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2018 Supreme(Del) 1354
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJIV KHANNA, CHANDER SHEKHAR, JJ.
Uttar Pradesh Financial Corporation - Appellant
Versus
Official Liquidator & Ors. - Respondents
CO.APP. 10 of 2018
Decided On : 23-05-2018
For the Appellant : Mr. Sonal Kumar Singh, Mr. Gunjan Gupta and Mr. Rajat Dasgupta
Active participation in proceedings and acceptance of bid may impact the claim of preference over dues in liquidation proceedings.
Headnote:
Companies Act 1956 - Intra Court Appeal - Section 483 - Delhi High Court Act 1966 - C.A. No. 1258/2006 in Company Petition No. 307/1999 - Sections 529-A, 10 - The judgment discusses the appellant's participation in the liquidation proceedings, acceptance of bid, and execution of transfer/sale deed. It also addresses the payment of dues to Noida Authority and the Corporation's claim of preference over the dues.
Fact of the Case:
The appellant, Uttar Pradesh Financial Corporation, participated in the liquidation proceedings, accepted a bid, and executed a transfer/sale deed. The court directed the Corporation to pay dues to Noida Authority.
Finding of the Court:
The court found that the Corporation had participated in the proceedings, accepted the bid, and executed the transfer deed. The court also rejected the Corporation's claim of preference over the dues of Noida Authority.
Issues: The issues involved the Corporation's participation in the proceedings, acceptance of bid, execution of transfer deed, and payment of dues to Noida Authority.
Ratio Decidendi: The Corporation's active participation in the proceedings and acceptance of bid led to the court's decision to reject its claim of preference over the dues of Noida Authority.
Final Decision: The appeal was dismissed, and the application for stay was dismissed as infructuous.
SANJIV KHANNA, J.
CM Nos. 21729-30/2018
Exemptions allowed subject to all just exception.
The applications are disposed of.
CO.APP. 10/2018 and CM No. 21728/2018 (stay)
This intra court appeal under Section 483 of the Companies Act 1956 (‘Act’ for short) read with Section 10 of Delhi High Court Act 1966 impugns order dated 13.03.2018 passed by the Single Judge in C.A. No. 1258/2006 in Company Petition No. 307/1999, Minnie Pan (India) P. Ltd. vs. M/s Eurobike Ltd.
2. The appellant-Uttar Pradesh Financial Corporation (‘Corporation’ for short) is a statutory Corporation under the State Financial Corporations Act, 1951.
3. Corporation had advanced Working Capital Term Loan of Rs.50 lakhs, Fixed Asset Term Loan of Rs.240 Lakhs and Lease Assistance of Rs.200 Lakhs to M/s Eurobike Ltd., the first respondent and company under Liquidation. To secure the loan, the company under liquidation had created an equitable mortgage by deposit of original title deeds of property /Plot No. C-06, Phase – II, Noida, District Gautam Budh Nagar, Uttar Pradesh (‘the property’ for short) with the Corporation on 31.03.1995 and had also executed agreement and hypothecation deeds dated 31.03.1995 and 24.01.1996.
4. Company under liquidation was directed to be wound up in 1996. Company under liquidation was unable to pay dues of Corporation. Corporation coming to know about the winding up order had filed CA No. 1853/2001 to remove hypothecated plant and machinery valued to be Rs.5.21 crores. This application was disposed of vide order dated 13.12.2001 recording that the Official Liquidator had no objection if the Corporation was permitted to remove and take possession of the plant and machinery. No objection on behalf of Allahabad Bank was also recorded. This order had also disposed of CA No. 1542/2001, another application filed by the Corporation praying that Official Liquidator should dispose of the property (C-06, Phase – II, Noida, District Gautam Budh Nagar, Uttar Pradesh). Directions were issued to dispose of the property by way of public auction and sale proclamation would be drawn up and issued by the Corporation. Liberty was granted to the Official Liquidator to move the court on the administrative side for fixing reserve price and settling terms of sale proclamation.
5. Subsequent order dated 03.10.2002 passed by the Company Judge records that the Corporation had prayed for an order, similar to order passed in A.P. State Financial Corporation vs. Official Liquidator, (2000) 7 SCC 291. Corporation was permitted to stay outside the liquidation proceedings subject to the following conditions: (i) the Corporation would undertake to discharge the liability due to the workers, if any, under Section 529-A of the Companies Act; (ii) the Corporation shall inform the Official Liquidator about the proposed sale of the assets of the Company under liquidation over which it holds the Charge at least ten days in advance before the date fixed for receipt of tenders and (iii) the Corporation shall obtain prior permission of the Court before finalising the tenders.
6. Thereafter, the Corporation had published as many as seven sale proclamation in different newspapers, inviting bids on ‘As Is Where Is Basis’ from interested parties. Bids or suitable bids were not received.
7. Order dated 20.11.2003 passed by the Company Judge on the administration side records that one offer/bid had been received pursuant to the sale proclamation issued by the Corporation on 18.10.2002. Earlier inspite of seven attempts only one tender was received, which was not accepted being on the lower side. Four persons, namely, Sh. Dinesh Verma, Sh. Hem Singh Rana, Sh. Mohd. Tariq and Smt. Sadhna Kumari had initially made a joint offer of Rs.4,01,00,000/- which was increased to Rs. 4,11,00,000/- after the bidders were contacted by the Corporation. Mr. Dinesh Verma who was present in the Court on 20.11.2003 had raised the offer to Rs.4,25,00,000/-. The order dated 20.11.2003 thereafter records
