2015 (1) TMI 112 - SC - Companies Law

Sale of stakes in property outside India or not - Whether apart from selling the immovable properties situated within the country Saharas propose to sell their stakes in three other properties situated outside the country Held that - SEBI contended that the Court could apart from lifting the embargo on the sale of the moveable and immovable assets in India, vacate the same qua the said three properties to enable Saharas to comply with the directions issued by this court - there is nothing on record to show that any request was made by the Saharas to the Bank of China at any stage there is no reason to prevent Saharas from taking up the matter with the Bank of China for its permission/consent to the proposed transfer/sale/alienation of their stakes in the equity of the companies that own the properties - it was urged that the valuation reports have been prepared by reputed valuers at the instance of the Bank of China in connection with the loan transactions as a part of on-going annual exercise undertaken by the lending Bank - if that be so, Saharas would do well to obtain a confirmation from the Bank of China to the effect that the valuation reports prepared in respect of the three properties mentioned above by CBRE and JLL, have been prepared at the instance of the Bank of China and that the said valuation reports have been accepted by the Bank to be correct - this could lend re-assurance to the Court that the value/stakes held by Saharas in these properties are sought to be transferred on the basis of the true market value of the assets.

Summary

Issues:
1. Request for permission to sell stakes in properties outside the country.
2. Lack of evidence regarding communication with Bank of China.
3. Submission of communication and valuation reports to the Court.

Issue 1: Request for permission to sell stakes in properties outside the country
The judgment addresses the contention made by the applicant's counsel regarding the intention of the Saharas to sell their stakes in three properties located outside the country, namely Grosvenor House in London, Plaza Hotel, and Dreams Downtown hotel in New York. The Saharas sought to dispose of these properties subject to a charge in favor of the Bank of China. The applicant's counsel proposed that the Court lift the embargo on the sale of these properties to enable compliance with the Court's directions. The Court acknowledged the proposal but highlighted the absence of any formal request made by the Saharas to the Bank of China. The Court allowed the Saharas to communicate with the Bank of China seeking approval for the proposed transfer of their stakes in the mentioned properties, subject to repayment of outstanding loans. The applicant's counsel was directed to provide a copy of the communication and the Bank's response to the Court within one week.

Issue 2: Lack of evidence regarding communication with Bank of China
The judgment emphasized the importance of formal communication between the Saharas and the Bank of China regarding the proposed transfer of stakes in the properties. Despite the applicant's counsel's submission that the Saharas had taken up the matter with the Bank of China and received an in-principle approval, the Court noted the absence of any documented evidence to support this claim. The Court allowed the Saharas to address a formal communication to the Bank of China seeking approval for the transfer, along with a request for confirmation of the outstanding loan amount against each property. This communication, along with the Bank's response, was required to be submitted to the Court within one week to ensure transparency and compliance with the Court's directions.

Issue 3: Submission of communication and valuation reports to the Court
In addition to the communication with the Bank of China, the judgment highlighted the need for the Saharas to provide valuation reports of the properties prepared by reputed valuers at the instance of the Bank of China. The Court stressed the importance of obtaining confirmation from the Bank of China regarding the acceptance of these valuation reports to ensure the transfer of stakes based on the true market value of the assets. The Saharas were directed to submit these valuation reports, along with the Bank's confirmation, to the Court within one week. This step was deemed essential to provide clarity on the value of the stakes held by the Saharas in the properties and to facilitate a transparent and lawful transfer process.