Common Judgment:

P. Sathasivam, J.

To begin with, let us comment that, in these matters, particularly in the Writ Appeals, we are considering the challenge made by the rival contestants to the orders passed by three learned single Judges of this Court, viz., F.M. Ibrahim Kalifullah, J. (F.M.I.K., J.), Dharma Rao Elipe, J. (D.R.E., J.) and A. Kulasekaran, J. (A.K., J.). Since the issues raised in the Writ Appeals and the Writ Petitions are interlinked to each other, they are being disposed of by the following common Judgment. Before proceeding ahead, we point out that inasmuch as the decision in the main matters would encompass the fate of the Miscellaneous Petitions filed for interim orders/clarification/impleading etc., we are not separately dealing with the same.

2. Genus of the controversies is traceable to the financial impairment of M/s. New Horizon Sugar Mills Private Limited (hereinafter referred to as the Mill), Ariyur, Pondicherry; hence, after outlining the factual scenario in a compact manner relating to the said aspect covering vital details, let us enumerate the challenge/claim of the respective parties in their Appeals/Petitions and discuss the merits or otherwise thereof.

3. The Mill availed credit facilities on 25.05.1983 from Indian Bank, Pondicherry, to the tune of Rs.26,50,00,000/- by offering their land and building situate at Ariyur as security. The Directors of the Mill viz., V. Kannan and V. Baskaran, who stood as guarantors for due repayment of the loan amount, also offered their personal properties as collateral security. The Mill did not fulfil its obligations and committed default in repayment of the loan amount. The Bank, after declaring the loan account of the Mill as non performing asset, initiated proceedings by issuing notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act). The said notice was challenged by the Mill by filing writ petition in W.P. No.33700 of 2004 before this Court. By Order dated 012. 2004, the said Writ Petition was disposed of with a direction to the Mill to repay the entire loan amount in three instalments. In the same order, this Court clarified that, in default, the Bank was entitled to proceed against the Mill in accordance with law. Since the Mill committed default even in payment of the first instalment, the Bank proceeded further and, after fulfilling the statutory formalities under Section 13 sub-clauses (2) and (4) of the SARFAESI Act, took possession of the property offered as security. Thereafter, the Bank initiated further steps for auction sale. In the auction proceedings, M/s. E.I.D. Parry (India) Limited (in short Parry Ltd.) was the successful bidder. The said auction was challenged by way of several writ petitions by other Banks and agencies to safeguard and protect their respective claims against the Mill, however, on 12.07.2005, all the Writ Petitions including the one filed by the workers/employees of the Mill were dismissed. In respect of the Writ Petition filed by Pondicherry Nidhi Limited (PNL) Depositors Welfare Association, the Court disposed of the same, directing the Association to work out their remedies under the provisions of the Reserve Bank of India Act (in short RBI Act) as well as the Pondicherry protection of Interests of Depositors in Financial Establishments Act, 2004 (Act No. 1 of 2005).

On receipt of Sale Confirmation Letter from the Bank, the purchaser, viz., EID Parry Ltd., remitted the entire balance amount within the prescribed time and also fulfilled all other formalities for getting the Sale Certificate registered in their favour.

While so, on the basis of a complaint received from one of the depositors, alleging that M/s. V. Kannan and V. Baskaran, said to be the major shareholders of M/s. PNL Nidhi Limited and Directors of the Mill, misappropriated a sum of Rs.12.5 crores belonging to PNL Nidhi Limited and divert