SARFAESI sale prevails over Companies Act limits, while disputed sale-process challenges belong before the statutory forum.

A sale of secured assets under the SARFAESI Act, when the mortgaged properties belonged to private guarantors and not to the company in liquidation, fell outside the Company Court's jurisdiction; challenges to measures under Section 13 had to be taken before the Debts Recovery Tribunal. Sections 531, 531A and 537 of the Companies Act, 1956 did not invalidate the SARFAESI sale, because the SARFAESI enforcement scheme, including its non-court intervention mechanism and vesting effect, prevails to the extent of inconsistency. Writ petitions based on disputed facts about valuation, notice, possession, encumbrances and loan adjustment were not maintainable on an incomplete record.

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Issues: (i) Whether the Company Court had jurisdiction to examine a sale effected by a secured creditor under the SARFAESI Act in respect of properties mortgaged by private guarantors. (ii) Whether Sections 531, 531A and 537 of the Companies Act, 1956 applied so as to invalidate the SARFAESI sale for want of leave of the Company Court. (iii) Whether the writ petitions challenging the sale and the connected loan adjustment could be entertained on disputed questions of fact and alleged irregularities in the sale process.

Issue (i): Whether the Company Court had jurisdiction to examine a sale effected by a secured creditor under the SARFAESI Act in respect of properties mortgaged by private guarantors.

Analysis: The mortgaged immovable properties were held to belong to the guarantors in their personal capacity and not to the company in liquidation. The Company Court is concerned only with the assets of the company in liquidation. Once action is taken under Section 13 of the SARFAESI Act, the remedy against the measures of the secured creditor lies before the Debts Recovery Tribunal under Section 17. In view of the overriding effect of Section 35 and the scheme of Sections 13, 17 and 37, the Company Court could not assume jurisdiction over the SARFAESI sale dispute.

Conclusion: The Company Court had no jurisdiction to examine the sale of the guarantors' mortgaged properties under the SARFAESI Act.

Issue (ii): Whether Sections 531, 531A and 537 of the Companies Act, 1956 applied so as to invalidate the SARFAESI sale for want of leave of the Company Court.

Analysis: Section 13(1) of the SARFAESI Act permits enforcement of security interest without intervention of court or tribunal, while Section 13(6) gives full vesting effect to the transfer made by the secured creditor. This is inconsistent with the requirement of leave under Section 537 and with the avoidance provisions in Sections 531 and 531A. The Court held that, to the extent of inconsistency, the SARFAESI Act prevails and the Companies Act provisions relied upon by the respondents do not govern a valid sale under SARFAESI.

Conclusion: Sections 531, 531A and 537 of the Companies Act, 1956 did not apply to invalidate the SARFAESI sale.

Issue (iii): Whether the writ petitions challenging the sale and the connected loan adjustment could be entertained on disputed questions of fact and alleged irregularities in the sale process.

Analysis: The alleged defects concerning valuation, notice, possession, encumbrances and the adjustment of the auction purchaser's loan involved disputed factual issues and incomplete material. Such matters were not fit for determination in writ jurisdiction. The challenge to the sale process and the consequential loan adjustment ought to have been pursued before the statutory forum and not by writ adjudication on an incomplete record.

Conclusion: The writ petitions were not maintainable on those disputed issues and the relief granted in writ jurisdiction could not stand.

Final Conclusion: The appellate court set aside the impugned orders, upheld the secured creditor's position on jurisdiction and statutory override, and left the parties to pursue any surviving factual disputes before the appropriate statutory forum.

Ratio Decidendi: A sale of secured assets under the SARFAESI Act, when lawfully undertaken, prevails over inconsistent Companies Act restrictions, and any challenge to measures taken under Section 13 must ordinarily be pursued before the Debts Recovery Tribunal rather than the Company Court or writ court on disputed facts.

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