Joint sale under SARFAESI permissible where parcels are inseparable and proportionate proceeds are transferred to the liquidator.

A joint/composite sale under the SARFAESI Act of land parcels owned by the corporate debtor and its promoters was permitted where the parcels were found factually inseparable for maximising realisation and the liquidator raised no objection; the legal principle applied is that a composite sale is allowable if it enhances realisation and the proportionate proceeds attributable to the liquidation estate are transferred to the liquidator. The Tribunal upheld the Adjudicating Authority's direction, rejected challenge arguments that the mechanism prejudiced the liquidation estate, and dismissed the appeal.

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Issues: Whether, in the liquidation of a corporate debtor, the Adjudicating Authority was justified in directing a joint/composite sale under the SARFAESI Act of (i) a 260 sq. yards plot belonging to the corporate debtor (liquidation estate) together with (ii) 1,400 sq. yards belonging to the promoters, with proportionate proceeds to be handed to the liquidator.

Analysis: The Tribunal examined the factual finding that the two land parcels form a composite whole for sale purposes and the Liquidator's stated position of no objection to a joint sale. The Tribunal considered the Liquidator's view that a joint sale would fetch higher realisation for the property and that the proportionate amount attributable to the corporate debtor (260 sq. yards) would be transferred to the Liquidator after sale. The Tribunal noted the pendency of an independent challenge under section 17 of the SARFAESI Act with respect to steps taken by the bank over the 1,400 sq. yards but found that in the peculiar facts and circumstances the composite sale mechanism under the SARFAESI Act did not prejudice the liquidation estate because proceeds attributable to the corporate debtor would be handed over to the Liquidator.

Conclusion: The Appeal is dismissed. The Adjudicating Authority's direction permitting a composite sale under the SARFAESI Act, with proportionate transfer of proceeds to the Liquidator, is upheld and no illegality is found in the joint sale direction.

Ratio Decidendi: Where separate parcels are, on the facts, inseparable for purposes of maximising realisation and the liquidator does not object, a joint sale under the SARFAESI Act is permissible provided the proportionate proceeds attributable to the liquidation estate are handed over to the liquidator.

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