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2017 Supreme(Del) 1078
IN THE HIGH COURT OF DELHI AT NEW DELHI
INDIRA BANERJEE & ANIL KUMAR CHAWLA, JJ.
NATIONAL TEXTILE LIMITED - Petitioner
Versus
PADMAVATI BUILDTECH ANAD FARMS PCT. LTD AND ORS. - Respondents
W.P.(C) 6112 of 2011 & CM Appln. No. 20516 of 2014
Decided On : 03-04-2017
For the Petitioner:Mr. Sandeep Sethi, Sr. Advocate with Mr. Sanjoy Ghose, R. Jeitly, Ms. Pratistha Vij, Advocates.
For the Respondent:Mr. P. Chidambaram, Sr. Advocate and Mr. Abhinav Vashisht, Sr. Advocate with Mr. Cyrus, Mr. Rahul Dwarkadas, Ms. Aayushi S. Khazanchi, Mr. Neville, Advocates.
Headnote:
Tender - Sale of Land - Textile Undertaking (Taking over of Management) Act 1983, Textile Undertaking (Nationalisation) Act, 1995, Companies Act 1956 - The court discussed the sale of land belonging to a textile company under the revival scheme sanctioned by the BIFR. The court emphasized that the ASC should re-examine the bid on the premise that there is no reserve price and directed the ASC to follow the due process as envisaged under the scheme of the BIFR. The judgment highlighted the importance of considering legitimate expectations in the decision-making process and the right of the tenderer to reject the highest bid if it is inadequate.
Fact of the Case:
The petitioner challenged the order dismissing the appeal against the sale of land belonging to a textile company under the revival scheme sanctioned by the BIFR. The highest bidder's offer was rejected due to not matching the reserve price, leading to a series of legal proceedings.
Finding of the Court:
The court held that the ASC should re-examine the bid on the premise that there is no reserve price and follow the due process as envisaged under the scheme of the BIFR. It also directed the petitioner to refund the earnest deposit with interest to the highest bidder.
Issues: The key issues revolved around the rejection of the highest bid, the legitimacy of the sale process, and the consideration of legitimate expectations in the decision-making process.
Ratio Decidendi: The court emphasized the importance of re-examining the bid in the absence of a reserve price and following the due process as envisaged under the scheme of the BIFR. It also highlighted the significance of considering legitimate expectations in the decision-making process and the right of the tenderer to reject the highest bid if it is inadequate.
Final Decision: The court directed the ASC to re-examine the bid, ordered the petitioner to refund the earnest deposit with interest to the highest bidder, and disposed of the writ petition.
INDIRA BANERJEE, J.
1. In this writ petition, the petitioner has challenged the order dated 24.06.2011 passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) New Delhi, dismissing the appeal filed by the petitioner against an order passed by the Board for Industrial and Financial Reconstruction.
2. Hira Mills, established in Ujjain in Madhya Pradesh was taken over by the Central Government under the Textile Undertaking (Taking over of Management) Act 1983 and nationalised under the Textile Undertaking (Nationalisation) Act, 1995.
3. NTC, a Government Company within the meaning of Section 617 of the Companies Act 1956, wholly owned by the Government of India, under the administrative control of the Nodal Ministry, being the Ministry of Textiles, has taken over the undertakings and assets of several textile companies including Hira Mills.
4. NTC became sick and was referred to the BIFR, which sanctioned a scheme of revival of the petitioner. As part of the revival scheme certain assets of the petitioner were to be sold by public tender under the Asset Sale Committee (ASC).
5. An advertisement was issued for sale of the land belonging to the Finlay Mills on 12.11.2008. However, the only offer was below the reserve price fixed by ASC and accordingly the ASC rejected the offer. At a meeting held on 23.12.2008, ASC ratified the decision to reject the tender and directed that the assets of the Finlay Mills be valued to ascertain the current market rate. At its meeting on 27.1.2009, the reserve price was fixed at Rs.710 crores.
6. Second advertisement inviting tenders for sale of land belonging to Finlay Mills was issued, but no suitable offers were obtained.
7. A third notification inviting the tenders was issued in respect of the land of Finlay Mills on 16.6.2009. The tender document provided:
“1.4 EARNEST MONEY DEPOSIT
The EMD of Rs.100,00,00,000/- (Rupees one Hundred Crores Only) is required to be deposited as per clause 2.6 below by way of a Bank Draft/Pay Order or Irrevocable Bank Guarantee of Nationalised/Scheduled Commercial Banks (excluding co-operative/rural banks) notified by RBI, payable at Mumbai along with bid in respect of this land.
ii. Soon after opening the bids, Member Secretary of the ASC shall prepare a “Comparative Chart” of the offer received and along with all relevant details place the same before the Chairman, ASC. In case the offer received is less than Reserve Price fixed by the Company, the Chairman, ASC reserves the right to go for fresh tender if so desired and inform the decision in the next meeting of the ASC to avoid delay in re-tendering.
iv. if the highest bid is less than the Reserve Price fixed by the Company, the Chairman, ASC reserves the right to reject the offer and return the EMD.”
8. The Bid submitted by Padmawati Pvt. Ltd. hereinafter referred to as Padmawati was the highest. However, the bid of Padmawati for Rs.657.90 crores was, below the last reserve price of Rs.710 crores set by the ASC.
9. At its meeting held on 23.07.2009, ASC decided that the petitioner should interact with the highest bidder, so that a higher offer could be obtained. Pursuant to negotiations, Padmawati offered to increase its bid to Rs.710 crores and Rs.1/-, subject to grant of extension of 60 days to make payment.
10. The Board of Directors of NTC met on 18.08.2009 and took a decision to invite fresh offers. Padmawati was intimated about the decision and its EMD of Rs.100 crores was returned to Padmawati under cover of a letter dated 19.08.2009.
11. Padmawati filed a writ petition in this Court on 14.10.2009, seeking inter alia cancellation of the order dated 19.08.2009, rejecting its bid. By an order dated 14.10.2009, this Court restrained NTC from issuing a fresh tender in respect of the property in question.
12. By an order dated 10.2.2010, this Court allowed the writ petition of Padmawati, holding that there was no reserve price fixed for the tender and that the ASC should re-examine th
