High Court · 2009

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 27-10-2009CORAM:THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVANANDTHE HONOURABLE MR. JUSTICE M. SATHYANARAYANANO.S.A.NOS.321, 341, 342 & 345 of 2008andM.P.Nos.1 of 2008In O.S.A.NO.321 of 2008:New Horizon Sugar Mills Ltd.Having its Regd. Office atAriyur, KandamangalamPondicherryRep. By V.Kannan, Director... Appellant/9th RespondentVs. 1.Indian Renewable Energy DevelopmentAgency Limited (IREDA), New DelhiCore-4-A, East Court I FloorIndia Habitat Centre ComplexLodhi Road, New Delhi 110 003Rep. By its Deputy General ManagerMr. S.K. Bhargava2.The Official LiquidaorHigh Court, Madrasas Provisional Liquidator forM/s. Arunachalam Sugar Mills Ltd.3.M/s. Sundaram Finance Ltd.Old No.21, New No.4, Pattulas RoadChennai – 600 0024.City Union BankNo.53, 55 Mission RoadPondicherry – 605 001 https://hcservices.ecourts.gov.in/hcservices/

5.Vijaya Bank114, Jawaharlal Nehru StreetPondicherry 605 0016.V. Kannan7.V. Baskaran8.Smt. K. Usha9.B.Bhavani(Respondent 6 – 9 impleaded as per orderdated 4.9.2007 in C.A.No.1471 of 2006time extended dated 22-10-2007 in C.A.No.1038 of 2006) 10.M/s. Bharat Heavy Electricals Ltd.Having its Regd. Office atBHEL House, Sivi FortNew Delhi 110 004and an office at EVR BuildingsNandanamChennai – 600 035(10th Respondent impleaded as per order dated 4.9.2007 in C.A.No.586 of 2007time extended dated 22-10-2007 in C.A.No.1038 of 2006) ... Respondents/Applicant and Respondents 1 to 8, 9In O.S.A.Nos.341 and 342 of 2008:M/s. Bharat Heavy Electricals Ltd.,having its Registered Office at BHEL House Siri FortNew Delhi – 110 004and an Office at EVR Buildings474, Anna SalaiNandanam, Chennai – 600 035... Appellant/Applicantin OSA.Nos.341 & 342/08 (Applicant in both Application)Vs. M/s. Arunachalam Sugar Mills LimitedRegd. Office AriyurPost KandamangalamPondicherry – 605 102... Respondent in both OSAs (Respondent in both Application) https://hcservices.ecourts.gov.in/hcservices/ In O.S.A.NO.345 of 2008:1.V.Kannan2.V.Baskaran3.K. Usha4.B.Bhavani... Appellants/Respondents 5 to 8Vs. 1.Indian Renewable Energy DevelopmentAgency Limited (IREDA), New DelhiCore-4-A, East Court I FloorIndia Habitat Centre ComplexLodhi Road, New Delhi 110 003Rep. By its Deputy General ManagerMr. S.K. Bhargava2.The Official LiquidaorHigh Court, Madrasas Provisional Liquidator forM/s. Arunachalam Sugar Mills Ltd.3.M/s. Sundaram Finance Ltd.Old No.21, New No.4, Pattulas RoadChennai – 600 0024.City Union BankNo.53, 55 Mission RoadPondicherry – 605 0015.Vijaya Bank114, Jawaharlal Nehru StreetPondicherry 605 0016.New Horizon Sugar Mills Ltd.Having its Regd. Office atAriyur, KandamangalamPondicherryRep. By V.Kannan, Director7.M/s. Bharat Heavy Electricals Ltd.Having its Regd. Office atBHEL House, Sivi FortNew Delhi 110 004and an office at EVR Buildings https://hcservices.ecourts.gov.in/hcservices/ NandanamChennai – 600 035 ... Respondents / Appellant & Respondents 1 to 4, 9, 10 O.S.A.NOs.321 & 345, 341, 342 of 2008:Original Side Appeals filed under order 36 Rule 1 of OS Rulesand r/w Clause 15 of the letters patent (1) against the Order dated02-09-2008 in C.A.No.1038 of 2006 in C.P.No.229 of 2004 (inOSA.Nos.321 & 345/2008) (2) against the Order dated 02-09-2008 inO.A.Nos.253 and 254 of 2005 (in OSA.Nos.341 & 342/08)For petitioner ::Mr. P.S. Raman, Senior Counsel for Gupta & RaviFor respondents::Mr. Vijayan, for King & Patridge- R1Mr. R.S. Sundar for Official Liquidator-R2Mr. K. Krishnamoorthy (SC)for Mr. S. Vasudevan – R3Mr. T.K. Ramkumar – R4Mr. B. Karthikeyan – R5No appearance – R6 to R9M/s. Dr. Anita Sumanth-R10COMMON JUDGMENT(Order of the Court is made by PRABHA SRIDEVAN,J.)All the appeals are disposed of and for the sake of conveniencethe array of parties in O.S.A.NO.321 of 2008 is adopted for referencein this order. The Arunachalam Sugar Mills, of which respondents 6to 9 are directors, was proceeded against by one M/s.Alstom ProjectIndia Limited in C.P.No.229 of 2004 for winding up of the saidcompany. By order dated 22-07-2005, the Official Liquidator wasappointed as Provisional Liquidator and he was directed to takecharge of all the properties and effects of the Company. Thereafter,the first respondent herein moved C.A.No.1038 of 2006, claiming to bea secured creditor having lent substantial money to the company whichwas sought to be wound up and the sister-company which is theappellant herein; it also referred to dues to the third respondentand the fifth respondent and prayed for an order for freshpublication joining the three parties namely, the OfficialLiquidator, the first respondent and third respondent fixing an upsetprice of Rs.135.50crores etc. C.A.No.1033 of 2006 filed byrespondents 6 to 9 for transfer of the proceedings before the DebtRecovery Tribunal was also heard and an order was passed directingthe Official Liquidator to cause publication, but C.A.No.1033 of 2006for transfer of proceedings before the Debt Recovery Tribunal wasdismissed. Against the order passed in C.A.No.1038 of 2006,O.S.A.No.226 of 2005 was filed. https://hcservices.ecourts.gov.in/hcservices/

2.On 25-07-2008, the matter was remanded and disposed of bythe following order:“Having heard the learned counsel for the parties, aswell as the interveners and with their consent, we remitthe matter back to the Company Court for freshconsideration with the following directions:-1) All the objections of the Appellants regarding thesale of the Company’s properties including maintainabilityof such application shall be considered by the CompanyCourt.2) The objections of the respondents regarding thelocus-standi of the appellants shall also be considered bythe Company Court.3) The objections raised by Bharath Heavy ElectricalsLimited, regarding their claim over certain machineries aswell as the pending arbitration proceedings and the interimorders passed in the same under Section –9 of the Act,shall also be considered by the Company Court along withthe objection of City Union Bank Limited, the fourthrespondent herein and any further secured creditor who mayso choose to oppose. 4) M/s. Ambika Sugar Mills Limited, who are intervenersin this appeal, waive their legal objections to the auctionand they are permitted to participate in the fresh auctionand to adjust the EMD of Rs.5 crores deposited by thempursuant to the earlier auction conducted by the firstrespondent.5) The Company Court shall also hear the applicationfiled by the appellants seeking for setting the orderappointing the Provisional Liquidator in C.A.(D)No.6007/2006.6) The Official Liquidator (second respondent herein)is permitted to receive all bids in sealed covers madepursuant to the tender notice published subsequent to theorders of the Company Court dated 03-07-2006. Such bidsshall not be opened until the Company Court hears all theparties and passes fresh orders on issues raised in clause1 to 5 above. Depending on the outcome of the issuesraised above the Company Court may proceed further with thetender.It is needless to say that the respondent/interveners/banks https://hcservices.ecourts.gov.in/hcservices/ and finance companies are entitled to be heard on theirobjections to the auction sale, and the order under appealshall be subject to further orders to be passed by thelearned Single Judge. The Company Court is requested todecide the matter expeditiously preferably within a periodof three weeks. 2. The appeal is accordingly disposed of. Consequently,M.P.No.2 of 2006 is closed.” 3.Mr. P.S. Raman, learned Senior Counsel raised severallegal objections to the order. But a preliminary objection that wastaken was that when the Division Bench has clearly directed that theobjections shall be heard by the Company Court, the order has beenpassed without discussing the objections and without giving thereasons for rejection of the same and therefore, on this ground aloneit should be set aside. 4.The learned counsel for the first respondent submitted thatthe matter was delayed only on account of the tactics of theappellant and there are materials to show why the objections couldnot have been entertained. Time was also taken often to settle thematter. 5.As regards the third respondent, the learned counselappearing for the third respondent submitted that they had onlyleased their machinery and the properties that are prayed to sale shall not include the machinery belonging to the third respondent. 6.The learned counsel for the 10th respondent/the appellantin O.S.A.Nos.341 and 342 of 2008 submitted that there is anarbitration proceeding pending and though the applications filedunder Section 9 could have been independently heard they were alsoclubbed along with these matters and their application was dismisseddirecting them to file the claim before the Official Liquidator. As regards the learned counsel appearing for the OfficialLiquidator in O.S.A.Nos.341 and 342 of 2008, any claim of BHEL couldonly be settled on proof therefor filed before the OfficialLiquidator. 7.We have heard the submissions made by the learned counselappearing on either sides. Objections were filed and it appears thatthere was also an offer for third party to purchase the assets of theCompany. But for some reason it did not fructify. Though severalstatements are made across the bar and there are references todevelopments which did not fructify. The fact remains that the orderunder challenge does not indicate consideration of the objectionsfiled by the appellants regarding the sale of the Company’s propertyor the objections regarding the maintainability of the application https://hcservices.ecourts.gov.in/hcservices/ or the objections regarding the locus standi of the respondents 6 to9 or the objections raised by the 10th respondent’s claims over theirmachineries and the objections raised by the intervenors’ Bank. 8.In these circumstances, we must set aside the impugnedorder in O.S.A.No.321 of 2008 and send it back to the Company Courtrequesting the learned Single Judge to decide the matterexpeditiously as per the order passed on 25-07-2008 in O.S.A.No.226of 2005. The submissions and/or objections of all the partiesincluding the respondents 9 and 10, who are now impleaded shall beconsidered by the Company Court. Since the counsel for the firstrespondent raised a complaint that the matter has been unnecessarilydragged, the learned Senior Counsel appearing for the appellantsubmitted that they would fully co-operate with the expeditiousdisposal of the matter. 9.The appellants in O.S.A.No.345 of 2008 were the appellantsin O.S.A.No.226 of 2005 where the directions were issued. Sotheir appeal viz., O.S.A.No.345 of 2008 is allowed for the samereasons as above. Therefore, both O.S.A.Nos.321 and 345 of 2008 mustbe allowed so that orders are passed in compliance with thedirections given by the First Bench earlier. (i) As regards the O.S.A.Nos.341 and 342 of 2008, they havebeen filed by the 10th respondent herein. Their injunctionrestraining the sale of the assets of the Company in liquidation wasdismissed directing them to lodge their claim before the OfficialLiquidator. (ii)In any event, now there cannot be any sale without thepermission of the Court. However, since all the matters areinterconnected, O.A.Nos.253 and 254 of 2005 are also to be heardalongwith the other matters. However, the interim order originallygranted in these applications will not continue. The parties canjointly file a memo before the learned Single Judge for earlyhearing. glpSd/-Asst. Registrar//True Copy//Sub Asst. Registrar https://hcservices.ecourts.gov.in/hcservices/ To1.The Official Liquidator, High Court, Madras.2.The Sub Assistant Registrar,Original Side, High Court,Madras.+ 1 cc to M/s. Gupta & Ravi, Advocate SR No.57266+ 1 cc to M/s. King & Partridge, Advocate SR No.57007•3 ccs to Dr. Anita Sumanth, Advocate SR No.57063, 57064, 57062+ 1 cc to M/s. Ram & Rajan Associates, Advocate SR No.56882+ 1 cc to Mr. S.R.Sundar, Advocate SR No.57216+ 1 cc to Mr. S, Vasudevan, Advocate SR No.56922O.S.A.NOS.321, 341, 342 & 345 of 2008GV(CO)SR/29.10.2009