REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CIVIL) NO.29421 OF 2010

BHARAT STEEL TUBES LIMITED   … PETITIONER VERSUS

IFCI LIMITED   … RESPONDENT WITH

 CONTEMPT PETITION (CIVIL) NO.271 OF 2010

IN  SPECIAL LEAVE PETITION (CIVIL) NO.29421 OF 2010

BHARAT STEEL TUBES LIMITED   … APPLICANT/                                       PETITIONER

VERSUS MR. MANORANJAN SHARMA & ANR.         … ALLEGED  

 CONTEMNORS

J U D G M E N T ALTAMAS KABIR, J.

1. Before  the  Special  Leave  Petition  which  had  

been specially fixed for hearing on 9th November,

2010, could be taken up for consideration, Mr. T.R.  

Andhyarujina,  learned  Senior  Advocate,  appearing  

for the Petitioner, M/s Bharat Steel Tubes Ltd.,  

submitted that Contempt Petition (Civil) No.271 of  

2010  had  been  filed  in  regard  to  wilful  and  

deliberate violation of the order passed by this  

Court  on  8th October,  2010,  by  the  alleged  

contemnors  in  entertaining  bids  for  the  auction  

proposed to be held in respect of the Petitioner’s  

property despite the said order.

2. Mr. Andhyarujina submitted that in relation to  

an  order  passed  by  the  Debts  Recovery  Tribunal,  

Delhi, on an application filed by the Petitioner  

under Section 17 of the Recovery of Debts Due to  

Banks  and  Financial  Institutions  Act,  1993,  

hereinafter referred to as “the Debts Recovery Act,  

1993”, a direction was given by the Tribunal  on  

15th September, 2010, to the Petitioner to deposit a  

sum  of  Rs.35  crores  with  the  Industrial  Finance  

Corporation  of  India  Ltd.  (IFCI  Ltd.)  without  

2

prejudice  to  its  rights  and  contentions.   The  

Respondent was also directed not to implement the  

possession  notice  as  well  as  the  public  notice  

published  on  13th September,  2010,  till  the  next  

date of hearing.  Against the said order, IFCI Ltd.  

filed Misc. Appeal No.352 of 2010 before the Debts  

Recovery  Appellate  Tribunal,  which  stayed  the  

proceedings before the Debts Recovery Tribunal by  

its order dated 22nd September, 2010. Aggrieved by  

such  direction,  the  Respondent  had  moved  Writ  

Petition  (Civil)  No.6652  of  2010,  in  which  an  

interim order was passed by the Division Bench of  

the  Delhi  High  Court  on  29th September,  2010,  

directing  that  during  the  pendency  of  the  writ  

petition,  the  writ  petitioner  would  be  free  to  

proceed in pursuance of the Public Notice dated 13th  

September,  2010,  but  the  bid  was  not  to  be  

finalized. Since a winding-up order had been passed  

in  respect  of  the  petitioner  company  on  the  

recommendation  of  the  Board  for  Industrial  and  

3

Financial  Reconstruction  (BIFR)  and  the  Official  

Liquidator had been appointed, it was also directed  

that  the  Official  Liquidator  would  be  associated  

with the process of auction and the amount received  

by the Petitioner from prospective purchasers, as  

earnest money under the bids, would be kept in a No  

Lien Account.   

3. Mr. Andhyarujina pointed out that such an  ex-

parte order  was  passed  on  the  supposition  that  

there were dues to the extent of Rs.1,100.00 crores  

payable by the Respondent and that proceedings had  

also  been  taken  under  Section  17  of  the  

Securitization  and  Reconstruction  of  Financial  

Assets  and  Enforcement  of  Security  Interest  Act,  

2002 (SARFAESI Act, 2002) even though the BIFR had  

recommended  the  winding  up  of  the  Petitioner  

Company and finalization of those proceedings was  

still pending before the Company Court where the  

Official Liquidator had been put in charge of the  

functioning  of  the  Petitioner  Company.  The  

4

Petitioner  Company,  being  aggrieved  by  the  said  

interim  order  of  the  Division  Bench  of  the  High  

Court, moved the instant Special Leave Petition and  

on  8th October,  2010,  while  issuing  notice  and  

giving  directions  for  filing  of  affidavits,  this  

Court stayed the operation of the order of the High  

Court which has been impugned in the Special Leave  

Petition.  The  result  was  that  the  order  of  the  

Debts  Recovery  Appellate  Tribunal  revived  and  

according to the Petitioner, despite such order of  

stay passed by this Court, the alleged contemnors  

continued with the auction process in violation of  

the order of stay passed by this Court.   

4. Mr. Andhyarujina submitted that while the order  

of stay was passed on 8th October, 2010, and the  

date of auction was fixed on 15th October, 2010, the  

Respondent Company continued to sell bid documents  

at least till 13th October, 2010, and the Bid Box  

was kept available in the office premises of the  

5

Respondent Company till 15th October, 2010, when the  

auction was to be conducted.  

5. Mr. Andhyarujina submitted that since the said  

steps were taken  by the Respondent Company despite  

the  order  of  stay  passed  by  this  Court  on  8th  

October, 2010, the alleged contemnors had committed  

contempt of Court and were liable to be dealt with  

accordingly before the Special Leave Petition was  

taken up for consideration.  

6. Both Mr. Parag P. Tripathi, learned Additional  

Solicitor  General  and  Mr.  Ranjit  Kumar,  learned  

Senior  Advocate,  who  appeared  for  the  alleged  

contemnors denied the allegations made on behalf of  

the  Petitioner  Company  and  submitted  that  except  

for  sweeping  allegations  having  been  made,  there  

was no material proof before the Court to hold that  

the  alleged  contemnors  had  wilfully  and  

deliberately violated the order of stay passed by  

this Court on 8th October, 2010.

6

7. On being asked as to whether the order passed  

on 8th October, 2010 had been communicated to the  

alleged  contemnors  or  not,  Mr.  Andhyarujina  

submitted that since the order had been passed in  

the presence of learned counsel for the Respondent  

Company, it had to be presumed that the same had  

been conveyed to the Respondent Company by their  

learned counsel.  Learned counsel submitted that a  

presumption  would  have  to  be  drawn  regarding  

knowledge of the order passed by this Court on 8th  

October, 2010, by the alleged contemnors since it  

was  duly  represented  on  the  said  date  through  

counsel.

8. We are unable to accept the submissions made on  

behalf of the Petitioner Company, since it is for  

the Petitioner in a contempt petition who alleges  

contempt, to establish that the alleged contemnor  

had defied and/or violated the order deliberately  

and wilfully, despite having knowledge thereof.  We  

7

cannot lose sight of the fact that in a contempt  

proceeding, which is entirely of a summary nature,  

a person can be sentenced to imprisonment and also  

punished with fine, without a regular trial, even  

in the nature of a summons trial. Accordingly, the  

Courts have to strictly construe the provisions of  

Section 3(b) of the Contempt of Courts Act, 1971,  

in  order  to  find  a  person  guilty  of  having  

committed contempt of Court.  We are not satisfied  

with  the  materials  placed  before  us  that  the  

alleged contemnors had any knowledge of the stay  

order passed by this Court on 8th October, 2010,  

and, accordingly, we are not inclined to entertain  

the  contempt  petition  which  is,  therefore,  

dismissed. The Special Leave Petition filed by M/s  

Bharat  Steel  Tubes  Ltd.  is  taken  up  for  

consideration on its merits.  

9. Mr. Andhyarujina submitted that the Petitioner,  

M/s Bharat Steel Tubes Ltd., had obtained a loan of  

Rs.55 crores from the Punjab National Bank in 1973.  

8

On 11th November, 2008, a lock-out was declared in  

the factory of the petitioner and ultimately on 1st  

May, 1990, the Petitioner made a reference to the  

BIFR.  On 23rd February, 2010, the BIFR recommended  

winding  up  of  the  Company  and  forwarded  its  

recommendation  to  the  High  Court.  Three  years  

thereafter,  the  Punjab  National  Bank  filed  O.A.  

No.12 of 2003 before the Debts Recovery Tribunal,  

Delhi,  for  recovery  of  a  loan  of  

Rs.3,27,62,27,044.00.   On  14th August,  2003,  the  

High Court passed an order winding up the Company  

and appointing the Official Liquidator to implement  

the order of winding up.   At this stage, on 2nd  

September, 2004, the Punjab National Bank entered  

into  a  One-Time  Settlement  with  the  Petitioner  

Company for a sum of Rs.26.16 crores out of which  

the Petitioner was able to pay a sum of Rs.13.80  

crores and was unable to pay the rest.  However, on  

9th February,  2005,  the  High  Court  stayed  the  

winding up order passed on 14th August, 2003, and  

9

directed the Official Liquidator to continue as the  

Liquidator and to also observe the functioning of  

the unit.

10. On  account  of  the  default  committed  by  the  

Petitioner  Company  in  respect  of  the  One-Time  

Settlement entered into on 2nd September, 2004, the  

Punjab National Bank revoked the said settlement on  

14th June, 2007.

11. Thereafter,  certain  further  developments  took  

place,  which  ultimately  brought  the  present  

Respondent Company into the picture.  On 5th May,  

2008,  the  Petitioner  Company  entered  into  an  

agreement  with  Assets  Care  Enterprises  Ltd.,  

hereinafter  referred  to  as  “ACE”,  a  third-party  

financier, whereby on payment of the balance amount  

of  the  One-Time  Settlement  by  ACE  to  the  Punjab  

National  Bank,  the  dues  of  the  Bank  stood  

completely  settled  and  there  was  no  existing  

liability of the Petitioner Company as far as the  

10

Bank was concerned.  A default clause was, however,  

included in the Memorandum of Understanding that in  

case of default of the Petitioner to repay ACE, the  

latter would be at liberty to proceed against the  

Petitioner  in  terms  of  the  financing  documents  

assigned to it by the Petitioner. In fact, a Deed  

of  Assignment  was  executed  between  the  Punjab  

National Bank and ACE on 15th July, 2008, for a sum  

of  Rs.15,01,28,752.00.  This  was  followed  by  a  

further  Deed  of  Assignment  between  ACE  and  the  

Respondent Company for a sum of Rs.18.63 crores.  

12. Thereafter,  on  10th August,  2009,  IFCI  Ltd.  

issued a notice of demand to the Petitioner Company  

under Section 13(2) of the SARFAESI Act, 2002, for  

a sum of Rs.1139.75 crores.  The said claim was  

refuted by the Petitioner Company on 17th September,  

2009, denying the right of IFCI Ltd. to the sum as  

demanded.   It was stated that the Memorandum of  

Understanding  between  the  Petitioner  Company  and  

ACE would indicate that ACE was only entitled to a  

11

sum  of  Rs.15,01,28,752.00  and  nothing  more.  

Subsequent thereto, on 10th October, 2009, IFCI Ltd.  

took  symbolic  possession  of  the  property  of  the  

Petitioner Company situated at Gannore in the State  

of  Haryana.  The  Petitioner  Company  also  filed  a  

suit,  being  CS  (OS)  No.1886  of  2009,  to  injunct  

IFCI Ltd. from proceeding in accordance with the  

notice dated 10th August, 2009, which was, however,  

dismissed by the High Court on the ground of lack  

of jurisdiction on 10th September, 2010.   

13. On the same date, an application was filed by  

the Petitioner before the Debts Recovery Tribunal-

III, Delhi, under Section 17 of the Debts Recovery  

Act, 1993, which passed an ex-parte stay order in  

favour  of  the  Petitioner  in  the  said  appeal.  

Thereafter,  on  13th September,  2010,  IFCI  Ltd.  

issued  possession  notice  with  regard  to  the  

residential  property,  being  Plot  No.17,  Friends  

Colony Cooperative Housing Building Society Ltd.,  

New Delhi, and on the same date a public notice was  

12

also  issued  inviting  bids  for  the  factory  at  

Gannore in Haryana.  In terms of the public notice  

issued, it was intimated for the information of the  

public that the sealed bids would be opened on 15th  

October, 2010.  On 15th September, 2010, the Debts  

Recovery  Tribunal-III,  Delhi,  passed  an  order  of  

stay  in  favour  of  the  Petitioner  Company  

restraining  IFCI  Ltd.  from  taking  steps  in  

accordance with the possession notice as well as  

the public notice for sale.  The Petitioner Company  

was also directed to deposit a sum of Rs.35 crores  

within 30 days of the order.   

14. The  IFCI  Ltd.  filed  two  appeals  against  the  

said order dated 15th September, 2010, being Misc.  

Appeal  Nos.352  and  353  of  2010,  and  on  22nd  

September,  2010,  the  Debts  Recovery  Appellate  

Tribunal issued notice and stayed the proceedings  

before the Debts Recovery Tribunal-III, Delhi, in  

the  Original  Application  as  also  in  the  

Securitization  Appeal.  Directions  were  given  for  

13

filing affidavits and the case was adjourned by the  

Appellate Tribunal to 27th October, 2010. Since the  

time granted by the Appellate Tribunal was beyond  

the date for opening of the bids, IFCI Ltd. filed  

Writ Petition No.6652 of 2010 before the Delhi High  

Court against the orders dated 10th September, 2010  

and  15th September,  2010  passed  by  the  Debts  

Recovery Tribunal-III, Delhi, and order dated 27th  

September,  2010,  passed  by  the  Debts  Recovery  

Appellate  Tribunal.  On  29th September,  2010,  the  

High Court allowed the IFCI Ltd. to proceed with  

the public notice dated 13th September, 2010, with  

the directions mentioned hereinbefore in paragraph  

2.  

15.  Mr. Andhyarujina submitted that till such time  

as  the  actual  dues  payable  by  the  Petitioner  

Company  was  determined  by  the  Debts  Recovery  

Tribunal-III,  Delhi,  no  proceedings  could  be  

continued under the SARFAESI Act, 2002, in respect  

of a nebulous figure.  Mr. Andhyarujina submitted  

14

that in view of the One-Time Settlement, which had  

been arrived at between the Petitioner Company and  

the  Punjab  National  Bank,  the  demand  raised  on  

behalf of IFCI Ltd. was entirely absurd since at  

best  the  said  Company  could  claim  what  had  been  

assigned  to  it  by  ACE.  How  a  sum  of  

Rs.15,01,28,752.00 could become Rs.1139.75 crores,  

remains unexplained and till such determination of  

the  actual  amount  payable,  proceedings  under  

Section  13(2)  of  the  SARFAESI  Act,  2002,  should  

not be allowed to be taken, since it would not be  

possible for IFCI Ltd. to determine as to what part  

of the Petitioner’s property was liable to be taken  

possession of.   

16. Mr. Andhyarujina submitted that it had also to  

be considered as to whether when the dues of the  

Punjab National Bank had been duly liquidated by  

ACE, its assignee could maintain the demand against  

the Petitioner Company.  

15

17. Mr. Andhyarujina submitted that the steps taken  

by IFCI Ltd. pursuant to its demand notice dated  

10th August,  2009  under  Section  13(2)  of  the  

SARFAESI Act, 2002, were wholly illegal and were  

liable to be quashed.   

18. Learned Additional Solicitor General, Mr. Parag  

P.  Tripathi,  appearing  for  the  respondent  IFCI  

Limited, submitted that there was no substance in  

the  Special  Leave  Petition  since  the  Petitioner-

Company had not only failed to repay its debts, but  

had also failed to abide by the One-Time Settlement  

which had been arrived at with the Punjab National  

Bank.  Having entered into a One-Time Settlement  

with the Punjab National Bank for a sum of Rs.26.16  

crores  on  2nd September,  2004,  the  Petitioner-

Company paid a sum of Rs.13.80 crores only and was  

unable to pay the balance of the Settlement amount.  

Ultimately, the One-Time Settlement was revoked by  

the Bank on account of such default.  Thereafter,  

the Petitioner-Company entered into a Memorandum of  

16

Understanding with ACE on 5th March, 2008, whereby  

ACE  agreed  to  pay  the  Punjab  National  Bank  the  

balance amount of the settlement amount.  The said  

agreement  made  it  clear  that  in  the  event  the  

Petitioner-Company failed to repay ACE, the latter  

would  be  at  liberty  to  proceed  against  the  

Petitioner-Company.  Thereafter, on 15th July, 2008,  

a  Deed  of  Assignment  was  executed  between  the  

Punjab  National  Bank  and  ACE  for  an  amount  of  

Rs.15,01,28,752.00.  ACE, in its turn, assigned its  

rights  under  the  above-mentioned  Memorandum  of  

Understanding  to  the  Respondent-Company  on  17th  

April,  2009,  amounting  to  Rs.18.63  crores,  

whereunder  notice  was  ultimately  issued  by  IFCI  

Limited  to  the  Petitioner-Company  under  Section  

13(2) of the SARFAESI Act, 2002.   

19. The  learned  Solicitor  General,  who  also  

appeared  for  IFCI  Ltd.,  urged  that  ACE  as  a  

“reconstruction  company”  within  the  meaning  of  

Section 3 of the SARFAESI Act, 2002, was entitled  

17

under Section 5 thereof to acquire interest in the  

financial assets of the Petitioner-Company and was  

entitled to maintain a proceeding before the Debts  

Recovery  Tribunal  under  Section  17  of  the  Debts  

Recovery Act, 1993.  The learned Solicitor General  

contended that the Petitioner-Company had not made  

any effort to clear any amount even from the unpaid  

balance  of  the  One-Time  Settlement  and  it  was  

virtually  under  the  control  of  the  Official  

Liquidator inspite of the interim order passed by  

the  Division  Bench  of  the  High  Court  under  

challenge.  The learned Solicitor General submitted  

that not only had a recommendation been made for  

winding up of the Petitioner-Company by the BIFR,  

but an order of winding up was actually passed by  

the High Court, whereby the Official Liquidator was  

appointed to take over the Company and its assets.  

It  was  submitted  that  the  High  Court  had  merely  

allowed  IFCI  Limited  to  proceed  in  terms  of  the  

Public  Notice  issued,  but  had  prevented  it  from  

18

taking  any  final  decision  in  the  matter  and  the  

same did not warrant any interference by this Court  

on  account  of  the  financial  condition  of  the  

Petitioner-Company.

20. As to the submissions made by Mr. Andhyarujina  

on  behalf  of  the  Petitioner-Company,  regarding  

quantification  of  the  dues  in  the  pending  

proceedings before the Debts Recovery Tribunal-III,  

Delhi, the learned Solicitor General submitted that  

the same could not be a reason to stay the auction  

in terms of Section 13(4) of SARFAESI Act, 2002,  

since the sale proceeds could be kept in a separate  

account  for  distribution,  once  the  amount  was  

determined.   

21. Mr. Ranjit Kumar, learned Senior Advocate, who  

appeared  for  the  alleged  contemnors,  while  

reiterating  the  submissions  made  by  the  learned  

Solicitor  General  and  the  Additional  Solicitor  

General, submitted that Public Notice was issued by  

19

IFCI Limited on 13th September, 2010, inviting bids  

for sale of the factory of the Petitioner-Company  

at  Gannore  in  Haryana  in  which  it  was  indicated  

that the sale bids would be opened on 15th October,  

2010. The Respondent-Company was served with notice  

of  the  securitisation  appeal  filed  by  the  

Petitioner-Company under Section 12 of the SARFAESI  

Act, 2002, before the Debts Recovery Tribunal-III,  

Delhi, on 13th September, 2010, in the evening, and,  

thereafter, stay was granted by the said Tribunal  

on  15th September,  2010, restraining  IFCI Limited  

from implementing the possession notice, as well as  

the  Public  Notice  for  sale,  with  a  further  

direction  to  the  Petitioner-Company  to  deposit  a  

sum of Rs.35 crores within 30 days of the order.  

Mr.  Ranjit  Kumar  submitted  that  the  Petitioner-

Company  has  not  deposited  the  said  sum,  as  

directed,  till  today.   On  the  other  hand,  IFCI  

Limited  preferred  the  above-mentioned  appeals  

before  the  Debts  Recovery  Appellate  Tribunal  

20

against the said order of 15th September, 2010, and  

the  Appellate  Tribunal  stayed  the  proceedings  

before the Debts Recovery Tribunal in the Original  

Application, as also the Securitisation Appeal by  

its order dated 22nd September, 2010.  It is against  

the  order  subsequently  granting  time  to  the  

Petitioner-Company to file a reply and adjourning  

the case to 27th September, 2010, which would be  

beyond  the  date  of  opening  the  bids,  that  IFCI  

Limited moved Writ Petition No.6652 of 2010 before  

the  Delhi  High  Court,  which  passed  the  impugned  

order on 29th September, 2010, allowing IFCI Limited  

to  proceed  with  the  Public  Notice  dated  13th  

September, 2010, but with the direction that the  

bids were not to be finalised and that the Official  

Liquidator was to be associated with the bidding  

process.  Furthermore, any amount received from the  

prospective purchaser as earnest money, was to be  

kept in a no-lien account.       

21

22. With regard to the allegation made on behalf of  

the Petitioner-Company that the Bid Box had been  

kept available in the company premises for filing  

bids  till  15th October,  2010,  Mr.  Ranjit  Kumar  

submitted that there was nothing on record to show  

that the Bid Box had been used after 13th September,  

2010, or that the contents thereof had been used  

for the purposes of the auction which was scheduled  

to be held on 15th October, 2010.  Mr. Ranjit Kumar  

urged that it would be clear from the above that  

the  alleged  contemnors  had  neither  violated  the  

order of stay made by this Court on 8th October,  

2010, nor did it have any intention to do so.

23. On  the  question  of  maintainability  of  the  

proceedings before the Debts Recovery Tribunal by  

the Respondent No.1-Company, Mr. Ranjit Kumar urged  

that  there  was  no  prohibition  either  under  the  

Banking Regulation Act, 1949 or under the SARFAESI  

Act,  2002,  debarring  an  assignee  financial  

institution  or  a  reconstruction  company  from  

22

continuing a proceeding initiated before the Debts  

Recovery  Tribunal  by  a  banking/financial  

institution and, in any event, the said question  

could be raised and answered before the Appellate  

Tribunal itself.  In this regard, learned Senior  

counsel referred to and relied upon the decision of  

this  Court  in  ICICI  Bank  Limited vs.  Official  

Liquidator  etc.  etc. [2010  (10)  SCALE  378],  in  

which this Court was called upon to decide whether  

inter se transfers of Non-Performing Assets (NPA)  

by banks is illegal under the Banking Regulation  

Act, 1949, as was held by the Gujarat High Court.  

After  considering  the  submissions  made  and  the  

materials  on  record,  this  Court  set  aside  the  

judgment of the Division Bench of the High Court,  

which had upheld the order of the learned Company  

Court on the ground that the assignment of debts by  

the  banks  inter  se is  an  activity  which  is  

impermissible  under  the  Banking  Regulation  Act,  

1949.   The  matter  was  remitted  to  the  Division  

23

Bench on other issues after setting aside the view  

taken  by  the  Division  Bench  of  the  Gujarat  High  

Court regarding the locus standi of the assignee of  

a debt as being an activity permissible under the  

aforesaid Act.  It was urged that the Special Leave  

Petition and the Contempt Petition were both liable  

to be dismissed.    

  24. Although,  the  Special  Leave  Petition  is  

directed  against  an  interim  order  passed  by  the  

High Court on 29th September, 2010, granting liberty  

to the Petitioner to proceed in pursuance of the  

Public Notice dated 13th September, 2010, during the  

pendency  of  the  writ  petition,  extensive  

submissions were advanced on behalf of the parties.

25. In  this  case,  we  have  a  situation  in  which  

moneys were admittedly borrowed by the Petitioner-

Company from the Punjab National Bank which it was  

unable to repay in full.  Ultimately, a One-Time  

Settlement was arrived at between the Petitioner-

Company and the Punjab National Bank for a sum of  

24

Rs.26.16  crores.   Out  of  the  said  amount,  the  

Petitioner-Company  paid  a  sum  of  Rs.13.80  crores  

and defaulted in payment of the rest. It entered  

into an agreement with ACE to pay off the entire  

dues of Punjab National Bank, which it did.  The  

entire  dues  of  the  Bank,  therefore,  stood  

satisfied, but a new liability was created by the  

Petitioner-Company in favour of ACE which assigned  

its rights to IFCI Ltd.  As explained hereinbefore,  

by virtue of Section 3 of the SARFAESI Act, 2002, a  

reconstruction  company,  such  as  ACE,  would  be  

entitled  to  carry  on  the  business  of  

securitisation.   

26. We  are  not,  therefore,  impressed  with  Mr.  

Andhyarujina’s submission that once the dues of the  

Bank were liquidated and a separate arrangement was  

entered  into  by  the  Petitioner-Company  with  ACE,  

the  demand  under  section  13(2)  of  the  said  Act  

ceased to exist and IFCI Ltd, which acquired the  

interest of ACE in the Memorandum of Understanding  

25

with the Petitioner-Company, could not take action  

against the Petitioner-Company under the SARFAESI  

Act.  There  is  no  dispute  that  IFCI  Ltd.  is  a  

financial institution which is an assignee of the  

interest  of  ACE  in  dues  recoverable  from  the  

Petitioner-Company.      

27.  However,  as  indicated  hereinabove,  this  

Special Leave Petition has been filed against the  

interim  order  passed  by  the  High  Court  on  29th  

September, 2010, in the Writ Petition filed by IFCI  

Ltd.  seeking  to  set  aside  the  order  dated  27th  

September,  2010,  passed  by  the  Debts  Recovery  

Appellate Tribunal limited to the question as to  

whether the auction sale should be proceeded with  

further.  In  effect,  the  question  regarding  the  

auction of the assets of the Petitioner Company is  

still the subject matter of the proceedings pending  

before the Debts Recovery Appellate Tribunal.  All  

the questions raised in this Special Leave Petition  

are at large in the pending proceedings before the  

26

Appellate Tribunal which had stayed the proceedings  

before  the  Debts  Recovery  Tribunal-III,  Delhi,  

directing stay of the auction sale proceedings.

28. Having heard the matter on 9th November, 2010,  

we had reserved judgment in the matter.  However,  

it has subsequently been brought to our notice that  

certain developments had taken place in the pending  

Writ  Petition  before  the  High  Court  on  11th  

November, 2010.  The High Court took note of the  

fact that the matter was still pending before the  

Debts Recovery Appellate Tribunal and that judgment  

in the Special Leave Petition before this Court was  

yet to be passed. It, therefore, held that nothing  

survived in the Writ Petition as the parties had to  

abide by the directions passed by this Court and,  

accordingly, the Writ Petition and the applications  

were disposed of.   

29. The matter before the High Court may have come  

to an end, but the issues involved regarding steps  

27

taken  under  the  SARFAESI  Act  are  yet  to  be  

determined  by  the  Debts  Recovery  Appellate  

Tribunal.  However,  since  the  order  impugned  in  

these proceedings has ceased to exist, we are not  

inclined  to  decide  the  questions  that  have  been  

raised  and  instead  we  can  only  direct  the  Debts  

Recovery  Appellate  Tribunal  to  consider  all  the  

questions raised in the two appeals pending before  

it, being Miscellaneous Appeal Nos.352 and 353 of  

2010.

30. We,  therefore,  dispose  of  the  Special  Leave  

Petition with a direction upon the Debts Recovery  

Appellate Tribunal to dispose of the pending appeal  

as early as possible since it would not be proper  

on  our  part  to  express  any  definite  view  with  

regard to the pending proceedings before the said  

Tribunal.  Till a decision is arrived at by the  

Debts  Recovery  Appellate  Tribunal  in  the  matter,  

the auction proceedings being conducted under the  

SARFAESI Act shall remain stayed.  

28

…………………………………………J. (ALTAMAS KABIR)

…………………………………………J. (CYRIAC JOSEPH)

New Delhi Dated:30.11.2010   

29