Asset reconstruction Company India Ltd vs Daewoo Motors India Ltd (through OL) on 2 June 2026

1. Daewoo Motors India Ltd. (in liquidation), through the Official Liquidator attached to the Hon’ble Delhi Hihg Court, having his office at 8th Floor, Loknayak Bhawan, Khan Market, New Delhi 11003

2. Omkara Assets Reconsturction Private Limited having their office at 47th Floor, Kohinoor Square, N C Kelkar Marg R G Gadkar Chowk, Shivaji Park, Mumbai 400028

3. Shakuntalam Landcraft Private Limited, having its registered office at H-27, W8, E Lane, Western Avenue, Sainik Farms, South Delhi

– 110062 (through Authorised Ms. Shruti Chowdhary)

…Respondents

APPEARANCES For the Appellant : Mr Bhalchandra Palav - Advocate For Respondent No.1 : Ms Barsha Parulekar – Advocate For Respondent No.2 : Mr Akbar Rizvi i/b M/s. AKS Legal Consultants, Advocate For Respondent No.3 : Mr Rajesh Nagori and Ms Sanjana Ghogare – Advocates

The Appellant, ARCIL, preferred the present Appeal under Section 30 of the Recovery of Debts and Bankruptcy Act, 1993 to challenge the orders dated 06.06.2024 and 19.06.2024 passed by the Learned Recovery Officer-2, DRT-II Mumbai in TRP No.02 of 2023 arising out of O.A. No.162 of 2002. The Appellant has prayed for: I. quashing and setting aside the impugned orders dated 06.06.2024 and 19.06.2024; II. direction to the Learned Recovery Officer to allow Exhibit-882 in terms of orders dated 17.05.2024 and 12.06.2024 passed by this Tribunal, subject to outcome of Appeal Nos.27 of 2024 and 33 of 2024 pending before the Hon’ble DRAT, Mumbai; and

III. interim stay of operation and implementation of the impugned order dated 19.06.2024.

Facts in Brief

In the said recovery proceeding, the mortgaged property situated at Surajpur Industrial Area, Noida Dadri Road, Greater Noida, District Gautam Budh Nagar, U.P. has been auctioned. The auction sale has been finalised in favour of the Respondent No.3 i.e. auction purchaser, M/s Shakuntalam Landcraft Private Limited.

The perusal of the record reveals that the auction sale stood confirmed, Sale Certificate was also issued in favour of the Auction Purchaser and the possession with original documents was directed to be handed over subject to the outcome of the Appeals pending before the Hon’ble DRAT, Mumbai.

On 09.05.2024, the present Appellant filed Miscellaneous Application Exhibit-882 seeking appropriation/distribution of sale proceeds in favour of Appellant i.e. ARCIL and Respondent No.2 i.e. SASF (now substituted by Omkara ARC) as per their admitted sharing ratio of 59.656% and 40.344% respectively towards satisfaction of Recovery Certificate.

However, the Ld. Recovery Officer, by orders dated 06.06.2024 and 19.06.2024, deferred consideration of Exhibit-882 by referring to pendency of proceedings before the Hon’ble DRAT,

Mumbai and other connected proceedings. Aggrieved thereby, the present Appeal has been preferred.

Submissions on behalf of the Appellant i.e., ARCIL: The Ld. Counsel for the Appellant submitted that the auction sale had attained finality at the Recovery Officer level and Sale Certificate had also been issued and despite culmination of the auction proceedings and repeated judicial directions of higher forums. The Ld. Recovery Officer unnecessarily deferred consideration of Exhibit-882, thereby frustrating recovery proceedings and protracting appropriation of sale proceeds. It was also submitted that the Appellant has agreed to file an undertaking before the Tribunal to bring back the amount of the sale proceed if directed by any judicial forum.

It is further submitted that higher forums had already incorporated safeguards while permitting continuation of auction proceedings and therefore pendency of Appeals before the Hon’ble DRAT, Mumbai could not have been treated as a reason to protract the sale proceed as prayed vide Exhibit-882 in the Recovery Proceeding.

The Ld. Counsel also prayed that the impugned orders be quashed and appropriate directions be issued to the Learned Recovery Officer to allow & dispose Exhibit-882 of the said Recovery Proceeding in terms of earlier orders. The Ld. Counsel also submitted that Appellant is ready to handover original title documents to the Auction Purchaser i.e. Respondent No.3.

Submissions on behalf of Respondent Nos.1, 2 and 3 i.e. Daewoo Motors India Ltd through Official Liquidator attached to the Hon’ble Delhi High Court, SASF now substituted by Omkara ARC Ltd. and Shakuntalam Landcraft Private Limited: The Ld. Counsel for Respondent Nos.1 and 2 also supported the case of the Appellant and submitted that the auction sale had already been finalised and consequential steps were permitted by judicial orders passed by this Tribunal and the Hon’ble DRAT, Mumbai.

The Ld. Counsel for the Respondent No. 1, Official Liquidator, further submitted that distribution of sale proceed may be appropriated & distributed subject to safeguarding workers’ claims on a pari passu basis with the secured creditors.

It is further submitted that the Appellant and certificate holder in the said Recovery Proceedings had already furnished undertakings and safeguards stood adequately protected by orders of Hon’ble DRAT, Mumbai.

The Ld. Counsel for Respondent No. 2 submitted that withholding of sale proceed from appropriation and distribution despite finalisation of auction would unnecessarily delay satisfaction of Recovery Certificate and prejudice certificate holders. The Ld. Counsel for Respondent No. 2 also submitted that the sale proceed can be distributed as per admitted ratio as mentioned above.

The Ld. Counsel for Respondent No.3, the auction purchaser, supported the Appellant case.

Heard Ld. Counsel for the parties, considered the submissions and perused the record available.

It is undisputed that the auction sale has already culminated, Sale Certificate has already been issued in favour of the Auction Purchaser on 01.05.2024 and the possession of the subject property i.e. the mortgaged property has already been given on 24.05.2024 in compliance of the order dated 17.05.2024 of this Tribunal. It is also pertinent to note that the order dated 30.04.2024 passed by the Hon’ble DRAT, Mumbai in Appeal on Diary No.922 of 2024 specifically protected the interests of interveners by directing the Ld. Recovery Officer to issue the sale certificate in favour of the auction purchaser subject to the ultimate decision of this Tribunal in the appeal and the Auction Purchaser not to create any third party rights till decision in the Appeal is taken.

Similarly, the order dated 01.05.2024 passed by the Hon’ble DRAT, Mumbai in Appeal No.27 of 2024 also directed the Ld. Recovery Officer for issuance of Sale Certificate to the 6th Respondent of that Appeal (Respondent No.3, Auction Purchaser, in the present Appeal) subject to outcome of Appeals. Thus, the higher judicial forum i.e. Hon’ble DRAT, Mumbai itself, had permitted finalisation of auction proceedings while simultaneously protecting interests of contesting parties through appropriate safeguards.

In such circumstances, mere pendency of Appeals before the Hon’ble DRAT, Mumbai could not have been treated by the Ld. Recovery Officer as an absolute restriction against consideration of Exhibit-882 seeking appropriation and distribution of sale proceeds.

The record further reveals that this Tribunal had also repeatedly issued directions for completion of the auction process and consequential steps arising therefrom. Vide order dated 17.05.2024 passed in Appeal No.3 of 2024, this Tribunal has recorded that the sale had already been confirmed and Sale Certificate had been issued in favour of the Auction Purchaser, however possession of the subject property and original title deeds had not been handed over. Accordingly, the Ld. Recovery

Officer was directed to dispose of Exhibit-885 on or before 22.05.2024 and to hand over possession of the subject property and original title deeds to the Auction Purchaser within one week thereafter. However, the Original Title documents were not handed over by the Ld. Recovery Officer despite the directions of this Tribunal. It is observed that till today the order of this Tribunal is partly executed only regarding handing over of possession of the mortgaged property and the original title documents are yet to be handed over even when, there is no objection on the part of the Appellant having custody of the said title documents.

Subsequently, vide order dated 12.06.2024 passed in Appeal No.4 of 2024, this Tribunal quashed and set aside the orders of Ld. Recovery Officer dated 25.04.2024 and 29.04.2024 and again directed the Ld. Recovery Officer to dispose of Exhibits 882 and 885 within one week. However, despite the repeated directions, the impugned orders dated 06.06.2024 and 19.06.2024 were passed, resulting in further deferment of the proceedings.

The proposed appropriation and distribution of sale proceed amounting to Rs. 359.05 crores and handing over the possession and title deeds to the auction purchaser was consented by all the parties and the same is recorded in the earlier orders dated 17.05.2024 and 12.06.2024 of this Tribunal which is also reiterated by the parties during the hearing of this appeal. The parties also admitted sharing of the said sale proceed in the ratio of 59.656 and 40.344 towards the partial satisfaction of respective Recovery Certificate between the Certificate Holders subject to the claims of Official Liquidator towards workers claim.

This Tribunal is of the considered view that once the sale stood confirmed, Sale Certificate issued, and possession handed over subject to appellate safeguards, the Ld. Recovery Officer ought to have proceeded to decide Exhibit-882 in accordance with law instead of delaying the same. Simultaneously, the interests of intervener and contesting parties can adequately be protected by clarifying that the appropriation and distribution shall remain subject to outcome of proceedings pending before the Hon’ble DRAT, Mumbai and other judicial forums.

That during the course of hearing, Ld. Counsel appearing for the Appellant as well as Ld. Counsels appearing for Respondent No.2, Omkara ARC, and Respondent No.3, M/s Shakuntalam Landcraft Private Limited, categorically submitted before this Tribunal that no adverse remarks were ever made by them against the Ld. Recovery

Officer and therefore, after their submission in open Tribunal there is no further need to file affidavit in this regard. Ld. Counsel for Respondent No.3 also submitted that the recovery of cost imposed vide order dated 19.06.2024 in Recovery Proceeding by the Ld. Recovery Officer has already been stayed by this Tribunal vide Order dated 23.07.2024 in Appeal No. 6 of 2024.

This Tribunal has considered the aforesaid submissions. The issue arising in the present Appeal essentially concerns implementation of judicial directions and continuation of recovery proceedings without any unnecessary delay. At the same time, this Tribunal is conscious that functioning of the justice delivery system rests upon mutual institutional respect between the Bench and the Bar. Judicial propriety and institutional discipline require that both the Bench and the Bar function in tandem for effective administration of justice as the Bench and the Bar are two wheels of the same chariot. The learned Advocates, though representing litigating parties, also act as an officers of this Tribunal and are expected to assist in orderly administration of justice. Equally, the officers performing quasi- judicial functions are also expected to ensure that proceedings remain strictly confined to adjudication of disputes arising before them.

In view of the above, unnecessarily prolonging the issues arising between the parties was unwarranted and the Recovery Proceedings ought not to be prolonged any further as the same will not advance the judicial process and would unnecessarily divert attention from the pending real issues in judicial proceedings.

Accordingly, without entering into further adjudication regarding the allegations and counter allegations concerning the personal conduct, this Tribunal deems it appropriate that these issues now should not be unnecessarily prolonged and the matter deserves to be brought to an end. Thus, the Tribunal deems it appropriate that the stakeholders involved in the present matter shall avoid making any unnecessary personal remarks against each other in future and shall show mutual respect in a dignified manner.

It is also evident from the record that the issue regarding consideration of Exhibit-882 already stood addressed by the Presiding Officer vide order dated 12.06.2024 directing disposal thereof regarding the relief of appropriation and distribution of the sale proceed within one week. The impugned orders dated 06.06.2024 and 19.06.2024 had the effect of frustrating and delaying implementation of the said direction without any cogent reasons. Consequently, the matter deserves to be restored to the stage contemplated by the order dated 17.05.2024 and 12.06.2024.

Hence, considering the aforesaid facts and circumstances of the case and in order to maintain judicial propriety and institutional balance, the impugned orders dated 06.06.2024 and 19.06.2024 passed by the Ld. Recovery Officer, DRT-II Mumbai in TRP No.02 of 2023 are hereby quashed and set aside. Accordingly, the Appeal deserves to be allowed and allowed as per orders below.

ORDER

The impugned orders dated 06.06.2024 and 19.06.2024 are hereby quashed and set aside.

The Ld. Recovery Officer is directed to proceed in accordance with the orders dated 17.05.2024 and 12.06.2024 passed by this Tribunal, within a period of one week from receipt of this order.

No order as to costs.

Sd/-

(Harish Kumar Kaushik) Presiding Officer, DRT-2, Mumbai Srishti