NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 573 OF 2005

Sajjan Textile Mills Ltd. …Appellant

Vs.

ICICI Bank Ltd. & Ors. …..Respondents

J U D G M E N T

HARJIT SINGH BEDI,J.

1. In  the  light  of  the  order  we  intend  making,  only  the

skeletal facts are necessary.  They are as under:

2. The  appellant,  Sajjan  Textile  Mills  Ltd.  was

sanctioned a loan of Rs.3 Crore by the respondent Bank

on 15th July 1992.  As the appellant committed default in

making re-payment,  a  civil  suit  for  recovery  was filed.

The Bombay High Court also passed an order dated 18th

December  1997,  appointing the Court  Receiver,  as the

Receiver for the movable and immovable properties of the

appellant.  The appellant, however, made an application

before the BIFR on 23rd June 1998 for being registered as

a sick industrial unit and it was registered as such on

15th July 1998 and was declared  a sick  unit  by order

dated 6th August 1998.  Two suits were thereafter filed by

the  respondent  Bank  in  the  Bombay  High  Court,  one

against      the  appellant  for  recovery  of  a  sum  of

Rs.8,36,15,087/-        and  the  other  against  the

guarantors.  The aforesaid civil   suits as also suits filed

by the Central Bank of India and      the State Bank of

Travancore also for recovery of loans advanced were all

transferred  to  the  DRT,  Bombay  Bench,   and  an

inventory of all the machinery available in the appellant’s

mill was made and a report submitted to the Tribunal.

The BIFR also passed an order on 5th October    2001

that  as  the  appellant  company  could  not  be

resusticated, it was just and equitable that it be wound

up.   In the meanwhile,  the respondent Bank (in April

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1999)  also  filed  an  application  for  the  recovery  of  the

principal       amount of Rs.3 Crore.  The DRT in its order

allowed  the  application  and  passed  an  order  for  the

recovery of the aforesaid amount from the appellant.  A

notice of demand dated 31st December, 2002 was issued

by the Recovery    Officer and recovery proceedings were

initiated.   The     Recovery  Officer  issued  a  certificate

against the appellant    and the guarantors making them

jointly  and  severally  responsible  for  a  payment  of

Rs.5,90,32,753/-.  As the properties were situated within

the jurisdiction of the        DRT, Coimbatore, Tamil Nadu,

the recovery proceedings     were accordingly transferred

to Coimbatore on an    application made by the Bank.  As

the  appellant  and  the  guarantors  did  not  pay  the

amounts due, an order for the attachment of the movable

property of the appellant was issued, and despite several

objections taken by the    appellant, a proclamation for

sale by way of tender was   issued on 19th January 2004.

The five tenders received     were opened on 3rd February,

2004 and Sri Maruthi      Textiles was found to be the

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highest  bidder  with  a  bid  of  Rs.2,50,99,999/-.   The

Recovery Officer thereupon       directed the successful

tenderer to deposit the balance   money within 15 days

which was further extended by 30   days up till   27th

February 2004.  The aforesaid amount    was, however,

not paid on which the Recovery Officer in       his order

dated 17th March 2004 directed that the offer of     the 2nd

respondent, Sri Vairalakshmi be accepted on     payment

of the amount tendered by Sri Maruthi Textiles.   This

offer  was  accepted  by  respondent  No.2  and  it

undertook to deposit the bid money, but vide application

dated 25th March 2004, sought an extension of time for

doing so, which too was granted.  It appears that on 1st

March 2004, the Office of the Recovery Officer and DRT

Coimbatore  fell  vacant  and  the  Presiding  Officer  DRT,

Chennai was appointed to hold the dual charge of both

places.  On 16th April 2004, respondent No.2 once again

applied for more time for complying with the conditions

of payment and the Presiding Officer, DRT, Chennai, who

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was holding the post as an additional charge made the

following order on 7th May 2004:

“Since  no  regular  Recovery  Officer is  available  in  this  Tribunal,  the EMD  deposited  by  the  second bidder has to be returned. Further, the  matter  should  be  returned  to DRT-III, Mumbai for further N.A.”   

4. On  11th May  2004,  the  respondent  Bank  filed  a  writ

petition before the Madras High Court for a direction to the

Presiding Officer, DRT, Chennai to proceed with the recovery

of  the  amounts  due.   In  this  petition,  Sajjan  Textiles,  the

present  appellant,  was  shown  as  respondent  No.3  and  Sri

Vairalakshmi  &  Co.  was  shown  as  the  second  respondent.

The appellant was duly served and a vakalatnama also filed by

an  Advocate  on  its  behalf  on  21st July  2004.   It  appears,

however  that  the  High Court  by its  order  dated  2nd August

2004  disposed  of  the  writ  petition  in  the  absence  of  the

appellant’s counsel by giving yet more time to respondent No.2

to  pay  the  balance  amount  either  in  full  or  in  instalments

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within a time frame of  2  months and the Presiding Officer,

DRTC was directed to complete the sale transaction in terms

mentioned in the body of the order.  It is this order which has

been impugned in this appeal.

5. Mr. Singhvi, the learned senior counsel for the appellant,

has at this stage raised only one argument before us. He has

pointed out that the appellant was respondent No.3 in the writ

proceedings in the High Court and though a Vakalatnama had

been filed by a counsel on its behalf, the name of the counsel

had not appeared in the cause list on the 2nd August, 2004 nor

on  the  date  preceding  that  date  with  the  result  that  the

appellant  had  suffered  serious  prejudice  on  account  of

remaining  unrepresented  on  being  unaware  of  the

proceedings.

6. Mr.  Andhyarujina,  the  learned  senior  counsel  for  the

respondent Bank has, however, taken us through the entire

sequence  of  events  and  the  history  of  the  litigation,  and

pointed out that the appellant was only a formal party in the

writ  proceedings,  and  as  all  the  orders  pertaining  to  the

recovery and the sale had become final as some had not been

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challenged by the appellant and in some others, the challenge

had failed, no useful purpose would be served in interfering in

this matter.  He has also pointed out that the property had

been sold  and removed  from the appellant’s  mill  under  the

orders of this Court and nothing now remained to be decided

and that the efforts of the appellants to prolong the litigation

any further should be discouraged.

7. We have heard the learned counsel for the parties and

gone through the record very  carefully.   It  is  true  that  the

litigation  has  had  a  chequered  career  in  several  forums

including this Court. However in the present proceedings, we

are not called upon to take a decision on the ultimate effect of

the earlier set of proceedings as Mr. Singhvi has limited his

claim to the fact that the appellant had not been heard at the

time when the High Court had made the impugned order on

2nd August 2004.  We are unable to accept Mr. Andhyarujina’s

plea that as the sale proceedings had attained finality, there

was no need to have heard the appellant/Company as it had

been impleaded as a mere formality.  We feel that once having

made the appellant a party in the writ proceedings, it does not

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lie on the Bank to contend that the appellant was not entitled

to a hearing.  We, accordingly, set aside the order of the High

Court dated 2nd August 2004, and remit the case for a fresh

decision in accordance with law.  We also direct that till such

time  the  High  Court  takes  its  decision  in  the  matter,  the

status quo order passed by this Court on 29th October 2004

will continue to operate.  We also request the High Court, in

the background that the matter has been pending for a very

long time, to render its decision as expeditiously as possible.

8.    The appeal is allowed.  There will, however, be

no order as to costs.

……………………………J. (TARUN CHATTERJEE )

  ……………………………J.

      ( HARJIT SINGH BEDI) New Delhi, Dated:  May 16,  2008

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