2016 (5) TMI 730 - HC - Companies Law

Winding up - auction sale proceeded under the SARFAESI Act - Held that - Sale of the assets of the company for realisation of the loan amount to State Bank of Patiala, Syndicate Bank and M/s. LIC Housing Finance Limited, Chennai. Company sought to be wound up has also now filed an affidavit dated 18.01.2016, undertaking that they would handover physical possession of the secured assets upon completion and confirmation of the auction sale to be proceeded under the SARFAESI Act. All the parties before this Court have consented for sale of the property by Edelweiss Asset Reconstruction Company, Mumbai under the provisions of the SARFAESI Act, and for distribution of the amounts due and payable to the abovesaid three creditors viz., State Bank of Patiala, Syndicate Bank and M/s. LIC Housing Finance Limited, Chennai. In the light of the consensus, this Court directs that Edelweiss Asset Reconstruction Company, Mumbai, the 2nd respondent, shall take measures in the manner known to law, under the provisions of the SARFAESI Act to sell the assets of the company and take steps to get the sale confirmed as expeditiously as possible. No sooner the sale is confirmed, M/s.Riverside Infrastructure (India) Private Limited, Chennai, shall handover the possession of the assets as per the affidavit of undertaking dated 18.01.2016, without demur or objections. The whole exercise has to be completed within four months from the date of receipt of a copy of this order.

Issues Involved:
1. Petition for winding up of the respondent company.
2. Default in repayment of Project Term Loan.
3. Non-completion and deviation of the project.
4. Classification of the loan account as Non-performing Asset (NPA).
5. Proceedings under the SARFAESI Act.
6. Assignment of debt to Edelweiss Asset Reconstruction Company.
7. Consent for sale of assets to recover dues.

Detailed Analysis:

1. Petition for Winding Up of the Respondent Company:
The petitioner, M/s. LIC Housing Finance Limited, filed Company Petition No.127 of 2015 seeking an order for winding up of the respondent company, M/s. Riverside Infrastructure (India) Private Limited, under Section 433 of the Companies Act, 1956. The petitioner claimed that the respondent company had defaulted on the repayment of a Project Term Loan and sought the appointment of an Official Liquidator.

2. Default in Repayment of Project Term Loan:
The respondent company availed a Project Term Loan of Rs. 217 Crores from a consortium of lenders including M/s. LIC Housing Finance Limited, State Bank of Patiala, and Syndicate Bank. The loan was secured against the mortgage of immovable properties. The respondent failed to repay the loan amount as agreed upon, leading to the classification of the loan account as a Non-performing Asset (NPA).

3. Non-completion and Deviation of the Project:
The respondent company was involved in the development of a commercial complex named "Marg Junction." The project was delayed, varied, and not completed as per the original plan. The respondent company also deviated from the original construction plan without the consent of the lenders, resulting in project overruns and further delays.

4. Classification of the Loan Account as Non-performing Asset (NPA):
Due to the respondent's failure to adhere to the repayment schedule and the delay in project completion, the loan account was classified as NPA. The outstanding dues as of 01.01.2013 amounted to Rs. 1,17,64,21,463.39, including unpaid interest from 01.05.2012.

5. Proceedings under the SARFAESI Act:
State Bank of Patiala, as the lead banker, issued a Demand Notice under Section 13(2) of the SARFAESI Act, calling upon the respondent to pay the outstanding sum of Rs. 250,66,51,688.47 as of 28.02.2013. The respondent failed to clear the dues, leading to the initiation of measures under Section 13(4) of the SARFAESI Act, including taking symbolic possession of the secured assets.

6. Assignment of Debt to Edelweiss Asset Reconstruction Company:
State Bank of Patiala and Syndicate Bank assigned their rights, title, and interest in the financial assistance granted to the respondent to Edelweiss Asset Reconstruction Company through Assignment Agreements dated 26.06.2014 and 28.06.2014. Edelweiss became the full and absolute owner of the debt and was entitled to recover the financial assets.

7. Consent for Sale of Assets to Recover Dues:
The respondent company, in an additional affidavit, accepted the liability and consented to the sale of its assets under the SARFAESI Act to repay the dues to the consortium lenders. All parties agreed to the sale of the property by Edelweiss Asset Reconstruction Company. The court directed Edelweiss to take measures to sell the assets and complete the process within four months.

Conclusion:
The court directed Edelweiss Asset Reconstruction Company to sell the respondent's assets under the SARFAESI Act and distribute the proceeds among the creditors. The respondent company was ordered to hand over possession of the assets upon completion and confirmation of the auction sale. The Company Petition was closed with these directions.

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