Appellant took a stand, Company Court in the High Court at Madras, had no jurisdiction in the legitimate domain of the RDB Act.
In its Latest Judgement Supreme Court has given a finding that orders passed by Company Courts are binding on Debt Recovery Tribunals.
The Bench comprising of Justices Jagdish Singh Khehar and Adarsh Kumar Goel was hearing a Petition challenging the order of Madras High Court which made a similar observation.
State Bank of Mysore had extended some loans to a Sugar Company, a Public Limited Company. However it was ordered to be wounded up in 1999. On default on the Bank’s petition for recovery of Rs. 22.31 Crore, DRT, Banglore issued a Recovery Certificate for Rs. 8.40 Crore. Since Company was under Winding up Bank sought permission from Company Court under the pending Company Petition.
Company Court on its part allowed the Bank’s plea and gave leave to go ahead with recovery subject to some conditions. Consequently Auction of the property of Sugar Company was fixed. Highest bid was made by M/s Anita International for Rs.10.25 Crore.
Workers Union of Sugar Company challenged the same before Karnataka High Court. One of the Directors of Sugar Company also challenged the Auction sale of a plea that reserve price of Rs. 10 Crore was too low.
High Court set aside the Auction Sale, ordered fresh sale at revised reserved price.
In the petition filed in Supreme Court, Appellant took a stand that the Company Court in the High Court at Madras, had no jurisdiction in respect of the proceedings which fell within the legitimate domain of the RDB Act.
Apex Court ruled that there was sufficient justification for the parties to approach the Company Court in Madras High Court.
The order of Company Court was clearly binding on the DRT, Bangalore and on the Recovery Officer. As such Appeal was dismissed
Read Full Text of Judgment Here-