TaxTMI 
TaxTMI 
TaxTMI 
2010 (2) TMI 967
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...." the BIFR" ) on May 16, 2000, under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short " the Act" ). Respondent No. 3 (IDBI) was appointed as an operating agency under section 17(3) of the Act, however, despite efforts, respondent No. 4 could not be rehabilitated. Vide order dated January 22, 2004, the BIFR appointed the IDBI as its selling agency under section 20(4) of the Act and permitted it to sell assets of the company, as per directions given by the BIFR. It was directed that the sale be conducted after advertisement and in a transparent manner under immediate supervision of the Assets Sale Committee (ASC). The sale proceeds were to be remitted by IDBI to the official liquidator of the concerned High Court for distribution, as per provisions of section 529A of the Companies Act, 1956. The concluding portion of the order dated January 22, 2004, reads thus : "25. IDBI is permitted under section 20(4) of the SICA to take up sale of assets of the company including the unsold assets of NGU as the selling agency of the BIFR. For this purpose, IDBI will issue fresh advertisements, after getting it approved by the BIFR under section 24 of the SICA.....
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....instalments of 50 per cent and 48 per cent. of the total selling price, payable, respectively, before the end of 45 days and 90 days from the date on which intimation regarding the final acceptance of the bid is dispatched to him by registered post (acknowledgment due)/special post at his notified address. (i) The successful purchaser shall within 15 days of the receipt of intimation regarding the acceptance of his bid, furnish a bank guarantee, valid for one year, as may be considered satisfactory by the OA/ MA, to secure full and timely payment of consideration for the assets purchased... (k) The possession of the assets purchased and the title thereof shall be transferred to the purchaser only on receipt of full payment of the purchase consideration along with interest at 15 per cent. per annum in case of delayed payments, if any, which may be accepted with the prior approval of the Board. (l) The extension of time to be granted by the Board in terms of sub-paragraph (k) above will not exceed 90 days each from the due date(s) of the respective instalment(s) and shall be subject to prior extension, if necessary, of the period of validity of the bank guarantee for the unpaid am....
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....espondents Nos. 5 to 7 made their offer on June 22, 2004 (annexure P4) to purchase the property, falling in Block IV, for an amount of Rs. 2 crores and 84 lakhs. They also attached a demand draft of Rs. 6 lakhs in favour of IDBI, with their offer, towards earnest money. It was further undertaken by them that they shall make full payment within six months from the date of confirmation of sale in their favour. It is the case of the petitioners that offer made was not in consonance with the terms and conditions, which were fixed by the BIFR for sale of the property, in dispute, vide order dated January 22, 2004. It is further stated in this writ petition that a large number of employees of BCI were residing in the staff colony, falling in Block IV of the property under sale. The operation of BCI came to an end in October 2001, the company went bankrupt, on account of which, various dues of its employees in the shape of gratuity, compensation, leave and other statutory benefits remained unpaid. Amount of those benefits run into crores of rupees. Vide their application dated August 14, 2004 (annexure P5), petitioner No. 1 made an offer to purchase the property for an amount of Rs. 3 cro....
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....unt worth crores due to them, towards their legal dues remained unpaid. They are poor persons and they are living in staff colony quarters for a period ranging between 6 and 35 years. In equity and also in law, they are entitled to get the property, in dispute. He further argued that the sale conducted by the IDBI was contrary to the mandatory guidelines issued by the BIFR vide order dated January 22, 2004. The offer made by respondents Nos. 5 to 7 was not as per guidelines, mentioned above and further for non-payment of sale consideration in time, respondents Nos. 5 to 7 have disentitled themselves to get the property, in dispute. The guidelines for sale of the property, framed by the BIFR had become final. The AAIFR was not competent to change those guidelines/conditions for sale and order confirmation of sale in favour of respondents Nos. 5 to 7. He prayed that the writ petition be allowed, order passed by the AAIFR dated April 1, 2005 (annexure P9) be set aside and that of the BIFR passed on November 24, 2004 (annexure P7) be restored. 15. The above plea has been vehemently opposed by counsel appearing for respondents Nos. 5 to 7, primarily on the ground that a confirmed sale ....
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...., wherein, it was provided that the property be sold through public auction after advertisement in newspapers and 45 days' time will be allowed to the prospective bidders to inspect the assets and then submit their offers. Provision regarding payment of earnest money was also made and it was further provided that the sale amount shall be paid in two instalments of 50 per cent and 48 per cent within 45 days and 90 days from the date on which intimation regarding final acceptance of bid may have been dispatched to the successful bidder. It was specifically provided that successful purchaser, within 15 days of the receipt of intimation regarding acceptance of the bid, shall furnish a bank guarantee, valid for one year, to secure full and timely payment of the sale proceeds. It was also stipulated that possession of the assets purchased shall be delivered only on receipt of full payment of the purchase price. There was also a provision for extension of time for payment. It was specifically provided that the ASC will open the bid/offer, on the appointed date, time and place in the presence of its members, bidders, the BIFR Special Director (if any) and representative of the company (if ....
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....garding status of compliance with the terms and conditions of the ASC and the BIFR by the successful bidders, it was intimated as under : "B. For Block IV-Land and Staff Colony thereon Despite verbal assurance(s) given on September 23, 2004, M/s. Rajeev Kumar and Others (RK and O) are yet to : (a) Furnish their legal and financial credentials sought vide IDBI' s (SA) letter dated September 16, 2004, due to R K and Other' s absence on the bid opening date. (b) Provide documentary proof to the effect that, the purchase consideration being paid is above the circle price as stipulated by the concerned State Government authorities. (c) Furnish bank guarantee (so as to secure full and timely payment of consideration of the assets purchased) for the unpaid amount of Rs. 278 lakhs valid for a period of one year on or before August 27, 2004, in accordance with clause (i) of the ASC guidelines stipulated by the BIFR in its order dated January 22, 2004. (d) Make payment of first instalment of Rs. 142 lakhs comprising 50 per cent of the purchase consideration of Rs. 284 lakhs on or before the due date of September 26, 2004, stipulated by SA in accordance with clause (h) of the ASC guidel....
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....made that the IDBI be permitted to refund earnest money deposited by respondents Nos. 5 to 7 because they have failed to comply with the terms and conditions, as mentioned above. In the alternative, it was suggested that permission may be granted to make an offer for sale of the property to the petitioners for an amount of Rs. 3 crores. However, that request was declined by the BIFR and matter regarding sale of the property, was left to the official liquidator of the concerned High Court for necessary action. 25. The facts mentioned above, clearly indicate that from day one, offer made by respondents Nos. 5 to 7 was not in consonance with the terms and conditions set down by the BIFR for sale of the property. Perusal of correspondence between the parties further indicates that the terms and conditions set down for sale of the property, as mentioned above, were known to respondents Nos. 5 to 7. In the advertisement dated May 24, 2004, it was specifically mentioned that the property is being sold under orders passed by the BIFR on January 22, 2004. As per principle of "caveat emptor" , it was bounden duty of respondents Nos. 5 to 7 to know about the terms and conditions set down in ....
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....khs in two instalments of Rs. 136 lakhs and Rs. 142 lakhs on September 20, 2004 and October 11, 2004, respectively in accordance with the guidelines duly approved by the Assets Sales Committee. In view of the aforesaid facts, we find that the impugned order of the BIFR refusing to accept the bid of the appellant in respect of Rajpura unit, Block IV along with land and staff colony was not justified. We, therefore, set aside the impugned order dated November 24, 2005 and direct the BIFR to confirm the sale of Rajpura unit, Block IV, land and staff colony thereon in favour of the appellant. The modalities of payment will be in accordance with terms and conditions as approved by the Assets Sales Committee." 27. The AAIFR has gone wrong to say that respondents Nos. 5 to 7 have failed to comply with only condition of furnishing of bank guarantee, whereas, to the contrary, as has been discussed earlier, their offer was defective and there was also non-compliance of many terms and conditions, which were set down for sale of the property, in question, by respondent Nos. 5 to 7. Furthermore it was not open at the appellate stage for the AAIFR to have waived a vital condition of bank guaran....