ORDER
1. Heard both sides.
2. It is brought to my notice that several members of public have deposited their money with the respondent Nidhi, which are alleged to have been diverted by way of loans without proper security, violating relevant norms and bye-laws of the respondent Nidhi as well as several provisions of the Companies Act.
3. Since five out of seven Directors of the RBF Nidhi Limited were arrested and two were absconding, necessary steps to take over the affairs of the Company in the larger interest of the depositors could not be postponed, the Company Board, the Ministry of Law Justice and Company Affairs, by proceedings dated 20.1.2000, exercising its power under Section 403 of the Companies Act, constituted a Board of Directors and thus, appointed six persons to hold the office of M/s. RBF Nidhi Limited with immediate effect therefrom. Accordingly, the respondent board is functioning and taking care of the affairs of the RBF Nidhi Limited.
4. The respondent board, considering the plight of the depositors, framed a scheme, which provides for immediate disposal of certain movable and immovable properties of M/s. RBF Nidhi Limited, so that the depositors whose deposits got already matured long time back, could be paid atleast in
part, if not in full, without interest and the said decision was approved by the Company board, by proceedings dated 2.4.2000. Accordingly, the respondent proposed to bring some of the properties for sale, so that the depositors could be repaid out of the sale proceeds.
5. In pursuance of the decision to sell the properties of the respondent RBF Nidhi Limited, the respondent gave a public notice inviting sealed tenders from the interested parties for the sale of seven immovable properties mentioned therein. The tender notification published in the dailies reads as follows:
PRIME PROPERTIES AT CHENNAI AND BANGALORE ON SALE
1. Old No.25, Greenways Road, R.A. Puram, Chennai 600 028. Premises admeasuring 29000 Sq.ft (B+G+3 floors) Land area – 5 grounds, Inspec-tion between 11.30 hours – 17.00 hours on May 12 and 13th, 2000
2. Old No.4 Subbarao Avenue, 2nd Street, Nungambakkam, Chennai 600 034. Premises admeasuring 11.62 Grounds. Inspection between 10.30 hours – 17.00 hours on May 15th and 16th, 2000.
3. Old No.4, Burkit Road, T. Nagar, Chennai 600 017. Premises admeasuring 1 ground + 2331 Sq.ft. of land and 3200 Sq.ft of built up area. Inspections between 10.30 hours – 17.00 hours on May 17th and 18th, 2000.
4. Old No.250 T.T.K. Road, Alwarpet, Chennai 18. Premises admeasuring 2 Grounds +2054 Sq.ft. of land and 1300 Sq.ft of built up area. Inspections between 10.30 hrs -17.00 hrs on May 19 and 20th, 2000.
5. Old No.18, Sivasailam Street, T. Nagar, Chennai 600 017, Premises admeasuring 3397 Sq.ft of land + 2750 Sq. of built up area. Inspection between 10.30 hours 17.00 hours on May 24th and 25th, 2000.
6. Plot No. 4923, AC 16, II Avenue, Anna Nagar West, Chennai- 600040. Premises admeasuring 10683 Sq.ft. (G+3 Floors) Land area. 2 Grounds + 1380 Sq.ft Inspection between 10.30 hours – 17.00 hours on May 26th & 27th 2000.
7. Plot Nos. 268-272 and 274-277, 6th Cross, Indira Nagar, I Stage, Bangalore 560 038. Premises admeasuring 9 grounds (1 ground each) Inspection between 10.30 hours – 17.00 hours on May 22nd 2000.
Interested parties may send their Quotation in a sealed envelope, superscribing boldly the name of the property at the top of the envelope the drop it in the Tender Box placed at the Registered Office of RBF Nidhi Limited at the Registered Office of RBF Nidhi Limited or send it by Registered Post to the address mentioned below on or before 5th June, 2000.
RBF Nidhi Limited
“Gokhale Bhavan”, No. 8, West Cott Road, Royapettah, Chennai 600 014.
For alternative inspection dates kindly contact 823 7898.
Payment terms would be indicated at the time of inspection.
6. Admittedly, the petitioner who is one of the directors of M/s. K. Subbayya Pillai & Co Ltd., Guntur, is having interest to purchase one of the properties mentioned in the notification and has submitted a sealed tender. Since the notification did not disclose the date and time for opening the sealed tenders and also did not provide for further public auction after opening the sealed tenders, the petitioner seeks a writ of Mandamus to direct the responded RBF Nidhi Limited to call all the tenderers who have submitted tenders in response to the advertisement referred to above for a negotiation after opening tenders and to knock down the sale in favour of the highest bidder between those who have filed their tenders as per the advertisement.
7. Mr.N.P.K.Menon, learned counsel for the petitioner contends that the petitioner, having filed the sealed tender, is entitled to know the result thereon and for an opportunity to bid more amount as against the highest tender amount, which would not only give him an option to quote more amount, but also enables the first respondent to fetch a higher price to the properties in question, in order to protect the interest of the depositors.
8. Mr. Ravi Paul, learned counsel for the respondent, placing reliance on the counter affidavit filed on behalf of the respondent, contends that out of the options, viz. inviting sealed tenders or selling the properties by public auction, the respondent have decided to prefer the earlier has the latter may give way for formation of a cartel, to depress the price. Secondly, the directors appointed by the Company Board are bound to follow the circular issued by the Central Vigilance Commission dated 18.11.1998 wherein the post tender negotiations are banned. Thirdly, introducing the public auction to an
auctioneer, would cause an expense @ 5% on the auction.
9. I have given careful consideration to the submissions of both sides.
10. In a matter of this nature, there cannot be any doubt that a greater
transparency in the administration as well as in the disposal of properties of the RBF Nidhi Limited cannot be dispensed with and it is highly required. Even as per the report of the Central Vigilance Commission dated 18.11.1998, it is observed that tenders are generally a major source of corruption. In order to avoid such corruption a more transparent and effective system has to be introduced. It is, under such circumstances, the Central Vigilance Commission discouraged the post tender negotiations and in fact, they also banned the same, as otherwise, it would give way for formation of a cartel to depress the price. Similarly, if the properties were sought to be disposed of by sale for immediate disbursement of the funds to the depositors, calling for the public auction alone may not be advisable, as it would also give way for formation of cartel, as rightly pointed out by Mr. Ravi Paul.
11. Therefore, in my considered view, neither the post tender negotiations nor the public auction alone would be safe to protect the interests of the depositors. On the other hand, if the respondent invites sealed tenders and opens the same, after notifying a specific date and time, in the presence of
tenderers of their representatives and thereafter provide a further opportunity to the tenders for public auction, starting from the higher tender amount as the lowest bid amount among the tenderers alone, the same would enable the respondent to fetch a higher amount than the amount mentioned in the sealed tender, by which the respondent would not, in any way, be prejudiced. Moreover, it would provide a healthy competition among the tenderers, of course, without permitting any third party to participate in the auction after the last date of filing of the sealed tenders. It would also avoid further delay in the matter and would fetch more amount by way of highest bid in the auction following the opening of the sealed tenders and the same would greatly benefit the depositors. However, taking note of the recommendation of the Central Vigilance Commission, I do not consider the requirement for any post tender negotiations, as sought for by the petitioner,
12. In the result, there shall be directions to the respondent, as follows:
(i) To inform all the tenderers by Registered Post with Acknowledgment Due or by Courier or Speed Post as the case may be, mentioning a definite time and date for opening the sealed tenders:
(ii) To notify that an auction will be held for the properties, immediately after opening of the sealed tenders, taking the highest tender amount as the lowest bid amount;
(iii) Only the tenderers who have filed the sealed tenders with reference to their respective properties are entitled to participate in the auction for such property, that follows the opening of the sealed tenders:
(iv) The respondent still would have the right to reserve the confirmation of sale if the highest bid amount does not satisfy the upset price and consequently, the respondent is at liberty to bring the properties for further tender-cum-action; and
(v) The respondent, without prejudice to the above conditions, is permitted to impose any other condition as they deem fit and necessary
11. The above writ petition is ordered accordingly. The respondent is directed to file a report to the above effect expeditiously. Post it after two weeks.