KOHINOOR FOODS LTD Vs. J K SYNTHETICS LTD

JUDGEMENT

(1.) M/s. J. K. Synthetics Ltd. is a sick company within the meaning of Sick industrial Companies (Special Provisions) Act, 1985, hereinafter called 'sica' for short. A scheme for its rehabilitation appears to have been approved under the provisions of the Act by the Appellate Authority for industrial and Financial Reconstruction. By an order dated 21st January, 2003 passed in Appeal No. 301/2000 arising out of BIFR Case No. 22/98, the aaifr constituted what is described as an Assets Sales Committee for the sale of surplus assets of the sick company by inviting offers through advertisements. The Committee comprised a representative of the IDBI, the operating agency, the Managing Director or Executive Director of a sick company and a representative of the State Bank of India which happens to be the lead bank. The AAIFR also authorized the Assets Sales Committee to formulate the procedure for disposal of the surplus assets and to submit a report on the same to the BIFR who was then to take a decision in the matter in accordance with law. The relevant portion of the order passed by the AAIFR reads:

(2.) THE Assets Sale Committee accordingly issued advertisements and invited bids from intending purchasers of the surplus assets that comprised four flats and a guest house situated in Mumbai, Flats in Delhi and Ajmer palace at Kota. In response to the said advertisements, the petitioner in w. P. (C)4979/2007 offered a bid of Rs. 1,82,84,000/- for a flat in the Masjid moth area of Greater Kailash -II, New Delhi. Negotiations held before the committee on 10th December, 2005, however, resulted in the enhancement of the amount offered by the petitioner in the said petition to Rs. 2. 70 Crores. The Assets Sale Committee found the said amount to be reasonable and accordingly recommended its acceptance to the AAIFR. The AAIFR heard the matter on 31st August, 2006 but declined to approve the bid offered by the petitioner in terms of its order dated 31st May, 2007 impugned in this petition. The AAIFR was of the opinion that since the value of the properties would have substantially increased between the date the bid was made and the date of the order, it would not be appropriate to confirm the sale in favour of any of the bidders. It was also of the view that before proceeding with the sale of the assets, a fresh evaluation should be done in order to ensure that the optimum price is realized for the asset. The Committee was accordingly directed to get the surplus asset of the sick company revalued and fix a reserve price. It was also authorized to accept any bid which was higher than the reserve price but if the bid was lower than the reserve price, it was directed to submit a report to the BIFR for further directions. In para 7 of the said order is under challenge which reads:

(3.) A valuation report was pursuant to the above direction prepared by the Asset Sale Committee in respect of each one of the assets being offered for sale. Insofar as the value of the property for which petitioner, Kohinoor foods Ltd. had offered a bid, the Assets Sale Committee fixed a reserve price of Rs. 4. 25 crores. On the basis of the said valuation, fresh bids were called by the Committee in response to which it received two bids one of which was offered by the petitioner. These bids were forwarded to this Court in terms of an order dated 12th July, 2007. Petitioner, Kohinoor Foods Ltd. has filed w. P. (C)4979/2007 to assail the validity of the order passed by AAIFR directing fresh evaluation and invitation of bids. Since however the petitioners had approached the Supreme Court by way of a Special Leave petition against the order of this Court dated 12th July, 2007 and obtained an order directing maintenance of status quo, the bids received by this Court have not been opened so far.