NCLAT (07.03.2022) in Mr. Prateek Gupta & Ors. Vs. Kotak Mahindra Bank Limited & Anr. [Company Appeal (AT) (Insolvency) No. 147 of 2022] held that;
Even the Liquidator when he sells the property under the liquidation, he has to follow the procedure under the SARFAESI Act, 2002 for sale of the property.
Excerpts of the order;
07.03.2022: Heard Mr. Kunal Tandon, Advocate for the Appellant, Mr. Jayant Kr. Mehta, Sr. Advocate for the Kotak Mahindra Bank, Mr. Ashwani Kr. Gupta, for Liquidator and Learned Counsel appearing for the Liquidator.
# 2. This Appeal has been filed against the Ex-Directors of the Corporate Debtor challenging the Order dated 04.01.2022 of the Adjudicating Authority (National Company Law Tribunal, New Delhi, Court-III) passed in IA-6014/2021 filed by the Kotak Mahindra Bank Limited-Financial Creditor.
# 3. In the Liquidation Proceeding of the Corporate Debtor, Kotak Mahindra Bank Limited-Financial Creditor has filed an Application IA-6014/2021 wherein following prayers have been made:
“a. The suitable directions to be issued to Respondent for handing over vacant physical possession of 260 sq. yards plot standing in the name of Corporate Debtor under the provisions of the SARFAESI Act to limited extent of conducting a public E Auction under SARFAESI Act;
b. the suitable directions be issued to applicant (Kotak Mahindra Bank) for sale of land admeasuring 260 sq. yards belonging to corporate debtor under the provisions of the SARFAESI Act, 2002 along with another three plots of land admeasuring 1400 square yards belonging to suspended directors/mortgagors;
c. Authorise and permit the Authorised Officer of the Applicant Bank to conduct joint E-Auction of the entire property admeasuring :-1660 sq. yards, as mentioned hereinabove;
d. Pro-rata of Sale Price deposited with the Applicant Bank be transferred to the Liquidator for further distribution by the Authorised Officer of the Applicant on conclusion of the joint E-Auction Proceedings;
e. any other or further relief, may be granted in favour of applicant, as deemed fit in the aforesaid circumstances.”
# 4. The necessary facts to be noticed for deciding the Appeal are:
That Corporate Debtor holds a plot of land admeasuring 260 sq. yards situated at Nangloi. There is another 1400 sq. yards land which was under the Promoters of the Corporate Debtor who are appellant before us. 1400 sq. yards land was mortgaged with the Kotak Mahindra Bank Limited and it is the case of the Bank that they have already issued Notice under Section 13(2) of the SARFAESI Act, 2002 on 28.09.2017 and has taken various steps under Section 13(4) for having physical and symbolic possession of the 1400 sq. yards. It is further on record that with regard to the measures taken by Bank under Section 13(4) of the SARFAESI Act, 2002 with regard to 1400 sq. yards an Application under Section 17 of the SARFAESI Act, 2002 has been filed by the Appellant before the Debt Recovery Tribunal (DRT in short) being Application No. 396 of 2019 which is pending consideration before the DRT. 260 sq. yards admeasuring land belonging to the Corporate Debtor is in the liquidation estate and the Application filed by the Kotak Mahindra Bank Limited i.e. I.A. No. 6014 of 2017 where the Bank has requested that Liquidator may give possession of the 260 sq. yards to the Bank so that the said land belonging Corporate Debtor may be sold under the SARFAESI Act along with area admeasuring 1400 sq. yards. This application has been allowed vide Impugned Order dated 04.01.2022 by the Adjudicating Authority. The Liquidator has made statement before the Adjudicating Authority that Liquidator has no objection in any of the prayers made in the I.A., consequently the result is that after allowing the Application the entire land 1660 sq. yards shall be sold as per SARFAESI Act, 2002 and the amount proportionate pertaining to 260 sq. yards shall be handed over to the Liquidator after the sale of the entire property.
# 5. The Learned Counsel for the Appellant challenging the Impugned Order contends that there is no occasion to permit the sale of the 260 sq. yards belonging to the Corporate Debtor along with the sale of 1400 sq. yards which belong to the promoters of the Corporate Debtor. It is submitted that the sale of the plot of land admeasuring 260 sq. yards ought to be sold under the IBC, 2016 Proceedings and the other plots admeasuring 1400 sq. yards will be sold under SARFAESI Act, 2002 and the Liquidator ought not to have given to the Bank for composite sale. It is submitted by the Appellant that he has filed an Application under Section 17 challenging the measures taken by the Bank under Section 13(4) of the SARFAESI Act, 2002 for the sale of 1400 sq. yards which application is pending.
# 6. In the present case, there is no doubt that 260 sq. yards land belongs to the Corporate Debtor which is in the liquidation estate. The Liquidator who is present before us submits that in view of the peculiar facts and circumstances of the case 1400 sq. yards and 260 sq. yards are not separable and sale of composite property can obtain the maximum revenue for the said land and joints sale of the property is material to have more revenue for the property which may be beneficial to the liquidation estate.
# 7. After considering the submissions which have been made by the Learned Counsel for the Appellant, we are of the view that in the peculiar facts and circumstances of the case, no error can be found with the Order of the Adjudicating Authority directing for composite sale of land of both the parts under the SARFAESI Act, 2002. Even the Liquidator when he sells the property under the liquidation, he has to follow the procedure under the SARFAESI Act, 2002 for sale of the property. In the peculiar facts and circumstances of the case, the property which is a composite one, we are of the view that no illegality can be said to have been committed by the Adjudicating Authority in directing the joint sale of the property. The proportionate amount will be given to the Liquidator which shall be in the liquidation estate hence, the Corporate Debtor cannot suffer any loss in the aforesaid sale.
# 8. We are thus of the view that there is no sufficient ground to entertain this Appeal, the Appeal is dismissed. We make it clear that it shall be open for the Appellant to proceed with the Application under Section 17 which is pending before the DRT.
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