Special Civil Application No. 16063 of 2010. Case: Electroherm India Ltd. Vs Asset Reconstruction Company (India Ltd.). High Court of Gujarat (India)
| Case Number | Special Civil Application No. 16063 of 2010 |
| Counsel | For Appellant: Mr. N. K. Pahwa for Mr. Ashish H. Shah, Advs. |
| Judges | S. J. Mukhopadhaya, C.J. and J. B. Pardiwala, J. |
| Issue | Constitution of India - Articles 12, 226, 298; Indian Companies Act, 1956; Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; Societies Registration Act; Code of Civil Procedure (CPC) |
| Citation | 2011 (1) GLH 781, 2011 (2) GLR 1133 |
| Judgement Date | March 10, 2011 |
| Court | High Court of Gujarat (India) |
Judgment:
Mr. J. B. Pardiwala, J.
1. This writ petition, under Article 226 of the Constitution of India, has been filed by the petitioner praying for the following reliefs:-
(b) This Hon'ble Court will be pleased to issue writ of or in the nature of mandamus quashing and setting aside the impugned communication dated 22.11.2010 issued by the respondent-ARCIL;
(c) This Hon'ble Court will be pleased to issue writ of or in the nature of mandamus directing the respondent-ARCIL to accept the tender bid of the petitioner-Company and further directing the respondent-ARCIL to confirm the sale in favour of the petitioner-Company in respect of the assets of M/s Mardia Steel Ltd.
(d) This Hon'ble Court will be pleased to issue writ of or in the nature of mandamus quashing and setting aside the action of the respondent-ARCIL in cancelling the auction,
(e) Pending admission, hearing and final disposal of this petition, this Honorable Court will be pleased to direct the respondent-ARCIL to maintain status quo regarding the properties and assets of M/s Mardia Steel Ltd. put to auction sale vide public notice dated 27.09.2010;
(f) That ex-parte ad interim relief in terms of the above prayer clause is granted.
2. Brief facts relevant for the purpose of deciding this writ petition can be summarized as under:-
3. The petitioner is a Company incorporated under the provisions of the Indian Companies Act, 1956. It seeks to challenge the legality and validity of the communication dated 22nd November 2010 issued by the respondent-ARCIL in rejecting the bid of the petitioner on the ground that the petitioner-Company had declined to increase the bid amount. Challenge in this writ petition is also to the action of the respondent-ARCIL in cancelling the auction proceedings without assigning any reasons. According to the petitioner, the action of the respondent in cancelling the auction proceedings is illegal, arbitrary, unjust, unreasonable and mala fide. It is the case of the petitioner that a writ of mandamus deserves to be issued directing the respondent-ARCIL to accept the bid submitted by the petitioner Company and confirm the sale of assets of M/s Mardia Steel Limited (in liquidation) in favour of the petitioner Company.
4. It appears that the respondent-ARCIL, supposed to be an asset reconstruction Company engaged in the business of resolution of Non Performance of the Financial Assets (NPAs) upon acquisition from Indian Banks and Financial Institutions, issued an advertisement for sale of the assets of the Company viz. M/s Mardia Steel Limited. The advertisement was issued on 27th September 2010 in 'the Economic Times'. Similarly, an advertisement was issued in daily vernacular Gujarati newspaper also for sale of the assets of Mardia Steel Limited. As per the advertisement, the assets of M/s Mardia Steel Limited were put to sale on "As is Where is and As is What is Basis". The reserve price for the assets described in the advertisement was Rs. 100 crore. The Earnest Money Deposit payable was Rs. 5 crore. The petitioner as per the advertisement procured the bid document on payment of Rs. 1,000/- and submitted the duly filled in bid document along with the Demand Draft of Rs.5 crore being the Earnest Money Deposit. It is the case of the petitioner that the petitioner submitted the bid for purchase of property of M/s Mardia Steel Limited for an amount of Rs. 100.10 crore. In the auction three companies have participated, which are as under:-
| Name of the Company | Bid Amount |
| 1. Parshwa Trading Company | Rs. 100 Crores |
| 2. Electrotherm India Limited | Rs. 100.10 Crores |
| 3. Rapport Trading Limited | Rs. 100.01 Crores |
5. It is the case of the petitioner that offers of Parshwa Trading Company was rejected as it failed to submit the Earnest Money Deposit along with the bid document. In the same manner, the offer of Rapport Trading Limited was rejected as the offer was conditional and it submitted price bid for the assets with a clear title. According to the petitioner, they were the only valid bidder left in the fray and its bid offer ought to have been accepted by the respondent.
6. It is the case of the petitioner that the respondent-ARCIL demanded more amounts and asked the petitioner to increase the amount of bid. This was not accepted by the petitioner and accordingly vide letter dated 22nd November 2010 (Annexure-J) the petitioner was informed by the Authorized officer of the respondent-ARCIL that the bid of the petitioner is not accepted as the petitioners have declined to increase the bid in view of the large statutory dues.
7. It is the case of the petitioner that the tender bid for an amount of Rs. 100.10 crores has been rejected by the respondent on a flimsy ground that the respondent had refused to increase the tender bid amount. According to the petitioner, the stand of the respondent is self-contradictory and mala fide inasmuch as the petitioner had offered Rs. 100.10 crores for the assets of M/s Mardia Steel Limited which was substantially higher than the amount being paid under the revision scheme of ARCIL which is an amount of Rs. 80 crores. In short, the case of the petitioner is that the action of the respondent-ARCIL in not accepting the tender bid of the petitioner Company is illegal, arbitrary and is liable to be quashed and set aside.
8. On 28th December 2010 this Court passed the following order:-
The petitioner is to address the Court on the following questions:-
(i) The petitioner having taken part in auction, what is his right to claim the secured asset, if ARCIL do not intend to auction sale the property?
(ii) Whether petition against ARCIL is maintainable or not?
Post the matter on 24.01.2011.
9. We propose to deal with the first question as to whether the petitioner having taken part in auction and even if his bid is highest amongst other bidders, what is the right of the petitioner to claim the secured asset, if ARCIL do not intend to auction sale the...
To continue reading
Request your trial