IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 27-10-2009 CORAM: THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN AND THE HONOURABLE MR. JUSTICE M. SATHYANARAYANAN O.S.A.NOS.321, 341, 342 & 345 of 2008 and M.P.Nos.1 of 2008 In O.S.A.NO.321 of 2008: New Horizon Sugar Mills Ltd. Having its Regd. Office at Ariyur, Kandamangalam Pondicherry Rep. By V.Kannan, Director ... Appellant/9th Respondent Vs. 1. Indian Renewable Energy Development Agency Limited (IREDA), New Delhi Core-4-A, East Court I Floor India Habitat Centre Complex Lodhi Road, New Delhi 110 003 Rep. By its Deputy General Manager Mr. S.K. Bhargava 2. The Official Liquidaor High Court, Madras as Provisional Liquidator for M/s. Arunachalam Sugar Mills Ltd. 3. M/s. Sundaram Finance Ltd. Old No.21, New No.4, Pattulas Road Chennai – 600 002 4. City Union Bank No.53, 55 Mission Road Pondicherry – 605 001 https://hcservices.ecourts.gov.in/hcservices/ 5. Vijaya Bank 114, Jawaharlal Nehru Street Pondicherry 605 001 6. V. Kannan 7. V. Baskaran 8. Smt. K. Usha 9. B.Bhavani (Respondent 6 – 9 impleaded as per order dated 4.9.2007 in C.A.No.1471 of 2006 time extended dated 22-10-2007 in C.A.No. 1038 of 2006) 10. M/s. Bharat Heavy Electricals Ltd. Having its Regd. Office at BHEL House, Sivi Fort New Delhi 110 004 and an office at EVR Buildings Nandanam Chennai – 600 035 (10th Respondent impleaded as per order dated 4.9.2007 in C.A.No.586 of 2007 time extended dated 22-10-2007 in C.A.No.1038 of 2006) ... Respondents/Applicant and Respondents 1 to 8, 9 In O.S.A.Nos.341 and 342 of 2008: M/s. Bharat Heavy Electricals Ltd., having its Registered Office at BHEL House Siri Fort New Delhi – 110 004 and an Office at EVR Buildings 474, Anna Salai Nandanam, Chennai – 600 035 ... Appellant/Applicant in OSA.Nos.341 & 342/08 (Applicant in both Application) Vs. M/s. Arunachalam Sugar Mills Limited Regd. Office Ariyur Post Kandamangalam Pondicherry – 605 102 ... Respondent in both OSAs (Respondent in both Application) https://hcservices.ecourts.gov.in/hcservices/ In O.S.A.NO.345 of 2008: 1. V.Kannan 2. V.Baskaran 3. K. Usha 4. B.Bhavani ... Appellants/Respondents 5 to 8 Vs. 1. Indian Renewable Energy Development Agency Limited (IREDA), New Delhi Core-4-A, East Court I Floor India Habitat Centre Complex Lodhi Road, New Delhi 110 003 Rep. By its Deputy General Manager Mr. S.K. Bhargava 2. The Official Liquidaor High Court, Madras as Provisional Liquidator for M/s. Arunachalam Sugar Mills Ltd. 3. M/s. Sundaram Finance Ltd. Old No.21, New No.4, Pattulas Road Chennai – 600 002 4. City Union Bank No.53, 55 Mission Road Pondicherry – 605 001 5. Vijaya Bank 114, Jawaharlal Nehru Street Pondicherry 605 001 6. New Horizon Sugar Mills Ltd. Having its Regd. Office at Ariyur, Kandamangalam Pondicherry Rep. By V.Kannan, Director 7. M/s. Bharat Heavy Electricals Ltd. Having its Regd. Office at BHEL House, Sivi Fort New Delhi 110 004 and an office at EVR Buildings https://hcservices.ecourts.gov.in/hcservices/ Nandanam Chennai – 600 035 ... Respondents / Appellant & Respondents 1 to 4, 9, 10 O.S.A.NOs.321 & 345, 341, 342 of 2008: Original Side Appeals filed under order 36 Rule 1 of OS Rules and r/w Clause 15 of the letters patent (1) against the Order dated 02-09-2008 in C.A.No.1038 of 2006 in C.P.No.229 of 2004 (in OSA.Nos.321 & 345/2008) (2) against the Order dated 02-09-2008 in O.A.Nos.253 and 254 of 2005 (in OSA.Nos.341 & 342/08) For petitioner :: Mr. P.S. Raman, Senior Counsel for Gupta & Ravi For respondents:: Mr. Vijayan, for King & Patridge- R1 Mr. R.S. Sundar for Official Liquidator-R2 Mr. K. Krishnamoorthy (SC) for Mr. S. Vasudevan – R3 Mr. T.K. Ramkumar – R4 Mr. B. Karthikeyan – R5 No appearance – R6 to R9 M/s. Dr. Anita Sumanth-R10 COMMON JUDGMENT (Order of the Court is made by PRABHA SRIDEVAN,J.) All the appeals are disposed of and for the sake of convenience the array of parties in O.S.A.NO.321 of 2008 is adopted for reference in this order. The Arunachalam Sugar Mills, of which respondents 6 to 9 are directors, was proceeded against by one M/s.Alstom Project India Limited in C.P.No.229 of 2004 for winding up of the said company. By order dated 22-07-2005, the Official Liquidator was appointed as Provisional Liquidator and he was directed to take charge of all the properties and effects of the Company. Thereafter, the first respondent herein moved C.A.No.1038 of 2006, claiming to be a secured creditor having lent substantial money to the company which was sought to be wound up and the sister-company which is the appellant herein; it also referred to dues to the third respondent and the fifth respondent and prayed for an order for fresh publication joining the three parties namely, the Official Liquidator, the first respondent and third respondent fixing an upset price of Rs.135.50crores etc. C.A.No.1033 of 2006 filed by respondents 6 to 9 for transfer of the proceedings before the Debt Recovery Tribunal was also heard and an order was passed directing the Official Liquidator to cause publication, but C.A.No.1033 of 2006 for transfer of proceedings before the Debt Recovery Tribunal was dismissed. Against the order passed in C.A.No.1038 of 2006, O.S.A.No.226 of 2005 was filed. https://hcservices.ecourts.gov.in/hcservices/ 2. On 25-07-2008, the matter was remanded and disposed of by the following order: “Having heard the learned counsel for the parties, as well as the interveners and with their consent, we remit the matter back to the Company Court for fresh consideration with the following directions:- 1) All the objections of the Appellants regarding the sale of the Company’s properties including maintainability of such application shall be considered by the Company Court. 2) The objections of the respondents regarding the locus-standi of the appellants shall also be considered by the Company Court. 3) The objections raised by Bharath Heavy Electricals Limited, regarding their claim over certain machineries as well as the pending arbitration proceedings and the interim orders passed in the same under Section –9 of the Act, shall also be considered by the Company Court along with the objection of City Union Bank Limited, the fourth respondent herein and any further secured creditor who may so choose to oppose. 4) M/s. Ambika Sugar Mills Limited, who are interveners in this appeal, waive their legal objections to the auction and they are permitted to participate in the fresh auction and to adjust the EMD of Rs.5 crores deposited by them pursuant to the earlier auction conducted by the first respondent. 5) The Company Court shall also hear the application filed by the appellants seeking for setting the order appointing the Provisional Liquidator in C.A.(D) No.6007/2006. 6) The Official Liquidator (second respondent herein) is permitted to receive all bids in sealed covers made pursuant to the tender notice published subsequent to the orders of the Company Court dated 03-07-2006. Such bids shall not be opened until the Company Court hears all the parties and passes fresh orders on issues raised in clause 1 to 5 above. Depending on the outcome of the issues raised above the Company Court may proceed further with the tender. It is needless to say that the respondent/interveners/banks https://hcservices.ecourts.gov.in/hcservices/ and finance companies are entitled to be heard on their objections to the auction sale, and the order under appeal shall be subject to further orders to be passed by the learned Single Judge. The Company Court is requested to decide the matter expeditiously preferably within a period of three weeks. 2. The appeal is accordingly disposed of. Consequently, M.P.No.2 of 2006 is closed.” 3. Mr. P.S. Raman, learned Senior Counsel raised several legal objections to the order. But a preliminary objection that was taken was that when the Division Bench has clearly directed that the objections shall be heard by the Company Court, the order has been passed without discussing the objections and without giving the reasons for rejection of the same and therefore, on this ground alone it should be set aside. 4. The learned counsel for the first respondent submitted that the matter was delayed only on account of the tactics of the appellant and there are materials to show why the objections could not have been entertained. Time was also taken often to settle the matter. 5. As regards the third respondent, the learned counsel appearing for the third respondent submitted that they had only leased their machinery and the properties that are prayed to sale shall not include the machinery belonging to the third respondent. 6. The learned counsel for the 10th respondent/the appellant in O.S.A.Nos.341 and 342 of 2008 submitted that there is an arbitration proceeding pending and though the applications filed under Section 9 could have been independently heard they were also clubbed along with these matters and their application was dismissed directing them to file the claim before the Official Liquidator. As regards the learned counsel appearing for the Official Liquidator in O.S.A.Nos.341 and 342 of 2008, any claim of BHEL could only be settled on proof therefor filed before the Official Liquidator. 7. We have heard the submissions made by the learned counsel appearing on either sides. Objections were filed and it appears that there was also an offer for third party to purchase the assets of the Company. But for some reason it did not fructify. Though several statements are made across the bar and there are references to developments which did not fructify. The fact remains that the order under challenge does not indicate consideration of the objections filed by the appellants regarding the sale of the Company’s property or the objections regarding the maintainability of the application https://hcservices.ecourts.gov.in/hcservices/ or the objections regarding the locus standi of the respondents 6 to 9 or the objections raised by the 10th respondent’s claims over their machineries and the objections raised by the intervenors’ Bank. 8. In these circumstances, we must set aside the impugned order in O.S.A.No.321 of 2008 and send it back to the Company Court requesting the learned Single Judge to decide the matter expeditiously as per the order passed on 25-07-2008 in O.S.A.No.226 of 2005. The submissions and/or objections of all the parties including the respondents 9 and 10, who are now impleaded shall be considered by the Company Court. Since the counsel for the first respondent raised a complaint that the matter has been unnecessarily dragged, the learned Senior Counsel appearing for the appellant submitted that they would fully co-operate with the expeditious disposal of the matter. 9. The appellants in O.S.A.No.345 of 2008 were the appellants in O.S.A.No.226 of 2005 where the directions were issued. So their appeal viz., O.S.A.No.345 of 2008 is allowed for the same reasons as above. Therefore, both O.S.A.Nos.321 and 345 of 2008 must be allowed so that orders are passed in compliance with the directions given by the First Bench earlier. (i) As regards the O.S.A.Nos.341 and 342 of 2008, they have been filed by the 10th respondent herein. Their injunction restraining the sale of the assets of the Company in liquidation was dismissed directing them to lodge their claim before the Official Liquidator. (ii) In any event, now there cannot be any sale without the permission of the Court. However, since all the matters are interconnected, O.A.Nos.253 and 254 of 2005 are also to be heard alongwith the other matters. However, the interim order originally granted in these applications will not continue. The parties can jointly file a memo before the learned Single Judge for early hearing. glp Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.The Official Liquidator, High Court, Madras. 2.The Sub Assistant Registrar, Original Side, High Court, Madras. + 1 cc to M/s. Gupta & Ravi, Advocate SR No.57266 + 1 cc to M/s. King & Partridge, Advocate SR No.57007 • 3 ccs to Dr. Anita Sumanth, Advocate SR No.57063, 57064, 57062 + 1 cc to M/s. Ram & Rajan Associates, Advocate SR No.56882 + 1 cc to Mr. S.R.Sundar, Advocate SR No.57216 + 1 cc to Mr. S, Vasudevan, Advocate SR No.56922 O.S.A.NOS.321, 341, 342 & 345 of 2008 GV(CO) SR/29.10.2009 https://hcservices.ecourts.gov.in/hcservices/