DEBANGSU BASAK,J. - (1.) The Court:- The challenge in this writ petition is directed towards an invitation of bids for taking over the management of Rohit Ferro-Tech Limited, the respondent no. 3 herein.
(2.) Learned Senior Advocate for the petitioners submits that, the bidding process contemplates invocation of Swiss Challenge Method (SCM), which is unusual. He submits that, the various clauses of the bid document are vague. The clauses are such that it is not capable of any clarity. Therefore, the bidding process is faulty. Moreover, referring to format VII he submits that, a bidder has to give an undertaking in such declared format which, inter alia, requires such bidder to give declaration on 9 stipulations. The same stipulations have not been applied to the initial bidder. Therefore, the respondent nos. 1 and 2 have not made available a level playing field to the bidders participating in the bid process. He submits that, the initial bidder being the respondent no. 4 does not qualify the conditions stipulated in the format for undertakings under format VII of the bid documents. He submits that, the methodology of Swiss Challenge Method (SCM) is not suitable for the purpose of undertaking the bid process to transfer the management of a limited liability company particularly whose shares are listed with the stock exchanges. He refers to the initial offer made by the respondent no. 4. He submits that, the offer contains various contingencies. Those contingencies are subject to compliance of Securities and Exchange Board of India (SEBI) guidelines and Take Over Code. A change of management cannot happen without the permission from SEBI. Therefore, the contingencies are incapable of being worked out. Furthermore, the initial offer of the respondent no. 4 contemplates the respondent no. 4 entering into the mutual agreements between the respondent nos. 1 and 2 and the initial bidder. The terms and conditions of the mutual agreements are not specified. Therefore, the prospective bidders such as the writ petitioner would not be in a position to understand the scope and ambit of the initial offer for the first petitioner to make a better offer.
(3.) Learned Advocate appearing for the respondent nos. 1 and 2 submits that, the respondent no. 1 is the lead banker of a consortium which has lent and advanced money to the respondent no. 3. The account of the respondent no. 3 going bad, an attempt was made to revive such account through the Corporate Debts Restructuring (CDR). The same was not successful. The respondent no. 4 has three units. Initially, the first petitioner had approached the respondent no. 1 for the purpose of buying of one of the units. Such offer of the first petitioner was found not to be suitable in the factual scenario obtaining with regard to the loan of the respondent no. 3. Therefore, such offer was not accepted. The respondent no. 3 has a liability in excess of Rs.2,600/- crores to the consortium of bankers. The consortium of bankers are anxious to recover such loan. The first petitioner has made an initial offer as contained in the offer letter dated July 7, 2017. The same was considered at the various levels of the respondent nos. 1 and 2. It was found acceptable for further exploration. The initial offer of the first petitioner was under the Swiss Challenge Method (SCM). In view of the requirement of Swiss Challenge Method (SCM), it was decided that a bidding process be invited for such purpose. The respondent nos. 1 and 2 had gone ahead and invited the bids with regard to the respondent no. 3 under the SCM. It has set out few conditions in the bidding process. It is for the prospective bidders to comply with the terms and conditions of the bid process. In the event there is a better offer by the respondent nos. 1 and 2 under the Swiss Challenge Method (SCM) then only the question of the first petitioner matching the qualification set out in the bid process will arise. The bank will consider such a situation, if it so arises, after the bid process has commenced. He submits that, the interest of the consortium of the bankers be kept in mind while considering the grant of any order in the present proceedings. The bidding process ought not to be stalled. According to him, there is an urgent requirement of recovery of the public money involved. The amount is in excess of Rs. 2,600/- crores. He submits that, it is possible to revive the respondent no.3 through this methodology. If the respondent no. 3 is revived, the question not only of recovery of the money of consortium of bankers will be there, but also the question of stoppage of further funding will arise. He points out that, the consortium of bankers are still required to extend the credit facility to the respondent no. 3 although the respondent no. 3 is incapable to turn around from its sickness on its own.;