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TMI Blog2016 (5) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... ar all dues. The sale was sanctioned in favour of the Petitioner on 16th October 2007. For the next five years, till 18th February 2011, the Petitioner failed to clear those dues. It can hardly be heard to complain now. The fact that there were several workmen of Daewoo was also known to all. Those workmen had intervened in the Appeals filed by unsuccessful bidders before the Presiding Officer of the DRT. They supported at first the Petitioner’s offer. This finds mention in the order of 28th September 2009. We must observe that this does not appear to us to have been attempt to revive the unit or a genuine offer to rehabilitate the unit and provide employment to the workmen of Daewoo. It appears to us to have been little more than an attempt to get possession and control of a huge tract of land and turn it to real estate development. The record indicates that at no point was any attempt made to run the plant. The existing facilities were totally gutted, down to the wiring and window frames being removed and the entire structure being stripped bare and rendered unusable. Significant too is the fact that the Petitioner sought change of user from industrial to residential, another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Shah, i/b MLS Vani Associates., Ms. Bhavna Mhatre,with Ms. Gayatri Singh, Senior Advocate, i/b Kranti LC For The Respondent : Mr. T. K. Cooper, a/w Mr. Bhalchandra Palav and Mrs. Radha Jayraman, i/b M/s. Cyril Amarchand Mangaldas and S.A., Shroff and Co., Ms. Varsha Parulekar., Mr. Sham Walve, a/w Ms. Sushila Vichare, i/b M/s. KS Legal Consultant., Mr. Karan Bhosale, i/b Ms. Neha Bhosale JUDGMENT (Per G. S. Patel, J.): 1. By this Petition, filed under Articles 226 and 227 of the Constitution of India, the Petitioner seeks to challenge an order dated 8th January 2014 passed by the Debt Recovery Appellate Tribunal ( DRAT ) in Miscellaneous Appeal No. 58 of 2013. The present Petitioner was the Appellant before the DRAT. Although Ms. Sethna for the Petitioner says that this is the limited challenge in the Writ Petition, we find that in actuality, there are two other orders that are implicitly under challenge. The first of these is an order dated 22nd November 2012 passed by the Recovery Officer on an application made by the 1st Respondent pursuant to which a certain sale of property, to which we will refer hereafter, in favour of the Petitioner was orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ida, Gautam Buddha Nagar, Tahasil-Dadri, District Gaziabad, Uttar Pradesh. The plot measures 204 acres. There are several structures standing on this land along with plant and machinery. This was once a motor car manufacturing and assembly plant. (d) Following the order of 9th May 2002 read with the DRT s order of 31st March 2003, the DRT Receiver took possession of the suit properties. This included the land at Surajpur Industrial Estate. (e) It seems that the DRT Receiver then made several attempts to sell the suit properties including the public auctions. These attempts were unsuccessful. (f) In the the meantime, on 31st August 2004, the ICICI Bank s O.A. was finally allowed. On 11th October 2004, a Recovery Certificate was issued in favour of ICICI Bank. (g) By an Assignment Agreement dated 29th March 2005, ICICI Bank assigned, transferred and sold all loans of Daewoo together with the Recovery Certificate and all underlying securities, including the suit properties, to ARCIL. The Recovery Certificate was then amended to bring ARCIL on record. ARCIL then initiated Recovery Proceeding No. 440 of 2004 before the Recovery Officer, Mumbai DRT ( Recovery Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dder, was now the fourth highest bidder on this revision; two other bidders had offered more than Adzon, but less than Crosslinks. (k) On 2nd January 2007, having studied the revised officers, ARCIL wrote to the DRT Receiver confirming its acceptance of the offer made by the Crosslinks, then the highest offerer. ARCIL Compilation, Vol. I, pp. 21-27 On 2nd February 2007, these revised offers with their supporting documents were placed by the Recovery Officer by the DRT Receiver, who made a report on them. (l) On 12th February 2007, after notice to parties, the Recovery Officer held extensive hearings. By an order dated 12th February 2007, the Recovery Officer allowed the DRT Receiver s report dated 2nd February 2007 and accepted Crosslinks s revised offer in respect of the fixed assets in favour of Crosslinks s nominee, i.e., Pan India Motors Private Limited, the Petitioner before us today. The offer made by Crosslinks in respect of Lot No. 2, the current assets, stood rejected. ARCIL Compilation, Vol. I, pp. 30-47. (m) On 28th September 2007, an order came to be passed by the Presiding Officer of the DRT recording and noting the support of the workmen s union to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober 2007, the Recovery Officer passed certain further directions regarding delivery of possession of the fixed assets to the Petitioner. ARCIL Compilation, Vol. I, pp. 56-67. A day later, on 18th October 2007, one of the unsuccessful bidders filed an application in its pending appeal before the DRT, and sought stay of the Recovery Officer s order of 16th October 2007. By its order dated 18th October 2007, the DRT adjourned this application for orders to 23rd October 2007 and restrained the DRT Receiver from taking any further steps in the matter. Aggrieved by this order, ARCIL and Crosslinks filed separate appeals before the DRAT. By a common order 19th October 2007, the DRAT directed the DRT to dispose of the unsuccessful bidder s application on 22nd October 2007. On that day, the DRT passed an order of interim stay of the recovery proceedings pending the final decision in all pending appeals. Again aggrieved by this order, ARCIL and Crosslinks filed appeals to the DRAT. By its order dated 25th October 2007, the DRAT vacated the interim stay of the recovery proceedings. (s) On 25th October 2007, the DRT Receiver delivered possession of the fixed assets to the Petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on schedule; specifically, for the right of ARCIL/SASF to place their nominees on the Petitioner s board. Clauses 2(xvii), ARCIL Compilation, Vol. I, p. 90; Petition, p. 183. Clauses 1 to 3, read with Clauses 4(e) and 4(f ) of the Consent Terms meant, she says, that the debenture series were both secured. Clause 4(h) cast an obligation on the Petitioner to insure the property in question. (y) Two days later, on 15th December 2009, the Recovery Officer gave the Petitioner liberty to clear the entire dues of UPSIDC in order to avoid further delay. The Petitioner withdrew its claim against UPSIDC. (z) On 21st December 2009, the Petitioner issued socalled letters of allotment of both the NCDs and OCDs. (aa) Under directions of the Recovery Officer, ARCIL then filed an Affidavit dated 29th January 2010, confirming that the Consent Terms of 13th November 2009 did not in any manner detract from or dilute the terms and conditions of the sale. On 8th March 2010, the Recovery Officer took the Consent Terms on file. Accordingly, as provided in those Consent Terms, all pending Miscellaneous Applications filed by both ARCIL and the Petitioner came to be disposed of. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed an Affidavit accepting that a final opportunity be given to the Petitioner till 15th February 2011 to create the requisite mortgage, charge, pledges and other securities in compliance with the terms and conditions of the sale. (dd) On 4th February 2011, ARCIL replied to the Petitioner saying that the debentures that ARCIL had received were not in consonance with the terms and conditions of the sale. ARCIL Compilation, Vol. II, pp. 101-102. ARCIL also pointed out that there were further pending compliances required of the Petitioner. (ee) On 14th February 2011, the Petitioner wrote to ARCIL saying that it had complied with the terms and conditions of the sale and apparently cleared all the dues of UPSIDC. ARCIL Compilation, Vol. II, p. 103. ARCIL claims that it did not receive this letter till the time of a hearing before the Recovery Officer several days later on 18th February 2011. (ff) On that date, i.e., 18th February 2011, ARCIL applied a second time to set aside the sale in favour of the Petitioner. This was numbered as Exhibit 194 . ARCIL Compilation, Vol. II, pp. 84-117. Simultaneously, the Petitioner filed an application, Exhibit 196 , bringing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led, the Petitioner proceeded to file a compilation of documents before the Recovery Officer, who heard the Petitioner s counsel at some length. At this time written submissions were also filed by the Workmen s Union. (ll) On 15th April 2011, the arguments on behalf of the Petitioner were concluded before the Recovery Officer. The matter was adjourned for the arguments of UPSIDC and for ARCIL s Rejoinder. (mm) On 26th April 2011, the DRAT allowed the Transfer Petition and transferred the recovery proceedings to the Ahmedabad DRT. This order of the DRT was challenged by ARCIL in Writ Petition No.1445 of 2011 before this Court. On 24th November 2011, this Court disposed of the Petition and transferred the recovery proceedings to the Recovery Officer of the Mumbai DRT No.2. (nn) A brief reference is necessary to the events of March 2012. During this period, it appears that the Petitioner filed an application before the Recovery Officer for vacating the Recovery Officer s injunction order dated 18th February 2011, i.e., one that had been passed almost a year earlier. It also filed an application for expediting the hearing. This was rejected. An appeal from the order of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Writ Petition. Petition, Ex. A , pp. 33-90. (tt) There are a few further facts that must be noted subsequent to the order of 8th January 2014. On 14th March 2014, the Recovery Officer passed an order inter alia directing simultaneous possession, inventory and valuation of the fixed assets. Petition, Ex. W , pp. 506-507. ARCIL s advocates wrote to the Petitioner s Advocates on 26th March 2014 informing them of the Recovery Officer s order of 14th March 2014. By its letter dated 4th April 2014 to the Petitioner, ARCIL fixed 11th April 2014 as the date for taking over possession. On 4th April 2014, the Recovery Officer passed an order appointing a new valuer of the fixed assets. Petition, Ex. X , p. 508. On 9th April 2014, ARCIL wrote to the Petitioner postponing the possession date and, on 16th April 2014, informed the Petitioner of the Recovery Officer s order appointing a new valuer. On 25th April 2014, ARCIL again wrote to the Petitioner, now fixing the possession date on 5th May 2014. On 5th May 2014, the Petitioner refused to hand over possession or allow an inventory and valuation of the assets. ARCIL took symbolic possession of the fixed assets. This Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is noted in Mr. Talekar s second report. On 30th October 2015, the re-auction sale of the fixed assets scheduled for 30th October 2015 was cancelled. A report was filed by ARCIL on 30th October 2015 about the site visit for inspection. 4. We have noted these facts in such detail not because we believe we can go into them in our writ jurisdiction as we might had we been an appellate court, but for precisely the converse reason, i.e., because, given this complexity of facts and the very many orders of the recovery tribunals, we cannot entertain any challenge that is in the least fact-centric. Even assuming we could get into all these disputes, we would then be sitting as a third appellate court, something wholly alien to our jurisprudence. 5. Ms. Sethna s submission is, first, that ARCIL being regulated by the terms of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( SARFAESI Act ) and being an assignee of the original lender, ICICI Bank, elected to conduct a purely private treaty sale. According to Ms. Sethna, such a private treaty sale lies specifically within the purview of Rule 8 of the Security Interest Enfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y virtue of the nature of the sale effected in favour of the Petitioner. 7. We understand Ms. Sethna s submission to mean, first, that the DRT has no jurisdiction over the sale at all, and, second, that ARCIL having bound itself to deferred payment terms could not possibly apply to the DRT for any order cancelling that sale. The DRT had no power or authority in law to order any such cancellation. Once possession was given to the Petitioner, the sale was absolute and only a Civil Court would have jurisdiction. 8. She further submits that ARCIL having conceded that a confirmed sale took place in favour of the Petitioner, it could not contend to the contrary before the DRT or the DRAT. It had no right to seek an order setting aside that sale without proof of fraud or material irregularity, neither of which has ever been contended by ARCIL. Ms. Sethna relies on the decision of the Supreme Court in Valji Khimji Co. v Official Liquidator of Hindusthan Nytroproducts (2008) 9 SCC 299 to allege that since ARCIL had neither set up a case of fraud or material irregularity, it was precluded from assailing a confirmed sale. Further, she submits that since ARCIL had intentionally r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third appeal at that. 10. She also contended that the DRT had no jurisdiction to act as an executing Court at all. That jurisdiction, if ever it existed, ceased once the sale in favour of the Petitioner was confirmed or, at any rate, once possession of the property was delivered to the Petitioner against the payment of the upfront first instalment. It was also submitted that once ARCIL elected to conduct a private treaty sale, any subsequent actions of the parties would not operate to confer on the DRT a jurisdiction which it did not otherwise possess. 11. Ms. Sethna s next submission is that so long as the Consent Terms were not themselves set aside, the sale could not independently be set aside in the manner that was purported to be done. Under the deferred payment terms, the second tranche was not due till October 2010. Once the debenture instruments were issued, ARCIL s remedies laying the exercise of their rights under those debenture instruments, as further circumscribed by the Consent Terms. There was no question of going behind either the terms of the debenture documents or the Consent Terms. It is Ms. Sethna s submission that either under the SARFAESI Act or un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... somewhat emotive plea by Ms. Sethna that ARCIL has been browbeating the Petitioner and hindering it in the performance of its contractual obligations, and that it has been mala fide transacting on the property with a rival bidder. We do not believe that these submissions are relevant for the purposes of a determination of this matter. This is, after all, as we repeatedly pointed out to Ms. Sethna, not a substantive appeal, but a Writ Petition invoking the discretionary remedy of this Court under Articles 226 and 227 of the Constitution of India. Within that framework, there are well established restrictions on what this Court can and cannot do in the exercise of that discretion. Such pleas of being browbeaten or coerced have no place and no role in the writ jurisdiction of this Court. 14. This is substantially the framework of Ms. Sethna s submissions. 15. The threshold argument by Mr. Cooper for ARCIL is that the challenge in this Petition being to concurrent findings of fact rendered by three tribunals, this Court should not exercise its discretion under Article 226 and 227 of the Constitution of India. In the context, Mr. Cooper relies on the decision of Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he last extension of time sought by the Petitioner expired on 15th February 2011. It was for this reason that the Petitioner was restrained by the Recovery Officer by his order of 18th February 2011 from creating third party rights. The Petitioner did not challenge this order for more than a year. Its appeal from that order of the Recovery Officer finally failed. No debentures as required by the terms and conditions of the sale or the Consent Terms were ever issued; what flowed from the Petitioner was useless paper. No security was ever created and the Petitioner was in breach of the Consent Terms in many ways, not least of which was its failure to keep the property insured, and its utterly false statement that it had done so. The NCDs were redeeemable on 25th October 2010, three years from the possession date of 25th October 2007. Even the Consent Terms confirm this. It was only after that date that ARCIL demanded payment. But the revised debentures sent on by the Petitioner, all still unsecured, purported to unilaterally extend the dates of redemption and conversion. The Consent Terms also required the creation of further security; this too was never done. The Petitioner cannot, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cooper says that the entire edifice of the Petitioner s case is based on a fundamentally flawed supposition that the sale in favour of the Petitioner was an entirely private sale without the intervention of the Recovery Officer. This is demonstrably incorrect, Mr. Cooper says. 20. We agree. For it is a matter of record that by his order of 8th August 2002, the Chairperson of the DRAT granted the power to the Receiver to sell the properties in question by way of either public auction or by private treaty. Several attempts at sale by public auction were made. All failed. The Receiver appointed by the Recovery Officer submitted modified terms and conditions of sale for the approval and sanction of the Recovery officer. On 10th November 2006, the Recovery Officer sanctioned these special terms and conditions on which the DRT-appointed Receiver was to invite private offers from various prospective bidders. They were about 19 prospective bidders, including Crosslinks. The Petitioner is admittedly a nominee of Crosslinks. Mr. Cooper also points out that the offers were invited from all the bidders who had participated in the public auction. The Receiver received different offers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fact, several bidders did indeed challenge that sale. They filed appeals. In all of these, it seems from the record that not only was the sale to the Petitioner under challenge, but so too was its validity on the ground that this was beyond the provisions of the DRT Act. These objections were negatived by the Presiding Officer by his order of 7th November 2007 allowing the sale in favour of the Petitioner. 23. It appears to us beyond doubt that the sale in favour of the Petitioner was not, as Ms. Sethna would have us hold, a private sale entirely outside court, but was very much a Court-ordered sale with its terms and conditions having been approved by the Recovery Officer. We cannot understand how such a jurisdictional issue can be raised now by this Petitioner. After all, it participated in the auction without protest. It raised its offer when asked to do so. The sale and its terms and conditions were approved and found to be according to law by the Recovery Officer and by the DRT. The Petitioner defended the confirmation of the sale in its favour before those authorities at various times. We cannot see how the Petitioner can now do this complete volte face and conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vised it, and the Petitioner is only Crosslinks s nominee. No such objection was taken at the time of possession. Indeed, the Petitioner demanded possession, and that could only be in pursuance of the sale in its favour, one that was under terms and conditions approved by the Recovery Officer and accepted by the Petitioner or its nominator. The Petitioner repeatedly sought extensions of time from the Recovery Officer and the DRT to comply with its obligations under these terms and conditions, and that too could only be if the Recovery Officer and the DRT had the necessary jurisdiction. No such plea was taken when the Petitioner attempted its negotiation with UPSIDC, again an issue that is directly traceable to a jurisdictionally-competent sale under the supervision and orders of the Recovery Officer. The very jurisdiction that the Petitioner now questions as never having existed is the one under which it purported to take possession of the property and then to strip it bare. The genesis of the Petitioner s involvement is, to begin with, a proceeding for recovery before the DRT. The entire structure of this argument is deeply flawed and, in our considered view, fundamentally disho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by unsuccessful bidders before the Presiding Officer of the DRT. They supported at first the Petitioner s offer. This finds mention in the order of 28th September 2009. 30. We must observe that this does not appear to us to have been attempt to revive the unit or a genuine offer to rehabilitate the unit and provide employment to the workmen of Daewoo. It appears to us to have been little more than an attempt to get possession and control of a huge tract of land and turn it to real estate development. The record indicates that at no point was any attempt made to run the plant. The existing facilities were totally gutted, down to the wiring and window frames being removed and the entire structure being stripped bare and rendered unusable. Significant too is the fact that the Petitioner sought change of user from industrial to residential, another factor that is not brought out in the Petition at all. 31. Mr. Talekar s reports are telling. They show how the the fixed assets were allowed to be pilfered and destroyed. All of this is relevant in the context of the plea now made, which is to urge that the sale in the Petitioner s favour was null and void; that the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, we believe we would be utterly remiss in our duty if we failed to impose costs in a matter such as this. We cannot escape the finding, established by this voluminous record, that the Petitioner has played fast and loose not only with the Recovery Officer, the DRT and the DRAT but also with this Court. The Petition is wanting in candour. It is deliberately mischievous. There is clear suppression. The Petition is a gross abuse of the process of the Court, and this has been the steady pattern of the Petitioner s conduct from the very beginning. We see no sign at all of the Petitioner ever being honest and bona fide in fulfilling its obligations and complying with the terms and conditions of the sale. It is apparent that the attempt always was to offer a high price to gain the top slot as a successful bidder, and then to persistently delay completion of the sale by payment of the balance consideration. To this end, there were constant applications for time extensions, appeals, writ petitions and more, all seeking to delay matters. Wholly incorrect statements were made include about the issuance of the necessary debentures and about the property being k ..... X X X X Extracts X X X X X X X X Extracts X X X X
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