HIGH COURT OF CHHATTISGARH AT BILASPUR x WRIT PETITION No. 112 of 2'000 > M/s SYNTEX PACKINGS 'PV. TD. Reglstered‘Office at 97/C Industrial Complex ' ~ Sector — A Slrgm Bilaspur Through Its ' Dlrector Praveen Kumar Patel S/o Late ' C.J,Patel Resident of Vinobha Nagar, Bllaspur. Praveen Kumar Patel S/o Late C.J.Patel, Aged 51 years, Director, Syntex Packings Private Limited, Resident of Vinobha Nagar, Bilaspur. VERSUS V . Madhya VPradesh Financial Corporation, Body incorporated under State Financial Corporation Act 1951 having its registered office at Agra- Bombay Road Indore (MP) . Managlng Dlrector Madhya Pradesh Financ1al Corporatlon Agra-Bombay Road Indore Financial Corporation, Bilaspur Branch, B1laspur . M/s Legend D1st111ar1es Pt Ltd 23 Zone II .Maharana Pratap Nagar Bhopal Pr1vate Company 1ncorporated under Companies Act Through its Managmg D1rector Shri Jagdish Arora _ WRIT PETITON UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA k A Present: Shri Manindra Shrlvastava Senlor Advocate With Shri Ashish r l Shrivastava Advocate for the petltloners Shrl Gautam Bhaduri Advocate for the respondent No l to 3 Shr1 Rajeev Shrivastava Advocate for the respondent No 4 .‘N PETITIONER WRIT PETI FION N0. 128 of 2001 Shri Salabh Chaturvedi S/o Narendra Chaturvedi, Aged about 26 years, Partner of M/s. K.L.Chaturvedi & Sons,‘ Dayalband, Bilaspur (C.G.) " t . MADHYA ’ PRADESH ‘FINANCIAL CORPORATION, (Body incorporated under tate Financial Corporation Act; 1951) having, its office at Agra-Bombay Road' Indore (Madhya Pradesh) ORPORATION AGRA BOMBAY ROAD NDORE VERSUS RESPONDENTS . Regional Manager/Branch .Manager,. M.P . MANAGING DIRECTOR MPFINANCIAL I T L BETITIONERS RESPONDENTS S . THE DY. GENERAL MANAGE, M.P. FINANCIAL CORPORATION, 19, CENTRAL:- AVENUE (w) CHOBEY COLONY, RAIPUR. - THE BRANCH ‘ MANAGER, M.P. FINANCIAL CORPORATION, HIGH COURT ROAD, BILASPUR. _ . M/S. LEGEND DISTILLARIES PVT. LTD. ZONE II, :MAHARANA PRATAP ‘NAGARg BHOPAL. ‘ - . M/S. SYNTEX PACKINGS PVT. LTD, Through its Director Shri Prav’in Kumar Patel, residing at L—4, Vinoba Nagar, Bilaspur (C.G.) . Chhattisgaxh State Industrial Development Corporation, through its Managing Director, Shailendra Nagar, Raipur. WRIT PETITON UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA Shri Rajendra Tiwari, Senior Advocate viiith Shri R.K.Tripathi,' Shri Abhishek Sinha, Advocates for the petitioner. Shri Gautam Bhaduri, Advocate for the respondent No.1 to 4. I Shri Rajeev Shrivastava, Advocate for the respondent No. 5. Shri R.S.Baghel, Advocate for the respondent No. 7 . Present: . i WRITPETITION No. 2404 of 2004 M/s. Legend Distillery (P) Ltd, A Company duly registered under the provisions of Indian Companies Act, 1956, having its registered office at Bhopal, M.P. Through K.G.S.Chouhan S/o Late Shri Shyarn Lal Chouhan, Aged about i 46 years, Authorised Officer of M/s. Legend Distillery (P) Ltd, R/o D-24, Vidya Nagar, - Bilaspur (C.G.) VERSUS y _ . State of Chhattisgarh‘Through the Secretary, r Industries Department, D.K.S. Bhawan, Raipur (CG) . PETITIONER w; _ , q» I; RESPONDENTS . Chhattisgarh State Industrial‘ Development Corporation Ltd., 1 ) A government of Chhattisgarh under taking) through its General *Manager B-4, MR. Colony, Shailendra Nagar, Raipur - (C.G.) g . District Industries Centre, Bilaspur through its General Manager behind Collector Building, Bilaspur (C.G.) ’- . WRIT PETITON UNDER ARTICLE 226/227 OF THE CONSTITUTION OF INDI R . ‘j A ' Present: Shri‘Raj eev Shrivastava, Advocate for the petitioner. Shri Y‘S.Thakur, Deputy Advocate General for the State. Shri R.S.Baghe1, Advocate for the respondent No. 2. Shri V.G.Tamaskar, Advocate for the Intervener Syntex Packings Pvt. Ltd. SB: Hon’ble Shri Satish K. Agnihotri, J. JUDGMENT (Passed on .IQL?‘ day ofMay, 2008) . The Writ Petition No. 112/2000, Writ Petition No. 128/2001 and. Writ Petition No. 2404/2004 involve common question of law as to whether the sale of the vacant land, & building i.e, Plot No. 97/C, Industrial Area Sirgitti, Bilaspur, pursuant to the sale notice dated 03.10.2000 and consequently handing over possession of the property in dispute and other actionsof the respondent— . Madhya Pradesh Financial Corporation is Vitiated and contrary to the well established principles of auction sale. Further, Whether the exercise of power under section 29 of the State Financial Corporation Act, 1951 (herinafter referred to as ‘the Act; 1951’) was legal and proper. Thus, all the three writ petitions are being considered and decided together. WRIT 13‘ET1T10N No. 112 of 2000 . This is a petition filed by M/s. Syntex Packings Pvt. Ltd and Praveen Kumar Patel wherein the petitioners (hereinafter referred to as ‘Syntex’) have prayed for a writ in the nature of certiorari to quash the sale letter dated 25.11.2000 and further all letters/documents relating to handing over possession of the Industrial ‘Unit i.e. Plot No. 97/C, Industrial Area, ’Sirgitti, Bilaspur to respondent No. 4. Further, the respondent Madhya Pradesh Financial Corporation (hereinafter referred to as ‘the MPFC’) be directed to accept amount of Rs.l2.95 lakhs against the loan amount and return back the possession of theabove stated Industrial Unit with land & building and plant & machinery t0 Syntex. The Madhya Pradesh Audyogik Vikas Nigam Limited, Raipur, granted lease of the land-in—‘disput’e admeasuring 42,542 sq.ft. The said lease was executed on 25.5.1985 for the same site admeasuring 4313.5 sq.ftl The MPFC sanctioned a term loan of Rs. 30 lakhs which was disbursed to the petitioners in the year 1985-86 wherein a subsidy 'of Rs. 4.82 lakhs was granted. On 27.01.1987, the industrial unit became operational. The Syntex failed to pay loan amount in accordance with terms of repayment. Therefore, the flrst reschedulement for ' repayment was made on 16.3.1991. T'Ohe Syntex failed to make payment again , i even on reschedulement. On 20.12.1994,. Rs. 6.38 lakhs was waived off being ' ‘ ‘ he second resohedulement of payment. According to the Syntex, a total sum of Rs. 41.44 lakhs was repaid. The Syntex applied for reschedulement of the loan . ’ mount as the Unit became sick. The Syntex was required to pay principal amount of Rs. 22.17 lakhs in 10 half yearly installments from 01.10.95 to ‘ 01.04.2000. The interest was charged at the rate of 15.5% per annum on the rescheduled loan of Rs. 22.17 lakhs with penal interest at the rate of 4% per ’ annum. The Syntex paid a sum of Rs. 1 lack on 01.01.96. The Syntex further made a requestfor one time settlement of dues on 27.12.1995. Rs. 1.25 lakhs p was paid on 22.6.96. Thereafter, on 29.7.96, a sum of Rs. 2.5 lakhs was paid. On 23.09.97 (Annexure P/6) the Syntex requested the MPFC not to take over the a Unit and allow theSyntex time till 3lst November, 1997 to make the entire j payment of the balance amount. Thereafter, no payment was made. In the meantime, the MPFC took over possession of the property in dispute on ’ 19.09.97 and informed the Syntex» Vide letter dated 09.10.1997 (Annexure P75); v 3 t a . It was further infofmed that the Manager, (Technical) of the Corporat’iorihas . assessed resalable value of the assets to the tune of Rs. 26.70 lakhs for inviting offer for sale of the property—in—,dispute. The Syntex was further called upon to submit concrete proposal for liquidation of the dues of the Corporation and _ r running of the Unit, Within 7 days. Being aggrieved, the Syntex and M/s. Polytex _ Packing Pvt. Ltd, sister concern of the Syntex, filed a‘ writ petition in the High Court of Madhya Pradesh at Jabalpur, being W.P. No. 3960 of 1997. The High‘ j ‘ Court of Madhya Pradesh on 6.1 L97 (Annexure P/8) passed an interim order to the effect that the 'MPFC would not transfer or alienate the unit belonging to the ‘ petitioners therein. Later on, the writ petition was dismissed as withdrawn on g 12.7.2000 with liberty to file a separate writ petition on behalf of the petitioner No. 1 and 2. The MPFC, on 0310.2000 published a sale nOtice 'of several " 1 industrial units including the property in dispute in “Nav Bharat" news—paper. Inspection dates were fixed on 3rd and 4m November, 2000 and last date o'f submission of offer was 17.11.2000. Two offers, one from Spin PaCkagings and other Legend Distilleries/respondent No. 4 (hereinafter referred to as ‘the ; Legend’) were‘received. Spin Packagings‘made an offer of Rs. 5 lakhs for the I. i entirex‘a’ssiets. The Legend made offer for Rs. 6.25 lakhs for the land & building. :4 On the basis of two offers, the land & buildingwas sold to the Legend for‘Rs. 8 ' I; lakhs and the remaining loan liabilities of the Syntex was settled asRs. 12.99 > lakhs. According to the learned counsel for the Legend, the possession of the land &’ building was ’handed‘ over to the Legend on receipt of consideratiOn, on.i‘ , 29.11.2000. The plant & machinery was removed by the MPFC and was kept in 7 ‘ . safe custody. Being aggrieved, the Syntex have flled this petition seeking the j aforementioned reliefs, on 12. 12.2000; WRIT PETITION’No. 128 of 2001 This is a petition filed by Shri Salabh Chaturvedi (hereinafter referred to as fSalabh’) who claims to be a small scale industrialist engaged in the business of r 1 manufacturing of ointments. According t0 Salabh, the entire Unit was to be put' ', § on sale on “AS IS WHERE IS BASIS”. Therefore he could not make his offer ‘ for purchase of only the vacantland & building. The land & building was sold separately which was a clear departure from theterms of the advertisement. Had . i . t been in the advertisement, Salabh would have made offer for the vacant land i l & building. Thus, the sale is contrary to the advertisement. It was further stated ‘ that the petitioner contacted the office of the Branch Manager, MPFC 'with a query for purchase of land & building. He was told that the property was offered ' for sale on “AS IS WHERE IS BASIS”. There could be no change in terms and' n conditions. Under no circumstances, vacant land & building can be sold. Salabh ; had sent a letter dated 15.11.2000 (Annexure P/3) expressing his intention to in purchase land & building. Thus, the petitioner has filed this petition seeking a i- i writ' ini'the nature of certiorari to quash the sale order dated 25.11.2000 and t further restraining the Legend from doing any activity including business in the Industrial Area at the plot No 97/C Sirgitti It was further prayed that the , property in dispute be re advertised for fresh sale so that Salabh can get 3.: opportunity to partiCipate in the same Thus this petition was filed on: 24.01.2001. The petitioner‘filed a defective affidaVit for which Salabh was permitted to file proper affidavit by order dated 7.5.2008. . e i § t WRIT PETITION No. 2404 of 2004 This is a petition filed by M/s. Legend Distilleries Pvt. Ltd. Who was the purchaser of the land & building of the disputed property, seeking a relief that the order dated 5.7.2004 (Annexure P/lO) passed by the Chhattisgarh State Industrial Development Corporation, whereby lease dead of plot No. 97/C, Sirgitti Indusrial Area, Bilaspur, Could not be executed in favour of the petitioner on the ground that the dispute is pending in the High Court, be quashed. The Legend further sought direction for execution of the lease deed in favour of the Legend. 7. This Court, on 29.12.2000, in W.P. N0. 112/2000, passed the following order: “Shri Jain, learned counsel for respondent No. 4 submits that the petitioner obtained the interim order after making certain mis-representations. According to him, the petitioner made a submission before the Court that‘he was ready and willing t0 pay a sum of Rs. 12.95 lakhs towards the dues, but his entire unit was sold for Rs. 8 lakhs. According to him, the land and building have been sold to respondent No. 4 for 8 lakhs while the balance has to be adjusted for Rs. 12.99 lakhs. According to him, the plant and machinery are to remain with the petitioner on his paying Rs. 12.99 lakhs. Supporting the application, Shri Aradhe, learned counsel for respondents 1 to 3 submits that from the minutes AnneXure R-l annexed with the return of respondent Nos. l to 3, it would clearly appear that the land and building were to be sold for Rs. 8 lakhs and the balance settled amount of Rs. 12.99 lakhs are payable by the petitioner on or before 25.3.2001. He submits that the petitioner obtained the interim order by playing fraud upon the court and making mis- representation. Shri Manindra Shrivastava, learned counsel for the petitioner submits that from a perusal of the petition, it would ‘ . learly appear that the petitioner did not make any ‘ ; c misrepresentation rather, he clearly stated before the Court that the land and building were sold for a sum ofRs. 8 lakhs only. He, however, submits that the minutes Annexure R/l are forged and appears to have been concocted to suit the requirements of the respondents and as such no reliance can be placed upon .it. He also submits that the affidavit of the Executive Director came to the file subsequently and as such it cannot be relied upon. He further submits that if the minutes were timely recorded, it was expected of the respondents No. l to 3 to issue a letter to the etitioners to remove the plant & machinery. According to him, as no letter has been issued to the petitioner regarding the said roceedings, the foul is floating on the surface of the records. He urther submits that the possession was illegally taken and the affidavit of the Executive Director is contrary to minutes. He astly submits that how could the building and the land belonging to the petitioner be shown to be property of respondent N0. 4. in his application to the Excise Commissioner. He submits that everything Was fixed and the petitioner has been thrown out of the possession of his property unceremoniously; I have heard the parties and have perused the records. True, it is that the petition contains allegations that the land and building have been sold for Rs. 8 lakhs, but from the texture and tenor of the order passed by this Court, it appears that it was ubmitted before the Court that the petitioner was ready and ' i willing to pay Rs. 12.95 lakhs towards the dues, but his property was sold‘ for Rs. 8 lakhs. From the order, it does not appear that the petitioners’ plant & machinery wEre not to be sold for the same amount ofRs. 8 lakhs. So far as the question of ante-dated or fraudulent recording of the minutes are concerned, that would be a question to be seen at the {time of final hearing. The respondents have clearly stated ‘ t een removed and possession of the property has already beenw b hat the plant and machinery belonging to the petitioners have p p f l s given to respondent no 4 If that is so it would not be proper t say that every thing belonging to the petltloners was sold for lakhs 8 From a document annexed With annexure R-l, it cle appears that on 5/6—12-2000, a letter was sent by the MPFC‘to t petitioner informing him of the minutes. The said letter clearly peaks that the settled amount of Rs. 12.99 lakhs‘ is to be paid-‘by\ the petitioners on or before 25.03.2001. The letter further says ' that after due discussion; the Committee had approved for settlement of loan liabilities @ Rs. 12.99 lakhs after adjusting the sale proceeds of land & building. ~ The argument of the petitioners that their factory site was shown as the factory site for respondent No. 1 much before ' property was purchased by respondent No. 4 appears to be lucrative, but according to ShriJain, respondent no. 4 was not required to inform the Excise Commissioner that they wOuld open the plant at a particular site. Be that as it may, \thet'question for consideration is whether the stay order passed earlier deserves to be vacated 0r not? Having gone through the entire material available on the record I am of the opinion that the interim order granted by this Court deserves to be vacated It 1s accordingly vacated w1th the followmg terms and conditions I l l The plant and machinery belonging to the petitioners would be kept in safe custody by the MPFC until furtherorders from this ' ' f Court. Any damage to the said plant and machinery would make the MPFC liable for its reimbursement. Respondent No. 4 may proceed with the installation of his factory at his own risk to cost and consequences. It is made clear that if the p'etitibn is allowed the respondent No 4 would be required to remove his plant & machinery and restore the property to its original shape and Situation The vacation of the interim order shall not affect the merits'of the . ' ‘ matter and the petition shall be heard finally by this Court. R o; , ar hey '- s Q A (d) At the time of hearing, the respondent. MPFC shall place 0 _ records the original minutes recorded by the MPFC showing‘the I ‘ii alleged settlement of the dispute. The parties if still are of the opinion that they are required to flle certain more documents or additional pleadings, they may do so within 15 days from today.‘ The matter be listed for further hearing on 29m of January, 2001. Copy to all the partles today itself ” 8 Thls Court in W P No 128/2001 passed an order of status quo on the bas1s that ‘ no busmess was m ex1stence m plot No 97/C Slrgittl Industrial Area B1laspur Thereafter, it was clarified on 09.05.2001 as under: “Mr. Jain learned Sr. Counsel for the respondent Nor. '5 seeks larification as regards this Court’s order passed on 24.2.2001 hich was passed by way of clarification/modification of i earlier order of status quo passed on 1/2/2001. Mr. Jain submits i i ‘ that further clarification maytbe made by this Court that giving electricity connection and also grant of. factory licence and registration with D.I.C. should in no way directly affect the issue raised in this petition which otherwise appears to be in respect of sale deed dated 25/11/2000. It is the submission of Mr. Jain that such clarification will in no way cause any prejudice as regards respective claims on merits in the writ i ‘. t etition. 'On 24/2/2001 among other things, this Court had ' it stated as follows: _ J I J “Therefore, the order of status quo. in my View, should not I stand in'the way of issuing licence, if at all the respondent is eligible or entitled to the grant of licence. It is directed accordingly Mr Jain further submits that so far grant of license 1s concerned, there was a clear directlon from this Court that such r grant of licence shall depend upon eligibilityor entitlement of. respondent No. 5 which is for the Competent Authority to; _ ,A‘W I h ‘ c w p consider. If returns had been tiled by the réspondents,‘ the matter could have been examined on merit by now. Mr. Sanjay K Agrawal learned counsel representing respondent No 6 however prays for a short time to enable hrm to frle return Mr A Slnha learned counsel for petitioner also prays for a short time to file rejomder. It is stated by Mr. Jain that electricity connection, grant of factory-licence and also registration with D.IC. have been refused mainly on the ground that there is an order of status quo passed by this Court. It appears to me that this Court’s order dated 24/2/2001 is otherwise clear and there is n0 such direction except that there shall be status quo as regards the sale deed dated 25/1 1/2000. In the light of this Court’s clear order, the Competent Authority should examine and do the needful. Learned counsel for the petitioner states that there is nothing on record t0 show that- the Competent Authority has efused to give electricity connection; grant of factory licence and registration with D.IC., on the ground of order of status quo. If that be so, the entire matter is clear and this Court need not pass any further order as regards the interim orders that . have already been passed.” 9 Shri Manindra Shrivastava, learned senior counsel appearing with Shri Ashish L Shrivastava, learned Advocate would submit that despite the settlement havmg been arrived on 25.11.2000 to the effect that Syntex would pay the balance amount of Rs. 1.2.95 lakhs within a period of 15 days, MPFC proceeded with sale of the vacant land & building on 25.1 1.2000 as is clear from the affidavit of Shri N.K.Verma (Annexure P/l4). ‘Shri Verma, according to Shri Shrivastava had made an offer of Rs. 5 lakhs and further settle the amount of Rs. 12.95 lakhs' Within a period of 15 days The minutes of the meeting dated 25 11 2000 filed by Ml’FC does not contain signature of Shri Verma Thus the same cannot be relied on. Shri Verina is an independent person and his affidaVit may be LT“ a p V‘ r accepted. Shri Shrivastava would further contend that the minutes of the ‘ meeting dated 25.11.2000 (Annexure R/l) should be rejected as tit does notv 1 contain signature of Syntex. MPFC has not explained about the procedure - adopted for recording of the minutes of the meeting. 10. Shri Shrivastava would next contend that the sale notice was for sale of the entire industrial unit on “AS IS WHERE IS BASIS”. The offer of Legend was only in respect of the vacant. land & building. The same ought to have been rejected as Salabh had also written that‘if the sale of vacant land & building was ‘ permissible, he should have been informed. M/s. Spin Packagings Pvt. Ltd. made‘ an offer for the entire unit and Legend made the offer for onlyland & building, g 1 which was accepted by MPFC. The same is contrary to the terms and conditions of the sale notice published on 3.10.2000, in the newspaper. Members present in l the meeting namely Shri C.K.K.Nair and Shri Alok Chandravanshi have also- filed their affidavit in this Court stating that SynteX has agreed for sale of land & i building and agreed to remove the plant and machinery. The affidavit of Shri Bhojane, Executive Director, MI)FC may not be believed as the same is notv supported by affidavits of other persons. The sale letter dated 25.11.2000 was § not endorsed to Syntex for removing the plant and machinery. The letter dated v i 5/6.12.2000 to Syntexprovides for payment of settled amount of Rs. 12.99 lakhs ' on or before 25.03.2001 after sale of the land .& building. The land & building: was sold for a sum of Rs. 8 lakhs to the Legend and the Syntex was directed to pay a sum of Rs. 12.99 lakhs after sale of the land & building. Thus, the SynteX ; was liable to pay‘a sum of Rs. 20.99 lakhs in the month of March,'2001./Syntex has disputed the affidavit of Shr Thoms aew ls. i a Mth ao : ' ? 11.Shri Shrivastava Would further contend that the action of MPFC to sell out a portion of the Industrial Unit i.e. the land & building to the Legend, ignoring their own valuation report is arbitrary, malaflde and gross abuse and misuse of power conferred under section 29 of the Act, 1951; The sale notice'indioates sale of Industrial Unit. Accordingly, Spin Packagings made offer for the entire unit and the Legend made an offer for only the land & building. Salabh could not‘ make offer as he was told that the entlre 1ndustr1al un1t was for sale and not only the land & building Thus it appears to be a clandestine deal between the MPFC and the Legend as even the MPFC could not procure the sale price as per the valuation of MPFC and as such