IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 09.08.2011 CORAM THE HON'BLE MRS. JUSTICE R.BANUMATHI and THE HON'BLE MR. JUSTICE V.PERIA KARUPPIAH O.S.A.Nos.58, 59, 63, 64 and 81 of 2011 & Company Application No.1038 of 2006 in Company Petition No.229 of 2004 ORDER (Order of the Court was made by R.BANUMATHI,J) Heard Mr.G.Masilamani, learned Senior Counsel appearing along with M/s.King and Patridge for IREDA. We have heard Mr.Ravi, appearing for Arunachalam Sugar Mills on behalf of M/s.Gupta Ravi. We have also heard Mr.S.R.Sundar, learned counsel appearing for the Official Liquidator. We have heard Mr.S.Vasudevan, appearing for Sundaram Finance Limited. We have also heard Mr.T.K.Ramkumar, appearing for City Union Bank and Mr.N.Muthukumar, on behalf of Dr.Anitha Sumanth appearing for BHEL. 2. In our Judgment dated 12.04.2011, we have ordered sale of assets  land, building, plant, machineries and other immovable assets of Arunachalam Sugar Mills Limited [ASM] at Rs.204.46 crores. Since there were no bidders for the said value, by the order dated 23.06.2011, the learned single Judge has directed the matter to be placed before the Division Bench for fixing the upset price of the assets of the Company in liquidation [ASM]. 3. By our order dated 06.07.2011, we have directed ITCOT Consultancy and Services Limited to re- assess the present value of assets of ASM and file a valuation report. Accordingly, ITCOT Consultancy and Services Limited has filed the valuation report in respect of the subject property. Sealed cover containing the report was opened in the presence of the counsels in the open Court and in the report, the land, plant, buildings and machineries are all valued at Rs.99.35 crores. 4. Mr.Ravi, learned counsel appearing for Arunachalam Sugar Mills [ASM] as well as Mr.T.K.Ramkumar, learned counsel appearing for City Union Bank submitted that it would be appropriate, if separate valuation is indicated for the machineries of New Horizon Sugar Mills [NHSM] installed in ASM and for the machineries of Sundaram Finance installed in ASM. It was submitted that the said separate valuation would be very much useful while considering the question of apportionment and other aspects. By our order dated 05.08.2011, we have directed the Official Liquidator to get separate valuation for the machineries of NHSM installed in ASM and also the machineries of Sundaram Finance installed in ASM. Accordingly, ITCOT Consultancy and Services Limited has filed the report giving separate valuation for the (i) assets reported to be charged to IREDA; (ii) assets reported to be belonging to NHSM installed in ASM; (iii) assets of Sundaram Finance Limited and other assets. The separate valuation given by the ITCOT Consultancy and Services Limited is as under:- Sl. No. Charge Holder / Owner Value of the Assets in Rs. Crores 1 Assets reported to be charged to IREDA  Efficient Equipment Plant 6.91 2 Assets reported to be charged to IREDA  Cogeneration 20.11 3 Assets reported to be belonging to M/s.New Horizon Sugar Mills Limited 9.65 4 Assets reported to be charged to M/s.Sundaram Finance Limited 4.41 5 Assets claimed by more than one secured creditors: (a) M/s.Walchandnagar Industries Limited & IREDA Cogeneration (b) M/s.New Horizon Sugar Mills & M/s.Sundaram Finance Limited 4.61 0.11 6 Assets not classified/Yet to be classified (including current assets) 5.17 Total value of the Movable Assets 50.97 Insofar as Sl.Nos.1 to 4: the same shall be form part of the record which shall be taken note of at the time of passing the final orders and distribution of the assets. Insofar as Sl.No.5(a) : the assets claimed by M/s.Walchandnagar Industries Limited, in Paragraph-124 of our Judgment dated 12.04.2011, we have already held that M/s.Walchandnagar Industries Limited has no right of preference in view of the filing of the Civil suit and Execution Proceedings and therefore, Sl.No.5(a) is ordered to be deleted. 5. Insofar as Sl.No.5(b) stated as assets of M/s.New Horizon Sugar Mills and Sundaram Finance Limited, it was submitted that the machineries are charged to Sundaram Finance Limited and therefore, name of M/s.New Horizon Sugar Mills is ordered to be deleted in Sl.No.5(b). However, the learned counsel Mr.Ravi appearing for ASM would fairly submit that the amount of sale proceeds has to go to Sundaram Finance Limited. 6. Insofar as Sl.No.6, the same shall remain as it is. The above separate valuation is only for the purpose of record and not intended for separate sale of the above machineries. Notwithstanding their separate valuation of the above machineries, machineries of NHSM installed in ASM and the machineries of Sundaram Finance installed in ASM and other machineries shall be sold along with the other plant, machineries as an integrated unit. 7. Official Liquidator has filed report stating that ITCOT Consultancy and Services Limited has valued the property two times i.e., in 2008 and 2011 and submitted their bills for valuation charges for Rs.15,09,950/- and Rs.17,09,926/- respectively. After taking into account remittance of Rs.1,00,000/- by Sundaram Finance, an amount of Rs.31,19,876/- is payable to ITCOT Consultancy and Services Limited as professional charges for assessing the valuation. The Official Liquidator has submitted that the said amount of Rs.31,19,876/- is payable to ITCOT Consultancy and Services Limited which has to be reimbursed by IREDA. Since the bills for valuation charges appear to be based upon percentage on the total value of the assets valued, we have directed the Official Liquidator to get the revised bills for valuation charges from ITCOT Consultancy and Services limited. Accordingly, the Official Liquidator has filed the report stating that ITCOT Consultancy and Services Limited has revised its fees to Rs.30,38,933/-. 8. Mr.G.Masilamani, learned Senior Counsel appearing for IREDA has drawn our attention to the invoice dated 13.02.2005 of ITCOT Consultancy and Services Limited addressed to IREDA charging the professional fees for the Inventory and Valuation of assets of ASM at Rs.6,61,200/- in 2005. In our considered view the revised fees charged by ITCOT Consultancy and Services Limited at Rs.30,38,933/- appears to be very much on the higher side. Actually, ITCOT Consultancy and Services Limited were re-assessing the value. Taking into account the invoice dated 13.02.2005, we deem it appropriate to order payment of the professional fees for ITCOT Consultancy and Services Limited for Inventory and Valuation of assets of ASM at Rs.13,22,400/- [Rs.6,61,200 x 2 = 13,22,400/-] for the valuation of the assets two times, one in 2008 and another in 2011. The said professional fees of Rs.13,22,400/- payable to ITCOT Consultancy and Services Limited is ordered to be shared by IREDA and Sundaram Finance equally. However, it is made clear that the said charges towards ITCOT Consultancy and Services Limited for valuation shall be reimbursed as first preference claim from out of the sale proceeds of the assets of ASM. 9. Insofar as the advertisement charges, in the report dated 04.08.2011, the Official Liquidator has stated that he had incurred expenses of Rs.11,09,076/- from Common Establishment Charges Account of the Official Liquidator. In Paragraph-135 of our Judgment dated 12.04.2011, we have already held that "the cost of paper publication in the English Daily and the Vernacular Daily shall be borne by the Official Liquidator which can be reimbursed from out of the sale proceeds". The same order shall hold good insofar as the expenses incurred towards paper publication i.e. for the earlier publication as well as for the publication to be effected. 10. Accepting the valuation report of ITCOT Consultancy and Services Limited, the valuation of land, plant, buildings, machineries and other movable assets of ASM are taken as Rs.99.35 crores as under:- 1.Land (125.66 Acres) : Rs.37.70 Crores 2.Buildings and other civil structures : Rs.10.68 Crores 3.Plant & Machinery and current assets : Rs.50.97 Crores ---------- Rs.99.35 Crores ---------- 11. In the result, the Official Liquidator is directed to effect publication in one edition of the English Daily "THE HINDU" in all the editions throughout India and one edition of the Tamil Daily "DAILY THANTHI" throughout Tamil Nadu inviting sealed tenders for the purchase of the assets, both movable and immovable belonging to the Company in liquidation  Arunachalam Sugar Mills and financed by IREDA and Sundaram Finance Limited. The publication shall indicate that it is issued by the Official Liquidator both on his behalf and on behalf of IREDA and other secured creditors in respect of the assets of the Company in liquidation as well as the machineries of New Horizon Sugar Mills Limited, now lying in the factory premises of Arunachalam Sugar Mills. The paper publication shall be effected on or before 29.08.2011. The last date for receipt of tenders shall be indicated as 10.10.2011 and the date of auction shall be fixed as 17.10.2011. The cost of Tender Forms is fixed at Rs.1000/-. The publication shall indicate that the Tender Forms shall be accompanied by Demand Drafts/Pay Orders for an amount representing 5% of the bid amount towards Earnest Money Deposit. The publication shall indicate that the Tender Forms along with the Demand Draft/Pay Order shall be sent in a sealed cover addressed to the Registrar General, High Court, Madras on or before the date indicated above viz., 10.10.2011. The upset price shall be indicated in the paper publication as follows:- 1. Land (125.66 Acres) : Rs.37.70 Crores 2. Buildings and other civil structures : Rs.10.68 Crores 3. Plant & Machinery and current assets : Rs.50.97 Crores ---------- Rs.99.35 Crores ---------- 12. The paper publication shall also indicate that the intending purchasers who wish to inspect the properties may give an intimation to the Official Liquidator and that upon an intimation being delivered by the intending purchasers, the Official Liquidator will arrange an inspection at the convenience of the Official Liquidator and Tenderers. The Official Liquidator shall also cooperate with the intending purchasers to arrange for the inspection of the premises and the machineries without any delay. If necessary the Official Liquidator shall seek adequate police protection from the Superintendent of Police of the District, on the dates of inspection. Upon production of a copy of this order by the Official Liquidator, the Superintendent of Police of the District concerned shall provide adequate police protection to ensure smooth inspection on the dates indicated above. It is open to the Officials of IREDA, the officials of Sundaram Finanace and other secured creditors/non-secured creditors and the representatives of the Company in liquidation  Arunachalam Sugar Mills to accompany the Officials/Deputy Official Liquidator, on the dates of the inspection along with the intending purchasers. The cost of the paper publication in the English Daily and the Vernacular Daily shall be borne by the Official Liquidator, which can be reimbursed from out of the sale proceeds. Apart from issuing paper publications, the Official Liquidator shall also send intimation of the proposed sale to the leading Sugar Mills in the country including (i) Ambica Sugar Mills which already offered to purchase for Rs.135.50 crores; (ii) the Sugar Mills which already evinced interest in buying these properties by tendering letters of offer and also to Mr.Ramachandran, who made offer for investment; and also to (iii) the Sugar Mill which purchased the properties of New Horizon Sugar Mills Limited. 13. 125 acres of ASM and the machineries thereon are situated in Malapambady, Thiruvannamalai District. Since it is Sugar Mill, State of Tamil Nadu might be willing to go in for purchase by participating in the public auction so that the Mill would be a boon for local development. Therefore, we are of the view that notice shall also be served upon the Government of Tamil Nadu. Copy is also directed to be marked to the learned Advocate-General and the learned Advocate-General shall take up the matter with the Government of Tamil Nadu to know whether Government of Tamil Nadu desires to participate in the public auction. 14. In order to avoid any confusion, it is made clear at the cost of repetition that the news paper publications inviting tenders, should contain the following details:- (i)The upset price of the land, building, plant and machinery and other movables, as detailed in the preceding paragraph. (ii)The cost of the Tender Forms, the last date for submission of tenders, the dates for inspection and the date of auction. (iii)The fact that the Tender Forms should be accompanied by Demand Draft/Pay Order representing 5% of the bid amount quoted by the tenderer towards Earnest Money Deposit. (iv)The fact that the sealed tenders are to be submitted along with the Pay Order/Demand Draft, addressed to the Registrar General, High Court, Madras on or before 10.10.2011. (v)Indicating that the tenders will be opened and the auction amongst the tenderers will be held before the single Judge on 17.10.2011. (vi)The fact that it is issued by the Official Liquidator both on his behalf and on behalf of IREDA as well as Sundaram Finanace Limited and the secured creditors and non-secured creditors in respect of the assets of the Company in liquidation  Arunachalam Sugar Mills as well as the machineries of New Horizon Sugar Mills, now lying in the factory premises of the Company in liquidation. 15. The matter shall be listed before the single Judge on 10.10.2011 i.e., the last date for receipt of sealed tenders. The learned single Judge shall then call the matter on 17.10.2011 for the conduct of auction and the parties and interested bidders are directed to appear before the single Judge. It is open to the Official Liquidator/IREDA to seek any further clarification, if necessary. Consequently, connected M.Ps. are closed. bbr Note: Office is directed to send copy of this order to the learned Advocate General forthwith