (5) CTC 121) , are relied for the proposition that the bonafide purchaser’s right should be protected in case the bonafide purchaser exercised reasonable care and caution in ascertaining the fact of power to transfer and acted in good faith.

¶54

In reply to this submission, Learned Counsel for Appellant submitted that the Hon’ble High Court found grave irregularities in the matter of sale. Only on the submission made by Learned Counsel for Respondents that

¶55

¶56

the remedy to the Appellant is available before DRAT, this Appeal is filed before this Appellate Tribunal. It is reiterated that the movables and the immovables were not properly valued. When there are other creditors pending for adjudication of the final proceedings, one creditor cannot take the entire benefit. The Liquidator has to take into consideration the interests of all the creditors.

¶57

Considered the rival submissions and perused the

¶58

records.

¶59

The prayer in this Appeal is a) to set aside the sale certificate dated 13.06.2000 issued by the Recovery Officer of the Debt Recovery Tribunal-I, Chennai in favour of the (Bank of Mdura Ltd.) First Respondent/Bank in OA No. 1589/1998 against the Appellant Company pending disposal of the Appeal on the file of the Hon’ble Appellate Tribunal and b) to set aside further sale effected and confirmed on 04.08.2006 registered as No. 13538/2006 in favour of Respondents 2 to 4. Thus, it is seen from the prayer that what is challenged in this Appeal is the issuance

¶60

¶61

of Sale Certificate dated 13.06.2000 by recovery Officer, DRT-I, Chennai and to set aside further sale effected and confirmed on 04.08.2006 registered as No. 13538/2006 in favour of the Respondents 2 to 4.

¶62

As rightly pointed out of Learned Counsel for Respondents that the Appeal against the order passed by the Recovery Officer lies only to the Debts Recovery Tribunal as provided under Section 30 of the RDB Act, 1993. However, this Appeal is filed primarily, as submitted by Learned Counsel for Appellant, on the basis of direction issued by Hon’ble High Court of Madras, to file an Appeal before DRAT under the provisions of Financial Institution Act, 1993. This direction, according to learned Counsel for Appellant, is issued on the basis of submission of Learned Senior Counsel for Respondents in Company Applications that the Applicant had certainly got remedy available by approaching DRAT in the Financial Institutions Act, 1993. After making submission that the Applicant Company has remedy before DRAT under Section 20 of the Financial Institutions Act, 1993, it is not now open to the Learned Counsel for Respondents to contend that DRAT has no

¶63

¶64

jurisdiction to try this Appeal. Learned Counsel appearing for the parties should have obtained clarification from Hon’ble High Court as to whether the challenge to the sale proceedings, sale certificate, sale deed has to be made before DRT or DRAT. Obviously, that has not been done. Hon’ble High Court in its order found that there are no particulars provided as to how the publications have been effected for the sale, how many bids received, and conclusion of the sale in favour of 1^st Respondent on the ground that there is no bidder. It is observed that “it is detrimental to the interest of the creditors, depositors and contributories of the applicant company” . It was noted, after declaring as successful bidder, 1^st Respondent sold the property to the Respondents 2 to 4 for higher price. There is also finding that the Provisional Liquidator sold various parts of the lands in and around the Schedule property for a higher value. There is no material produced to show that the valuation of the machineries. On these reasons, Official Liquidator was directed to file an Appeal before this Tribunal. It is necessary to extract the relevant paragraphs for the better understanding of the order of Hon’ble High Court:-

¶65

¶66

“61. Even though the applicant company has not chosen to appear before the Debt Recovery Tribunal, it is not as if the applicant company has no right to approach the Appellate Tribunal as per its powers under section 20 of the Financial Institutions Act, 1993. The crucial point which is raised by the Provisional Liquidator, which certainly touches the conscience of the Company Court and which relates to the conduct of the first respondent/Bank, is no doubt a forbidden point to be answered by this court. If the averments made by the Provisional Liquidator against the first respondent/Bank, especially treating the conduct as fraudulent in nature, is true, certainly the sale effected through the Debts Recovery Tribunal by the first respondent/Bank is detrimental to the interest of the creditors, depositors and contributories of the applicant company.

¶67

62. It is also astonishing to note that there are no particulars available as to how the publications have been effected for the sale effected by the first respondent Bank through the Debts Recovery Tribunal and how many applications were received, except stating that there was no bidder to offer before the Tribunal on the date fixed in the advertisement. Such advertisements are also not placed before this Court. It

¶68

¶69

is stated that in the absence of any bidder, with the leave of the Debts Recovery Tribunal, the first respondent Bank itself has offered to purchase the property for 1,00,10,000/- and that came to be straightaway accepted by the Debts Recovery Tribunal and subsequently, certificate has been issued.

¶70

63. As correctly pointed out by the learned Provisional Liquidator, the Debts Recovery Tribunal is only concerned about the recovery of money due to the first respondent/Bank from the applicant company and it has no jurisdiction to decide about the larger interest of the creditors and contributories of the company, even though by judicial dictum when it relates to the secured creditors deciding about the priorities of claims, especially with reference to Section 529A of the Act, the Official Liquidator has to be associated in cases where the company has been ordered to be wound up.

¶71

64. On the other hand, the powers of the Company Court under the Act are not mainly intended in securing money by way of sale of the assets of the company under liquidation, but such sale must be in the best interest of the creditors and contributories of the company and that is the reason why the Company Court, at the first instance, Ascertains the proper valuation of the assets of the company rather than deciding about the amount of the claim made by the

¶72

¶73

petitioning creditor, who has filed a petition for winding ups. When once any of the creditors files a petition for winding up against the company, the Company Court takes up the entire assets of the company not for the benefit of the person who has filed the company petition alone, but it takes into consideration the interest of other persons who are involved in the company's affairs through the statutory provision contained under the Act, by making the Official Liquidator as a liquidator of the company and so on and therefore, one cannot expect the nature of sale which is effected by the Company Court by virtue of the provisions of the Act to be followed by the Tribunals which are invested with particular powers regarding the claims of the banks and financial institutions.

¶74

65 it is equally shocking to note that the first respondent/Bank having purchased the property in such auction before the Debts Recovery Tribunal has chosen to sell the same property to respondents 2 to 4 for an enhanced price and it is not known as to how the bidders were not available before the Debts Recovery Tribunal when the property was originally brought for sale. It is further relevant, as submitted by the learned Provisional Liquidator, that the Provisional Liquidator himself has sold various parts of the lands in and around the schedule mentioned property for a value which is much more and there are records to show that

¶75

¶76

he had sold some of the lands in the same area for a price which is stated to be around 3 Crores and the sale of such vast extent of land for a meagre price would detrimentally affect the interest of the creditors.

¶77

66. It is also stated that when the machinery, which were stated to be imported machines valued around 3 Crores, were hypothecated as security, it is not known as to whether the first respondent/Bank has taken steps for effecting sale of the machines before bringing the Immovable property for auction through the Debts Recovery Tribunal.

¶78

67. However, by virtue of the categoric judicial precedents, the Debts Recovery Tribunal has exclusive jurisdiction to decide about the claims made by the first respondent/Bank for recovery of money and therefore, it is not possible to accept the contention of the learned Provisional Liquidator for setting aside the sales effected through the Debts Recovery Tribunal to the first respondent and the subsequent to sale deeds executed by the first respondent in favour of respondents 2 to 4. As correctly submitted by the learned Senior Counsel for the respondents, the applicant company has certainly got a remedy available by approaching the Debts Recovery Appellate Tribunal under Section 20 of the

¶79

¶80

Financial Institutions Act, 1993, which is certainly an adequate and efficacious remedy.”

¶81

Though Hon’ble High Court directed to file an Appeal before DRAT, on the basis of the submission made by Counsel for Respondents, this Tribunal has to go by the statutory requirements. As per Section 30 of the RDB Act, 1993, any person aggrieved by an order of the Recovery Officer, within 30 days from the date of order issued to him, prefer an Appeal before the Tribunal i.e. (Debts Recovery Tribunal). Section 30 reads as follows:-

¶82

[30. Appeal against the order of Recovery Officer. —

¶83

(1) Notwithstanding anything contained in section 29, any person aggrieved by an order of the Recovery Officer made under this Act may, within thirty days from the date on which a copy of the order is issued to him, prefer an appeal to the Tribunal.

¶84

(2) On receipt of an appeal under sub-section (1), the Tribunal may, after giving an opportunity to the appellant to be heard, and after making such inquiry as it deems fit, confirm, modify or set aside the order made

¶85

¶86

by the Recovery Officer in exercise of his powers under sections 25 to 28 (both inclusive).] “

¶87

Appeal lies to DRAT only against the order passed by Debts Recovery Tribunal as provided under Section 20 of the RDB Act, 1993. Therefore, this Tribunal disposes this Appeal by sending this Appeal to DRT-III, Chennai, (Nandanam jurisdiction) for disposal, as directed by Hon’ble High Court of Madras, in its Company Application Nos. 884 to 886/2008 in Company Petition No. 57/1998, in accordance with law, within a period of three months from the date of receipt of copy of this Order, after affording opportunity of hearing to the parties.

¶88

In the result, Appeal in M.A 191/2011 is disposed as indicated above. Both the parties shall bear their own costs. All pending IAs, if any stand closed.

¶89

[Dictated to Athistamani, PS, in open court, transcribed by her, corrected and signed by me this 16^th of October, 2025]

¶90

[ Justice G. Chandrasekharan] CHAIRPERSON

¶91

The Official Liquidator M s Maxworth orchards India Ltd. v. Icicic Bank Ltd. and 3 Ors.

Case brief

What is this about?

What did the court decide?

The Official Liquidator M s Maxworth orchards India Ltd. v. Icicic Bank Ltd. and 3 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Richard Hillary Quarders versus Bank of Baroda

V Ashok versus Bank of India

Mr.S Balamurugan versus Tamilnad Mercantile Bank Limited

E Kumar versus a O Kotak Mahindra Bank Ltd.

Umakumar Hospital versus Central Bank of India

UmaKumar Hospital versus Central Bank of India