IN THE MATTER OF M/S U.P.STATE CEMENT CORPORATION LTD.

High Court of Judicature at Allahabad

Indian Supreme Court Cases / Judgements / Legislation

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In The Matter Of M/S U.P.State Cement Corporation Ltd. - MISC. COMPANY APPLICATION No. 4 of 1997 [2006] RD-AH 3525 (15 February 2006)

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HIGH COURT OF JUDICATURE OF ALLAHABAD

In Chamber

MISC. COMPANY APPLICATION NO. 4 OF 1997

In the matter of : U.P. STATE CEMENT CORPORATION LTD.

(IN LIQUIDATION)

Hon'ble Sunil Ambwani, J.

Present Shri Ashok Mehta, learned counsel for the Official Liquidator; Shri S.K. Saxena, Official Liquidator; Shri A.K. Upadhyay, Ex Manager; Finance and Accounts, U.P. State Cement Corporation Ltd. (In Liq.);  Shri Navin Sinha, Senior Advocate, Assisted by Shri Yashwant Verma for M/s Jaiprakash Associates Ltd; Shri Om Prakash Misra for Kotak Mahindra Ltd and IFCI; Shri Anjani Kumar Misra for IDBI; Shri P.N. Tripathi for Allahabad Bank and Shri Anil Mehrotra for State of U.P.

The Official Liquidator has submitted his Report No. 33 of 2006,  annexing therewith the proceedings of the  Asset Sale Committee dated 8.2.2006 which has approved the payment schedule offered by the highest bidder. M/s Jaiprakash Associates Ltd. the highest bidder  has deposited demand drafts totalling  Rs. 114,75,00000/- (One Hundred and Fourteen Crores and Seventy Five Lacs only) which is 25% of its offer. The details of which are given as follows;

1.Demand draft No. 009366 dated 13.2.2006 drawn at UTI Bank Ltd. Allahabad, in favour of Official Liquidator, U.P. & Uttaranchal for Rs. 86,25,00000/-.

2.Demand draft No. 051100 dated 13.2.2006 drawn at U.T.I. Bank Ltd. Allahabad in favour of Official Liquidator, U.P. and Uttaranchal for Rs. 28,50,00000/-

M/s Jaiprakash Associates has also submitted a set of  Bank guarantees of the five Banks totalling   Rs. 91,80,00000/- with date of expiry 3.5.2006;  second set of  Bank guarantees of four banks  totalling  Rs.91,80,00000/- with date of expiry 30.6.2006 and third set of bank guarantees of four banks of Rs. 150,65,00000/- with expiry date 4.10.2006. The total amount   guaranteed by the Banks is 334,25,00000/- which is 75% of the offer. The banks guarantees shall be checked and verified  by the

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Official Liquidator.

The Banks guarantees have been submitted for due payment of the three instalments payable on 18.4.2006 (20%); 15.6.2006 (20%); and  the last on  19.9.2006 (35%) including earnest money already paid by the Company.

Shri Navin Sinha, learned Senior Counsel appearing for M/s Jaiprakash Associates Ltd. states that during the course of the meeting of the Asset Sale Committee, it was observed that the reliefs and concessions were linked with the one time settlement by Banks and Financial Institutions. He seeks a clarification in this regard,  for the purposes of financial arrangements  with the Banks .

It was made clear in the order dated 14.6.2002, that the State Government shall abide by the same  reliefs and concessions which it has offered to any of the intending purchasers. This position was re-asserted on the records many times and that the same position was reiterated by the State Government in the letter  of Shri Ravindra Singh, Principal Secretary, Government of U.P.  dated 2.8.2005 which is part of  record. The entire proceedings of the sale  are based on the reliefs and concessions given by the State Government. In case there is any doubt, it is further made clear that the  highest bidder, in whose  favour of acceptance for sale is accorded today, shall be entitled to the reliefs and concessions by the State Government, on the   record and which were also advertised,  and were made part of the tender document.

Shri Anil Mehrotra submits that the reliefs and concessions were offered on the  Banks and Financial Institutions agreeing  with one time settlement. It may  be reiterated here that consortium of banks had agreed to one time settlement and this fact was so recorded in the order dated 14.2.2002  and that both State Bank of India and Allahabad Bank had agreed to  one time settlement with condition that surplus  sale proceed should be made available to the Banks.

The  order in Special Appeal dated 20.12.2004 disposing of the Special Appeal  had made it clear that the Allahabad Bank has agreed to the sale the properties by the Court in winding up proceedings and that virtually amounts to withdrawal of the appeal.

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In principle the Banks and Financial Institutions  had agreed to one time settlement. The issue with regard to the distribution of the surplus amount will be taken up as and when such claims are made. The Banks had   agreed to the sale through the Official Liquidator,  and  have been present in the proceedings from the beginning without any objections. The issue of one time settlement as such need not detain the Court at this stage as the highest bid is almost twice the amount which was offered in the year 2001. The present offer is likely to cover the entire dues of workmen, and will also substantially cover the claims of the Banks and Financial Institutions. It is thus confirmed that the reliefs and concessions are, and shall be integral part of the sale of assets of the Company (In Liq.).

The recommendation of the Asset Sale Committee, with regard to additional security to be deployed by M/s Jaiprakash Associates Ltd., the highest bidder and for allowing it to initiate study of mining reserves, and carry out studies/surveys/investigations without causing damage to the property, is accepted.

Dt. 15.2.2006

RKP/-

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