Delhi High Court
National Investor Forum Regd. vs Golden Forests India Ltd. on 23 July, 2014
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DECIDED ON: 23.07.2014
+ W.P. (C) 1399/2010
C.M. Nos.5461/2014 & 8566/2014
NATIONAL INVESTOR FORUM REGD. ..... Petitioner
Through: None.
versus
GOLDEN FORESTS INDIA LTD. ..... Respondent
Through: Mr. Harpawan Kumar Arora, Advocate
for Committee-GFIL.
Mr. Satyawra Bhardwaj with Mr. Debjyoti Baru,
Advocates for applicant in CM APPL.8566/2014.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE VIPIN SANGHI
S.RAVINDRA BHAT, J. (OPEN COURT)
CM No. 5461/2014
1. This application filed by the Supreme Court appointed Committee for
GFIL ("the Committee"), seeks confirmation of sale of the agricultural
land situated in Village Harsola, District Indore, Madhya Pradesh,
against which a successful bid was received from one M/s Ekaakshara
Agritech Pvt. Ltd. ("successful bidder") Regd. Office: Flat no. 205,
Ackruti Erica Building, Vile Parle (E), Mumbai, for an amount of `83
Crores.
C.M. Nos.5461 & 8566/2014 Page 1
2. The facts are that the Supreme Court held on 5.9.2006, in SEBI v. Golden
Forests (India) Ltd. that the Committee (constituted on 19.8.2004) was at
liberty to put up for sale, certain properties of the respondent, Golden
Forest (India) Ltd. ("GFIL"), by public auction. On 15.10.2006, the
Court held that the Committee was authorised to take possession of all
the properties owned by GFIL, and sell them, in order for to facilitate the
disbursement of sale proceeds to the investors, subject to any valid
claims on the properties by third parties. Third party claims on the
properties of GFIL were to be dealt with appropriately by the Committee,
by passing appropriate orders subject to the confirmation of the Court.
The order directed that appropriate publication be made of the sale, in
newspapers with wide circulation, with sufficient notice to prospective
purchasers. All sales were subject to the confirmation of the Court. Soon
after the bid was completed, the prospective buyer was to deposit 20% of
the consideration amount in the Committee's account.
3. In accordance with these orders of the Supreme Court, agricultural land
in Village Harsola, District Indore, Madhya Pradesh, among other
properties, had first been auctioned on 16.9.2011 for `98.01 Crores, and
the sale duly confirmed by this Court. However, the bidder backed out
and did not deposit the balance of the bid amount; his participation
money was consequently forfeited. The property was advertised for sale,
a second time, on 29.12.2013 with the reserve price of `82.50 crores,
which was arrived at by taking the Collector Rate for the whole area of
205.170 hectares of land. This time, no bids were received in respect of
the land.
C.M. Nos.5461 & 8566/2014 Page 2
4. The property was advertised for sale (by inviting sealed bids) in four
leading newspapers for the third time, on 1.3.2014, with the reserve price
and participation money indicated against each property, with the
deadline for bids being 3.4.2014. The property in question was declared
to be of an area 205.170 Hectares. The bids were opened on 4.4.2014.
Only one sealed bid was received from one M/s Ekaakshara Agritech
Pvt. Ltd. ("successful bidder") Regd Office: Flat no. 205, Ackruti Erica
Building, Vile Parle (E), Mumbai, for an amount of `82.50 Crores, which
after some persuasion, was raised to `83 Crores. The Committee sought
to confirm the bid of the successful bidder i.e. M/s Ekaakshara Agritech.
Participation money was deposited in a bank account and by order of
4.4.2014, the bidder was required to deposit 20% of the bid money
(excluding the participation money) within ten days. This amount was
deposited on the 16.4.2014. According to paragraphs 14 and 15 of the
terms and conditions of the auction, the entire balance bid amount
(excluding the participation money and the 20% already deposited) was
to be deposited within 30 days of the date of confirmation of the sale by
this Court.
5. On 18.4.2014, the Committee, by its order, disposed of the objections
raised on 16.4.2014, by the successful bidder. That order of the
Committee notes that the successful bidder sought a reduction in the sale
consideration proportionately, if the full area advertised, i.e. 205.170
hectares, could not be conveyed to it. The other demands made included
supply of revenue record copies to the bidder, a no-objection certificate
from the Collector, Indore, and the splitting up of the whole land into
smaller parcels, to be registered in the names of various companies and
C.M. Nos.5461 & 8566/2014 Page 3
individuals, so as not to fall foul of the land ceiling laws of the state. The
Committee, in its order, reiterated the terms and conditions of the sale,
holding that they leave no room for such demands to be made of it,
especially in light of the fact that the successful bidder had filed an
affidavit undertaking to abide by them unconditionally, recording its
satisfaction as to the condition of the property, its revenue records and
the correctness of details regarding it. On this count, the objections of the
successful bidder were dismissed.
6. This application sought confirmation of the sale to M/s Ekaakshara
Agritech, with a direction that the balance bid amount be deposited
within the 30 day period, failing which its participation money and 20%
bid amount already deposited would be forfeited. When the Court was
first seized of this application, it held, by its order of 29.4.2014:
"This application seeks confirmation of sale, pursuant to
the notice inviting bids published on 01.03.2014, with
respect to 205.170 hectares of agricultural land in Village
Harsola, District Indore, M.P. The said advertisement
had indicated the reserve price for the property at `82.50
crores. The application states that in response to the same,
a sole bidder Ms. Ekaakshara Agritech Private Limited
offered to purchase the property and after negotiations,
the price was settled at `83 crores. The Committee
accepted the bid on 04.04.2014 and the bidder deposited
`16.6 Crores, constituting 20% of the bid amount, on
16.04.2014.
Considering that the Committee seeks confirmation of a
transaction pursuant to a solitary bid, this Court is of the
opinion that it would be appropriate that the property is
readvertised. The Committee shall ensure that the wide
publicity is given to the tender notice and that it is
published in the national editions of major newspapers,
such as The Times of India, The Hindu and The Indian
C.M. Nos.5461 & 8566/2014 Page 4
Express. Besides, the Committee shall also give publicity
in real estate portals which engage themselves in sale and
purchase of property.
List on 14.07.2014."
7. Subsequently, a second advertisement was issued by the Committee on
10.5.2014, in which the total area of the land was declared to be 195.789
hectares (as found, on measuring the area again), as opposed to 205.170
hectares. The reserve price was indicated as being `83 crore, keeping in
mind the bid of the successful bidder. However, no fresh bid was
received in response to this advertisement. The Special Leave Petition
against the order of 29.4.2014 was dismissed as being infructuous by the
Supreme Court on 13.6.2014, as the second auction had already been
conducted by then, on 11.6.2014.
8. In light of these circumstances, the Committee seeks confirmation of the
sale in favour of the successful bidder.
CM No. 8566/2014 in CM No. 5461/2014
9. In this application filed by the successful bidder, M/s Ekaakshara
Agritech Pvt. Ltd., the order of the Committee disposing of its
objections, dated 18.4.2014, is sought to be challenged, on the ground
that the Committee acted contrary to its interests, despite its express
power to relax terms and conditions of the sale, as recorded in clause 7 of
the auction notice.
10.The successful bidder argues that the Committee did not take into
account its bone fides as an auction purchaser, in disposing of the
objections. Moreover, the Committee had itself mis-declared the area of
the property to be sold. Consequently, the applicant seeks confirmation
C.M. Nos.5461 & 8566/2014 Page 5
of the sale with a pro rata reduction in the bid amount of `83 Crores,
commensurate to the size/area of the land being actually sold to it i.e.
195.789 hectares. The applicant also seeks a direction of the Court to the
effect that the sale can be registered in its name as well as the names of
its nominees, keeping in mind the land ceiling legislations in operation in
Madhya Pradesh.
11.This Court has considered both the applications. The relevant terms and
conditions of the sale of properties, in the advertisement dated
1.3.2014,are being reproduced below:
"2. Sealed bid may be submitted, by a person either
individually or jointly with others, on a plain paper in the
format given below. If submitted jointly, then each of the
joint bidders must sign the bid. Also the names/addresses
of all joint bidders should be stated in capital letters
legibly.
...
6. Before submitting sealed bid, the Intending purchasers
are advised to inspect the all government records
including Municipal/Revenue records of the property.
They are also advised to physically inspect the property
concerned before offering bid for it.
...
16-A. Under no circumstances transfer of bid or
substitution of name of bidder(s) would be allowed.
17. The sale of properties is on "As is, Where Is and
Whatever There Is" basis and subject to the acceptance
of the bid by the Committee and its subsequent
confirmation by the Hon'ble High Court of Delhi.
18. Court Sale Certificate shall be issued and registered
in the name of the successful bidder in whose name the
sale has been confirmed by the Hon'ble High Court of
Delhi.
...
C.M. Nos.5461 & 8566/2014 Page 6
22. The particulars and description of properties given in
the advertisement have been stated to the best of the
information of the Committee and the Committee shall
not be responsible for any error, misprint or omission in
the sale notice or in the description of the property(ies).
25. The prospective bidder shall file an affidavit in the
prescribed format affirming that he has checked the
government's revenue and municipal record pertaining to
the land/ property and has inspected the advertised
land/property physically also. He will state in the affidavit
that he is satisfied with correctness of the details of the
advertised land/property and also about the legal title of
the Golden Forest (India) Limited in it. He shall further
state that the funds have been, and will be deposited from
his own account. He will further state that after being
declared successful bidder by the Committee or after the
confirmation of sale by the Hon'ble Court, he will not be
entitled to file any objection on any of these grounds."
(emphasis supplied)
12.Clearly, the bidder was required to make himself aware of the property's
details, through municipal/government records, and physically inspect
the land. The buyer undertook to buy the land on an "As is Where is,
Whatever There Is" basis. A similar condition (in the context of an
Official Liquidator selling off immovable property of a company, on an
"as is where is" basis) has been interpreted by the Supreme Court in
United Bank of India v. Official Liquidator, (1994) 1 SCC 575to mean:
"14.When the Official Liquidator sells the property and
assets of a company in liquidation under the orders of the
Court he cannot and does not hold out any guarantee or
warranty in respect thereof. This is because he must
proceed upon the basis of what the records of the company
in liquidation show. It is for the intending purchaser to
satisfy himself in all respects as to the title, encumbrances
and so forth of the immovable property that he proposes to
C.M. Nos.5461 & 8566/2014 Page 7
purchase. He cannot after having purchased the property
on such terms then claim diminution in the price on the
ground of defect in title or description of the property. The
case of the Official Liquidator selling the property of a
company in liquidation under the orders of the Court is
altogether different from the case of an individual selling
immovable property belonging to himself. There is,
therefore, no merit in the application made on behalf of
Triputi that there should be a diminution in price..."
(emphasis added)
Consequently, the successful bidder cannot be heard to renege on its
undertaking at this stage, on the ground that the Committee had held out
that the area of the property was actually 195.789 hectares and not
205.170 hectares. The Committee, in any case, made it adequately clear
in Condition 22 that the Committee will not be responsible for any
misprint in the advertisement of sale.
13.As regards the successful bidder's objection that the property should be
permitted to be registered in separate parcels in the names of various
individuals/companies, to enable conformity with the land ceiling laws,
this Court finds that Conditions 18 and 16A cover this issue conclusively.
Condition 18 states that the sale will be registered only in the name of the
successful bidder and Condition 16A prohibits substitution of bidders'
names or transfer of bids. Condition 2 also appears to allow multiple
persons/parties to tender a single bid. This option was always available to
the successful bidder at the time of making the bid. Consequently, it
cannot seek to nominate other individuals in whose names the property
should be registered, at this stage.
14.Lastly, this Court notes that no objections were raised as to the area of
the property, or any other detail, by the successful bidder before this
C.M. Nos.5461 & 8566/2014 Page 8
Court on the date of the last order of this Court i.e. 29.4.2014.In fact, the
successful bidder has even filed an affidavit to the following effect:
"1. That, We have read and understood the Terms and
Conditions of the sale of the properties prescribed by the
Committee-GFIL and we shall abide by the same...
2. That, We further declare that our bid is not conditional.
3. That We have, checked the government's revenue record
and municipal record pertaining to the advertised
land/property and We are satisfied with correctness of the
details provided to us by the Committee for which we have
filed a bid
4. That, We have physically inspected the advertised
land/property and found it free from encroachment.
5. That, We declare that after being declared successful
bidder by the Committee or after the confirmation of sale
by the Hon'ble Court, We will not be entitled to file any
objection before the Committee or before the Hon'ble
Court, on the said grounds."
Therefore, the successful bidder cannot now be heard to object to the
Terms and Conditions of the sale/bid, having already undertaken to abide
by them.
15.For the above reasons, C.M. no. 5461/2014 is allowed and C.M. no.
8566/2014 is rejected. The sale of the property is hereby confirmed. The
successful bidder shall be permitted 30 days' time from the receipt of the
copy of this order, to comply with terms of the bid and pay the balance
sale consideration and complete other formalities.
S. RAVINDRA BHAT, J
VIPIN SANGHI, J
JULY 23, 2014
C.M. Nos.5461 & 8566/2014 Page 9
