NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

Common Law in India – 1st Trimester Project

ANITA INTERNATIONAL AND ORS.

VERSUS

TUNGABADRA SUGAR WORKS MAZDOOR SANGH AND ORS.

Decided on: 04.07.2016

Hon'ble Judges/Coram: J.S. Khehar and A.K. Goel, JJ.

SUBMITTED BY: SUBMITTED TO:

AASHISH DHAKA PROF. (DR.) GHAYUR ALAM

SECTION- A

ROLL NO. – 2017BALLB15

ENROLLMENT NO. - A-1792

1
 An Analysis of

ANITA INTERNATIONAL AND ORS. …… APPELLANT

VS.

TUNGABADRA SUGAR WORKS MAZDOOR SANGH AND ORS.

…… RESPONDENTS

http://judis.nic.in/supremecourt/imgs1.aspx?filename=43749

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. 6042-6048 Of 2011

NAME OF JUDGES: J.S. Khehar and A.K. Goel, JJ.

DECIDED ON: 04.07.2016

2
 TABLE OF CONTENTS

Sr. No. Particulars Page No.

1 CONCRETE FACTS 4
2 MATERIAL FACTS 6
3 QUESTIONS OF LAW AND ANSWERS TO 7
THESE QUESTIONS
4 CONCRETE JUDGEMENT 8
5 RATIO DECIDENDI 9

CONCRETE FACTS

3
(i) Two company petitions were filed by Videocon International Ltd. and Tapti Machines
Pvt. Ltd., for winding up of Deve Sugars Ltd. before the High Court of Madras. Deve
Sugars Ltd. was running a sugar factory in the State of Karnataka. Deve Sugars Ltd.
was ordered to be wound up and the Official Liquidator took possession of the assets of
Deve Sugars Ltd.

(ii) State Bank of Mysore filed Company Applications, in the then pending Company
Petition, seeking leave of Company Court in High Court to pursue recovery
proceedings before Debt Recovery Tribunal (DRT).

(iii) Company Court granted leave “…subject to condition that…no coercive steps are taken
against assets of company during or after conclusion of proceedings before Tribunal…”

(iv) After DRT, issued recovery certificate, State Bank of Mysore filed Company
Application with a prayer that bank be permitted to seek execution of recovery
certificate. Registry of High Court, at its own, returned above Company Application, by
recording an endorsement, that leave of High Court was not necessary.

(v) Recovery Officer thereafter proceeded with sale of properties of Deve Sugars Ltd.
Respondent-workers’ union of Deve Sugars Ltd., objected to execution of recovery
certificate by Recovery Officer. Official Liquidator, who was ordered to be impleaded
in recovery proceedings initiated by State Bank of Mysore also filed objections.
Objections were overruled by Recovery Officer.

(vi) Respondent-workers union, then assailed recovery proceedings, before High Court.
Videocon International Ltd. and Tapti Machines Pvt. Ltd. also filed writ petitions
before High Court.

(vii) In above writ petitions, petitioners assailed sale proceedings before Recovery Officer.
Based on a preliminary objection raised by Appellant-Anita International, High Court
relegated petitioners to their alternative remedy under RDB Act, by a common order.

(viii) Above order was challenged through Writ Appeals before High Court. Writ Appeals
were dismissed.

4
(ix) Respondent-workers’ union thereafter preferred AOR No.15 of 2006 and Videocon
International Ltd. filed AOR No.1 of 2007. In both above matters, a challenged was
raised to order passed by Recovery Officer, whereby sale of properties of Deve Sugars
Ltd. to Anita International, was confirmed. Company applications were dismissed and a
challenge raised to order passed by Recovery Officer was also dismissed by High
Court.

(x) Applications filed by Official Liquidator and Ors. were considers collectively (with
Company Application Nos. 2740-2742 of 2007) and were rejected by a common
order, whereby all applicants were relegated to their remedy of appeal under RDB
Act.

(xi)A challenge raised to above order, by way of an intra-court appeal, was allowed by
High Court in impugned order, holding that proceedings before Recovery Officer,
including sale of properties of Deve Sugars Ltd. and confirmation thereof, had been
conducted in disregard of order of Company Court in High Court passed in
Company Applications, seeking leave of Company Court in High Court to pursue
recovery proceedings before DRT.

(xii) Sale and confirmation of properties of Deve Sugars Ltd. in favour of Anita
International were accordingly set aside.

5
 MATERIAL FACTS

(i) Two company applications were filed by two companies for winding up
of Deve Sugars Ltd. in Madras High Court.
(ii) Subsequently State Bank of Mysore filed company application for
recovery of the loan extended to Deve Sugars Ltd. before the DRT by
taking a prior permission of Company Court.
(iii) The recovery officer started the auction process of Deve Sugars Ltd. and
ultimately was sold to Anita International with a bid of 10.25 crore rupees
while the base price was 10 crore rupees.
(iv) The two parent companies raised objections that the recovery officer dealt
unfairly and the evaluation at 10 crore rupees was too low.
(v) The jurisdiction of DRT was also in question because State Bank of
Mysore wanted to execute the recovery certificate given by the recovery
officer.
(vi) Ultimately the jurisdiction of Company Court and DRT were challenged.

6
QUESTIONS OF LAW AND ANSWERS TO THESE QUESTIONS

(i) Whether the order passed by Company Court in High Court, was jurisdictionally
and legally impermissible, and as such, was liable to be set aside.

 No, it was not impermissible because the acts and proceeding coming in
the Company Act comes under the Company Court in the High Court.

 The Company Court has all the rights to set aside a sale of property of a
company which has not paid the dues and provident funds of the
employees of the company under section 529A of Company Act 1956.

(ii) Whether the amounts realized under the RDB Act at the instance of the appellant
can be straight away released in its favor.

 No, the amounts could not be released directly in the favor of applicants.
The benefit has to be given first to the workers of the company.

7
 CONCRETE JUDGEMENT

(i) The appeals filed by Anita International were dismissed by the court and the sale
of the property was set aside.
(ii) Official liquidator was asked to take the possession of the assets and start the
valuation and the auction of the properties afresh.

8
 RATIO DECIDENDI OF THE CASE

(i) The fact that the recovery officer took coercive steps while dealing with the assets of
the company was taken into account and the decision was restored to the original
position of the company.
(ii) The court according to the law thought in favour of the workers of the company and
set the auction of the company aside.

9
10