IN THE HIGH COURT OF JUDICATURE AT MADRAS
Date:- 07.01.2010
Coram
The Honourable Mr. Justice M. CHOCKALINGAM
and
The Honourable Mr. Justice T. RAJA
O.S.A. Nos.444 of 2009 & 11 of 2010
and
M.P. Nos.1 of 2009, 1 and 2 of 2010
Fairdeal Supplies Ltd.,
rep. by Director
Mahesh B. Gor ... Appellant in both appeals
..Vs..
1. Asset Reconstruction Company
(India) Ltd.,
17th Floor, Express Towers,
Nariman Point,
Mumbai 400 021.
2. The Official Liquidator,
High Court, Madras as the
Liquidator of SIV Industries
Limited (In Liquidation) ... Respondents 1 and 2
in both appeals.
3. South India Viscose National
Workers Union (NTUC),
rep. by its Secretary,
K. Arumugam,
12/11, Sathyamangalam Main Road,
Sirumugai 641 302,
Coimbatore District.
4. M/s. Veetrag Housing Development
and Finance Co. Ltd.,
rep. by its Director,
Shri Sumermal Mishrimal Bafna,
Block No.12, 3rd Floor, Nagin Mahal,
82, Veer Nariman Road,
Churchgate, Mumbai 400 020. ... Respondents 3 and 4 in
O.S.A. No.444 of 2009
(3rd and 4th respondents are impleaded
as per order dt.7.1.2010 passed in
M.P. Nos.1 and 2 of 2010 respectively)
Original Side Appeals filed against the order dated 19.10.2009 passed in Company Application No.1306 of 2009 in Company Application No.973 of 2009 in Company Application No.360 of 2009 in Company Application No.17 of 2004 and the order dated 22.10.2009 passed in Company Application No.360 of 2009 in C.P. No.17 of 2004 on the file of this Court.
For Appellant : Mr. T.V. Ramanujam,
Sr. counsel for
Mr. Prakash Goklaney
For Respondents: Mr. A.L. Somayaji,
Sr. counsel for
M/s. R & P. Partners for R1
Mr. A.R.L. Sundaresan,
Sr. counsel for
the Official Liquidator
assisted by Mrs. K. Latha Parimalavadana
Assistant Official Liquidator.
JUDGMENT
(Judgment was delivered by M. CHOCKALINGAM, J.)
Original Side Appeal No.444 of 2009 has arisen against the order dated 19.10.2009 passed in Company Application No.1306 of 2009, whereby the application for extension of time for depositing the balance amount of Rs.46 crores was denied and O.S.A. No.11 of 2010 has arisen from the consequential order restraining the appellant from removing the plant and machinery.
2. The Court heard the learned counsel appearing for the appellant and the respondents and also for the Official Liquidator.
3. The following facts would emerge as admitted facts:-
(i) An order came to be passed on 26th March, 2009 in C.A. No.360 of 2009, which was taken out by M/s. Assets Reconstruction Company (India) Limited, a secured creditor. The offer made by the appellant in Company application No.1306 of 2009 was accepted by the Court for a total sum of Rs.101“` crores as a highest offer in respect of the plants, machineries, building and also the site. The Court recorded that the appellant has first made a payment of Rs.10 crores towards the Earnest Money Deposit and he had also agreed to pay another sum of Rs.2 crores towards further EMD by 30th March, 2009. He has also agreed to remit a sum of Rs.45 crores within thirty days from that date of the order and also undertakes to deposit balance sale consideration within sixty days after remitting the first installment.
(ii) After the order was passed, another Company by name Annapuram Steel Private Limited also made an offer for a higher amount. An opportunity was given to the said offerer to prove its credentials.
(iii) Thereafter, as per the order dated 26.3.2009, the appellant paid a sum of Rs.45 crores in addition to the EMD amount of Rs.10 crores originally made. The application in C.A. No.360 of 2009 was taken up for confirmation of sale on 29.4.2009, wherein the appellant sought following directions:-
“(i) Permission to remove the plant and machinery.
(ii) Direction to the Official Liquidator to furnish exact details of the public dues.
(iii) Permission to apply for power and water connection.
(iv) Direction to the Official Liquidator to deploy armed guards to guard the assets and
(v) Permission to sell the plant and machinery as scrap to avoid the incidence of taxation.”
(iv) An order came to be passed on 29.4.2009, granting the prayer, but the Court did not give permission for sale of the plant and machinery as scrap. By the said order, it directed the appellant to make the payment of balance of Rs.46 crores within a period of ninety days. Though the order was passed on 29.4.2009, the order indicated that this ninety days would commence from 23.4.2009. The application made by Annapuram Steels Limited was rejected. Aggrieved over the same, the said Annapuram Steels Limited took the matter on appeal in O.S.A. No.116 of 2009, which was partly allowed, thereby the permission granted to the appellant to remove the plant and machinery was actually set aside. The dismissal of the application filed by M/s. Annapuram Steels Limited was affirmed.
(v) Aggrieved over the same, the appellant filed S.L.P. (Civil) No.15389 of 2009 against the denial of the relief of removal of plant and machinery. The Apex Court, by its order dated 21.8.2009, by recording the no objection made by the Deputy Official Liquidator, permitted the appellant to remove the plant and machinery from the factory premises. He filed another application in C.A. No.973 of 2009, seeking extension of time and the same was disposed of by an order dated 21.7.2009 permitting the appellant to pay the balance amount of Rs.46 crores within sixty days. The time of sixty days, which was granted, came to be over on 19.9.2009 and within which period, the balance amount of Rs.46.0 crores was not paid.
(vi) Under such circumstances, the instant application in C.A. No.1306 of 2009 was filed for extension of time. The said application, on enquiry, was dismissed and apart from that, consequently, the appellant was restrained from removing the plant and machinery. Aggrieved over the same, another appeal in O.S.A. No.11 of 2010 has been brought forth by the appellant.
4. Advancing arguments on behalf of the appellant, learned senior counsel would submit that in the instant case, it is true, there was a delay. Originally ninety days was granted and subsequently this Court, by an order dated 21.7.2009 granted sixty days time, which came to an end on 19.9.2009. Originally, a sum of Rs.55 crores was made and he was permitted to remove the plant and machinery. Because an appeal was filed by Annapuram Steels Limited while its bid was denied, there was a stay by the Appellate Forum in O.S.A. No.116 of 2009, by which the appellant was impeded from removing the plant and machinery and thereafter he had approached the Apex Court and the Apex Court, in its order, granted permission on 21.8.2009. At this juncture there arose necessity for filing an application, seeking extension of time for making payment. Hence, it was a case where, though permission was granted originally to remove the plant and machinery, it was stopped by the third party appeal. Under such circumstances, the delay was neither deliberate nor wanton. These circumstances were brought to the notice of the Company Court, but the Court has declined to grant extension of time.
5. What is contended by the respondents before the Company Court to deny the extension of time is that when the appellant filed S.L.P. Before the Supreme Court seeking for permission to remove the plant and machinery, it was well within his knowledge that the time, which was originally granted by the Company Court was not yet over and hence when the order came to be passed by the Apex Court, the time was still available for him and before the time, he should make the payment on the premise that the permission for removal of plant and machinery was given to him. But, the contention of the learned counsel for the respondents was not correct.
6. According to the learned counsel, when the matter was taken into consideration by the Apex Court, the Deputy Official Liquidator was present. He states no objection and it was recorded so in the order. The Apex Court was also appraised of the situation. The appellant has paid Rs.55 crores out of Rs.101 crores. Hence, it was a fit case for permission to remove the plant and machinery and accordingly, it was granted. That cannot be a reason to deny the extension of time, which was necessitated by circumstances. Hence, it is a fit case where time has got to be granted. Insofar as the consequential order is concerned, it followed the original order denying extension of time. Under such circumstances, the appeals have got to be ordered, allowing the appellant to make the balance payment within a reasonable time fixed by this Court.
7. Learned senior counsel representing Official Liquidator, by laying emphasis on the earlier order passed by the Company Court, would submit that original order was passed on 29.4.2009 where ninety days was given and that within which time, the appellant should have made the payment, but not done so. The second extension of sixty days was given by an order dated 21.7.2009. Even then, the appellant has not made payment. Originally, he was given permission to remove the plant and machinery. It was stayed by the Division Bench in the appeal filed by the third party. It would not prevent the appellant from making payment of rest of the sale price. Further, in the instant case, even the Division Bench has made it clear that he should make payment within the stipulated period of sixty days and if not, he should forfeit the E.M.D. Amount.
8. Learned senior counsel added further that before the Apex Court, only denying permission to remove the plant and machinery was set aside, but the original order in respect of money will hold good, and he has not followed that order. The time stipulation in the original order was not disturbed. Under such circumstances, the appellant cannot have the relief of extension of time. Learned Single Judge has considered the application in proper perspective and denied the relief. The order passed by the learned Single Judge has got to be affirmed.
9. Learned senior counsel appearing for the creditors pointing to the original order, would submit that in the original order, ninety days time was granted, specifying that it must be paid within the stipulated time, otherwise he will lose his right. Learned senior counsel added further that when this matter was appealed before the Apex Court, it was only in respect of removal of plant and machinery, which would not in any way affect the original order fixing the time that he should pay the payment within the stipulated period. Under such circumstances, there is no justification for seeking further extension.
10. Learned counsel appearing for the third party, who has made the bid for purchase of the plant and machinery during the interregnum period and who preferred the appeal, has also placed his submissions.
11. The Court considered all the contentions put forth by the learned counsel as stated above and looked into the materials available on record.
12. It is not in controversy that originally, pursuant to the bid made by the appellant for Rs.101 crores, he has paid a sum of Rs.55 crores and R.46 crores was to be paid and also sought for extension of time. Time was granted originally for ninety days on 29.4.2009 which should commence from 23.4.2009 and thereafter sixty days on 21.7.2009 and the said time came to an end on 19.9.2009.
13. Insofar as the factual position is concerned, there is no quarrel between the parties. What were all contended by the appellant was that originally when the bid was made, he moved the Court seeking number of directions. One of the directions which was sought for before the Court inter-alia was the removal of the plant and machinery. The third party, who also made a bid and aggrieved over the denial of bid, preferred an appeal, and in that appeal, a Division Bench of this Court has granted stay of the removal of the plant and machineries.
14. At this juncture, it is pertinent to point out that he moved the Court for a direction and the Court confirmed the sale and granted permission for removal of plant and machinery, but the same was stayed by the Division Bench. This impediment did not allow the appellant to remove the plant and machinery though ordered by the Company Court. Under such circumstances, the appellant was to move the Apex Court by filing S.L.P. (Civil) No.15389 of 2009, wherein an order came to be passed on 21.8.2009. It is more apt and appropriate to reproduce the order, which reads as follows:-
” Since the petitioner (highest bidder) has paid an amount of Rupees Fifty Five Crores in respect of plant and machinery, we hereby permit the petitioner to clear the said plant and machinery from the factory premises.
The Deputy Official Liquidator has no objection to such clearance.”
15. From the reading of the above order, it would be quite clear that the Apex Court, in appraisement of all the circumstances and situation and the fact that the appellant has paid Rs.55 crores in respect of plant and machinery, permitted the appellant to clear the same from the factory premises. It is also pertinent to point out that the Deputy Official Liquidator has no objection to give such clearance and having given no objection to such a course of clearance at the time of passing the order, he cannot now be allowed to say that such course cannot be followed.
16. Learned Single Judge in the course of the order has stated that permission granted would naturally be withdrawn. This Court is of the considered opinion that that part of the order of the learned Single Judge cannot stand in the face of the above order of the Apex Court. Apart from that insofar as second bid is concerned, it is only part of the earlier bid namely the plant and machinery brought for sale again.
17. It is true, there was a delay. Two extensions of ninety days and sixty days respectively were granted by the Court. The only question that arises for consideration at this juncture is whether time could be extended as requested by the appellant under the above facts and circumstances. Admittedly, permission was granted for removal of plant and machinery by the Company Court. In view of the stay granted by the Division Bench already, the appellant could not remove the same. On appeal, the Apex Court allowed the appellant to remove the plant and machinery by restoring the order of the Company Court, and hence, there could not be any impediment for the appellant to remove the plant and machinery. It is contended that in view of another offerer for higher amount, if the original sale in favour of the appellant is restored, it would fetch only a lesser amount. No doubt, the appellant had sufficient time, but defaulted in making timely payment. It is not the case of the Official Liquidator or the Creditor that the sale price fixed in favour of the appellant was not reasonable. The appellant in order to show his bona fide, this day, has handed over a demand draft for a sum of Rs.11.50 crores to the Official Liquidator. Thus out of Rs.101 crores, he has paid Rs.66.50 crores.
18.Considering all the above, this Court is of the opinion that though the delay has been caused as stated above, an opportunity could be given to the appellant to pay the remaining amount. But, at the same time, the delay occasioned has to be properly compensated which would meet the ends of justice. The balance amount namely Rs.34.50 crores should carry interest from the original date namely 23.4.2009, at 12% per annum till payment.
19.Accordingly, it is ordered as follows:
(a) The balance amount namely Rs.46 crores will carry interest at 12% per annum from 23.4.2009 till this date i.e., 6.1.2010.
(b) Since the appellant has paid Rs.11.50 crores today, the balance payable by the appellant is only Rs.34.50 crores. This amount of Rs.34.50 crores will also carry interest at 12% per annum from this day till payment.
(c) The above said Rs.34.50 crores along with interest as referred to above, should be paid on or before 9.3.2010.
(d) If the appellant makes default in making the aforesaid amount, the EMD amount originally deposited by him, will be forfeited, and the Official Liquidator is free to bring the land and building for sale. However, there was no impediment for the appellant to remove the plant and machinery as stated above.
20.In the result, these Original Side Appeals are, accordingly, disposed of. Consequently, the connected M.P. is closed. No costs.
ssa.
To
The Sub Assistant Registrar
(Original Side),
High Court,
Madras