PRIME INDUSTRIES Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) The applicant, who is one of the unsecured creditors of M/s B.S. Refrigerators Ltd. (hereinafter referred to as to the 'Company in liquidation') had instituted the petition in Co.P. No. 185/2002 seeking winding up. The said petition along with the connected petitions were considered by this Court and by the order dated 18.08.2010 allowed the petitions and ordered the winding up of the Company in liquidation. The second respondent which is the Asset Reconstruction Company under assignment agreement from the secured creditors viz., State Bank of Mysore, Bank of Baroda and ICICI Bank, has exercised its right under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI' Act). In that context, the second respondent herein had objected to the passing of the winding up order. But, this Court on holding that the secured creditor's right to sell the secured asset is not affected, had rejected the objections and proceeded to pass the order of winding up. Subsequent thereto, the second respondent has taken steps for sale of the properties belonging to the Company in liquidation as provided under the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as 'Enforcement Rules') and movable assets are already sold. In the said process, the second respondent is contemplating sale of the immovable property by private treaty. The applicant, apprehending that the said process would not fetch the true value, is before this Court in this application praying that the second respondent be restrained from selling the assets by private negotiation, instead to follow a transparent process. The concern of the applicant is that if the real value is realised, the other creditors also could be settled.

(2.) The second respondent apart from justifying the action with regard to the sale of plant and machinery has further asserted the right to sell the property without any fetters. The decision to sell the property by private treaty is sought to be justified by contending that the repeated effort made by them by causing advertisements has not yielded any results and as such the present course is adopted which is also permissible under the Enforcement Rules. Without prejudice to its contentions, the second respondent has conceded that it is willing to once again advertise and call for the highest bidders. The first respondent Official Liquidator has however sought to support the case of the applicant relating to adoption of proper procedure for selling the property belonging to the Company in liquidation by associating the Official Liquidator. It is the case of the first respondent that it has equal right along with the second respondent so as to protect the interest of all the creditors who are entitled.

(3.) Heard Sri Sriranga, learned counsel for the applicant, Sri K.S. Mahadevan, learned counsel for the first respondent and Sri Udaya Holla, learned senior counsel on behalf of Sri Venkatesh Dodderi, learned counsel for second respondent and perused the materials on record.