High Court of Judicature at Allahabad
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In The Matter Of M/S Rajinder Steels Ltd. - COMPANY PETITION No. 44 of 1998  RD-AH 7414 (13 December 2005)
Company Petition No.44 of 1998
In the matter of
M/s Rajinder Steels Ltd. (In Liq.)
Hon. Sunil Ambwani, J.
With reference to the orders dated 28.9.2005 and 5.10.2005 the Asset Sale Committee, on the request made on behalf of IDBI was permitted to revalue the assets of the Company (In Liq.), and re-advertise both the units at Raipur and Kanpur for sale, accepting earnest money bids and permit competitive bidding.
The Official Liquidator has submitted his report No.176 of 2005 stating that Shri Vinod Sharma, Company Prosecutor of this office represented him in the meeting of the Asset Sale Committee held on 28.10.2005 and bidding on 1.12.2005.
The Stressed Assets Stabilization Fund, IDBI, Mumbai got the assets revalued and advertised the sale in the newspapers. Inspections were arranged and were carried out both of Kanpur and Raipur Units. The modalities for sale and approval of draft advertisement after revaluation was prepared in the meeting of the Asset Sale Committee held on 28.10.2005. The minutes of the meeting of Asset Sale Committee dated 1.12.2005 held at IDBI Tower, Mumbai are reproduced as below:
"In compliance of the order dated 5.10.2005 passed by the Hon'ble High Court of Judicature at Allahabad in the aforesaid matter, the Asset Sale Committee represented by the following officials met at IDBI Tower, Mumbai on December 1, 2005 at 11.00 am.
(1)Shri Vinod Sharma, Company Prosecutor (representing official liquidator)
(2)Smt. N.J. Shetty, DGM, SASF/IDBI
(3)Shri Parmod Kumar Arora, Assistant Secretary, LIC
(4)Shri Shivaji Gunware, Manager, IFCE
(5)Shri P.K. Sinha, Manager, HBI
(6)Shri Kurian Jose, Asst. Vice President, UTI Mutual Fund
The committee opened the technical bids in the presence of the bidders. The attendance sheet is at Annexure I. A total number of 29 bids were received. Bid made by Harmony Marketing Services, Bangalore was received without the Earnest Money as such the same was rejected. The balance 28 bids were prima-facie found to be eligible. 26 bids were for both lot No.1 & 2 of Raipur Unit. One bid was for lot No.1 of Raipur Unit (land & buildings). Only one bid was for lot No.1 & 2 of Kanpur Unit.
The committee again met at 14.30 hrs to open the financial bids which were opened in the presence of the bidders. The attendance sheet is at Annexure II. Since there was only one bid for Kanpur Unit offered by Kay Ess Enterprises Ltd., it was decided to take up bidding for Kanpur Unit First. The said bidder had made a bid of Rs.315 lakh. The bidder was asked to increase the bid. The representative of the bidder said that this as his first and last bid. As such the bid of Kay Ess Enterprises Ltd. for Rs.315 lakh of both the lots of Kanpur Unit was taken on record. It was noted that the Reserve Price for lot No.1 & 2 of the Kanpur Unit was Rs.850 lakh and the final bid received was much below the Reserve Price.
The committee next took up the bidding for lot No.1 & 2 of Raipur Unit. The financial bids made for Raipur Unit were opened and it was found that the highest bid of Rs.44.27 crore made by Corporate Ispat Alloys Ltd. was received against the Reserve Price of Rs.44.02 crore. Hence the bidding was started with the bid price of Rs.44.27 crore. The bidding went on upto 19.00 hrs. About 217 bids were made by various bidders and finally the highest bid made by Corporate Ispat Alloys Ltd. for a sum of Rs.75.50 crore for both lot No. 1 & 2 of the Raipur Unit was taken on record. The committee decided to recommend the same to the Hon'ble High Court.
The committee next took up the bidding for lot No.1 (land & building) of Raipur Unit. The financial bid of Rs.20.25 crore for lot No.1 was received from Chattisgarh Electricity Company Ltd. The bidder was requested to increase the bid. The bidder increased the bid to Rs.24 crore for lot No.1 of Raipur Unit. The said bid was taken on record. The bid sheet for Kanpur Unit, for Raipur Unit and for lot No.1 of Raipur unit is at Annexure III.
The valuation report submitted by Darashaw Consultants Ltd. appointed for revaluation of the assets of the Raipur Unit is at Annexure IV.
The demand drafts of Rs.80 lakh received from Kay Ess Enterprises Ltd. for Kanpur Unit, demand drafts of Rs.110 lakh received from Corporate Ispat Alloys Ltd. for Raipur Unit and demand drafts of Rs.40 lakh received from Chattisgarh Electricity Company Ltd. for lot No.1 of Raipur Unit have been retained and kept with the Official Liquidator. The demand drafts submitted by other bidders were returned to them.
The above minutes are recorded by the above committee and signed for submitting the same to the Hon'ble High Court for orders/ directions as the Hon'ble Court may deem fit and proper in the circumstances of the case."
Shri Sanjay Bhatt and Ms. Kritika Singh holding brief of Shri V.B. Singh for IDBI, Shri Anjani Kumar for Official Liquidator, Shri Vinod Sharma, the Company Prosecutor, Shri Manish Mehrotra for Canara Bank, Shri Rakesh Gupta for IIBI, Shri J. Nagar for LIC and Shri Bharat Pratap Singh for Vijaya Bank are present. Sri Jayant Banerjee represents M/s Jayaswal Neco Ltd., one of the bidders, who has participated in the bidding.
According to the fresh valuation report carried out by S.K. Ahuja and Associates, the abstract of valuation of fixed assets as on 1.11.2005 of the Raipur Unit of the Company (In Liq.) is as follows:
ABSTRACT OF VALUATION OF FIXED ASSETS
AS ON 01.11.2005
M/S. RAJINDER STEEL LIMITED, RAIPUR
Current Replacement Cost (Rs.)
Net Replacement Value (Rs.)
Realisable Value (Rs.)
Distress Sale Value (Rs.)
Plant & Machinery
The Asset Sale Committee did not get the assets of the Kanpur Unit of the Company (In Liq.) revalued.
The revaluation report was accepted by the Asset Sale Committee and accordingly fresh reserve price was advertised as follows:
Description of Properties
Reserve Price (Rs. Lacs)
Earnest Money (Rs. Lacs)
The free hold land comprised in Plot Nos. 865 admeasuring 11 Bighas 3 Biswas. 11 Biswansi together with building, structures, civil construction, fixtures, fittings, electrical fitting situated at village Chiraura, Tehsil Akbarpur, District Kanpur Dehat in the State of Uttar Pradesh.
Whole of movable including Plant and Machineries Accessories, Tools, Jigs, Fitting etc. (except movable which are marked as not for sale) lying in Pipe Unit at Village Chiraura, Tehsil Akbarpur, District Kanpur Dehat (U.P.
Both Lot No. I and II
The Lease hold land admeasuring 52.640 hectares, together with Buildings, Civil Construction, Structures, Fixtures, Fittings, Electrical Fittings etc. Situated at Siltara industrial Estate, Village Mandhar, Tehsil and District Raipur (Chattisgarh) in the State of Chattisgarh
Whole of Movable including Plant and Machinery, Accessories, Tools, Jigs, Fitting etc. (except such movable which are marked as not for sale) lying in H.R. Coil Unit at Siltara Industrial Unit Village Mandhar, Tehsil and District Raipur in the State of Chattisgarh.
Both Lot No.I and II
The highest bid of Rs.75.50 crores for both Lot No.1 and 2 of Raipur Units offered by M/s Corporate Ispat Alloys Ltd., as against the second highest bid of Rs.75.05 crores of M/s Raipur Alloy & Steel Ltd., is much above the reserve price fixed for both Lot Nos. 1 and 2 taken together and thus the highest bid of Rs.24 crores for Lot No.1 only of Raipur Unit received from Chattisgarh Electricity Company Ltd. does not require consideration.
The Asset Sale Committee has recommended to this Court to accept the highest bid of Rs.75.50 crores for both Lot Nos. 1 and 2 of Raipur Unit offered by M/s Corporate Ispat Alloys Ltd. I find that the highest bid is above the realizable value, assessed by the official valuer, and is quite reasonable.
The Official Liquidator has produced the annual report including auditor's report of M/s Corporate Ispat Alloys Ltd., enclosing the balance sheet as on 31.3.2003. The company has reserved and surplus of Rs.49.95 crores, secured loans of Rs.27.90 crores and turn over of Rs.65.30 crores. It disclosed net turn over of Rs.56.98 crores and profit of Rs.2.02 crores before tax. The financial condition of highest bidder as such does not appear to be sound enough to pay the bid amount. However, taking into account entire facts and circumstances and the fact that the asset have been advertised for sale for the second time and the bid is comparatively fair reasonable. The highest bid of M/s Corporate Ispat Alloys Ltd. as recommended by the Asset Sale Committee is as such accepted.
The highest bidder has not sent any representative to attend the proceedings.
Let M/s Corporate Ispat Alloys Ltd, the highest bidder, in accordance with the advertised terms and condition of sale, deposit 25% of the bid amount within 30 days from today. The Official Liquidator give notice to the highest bidder to appear before him for fixing the instalments, and for imposing conditions for timely payment of such instalments. The Official Liquidator will submit a report after considering the schedule proposed by the highest bidder for instalments and for putting such other conditions, which may secure timely payment of installments.
With regard to Kanpur Unit, the only offer received is much below the reserve price. Shri S.K. Saxena, the Official Liquidator pointed out that access to the assets of the Kanpur Unit of the Company (In Liq.), is through the property of Rajendra Pipes Ltd., which was permitted by this Court to be sold through the Recovery Officer of the Debts Recovery Tribunal in pursuance of a recovery certificate issued in favour of the Allahabad Bank.
Let the Asset Sale Committee meet and consider the issue with regard to the access to the property, the reasons for which the prospective bidders are not showing interest and the possible methods for securing the best price for the unit. It will be open to the Asset Sale Committee to revalue the assets of the Kanpur unit and/ or to appoint an expert committee to provide technical assistance. The meeting shall be held within a month.
Shri Vikram D. Chauhan appearing for Canara Bank and Shri Bharat Pratap Singh appearing for Vijaya Bank requested for consideration of their applications for balance of lease rentals and delivery of the plant and machinery, which they had leased to the Kanpur Unit of the Company (In Liq.). Let copies of these applications be served upon the counsel for IDBI. The applicants may also consider the option of either making claim of balance of lease rentals and possession of the machinery, or for making a composite claim of these amounts from out of the sale proceeds. In case they desire, they may be permitted inspection of the plant and machinery leased out by them after giving at least a week's notice to the Official Liquidator. These applications will also come up for hearing on the next date.
Let the matter be listed for orders on 18.1.2006 in Chambers at 2.00 p.m.
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