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Pegasus Assets Reconstruction P. Ltd. v. M/s. Haryana Concast Limited & Anr.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3646 of 2011)Decided 29 Dec 2015
Civil Appeal No. 3646 of 2011
Justice Vikramajit Sen · Justice Shiva Kirti Singh

Background

Haryana Concast Ltd. was under a winding-up order from 1999. Its secured lender assigned its debt to Pegasus, a securitisation company, which stayed outside the winding-up and sold about 36 acres of the company's land under the SARFAESI Act. The Company Court and the Official Liquidator had placed conditions on that sale, while a Delhi High Court decision in a different case had said a Company Court cannot interfere with a secured creditor's enforcement. The sale of the land to Venus Realcon for Rs. 32 crore was challenged in a public interest petition and in other appeals.

Decision Breakdown

The Court held that the Company Court and the Official Liquidator cannot supervise or control a secured creditor's sale of secured assets under the SARFAESI Act, because that Act allows enforcement without the intervention of a court or tribunal. It approved the Delhi High Court view and disapproved the contrary Punjab and Haryana High Court view. The Court refused to disturb the completed auction sale, since it had been conducted with wide publicity and was not shown to be fraudulent, and later higher offers do not automatically reopen a valid sale. The Pegasus appeal was allowed only to declare the law, without disturbing the sale, and the other appeals were dismissed, with deposits refunded to an intervener with interest.

Lesson Learnt

When a company is in winding-up, a lender or securitisation company that holds security over its assets can generally sell them under the SARFAESI Act without the winding-up court directing the sale. A sale conducted fairly and openly after wide publicity is not easily reopened just because someone later offers more money.

Official source (sci.gov.in)View Judgment (PDF)

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