Liquidation sale process prevails over pending debt recovery claims and private offers; court-supervised sale protects creditor priorities.

Pending proceedings before the Debts Recovery Tribunal do not, by themselves, bar the Official Liquidator from selling a company's assets in liquidation under the Companies Act, 1956, because the Tribunal's role remains confined to adjudication and recovery of bank debts and does not displace the winding-up process. The banks' rights are protected through statutory priorities in distribution of sale proceeds. A private sale proposal for the company as a going concern cannot replace a court-supervised sale process without proper judicial sanction; wider publicity, sealed tenders, and participation of the Official Liquidator and stakeholders remain necessary to secure a fair realisation of assets.

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Issues: (i) Whether the secured banks could object to sale of the company's assets by the Official Liquidator on the ground that their claims were pending before the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. (ii) Whether the State Government's request to treat its private offer process as sufficient for sale of the company as a going concern to a single bidder could be accepted, or whether the sale had to proceed through the Official Liquidator under the Companies Act, 1956.

Issue (i): Whether the secured banks could object to sale of the company's assets by the Official Liquidator on the ground that their claims were pending before the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: The pending claims before the Debts Recovery Tribunal had not yet been adjudicated, and the banks had not elected to stand outside the winding up. The Court treated the Tribunal's exclusive jurisdiction under the 1993 Act as confined to adjudication and execution of bank debts, and not as a bar against the Official Liquidator's power to sell the company's assets under the Companies Act, 1956 with the Court's sanction. The Court held that sale by the Official Liquidator would not prejudice the banks' rights in the realization and distribution of sale proceeds in accordance with the statutory priorities.

Conclusion: The banks' objections were rejected. Their pending proceedings before the Debts Recovery Tribunal did not prevent sale of the company's assets by the Official Liquidator.

Issue (ii): Whether the State Government's request to treat its private offer process as sufficient for sale of the company as a going concern to a single bidder could be accepted, or whether the sale had to proceed through the Official Liquidator under the Companies Act, 1956.

Analysis: The Court found that the State Government had earlier accepted, at cabinet level, a course that contemplated proceeding under section 466 of the Companies Act, 1956 if rehabilitation was to be pursued, but it had instead invited and entertained a private offer without first obtaining the necessary leave to stay the winding up and without displacing the Official Liquidator. The Court also held that the sole offer received from Grasim Industries Ltd. was not enough to justify acceptance on the basis adopted by the State Government, especially when wider publicity, exploration of higher bids, and a sale process through the Official Liquidator remained available. The Court therefore directed a fresh, open sale process through the Official Liquidator, with advertisement, sealed tenders, and participation of a committee including the Official Liquidator and representatives of the financial institutions and the State Government.

Conclusion: The State Government's application was rejected. The sale was directed to proceed through the Official Liquidator by an open and supervised process.

Final Conclusion: The Court refused to accept the State Government's private-sale proposal and preserved the winding-up framework, while ensuring that the assets would be sold through a court-supervised process designed to protect the interests of workers, secured creditors, and the estate of the company.

Ratio Decidendi: Pending adjudication before the Debts Recovery Tribunal does not bar the Company Court or Official Liquidator from selling the company's assets in liquidation, and a private proposal for sale cannot supersede the statutory sale process under the Companies Act, 1956 without proper judicial sanction.

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