9911796707
TMI Blog2004 (1) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and M/s. Chandra Developers Pvt. Ltd., submitted its tender offering Rs. 125 per sq. ft. After negotiation and deemed completion of the tender formalities, the said applicant agreed to pay the price of Rs. 278 per sq. ft., and gave acceptance letter dated 11-2-2002. The Board approved the same as per the decision of the Board Meeting held on 25-2-2002. Sanction of rehabilitation scheme was ordered on 26-7-1996 in case No. 602/94. Since the Company-NGEF was in financial difficulties and was unable to pay the debts of its creditors, proceedings were initiated before the Board for Industrial and Financial Reconstruction (for short BIFR ). The BIFR by a detailed order has held that the NGEF is not likely to make its net worth exceed its accumulated losses within a reasonable time while meeting all its financial obligations and that the Company as a result thereof is not likely to become viable in future and hence it is just, equitable and in public interest that it should be wound up under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short the SIC Act) and the opinion was forwarded to this Court along with copies of all earlier orders/proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel submits that this is apparent from letter dated 18-9-2003 written by the Government to the NGEF directing it to oppose the application, and therefore, the learned Company Judge erred in holding that there was a concluded contract, and granting permission was illegal, and the order is liable to be set aside. 6. Sri. Varadaraj R. Havaldar, learned counsel appearing for the secured creditor-State Bank of Mysore-the appellant in OSA No. 70/2003 submitted that the appellant was not aware of the sale, which has been held behind his back. It is submitted that the learned single Judge erred in holding that there was a concluded contract and failed to note that the price offered by respondent No. 1 - M/s. Chandra Developers Pvt. Ltd. is also inadequate; and that the grant of permission would affect the vested rights of this appellant and other secured creditors. He also submits that the appellant has got share in the NGEF, and unless there is an order of winding up in view of the provisions of section 20 of SIC Act, the BIFR would be having control over the properties of the Company and only after a winding up order is passed the Company Court would get jurisdiction to permit sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as approved the proposed sale on 25-2-2002. He submits that the applicability of the Articles of Association does not arise. Neither the documents/Articles of Association were filed nor the point was raised. More so, the winding up proceedings had commenced and the matter was remitted to this Court for a direction. It is also seen that the Government has not questioned the approval of sale by the Board at the relevant time, nor it could have raised, which is apparent from the letter dated 7-3-2002/2-9-2002 written with reference to letter dated 8-8-2002, stating that the NGEF is not authorised to dispose of its assets without the approval of the High Court of Karnataka. In other words, it would mean that the Government will abide by order that would be passed by the Court. The permission has been granted. Under the circumstances, the argument that the order passed by the learned Company Judge is without jurisdiction for want of consent by the Government is not helpful. The appellants cannot take advantage of the alleged letter dated 18-9-2003 asking the NGEF to oppose, and on that basis the grant of permission cannot be interfered with. The learned counsel submits that NGEF has exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities of the secured creditors, employees and other creditors, as the matter was pending before the BIFR, permission was necessary and the BIFR instead of granting permission, recommended for winding up of the company vide order dated 2-8-2002 under section 20(1) of the Act and further recommended to the parties to move Company Court for permission to sell its assets. On that basis this Company petition was registered in Company Petition No. 154/2002. Under these circumstances, it is clear from the provisions of section 20(4) of the SIC Act and the pendency of the winding up proceedings referred above, as stated, the learned Company Judge has jurisdiction to consider the application seeking permission for sale. The question of sending back the matter to the BIFR for permission to sell would not arise nor approval of the Government was necessary in the facts of the given case. As stated, the BIFR observed that the company being a sick unit, further direction in the matter from the concerned High Court is required. The learned Company Judge after hearing the parties granted permission to sell, as such the same cannot be interfered with. 11. The Division Bench of this Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the matter need not be referred back to the BIFR as the BIFR itself had directed the parties to obtain necessary direction from this Court. Therefore, the argument that grant of permission for sale is bad for want of approval of Government, is not acceptable as per the material and facts of the given case. 15. The other question about the adequacy of consideration was not canvassed before the learned Company Judge and could not have been canvassed when the application for seeking permission against the acceptance of bid by calling for global tender had not been challenged. It is also seen that the appeal against winding up order has been dismissed. A perusal of section 20(4) of SIC Act specifically empowers the BIFR, notwithstanding the provisions for winding up under section 20(2) of the Act. Any sale in pursuance of a direction by the BIFR under section 20(4) of SIC Act before an order of winding up under section 20(2) of SIC Act is valid. Considering the facts of the given case, the direction given by the learned Company Judge cannot be said to be erroneous or illegal so as to call for any interference. 16. No doubt, the secured creditors have priority. A secured cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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