Punjab-Haryana High Court
M/S Jct Electronics Ltd., A-32, Indl. ... vs - on 8 March, 2018
103+104
103
CA-1-2018 IN CP-217-2015
In the matter of M/S JCT ELECTRONICS LTD.
104
CA-38-2018 IN CA-1-2018
M/S AANANTA EXIM LLP.
V/S
M/S JCT ELECTRONICS LTD. (IN LIQN.) AND ANOTHER
Present: Mr. Chetan Mittal, Senior Advocate,
with Mr. V.K. Sachdeva, Advocate,
for the applicant.
Mr. Deepak Aggarwal, Advocate,
for the Official Liquidator.
Mr. Ashwani Chopra, Senior Advocate
with Mr. Mayur Kanwar, Advocate,
and Mr. Ankit Middha, Advocate,
for the Auction Purchaser.
Mr. Vishal Aggarwal, Advocate.
for the applicant (CA No. 38 of 2018)
Mr. Manish Jain, Advocate
for SASF.
***
This application is filed by the M/s. Asset Reconstruction Company (India) Ltd. (for short ARCIL) for seeking permission to conduct and confirm the sale of 24 Ares 28 Sq. Mtrs = 0.60 Acres approximately of land situated in Block No. 1746 situated at Village Kandri, Taluka Karjan, District Vadodra, Gujarat owned by M/s. JCT Electronics Limited (Company in Liquidation) which is in possession of the Official Liquidator, at the already confirmed reserved price of ` 56.91 Lacs per acre, to the same Auction Purchasers - M/s Mahansaria Industrial Ventures Private Limited and M/s Astra Industries and Trading Private Limited to whom 183.32 acres 1 of 15 ::: Downloaded on - 06-05-2018 12:04:29 ::: Page 2 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 of land has already been sold in consolidated manner (35.88 acres of uncharged land on behalf of official liquidator alongwith 147.44 acres of land already in the possession of the applicant-ARCIL situated at Block No. 1669 at Kandari, Taluka Karjan, District Vadodra, Gujarat in the same terms of the order dated 27.02.2017 passed by this Court in CA No. 597 of 2016 and in terms of order dated 02.12.2017 passed in CA No. 296 of 2017 in CP No. 2017 of 2015.
The brief background of this case is that the company in liquidation was ordered to be wound up vide order dated 26.08.2016 of this Court passed in a Company Petition bearing No. CP-217-2015. The official liquidator took the possession of 35.88 Acres of uncharged land. The applicant filed an application bearing No. CA-597-2016 for seeking permission of this Court to conduct consolidated auction of the total land measuring 147.44 acres already in its possession and 35.88 acres of land which is in possession of the official liquidator. In the said application, the following order was passed on 27.02.2017 by this Court:-
"After going through the facts and circumstances of the case and on account of no objection on the part of Official Liquidator, the company application is allowed.
The permission is granted for consolidated auction by ARCIL and Official Liquidator of the total land of 147.44 acres in possession of ARCIL and 35.88 acres of land in possession of Official Liquidator. It is further directed that ARCIL shall fix the Reserved price of total land of 183.32 acres at Rs. 56.91 lacs per acre in two lots, i.e. for 147.44 acres and for 35.88 acres land separately.
Applicant ARCIL shall deposit proportionate sale proceeds of 35.88 acres of land arising out of total sale of 183.32
2 of 15 ::: Downloaded on - 06-05-2018 12:04:30 ::: Page 3 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 acres (147.44+35.88) with Official Liquidator immediately upon realization.
So far as the adjacent land of 44.15 acres in possession of Official Liquidator is concerned, the applicant shall be permitted to sell the same on Reserved price of Rs. 12.75 crores, ARCIL shall remit the entire sale proceeds to Official Liquidator. In case the auction proceedings are not finalized, the ARCIL would be permitted to re-auction the properties on the same terms but the Reserved price will be re-fixed after seeking permission from the Court not to sell the land below the distress sale value as already assessed by valuer.
On asking of the Court, affidavit of authorized representatives of the company has placed on record giving detailed particulars of the property in the form of Schedule 1,2 and 3. Copy of the order be supplied to the learned counsel for the parties under the signatures of the Bench Secretary."
Apropos, the applicant issued an e-Auction notice on 01.03.2017 in respect of 147.44+35.88 acres of land total measuring 183.32 acres for conducting auction on 31.03.2017 at a total reserved price of ` 104.34 Crores. In the said auction notice, reserved price for building was fixed at `11.82 Crores and ` 12.75 Crores was fixed for a separate chunk of land measuring 44.15 acres The said auction failed because there was no bidder. Consequently, the applicant issued the second auction notice on the same terms and conditions on 07.08.2017 for 24.08.2018 which was extended for 15 days i.e upto 08.09.2017.
It is alleged that on 07.09.2017, one Ananta Exim LLp (hereinafter referred as "Bidder") had submitted a bid of ` 90.00 Crores for the land to the applicant as against the reserved price of ` 104.34 Crores and a bid for building of ` 2.00 Crores against the reserved price of ` 6.00 3 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 4 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 Crores. (The reserved price for building was reduced from ` 11.82 Crores to `6.00 Crores as the buyers were primarily interested in the land only). The Bidder submitted three cheques of `9.20 Crores towards EMD with the following conditions: -
a) Cheque for `1.00 Crore to be kept in FDR till the approval of Court for sale.
b) Cheques of ` 8.00 Crores and ` 20.00 Lakhs to be deposited after confirmation by OL/Court.
c) 15% to be deposited within one month thereafter.
d) 75% to be paid in 9 months.
There was some communication between the applicant and the said Bidder on 29.09.2017 and 10.10.2017 as it was informed by the applicant that the assets would be sold on as is where is basis. But no acceptance was given to the offer. It was also mentioned in the letter dated 10.10.2017 that the possession would be handed over after the receipt of the entire money and after the approval from this Court. But no approval was given to the bid. It is alleged that on 16.10.2017, the said Bidder had submitted another offer with the same price of ` 90.00 Crores for the land but for building, the bid was increased from ` 2.00 Crores to ` 3.00 Crores but imposed the following conditions: -
a) Demand Draft for `1.00 Crore dated 08.09.2017 to be kept in FDR till the approval of Court for sale.
b) Cheques of ` 8.00 Crores, ` 20.00 Lakhs and ` 10.00 Lakhs to be deposited after confirmation by OL/Court.
c) 15% to be deposited within one month upon acceptance of bid and confirmation of acceptance of Bid by High Court and issuance of Sale Letter.
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d) 75% to be paid in 9 months.
It is alleged that ARCIL-applicant did not send any response to the counter offer/fresh offer made by the Bidder. However, on 18.10.2017 i.e. 2 days thereafter, M/s MIVPL-Auction Purchaser gave the offer at reserved price of ` 104.34 crores for 183.32 acres of land and ` 6.00 Crores for building in terms of the reserved price fixed in the auction notice. The land was to be purchased in the name of two companies and the following details were given: -
a) Deposit of 10% of EMD Amount of ` 11,03,40,000/- (` 11.034 Crores by way of pay orders dated 18.10.2017).
b) 15% to be paid within 7 days of receipt of acceptance of offer by ARCIL.
c) 75% to be paid within 90 days from the date of acceptance of officer by ARCIL.
On 15.11.2017, the said Auction Purchaser submitted the conditions of bid in continuation of earlier bids and also pointed out that the land in question in this application is in the Block No. 1746. After receiving the bid from the Auction Purchaser, the applicant-ARCIL filed an application bearing No. CA-296-2017 before this Court for seeking permission to sell the land in favour of the Auction Purchaser who had made the offer with a delay of 40 days. This Court has allegedly called for the status report from the official liquidator on 24.11.2017 and on 02.12.2017 allowed the application i.e CA-296-2017 and the following order was passed: -
"In light of order dated November 24, 2017, status report has been filed by the official liquidator. Admittedly, property has been sold in lot No.1, which comprised land measuring 183.32 5 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 6 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 acres, out of which 35.88 acres belongs to the Official Liquidator. According to Mr. Mittal, same has been sold at the reserved price. Prayer is made for confirmation of the sale so that the amount can be remitted to the official liquidator.
At this stage, Mr. D.K. Singh, official liquidator submits that the amount of Rs.20.42 Crores is due in respect of 35.88 acres, which is the share of the Official Liquidator in the total land. The application is allowed in respect of confirmation of the sale of the land subject to the condition that the amount be deposited with the official liquidator within two months of the confirmation of the sale. Application is disposed of."
Thereafter, on 06.12.2017, it is alleged by the applicant-ARCIL that it had confirmed the sale in favour of the Auction Purchaser. On 08.12.2017, the auction purchaser has pointed out that there is another block of land bearing No. 1746 and is required to be sold to them since the said block of land is contiguous to the property already sold.
On 15.12.2017, Auction Purchase made the payment of 15% of the bid amount i.e. ` 16.55 Crores but again pointed out regarding 0.60 Acres of land is in Block No. 1746 and put a condition to apply to this Court within a period of 30 days and to execute the sale deed.
The applicant had to file an application for seeking permission of this Court for sale of 0.60 acres of land belonging to the company in liquidation as per sale deed dated 19.12.1994 which is in possession of the Official Liquidator. In this application, the following order was passed by this Court on 16.02.2018, which reads as under: -
"Present application has been moved by the applicant- assignee of the secured creditor/ARCIL, seeking permission of this Court regarding sale of additional 0.60 acres (Block No. 1746) of 6 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 7 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 land belonging to the Company under liquidation and now in the possession of the Official Liquidator.
It is contended that this Court vide order dated 27.02.2017 (Annexure A-1) had permitted the applicants to conduct a joint auction of the land of 147.44 acres in possession of the applicant alongwith 35.88 acres land in possession of the Official Liquidator belonging to the Company under liquidation, totaling 183.32 (147.44+35.88) acres, so as to fetch a much better price.
In the auction proceedings conducted on 18.10.2017, the MIVPL (the Auction Purchaser) gave a highest bid for an amount of Rs. 104.34 crores for 183.32 acres of land and Rs. 6 crores for the building. The Auction Purchaser has deposited a sum of Rs. 27.58 crores towards 25% of the total bid money. This Court vide order dated 02.12.2017 (Annexure P-4) has confirmed the sale and the remaining 75% amount of the bid money has to be deposited within ninety (90) days of the said confirmation.
It transpires that there is a small chunk of land measuring 0.60 acres belonging to the Company under liquidation situated in the midst of the aforesaid larger chunk of 183.32 acres of land under auction. The Auction Purchaser has offered to purchase the said 0.60 acres land on the same terms and conditions of the previous auction notice. Hence, the present application.
At this stage, Mr. Vishal Aggarwal, Advocate, has put in appearance as Objector, being the unsuccessful bidder in the auction conducted on 18.10.2017. He submits that his client-M/s. Aananta Exim LLP has moved an application for recalling of the confirmation of the order dated 02.12.2017 (P-4), which is stated to be pending for consideration on 27.04.2018. He further submits that his client is ready and willing to offer a much higher price and, therefore, opposes the permission for sale of the additional 0.60 acres of land. To show his bona fide, at this stage, he has offered to deposit a sum of Rs. 30 crores (Thirty crores only) towards 25% of his proposed bid money towards purchase of auctioned 183.32 acres of land before the Official Liquidator by 28.02.2018, subject to the terms and conditions to be imposed by this Court.
7 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 8 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 List on 01.03.2018 for further consideration. To be shown in the urgent list."
The Bidder made the offer in this Court while appearing as an objector that he would pay an amount much higher than the Auction Purchaser. The Court was inclined to see the bonafide of the Bidder and thus asked it to deposit a sum of ` 30.00 Crores towards 25% of the bid money towards the purchase of the auctioned land with the official liquidator by 28.02.2018, subject to the terms and conditions which may be imposed by this Court. Admittedly, the amount of `30.00 Crores has not been deposited by the Bidder rather an application bearing No. CA-38-2018 has been filed for seeking extension of time for depositing the amount in terms of order dated 16.02.2018. In the said application, the Bidder has averred that he has prepared a draft of `10.00 Crores dated 26.02.2018 drawn on HDFC Bank in favour of the official liquidator but due to some unforeseen reasons and the time being very short of 12 days, it could not prepare the draft for the remaining amount of ` 20.00 Crores by 28.02.2018 in terms of order dated 16.02.2018 passed by this Court.
This application of the petitioner is strongly opposed by the Auction Purchaser, inter alia, on the ground that the Bidder, in the past had also an opportunity to purchase the land in question, but it only made an offer of ` 90.00 Crores for the land and ` 2.00 Crores for the building which was lesser than the reserved price i.e ` 104.34 in respect of the land and ` 6.00 Crores in respect of the building.
8 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 9 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 The applicant again gave indulgence to the Bidder when there was correspondence between them i.e. letters dated 29.09.2017 and 10.10.2017 but in response, the Bidder made the offer of increase of paltry some amount of ` 1.00 Crore towards cost of the building only that too upon certain conditions which were not acceptable to the applicant in which the main condition which was found unacceptable was payment of 75% of the amount in nine months. It is also submitted that the Court had been magnanimous enough to give one more opportunity to the Bidder vide order dated 16.02.2018 to show its bonafide of purchasing by depositing `30.00 Crores. Even this opportunity has also not been availed by the Bidder as it could not arrange to pay ` 30.00 Crores only what to talk of payment of money higher than the reserved price of ` 104.34 Crores and ` 6.00 Crores respectively.
The Auction Purchaser has thus vehemently contested the application for extension of time on the ground that enough opportunities have already been given to the Bidder and now it is time for the matter to be closed by allowing the sale of 0.60 acres of land on the same terms and conditions on which he had already purchased the other portion of the land.
Mr. Chopra appearing for the Auction Purchaser has raised a legal issue also to the effect that the Court may, in any given case, interfere after confirmation of sale, if it is of the opinion, on the basis of the material brought before it, that there has been an element of fraud played in the sale of the property by auction, otherwise it is submitted it would be an unending process if the confirmed sale is set aside on the asking of the disgruntled 9 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 10 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 Bidder who had been participating the bid earlier and has remained unsuccessful and in this way the sale would never be confirmed and in that process, may be the investors available with the Auction Purchaser back out. In support of his submissions, he has relied upon the three decisions of the Supreme Court of India in the cases of Valji Khimji & Company Vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. and Others; 2008 (9) SCC 299, Sadashiv Prasad Singh Vs. Harender Singh and others; 2014 (2) Recent Apex Jugements (RAJ) 251 and Vedica Procon Private Limited Vs. Balleshwar Greens Private Ltd. and Others; 2015 (10) SCC 94. He has also relied upon a decision rendered by the Division Bench of this Court in CWP No. 26039 of 2014 titled as Surbhi Handicraft Vs. Union of India and Others decided on 19.05.2015.
It is submitted that the adequacy or inadequacy of price offered at the time of auction, if it is more than the reserved price, is no ground for setting aside the confirmed sale and that after the confirmation of sale, a right of legitimate exception vests with the Auction Purchaser and should not be taken away, just on the asking of the Bidder, who remained unsuccessful in the bid and has now appeared suddenly in the Court for taking the property by offering higher price and has also not been able to prove his bonafide despite opportunities granted.
He has also submitted that the Bidder has been indulging in the forum shopping as on the one hand, it has challenged the auction sale in favour of the Auction Purchaser by way of filing a Securitisation Application bearing No. SA-23-2018 filed on 04.01.2018 before the Debt Recovery 10 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 11 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 Tribunal-II, Ahmedabad and on the other hand it has appeared as an intervener in the confirmation of sale in respect of the remaining 0.60 acres of land before this Court.
In reply Sh. Vishal Aggarwal, learned counsel appearing for the Bidder has submitted that the applicant-ARCIL has written a letter on 29.09.2017 in respect of sale of the secured assets pertaining to the property of company in liquidation by which the applicant has practically responded to its offer of `90.00 Crores for land and ` 2.00 Crores for building to sell it on "as is where is" and "as is what is" basis. He has further referred to letter 10.10.2017, which has the reference of the earlier letter dated 29.09.2017, in which the applicant has informed that the sale would be subject to the approval of the bid from the High Court after receipt of the entire money. He has also relied upon a decision of the Supreme Court in the case of Divya Manufacturing C. (P) Ltd. and another Vs. Union Bank of India and others; 2000 (3) PLR 369 to contend that in certain cases, inadequacy of price can also be gone into by the Court for the purpose of setting aside a confirmed sale. He has also referred to another decision of the Supreme Court in the case of Lica (P) Ltd. Vs. Official Liquidator; 2000(6) SCC 79 and the decision of a single bench of this Court, passed in the matter of M/s Oswal Agro Furnace Ltd. (In liquidation) 2004 (2) PLR 1, to contend that the Court should lean towards the recovery of money as much as possible as it would be in the interest of the company in liquidation for making payment to the creditors. He has also submitted that the Bidder has given the offer of almost `10.00 Crores over and above the offer made by the Auction Purchaser 11 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 12 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 which would be in the interest of the company in liquidation for the purpose of discharging its debts of the secured creditors etc. In rebuttal, Mr. Chetan Mittal, learned Senior counsel appearing on behalf of ARCIL and Mr. Ashwani Chopra, learned Senior counsel appearing on behalf of the Auction Purchaser, have unanimously submitted that the decision in the case of Divya Manufacturing (Supra) cannot be applied in the present scenario because there is no element of fraud involved in the present case as it has not been pleaded. It is also submitted by them that the fraud is not only to be pleaded but also to be proved at least prima facie so as to take the Court into confidence for setting aside the confirmed sale in favour of the Auction Purchaser. It is also submitted that the letters dated 29.09.2017 and 10.10.2017 are of no value for the Bidder, in view of the letter dated 16.10.2017, in which the Bidder has marginally revised its offer to the extent of ` 1.00 Crore which was still much below the reserved price and had imposed certain conditions which were totally unacceptable as the applicant was in need of money immediately whereas the Bidder was offering substantial amount of 75% in nine months.
I have heard learned counsel for the parties and after the perusal of the record, am of the considered opinion that this application of ARCIL deserves to be allowed because there is no dispute that the land measuring 0.60 acres approximately is a part of a bigger chunk of land and would break the continuity of the land already purchased by the Auction Purchaser. It is also an admitted fact that the land of the company in liquidation has been put to auction three times and at last Auction Purchaser was found who has given 12 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 13 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 the reserved price for purchasing the land in question. Additionally, the offer made by the Auction Purchaser has also been accepted by the Court vide its order dated 02.12.2017. The Bidder has failed to point out any defect in the auction procedure adopted by the applicant much less any collusion with the applicant and the Auction Purchaser or any fraud having been played in the auction proceedings. Therefore, the decision relied upon by the Auction Purchaser in the cases of Valji Khimji (Supra), Sadashiv Prasad Singh (Supra) and Vedica Procon Private Limited (Supra) are all squarely applicable to the facts and circumstances of this case and the decision relied upon by the Bidder in the case of M/s Divya Manufacturing C. (P) Ltd. (Supra), altogether on different facts and circumstances, is not applicable because the Bidder had been participating in the auction proceedings and did not offer even the reserved price for purchasing the same and cannot be allowed at present to turn around to say that he would offer more money than the Auction Purchaser.
Besides the aforesaid facts and circumstances, this Court was still of the view that it would be in the interest of the company in liquidation, much less, the applicant that if some more money comes to its coffer, offered by the Bidder, while appearing before this Court on 16.02.2018 and thus a period of 12 days was given to the Bidder to deposit ` 30.00 Crores with the official liquidator to show its bonafide. This step was taken by the Court so as to avoid a person, who is unnecessarily intervening in the process, for adjudging his interest in property in question, asked him to deposit atleast 25% of the proposed bid money. Admittedly, the said order has not been 13 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 14 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 complied with by the Bidder. It is really interesting to note that on the one hand the Bidder is saying that he would pay more amount than the Auction Purchaser which is more than ` 10.00 crores and on the other hand it was not having 30.00 Crores readily available for the purpose of showing its bonafide. All that has been done by the Bidder is to prepare a demand draft of ` 10.00 crore which is a paltry amount for the purpose of showing its readiness and willingness, much less, bonafide to purchase the property in question. Thus, in these facts and circumstances especially the fact that the sale has been confirmed and the Bidder has not been in a position to show his bonafide, application bearing No. CA-38-2018 for seeking extension of time to deposit ` 30.00 Crores is hereby dismissed.
As a consequence, once the Bidder is out of picture now, the application of the ARCIL for seeking permission of this Court can be easily granted and hence application bearing No. CA-1-2018 is allowed and permission is granted to sell 0.60 acres of land situated in Block No. 1746 situated at Village Kandri, Taluka Karjan, District Vadodra, Gujarat owned by the company in liquidation at a reserved price of ` 56.91 Lakhs per acre to whom the remaining land has been sold.
At this stage, on the request of Auction Purchaser, it is directed that the balance payment shall be made within next five working days including the sale value of 0.60 Crores which has been allowed today. Thereafter, the same proportionate amount shall be remitted by the applicant to the Official Liquidator within seven days. The applicant and Official 14 of 15 ::: Downloaded on - 06-05-2018 12:04:31 ::: Page 15 of 15 CA-1-2018 IN CP-217-2015 and CA-38-2018 IN CA-1-2018 liquidator thereafter shall issue sale certificate after receipt of entire sale consideration within 15 days.
March 8, 2018 [ RAKESH KUMAR JAIN]
Ess Kay JUDGE
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