9911796707
TMI Blog2010 (3) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Nagappan, J. The petitioners have sought for issuance of a writ of certiorarified mandamus to quash the order dated November 18, 2009, passed by the second respondent and to direct respondents Nos. 2 and 3 to issue tender and hold auction afresh for the sale of properties covered under the order dated November 18, 2009, after assessing the value of the entire properties including plant, machinery and other movable and immovable properties based on the current market value and to allow the petitioners to participate and to be present throughout the sale process. 2. The petitioners are two workers' unions, employed in the first respondent mill at Salem. The United Bank of India extended financial facilities to the first respondent-company from 1989-1994 and the first respondent-company had mortgaged, inter alia , its immovable properties and hypothecated its plant and machinery lying at factory premises to the United Bank of India and due to failure to repay the amount, the bank initiated steps and issued notice dated January 20, 2007, under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmation of sale covered by sale notice, dated September 24, 2008, as null and void, and sought for interim injunction, but notice alone was ordered. All the three writ petitions came up for hearing on August 25, 2009 and a Division Bench of this court vacated the interim order granted in W.P. No. 8930 of 2008 on the ground that the second and third respondents herein agreed to share 3/8 of sale proceeds of Rs. 6 crores received by them pursuant to the sale of the part of properties of the first respondent mill to M/s. Syhims Granites. 4. The second respondent in consultation with the official liquidator, fixed the reserve price at Rs. 17,30,00,000 and effected publication of notice of sale in The Economic Times and Dina Thanthi on September 22, 2009. The first respondent, through its authorised officer, filed appeal in S.A. No. 225 of 2009 before the Debts Recovery Tribunal, Madurai under section 17 of the SARFAESI Act and after notice, the Tribunal granted stay on condition that the first respondent to deposits an amount of Rs. 1 crore in an interest bearing no lien account with a nationalised bank on or before October 24, 2009 and permitted the second respondent to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the upset price fixed was arbitrarily low and not fair and reasonable and wide publicity was not given and respondents Nos. 2 and 3 have concluded the sale process in an unlawful manner in order to gain more amount to the exclusion of the petitioners and there are offers for a higher price and the guideline value of the lands alone would be Rs. 18 crores on the basis of the value of Rs. 400 per sq. ft. and the market value will be still higher and the upset/reserve price fixed is less than the actual market value and public auction, after adequate publicity, would only ensure the best price and that has not been done in the present case and hence the petitioners are entitled for the reliefs sought for. In support of his submission, learned counsel for the petitioners relies on a decision of the Supreme Court in Haryana Financial Corporation v. Jagadamba Oil Mills [2002] 110 Comp Cas 20 ; [2002] 3 SCC 496. 9. The official liquidator has filed his report dated February 9, 2010, in the matter stating that the first respondent-company was wound up by order dated October 28, 2008, made in Company Petition No. 141 of 1994 and the second respondent has sold the assets at Alagapur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the second respondent moved the company court in C. P. No. 141 of 1994 and the company court held that the second respondent is entitled to sell the secured assets and retain the sale proceeds after depositing the workmen's dues with the liquidator in accordance with section 529A of the Companies Act and directed the second respondent to involve the official liquidator in the sale process and further directed the second respondent to appoint M/s. ITCOT Consultancy and Services Ltd., to value the assets in the presence of the official liquidator and the second respondent appointed the approved valuer through ITCOT to value the movable and immovable properties and as per the valuation report, the value of the immovable properties as on August 11, 2009, was fixed at Rs. 15,02,57,000 and the fair market value of the movables was fixed at Rs. 2,25,000 and in consultation with the official liquidator, taking into account the market value of the properties and fixed assets, the second respondent fixed the upset/reserve price at Rs. 17,30,00,000 and wide publication was effected in The Economic Times and Dina Ttonthi dated September 22, 2009 and four bids were received and in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the fourth respondent and there is no genuine proposal offering a higher price than the price for which the properties were sold and the second respondent has observed the legal formalities in letter and spirit and the reserve price has been fixed based on the approved valuer's report and it is not distress sale and the present writ petition is not maintainable and deserves to be dismissed. In support of his submission, learned senior counsel relies on a decision of the Supreme Court in Valji Khimji and Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. [2008] 145 Comp Cas 36 ; [2008] 9 SCC 299. 14. The fourth respondent has filed counter affidavit stating that its bid of Rs. 17,32,00,000 was the highest and was declared as successful bidder and it paid the 25 per cent, of sale consideration amounting to Rs. 4,33,00,000 on November 16, 2009 and the balance sale consideration was directed to be paid on or before December 15, 2010 and the same was extended up to January 27, 2010, if paid with interest at 20 per cent, and the fourth respondent paid the balance 75 per cent, of sale consideration with interest on various dates and the last payment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To assess the market value of the plant and machinery and other items available at the subject factory for sale purpose. Date and place of inspection 11-8-2009 at M/s. Akilandeswari Mills P. Ltd., Gandhi Nagar, Salem, Tamil Nadu. Executives associated Mr. Santhosh representative OL office, Chennai. Mr. Madhavan and Mr. Mani Babu legal officers ARCIL Portfolio office, Chennai. Mr. Senthil ITCOT Consultancy and Services, Chennai. Details Net worth/value in rupees as on 11-8-2009 Fair market value 225 lakhs 16. It is relevant to note that the assessed market value of the land and the structures and facilities therein has been determined at Rs. 15,02,57,000. The distress value of the property is also indicated in the report. The second respondent has taken only the current market value of the immovable and movable properties while fixing the reserve price. Due publication was effected in The Economic Times and Dina Thanthi, which are newspapers having wide circulation and in the auction, four bids were received and in the meanwhile, interim order was passed in a writ petition in W. P. No. 1077 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany become secured creditors by operation of law to the extent of the workmen's dues provided there exists a secured creditor by contract and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. In the present case, the second respondent has remitted the workers' dues, namely, the dues of the members of the petitioners' union and from the report of the official liquidator, it is seen that the claims in Form No. 67 from 327 workmen, claiming a sum of Rs. 16 crores have been received and the enquiry is to take place. 21. There is no specific allegation of any collusion in the affidavit filed in support of the petition, but it is averred that the second and third respondents have concluded the sale process in an unlawful manner. As already seen, in the sale process, the second respondent has acted as per the order of this court then and there and there was no distress sale. The valuation has been done by an approved valuer, who was suggested by the official liquidator and directed by the company court and the assessed market value of the land mentioned in the report was tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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