Delhi High Court

National Textile Corporation ... vs D.V. Exports And Ors. on 3 April, 2017

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                                   Reserved on: February 14, 2017
%                                  Decided on: April 03, 2017

+       WP(C) 2651/2014
        NATIONAL TEXTILE CORPORATION LIMITED
                                               ..... Petitioner
            Through: Mr. Sandeep Sethi, Sr. Advocate with Mr.
                     Sanjoy Ghose, Mr. Rhishabh Jetley and Ms.
                     Pratistha Vij, Advocates.

                          versus

    D.V. EXPORTS AND ORS.                  ......Respondents
          Through: Mr. Souhabho Ghosh and Mr. shrey
                   Chathly, Advs. for R1.
                   Mr. Sanjib K. Mohanty, Senior Panel
                   Central Government Counsel for R-5.
CORAM:
HON'BLE MS. JUSTICE INDIRA BANERJEE
HON'BLE MR. JUSTICE ANIL KUMAR CHAWLA

                             JUDGMENT

INDIRA BANERJEE, J

1. In this writ petition the petitioner, National Textile Corporation

Ltd., hereinafter referred to as NTC, has challenged a judgment

and order dated 26.03.2014 passed by the Appellate Authority

for Industrial and Financial Reconstruction, hereinafter referred =====================================================================. WP(C) NO. 2651/2014

to as AAIFR, dismissing Appeal No.67/2012 filed by NTC,

against an order dated 18.01.2012 passed by the Board for

Financial Reconstruction (BIFR) in the application being M.A.

No.777/2011 and M.A. No.807/2011 in BIFR Case No.501/2008.

2. NTC and some of its subsidiaries were declared sick under the

Sick Industrial Companies (Special Provisions) Act, 1985,

hereinafter referred to as the SICA. Hira Mills, Ujjain (MP) was

declared a sick industrial undertaking under the SICA.

3. By an order dated 01.04.2006, the BIFR permitted the

subsidiaries of NTC to be merged with NTC. On 04.09.2008, a

modified rehabilitation scheme was sanctioned by BIFR in

respect of NTC and on 14.09.2008, an Asset Sale Committee was

constituted by the BIFR.

4. On 23.12.2009, BIFR passed an order extending the

implementation of the sanctioned revival scheme till 31.03.2011.

Thereafter on 12.10.2010 guidelines were issued for sale of

properties by the Asset Sale Committee. On 18.11.2011, the

Board of Directors of NTC took a policy decision that reserve =====================================================================. WP(C) NO. 2651/2014

price for sale of assets, once fixed would remain valid only for

six months.

5. Pursuant to a rehabilitation scheme sanctioned by the BIFR, the

NTC advertised auction of its property at Hira Mills, Ujjain. As

per the advertisement, the tender was for a sale of surplus

properties on, „as is where is‟ and „as is what is‟, basis in

compliance of the said rehabilitation scheme. The reserve price

for the said property was kept at Rs.40.90 crores and all

applicants were to make earnest money deposit of Rs.2.05 crores.

6. One M/s D.V. Exports, the respondent no.1 offered Rs.76.51

crores. The offer of M/s D.V. Exports which was almost double

the reserve price, was the highest offer.

7. Even though as per terms and conditions of the tender

documents, the successful bidder had to deposit a bank guarantee

for the full amount excluding the earnest money deposit, within

15 days of receipt of intimation regarding acceptance of bid, no

such intimation was received.

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8. According to M/s D.V. Exports, D.V. Exports got bank

guarantees amounting to Rs.75 crores sanctioned from the Bank

of Baroda, Punjab National Bank and Bank of India.

9. D.V. Exports did not receive any intimation of confirmation of

sale, allegedly inspite of reminders and requests. In the

circumstances, D.V. Exports filed an application before the BIFR

being M.A. No.777/2011 on 09.12.2011 for directions on the

Asset Sale Committee to approve the bid of D.V. Exports and

also sought orders restraining NTC from creating third party

interest in respect of the property in question.

10. The said application, being M.A. No.777/2011 was listed before

the BIFR on the same date on which the meeting of the Asset

Sale Committee was scheduled to be held. The BIFR found the

application premature as no final decision had been taken by the

Asset Sale Committee.

11. By an order dated 20.12.2011, the Asset Sale Committee

declined to approve the bid of D.V. Exports and decided to

retender the property.

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12. On 28.12.2011, NTC issued an advertisement for reauction of the

said property, whereupon D.V. Exports filed another application

being M.A. No.807/2011 seeking stay of the advertisement.

Both the applications were listed on 18.01.2012.

13. In the meanwhile, NTC received an offer from M.P. State

Industrial Corporation Limited for the said property which was

much higher than the bid of respondent No.1.

14. On 13.01.2012, Muskan Estate Limited which was the second

highest offerer in the earlier auction increased its bid amount to

Rs.79 crores. While these applications were pending, M/s

Abhinandan Ispat Pvt. Ltd. filed WP(C) No.2099/2012 in the

Madhya Pradesh High Court, whereupon the High Court issued

notice and restrained NTC from finalizing the sale. In the

meanwhile on 18.01.2012, the BIFR set aside the advertisement

for retender and confirmed the bid in favour of D.V. Exports. On

19.03.2012, NTC filed an appeal against the order dated

18.01.2012 before the AAIFR being Appeal No.67/2012 along

with M.A. No.150/2012. By an order dated 23.04.2012, the =====================================================================. WP(C) NO. 2651/2014

Madhya Pradesh High Court dismissed Writ Petition (C)

No.2099/2012 with liberty to Abhinandan Ispat Pvt. Ltd. being

the respondent No.2 to file a proper appeal in accordance with

law.

15. Abhinandan Ispat Pvt. Ltd. filed an SLP No.167272/2012 before

the Supreme Court which was dismissed by an order dated

03.07.2012, after which, on 30.07.2012, Abhinandan Ispat Pvt.

Ltd. also filed an appeal before the Appellate Authority which

was Appeal No.172/2012.

16. By an order dated 12.09.2012 the Appellate Authority directed

that Appeal No.67/2012 of NTC be listed along with Appeal

no.172/2012 of Abhinandan Ispat Pvt. Ltd. On 07.11.2013,

Abhinandan Ispat Pvt. Ltd. gave an undertaking before the

Appellate Authority to buy the property for an amount of Rs.90

crores. On 26.03.2014, the Appellate Authority passed the

impugned judgment dismissing the appeal.

17. The short question involved in this writ petition is whether the

BIFR ought to have interfered with the order of the Asset Sale =====================================================================. WP(C) NO. 2651/2014

committee for re-auction and that too, after advertisements for

re-auction were issued.

18. There can be no dispute that as per the policy decision taken on

08.11.2011 by the Board of Directors of NTC, any reserve price

for sale of assets once fixed, was to remain valid only for six

months.

19. It is well settled that an offer in an auction sale, until and unless

accepted does not give any right to the bidders in the auction.

No right had accrued to D.V. Exports since acceptance was never

communicated to D.V. Exports. There being a long time gap, the

Asset Sale Committee directed reauction.

20. Incidentally, even the BIFR did not proceed to accept the offer of

D.V. Exports. It set aside the advertisement for reauction but

directed that fresh auction be held amongst parties who had

already submitted their bids.

21. When the properties of a public sector undertaking are sold, it is

in public interest that the same should be sold at the highest

possible price. It is reiterated at the costs of repetition that there =====================================================================. WP(C) NO. 2651/2014

was no concluded contract between D.V. Exports and NTC. D.

V. Exports had only submitted its bid at the auction, acceptance

of its bids had not been communicated to D. V. Exports.

22. It is well settled that the highest offerer does not have any

inherent right to be given the property until and unless there is a

concluded contract. It is open to the owner of the property not to

sell the property, if it so chooses. Moreover, it is not in public

interest to direct confirm a sale in favour of an offerer several

years after the offer, without revalidation of the properties.

23. While this writ petition was pending the Sick Industrial

Companies (Special Provisions) Repeal Act, 2003 was enforced

with effect from 01.12.2016 by a Notification issued in

November 2016. Pursuant to the repeal, BIFR and AAIFR stand

dissolved and all proceedings abate.

24. Section 5 of the Sick Industrial Companies (Special Provisions)

Repeal Act, 2003, however, provides as follows:

"5. Saving - (1) The repeal by this Act of the repealed enactment shall not -

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(a) affect any other enactment in which the repealed enactment has been applied, incorporated or referred to;

(b) affect the previous operation of the repealed enactment or anything duly done or suffered thereunder;

(d) affect any order made by the Board for sanction of the schemes;

(e) affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred or any remedy or proceeding in respect thereof or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand, or any indemnity already granted, or the proof of any past act or thing;

(f) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against the repealed enactment, affect any investigation, legal proceedings or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or =====================================================================. WP(C) NO. 2651/2014

punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such privilege, forfeiture or punishment may be imposed as if this Act had not been passed;

(g) affect any principle or rule of law, or established jurisdiction, form or course of pleading, practice or procedure, or existing usage, custom, privilege, restriction, exemption, office or appointment, notwithstanding that the same respectively may have been in any manner affirmed or recognized or derived by, in, or from, the repealed enactment;

(h) revive or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction, exemption, usage, practice, procedure or other matter or thing not now existing or in force.

(2) Save as otherwise provided in section 4 and in sub-

section (1) of this section, the mention of particular matters in the said section and sub-section shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897), with regard to the effect of repeal."

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25. In view of Section 5, the sanctioned scheme would continue to

operate, as also the orders pertaining to the sanctioned scheme

that might have been passed before the repeal.

26. The impugned order dated 18.1.2012 of BIFR setting aside the

advertisement, as also the impugned order dated 26.03.2014 of

the AAIFR are both set aside. Should the sale no longer be

necessary in view of the present health of NTC and its

subsidiaries, the property need not at all be sold. Should any sale

in terms of the scheme, in operation be necessary it will be open

to the NTC to re-advertise the properties for sale.

27. The writ petition is disposed of accordingly.