Haryana Financial Corporation vs Dabriwala Steel and Engineering Company

M.M. Kumar, J.—The Haryana Financial Corporation (for brevity ''the HFC, one of the secured creditors has filed the instant application under Rule 9 of the Companies (Court) Rules, 1959 for confirmation of sale of the Building and Machinery of M/s Dabriwala Steel and Engineering Company Ltd. (Company in liquidation) in favour of M/s Shri Balaji Industries, New Delhi by accepting its highest offer of Rs. 81 lacs. In paras 7 and 8 of the application, details of inter se bidding amongst 8 bidders, who offered their bids have been given along with the bid sheet.

The Company in liquidation was ordered to be wound up by an order dated 24.2.1995 passed in CP No. 31 of 1995 by this Court and the Official Liquidator attached to this Court was asked to take over the afore-mentioned Company. The HFC filed CP No. 72 of 1995 with a prayer for permission to sell the land, building, fixtures, plant and machinery and other miscellaneous items of the Company in liquidation. This Court granted permission to HFC vide its order dated 21.7.95 with a direction that it shall make all efforts to finalise the sale within six months. However, the ''HFC remained unsuccessful in selling the assets of the Company resulting into filing of another application being CA No. 621 of 2003 in CP No. 72 of 1995 again seeking permission to sell the assets and property of the Company in liquidation in order to enable it to recover the outstanding dues. This Court disposed of the application on 31.10.2003 wherein extension of time by six months was granted to ''HFC'' for selling the assets of the Company subject to the condition that the Official Liquidator was to be associated with the sale process. It was further directed that ''HFC was to deposit the entire sale proceeds with the Official Liquidator within 15 days of its receipt.

In pursuance to the afore-mentioned direction issued by this Court, the HFC associated the Official Liquidator and State Bank of India-respondent No. 2 for undertaking the sale process. Respondent No. 2-SBI has the second charge whereas HFC has the first charge over the land, building and machinery of the Company in liquidation. After getting the valuation from an approved valuer on the panel of HFC and obtaining approval from the Official Liquidator, an advertisement was published in "Hindustan Times" (Delhi Edition), the Economic Times (Delhi Edition) and Dainik Bhaskar (both Chandigarh and Haryana Edition) on 3.1.2004 (A-2). The HFC received 8 tenders, which were opened on 21.1.2004 in the presence of the Official Liquidator, officials of HFC and the representatives of State Bank of India and prospective bidders. As mentioned above, the highest offer of Rs. 2 crores from M/s Shri Balaji Industries, New Delhi for the composite unit was received. The Sale Committee decided that highest offer of Rs. 81 lacs from M/s Shri Balaji Industries, New Delhi for plant, machinery and building, be accepted and confirmed. The Sale Committee also decided that as there was huge difference between the price offered and the valuation in respect of the land and boundary wall, the sale be deferred. A draft of Rs. 14 lacs from M/s Shri sale Balaji Industries was received, which was more than 10% of the bid amount of Rs. 81 lacs. The balance amount of 25% had also been deposited by M/s Shri Balaji Industries within 15 days of the bidding. The drafts of unsuccessful bidders were returned to them on 21.1.2004 itself.

After notice of motion when the application came up for consideration before this Court, a number of firms through their counsel appeared in the Court by offering much higher bids in respect of the whole unit. On 9.9.2004, this Court had passed the following order:

"In pursuance to the Order passed'' by this Court, the applicant, Haryana Financial Corporation has issued a sale notice by dividing the assets of the company in three parts, namely, land, building and machinery. The valuation has also been got done in that fashion. The sale committee has received the highest bid of Rs. 1,64,00,000/- for the land and boundary wall and Rs. 81 lac for the machinery and building. The auction purchaser, namely, Shri Balaji Industry, New Delhi, is the highest bidder in respect of the machinery and building for Rs. 81 lac and a bid of Rs. 1,64,00,000/- has been received from M/s Bansal Petroleum, Kaithal for the land and boundary wall. However, C.A. No. 140 of 2004 has been filed by M/s R.K. Capital Services Private Limited, Sector 19/28 Dividing Road, Faridabad and who is now offering a consolidated bid of Rs. 2,80 Crore. However, Mr. Ashwani Gaur, appearing for another bidder, M/s Laxmi Enterprises, C 40/2, Wazirpur, Industrial Area, New Delhi and Mr. Munish Jolly, appearing for M/s Gulati Industrial Fabrication Private Limited have also offered much higher consolidated bid.

In view of the above, it become necessary for posting the case for an inter se bidding. The applicant, Haryana Financial Corporation or any other secured creditor is at liberty to bring any other person for inter se bidding. The necessity of passing the afore-mentioned order has arisen on account of the fact that the applicant, Haryana Financial Corporation had issued two advertisements, one on 1.1.2004 and the other on 24.2.2004. According to its record, there may be other persons interested in inter se bidding. Similar may be the position with State Bank of India represented by Mr. R.M. Suri, Advocate.

To come up for inter se bidding on 17.9.2004. It is made clear that before the date fixed, the person interested in bidding shall either file application alongwith 10% of the reserve price fixed i.e. 2.50 Crore. If any person interested wishes to participate in inter se bidding on the date without moving a formal application, he shall be permitted to participate in the inter se bidding subject to payment by demand draft to the Official Liquidator of an amount of 10% of the reserve price.

Needless to say that the auction purchaser shall be permitted to participate in the inter se bidding."

In pursuance to the aforesaid order passed by this Court inter se bidding has been held in the Court. There are four firms, which have participated in the bidding, namely, Excel Buildcon Private Limited, New Delhi, A.S.R. Marketing, M/s Gulati Industrial Fabrication Private Limited, Faridabad and M/s. Continental Vehicles Private Limited, New Delhi.

After inter se bidding, the Excel Buildcon Private Limited, 7 Raj Block, New Delhi have emerged the highest bidder for Rs. 4 Crore 10 lacs in respect of the land and boundary wall as well as the "machinery and building" (iron shed). The Official Liquidator, who has received the drafts along with applications from all the bidders, is directed to hand over the drafts to the respective bidders, who have remained unsuccessful. Accordingly the drafts have been handed over back to their respective counsel. However, the drafts for an amount of Rs. 25 lacs as the earnest money of Excel Buildcon Private Limited are to be retained by the Official Liquidator. The bid of Excel Buildcon Pvt. Ltd. has been accepted without any condition on as is where is and whatever is basis. Learned counsel for the secured creditor has expressly accorded their willingness to accept the highest bid as per conditions of the sale notice as well as on the condition as is where is and whatever is basis''. In fact, Mr. Puneet Gupta, learned counsel for the HFC has requested for confirmation of the highest bid of M/s Excel Buildcon Pvt. Ltd., New Delhi.

In view of the above and by taking into consideration the fact that the winding up order in this case was passed on 24.2.1995 and efforts have been made by HFC with the association of the Official Liquidator to dispose of the land, building and assets of the Company in liquidation, I am of the considered view that it would be in the interest of the Company in liquidation, its secured creditors and other creditors to confirm the sale in favour of Excel Buildcon Pvt. Ltd. I am not inclined to follow the other course of re-advertising the land, building and assets of the Company because already wide publicity has been given as is evident from the advertisement published on 1.1.2004 in various newspapers. In view of above, the sale is confirmed in favour of M/s. Excel Buildcon Pvt. Ltd., New Delhi subject to the payment of the entire bid amount. However, the Official Liquidator shall provide all permissible help to the auction purchaser in respect of the possession of the property sold. The entire amount of Rs. 4 Cores 10 lacs minus the amount of earnest money already paid shall be deposited by the Excel Buildcon Private Limited within 15 days from today with the Official Liquidator, who shall then hand over the possession of the land as well as the property to the auction purchaser as early as possible and which shall remain subject to payment of the auction price as accepted by the Court today. In case of default of payment of entire amount as aforesaid, the earnest money deposited by the auction purchaser shall be forfeited. The Official Liquidator shall have no objection if the auction purchaser deploys its own security outside the premises along with the security deployed already.

The Official Liquidator/HFC shall further refund the earnest money received from the other bidder, namely, M/s Shri Balaji Industries, New Delhi along with interest which might have accrued thereon within 2 weeks from today. The application stands disposed of in the above terms.