CORAMTHE HONOURABLE MR v. The Presiding Officer DRT, Coimbatore2. K.B.Ramasubramania Raja Proprietor of Sri Vairalakshmi

2.3. The Recovery Officer DRT, Coimbatore on 20.09.2003issued demand notice and warrant of attachment of movables includingall machineries and finally the Recovery Officer, Coimbatore passedan order on 30.09.2003 ordering attachment of the machineries.. TheMill filed an application before the Recovery Officer DRT, Coimbatorechallenging the authority of the Recovery Officer DRT, Mumbai totransfer the Recovery Certificate to Coimbatore. The said applicationwas dismissed on 12.01.2004 and the said order became final, sinceneither the Mill nor the guarantors challenged the same.2.4. The bank thereafter requested the Recovery OfficerDRT, Coimbatore to proceed with the sale of the machineries of theMill. The Recovery Officer DRT, Coimbatore thereafter invited sealedtenders for the sale of machineries of the Mill. A sum ofRs.1,75,00,000/- was fixed as upset price and the date of inspectionwas fixed on 29.01.2004. He also invited the prospective tenders onor before 30.01.2004. The tenders were to be opened on 03.02.2004 inthe presence of the bidders.2.5. One Shree Maruthi Textiles submitted its tender andoffered to pay a sum of Rs.2,50,99,999/-. It was the highest offerand hence the Recovery Officer declared the said textile mill as thehighest bidder. The said mill was directed to remit the full purchasemoney together with the poundage fee within 15 days from the date ofsale. The textile mill did not remit the amount within the stipulatedtime and submitted a letter dated 18.02.2004 seeking extension oftime. The said application was consented by the bank. However, theRecovery Officer passed an order dated 27.02.2004 directing the saidtextile mill to pay 25% of the bid amount less EMD on or before05.03.2004 and the balance of 75% on or before 10th March 2004 alongwith the poundage fee of Rs.2,51,000/-. The said textile mill did notpay 25% as directed and submitted a letter dated 08.03.2004 forextension of time by one more month stating that the labourers werepreventing its representatives from entering into the place where themachineries were installed. 2.6. The Recovery Officer declined to grant time and on17.03.2004, he declared Shree Maruthi Textiles as defaulter and heldthat the machineries would be resold and the second highest bidderviz. Sri Vairalakshmi and Co., would be given opportunity to bid themachinery for Rs.2,50,99,999/-. The second respondent, in pursuanceto the said order, submitted a letter agreeing to deposit the EMDamount of Rs.17,50,000/- and also willing to pay the purchase priceof Rs.2,50,99,999/-. It was accepted by the Recovery Officer. Thesecond respondent paid the EMD amount of Rs.17,50,000/-. On25.03.2004, Sri Vairalakshmi & Co., filed a letter before theRecovery Officer, DRT, Coimbatore requesting him for extension oftime and accordingly he granted extension of time till 16.04.2004 formaking payment of the full purchase money. https://hcservices.ecourts.gov.in/hcservices/

2.7. While the matter stood thus, during the first week ofApril, 2004, the Recovery Officer, DRT Coimbatore went back to hisparent department and the office of the DRT became vacant with effectfrom 01.04.2004. Since, the Presiding Officer of DRT, Coimbatore wasalso transferred, the Presiding Officer DRT II, Chennai was appointedas the Presiding Officer holding concurrent charge of DRT,Coimbatore. In view of the request made by the petitioner-bank toproceed with the recovery proceedings, the first respondent took upthe recovery proceedings on 07.05.2004. However, he passed thefollowing order in the docket:-" Since no regular R.O is available in this Tribunalthe EMD deposited by the second bidder has to be returned.Further, the matter should be returned to DRT III, Mumbaifor further NA. "2.8. As the first respondent declined to deal with thematter and directed the Registry to return all the papers to DRT,Mumbai, the bank has come up with the present writ petition for therelief set out earlier.2.9. For completion of narration of facts, we may alsostate that in the present writ petition, this Court by order dated2.8.2004 directed Sri Vairalakshmi & Co., to deposit a sum of Rs.50lakhs immediately and the balance amount to be paid in instalments orin one lot, however within 2 months (i.e) on or before 02.10.2004.The Mill filed SLP No.22658 of 2004 challenging the said order andthe Apex Court by order dated 29.10.2004 directed status quo.2.10. In the meantime, on 13.8.2004, the Presiding Officer,DRT, Chennai, at the instance of the bank as well as Sri Vairalakshmi& Co., directed the Recovery Inspector, Coimbatore to go with thebank officials with approved valuer and segregate the machinery intofive lots and also segregate the machinery at the first instance forRs.50 lakhs and to file a compliance report before 08.09.2004.Between 24.8.2004 and 26.10.2004, Sri Vairalakshmi & Co., removed lot'P' machinery. On 1.9.2004, Sri Vairalakshmi & Co., moved anotherapplication before the Presiding Officer, DRT, Chennai to removeother lots and deposited Rs.60.36 lakhs. However, the PresidingOfficer, DRT, Chennai directed Sri Vairalakshmi & Co., to remove lot'K'. Thereafter, Sri Vairalakshmi & Co., removed certain lots. On5.10.2004, the bank filed an application before the PresidingOfficer, DRT, Chennai in I.A.No.407 of 2004 for appropriation ofproceeds. By order dated 26.10.2004, the Presiding Officer, DRT,Chennai, confirming that the entire sale proceeds were paid by SriVairalakshmi & Co., and had removed the machinery as on 26.10.2004,ordered for appropriation of sale proceeds. https://hcservices.ecourts.gov.in/hcservices/

2.11. On 16.5.2008, the Apex Court allowed the Civil Appealfiled questioning the order of the Division Bench of this Court andremanded the same to this Court on the ground that the Mill was notgiven an opportunity of being heard and ordered the status quo to bemaintained. 2.12. In the meanwhile, BIFR, Mumbai recommended thewinding up of the company, and by order dated 28.3.2008, the HighCourt of Bombay directed the winding up of the third respondent Millin C.P.No.395 of 2003. The third respondent Mill filed an appeal andthe order of winding up was confirmed on 8.8.2008. SLP No.22300 of2008 filed by the Mill was also dismissed by the Apex Court on22.9.2008. 3. We have heard Mr. A.L.Somayaji, learned Senior Counselappearing for the petitioner, Mr.P.S.Raman, learned Advocate Generalappearing for the second respondent assisted by Mrs.Pushpa Menon,Mr.Ajit K.Sinha, learned Senior Counsel appearing for the thirdrespondent and Mr.S.R.Sundar, learned Assistant Official Liquidatorappearing for Official Liquidator (Bombay).4. Mr.A.L.Somayaji, learned Senior Counsel for thepetitioner-bank would submit that the Presiding Officer, DRT,Coimbatore has not passed any judicial order on the proceedingsrelating to the Recovery Certificate. By order dated 7.5.2004, hehas only made an endorsement in the docket that in view of want ofRecovery Officer in the said Tribunal, the matter should be returnedto DRT III, Mumbai for further necessary action. In thesecircumstances, it is not necessary for the bank to question the saidorder and on the other hand, the writ petition seeks for a directionto the DRT, Coimbatore to proceed further with the RecoveryCertificate based upon the order of DRT III, Mumbai directing theDRT, Coimbatore to proceed with the Recovery Certificate, which orderhas become final, as the appeal filed by the Mill was dismissed. Hewould also submit that subsequent to the filing of the writ petition,the bank also filed an application before the DRT, Chennai forcompletion of sale on the basis of the order of the Division Bench ofthis Court and thereafter further proceedings were held and in fact,Sri Vairalakshmi & Co., was permitted to remove lot 'K' of themachineries. Thereafter, by further orders, the said Sri Vairalakshmi& Co., was allowed to remove lot 'D', lot 'L' and lot 'T'machineries. The said Sri Vairalakshmi & Co., also has paid theentire money representing the sale price of machineries and theRecovery Inspector, DRT, Coimbatore also submitted a report to thePresiding Officer, Chennai confirming the payment. On 5.10.2004, thebank also filed an application before the Presiding Officer, DRT,Chennai in I.A.No.407 of 2004 for appropriation of proceeds to bepaid to the bank towards security charges. The DRT, Chennai has alsopassed such an order on 26.10.2004. In this background, the writ https://hcservices.ecourts.gov.in/hcservices/ petition seeking for a direction can be entertained even when thedocket order dated 7.5.2004 passed by the DRT, Chennai is notquestioned. 5. On the other hand, Mr.Ajit K.Sinha, learned SeniorCounsel for the third respondent-Mill would firstly submit thatunless the order of DRT, Chennai dated 7.5.2004 in returning thepapers to DRT III, Mumbai is questioned, the writ petition in thenature seeking for a direction alone is not maintainable. By thatorder, in fact the DRT, Chennai has also directed the refund of EMDpaid by the Mill. Hence the learned Senior Counsel submitted thatthe writ petition is liable to be rejected. That apart, he wouldsubmit that the entire proceedings both before the High Court ofBombay followed by the proceedings before the DRT, Mumbai and theconsequential proceedings of DRT, Coimbatore and Chennai are anullity since the matter was already pending before BIFR. He wouldrely upon the provisions of Section 22 of the Sick IndustrialCompanies (Special Provisions) Act, 1985 (for short, "the SICA").The core contention of the learned Senior Counsel is that in theabsence of consent from BIFR, the decree passed by Court or any otherforum is a coram non judice and is without jurisdiction and it is anullity. He would also submit that the provisions of Section 34 ofthe RDDBFI Act will only be in addition and not in derogation ofSICA. Therefore, the provisions of Section 22 of SICA will prevailover the provisions of RDDBFI Act. He would further submit that theentire sale proceedings are illegal, since the proceedings are incontravention of Schedule II and III of the Income Tax Act. He alsoadded that a fraud has been played in the sale. 6. In response to the above submissions, Mr.A.L.Somayaji,learned Senior Counsel for the bank would submit that the Mill hadparticipated in the proceedings right from the inception of the twosuits before the High Court of Bombay. The Mill has also filedwritten statement after the transfer of the suits to DRT III, Mumbai.The Mill had participated in the entire proceedings. Even after theRecovery Certificate was issued and the same was transferred to DRT,Coimbatore for further action, as the properties of the Mill weresituated within the jurisdiction of that Tribunal, the Millparticipated in the proceedings and allowed the DRT, Coimbatore andsubsequently DRT, Chennai to proceed with the sale proceedings.Hence it is not now open to the Mill to question the entireproceedings on the ground they are a nullity. That apart, even onfacts, the Mill was declared sick on 6.8.98 even before the suitswere filed. The bank was also appointed as an operating agency. On30.10.2000, BIFR permitted the banks and financial institutions tocontinue the suits filed before the DRT. On 5.10.2001, BIFRrecommended for winding up of the company and based upon therecommendations of BIFR, the Mill was wound up by the orders of HighCourt of Bombay made in C.P.No.395 of 2003 dated 28.3.2008. The https://hcservices.ecourts.gov.in/hcservices/ appeal preferred by the Mill was dismissed by the High Court ofBombay on 8.8.2008 and thereafter, the SLP filed by the Mill was alsodismissed by the Apex Court on 22.9.2008. In the meantime, aprovisional liquidator was appointed on 28.9.2007. In thesecircumstances, the challenge to the above proceedings on the groundof nullity is not available to the Mill. Further, as on today, theMill cannot question the proceedings, as the provisional liquidatorwas appointed and subsequently, the Official Liquidator, Bombay hastaken over charge of the Mill. In these circumstances, on thequestion of waiver, the Mill is not entitled to raise the non-compliance of the provisions of Section 22 of SICA. 7. Mr.P.S.Raman, learned Advocate General appearing for thesecond respondent has also submitted that the Mill, which has sleptover the matter for several years without questioning the filing ofthe suits filed by the bank and without questioning the proceedingsbefore the Debts Recovery Tribunals at Bombay and Coimbatore and theorders passed thereunder, cannot now raise for the first time beforethis Court that the suits filed before the High Court of Bombay andthe proceedings before the Debts Recovery Tribunals at Bombay andCoimbatore and the orders passed thereunder are non est in law.Having failed to take the plea at the earliest point of time, now theMill cannot take such a plea that too, in the writ petition filed bythe bank. 8. Mr.S.R.Sundar, learned Assistant Official Liquidator forthe Official Liquidator (Bombay) has submitted that the question ofwaiver does not arise on the given facts and circumstances of thecase, especially when Section 22 of SICA is pressed into service. Inthis context, he relied upon a judgment of the Apex Court in HarshadChiman Lal Modi v. DLF Universal Ltd., and another, (2005) 7 SCC 791. 9. We have carefully considered the submissions made oneither side. 10. The primary objections of the Mill are that the writpetition for a mandamus is not maintainable, when the order of theDRT, Chennai dated 7.5.2004 in returning the papers relating to theproceedings pending before the Recovery Officer to the DRT, Mumbai isnot questioned. We have carefully gone through the endorsement madeby the Presiding Officer, DRT, Chennai dated 7.5.2004. The paperswere returned only on the ground that since no Recovery Officer wasavailable in the DRT, the papers were sought to be returned to theDRT, Mumbai for further action. By the said endorsement, it couldnot be said that final orders were passed as to the recoveryproceedings on any ground. The said order only directed DRT III,Mumbai to take further action. Subsequent to the above, the PresidingOfficer, DRT, Chennai considered the request of Sri Vairalakshmi &Co., which was the second highest bidder, and directed the Recovery https://hcservices.ecourts.gov.in/hcservices/ Inspector, Coimbatore to go with the bank officials with approvedvaluer and segregate the machineries into five lots and to file acompliance report on or before 8.9.2004. Pursuant to the saiddirection, the machineries were segregated into five lots and thereport fixing the valuation of each lot was filed by the valuer on20.8.2004. In fact the Recovery Inspector, Coimbatore himself visitedthe factory with the valuer and ensured the segregation ofmachineries on 23.8.2004, who later submitted his report to the DRT,Chennai on 27.8.2004. Subsequent to the report, Sri Vairalakshmi &Co., was allowed to remove lot 'P' machineries between 24.8.2004 and26.10.2004. Thereafter, Sri Vairalakshmi & Co., deposited a sum ofRs.60.36 lakhs before the Presiding Officer, DRT, Chennai, who againdirected the said Sri Vairalakshmi & Co., to remove lot 'K' by hisorder dated 1.9.2004. Accordingly, the machineries were removed andthe bank also filed an application before the Presiding Officer, DRT,Chennai in I.A.No.407 of 2004 for appropriation of the sale proceeds.11. Before adverting to the rival contentions, it will beuseful to extract the operative portion of the order of the ApexCourt made in Civil Appeal No.573 of 2005 dated 16.5.2008 questioningthe earlier order passed by this Court in the present writ petition.Paragraphs 5, 6, 7 and 8 of the said order are usefully extractedhere under:-"5. Mr.Singhvi, the learned senior counselfor the appellant, has at this stage raised onlyone argument before us. He has pointed out thatthe appellant was respondent No.3 in the writproceedings in the High Court and though aVakalatnama had been filed by a counsel on itsbehalf, the name of the counsel had not appearedin the cause list on the 2nd August, 2004 nor onthe date preceding that date with the resultthat the appellant had suffered seriousprejudice on account of remaining unrepresentedon being unaware of the proceedings.6. Mr.Andhyarujina, the learned seniorcounsel for the respondent bank has, however,taken us through the entire sequence of eventsand the history of the litigation and pointedout that the appellant was only a formal partyin the writ proceedings, and as all the orderspertaining to the recovery and the sale hadbecome final as some had not been challenged bythe appellant and in some others, the challengehad failed, no useful purpose would be served ininterfering in this matter. He has also pointedout that the property had been sold and removed https://hcservices.ecourts.gov.in/hcservices/ from the appellant's mill under the orders ofthis Court and nothing now remained to bedecided and that the efforts of the appellantsto prolong the litigation any further should bediscouraged.7. We have heard the learned counsel forthe parties and gone through the record verycarefully. It is true that the litigation hashad a chequered career in several forumsincluding this Court. However, in the presentproceedings, we are not called upon to take adecision on the ultimate effect of the earlierset of proceedings as Mr.Singhvi has limited hisclaim to the fact that the appellant had notbeen heard at the time when the High Court hadmade the impugned order on 2nd August 2004. Weare unable to accept Mr.Andhyarujina's plea thatas the sale proceedings had attained finality,there was no need to have heard the appellant /company as it had been impleaded as a mereformality. We feel that once having made theappellant a party in the writ proceedings, itdoes not lie on the Bank to contend that theappellant was not entitled to a hearing. We,accordingly, set aside the order of the HighCourt dated 2nd August 2004, and remit the casefor a fresh decision in accordance with law. Wealso direct that till such time the High Courttakes its decision in the matter, the status quoorder passed by this Court on 29th October 2004will continue to operate. We also request theHigh Court, in the background that the matterhas been pending for a very long time to renderits decision as expeditiously as possible.8. The appeal is allowed. There will,however, be no order as to costs."12. A careful reading of the judgment of the Apex Courtwould show that the history relating to the litigation was brought tothe notice of the Court and after noting the history, the Apex Courtobserved as above. It is also clear that the submission ofMr.Andhyarujina, the learned Senior Counsel for the bank that nouseful purpose would be served in interfering in the matter, as theproperty had already been sold and removed from the Mill under theorders of the Court and nothing remained to be decided and that theefforts of the Mill were only to prolong the litigation andaccordingly the same should be discouraged, did not find favour, as https://hcservices.ecourts.gov.in/hcservices/ the Apex Court did not accept the said contention, but ratherremitted the matter for fresh consideration. In these circumstances,we are called upon to consider all the contentions raised by eitherside and decide the same. 13. On the above factual background, the question forconsideration is as to whether the bank will be justified inapproaching this Court for continuance of the proceedings withoutchallenging the docket order? In our opinion, the Presiding Officer,DRT, Coimbatore did not decide the dispute between the parties videthe docket order dated 7.5.2004 and such order did not give any causeof action for the parties to question it's validity. The docketorder, as already indicated, is only directing the return of thepapers to the DRT, Mumbai for want of regular Recovery Officer.Later on, the DRT itself has taken up the application and much waterhas flown by now. In these circumstances, the bank cannot be deniedthe relief solely on the ground that it had not questioned the docketorder. In matters like this, the Court is bound to consider thejustification in the relief, rather than finding a reason ontechnicalities to reject the claim, if such claim is otherwisejustifiable. Hence the first contention of the Mill that the writpetition for a mandamus cannot be entertained in the absence ofchallenge to the docket order has no substance and accordingly, thesame is rejected. 14. The next submission is relating to the challenge tothe entire proceedings on the ground of nullity. Before we delve uponthe legal contentions, we may refer to the facts of the case. 15. The learned Senior Counsel appearing for thebank as well as the learned Advocate General appearing for the secondrespondent contended that both in the suits that were filedbefore the High Court of Bombay and in the proceedings beforethe Debts Recovery Tribunal either at Bombay or at Coimbatore,the Mill did not raise the issue at any point of time that theinitiation of the suits or proceedings before the Debts RecoveryTribunals cannot be proceeded in view of the bar under Section22 of SICA. In this regard, it may be noticed that the suits werefiled in April, 1999 before the High Court of Bombay. The suits weretransferred even in the year 1999 to Debts Recovery Tribunal, Mumbaiand renumbered as O.A.Nos.1526 and 1631 of 1999. Thereafter, BIFRby its order dated 13.10.2000 permitted the banks and institutionsto continue the suits filed before Debts Recovery Tribunal, but itsaid that the decrees could be executed only after prior approvalfrom the BIFR. 16. On 11.3.2003, the Bombay High Court issuednotice to the Mill directing it to appear in theCompany court to answer the winding up of the company. https://hcservices.ecourts.gov.in/hcservices/ On 17.4.2003 a common order was passed by the Debts RecoveryTribunal, Mumbai in O.A. Nos.1526 and 1631 of 1999 forrecovery of a sum of Rs. 5,89,62,243. On 10.6.2003, finalRecovery Certificate was issued by the Debts RecoveryTribunal, Mumbai. The Mill and its guarantors neverchallenged the said orders. Thus the decreepassed by Debts Recovery Tribunal had become final.Thereafter, the Recovery Officer, DRT III, Mumbai passedan order on 9.7.2003 forwarding the Debt RecoveryCertificate to Debts Recovery Tribunal, Coimbatore for execution,since the factory, land and building, plant and machinery werewithin the jurisdiction of Debts Recovery Tribunal, Coimbatore. TheMill filed Appeal No.429 of 2003 against such transfer. That appealwas dismissed on 16.12.2003 and the said order has become final. 17. On 30.9.2003, the Recovery Officer, Debts RecoveryTribunal, Coimbatore issued warrant of attachment of movableproperties and the same seems to have been executed on 10.10.2003in the presence of Mr.Pandey, the representative of the Mill.Thereafter, the Mill filed an application before the RecoveryOfficer challenging the transfer of Debts Recovery Certificate andthe recovery proceedings before the Recovery Officer, DRT, Coimbatoreand the same was rejected on 12.1.2004. Subsequently, the RecoveryOfficer issued a Proclamation of Sale of Machinery by proceedingsdated 19.1.2004. The Mill was aware of the same and did not raise anyobjection. The facts narrated above would amply establish that theMill was aware of the entire proceedings and had also participated inthe entire proceedings. It did not raise that no consent of BIFR wasobtained and therefore, in view of Section 22 of SICA, noproceedings against the Mill can be proceeded with. In our opinion,the Mill cannot be allowed to raise the said contention at this pointof time. Further, we may point out that as early as on 13.10.2000,the BIFR had permitted the bank and the institutions to continue thesuits pending before DRT III, Mumbai. Of course, in that order, theBIFR had also observed that the decrees if any obtained were to beexecuted only after prior approval of BIFR. Section 22 of SICArequires only a consent for initiating proceedings to recover anymoney due. Even before the suits were laid, the Mill was declared assick and the ICICI bank was appointed as the operating agency on6.8.98. Nevertheless, BIFR had permitted the bank to continue withthe suits instituted. That permission would amount to the grant ofconsent by BIFR in exercise of the power under Section 22 of SICA.Of course, a condition was imposed that the decrees if any obtainedwere to be executed after approval. The subsequent proceedings forexecution of the recovery certificate would only be procedural and inview of the participation of the Mill subsequently in all theproceedings which has resulted in sale of the properties, what isremaining is the appropriation of the sale proceeds by the bank. Inthe facts and circumstances of the case, the Mill cannot question the https://hcservices.ecourts.gov.in/hcservices/ subsequent proceedings on the ground of non-compliance of theconditional permission granted by the BIFR. We may also point outthat when the DRT III, Mumbai transferred the recovery proceedings toDRT, Coimbatore, the Mill only objected to the power of DRT III,Mumbai in having transferred the recovery proceedings to DRT,Coimbatore, but did not question the bar contained in Section 22 ofSICA. Further, even when that application was dismissed, no furtherchallenge was made by the Mill and allowed that order to becomefinal. Of course, the learned counsel would also submit that thesequestions can be raised in a collateral proceedings. In our opinion,the question of nullity, of course, can be raised in a collateralproceedings, but when the Mill has acquiesced itself to theproceedings by participating in the same, it cannot now raise thequestion of further proceedings. 18. The learned Senior Counsel for the Mill has referredto a series of judgments of the Apex Court as well as the DivisionBench of this Court in support of his contention that the entireproceedings right from the institution of the suits at the High Courtof Bombay till the recovery proceedings were continued at DRT,Chennai are a nullity. (i) Kiran Singh and others v. Chaman Paswan and others, AIR 1954 SC340;(ii) Sushil Kumar Mehta v. Gobind Ram Bohra, (1990) 1 SCC 193;(iii) Real Value Appliances Limited v. Canara Bank and others, (1998)5 SCC 554;(iv) Rishabh Agro Industries Ltd. v. P.N.B.Capital Services Ltd.,(2000) 5 SCC 515;(v) Jay Engineering Works Ltd., v. Industry Facilitation Council andanother, (2006) 8 SCC 677;(vi) Bhoruka Textiles Ltd., v. Kashmiri Rice Industries, (2009) 7 SCC521;(vii) The Clan Line Steamers Ltd. v. Gordon Woodroffe and Co.,(Madras) and others, 1979 (1) MLJ 349. 19. In Kiran Singh's case, the Apex Court was consideringthe question whether a suit could be laid before a District MunsifCourt when the proper Court to try the suit would be the SubordinateCourt as per the valuation of the suit. The construction of Section11 of the Suits Valuation Act was under consideration. Having regardto the objections raised as to the jurisdiction of the Munsif Courtto try the suit immediately at the appellate stage, the Apex Court https://hcservices.ecourts.gov.in/hcservices/ had observed as follows:-"6. The answer to these contentions must depend onwhat the position in law is when a courtentertains a suit or an appeal over which it hasno jurisdiction, and what the effect of Section 11of the Suits Valuation Act is on that position. Itis a fundamental principle well established that adecree passed by a court without jurisdiction is anullity, and that its invalidity could be set upwhenever and wherever it is sought to be enforcedor relied upon, even at the stage of execution andeven in collateral proceedings. A defect ofjurisdiction, whether it is pecuniary orterritorial, or whether it is in respect of thesubject-matter of the action, strikes at the veryauthority of the court to pass any decree, andsuch a defect cannot be cured even by consent ofparties. If the question now under considerationfell to be determined only on the application ofgeneral principles governing the matter, there canbe no doubt that the District Court of Monghyr wascoram non judice and that its judgment and decreewould be nullities. The question is what is theeffect of Section 11 of the Suits Valuation Act onthis position."We may point out that the Apex Court has observed as above havingnoticed that the objections were raised even at the initial stage. 20. In Sushil Kumar Mehta's case, the facts were that thelandlord without taking recourse under the rent control proceedings,filed an ejectment suit. The tenant thereupon filed an applicationunder Section 47 C.P.C. contending that the decree of the Civil Courtwas a nullity. In those circumstances, the Apex Court has held thatthe decree passed by the Court without jurisdiction over the subjectmatter or on other grounds which goes to the root of its exercise orjurisdiction, lacks inherent jurisdiction. It is a coram non judice. 21. In Real Value Appliances Limited case, the appellantbefore the Apex Court challenged the appointment of the provisionalliquidator and the order appointing a receiver by the High Court ofBombay contending that in view of mandate of Section 22 of the Act,such order should not have been passed. The Apex Court held thatonce a reference is registered or that an enquiry under Section 16(1)commences, the prohibitions contained in Section 22 shall immediatelycome into play. That was also a case where the appellant immediatelyafter the orders of High Court of Bombay had approached the ApexCourt contending that in view of bar under Section 22, the High https://hcservices.ecourts.gov.in/hcservices/ Court of Bombay ought not to have passed an order appointing aprovisional liquidator or a receiver. In the case on hand, asstated already, the Mill had participated in all the proceedings,invited orders and thereafter for the first time raised such a pleaand that too, in a writ petition filed by the petitioner-bank. Evennow the Mill did not question the jurisdiction of the High Court ofBombay and the DRT by initiating appropriate proceedings. 22. The next decision relied on is Rishabh Agro IndustriesLimited case. That was a case where the appellant before the ApexCourt filed an application before the High Court for stay of thesuit in view of Section 22 of the Act, when winding up proceedingswere initiated. That was also a case where the parties hadapproached the Court immediately after initiation of the winding upproceedings and there was no laches on their part. 23. In Jay Engineering Works Limited case, the Apex Courtwas considering a case where respondent No.2 filed a claim petitionbefore the Industry Facilitation Council, the first respondenttherein in terms of provisions of the Interest on Delayed Payments toSmall Scale and Ancillary Industrial Undertakings Act, 1993. Theaward of the Council was put in execution. The bank account of theappellant was attached by the District Court, Ratlam. A writ petitionwas filed by the appellant before the Madhya Pradesh High Courtquestioning the same. The writ petition was dismissed by the learnedSingle Judge and the Letters Patent Appeal was also dismissed. TheApex Court, while dealing with the issue, held that when an enquirywas initiated under Section 60, no suit for recovery of money orother proceedings shall be proceeded with. Here again, the appellanttherein was diligent in approaching the High Court with a plea thatno further proceedings could be initiated in any Court. In this case,as stated already, the Mill had not initiated any proceedings and ithad taken such a plea only in the writ petition filed by the bank. 24. In Bhoruka Textiles Limited case, the Apex Court wasconsidering a case where the respondents therein filed a suit forrecovery of the amount before the Civil Judge, Hangal. One of thecontentions raised by the appellant before the Apex Court in thesaid suit was that the company has become a sick Industry within themeaning of the provisions of Section 22 of the SICA and a referencehaving been made to the Board of Industrial and FinancialReconstruction in terms of the provisions of the Act, the suit wasnot maintainable. Since such a plea was taken at the earliest pointof time, the Apex Court has held that the jurisdiction of the CivilCourt was ousted in terms of the provisions of Section 22 of the SICA. 25. In Clan Line Steamers Limited case, the DivisionBench of this Court was considering a question as to whether leaveshould be obtained at the institution of the suit and if no https://hcservices.ecourts.gov.in/hcservices/ application was filed for such leave, the defect could be cured.While answering the same, the Division Bench held that in the absenceof leave the suit was not maintainable. Nevertheless, that will notbe a bar for the Court to grant leave. However the Bench went on toobserve that when a new defendant is sought to be added, in the suitinstituted in respect of that defendant, leave could be grantedinsofar as that defendant is concerned. In view of the above, theBench held that the suit filed without obtaining leave under Clause12 of the Letters Patent cannot be entertained. In our opinion, thesaid judgment cannot be made applicable to the facts of this case. 26. A perusal of the above judgments would show thatwhenever the plea of jurisdiction was available to the parties, suchplea could only be raised at the earliest point of time in the verysame proceedings. Only under those circumstances the issue ofnullity of the proceedings was considered and upheld. 27. The law on the issue of nullity of the proceedings isby now well settled. Whenever a Court or the Tribunal, as the casemay be, tries a suit without jurisdiction and any judgment or orderis passed to be a nullity in most of the cases, be it in a civil suitrelating to civil dispute or the suits laid invoking the provisionsof SICA, the Apex Court had found that the plea should be raised atthe earliest point of time. 28. The provisions of Section 22(1) of SICA read thus:-"22.Suspension of legal proceedings, contracts,etc. (1) Where in respect of an industrialcompany, an inquiry under section 16 is pendingor any scheme referred to under section 17 isunder preparation or consideration or asanctioned scheme is under implementation orwhere an appeal under section 25 relating to anindustrial company is pending, then,notwithstanding anything contained in theCompanies Act, 1956, or any other law or thememorandum and articles of association of theindustrial company or any other instrumenthaving effect under the said Act or other law,no proceedings for the winding up of theindustrial company or for execution, distressor the like against any of the properties ofthe industrial company or for the appointmentof a receiver in respect thereof and no suitfor the recovery of money or for theenforcement of any security against theindustrial company or of any guarantee inrespect of any loans or advance granted to theindustrial company shall lie or be proceeded https://hcservices.ecourts.gov.in/hcservices/ with further, except with the consent of theBoard or, as the case may be, the appellateauthority.(2) to (5) ....."The provisions of Section 34 of RDDBFI Act, 1993 read thus:"34. Act to have overriding effect.--(1) Saveas provided under sub-section (2), theprovisions of this Act shall have effectnotwithstanding anything inconsistent therewithcontained in any other law for the time beingin force or in any instrument having effect byvirtue of any law other than this Act.(2) The provisions of this Act or the Rulesmade thereunder shall bein addition to, and notin derogation of, the Industrial FinanceCorporation Act, 1948 (15 of 1948), the StateFinancial Corporations Act, 1951 (63 of 1951),the Unit Trust of India Act, 1963 (52 of 1963),the Industrial Reconstruction Bank of IndiaAct, 1984 (62 of 1984) and the Sick IndustrialCompanies (Special Provisions) Act, 1985 (1 of1986) and the Small Industries Development Bankof India Act, 1989 (39 of 1989)." 29. A careful reading of Section 22 of the SICA would showthat when an enquiry under section 16 is pending or any schemereferred to under section 17 is under preparation or consideration ora sanctioned scheme is under implementation or where an appeal undersection 25 relating to an industrial company is pending, thennotwithstanding anything contained in the Companies Act, 1956 or anyother law, no suit for recovery of money or for the enforcement ofany security against the interested company or of any guarantee inrespect of any loans or advance granted to the industrial companyshall lie or be proceeded with further, except with the consent ofthe Board or, as the case may be, the appellate authority. Therestriction for institution of a suit for recovery of money or forenforcement of any security against an industrial company or anyguarantee to the industrial company is not totally prohibited, butsuch proceedings are restricted to be initiated only after obtainingconsent of the Board or, as the case may be, the appellate authority.The consent of the Board appears to be only procedural and, ofcourse, must be strictly complied with. 30. In KSL and Industries Limited v. Arihant ThreadsLimited and others, (2008) 9 SCC 763, the Apex Court was considering https://hcservices.ecourts.gov.in/hcservices/ the two statutes, namely, Sick Industrial Companies (SpecialProvisions) Act, 1985 and the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993. Speaking for the Bench, HisLordship Justice C.K.Thakker observed that even though both theconflicting statutes contain non obstante clause, in case ofconflict, the RDDBFI Act will prevail over the SICA so far as therecovery of public revenue is concerned. His Lordship Justice AltamasKabir, on the other hand, held otherwise. The Bench, however,recognised the proceedings pending before the Debt Recovery Tribunalon the facts of that case. Ultimately, the Apex Court held inparagraphs 134 to 142 as follows:-"134. This brings us to the next questionregarding the applicability of Section 22 of SICAin the proceedings initiated by IDBI for recoveryof its dues under the provisions of the RDDB Act,1993.135. As will be seen from what has beenindicated hereinabove, the final order was passedon 15.7.2003 by DRT, Chandigarh, at a point oftime when no reference had at all been made by therespondent Company to BIFR for being declared a"sick company". The auction was held and concludedon 30.10.2004, again before a reference had beenmade by the respondent Company to BIFR. It isonly on 21.12.2005 that the Company filed areference before BIFR which was rejected on3.4.2006. In between, the appeal preferred by therespondent Company (No.52 of 2004) before DRTunder Section 30 of RDDB Act was allowed and theauction-sale was set aside, but the final orderpassed by DRT, Chandigarh, remained untouched.136. The appeal preferred by the appellantherein against the order of DRT allowing AppealNo.52 of 2004 was subsequently decided in favourof the appellant on 10.2.2006 and the auction-salewas confirmed in favour of the appellant with adirection upon the Recovery Officer and the otherauthorities concerned to complete the sale infavour of the appellant herein. It is only on15.9.2006, after all the aforesaid orders had beenpassed that a second reference was filed by therespondent Company before BIFR on 15.9.2006 and on22.2.2007 the Company was declared to be a "sickcompany" by BIFR.137. The above dates will amply show that the https://hcservices.ecourts.gov.in/hcservices/ proceedings had been taken by IDBI under Section19 of the RDDB Act and the final order had beenpassed therein long before BIFR came on to thescene. Even the auction-sale was concluded infavour of the appellant before the first referencewas made by the Company to BIFR. The sale wasconfirmed by DRAT before the writ petitions wereallowed by the High Court on the ground that therecovery proceedings were barred under Section 22of SICA. Ultimately, the Company's first referencewas rejected by BIFR and only upon a secondreference filed by the respondent Company on15.9.2006 was the Company declared by BIFR to be a"sick company" on 22.2.2007.138. In other words, the final order in therecovery proceedings under Section 19 of the RDDBAct was passed and the auction-sale was concludedbefore the first reference was filed by therespondent Company with BIFR and long before therespondent Company was declared to be a sickcompany on 22.2.2007. It is, therefore, clearthat the provisions of the Sick IndustrialCompanies (Special Provisions) Act, 1985, weresought to be invoked by Respondent 1 Company afterthe recovery proceedings had been concluded infavour of the appellant who had also deposited thesale price in respect of his offer which had beenaccepted by the Recovery Officer.139. For reasons which are obvious, therespondent Company chose not to take recourseeither to Section 20 of the RDDB Act or Rule 60 ofthe Second Schedule of the Income Tax Act, 1961,and took a chance of filing an appeal underSection 30 of the RDDB Act with regard to thefixation of the reserve price of the Company'sassets by the Recovery Officer for the purposes ofthe auction-sale and the scope of the appeal waslimited to such issue alone.140. Since the respondent Company did notchallenge the final order of DRT, Chandigarh, thesame continued to be in force and was carried toits logical conclusion by the holding of auction-sale and confirmation thereof in favour of theappellant herein.141. The order passed by DRAT on 10.2.2006 https://hcservices.ecourts.gov.in/hcservices/ confirming the sale in favour of the appellant wasmade long before the respondent Company wasdeclared to be a "sick company" on 22.2.2007. TheHigh Court was, therefore, in error in applyingthe provisions of Section 22 of SICA when the salehad already been confirmed in favour of theappellant and the purchase price had already beendeposited. Furthermore, the first reference madeby the respondent Company was also rejected byBIFR on 3.4.2006.142. Apart from the above, even on merits,the conduct of Respondent 1 Company leaves much tobe desired. Without challenging the final orderpassed by DRT, Chandigarh, allowing the Bank'sclaim of Rs.25,26,60,836 together with interest @7.8% per annum, the said respondent questioned theorder of the Recovery Officer, fixing the reserveprice of the Company's assets for the purposes ofthe auction-sale, under Section 30 of the RDDBAct, having full knowledge of the fact that thefinal order of DRT, Chandigarh, could not bechallenged in such appeal. The steps taken byRespondent 1 Company were far from bona fide andwere only aimed at stalling the auction-sale. Evenat the time of auction of the Company's assets, noattempt was made by Respondent 1 Company to securea bid higher than that of the appellant."31. On the facts of this case, the Mill has not questionedthe earlier proceedings by way of separate proceedings and has onlychosen to oppose the relief prayed by the bank. In this context, thelearned Senior Counsel for the Mill would submit that such a plea isavailable even in collateral proceedings. Law in this regard is wellrecognised by the Apex Court. However, the question is whether atthis point of time the Mill is entitled to take such a plea? On thefacts of this case, such a plea is not available to the Mill andhence we are not inclined to accept the submission of the learnedSenior Counsel for the Mill that in view of the entire proceedingsbeing a nullity the prayer in the writ petition cannot be ordered. 32. One more contention is raised by the learned SeniorCounsel appearing for the Mill, namely, that even assuming that theDebt Recovery Tribunal has the power to sell the properties of theMill, the sale conducted is in total contravention of schedule II andIII to the Income Tax Act, 1961 as made applicable to the sale by theDebt Recovery Tribunal under Section 29 of the RDDBFI Act, 1993. Thesale, since illegal, is liable to be set aside. Elaborating the saidcontention, learned Senior Counsel appearing for the Mill submitted https://hcservices.ecourts.gov.in/hcservices/ that the tender notice was published in Dindigul Edition of “DailyThanthi”. The publication was made in English in Tamil newspaper,which is contrary to Rule 38 of Schedule II to the Income Tax Act,which states that such publication must be given in the language ofthe local District, which is Tamil in the instant case; the tendernotice was never published in any Tamil daily in other parts of TamilNadu nor in any English daily having circulation all over India orTamil Nadu thereby effectively shutting out the wide participation;the tender notice was published on 21.01.2004 and the date ofinspection of the machineries was fixed as 29.01.2004 and the lastdate for submission of tender was 30.01.2004. By not givingsufficient time, effective participation from the bidders are shutout; fifteen days notice was dispensed with which is contemplatedunder Rule 40 of Schedule II to the Income Tax Act, 1961; ShreeMaruti Textiles was declared as highest bidder and since it could notpay the money within the time stipulated, extension of time wasgranted. However, the said period also lapsed. Hence, the secondrespondent wrote a letter dated 24.02.2004 enclosing the EMD ofRs.17,50,000/- and promised to pay Rs.1,00,00,000/- within four daysand the balance amount by 06.03.2004; when Shree Maruti Textilesfailed to pay the bid amount, instead of bringing a fresh sale,opportunity was given to the second highest bidder and the sale wasconfirmed in favour of the second respondent; as per Rule 38 ofSchedule II to the Income Tax Act, every sale of movable propertyshall be only through issue of a proclamation under Rule 39. Rule 43stipulates that the immovable properties shall be sold only by publicauction and Rule 44(1) stipulates that in case of any default inpayment, the properties shall be re-sold; the undertaking given bythe second respondent in its letter dated 24.02.2004 agreeing to makepayment of Rs.1,00,00,000/- within four days and the balance amounton or before 06.03.2004 was given a complete go by since the secondrespondent sent a letter dated 25.03.2004 praying for extension ofthree weeks to remit the sale consideration; as per the order dated25.03.2004, since the second respondent did not pay the amount withinthe stipulated time, the EMD paid by the second respondent ought tohave been returned and the properties ought to have been brought forfresh sale by issuing fresh proclamation; even before this Court, thesecond respondent did not honour the orders of the Court in payingRs.50,00,000/- within the stipulated time; the entire tender processand sale have been conducted in undue haste and without propervaluation of the machineries. 33. The only answer to the above would be that the Milldid not question the sale of the properties till date. The RecoveryOfficer, Debt Recovery Tribunal, Coimbatore issued warrant ofattachment of movable properties as early as on 30.09.2003 and thesame was executed on 10.10.2003 in the presence of one Mr.Pandey ofthe Mill. The proclamation was issued as early as on 19.01.2004. TheRecovery Officer invited sealed tenders on 19.01.2004. The Mill, by https://hcservices.ecourts.gov.in/hcservices/ its letter dated 12.04.2004 to the Recovery Officer, Debt RecoveryTribunal, Coimbatore only reminded about the statutory obligation ofthe Mill for payment of the customs duty to the machineries imported.On 03.02.2004, the date of public auction, five prospective biddersparticipated. The Recovery Officer, Debt Recovery Tribunal,Coimbatore, proclaimed Shree Maruti Textiles as the successfulbidder. On 27.03.2004, the Recovery Officer declared Shree MarutiTextiles as a defaulter as it failed to pay the balance amount inspite of two extensions granted to it. Thereafter, the RecoveryOfficer held that the machineries will be re-sold and the secondhighest bidder would be given opportunity to bid for the same amountas quoted by Shree Maruti Textiles. The Mill who failed to questionthose orders, cannot now raise the plea in the writ petition filed bythe bank that the sale was not properly conducted. Hence, the saidground raised by the Mill is liable to be rejected and accordingly,rejected. 34. In this connection, it will be useful to rely on thedecision in Basheshar Nath v. I.T.Commr., AIR 1959 SC 149. Inparagraph 66 of the said judgment, it has been held by the Apex Courtthat a right granted by an ordinary statutory enactment can be waivedby an individual, however, it is not so in respect of the rightguaranteed under the Constitution. Paragraph 66 of the said judgmentis usefully extracted here under:-"(66) There is, I think, a three-foldclassification: (1) a right granted by anordinary statutory enactment; (2) a rightgranted by the Constitution; and (3) a rightguaranteed by Part III of the Constitution.With regard to an ordinary statutory rightthere is, I think no difficulty. It is wellrecognised that a statutory right which is forthe benefit of an individual can in propercircumstances be waived by the party for whosebenefit the provision has been made. Withregard to a constitutional right, it may bepointed out that there are several provisionsin our Constitution which do not occur in PartIII, but which yet relate to certain rights;take, for example, the rights relating to theServices under the Union and the States inPart XIV. I do not think that it can beseriously contended that a right which isgranted to a Government servant for hisbenefit cannot be waived by him, provided noquestion of jurisdiction is involved ..." 35. In yet another decision in Construction India v. https://hcservices.ecourts.gov.in/hcservices/ Secretary, Works Department, Government of Orissa, (1998) 2 SCC 89,in paragraphs 12 and 13, the Apex Court has held as follows:-"12.The jurisdiction which is conferredon an arbitrator is on account of the consentof the parties to the arbitration agreement.Before the arbitrator, the objection as tojurisdiction of the arbitrator was withdrawnby the respondents. It shows acquiescence onthe part of the respondents in the continuedjurisdiction of the arbitrator to decide thedispute. The minutes recorded show that afterraising the objection, the respondents havewithdrawn the same. This would indicate aconscious acquiescence on the part of therespondents in the continued jurisdiction ofthe arbitrator. In the case of N.Chellappanv. Secy., Kerala, this Court on similargrounds held that the State Electricity Boardwas precluded from challenging thejurisdiction of the umpire. A passage fromRussell on Arbitration, 17th Edn. At p.215 wasrelied upon. It is to the following effect:" If the parties to the reference eitheragree beforehand to the method of appointmentor afterwards acquiesce in the appointmentmade, with full knowledge of all thecircumstances, they will be precluded fromobjecting to such appointment as invalidatingsubsequent proceedings. Attending and takingpart in the proceedings with full knowledge ofthe relevant fact will amount to suchacquiescence".It has also relied upon a decision of PrivyCouncil in the case of Murtaza Hossein v. BibiBechunnissa.13. The same passages have been quotedby this Court in a later judgment in the caseof Prasun Roy v. Calcutta MetropolitanDevelopment Authority where this Court saidthat long participation and acquiescence inthe arbitration proceedings preclude a partyfrom contending that the proceedings werewithout jurisdiction. Therefore, on thisground also the appellant is entitled tosucceed." https://hcservices.ecourts.gov.in/hcservices/

36. In Prasun Roy v. Calcutta M.D. Authorities, AIR 1988SC 205, the Apex Court has held that acquiescence of a party toarbitration proceedings by participating in it for long time cannotbe allowed thereafter to contend that by reason of some disabilitymatter is legally incapable of being referred to arbitrator.Paragraphs 8, 9 and 10 of the said judgment are usefully extractedhere under:-"8.The Judicial Committee in decision inChowdhury Murtaza Hossein v. Mussumat BibiBechunnissa (1876) 3 Ind App 209 observed atp.220:On the whole, therefore, their Lordshipsthink that the appellant, having a clearknowledge of the circumstances on which hemight have founded an objection to thearbitrators proceedings to make their awards,did submit to the arbitration going on; thathe allowed the arbitrators to deal with thecase as it stood before them, taking hischance of the decision being more or lessfavourable to himself; and that is too latefor him, after the award has been made, and onthe application to file the award, to insiston this objection to the filing of the award".Relying on the aforesaid observations, thisCourt in N.Chellappan v. Secy, Kerala StateElectricity Board, (1975) 1 SCC 289: (AIR 1975SC 230) acted upon the principle thatacquiescence defeated the right of theapplicant at a latter stage. In that case,the facts were similar. It was held byconduct there was acquiescence. Even in acase where initial order was not passed byconsent of the parties a party byparticipation and acquiescence can precludefuture challenges.9. In the grounds of appeal, no prejudicehas been indicated by the appointment of thesecond arbitrator.10. Mr.S.N.Kacker, learned counsel forthe respondents drew our attention to the factthat the decision in the Chowdhuri MurtazaHossein's case (1876 (3) Ind App 209) was https://hcservices.ecourts.gov.in/hcservices/ where the party challenged the appointment ofthe receiver after the award was made. Healso submits that in this case the respondentsherein had challenged the order of appointmentof the arbitrator on 19.04.1983 and not afterthe arbitrator had made the award. We areable to accept this distinction, basically theprinciple of waiver and estoppel is not onlyapplicable where the award had been made buton the principle that a party, fromchallenging the proceedings in which heparticipated. In the facts of this case,there was no demur but something which can becalled acquiescence on the part of therespondents or which precludes fromchallenging the participation." 37. The next contention raised by the learned SeniorCounsel appearing for the Mill is that the entire sale process isliable to be set aside on the ground of fraud committed by the bankand the collusion between the bank and the second respondent. Thecontention raised in this regard is liable to be rejected for thereasons enumerated in the earlier paragraphs. 38. Having considered the issue, we are of the firm viewthat none of the grounds raised by the Mill can be accepted. As ofnow, the entire proceedings are at the stage of only appropriation ofsale proceeds by the bank. That apart, the Mill has been declared assick and the liquidator was also appointed. The further proceedingsbefore the DRT, Chennai relating to the appropriation of saleproceeds can very well be defended by the Official Liquidator on anyother grounds available to him. As the writ petition seeks only adirection to the Presiding Officer, DRT, Coimbatore to proceedfurther with the recovery proceedings without reference to the returnand much water has flown, the bank must be allowed to work out itsremedy before the DRT, Coimbatore in the application pending forappropriation. In that view of the matter, the writ petition must beallowed and accordingly, the same is allowed. However, there shallbe no order as to costs. Consequently, W.P.M.P.Nos.16614 & 16615 of2004 are closed. Sd/- Asst.Registrar/true copy/ Sub Asst.Registrarss https://hcservices.ecourts.gov.in/hcservices/ To1. The Presiding Officer DRT, Coimbatore2. The Official Liquidator High Court, Bombay 5th Floor, Bank of India Building M.G.Road, Fort Bombay – 400 001.+2 cc to M/s.Satish Parasaran, Advocate, SR.No.64352+1 cc to Mr.R.Shankaranarayanan, Advocate, SR.No.64494+1 cc to Mr.S.R.Sundar, Advocate, SR.No.64719 Order inW.P.No.14090 of 2004SSN {CO}TP/1.12.2009.