Indian Renewable Energy Development Agency Limited (IREDA) vs The Official Liquidator, High Court, Madras as Provisional Liquidator for Arunachalam Sugar Mills Limited and Others

R. Banumathi, J.—This appeal is preferred against the order of the single Judge dated 23.06.2011 disposing the Company Application No.

1038 of 2006 in C.P. No. 229 of 2004 as having been rendered infructuous.

By our elaborate judgment dated 12.04.2011, we have dismissed the appeals O.S.A. Nos. 58, 59, 63, 64 and 81 of 2011 and directing sale of

both movable and immovable properties of the Company in liquidation - M/S. Arunachalam Sugar Mills Limited. We have fixed the upset price of

immovable properties, buildings, plant, machineries and other immovable assets at Rs. 204.46 crores and remitted the matter to the learned single

Judge for sale of the assets as per the schedule indicated in our judgment dated 12.04.2011.

When the matter came up before the Company Judge, there were No. bidders for the said value of Rs. 204.46 crores and therefore, the

learned Judge passed the order dated 23.6.2011 directing the matter to be placed before the Division Bench for fixing the upset price so that the

assets of the Company in liquidation can be sold. While so passing the order, learned Judge disposed the application C.A. No. 1038 of 2006 and

the said order for placing the matter before the Division Bench came to be passed in C.P. No. 229 of 2004.

Being aggrieved with the disposal of the application C.A. No. 1038 of 2006 and the observation that ""applicant [IREDA] has No. role to play"",

IREDA has preferred this appeal.

Mr. G. Masilamani, learned Senior Counsel for Appellant-IREDA has submitted that learned Judge ought to have noted that IREDA had

handed over possession of the assets relating to 1st Respondent''s Company only by virtue of the order dated 24.04.2006 of the Company Court

in C.A. No. 1786 of 2005 and continuing the secured interest of IREDA in the 1st Respondent''s sale assets has been upheld in the order dated

19.01.2011 of the Company Court confirmed in Paragraphs 89 and 90 of the order dated 12.04.2011 of the Division Bench. Learned Senior

Counsel would further contend that in as much as the Appellant is the secured creditor and holds the secured interest that it has not relinquished

and only at the instance of the Appellant-IREDA the property was brought for sale and while so, the learned Judge erred in concluding ""applicant

has No. role to play"" and that the application has become infructuous.

We have heard Mr. Ravi, learned Counsel appearing for M/S. Arunachalam Sugar Mills Limited. We have also heard Mr. S.R. Sundar, learned

Counsel appearing for the Official Liquidator. We have heard Mr. S. Vasudevan, learned Counsel appearing for M/S. Sundaram Finance; Mr.

T.K. Ramkumar, learned Counsel appearing for City Union Bank. We have also heard Mr. N. Muthukumar, learned Counsel appearing for

BHEL on behalf of Dr. Anitha Sumath.

Mr. Ravi, learned Counsel appearing for ASM would fairly submit that application C.A. No. 1038 of 2006 ought not to have been disposed

and the order for sale made in C.P. No. 229 of 2004 ought to have been made only in C.A. No. 1038 of 2006. Appeals O.S.A. Nos. 63 of 2011

and 64 of 2011 were filed against the order dated 19.1.2011 in C.A. No. 1038 of 2006. As rightly submitted by the learned Senior Counsel for

Appellant, in view of the default committed by the 1st Respondent-ASM and 9th Respondent-M/S. New Horizon Sugar Mills Limited [NHSM],

IREDA took recourse to Section 13(4) of SARFAESI Act in respect of the assets financed by it and took possession of the sale assets on

05.10.2005. By virtue of the order dated 24.04.2006 of the Company Court in C.A. No. 1786 of 2005, Appellant had handed over possession

of the sale assets relating to ASM. Thereafter, IREDA filed application C.A. No. 1038 of 2006 to bring the sale assets of ASM and the lease hold

assets of Sundaram Finance. Only in C.A. No. 1038 of 2006 order for sale came to be passed which was the subject matter of two rounds of

litigations by preferring an appeal. Application C.A. No. 1038 of 2006 filed by IREDA for joint sale of the properties was only an exercise

through the Company Court and through the Official Liquidator of an act that the Appellant was entitled to do so by itself under SARFAESI Act.

The said stand of IREDA has been upheld by the Company Court''s order dated 19.1.2011 and confirmed by this Bench in Paragraph 85 of the

judgment dated 12.04.2011. As held, IREDA without giving up its stand that it was standing outside the winding up proceedings is entitled to

exercise the power as secured creditor and appropriate direction of the Company Court and by associating with the Official Liquidator that the

sale as enjoined in Rajasthan Financial Corporation and Another Vs. The Official Liquidator and Another, and Asset Reconstruction Company

(India) Limited Vs. The Official Liquidator, High Court as the liquidator of SIV Industries Ltd. (in liquidation), . In our considered view the

impugned order closing the application C.A. No. 1038 of 2006 depriving the Appellant and 2nd Respondent-Sundaram Finance of the fruits of the

sale of assets which had been prolonged over five years. Having regard to the sequence of events and facts and circumstances of the case, we are

of the view that the learned single Judge was not right in saying that ""applicant has No. role to play"" and not right in disposing the application on the

ground it has rendered infructuous.

In the result, the order made in C.A. No. 1038 of 2006 in C.P. No. 229 of 2004 dated 23.06.2011 is set aside and this appeal is allowed.

C.A. No. 1038 of 2006 in C.P. No. 229 of 2004 is ordered to be restored to file. Learned single Judge shall proceed with the sale proceedings in

C.A. No. 1038 of 2006 in C.P. No. 229 of 2004. No. costs.