2017 (10) TMI 148 - SC - Companies Law

Court orders auction of Grosvenor House Hotel to recover dues. Non-compliance leads to contempt proceedings. Timely compliance stressed.

S.E.B.I. Versus Sahara India Real Estate Corporation Ltd. & Ors.

The court directed the official liquidator to auction properties, including the Grosvenor House Hotel, to recover dues. Despite multiple opportunities, ... Auction procedures - auction of Sahara Aamby Valley City - Held that:- Held that:- We are of the convinced opinion that grant of further time to the respondent-contemnor and entertaining post-dated cheques which are dated 11th November, 2017, would tantamount to travesty of justice and extending unwarranted sympathy to a person who is indubitably an abuser of the process of law. He, who thinks or for that matter harbours the notion that he can play with law, is under wrong impression. To quote a phrase from Chief Justice Marshal, 'it is not a laboratory where children come to play'. We are constrained to state that the respondent-contemnor in his own way has treated this Court as a laboratory and has made a maladroit effort to play, possibly thinking that he can survive on the ventilator as long as he can. He would have been well advised that a person who goes on a ventilator may not survive for long and, in any case, a time would come when he has to be comatosed. Here comatose takes place as regards the ambitious effort made by the respondent-contemnor. Therefore, we direct without any hesitation that the auction shall be held as per the direction given by this Court and the Official Liquidator is permitted to carry out the auction as per procedure and during the auction the Registrar General of the High Court of Bombay, who is designated as Supreme Court appointee, shall remain personally present to over see the physical auction at the auction venue at Mumbai. After the auction is held, liberty is granted to the counsel for the parties to mention. Issues Involved:1. Contempt of Court by the respondent-contemnor.2. Payment of dues to SEBI-Sahara Refund Account.3. Auction and sale of properties to recover dues.4. Compliance with court orders and timelines.5. Judicial patience and legal consequences for non-compliance.Issue-wise Detailed Analysis:1. Contempt of Court by the respondent-contemnor:The proceedings for contempt have a chequered history primarily due to the recalcitrant behavior of the respondent-contemnor. The court noted that the respondent-contemnor harbored the idea of testing the patience of the court, which has its limitations. Despite several opportunities, the respondent-contemnor failed to comply fully with the court's orders, leading to the current contempt proceedings.2. Payment of dues to SEBI-Sahara Refund Account:The court granted multiple liberties to the respondent-contemnor to pay the amount by depositing it in the SEBI-Sahara account. Despite hyperbolic arguments and rhetoric statements, the entire amount was not paid. The court noted that approximately Rs. 8651 crores were still due, and despite the respondent-contemnor's claim of having paid substantial amounts, the submissions did not hold up against the recorded proceedings.3. Auction and sale of properties to recover dues:The court directed the auction of properties, including the Grosvenor House Hotel and lands in Haridwar, to recover the dues. The official liquidator was instructed to proceed with the auction following the rules of procedure, with a reserved price fixed at Rs. 37,392 crores. The court approved the terms and conditions for the auction, emphasizing the need for public auction and e-auction for transparency.4. Compliance with court orders and timelines:The court repeatedly extended deadlines for the respondent-contemnor to comply with the payment orders. Despite assurances and post-dated cheques, the respondent-contemnor failed to meet the deadlines. The court noted the respondent-contemnor's efforts but emphasized that the principle of reasonableness would be defeated if further extensions were granted without concrete actions.5. Judicial patience and legal consequences for non-compliance:The court expressed its disinclination to grant further extensions, stating that indulgence in this case would lead to procrastination, which is detrimental to justice. The court highlighted the need for realization of the dues as the principal purpose of the proceedings. The respondent-contemnor's actions were seen as an abuse of the process of law, and the court decided to proceed with the auction as per the directions given.Conclusion:The court directed the official liquidator to carry out the auction of the properties as per the approved terms and conditions. The Registrar General of the High Court of Bombay was designated to oversee the physical auction at the auction venue in Mumbai. The interim orders regarding the respondent-contemnor remained in force, and the court granted liberty to the counsel for the parties to mention after the auction. The judgment emphasized the importance of compliance with court orders and the consequences of non-compliance, underscoring the court's limited patience and the need for timely realization of dues.