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Issues: (i) Whether proceedings before the Debts Recovery Tribunal and the Recovery Officer could be interfered with on the ground that winding up proceedings were pending and leave of the company court was required; (ii) Whether Section 31 of the Tamil Nadu Recognised Private Schools (Regulation) Act, 1973 barred sale of the property in question as school property; (iii) Whether the writ petitions challenging the auction sale were maintainable in the facts of the case.
Issue (i): Whether proceedings before the Debts Recovery Tribunal and the Recovery Officer could be interfered with on the ground that winding up proceedings were pending and leave of the company court was required.
Analysis: The RDB Act confers exclusive jurisdiction on the Tribunal at the stage of adjudication and on the Recovery Officer at the stage of execution. In view of the binding principle that the company court cannot stay, transfer, or decide claims already within the exclusive domain of the Tribunal, leave of the company court was not necessary for the bank or financial institution to proceed. The provisions relating to company-court control over assets in liquidation could not be invoked to obstruct the statutory recovery process under the RDB Act.
Conclusion: The challenge to the auction proceedings on the basis of pendency of winding up proceedings failed and the objection was against the petitioners.
Issue (ii): Whether Section 31 of the Tamil Nadu Recognised Private Schools (Regulation) Act, 1973 barred sale of the property in question as school property.
Analysis: Section 31 prohibits transfer of private-school property without prior permission of the competent authority, but the petitioners did not establish that the secured asset was the independent property of the school. The material on record indicated that Rajalakshmi Mills remained the owner of the property, and the school's assertion of a separate proprietary right was unsupported by documents. The statutory protection therefore could not be extended to defeat the auction sale.
Conclusion: The sale was not hit by Section 31 of the Tamil Nadu Recognised Private Schools (Regulation) Act, 1973 and the objection was against the petitioners.
Issue (iii): Whether the writ petitions challenging the auction sale were maintainable in the facts of the case.
Analysis: The petitions were filed after the auction proceedings had substantially progressed, and similar relief had already been declined in connected proceedings. The Court treated the auction purchaser's bona fide participation and full deposit of the bid amount as a factor requiring sanctity to be attached to the sale. The proper remedy for any independent claim to title or encroachment lay elsewhere and not by stalling the auction through writ jurisdiction.
Conclusion: The writ petitions were not maintainable on the facts and were against the petitioners.
Final Conclusion: The auction sale process was allowed to stand, the interim restraints were vacated, and the connected interlocutory applications could not survive.
Ratio Decidendi: When a special statute confers exclusive recovery jurisdiction on the Tribunal and Recovery Officer, and the claimant fails to establish a legal proprietary bar to sale, writ jurisdiction cannot be used to obstruct a bona fide auction of secured assets.
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