2004 (12) TMI 394 - HC - Companies Law

Issues Involved:
1. Validity of the sale deed executed by the first respondent in favor of the sixth respondent.
2. Locus standi of the workers' union to challenge the sale.
3. Compliance with the procedural requirements for the sale under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and its Repeal Act, 2003.
4. Adequacy of the wells for the factory operations post-sale.
5. Proper forum for challenging the sale deed.

Issue-wise Detailed Analysis:

1. Validity of the Sale Deed:
The workers' union sought a declaration that the sale deed executed by the first respondent in favor of the sixth respondent is null and void. The sale was part of a rehabilitation scheme framed by the Board for Industrial and Financial Reconstruction (BIFR) and later modified by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). The union argued that the sale of the property containing essential wells made it impossible to restart the factory. However, the court found that the sale was conducted under the directives of the AAIFR and the Asset Sales Committee (ASC), which had the authority to sell the property to facilitate rehabilitation.

2. Locus Standi of the Workers' Union:
The court questioned the locus standi of the workers' union to challenge the sale deed. The respondents argued that the union had no standing to attack the sale deed or seek an injunction. The court noted that the union had not shown any infringement of their rights and that their remedy, if any, lay before the civil court, not in a writ petition.

3. Compliance with Procedural Requirements:
The union contended that the sale required prior government permission and that the repeal of SICA abated all proceedings, making the sale void. The court found that the AAIFR had authorized the ASC to conduct the sale, and the repeal of SICA did not affect actions taken under the Act due to the saving clause in the Repeal Act. The court also noted that the ASC comprised responsible officials and there were no allegations of undervaluation or procedural irregularities in the sale.

4. Adequacy of Wells for Factory Operations:
The union argued that the sale of the property containing active wells would hinder factory operations. The respondents countered that sufficient wells remained with the first respondent and additional wells could be dug if necessary. The court accepted the respondents' explanation and found no merit in the union's objection regarding the wells.

5. Proper Forum for Challenging the Sale Deed:
The court emphasized that the union's challenge to the sale deed should be brought before a civil court rather than through a writ petition. The court noted that the union had not attacked the AAIFR's decision to sell the property but only the sale itself, which was not appropriate in a writ petition.

Conclusion:
The court dismissed the writ petition, finding no irregularity in the sale process and noting that the union had not shown any infringement of their rights. The court held that the union's remedy lay before the civil court and not in a writ petition. The court also found that the sale was conducted under the directives of the AAIFR and the ASC, and the repeal of SICA did not affect the validity of the actions taken under the Act. The objections regarding the wells and prior permission were found to be without merit. Therefore, the petition was dismissed, and the sale deed was upheld.

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