Gujarat High Court
Collector vs Liquidator - Petrofils Co-Operative ... on 23 October, 2015
Author: Akil Kureshi
Bench: Akil Kureshi, R.P.Dholaria
C/MCA/1412/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
MISC. CIVIL APPLICATION (FOR REVIEW) NO. 1412 of 2015
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
CIVIL APPLICATION NO. 7620 of 2015
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
CIVIL APPLICATION NO. 7623 of 2015
In
MISC. CIVIL APPLICATION NO. 1412 of 2015
With
CIVIL APPLICATION NO. 7627 of 2015
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
MISC. CIVIL APPLICATION NO. 3050 of 2015
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
MISC. CIVIL APPLICATION NO. 1900 of 2015
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
MISC. CIVIL APPLICATION NO. 1413 of 2015
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
CIVIL APPLICATION NO. 3036 of 2010
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
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COLLECTOR....Applicant(s)
Page 1 of 62
HC-NIC Page 1 of 62 Created On Fri Oct 30 00:06:09 IST 2015
C/MCA/1412/2015 ORDER
Versus
LIQUIDATOR - PETROFILS CO-OPERATIVE LIMITED & 21....Opponent(s)
==========================================================
Appearance:
MR TUSHAR MEHTA-ASG, MR PRAKASH JANI-AAG, MS MANISHA L.
SHAH-GP, MR PARTH BHATT-AGP for the State Government.
MR R S SANJANWALA WITH WITH MR BHARAT JANI, ADVOCATE for the
Opponent(s) No. 2 - 3 , 6 , 9 - 11
MR MIHIR THAKORE FOR SINGHI & CO, ADVOCATE for the Opponent(s)
No. 16
MR P CHIDAMBARAM , SR COUNSEL , MR PR NANAVATI, DHAVAL DAVE
WITH MR BS KHATANA, ADVOCATE for the Opponent(s) No. 19
MR CZ SANKHLA, ADVOCATE for the Opponent(s) No. 14
MR PERCY KAVINA WITH MR DEVANG VYAS for the Opponent(s) No. 1
MR SHALIN MEHTA FOR MR HRIDAY BUCH, ADVOCATE for the
Opponent(s) No. 17 - 18
MR KI SHAH, ADVOCATE for the Opponent(s) No. 12 - 13
MR KKASHYAP K PUJARA, ADVOCATE for the Opponent(s) No. 15
MR PRANAV G DESAI, ADVOCATE for the Opponent(s) No. 4 - 8
MR NIRUPAM NANAVATI WITH MR RUTVIJ M BHATT, ADVOCATE for the
Opponent(s) No. 20
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 23/10/2015
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. These review petitions arise out of the judgement dated 7.5.2015 passed by the Division Bench of this Court in Special Civil Application No.4353/2008. MCA No.1413/2015 filed by the State Government in which Page 2 of 62 HC-NIC Page 2 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER prayer for review of the said judgement dated 7.5.2015 is made, may be considered as a lead matter. Review Petition has a chequered history. Briefly, as possible background facts are as under :
2. Special Civil Application No.4353/2008 was filed by the Official Liquidator of one Petrofils Cooperative Ltd. in liquidation. Petrofils was a Cooperative Society in which Government of India held 84% of its share capital. It was a society included in ScheduleII of the MultiState Cooperative Societies Act, 2002. It was engaged in manufacturing polyester, fiber, yarn. For setting up the industrial unit and a township for the employees of the society, the land was needed and it was envisaged that such lands would be allotted in the Gujarat Industrial Development Corporation ("GIDC" for short) estate at Baroda. At the request of GIDC therefore, the State Government initiated steps for acquisition of private lands for such purpose. The land was acquired under the Land Acquisition Act, 1894, by issuance of notifications under sections 4 and 6 on 23.8.1979 and 21.8.1981 respectively.
Consent award was passed on 13.10.1981. GIDC paid the entire consideration for acquisition inclusive of other expenses barring Rs.1000/ which was contributed by the Government. The land so acquired was leased to Petrofils Page 3 of 62 HC-NIC Page 3 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER by the GIDC and the industrial unit as well as the township as envisaged came into existence. Many years later however, Petrofils accumulated huge losses and went into liquidation. The Official Liquidator was appointed for winding up. One of the creditors, IDBI, approached the Debt Recovery Tribunal ("DRT for short) and filed a suit for recovery. DRT allowed the suit against which an appeal was filed before Debt Recovery Appellate Tribunal ("DRAT" for short). Pending such appeal, notice dated 16.8.2007 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act" for short) was issued by IDBI. Official Liquidator of Petrofils, filed the said petition and challenged the notice. The petition was later on amended adding two prayers namely, for a declaration that provisions of the SARFAESI Act are not applicable to the petitioner in view of the provisions contained in the MultiState Cooperative Societies Act, 2002, and to appoint an Asset Sale Committee "to ensure total transparency in the sale process".
3. Learned Single Judge by a detailed order dated 12.12.2008 set up a Asset Sale Committee and laid down the parameters for holding the auction of the properties of the society in liquidation. Relevant portion of the order reads as under :
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HC-NIC Page 4 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER "9. There was suggestions and counter suggestions from both the sides and ultimately, it appears that the learned counsels are on agreement for constitution of the Committee.
(i) The modalities to be undertaken for such Committee as stated hereinafter:
A) The Committee shall comprise of the liquidator of the petitioner Society being Convener and Chairman.
B) One member of each financial institutions who are having status of secured creditor.
C) One member of each Bank who is having status of secured creditors.
D) One member representing majority unsecured creditors.
E) One member nominated by NCDC re representing Contributors.
F) One member nominated by the Department of Chemicals & Petrochemicals, Government of India.
(ii) In normal circumstances, it will be for the Convener of the Committee to call the meeting of the Committee. However, it would be open for more than one or two members to request the convener to convene the meeting and upon such request, the convener shall convene the meeting within 15 days from the receipt of such request. The decision of the Committee shall be taken generally by majority. However, in case of any major policy decision, when there is no unanimous agreement, it would be open to any member of the Committee either directly or through the convener to approach this Court in the present proceeding for intervention, if any, for exercise of the judicial power.
(iii) The Committee shall through the convener undertake the exercise of preparing the valuation report of the assets. The Page 5 of 62 HC-NIC Page 5 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER valuation shall be by atleast one independent Government valuer. Such process for valuation report shall be completed by 31.01.2009. IDBI, which is the lead secured creditor , respondent No.1 herein, shall also be at the liberty to get the valuation report prepared of the assets of the property by the Government approved valuer, but such process for preparation of the valuation report shall be completed by 31.01.2009. The petitioner shall permit access to the assets so as to enable the valuer to prepare the report at the instance of IDBI which is the lead secured creditor.
(iv) Whichever highest valuation report is available on the record of the property concerned, shall be the basis for fixation of the upset price for the respective assets, may be in one lot or different lot as may be finalised by the Committee. The process for issuing advertisement, open bid, inter se bidding amongst the bidder and confirmation of sale, shall be finalised by Asset Sale Committee, but subject to the approval granted by this Court.
(v) It shall be specifically informed to the interested offerers who may deposit earnest money that they may be required to undertake inter se bidding even at the time when there is approval to be granted by this Court.
(vi) The amount of deposit as EMD shall be in the separate Bank account with any nationalised Bank to be opened by the Liquidator of the petitioner and such amount shall be appropriated or adjusted only under the specific orders of this Court.
(vii) After the approval granted by this Court, the price realised shall be deposited with this Court and thereafter, the investment shall be ordered as may be finalised by this Court.
(viii) The aforesaid process of issuing advertisement and inter se bidding and confirmation before the Sale Committee shall be completed within a period of 2 months, i.e. on or before 31.03.2009.
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(ix) The expenses for advertisement and other process as integral part of the sale process, until it is approved by this Court, shall be borne by the petitioner Society through its liquidator. At the time when the proposal for approval is submitted before this Court, the amount of EMD in the aforesaid separate Bank account shall also be made available to this Court for directions to be deposited as may be finalised by this Court.
(x) The aforesaid would be the function of the Committee. However, in the event there is any major dispute or there is any grievance on the part of any member of the Committee pertaining to major policy decision, it would be open to any member of the Committee to move this Court for appropriate clarification and/or directions."
4. On 6.4.2010, upon an application filed by the Official Liquidator, the Division Bench of this Court confirmed some of the sales affected by the liquidator through auction conducted by the Asset Sale Committee.
5. On 22.6.2011, the Division Bench disposed of the writ petition taking note of the fact that what was in challenge before the High Court was notice under section 13(2) of the SARFAESI Act and there is a remedy of appeal under section 17 of the said Act, if any measure is taken by the secured creditor under section 13(4).The Court observed as under :
"Today when the matter was taken up, it is stated that the matter is still pending for settlement, but this Court is not inclined to grant time, as in the present case only a notice Page 7 of 62 HC-NIC Page 7 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER under Section 13(2) of the SARFAESI Act is under challenge and this Court is not inclined to interfere with such notice, under Article 226 of the Constitution of India. There is also a remedy of appeal under Section 17 of the SARFAESI Act if any measure is taken by the secured creditor under Section 13(4) of the SARFAESI Act.
Learned counsel for the petitioner and the respondents would submit that number of properties have already been auction sold by the Liquidator and the amount has been deposited with this Court, and therefore the Liquidator be directed to withdraw the amount and to disburse the amount amongst the creditors on proportionate basis. In this regard, we may only observe that this Court is not inclined to decide the main issue as measures have already been taken under the SARFAESI Act and there is efficacious remedy before Debt Recovery Tribunal. We allow the Liquidator to withdraw the amount, if any, deposited with the Court pursuant to the interim orders passed by this Court in the present case, and direct the Liquidator to keep the amount in a separate interest bearing no lien account till the matter is settled by the Liquidator, if he is empowered under the law, or by any competent authority or a Court of competent jurisdiction/Debt Recovery Tribunal.
The Registrar General of this Court is directed to release the amount in favour of Liquidator, if any amount is deposited pursuant to the order passed by this Court in the present case, after proper verification of the Liquidator by learned counsel for the petitioner. It is expected that the matter will be resolved on an early date. The writ petition stands disposed of."
6. Such order of the Division Bench was carried in appeal by the Official Liquidator before the Supreme Court, since the challenge raised in the petition to the validity of notice Page 8 of 62 HC-NIC Page 8 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER under section 13(2) of the SARFAESI Act was not entertained by the High Court. SLP came to be disposed of by an order dated 29.3.2012 in the following manner :
"Shri H.P. Raval, learned Additional Solicitor General appearing for the petitioner, on instructions, would submit that he is not interested in prosecuting the Special Leave Petition against respondent nos.2 and 14 for the present and, accordingly, requests us to delete respondent nos.2 and 14 from the array of parties, at his risk. Request sought for is granted. Petitioners are permitted to delete respondent nos.2 and 14, at his risk.
Learned Additional Solicitor General for the petitioner submits that respondent nos.1, 3 to 13 and 15 have entered into a joint agreement for amicable settlement dated 7.3.2002. In view of that, he requests this Court to permit the petitioner to withdraw the Special Leave Petition. Permission sought for is granted and the Special Leave Petition is disposed of as withdrawn.
Liberty granted to the petitioner, if need arises, to make appropriate application for modification/recalling of the orders.
I.A. no.1 is disposed of accordingly.
Ordered accordingly."
7. The State Government had filed earlier review petition Misc. Civil Application No.54/2014 and sought recall of two orders passed by the High Court. First was one dated 6.4.2010 in which, as noted, the Court allowed the liquidator to confirm the sale. The other was one dated 22.6.2011 by which the Division Bench disposed of the writ petition. The review petition was based on the State's contentions that the land was acquired by the State Page 9 of 62 HC-NIC Page 9 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Government at the instance of GIDC. The contribution of Rs.1000/ was paid by the Government. The lands never vested in GIDC. Any disposal of such lands without the involvement of the State Government was not permissible. It was also contended that the land use cannot be changed. The provisions of Gujarat Industrial Development Act ("GID Act" for short) were referred to contend that even if one public purpose for which the land was acquired no longer survived, any change of use, that too for other public purpose, could be made only with prior sanction of the State Government. It was also contended that the sales suffer from serious defect. According to the Government, the valuations relied upon by the Sale committee were not properly carried out. The lands were sold at abysmally low prices. Correct market price was not fetched. There was serious cartelization in the process. It was urged that the offers made by different auction participants were so close to each other that the prior meeting of mind was manifest. It was also highlighted that in some cases soon after the auctions were held, there were internal migration of the directors of the participating companies, further pointing to the factor of cartelization.
8. The Review petition was strongly opposed by the auction purchasers and the official Liquidator on the ground of delay as well as on merits. Their case was that the Page 10 of 62 HC-NIC Page 10 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Government had no stakes in the matter. The land was acquired for the purpose of GIDC and it stood vested in GIDC by virtue of section 30 of the Gujarat Industrial Development Act. Auctions were properly held, valuation reports from Government approved valuers were obtained. The auctions were supervised by Asset Sale Committee appointed by the High Court and the High Court had confirmed the sales.
9. Division Bench of this Court by judgement dated 8.5.2014 allowed the delay condonation application of the State Government and also granted the review petition. Both the orders dated 6.4.2010 and 22.6.2011 were recalled. Certain observations were made on the question of vesting of land. The Bench had also taken note of concern of the State Government regarding correct market price not having been fetched during the auction and taken note of the counter valuation reports submitted by the State Government to highlight this aspect. It was held that when such facts are emerging from the record, we cannot shut our eyes completely to certain data presented by the State. The stand of the Government was that there was huge difference in the price at which the land was sold and the Government Jantri rates prevailing during the period in question. It was observed that :
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HC-NIC Page 11 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER "15. We have noticed the yawning gap between the two valuations. We have also noticed that the sale was confirmed by the Court in a brief order primarily on consent which would not reflect any independent scrutiny by the Court about the various factors which now the State wants to present before the High Court. In this context, some of the other factors of the participating parties in the successive auction attempts also cannot be completely ignored. We may clarify that this should not be seen as our acceptance of the States rather frontal accusations of fraud. This is only one of the indicators to accept the request of the State to condone the delay and to enable the State to place full facts and argue its point before the Court."
The operative portion of the said order reads as under:
"26. Under the circumstances, the following order is passed :
1) Orders dated 22.6.2011 passed in Special Civil Application No.4353/2008 and dated 6.4.2010 passed in Civil Application No.3036/2010 are recalled.
2) Writ petition being Special Civil Application No.4353/2008 is revived and shall be placed before appropriate Court for hearing.
2) Till such time the Court grants first hearing, all parties shall maintain statusquo with respect to the lands in question.
27. Civil Application and Misc. Civil application stands disposed of accordingly. Rule made absolute in Civil Application."
10. One of the auction purchasers Avni Infrastructure filed a review petition being Misc. Civil Application Page 12 of 62 HC-NIC Page 12 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER No.3307/2014 which came to be dismissed by the Bench on 21.11.2014. The Official Liquidator carried the review judgement dated 8.5.2014 before the Supreme Court but the SLP was dismissed.
11. This cleared the decks for fresh consideration of Special Civil Application No.4353/2008. The Division Bench by its judgement in review dated 7.5.2015 held that the land had vested in GIDC. The stand of the Government that the ownership of the land remained with the Government and the titles never passed on by vesting in GIDC was not accepted. It was observed that merely because the State Government had invested Rs.1000/ for acquiring the land for public purpose would not mean that the land belonged to the State Government or the acquired land had vested in the State Government. The Court was of the opinion that possession of the land was never taken by the Government under the land Acquisition Act and was taken only by GIDC. The Division Bench (Coram : Acting Chief Justice V.M. Sahai and Justice R.P. Dholaria) by a detailed CAV judgement dated 7.5.2015 disposed of the writ petition in the following terms :
"38. The State Government had no right to file a review petition before this Court on the ground that the writ petition was filed without joining the State Government as party as the State Government had no right whatsoever as the land in dispute Page 13 of 62 HC-NIC Page 13 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER never vested in the State Government nor the State Government ever took possession over the land in dispute. Therefore, there was no question of vesting the land in the State Government under Section 16 of the LA Act. The GIDC never raised any objection to the auction sale as it was well aware of the auction sale and as a matter of fact, has issued No Objection to the respondent Nos.16 to 18 as it was well aware of the entire proceedings. However, by way of abundant caution, GIDC was also impleaded as party to the writ petition. However, more than two years have passed and due to the review petition filed by the State Government, the respondent Nos.16 to 18 could not enjoy the fruits of the leasehold rights in the land purchased by them, nor could they construct the industry or residential township, the interest of justice demands that the concerned authority shall complete the formalities expeditiously as the GIDC has leased out the land for public purpose to fulfill the object of GID Act.
39. By judgment dated 22.6.2011, this Court had allowed the Liquidator to withdraw the amount deposited with the Court pursuant to the interim orders passed by this Court. The Registrar General of this Court had been directed to release the amount in favour of Liquidator, and the amount deposited pursuant to the order passed by this Court in the present case, after proper verification had been withdrawn by the Liquidator and paid to the Secured Creditors on prorata basis and no one has come up to contest this writ petition except the State Government which has no legal right or title over the land in dispute, in our considered opinion, the dispute having been set at rest, this petition is liable to be disposed of so that the respondent Nos.16 to 18 may use the property for the purpose for which they have purchased it in Court auction.
40. This writ petition is finally disposed of with a direction to the GIDC and other concerned authorities to expeditiously complete the formalities so that the object of Gujarat Industrial Development Act, 1962 is achieved. The State Government and Page 14 of 62 HC-NIC Page 14 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER the Collector, Vadodara are directed not to create any hindrance in implementation of the Project by the auction purchasers. There shall be no order as to costs. Civil Application also stands disposed of."
Sd/ (V.M.SAHAI, ACJ.) Sd/ (R.P.DHOLARIA, J.) Mr. P.K. Jani, learned Additional Advocate General assisted by Mr. Parth Bhatt, learned Assistant Government Pleader appearing for respondent Nos.19 to 21 has prayed that this judgment be stayed for a period of six weeks. We do not find any reason to stay our judgment. The oral prayer for grant of stay is rejected. "
12. Against the said judgement of the Division Bench, the State Government preferred SLP before the Supreme Court. The SLP came to be dismissed by an order dated 20.5.2015 as under :
"ORDER On the facts of this case, we are not inclined to exercise our jurisdiction under Art.136 of the constitution of India. The special leave petition is accordingly dismissed. However, the question of law is kept open."
13. This fresh review petition has been filed by the State Government seeking recall of the judgement dated 7.5.2015 in Special Civil Application No.4353/2008 on various grounds. Misc. Civil Application No.1412/2015 is filed by the Collector, Vadodara for the same purpose. Now Page 15 of 62 HC-NIC Page 15 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER GIDC also has joined the State Government and filed Misc. Civil Application No.1900/2015 seeking recall of the same judgement. All these proceedings pertain to the sale of Petrofils land at Baroda. While the proceedings were going on, Asset Sale Committee also auctioned one parcel of land of Petrofils situated at Ankleshwar. Since this auction sale and validity thereof was not pointedly questioned by the State Government in the earlier proceedings, Misc Civil Application No.3050/2015 is filed by the Collector, Bharuch for recall of the same judgement. Civil Application No.7620/2015 is filed by the Collector Bharuch for impleading the Collector, Bharuch as well as the auction purchaser of Ankleshwar property as party in the main petition. Similar prayers are made in Civil Applications No. 7623/2015 and 7627/2015 which is filed by the Collector, Vadodara.
14. Appearing for the State Government, learned Additional Solicitor General Shri Tushar Mehta raised following contentions :
1) Admittedly the Government had contributed Rs.1000/ for the acquisition of the land. The land was acquired under the Land Acquisition Act read with section 30 of the GID Act. Nevertheless, when the acquisition is carried out by the State Government, with contribution from the Page 16 of 62 HC-NIC Page 16 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Government funds, the land would vest in the State Government.
2) Our attention was drawn to section 17A of the Land Acquisition Act as applicable to the State of Gujarat which provides that when any land vests in the State Government or any Corporation owned by the State Government under the provisions of the Land Acquisition Act, 1894, it shall be lawful with the previous sanction of the State Government to use such land also for any different public purpose other than for which its possession was taken. It was therefore, contended that it was not possible for GIDC to divert the land use for any purpose other than the public purpose for which it was acquired. It was contended that in the present case, if the purpose of setting up of Petrofils was exhausted, the land could be used for some other public purpose by the State Government or at any rate by GIDC with previous sanction of the State Government. In any case, the land cannot be sold for any commercial use as was done in the present case.
3) It was further contended that the Supreme Court having dismissed the SLP by a nonreasoned order, review petition would be maintainable. In this context, our attention was drawn to the decision of the Supreme Court Page 17 of 62 HC-NIC Page 17 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER in case of Abbai Maligai Partnership Firm and another v.
K. Santhakumaran and others reported in (1998) 7 Supreme Court Cases 386 which was considered by another three Judges Bench in judgement in case of Kunhayammed and others v. State of Kerala and another reported in (2000) 6 Supreme Court Cases 359. Our attention was also drawn to the later decision in case of Khoday Distilleries Limited and others v. Mahadeswara S.S.K. Limited reported in (2012) 12 Supreme Court Cases 291 to contend that when SLP is dismissed without assigning reasons, it would be open for the High Court to entertain a review petition. Decision in case of Board of Control for Cricket, India and another v. Netaji Cricket Club and others reported in AIR 2005 Supreme Court 592(1) was cited in support of his contention that the Court had sufficient powers to review a judgement where an error of law or fact apparent on record is pointed out.
15. Learned Additional Advocate General Shri P.K. Jani represented the Collector, Vadodara, and raised the following contentions :
1) There were gross illegalities and material irregularities committed in conducting the auction. The valuation Page 18 of 62 HC-NIC Page 18 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER reports did not contain any basis for the valuations adopted. There was collusion between the participating auctioneers. A fraud was perpetrated by cartelization.
Valuable lands were sold at a throw away price. These contentions were raised before the Division Bench but were not decided.
2) The land had vested in the Government. It was not even the case of GIDC that the land had vested in GIDC.
3) Entire issue in the writ petition was regarding the applicability of SARFAESI Act in face of Multi Cooperative Societies Act and the validity of notice under section 13(2) of the SARFAESI Act on such ground.
4) Following decisions were cited to urge the Court to exercise review powers in such facts :
1) Indian Charge Chrome Ltd. and another v. Union of India and others reported in (2005) 4 Supreme Court Cases 67.
2) Shivdeo Singh v. State of Punjab and Haryana reported in AIR 1963 Supreme Court 1909.
3) S. Nagaraj v. State of Karnataka reported in 1993 (4) (Supp) Supreme Court Cases 595.
5) Following decisions were cited to contend that it is the Page 19 of 62 HC-NIC Page 19 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER duty of the Court supervising the sales to ensure that full sale consideration at the market value is fetched for the property under sale :
1) Navalkha and sons v. Ramanya Das reported in 1969(3) Supreme Court Cases 537.
2) Divya Manufacturing Company Private Limited v. Union Bank of India reported in 2000(6) Supreme Court Cases 69.
3) Fcs Software Solutions Ltd. v. La Medical Devices Ltd.
reported in 2008 (10) Supreme Court Cases 440.
4) Shradha Aromatics Private Limited v. O.L. Of Global Arya Industries Limited reported in 2011(6) Supreme Court Cases
207.
5) Manoj Naik & Associates v. Official Liquidator reported in 2015(3) Supreme Court Cases 112.
16. Counsel Shri N.D. Nanavati for GIDC also adopted a similar stand and contended that Division Bench in the judgement under consideration could not have doubted the locus of the State Government and GIDC, since such issues were already concluded in the review judgement of the Court.
17. Counsel Shri Percy Kavina for the Official Liquidator Page 20 of 62 HC-NIC Page 20 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER submitted that though previously the Official Liquidator had supported the confirmation of auction sale, upon further scrutiny of the auctions, it emerges that auction proceedings were vitiated. The Official Liquidator has therefore, in the present case filed an affidavit supporting the case of the State Government and the GIDC. He submitted that out of the four properties which were situated in Vadodara, which were auctioned, GIDC had executed lease in favour of Petrofils for only two of them and in two other cases, mere allotment letters were issued. He therefore, submitted that these two properties could never be part of auction sale since no title even ever passed on to Petrofils.
18. Learned senior counsel Shri P. Chidambaram appeared for Avni Infrastructure, respondent no.19, and raised the preliminary contention regarding maintainability of the review petitions. His contentions can be recorded as under :
1) That once the Supreme Court had dismissed the SLP, review petition was not maintainable.
2) Specially when an SLP is dismissed with reasons, howsoever brief, as in the present case, review by the Page 21 of 62 HC-NIC Page 21 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER High Court would be completely shut out.
3) When the Supreme Court observed "question of law is kept open", it only means that such a question may be gone into by the Supreme Court at a later stage and not by the High Court.
4) Reliance was placed on order XLVII Rule 9 of the Code of Civil Procedure to contend that a review of an order passed upon a review would not be maintainable.
5) Even on merits, the review petitioners have failed to make out any case. The Division Bench having examined all the aspects of the matter and having given detailed consideration, even if two views are possible, it would not be open for the Court to review the judgement
6) Counsel highlighted that insofar as Avni Infrastructure is concerned, there is no allegation of diversion of the use of the land. The factory, plant and machinery were purchased and are being put to same use as initially envisaged.
7) Following decisions were cited in support of the contention that once a SLP is dismissed, review Page 22 of 62 HC-NIC Page 22 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER petition would not be maintainable :
1) Abbai Maligai Partnership Firm and another v. K. Santhakumaran and others(supra).
2) Kunhayammed and others v. State of Kerala and another(supra).
3) K.Rajamouli v. A.V.K.N. Swamy reported in (2001) 5 Supreme Court Cases 37.
4) Meghmala and others v. G. Narasimha Reddy and others reported in (2010) 8 Supreme Court Cases 383.
5) Gangadhara Palo v. Revenue Divisional Officer and another reported in (2011) 4 Supreme Court Cases 602.
8) In support of the contention that in exercise of review powers under Article 226 of the Constitution also the Court would be bound by the provisions of Order XLVII Rule 1, counsel relied on following decisions :
1) Meera Bhanja(Smt.) v. Nirmala Kumari Choudhury (Smt.) reported in (1995) 1 Supreme Court Cases 170
2) Union of India and others v. B. Valluvan and others reported in (2006) 8 Supreme Court Cases 686 Reliance was also made to Gujarat High Court rules which provides that in civil as well as criminal proceedings, Civil Page 23 of 62 HC-NIC Page 23 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Procedure Code and Criminal Procedure Code respectively would apply to the extent the same are not inconsistent.
19. Counsel Shri Shalin Mehta for other purchasers namely, respondents no. 17 and 18 while adopting the contentions of Shri Chidambaram additionally contended as under :
1) There would be no review when two views are possible as in the present case.
2) There is no evidence of any mal practice or fraud or even insufficient sale consideration during the auctions. He submitted that the Government valuation which is made the basis of targeting the auction sales itself is flawed.
There is no material in support of such valuation. Comparison is made of leasehold lands with valuation of freehold lands which is wholly impermissible.
3) Question of adequate sale consideration was examined by the Division Bench while disposing of the writ petition after review.
4) Heavy reliance was placed on the decision of the Supreme Court in case of Major General Kapil Mehra and others v. Union of India and another reported in (2015) 2 Supreme Court Cases 262 as well as in judgement of the Supreme Court in case of Vedica Page 24 of 62 HC-NIC Page 24 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Procon Private Limited v. Balleshwar Greens Private Limited & others reported in AIR 2015 Supreme Court 3103, to contend that confirmed auction sales should not be lightly disturbed. The purchasers have paid full sale consideration and additionally incurred huge expenditure for transfer of lands. Their projects are stalled on account of pending litigation.
20. Counsel Shri Sanjanwala appearing for the IDBI bank opposed the review petition contending that huge outstanding debts of IDBI and other financial institutions are involved. Even after distribution of the sale proceeds collected through various auction sales, a very small part of the original debt would be realized. Any further delay is detrimental to the interest of the financial institution.
21. Before entering into the merits of the review petition, we must deal with the preliminary objection of the maintainability itself. This contention, we may recall is based on the following premises :
22. Firstly that once the SLP is rejected irrespective of the nature of rejection, review by the High Court simply would not be permissible. Second, that when SLP is rejected by recording reasons, review petition thereafter, at the hands Page 25 of 62 HC-NIC Page 25 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER of unsuccessful party is totally barred. Third, that when the Supreme Court records "question of law is kept open", the same would mean only for being considered by the Supreme Court at a later stage and not by this Court or by any other Court. Lastly, in terms of Order XLVII Rule 9 of the Code of Civil Procedure, a review in an order on review is not permissible.
23. In case of Abbai Maligai Partnership Firm and another (supra), the three judges Bench of the Supreme Court severely criticized the parties for approaching the High Court after dismissal of the SLP and observed that the same amounted to abuse of the process of law and parties had indulged in vexatious litigation. The Court strongly deprecated the manner in which the review petitions were filed and heard by the High Court after dismissal of the SLP. This judgement came up for consideration before the another three Judges Bench in case of Kunhayammed and others(supra). The issue was examined in light of doctrine of merger as well as binding effect of the law laid down by the Supreme Court under Article 141 of the Constitution. It was held that disposal of the SLP by a speaking order or a reasoned order would not involve the principle of merger but the rule of discipline and the principles flowing from Article 141 of the Page 26 of 62 HC-NIC Page 26 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Constitution would be attracted. It was further held that when leave is granted and appeal is dismissed even without assigning reasons, it will still be a dismissal of the appeal and the decision of the Court would result in superseding the decision, attracting the doctrine of merger. It was however, held that when the dismissal is not of the appeal but of the special leave, and no reasons are cited, neither the doctrine of merger nor Article 141 of the Constitution would be attracted to such an order. Following observations of the Supreme Court may be noted:
"40. A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the Court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving being dealt with by the apex court of the country and so on. The expression often employed by this Court while disposing of such petitions are heard and dismissed, dismissed, dismissed as barred by time and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The Court may apply its mind to the meritworthiness of the petitioners prayer seeking leave to file an appeal and having formed an opinion may say dismissed on merits. Such an order may be passed even exparte, that is, in the absence of the opposite party. In any case, the dismissal would remain a dismissal by a nonspeaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the Page 27 of 62 HC-NIC Page 27 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion neither doctrine of merger nor Article 141 of the Constitution is attracted to such an order. Grounds entitling exercise of review jurisdiction conferred by Order 47 Rule 1 of the C.P.C. or any other statutory provision or allowing review of an order passed in exercise of writ or supervisory jurisdiction of the High Court (where also the principles underlying or emerging from Order 47 Rule 1 of the C.P.C. act as guidelines) are not necessarily the same on which this court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of special leave petition does not take away the jurisdiction of the court, tribunal or forum whose order forms the subject matter of petition for special leave to review its own order if grounds for exercise of review jurisdiction are shown to exist. Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger.
44. To sum up our conclusions are :
(i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before Page 28 of 62 HC-NIC Page 28 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.
ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. First stage is upto the disposal of prayer for special leave to file an appeal.
The second stage commences if and when the leave to appeal is granted and special leave petition is converted into an appeal.
(iii) Doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subjectmatter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgmentdecree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter.
iv) An order refusing special leave to appeal may be a non speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed.
v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Page 29 of 62 HC-NIC Page 29 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.
(vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.
(vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by subrule (1) of Rule (1) of Order 47 of the C.P.C."
24. In case of Gangadhara Palo v. Revenue Divisional Officer and another (supra), similar view was expressed as under :
"7. The situation is totally different where a special leave petition is dismissed without giving any reasons whatsoever. It is well settled that special leave under Article 136 of the Constitution of India is a discretionary remedy, and hence a special leave petition can be dismissed for a variety of reasons and not necessarily on merits. We cannot say what was in the mind of the Court while dismissing the special leave petition without giving any reasons. Hence, when a special leave petition is dismissed without giving any reasons, there is no merger of Page 30 of 62 HC-NIC Page 30 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER the judgment of the High Court with the order of this Court. Hence, the judgment of the High Court can be reviewed since it continues to exist, though the scope of the review petition is limited to errors apparent on the face of the record. If, on the other hand, a special leave petition is dismissed with reasons, however meagre (it can be even of just one sentence), there is a merger of the judgment of the High Court in the order of the Supreme Court. (See the decisions of this Court in the cases of Kunhayammed V. State of Kerala (2002) 8 SCC 361, S. Shanmugavel Nadar vs. State of Tamil Nadu JT (2002) 7 SC 568 ; State of Manipur v Thingujam Brojen meetei AIR 1996 SC 2124 and U.P. State Road Transport Corporation v. Omaditya Verma AIR 2005 SC 2250)."
25. We are conscious that there have been some decisions of the Supreme Court taking slightly different approach depending on the facts of the case on hand. It was therefore, that a reference was made to larger Bench in case of Khoday Distilleries Limited and others(supra). However, the detailed consideration and pronouncement of law made by the supreme Court in case of Kunhayammed and others(supra) in our understanding continue to hold the field.
26. The question therefore is, in the present case was the SLP dismissed by citing reasons or was a simplicitor order of dismissal. We have reproduced the order of SLP in the earlier portion of this judgment. The order records that on facts of this case, the Court was not inclined to exercise Page 31 of 62 HC-NIC Page 31 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER jurisdiction under Article 136 of the Constitution of India. While therefore, dismissing the SLP the Court proceeded to observe "However, the question of law is kept open". In our understanding neither the expression that on the facts of the case, the Court was not inclined to exercise jurisdiction under Article 136 or that the question of law is kept open, would indicate the reasons for not entertaining the SLP. As has been observed in case of Kunhayammed and others(supra) and Gangadhara Palo v. Revenue Divisional Officer and another (supra), SLP can be dismissed for variety of grounds, could be on the ground of delay, latches, equity or simply because the Supreme Court thinks in a given set of facts, it is not appropriate to exercise discretionary power to entertain the SLP. The thrust of the order was that the Court was not inclined to exercise jurisdiction under Article 136 of the Constitution. Mere expression of disinclination coined in a slightly different phraseology does not amount to giving reasons. Further the expression "question of law is kept open"
would only guard against any future contention that the Supreme Court had confirmed the ratio of the judgement under challenge whereby either giving rise to a possible contention of merger or that even in future cases, Supreme Court would be precluded from considering such an issue in better facts.Page 32 of 62
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27. When the Supreme Court records that the question of law is kept open, undoubtedly it is meant to be reconsidered in future by the Supreme Court only. The question of law, as correctly contended by Shri P. Chidambaram, is not kept open for the High Court. This is precisely what was held and observed by the Division Bench of this Court in an unreported decision in Tax Appeal No. 380/2013 dated 9/12/2013. We are in full agreement with the view expressed therein. It was a case where an issue of unabsorbed depreciation under section 32(2) of the Income Tax Act, 1961, was raised by the Revenue before the High Court. An identical issue was already decided by the High Court in case of General Motors India (P) Ltd. v. Deputy Commissioner of Income Tax reported in (2013) 354 ITR 244(Guj) by allowing the appeal of the assessee and setting aside the order of the Commissioner. The judgement of the High Court was carried in appeal before the Supreme Court. The Supreme Court dismissed the SLP making it clear that the question of law is kept open. When a similar question came up before the High Court in the Tax Appeal, the Revenue argued that when the Supreme Court has left the question of law open, it would be open for the High Court to reconsider the issue regardless of the judgement of another Page 33 of 62 HC-NIC Page 33 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Division Bench in case of General Motors Pvt. Ltd.(supra). It was in this background, Division Bench made the following observations :
"[10] Now so far as the submission made by learned counsel appearing on behalf of the revenue that though against the decision of the Division Bench of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra), as such, Special Leave to Appeal was preferred before the Honble Supreme Court and the same came to be dismissed by the Honble Supreme Court on the ground of delay and kept the question of law open, this Court may consider the question of law raised on merits is concerned, the same cannot be accepted. It is required to be noted that as such, consideration of the question raised with respect to set off of unabsorbed depreciation on merits, there is a direct decision of the Division Bench of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra). Against the said decision, the Special Leave to Appeal was preferred and the same came to be dismissed on the ground of delay and the Honble Supreme Court kept the question of law open. Therefore, it can not be said that the said question of law is kept open by the Honble Supreme Court to consider subsequently by this Court Coordinate Bench. It can be said that the said question of law is kept open by the Honble Supreme Court to consider subsequently in other cases by the Honble Supreme Court. So far as this Court is concerned, the decision of the Division Bench of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra) is binding unless a contrary view is taken and the matter is referred to the Larger Bench. In view of the decision of the Division Bench of this Court in the case of General Motors India (P) Ltd Vs. Deputy Commissioner of Income Tax (supra) which has been relied upon by the learned ITAT while passing the impugned judgment and order, as such, no question of law much less any substantial question of law arises now."Page 34 of 62
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28. We are in full agreement with the view so expressed and in our understanding brings about a correct legal position. When a question of law is kept open by the Supreme Court not entertaining a SLP against the judgement of the High Court, in fact, what is done is neither to confirm nor to dilute the ratio of the judgement under challenge. That however, does not mean that the High Court in a future case is allowed to take a fresh view ignoring the law of precedence. It only means that the Supreme Court refused to bind itself or put its seal on the ratio propounded by the High Court in the judgement under challenge. Therefore, when an identical question comes up before the same High Court and is presented for consideration before a Bench of coordinate strength, by virtue of principles of law of precedence, the Bench would be bound by the ratio of the earlier judgement of the High Court, unless persuaded to refer it to a larger Bench. This is precisely what has been recorded by the Division Bench in the said case and this is why the Bench was of the opinion that it had either to follow the ratio in case of General Motors or make a reference to the larger Bench. This perse however, would not mean that the review consideration is shut out, if the review is otherwise maintainable. Normally, in almost all the cases, the same Bench would be reconsidering the matter on the grounds Page 35 of 62 HC-NIC Page 35 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER raised in the review petition. If in the process, it is found that the proposition of law laid down suffers from some error apparent on face of the record, review certainly would be available. In other words, if a decision has become final, it would continue to bind the Bench of coordinate strength of the same High Court in future though in SLP the Supreme Court it might have been observed that the question of law is kept open. But when a review petition comes before the same Bench, it is the judgement in review which is being criticised. It would have the same limitations as in any other case of review where SLP may not have been filed. Nothing more nothing less. In other words, the expression "question of law is kept open" does not put any additional fetters on the High Court exercising review powers.
29. Coming to the question of limitation under Order XLVII Rule 9, we may notice that the Constitution Bench of the Supreme Court in case of Shivdeo Singh (supra), held that the High Court has inherent powers to review its own judgements to prevent miscarriage of justice or to correct grave and palpable errors committed by it. It was held as under :
"It is sufficient to say that there is nothing in Article 226 of the Constitution to preclude a High Court from exercising the power of review which inheres in every court of plenary jurisdiction to Page 36 of 62 HC-NIC Page 36 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER prevent miscarriage of justice or to correct grave and palpable errors committed by it."
30. This view has been reiterated in several decisions later. In case of Gujarat University v. Sonal P. Shah reported in 1982 AIR GUJ 58, Full Bench of this Court had held that the provisions of the Code of Civil Procedure, Order XLVII, are not applicable to the High Court's power of review in the proceedings under Article 226 of the Constitution. It was however, recognized that such inherent powers are not treated as unlimited or unabridged, but they are to be invoked on the grounds analogous to the grounds mentioned in Order XLVII Rule
1. N.H. Bhatt, J. in his judgement which through separate reasons, was concurred by other two members forming the Bench, observed as under :
"So I find that the following legal propositions stand firmly established: (1) The provisions of the civil procedure Code in Order 47 are not applicable to the High Court's power of review in proceedings under Art. 226 of the Constitution:
(2) The said Powers are to be exercised by the High Court only to prevent miscarriage of justice or to correct grave and palpable errors. (The epithet "palpable" means that which can be felt by a simple touch of the order and not which could be dug out after a long drawn out process of argumentation and ratiocination). (3) The inherent powers, though ex facie Plenary, are not to be treated as unlimited or unabridged, but they are to be invoked on the grounds analogous to the grounds mentioned in Order Page 37 of 62 HC-NIC Page 37 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER 471 Rule 1; namely;
(i)discovery of new and important matter or evidence which the party seeking the review could not produce at the time when the earlier order sought to be reviewed was made, despite exercise of due diligence. (ii) existence of some mistake or error apparent on the face of the record, and (iii) existence of any analogous ground. (These are the very three grounds referred to in order 47 Rule I Civil P. C. and by declaration of law at the hands of the Supreme Court in the above case they are the hedges or limitations of the High Court's power.)"
31. We are conscious that in later judgements, the Supreme Court has with greater emphasis laid down that the scope of the review by the Supreme Court under Article 226 would be confined to the review powers under Rule 1 of Order XLVII namely, to correct the error apparent on the face of the record. These observations were made by the Supreme Court in case of Meera Bhanja(Smt.)(supra) as pointed out by the learned senior counsel Shri Chidambaram as also in case of B. Valluvan and others (supra). These observations however, were made more to highlight that even while exercising such inherent plenary powers of review, the High Court would not be justified in reversing its earlier decision on reconsideration of the entire evidence taking a different view on merits. In other words, if two views are possible, it would not be a ground for reviewing the earlier judgement.
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32. While therefore, recognising the parameters of power of review by the High Court and being at all times conscious of provisions of Rule 1 Order XLVII, it cannot be stated that for all procedural aspects, Order XLVII with its rigidity must apply to review before the High Court in writ petition. This is neither being stated by the Supreme Court in the above two judgements nor flows from the decision of Full Bench in case of Sonal P. Shah(supra). In other words, therefore, even a review consideration by the High Court under Article 226 of the Constitution must be within the principles analogous to those flowing from Rule 1 Order XLVII. Such review proceedings would not be bound by procedural aspects flowing from rest of the Rules of Order XLVII.
33. Rule 9 of Order XLVII does recognize a limitation on a Civil Court exercising review powers when it provides that "no application to review an order made on application for a review or a decree or order passed or made on a review shall be entertained". This bar on review application thus comes at two stages. Firstly, Rule 9 prohibits an application for reviewing an order made on an application for review. In other words, an order passed on review petition cannot be the subject matter of another review. This second stage prohibition comes against a review of a Page 39 of 62 HC-NIC Page 39 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER decree or order passed on a review by the Court.
34. We are doubtful whether this provision by itself would shut out review of the judgement, in which issues are different from those arising in the earlier review order. However, we need not settle this issue in the present proceedings that too without full debate. Suffice it to say, as noted earlier, rigid bar flowing from Rule 9 Order XLVII would not shut out the consideration of review by the High Court under its inherent powers as held by the Constitution Bench judgement of the Supreme Court in case of Shivdeo Singh (supra).
35. This brings us to the merit of the review petition. As noted, the State's objections to the judgement under review are principally, two fold. Firstly that the land vested in the Government and that therefore, neither GIDC nor Petrofils and as a substitute of Petrofils, its Official Liquidator, could deal in the land freely. Any finding by the Division Bench to the contrary was an error apparent on face of the record. Second grievance of the State was that its detailed objections to the auction sales and its confirmation before the Division Bench, were not decided.
36. Judgement of the Division Bench dated 7.5.2015 was Page 40 of 62 HC-NIC Page 40 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER rendered by a Bench comprising of Acting Chief Justice V.M. Sahai and Justice R.P. Dholaria. The review petition was entertained and admitted by the same Bench. However, before it could be finally disposed of, Acting Chief Justice V.M. Sahai retired and that is how this new Bench has been formed by the present Acting Chief Justice.
37. Nevertheless, we are acutely conscious that we are exercising review powers and must view the State's contentions within the narrow confines of the review jurisdiction. In that context, had the question of vesting of the land been the only consideration, we would have been wholly unjustified in entertaining the review petition. The Division Bench had at length considered the State's objections and the legal contentions. The view of the Bench was that the land did not vest in the Government but vested in GIDC. That the Government never took the physical possession of the land under the Land Acquisition Act so as to claim vesting. Relevant provisions of the Land Acquisition Act and Sections 30 and 32 of the Gujarat Industrial Development Act were noted and interpreted. It was held that the land had now vested in the Government. Reference was also made to Section 17A of the Land Acquisition Act in the context of the contention of diversion of land use. Even if two views were possible, it Page 41 of 62 HC-NIC Page 41 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER would be completely out of bounds to upset factual and legal conclusions arrived in the previous innings. In fact, we notice that in the agreement between the State Government and the GIDC, there is a clear mentioning that the GIDC will pay all the charges for acquisition of land barring Rs.1000/ contribution coming from the Government and as soon as such charges are paid, land would vest absolutely into the GIDC free from all encumbrances. In such agreement it is stated as under:
"Now these presents witness that the Corporation doth here by bind itself to pay to the Government the cost of the acquisition of the said land excluding rupees one thousand that will be paid by the Government and such charges as may be incurred by the Government or by any of the officer of the Government in respect of the said acquisition at such time or times as the Collector of (hereinafter referred to as the Collector) shall require on the amount of the said cost being certified by the Collector and doth agree that in the event of its making default in any such payment, it shall be lawful for the Government to recover the same as arrears of land revenue and the Government doth hereby agree with the Corporation that as soon as all the costs and charges of the said acquisition shall be paid by or recovered from it as aforesaid, the said land together with the trees, housing and other things standing thereon or attached thereto or permanently fastened to anything attached thereto shall be transferred to the Corporation so as to vest in the Corporation and be henceforth held by it for the purpose of the Gujarat Industrial Development Act, 1962 free from all claims or charges whatsoever on the part of Government."
38. One entirely plausible view therefore, would be Page 42 of 62 HC-NIC Page 42 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER whether statutorily such land vested in the GIDC or not by agreement between the Government and the GIDC, such vesting took place. Likewise, question of diversion of land use can arise at the stage when the purchaser wishes to put the land for use other than for which the land may have been acquired. It is doubtful if such an issue would arise at the stage of sale. We have perused the tender notice and the tender documents. It did not specify the land use. If therefore, there has been any subsequent change in the use of the land which is not in consonance with the statutory provisions, rules and regulations, it would wholly be a different matter of concern for the competent authority to take up at an appropriate stage. That by itself would not mean that auction itself was bad in law. Likewise, contention of Shri Kavina that in two out of four pieces of land, there was not even lease deed executed in favour of Petrofils cannot be a ground for quashing auctions. Purchasers would acquire only those rights which Petrofils had, nothing more nothing less. If therefore, the Petofils had limited right or virtually no right, its purchasers will not get any further than what Petrofils had. This by itself would not have any bearing on the auction sale.
39. In our opinion, however, this issue would not decide Page 43 of 62 HC-NIC Page 43 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER the final outcome of the review petitions. In fact, the question of vesting is like much ado about nothing. Whether the land vested in the Government or it vested in the GIDC, the fact remains that it is nobody's case that the land was not validly or legally allotted to Petrofils for its use on a lease executed by GIDC. Therefore, when Petrofils raised finance by mortgaging such rights in the property and later on failed to repay its debts to banks and financial institutions, the lenders were within their right to recover their unpaid dues through sale of such rights in the property. All the auction purchasers would thus receive is residue of rights of Petrofils. What would be transferred by way of title in land is not the ownership of the land but whatever rights of occupancy, Petrofils had over such land under lease agreements with the GIDC. Under the circumstances, even if the land had vested in the Government and not in GIDC, we do not understand how it would make any difference so far as proposed sales are concerned. Whether vested in GIDC or in Government, the sale of the rights of Petrofils on such land, could have been executed. However, whether vesting in Government or GIDC, such sale had to be transparent bringing maximum possible sale consideration and in any case, not below the then prevailing market rate. It is in this context we have serious concern which we must share with that of the review petitioners. We may recall the entire origination of Page 44 of 62 HC-NIC Page 44 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER the litigation was in writ petition filed by the Official Liquidators of Petrofils challenging notice under section 13(2) of SARFAESI Act issued by one of the lenders. In such proceedings, it was neither obligatory nor at the outset even prayed by the petitioner that the Court should supervise the sale. Learned Single Judge when therefore, by his order dated 12.12.2008 laid down the detailed procedure and set up a Asset Sale Committee and provided for parameters under which sales would be effected, essentially took up voluntarily task of supervising the sale process. Having done that, it was absolutely essential that proper consideration goes into supervising and scrutinizing any such sale effected by the Sale Committee. This is for several reasons. Firstly, as noted, the Court voluntarily decided to supervise the sales. Secondly, the secured creditors of Petrofils were banks, mainly nationalised and other financial institutions whose interest would be to secure maximum sale consideration. Thirdly, any such sale would be confirmed by the Court and therefore, once confirmed, no other objections to the validity of sale would be entertained by any other authority or forum. In this context, we are firmly of the opinion that there had to be a much greater scrutiny of the auction proceedings then was bestowed by the Bench under its order dated 6.4.2010. All that the Court did was to observe that auction having already taken place pursuant to the Court's orders and in Page 45 of 62 HC-NIC Page 45 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER absence of any objections made by any of the parties, we allow the liquidator to confirm the sale. Large number of finer nittygritties, as to the valuation report, the contents and basis of valuation report, the manner and method in which auction was conducted, any possibility of cartelization or undervaluation, were apparently and clearly not gone into primarily because no one had raised any objection. When this order was recalled by the judgement dated 8.5.2014 in the review, the Court prima facie recognized the locus of the Government and allowed it an audience before the Division Bench for fullfledged objections in the petition which was being revived. In the judgement under consideration even the right of Government to seek review came to be questioned. However, this would not be a decisive factor in our allowing or not allowing the review petitions. What is clinching is that detailed submissions were made on pricing. As noted, according to the State Government and other institutions who have now joined the State Government in the common cause, had strenuously urged before the Bench that there was gross undervaluation of extremely valuable sizeable urban properties; that the valuation reports lack proper foundation; their own examination of valuation showed nearly three to four times price difference; that there was total cartelization in the auction proceedings. It was pointed out that price Page 46 of 62 HC-NIC Page 46 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER difference between different participants was minuscule and most importantly, it was pointed out that soon after the auction sales were confirmed, there were cross company migration of the directors from one bidder to another clearly demonstrating a successful attempt at artificially lowering the price in the auction. The Court also noted in brief the contention of Government counsel in the judgement as under :
"18.5 He further submitted that the entire process of constituting sale committee, giving public notice for auction, determining upset price of the land in dispute and confirmation of sale sufferers from patent illegality, irregularity and impropriety. The upset price of the land had not been determined by Government valuer, but it was done by a person different than Government valuer. There was no effective wide publicity for sale of land. Only few persons participated in auction. After the auction, all the participants formed common legal entities. There is huge difference between price offered by the auction purchasers and the actual price. Hence, there was cartel of selected persons to get the land at very low price.
18.6 He further submitted that this Court had no occasion to go into the legality, validity and propriety of the auction proceedings as the parties before this Court did not object to the auction proceedings. This Court did not assign any reasons for confirmation of sale. At that stage, the State and the office of Collector were not parties to the proceedings at that time."
40. It is undoubtedly true that the Courts have lately been leaning on not disturbing the confirmed auction sales primarily on the ground that such frequent interference Page 47 of 62 HC-NIC Page 47 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER seriously dents the public confidence in such auction proceedings which is detrimental to confidence of public in such auctions and that one who did not participate in auction cannot come at a later stage even with a higher offer. Nevertheless, the factum of cartelization, possible rigging of price and taking advantage of the Court proceedings by purchasing valuable immovable property at unrealistically low price, is also a matter of grave concern shared by the Court over a long period of time by now. As we are only in review petition, we are not either intending to or able to conclude this issue. Learned counsel Shri Shalin Mehta had also requested us to stop at first stage consideration of review and if the review petitions are granted, not to proceed with further hearing here and now and we completely share his viewpoint since today what is assigned to this specially constituted Division Bench is the task of deciding the review petitions. We are not assigned the subject matter of the main petition. In fact, we do not even constitute regular bench. Any further consideration by us therefore, would be wholly unauthorized and would be by a forum nonjudis.
41. Out of many disputable and disputed issues, one thing which is not disputed before us is that all these contentions were raised before the Division Bench in Page 48 of 62 HC-NIC Page 48 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER earlier round of hearing. What is feebly disputed is that such contentions were never decided. Learned counsel Shri Shalin Mehta drew our attention to the observation in the judgement in which it is recorded as under
"It is relevant to state that in the Court auction, the auction sale has been confirmed in favour of the highest bidder and there was no material irregularity in the conduct of auction sale and neither this Court committed any illegality in accepting the highest offer in view of law laid down by the Apex Court in Kayjay Industries Private Limited v. Asnew Drums Private Limited, AIR 1974 SC 1331."
42. One isolated statement picked out of context from the entire judgement cannot be seen as the consideration by the Court. To our mind this is no consideration of the multiple issues thrown up by the State Government and other supporters in context of incorrect price being fetched in auction sale. The issues were many and highly complex. The correct valuation adopted by the Sales committee, the basis of such valuation, the possibility of market price being higher, the possibility of correct price not being fetched as compared to the facts and figures presented by the Government, the possibilities of rigging and cartelization. If the decision was rendered by the Division Bench taking into account these aspects, our role would have been over. But when no decision is rendered surely it calls for reconsideration. In the earlier review proceedings Page 49 of 62 HC-NIC Page 49 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER also the Government counsel had referred to several factors of price differential as under :
"2) The State Government was not joined as a party in the writ petition though it was a necessary party. In absence of the State Government by consent between the parties the land was sold at a very low price. To highlight this aspect, he relied on the following factors :
a) According to him, the valuation report was not obtained from the Government valuer though directed by the Court.
b) There was consent between all the parties.
c) Through successive sale attempts only three purchasers actively participated who eventually offered the highest price for different lands and whose offers were accepted.
Soon after completion of the sale, some of the purchasers joined hands clearly demonstrating carteling
d) The upset price fixed and ultimate sale price fetched were way below the Government valuation estimating the value of the lands prevailing during the auction period. The valuation reports obtained for fixing the upset price ignored many factors and relevant material. In this context, he drew our attention to communication dated 8.10.2003 from the Town Development Officer, Vadodara to the Collector Vadodara pointing out that the value of the land in question as on 7.1.2010 was assessed at Rs.12,458/. Along with such communication, he had attached detailed valuation report to come to such conclusions. In such report several sale considerations of neighbouring lands were taken into account. Adjustments were made on the basis whether the sale instances were of agricultural lands, non agricultural land and whether town planning scheme have already been framed etc. On the basis of such detailed exercise valuation of the land was assessed. He pointed out summary of the valuation which reads as under :
Page 50 of 62
HC-NIC Page 50 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Sr. Name Name of Details of Purpose Average Details as per Price Price No. of the the village land price as Jantri determined determined office per as per Town as per extract of Planner/ consensus in sales Date meeting (per sq. mtr) 1 Survey Non Rs.3833/ (1) For As per Rs.12,458/ no.235, 236, agricultural per sq. Industrial assessment 237, 238 etc. purpose km. purpose of situation of Moje Rs.4000/ per as on Udera, sq mtr 7.1.2010 by Taluka the Town District (2) For Open Planner, Vadodara. land Rs.4600/ Vadodara Total land of per sq. mtr. Rs.12,458/ 36 survey per sq. mtr numbers. dated 8.10.2013 2 Survey Non Rs.3833/ (1) For As per Rs.12,458/ no.193/2/A agricultural per sq. Industrial assessment etc of Moje purpose km. purpose of situation Udera, Rs.4000/ per as on Taluka sq mtr 7.1.2010 by District the Town Vadodara. (2) For Open Planner, Total land of land Rs.4600/ Vadodara 44 survey per sq. mtr. Rs.12,458/ numbers. per sq. mtr dated 8.10.2013 3 Survey Non Rs.3963/ (1) For As per Rs.12,880/ no.193/2/A agricultural per sq. Industrial assessment etc of Moje purpose mtr purpose of situation Udera, Rs.4000/ per as on Moje Taluka sq mtr 6.4.2010 by LAQ Udera District the Town Vadodara. (2) For Open Planner, Taluka Total land of land Rs.4600/ Vadodara District 44 survey Rs.12,880/ per sq. mtr.
Vadodara numbers. per sq. mtr
dated
8.10.2013
He highlighted that against such valuation of Rs.12458/ and 12880/ per sq. mtrs for three parcels of land, upset price for the lands was fixed at Rs.2674/ per sq. mtr. The ultimate sale consideration fetched by the lands was barely above the said upset price. He drew our attention to comparative chart suggesting the sale price of lands during auction, the value of the land as per the Page 51 of 62 HC-NIC Page 51 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Government valuation noted above and the difference in total sale consideration as under :
Sr. No. Name of Area of Rate as Total Purchase Difference Purchaser lnad (In per DLPC value of value of (56) sq. mt) land (3x4) auction 1 2 3 4 5 6 7 1 Aspire Confra 2,18,261 12880/ 281.12 84.20 196.92 Pvt. Ltd per sq mtr crore crore crore 2 Prestige 7000 9.02 crore 3.92 crore 5.10 crore Infrastructure Pvt. ltd 3 Avani 2,87,719 370.58 38.98 331.60 Infrastructure crore crore crore Total 5,12,980 660.72 127.10 533.62 crore crore crore On the basis of such materials, he contended that valuable lands were sold off at an extremely low price. In the process there was complete fraud committed by the parties and the land which was otherwise acquired for the public purpose was diverted to entirely unrelated purpose. In the process, the Government exchequer has suffered.
Inadequate price of the land also means lower recoveries by creditors who comprise of Banks and financial institutions"
43. Before us also Additional Advocate General Shri Jani had presented a summary of price variation between that fetched during the auction sale and as established by the Government on the basis of valuation reports and Jantri prices as under :Page 52 of 62
HC-NIC Page 52 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER "PROPERTY NO. 1 Vadodara Town Ship (Package 2) Details of the property : Survey No. 235, 236, 237, 238 etc. Total Area of the land : 2,18,261 sq. mtrs.
a. First Advertisement Dt. 19.3.2009 Upset Price : Rs. 87.30 crores.
b. Second Advertisement Dt. 6.8.2009 Upset Price : Rs. 84.15 crores c. Third Advertisement Dt 7.1.2010 Upset Price : Rs. 75.73 crores
1. Highest Offer in third auction Rs. 84.20 crores.
2. Value as per Govt. Valuers ( Town Planning Officer) Rs. 12880 per. Sq. Mts.
Total Value : Rs. 12880 X 2,18,261 (sq.Mt) = Rs. 281.12 crores.
3. Valuation as per Dist. Land Price Committee as on the date of advertisement Rs. 281.12 crores.
4. Valuation as per approved valuer Narulla & Co. as on 1.12.2008 Rs. 85.65 crores.
Page 53 of 62 HC-NIC Page 53 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER
5. Valuation as per Tata stragic Rs. 87.30 crore ( Realizable Market Value) report dated 3.3.2009 Offer of 3 parties : 1. Aspire Confra Rs. 84.20 crores
2. Prestige Infra Rs. 84.00 crores
3. Backbone Rs. 84.10 crores Difference between the valuation of Government and highest bidder.
Rs. 281.12 crores is the valuation by Government 84.20 crores amount is offered by respondents. Rs. 196.92 crores. Difference PROPERTY NO. 2 Vadodara School Building ( Package5)
1. Details of the property : Village Undera , Tal. Vadodara Survey No. 235, 236, 237, 238 etc, Total Area : 7000 sq. mtrs.
a. First Advertisement : 19.3.2009
Upset price Rs. 2.8 crores.
b. Second Advertisement : 6.8.2009
Upset Price Rs. 2.67 crores
c. Third Advertisement : 7.1.2010
Upset price Rs. 2.4 crores.
1. Value of the land as per Government Valuer Rs. 12880 X 7000 (sq.Mt) = Rs. 9.02 crores
2. Value of the land as per Dist. Land price Committee Rs. 9.02 crores
3. Value of the land as per Govt. approved valuer Narulla & Co Rs. 3.01 crore
4. Value of the land as per Tata Strategic (Realisable Market Value) Rs. 2.70 crore.
Page 54 of 62 HC-NIC Page 54 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Offer of 3 parties : 1 Prestige Infra Rs. 3.92 crores
2. Backbone Rs. 3.05 crores
3. Jyotsana Shah Rs. 3.90 crores Difference between the valuation of the Government and the amount offered by the auction purchaser.
Rs. 9.02 crores Valuation by the Government 3.92 crores amount offered by the respondent.
Rs. 5.10 crores. Difference.
PROPERTY NO. 3
Vadodara Plant ( Package1)
1. Particulars of the property : Survey Nos. 726 728/2/p, 708/9, 730.
Total Area of the land 2,87,719 sq.mtrs.
a. First Advertisement : 19.3.2009
Upset price Rs. 39.96 crores.
b. Second Advertisement : 6.8.2009
Upset Price Rs. 33.64 crores
c. Third Advertisement : 7.1.2010
Upset Price Rs. 30.28 crores
1. Value of the land as per Government Valuer Rs. 12880 X 2,87,719 (sq.Mt) = Rs. 370.58 crores
2. Bidder Avni Infra P.Ltd (only one bidder participated) Difference of price between the valuation made by Government and bidder.
Rs. 370.58 crores is the valuation by the Government 38.98 crores amount offered by the respondents. Rs. 331.60 crores is the difference of amount between Government Valuation and actual price offered." Thus according to the Government total undervaluation of the three properties was Rs.533.62 crores. Page 55 of 62 HC-NIC Page 55 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER
44. In view of such prima facie materials the issue requires a further probe which the Court failed to carry out. Learned counsel Shri P.K. Jani prima facie appears to be correct in pointing out that the lease in favour of Petrofils was for 99 years and thus virtually a perpetual lease. The difference between the valuation of land held on leasehold against freehold rights, if at all, would be minuscule.
45. It is by now well settled that the attempt on part of the Court at any such instance would be to fetch maximum possible price through public auction. Series of judgements of Supreme Court in different terms expressed the same sentiments. We may refer to couple of them :
1) In case of Navalkha and sons(supra), the Supreme Court observed as under :
The principles which should govern confirmation of sales are wellestablished. Where the acceptance of the offer by the Commissioners is subject to confirmation of the Court the offeror does not by mere acceptance get any vested right in the property so that he may demand automatic confirmation of. his offer. The condition of confirmation by the Court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to satisfy itself that having regard to the market value of the property the price offered is reasonable. Unless the Court is satisfied about the adequacy of the price the act of confirmation Page 56 of 62 HC-NIC Page 56 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER of the sale would not be a proper exercise of judicial discretion. In Gordhan Das Chuni Lal v. T. Sriman Kanthimathinatha Pillai, AIR 1921 MAD 286, it was observed that where the property is authorised to be sold by private contract or otherwise it is the duty of the Court to satisfy itself that the price fixed 'is the best that could be expected to be offered. That is because the Court is the custodian of the interests of the Company and its creditors and the sanction of the Court required under the Companies Act has to be exercised with judicial discretion regard being had to the interests of the Company and its creditors as well. This principle was followed in Rathnaswami Pillai v. Sadapathi Pillai. AIR 1925 Mad 318 and Soundararajan v. Mahomed Ismial, M/s Roshan & Co AIR 1940 Mad 40. In A. Subbaraya Mudaliar v. K. Sundararajan, AIR 1951 Mad 986, it was pointed out that the condition of confirmation by the Court being a safeguard against the property being sold at an inadequate price, it will be not only proper but necessary that the Court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its orders, should see that the price fetched at the auction, is an adequate price even though there is no suggestion of irregularity or fraud. It is well to bear in mind the other principle which is equally wellsettled namely that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received."
2) In case of Divya Manufacturing Company Private Limited (supra), the Supreme Court held as under :
"13. From the aforesaid observation, it is abundantly clear that the Court is the custodian of the interests of the Company and its creditors. Hence, it is the duty of the Court to see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud.....
14. In LICA (P) Ltd. (1) v. Official Liquidator and Anr. [(1996) 85 Page 57 of 62 HC-NIC Page 57 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER Comp. Cases 788], this Court dealing with a similar question observed thus: The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The Court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case.
15. The matter was again brought before this Court and in LICA (P) Ltd. (2) v. Official Liquidator & Anr. [(1996) 85 Comp. Cases 792] and the Court held: Proper control of the proceedings and meaningful intervention by the court would prevent the formation of a syndicate, underbidding and the resultant sale of property for an inadequate price. The order passed by this court yielded the result that the property which would have been finalised at Rs.45 lakhs, fetched Rs.1.10 crores and in this court a further offer of Rs.1.25 crores is made. In other words, the property under sale is capable of fetching a higher market price. Under these circumstances, though there is some force in the contention of Sri Ramaswamy that the court auction may not normally be repeatedly disturbed, since this court, on the earlier occasion, had limited the auction between the two bidders, the impediment will not stand in the way to direct sale afresh. Even today the parties are prepared to participate in the bid."
46. It is true that the Division Bench in judgement under consideration has held that the State had no role to play. We are prepared to go along with such finding. The question is, would it still be open for the Court to shut its eyes to serious allegations of price rigging merely because it came from a quarter which the Court thinks was not appropriate. We may recall that auction proceeds had to be shared by the secured and other creditors of the Petrofils Page 58 of 62 HC-NIC Page 58 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER including the workers whose statutory dues may have remained unpaid. Dues of the Petrofils also included sizeable outstanding taxes and other statutory dues. Majority of the banks and financial institutions were public bodies such as nationalized banks and Government financial Corporations. Any underrealisation of the sale consideration would have a direct and serious impact on such banks and financial institutions. Even if these banks were wholly private banks, they form an important element in the financial set up of the country. Even their dues cannot be allowed to be jeopardized. Any undervaluation would therefore, have a direct element of pubic interest and interest of the Government owned nationalized bank and financial institutions and the dues of the workers. We are informed in the lease deeds between the GIDC and the Petrofils, it is provided that in case of sale of land (petrofil's rights in the land) by Petrofils, GIDC would receive 50% of premium(i.e. unearned increase). If that be so, even GIDC had a direct interest in ensuring that the auction sales fetched maximum price.
47. If therefore, there was prima facie evidence pointed to the Court that the auction sale suffered from various defects and possible fraud, it was least the duty of the Court to consider such issues and give its final findings Page 59 of 62 HC-NIC Page 59 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER based on appreciation of materials on record. When such questions were never considered, the judgement does to that extent suffer from an error apparent on record and calls for a recall.
48. The applications pertaining to Bharuch sale, however, in our opinion, are wholly premature. These applications are filed even before the judgement finally disposing of the writ petition is recalled. In a disposed of petition, there cannot be an application for joining party or for adding prayers or any amendments. If and when the writ petition is revived only then any addition or subtraction in the list of opponents can be made. We refrain from making any further observations particularly, in view of the contention by Shri Dhaval Dave that sales which were confirmed were never sought to be disturbed and that therefore, at this distant point of time without reference to the nature of delay, they cannot be allowed to be reopened, that too, without even a prima facie material to suggest that the price received during such auction was not appropriate.
49. Before concluding we may recall that in final portion of the judgement, the Court directed the State Government and Collector Vadodara "not to create any hindrance in implementation of the Project by the auction purchasers." Page 60 of 62 HC-NIC Page 60 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER These directions go far beyond what was even prayed for by the petitioner. They are in the nature of directions in favour of auction purchasers who are respondents and who had not even prayed for such reliefs. These directions therefore, also need to be recalled.
50. Under the circumstances judgement dated 7.5.2015 of the Bench is recalled and the writ petition Special Civil Application No. 4353/2008 and Civil Application No.3036/2010 are revived and be placed before the appropriate Bench. We make it clear that this recall is not on the conclusion of the Bench on the question of vesting of the land in question in GIDC and not in the Government.
51. Misc. Civil Application No. 3050/2015 as well as Civil Application No.7620/2015 filed by Collector Bharuch are dismissed as premature. This would also be the fate of Civil Application No.7623/2015 and Civil Application No.7627/2015 filed by Collector Baroda for the same purpose.
52. Misc. Civil Applications No.1412/2015, 1413/2015 and 1900/2015 for review are allowed. All the Misc. Civil Applications are disposed of in above terms. Page 61 of 62 HC-NIC Page 61 of 62 Created On Fri Oct 30 00:06:09 IST 2015 C/MCA/1412/2015 ORDER
53. Now that the review itself is allowed, the order of statusquo dated 9.6.2015 granted while entertaining the petition would continue, subject ofcourse to the consideration by regular Division Bench in future.
54. At this stage, learned counsel Shri Dhaval Dave for Avni Infrastructure requested that this judgement be stayed for a reasonable period to enable the respondent to file appeal. On earlier order of statusquo granted by Division Bench by an order dated 9.6.2015 continuing, such request is accepted. The rest of the judgement is suspended till 30.11.2015.
(AKIL KURESHI, J.) (R.P.DHOLARIA,J.) raghu Page 62 of 62 HC-NIC Page 62 of 62 Created On Fri Oct 30 00:06:09 IST 2015