1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORGINAL CIVIL JURISDICTION APPEAL (LODGING) NO. 375 OF 2008 IN COURT RECEIVER REPORT NO. 172 OF 2008 IN SUIT NO. 434 OF 2003 Rasiklal S Mardia ) Ex-Chairman & Managing Director of ) Mardia Chemicals Ltd. (In Liquidation) ) 183, Manekbaug Society, Ambawadi ) Ahmedabad 380 015 ).. APPELLANTs VERSUS ICICI Bank Limited (Debenture Trustee) ) ICICI Bank Limited ) Bandra-Kurla Complex ) Bandra (East), Mumbai 400 051 ) AND Official Liquidator attached to ) Hon'ble High Court of Gujarat ) the Liquidator of Mardia Chemicals Ltd. ) Jivabhai Chambers, Ashram Road ) Ahmedabad 380 009 ).. RESPONDENTS Mr Gaurav Joshi a/w Mr D P Desai for the Appellant. Mr BirendraSaraf with Mr Sachin Chandarana with Mr Sheerish Oak and Ms Priyanka Vegad i/b M.K. Ambalal & Co. for Respondent No.1 Bank. Mr Devasis Mitra, Official Liquidator, Gujarat. 2 Mr K L Vyas, Court Receiver. CORAM : SWATANTER KUMAR, C.J. & A.P. DESHPANDE, J. JUDGMENT RESERVED ON : 13TH AUGUST 2008 JUDGMENT PRONOUNCED ON : 29TH AUGUST 2008 JUDGMENT (Per Swatanter Kumar, C.J.) ICICI Bank Limited filed Suit No. 434 of 2003 against Maradi Chemicals Limited (hereinafter referred to as “the Company”) for recovery of their dues in their capacity as Debenture Trustees. In the said Suit, Notice of Motion No. 364 of 2003 was taken out for interim reliefs including for appointment of a Court Receiver. The Court vide its order dated 13th August 2004 allowed the Notice of Motion and appointed the Court Receiver with certain directions. In furtherance to the orders of the Court, the Court Receiver took possession of the property on 2nd March 2005. After some time, proceedings against the Company were taken out and it was ordered to be wound up by the Gujarat High Court vide its order dated 3rd August 2005. There were complaints of pilferage of the movable 3 properties of the Company and the Court Receiver of this Court held a meeting at the site on 27th April 2007 and it was noticed that certain materials were missing and even an inventory was prepared. There were large machineries, components and other items which took a considerable time in preparation of inventory. The Court receiver filed different reports from time to time before this Court. The properties were directed to be sold and two different inventory reports dated 9th November 2005 and 7th July 2006 were prepared. The present Appellant, who claims to be a Director of the Company, filed an application for attending the meetings and proceedings of the Court Receiver. On 18th December 2007, the Court Receiver fixed an appointment at the site for verification and to comply with the directions contained in the order dated 29th November 2007. The Valuer wrote a letter to the Court Receiver informing him of his readiness to carry out the inventory subject to such a list of missing items being supplied to him prior to the visit. The Court Receiver referred the said letter to the Appellant. Finally, after this representative visited the suit site, the Court Receiver submitted his 4 Report No. 172 of 2008 to the Court. In the Report, the Court Receiver gave various details and prayed before the Court and sought directions in regard to the following : (a) that Shri Rasiklal S Mardia, Ex-Chairman and Managing Director of 1st Defendant Company (in Liquidation), be directed to submit list of missing movables/machinery to enable the Panel Valuer to physically verify the same. (b) whether alternatively a fresh inventory of movables and machinery be carried out and comply the order dated 20th November 2007. (c) In the event of any theft and/or missing items are found at the time of verification of the movables machineries the Court Receiver and/or aggrieved parties be permitted to invoke Indemnity furnished by M/s Check Mate Services Ltd., the Security Agency deployed by Plaintiffs to safeguard the factory premises. (d) Any other directions that this Hon'ble Court may deem fit in the matter. (e) Cost of this application and the order to be made thereon be fixed at Rs.1000/-. 2. The Appellant also filed his reply affidavit on 27th May 5 2008. When the Report and the affidavit came up for hearing, the Court passed the order dated 19th June, 2008 primarily dealing with the Report of the Court Receiver and also observed that a specific objection was being taken that the applicant is an outsider as a past Director of the Company in liquidation and cannot be heard. However, the Court, in the interest of justice and to see prima facie that there is indeed theft of some movable genuinely informed the Court, he was heard. The Court Receiver had also written a letter dated 27th March 2008 to the Police Station at Surendranagar, Gujarat to obtain particulars of the alleged theft in furtherance to the FIR alleged to have been registered with the Police Station. The Court also noticed that the earlier orders of the Court particularly that of 13th August 2004 had not been complied in entirety and the property need to be sold and directed “the Court Receiver shall forthwith proceed with the work of sale of all the units of the 1st Defendant-Company”. The applicant-Appellant claims that he is aggrieved by the order dated 19th June 2008 and has filed the present Appeal against that order. 6 3. We may notice at the very outset that the very locus standi of the Appellant has been rightly questioned in the present Appeal. The Appellant is neither a party to the Suit nor has been ordered to be impleaded as a party in the proceedings before the Court Receiver. The sale of the property had been directed by the Court vide its order dated 19th June 2008 has not been complied with. For whatever reason it may be, but the fact is that the properties in question have not been put to sale as yet despite various directions of the Court and now the allegations after allegations are being made that the movable property of the Company is missing and/or there has been a theft. It is not in dispute before us that at one point of time a complete inventory was prepared with the help of the Valuer. Whatever are the circumstances, it is in nobody' s interest that the property of the Company should not be protected. We are of the considered view that the Appellant has no substantive right in any of the proceedings and as such cannot delay the proceedings any further. If the property and the plaint and machinery is not sold at the earliest, it will jeopardise the interest not only of the Bank but even of the Company 7 as they would stand to lose in terms of value as the plant and machinery is bound to depreciate with the passage of time. As has been noticed by the learned Single Judge that the Court Receiver should look into the question of theft, but, however, it failed short of directing reconfirming of the inventory. Firstly, there were no applications filed by the Appellant which has been dealt with or disposed of by the impugned order. It is only the Receiver's application in which he voluntarily filed an affidavit which was looked into by the Court in order to examine the prima facie case as well as to protect the interest of the Company as well as the Bank. 4. In the present Appeal, the Court Receiver has also filed a proposed schedule of the sale of the building, plant and machinery of the Company on as is where is basis. We have heard the learned Counsel appearing for the parties and we are of the considered view that the schedule submitted by the Court Receiver needs to be modified to a limited extent that the period of inspection of the plant should be over a larger period than specified. The schedule is thus 8 specified as under :- 7th September 2008 The advertisement in newspapers viz. Economic Times (In English) and Gujarat Samachar (in Gujarati) shall be published. 11th September to Inspection to be provided to the 14th September 2008 prospective purchasers from 11.00 a.m. to 5.00 p.m. at the site at Surendranagar. 16th September 2008 The intending offerers to submit their offer along with Demand Draft/Pay Order/ or Banker's cheque in the sum of Rs. 5.00 crores in favour of Court Receiver, High Court, Bombay payable at Mumbai and should reach the office of the Court Receiver on or before 4.00 p.m. by 16th September 2008. 17th September 2008 The Auction Sale will be held in at 12.00 noon. the office of the Court Receiver, High Court, Mumbai 5. The terms and conditions of sale have been submitted by the Court Receiver along with the draft of public notice. In our 9 opinion, the same is in order. There is no objection raised by the learned Counsel appearing for the Official Liquidator, Gujarat High Court and as far as the Appellant is concerned, he hardly has any locus in this regard and nothing material was pointed out in these proposed terms and conditions. 6. In view of the above, we disposed of the present Appeal with the following directions :- (a) The Court Receiver shall ensure that the property is put to auction in terms of the orders of the Court dated 13th August 2004 and 19th June 2008 which have already attained finality. (b) The Court Receiver shall strictly adhere to the schedule of sale mentioned in this order. (c) The Court Receiver shall make every effort to confirm if there are any properties of the Company missing from the site in question by verifying the 10 inventory already prepared. (d) Strict arrangement shall be made henceforth by the concerned persons for employing stringent security to ensure that no damage is done to the property and no property is moved from the premises in question till it is put to sale. (e) The Court Receiver shall also take steps in accordance with law if any property is found to be missing and pursue the matter with the concerned Police Station. (f) The Official Liquidator of the Company shall fully co-operate with the Court Receiver of this Court and ensure compliance of the orders of the Court. 7. Appeal is disposed of accordingly. Parties to bear their own costs. CHIEF JUSTICE 11 A.P. DESHPANDE, J