POYSHA POWER GENERATION (P) LTD. Vs. REGISTRAR

JUDGEMENT

(1.) The petitioner has come forward with this writ petition challenging the legality and/or correctness of the order dtd. 31/8/2017 passed by the first respondent in I.A. No. 253 of 2016 in S.A. No. 338 of 2014 and to quash the same and consequently to direct the second respondent to refund the sum of Rs.6,78,75,000.00 (Rupees Six Crores Seventy Eight Lakhs Seventy Five Thousand Only) together with interest calculated at 24% per annum from 14/11/2014 till the date of payment.

(2.) The petitioner is a company incorporated under the provisions of the Companies Act, 1956 and engaged in power generation business by installing wind mills located in various parts of the Country. During the course of it's business, the petitioner came across a notification dtd. 9/10/2014 issued by the second respondent bank pertaining to e-auction under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short SARFAESI Act). As per the said notification dtd. 9/10/2014, it was stated that the third respondent is a company incorporated under the provisions of the Companies Act and engaged in the business of generating electricity by installing Wind Mills in various places. It was further stated that in the year 2009, the second respondent bank had extended financial assistance to the third respondent to the tune of Rs.45.70 Crores for setting up of 6 wind mills of 1.65 MW capacity each at Theni District, Tamil Nadu. It was further stated that as the third respondent became a sick industry and unable to repay it's debts, on 31/10/2013, the third respondent made a reference to the Board of Directors for Industrial and Financial Reconstruction (BIFR) and it was taken on file as Case No. 70 of 2013. In such reference made by the third respondent bank before the BIFR, the second respondent also participated and the second respondent is fully aware of the pendency of the proceedings before the BIFR. While so, the second respondent bank had initiated action under Sec. 13 (2) of the SARFAESI Act by issuing a notice dtd. 5/6/2014 to the third respondent and thereafter, taken possession of the secured assets viz., wind mills installed by the third respondent. It is in those circumstances, the second respondent bank had issued the e-auction notice dtd. 9/10/2014 under Sec. 13 (4) of the SARFAESI Act. The notice dtd. 9/10/2014 was published in two newspapers - one in English Daily "Indian Express" and the other in Tamil Daily "Dinamani" indicating that 4 Nos. of Wind Turbine Generator (WTG) of 1.69 MW (Vestas Make) mortgaged with it by the third respondent and installed at Theni District are to be auctioned for recovery of the defaulted loan amount of Rs.42.37 Crores (approximately) to the second respondent. Accordingly, an e-auction was scheduled to take place on 14/11/2014 fixing the reserve price at Rs.25.00 Crores out of which 10% of the reserve price was fixed as Earnest Money Deposit and it was directed to be deposited on or before 12/11/2014 before 1.30 pm. As per the e-auction notification dtd. 9/10/2014, the successful bidder has to deposit 25% of the bid amount immediately upon confirmation of the auction and the balance 75% of the amount has to be deposited within 15 days of confirmation of auction sale. However, in default, the amount deposited would be forfeited and the second respondent bank will be at liberty to re-auction the secured assets. According to the petitioner, in the e-auction notice, it was categorically mentioned that "there are no encumbrances known to the respondent bank on the property". As the petitioner submitted their application to participate in the e-auction, M/s. Core Asset Organisation Services Private Limited, e-auction sales support team appointed by the second respondent bank, furnished to the petitioner the details with respect to e-auction to be conducted on 14/11/2014 by an e-mail dtd. 8/11/2014 inter alia the terms and conditions of the e-auction.

(3.) According to the petitioner, even before the e-auction to be conducted on 14/11/2014, the third respondent moved the BIFR by filing an application on 26/8/2014 and the second respondent/bank was also fully aware of the same. However, the filing of an application by the third respondent before the BIFR was conveniently suppressed by the second respondent in the e-auction notification and the second respondent went on to state that the property, which is the subject matter of the e-auction, is free from any encumbrance. However, the petitioner without being aware of the application filed by the third respondent expressed their inclination to participate in the e-auction. Even before participating in the e-auction, the petitioner made it clear that in case the petitioner being adjudged as the highest bidder and deposits 25% of the amount, the bank shall confirm the sale immediately without withholding the amount deposited by them for any reason whatsoever. In other words, the petitioner made it clear that if they are declared as the highest bidder in the auction, the sale has to be confirmed in their favour without any loss of time.