2017 (3) TMI 277 - SC - Companies Law

Public auction - properties free from any encumbrance - Held that - We permit the contemnor to sell the properties mentioned in Part A barring the property at Item No.15, and any other properties mentioned in Part B and other properties which are not encumbered and deposit ₹ 5092.64 crores on or before 13th April, 2017. The amount shall be deposited in SEBI Sahara Refund Account. In case, the substantial amount is deposited, this Court may think of extending the time, otherwise appropriate direction shall be issued. As is evident from Part A , item No.15, the land at Ghaziabad admeasures 91.65 acres. We have been apprised at the Bar that the same has been acquired by the Ghaziabad Development Authority and the price, as stated in the Annexure, is ₹ 1112.70 crores. It is submitted by the learned senior counsel for the contemnor that the same is payable to him along with interest. To appreciate the said submission, it is obligatory on the part of the Court to offer an opportunity of hearing to the Ghaziabad Development Authority. Let notice be issued to the said authority within a week hence. The requisites in that regard be filed by the petitioner, S.E.B.I., within three days from today. The competent authority of the Ghaziabad Development Authority shall bring the computation in regard to the compensation awarded and remain personally present on 17th April, 2017 before this Court. The Registry is directed to send a copy of this order to the competent authority of the Ghaziabad Development Authority. In a case of this nature, surprises are bound to spring up. Mr. Sriram P., learned counsel has submitted that he has instructions from an International Real Estate Company, namely, MG Capital Holdings LLC, which is prepared to purchase the Plaza Hotel at New York, U.S.A. The company intends to offer 550 million US dollars for the stake of Sahara in that hotel. However, he wanted that he may be permitted to do due diligence and that should be granted by the contemnor. Though the submission advanced by Mr. Sriram appears quite innocuous, it cannot be so perceived. Once he intends to get into the fray, a fiscal one, he must be financially prepared. The permission can only be granted if he deposits a sum of ₹ 750 crores before the Registry of this Court on or before 17th April, 2017. In addition, he may supply the details of the company to Mr. Narendra Hooda, learned senior counsel assisting Mr. Kapil Sibal so that the credentials of the company can be verified.

Issues:
1. Contempt of court - direction to file list of properties for public auction
2. Classification of properties into encumbered and free from encumbrances
3. Authorization to sell specific properties and deposit proceeds with SEBI
4. Dispute regarding compensation for acquired land at Ghaziabad
5. Notice to Ghaziabad Development Authority for hearing
6. Proposal for purchase of Plaza Hotel stake by MG Capital Holdings LLC

Analysis:
1. The Supreme Court directed the contemnor to provide a list of properties for public auction, emphasizing they should be free from encumbrances. The list included both encumbered and unencumbered properties, with a specific mention of properties in Part 'A' deemed free from encumbrances.

2. Notable properties in Part 'A' included Sahara Hospital in Lucknow, Sahara City Homes in various locations, and a stake in Orange India Holdings Sarl, among others. The court excluded an immovable property from auction and addressed compensation issues for a property in Ghaziabad, directing further hearings and computations.

3. The court discussed the challenges faced in conducting auctions for certain properties and permitted the contemnor to sell specified properties, excluding encumbered ones. A deposit of a specified amount was mandated to be made to SEBI Sahara Refund Account by a set deadline, with provisions for extension based on compliance.

4. Regarding the compensation for the land in Ghaziabad, the court directed notice to be issued to the Ghaziabad Development Authority for a hearing and computation of the awarded compensation. The authority was required to be present before the court on a specified date.

5. An unexpected proposal for the purchase of a stake in Plaza Hotel at New York by MG Capital Holdings LLC was presented. The court set conditions for due diligence and financial preparedness, including a substantial deposit and verification of the company's credentials before granting permission.

6. The interim order from a previous hearing was to remain in effect until the next hearing date, ensuring continuity in the proceedings and decisions made by the court.

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