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TMI Blog2010 (3) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... ded 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 first respondent-company and the United Bank of India by assignment deed, dated March 26, 2007, assigned and released all the financial assistance granted to the first respondent-company in favour of the second respondent-company in terms of section 5 of the SARFAESI Act. Thereafter the second respondent issued a fresh notice, dated August 6, 2007, under section 13(2) of the Act and it took symbolic possession of the secured immovable properties under section 13(4) of the Act on November 27, 2007 and subsequently took actual possession on August 25, 2008, pursuant to an order passed under section 14 of the Act. In the meanwhile, the first respondent-company was directed to be wound up and the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 receive the tenders as per the terms of the sale notice and keep them intact. The first respondent challenged the same by filing a writ petition in W. P. No. 10773 of 2009 before the Madurai Bench of this court and obtained stay of the sale of auction fixed on October 24, 2009, on condition the first respondent deposits a sum of Rs. 2 crores within a period of two weeks. By that time, the second respondent had received four bids and in view of the interim order of the court, two of the bidders wanted to withdraw from the bid and wanted refund of earnest money deposit. The second respondent filed miscellaneous petition in W. P. No. 10773 of 2009 seeking permission to return the earnest money deposits to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Alagapuram, Pudur village, Salem before the order of winding up and a sum of Rs. 4,04,38,909 has been remitted to PF authorities and a sum of Rs. 34,19,037 to the ESI Corporation and pursuant to the order of this court, the second respondent has brought the company's factory premises at Gandhi Nagar, Salem for sale on November 11, 2009, by fixing the reserve price for the assets at Rs. 17.30 crores and the auction was held in the presence of representative of the official liquidator and the sale was confirmed in favour of the fourth respondent for a sum of Rs. 17,32,00,000 and the entire sale consideration has been remitted. He has further stated in the report that in the writ petition filed by the petitioners in W. P. No. 8930 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 of the interim order of this court, two of the bidders wanted to withdraw from the bid and wanted refund of earnest money deposits and the second respondent obtained permission of this court and returned the earnest money deposits to both of them and the tenders were opened on November 11, 2009, in the presence of the representative of the official liquidator and the fourth respondent offered Rs. 17,32,00,000 which was the highest bid and it was declared as successful bidder and the fourth respondent paid 25 per cent, of sale consideration and assured to pay the balance 75 per cent, on or before January 18, 2010 and subsequently, it has deposited the entire amount and the entire sale consideration was paid and the sale certificate was also issued on J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul 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 made on January 23, 2010 and totally, the fourth respondent has paid a sum of Rs. 17,52,00,000 which includes the interest for belated payment and the same was agreed and acted upon by the second respondent and the sale certificate was issued in its favour. Learned counsel for the fourth respondent submits that it is a bona fide purchaser for value and the sale has also been confirmed in its favour. 15. The petitioners have alleged in the affidavit filed in support of the writ petition that even on the guideline of Rs. 400 per sq. ft., the value of the lands alone would be Rs. 18 crores and the market value would be much more than that and the second respondent has fixed the upset/reserve price less than that of the actual market value and they have concluded the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10773 of 2009, filed by the first respondent before the Madurai Bench of this court and two of the bidders expressed their wish to withdraw. The second respondent obtained the permission of the court in the writ petition to return the EMDs of those two bidders and later the writ petition itself came to be withdrawn. 17. Among the two bidders, the tenders were opened on November 11, 2009 and the bid of the fourth respondent of Rs. 17,32,00,000 was the highest and it was declared as successful bidder. In this context, it is relevant to note that the petitioners herein have filed earlier writ petitions and in terms of the interim order, an amount of Rs. 6 crores has been apportioned out of the sale proceeds of other secured assets and was kept in no lien fixed deposit account towards the workmen's dues and further, an amount of Rs. 4,41,42,765 has also been deposited in discharge of labour dues to EPF and ESI Corporation and the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 taken into account and the reserve price was fixed higher than that. Though it is stated that there is higher bidder, no such concrete proposal is found in the records. 22. We are satisfied that there was adequate publication in well known newspapers, having wide circulation and the auction sale was made after due publicity. In this context, the latest decision of the Supreme Court in Valji Khimji and Co.'s case [2008] 145 Comp Cas 36; [2008] 9 SCC 299, is relevant and for better appreciation, the relevant observation made in the decision is extracted below (page 43 of 145 Comp Cas) : "31. If it is held that every confirmed sale can be set aside the result would be that no auction sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. 32. It could have been a different matter if the auction had been held without adequate publicity in well-known newspapers having wide circulation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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