Hemant Gupta, J. - (1.) This order shall dispose of CWP Nos.11058 of 2011 and 13065 of 2011, both raising identical question of payment of dues of the State in terms of the auction conditions.
(2.) The assets of M/s Punjab Fibres Ltd. (for short the Company) were put to auction by IFCI Ltd. in terms of provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act). The tender conditions, which are subject matter of interpretation, read as under: "2.6 All the assets offered for sale are on "AS IS WHERE IS AND WHATEVER THERE IS BASIS" as a composite unit or separately lot wise for Land & Building and/or Plant & Machinery and other assets. The quantity indicated, if any, are purely indicative & without any guarantee and IFCI Ltd. Shall not entertain any claim/complaint from the buyer for any deficiency in quantity/size/number etc. for recovery of whole or any part of the bid, purchase money, loss of profit/interest, damages etc. 2.7 The unit may have certain outstanding liabilities which are to be met by the purchaser and which will be over and above the purchase consideration. The prospective purchaser may carry out due diligence in respect of likely liabilities pertaining to the unit before submitting the tender. It may be noted that the purchaser will be responsible for meeting these liabilities, if arise, and IFCI Ltd. will not be liable to meet any such liabilities whatsoever."
(3.) The petitioner was found highest bidder, but the sale of assets became subject matter of challenge before the Debt Recovery Tribunal, Delhi on behalf of the Company, in which the petitioner was impleaded as respondent No.2. The Debt Recovery Tribunal considered the various issues raised by the Company including the issue; Whether the IFCI has failed to give the details of statutory dues in the sale notice, which is mandatory as per Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 and if so, then its effect While consider the said issue, the Tribunal noticed that the Company offered a settlement proposal to IFCI disclosing statutory liabilities totaling Rs. 2075.36 lacs, which includes Employees Provident Fund, Employees State Insurance, Salaries & Wages, Gratuity, Bonus, Central Excise Duty, State Electricity Dues etc. The Tribunal considered Clause 2.7 of the Tender Notice, as reproduced above, and observed as under: "I have considered this issue at length. The respondent FI in its tender document clearly states that the units may have certain outstanding liabilities, which are to be met by the purchasers and which will be over and above the purchase consideration. The prospective purchaser may carry out due diligence in respect of likely liabilities pertaining to the unit before submitting the tender. It may be noted that the purchaser will be responsible for meeting these liabilities, if arise, and IFCI Ltd. will not be liable to meet any such liabilities whatsoever. The above terms and conditions of the tender documents were duly agreed to and accepted by the auction purchasers. Even otherwise, the statutory dues have the priority over the dues of the respondent FI. Therefore, it is the responsibility of the respondent FI to ensure the recovery of all the statutory dues/claims from the auction purchasers before the issuance of sale certificates in their favour. IA No.441/2010 has been filed on behalf of the Employees Provident Fund Organisation submitting that certain amount is due against the applicant company and they have the first charge over the assets of applicant company. The said application was already allowed vide order dated 08.06.2010 and the said order has already attained its finality. Besides this, the other state authorities/employees of the applicant company have also filed certain applications before this Tribunal claiming various amounts from the applicant company. Copies of said applications have already been supplied to the respondent FI as well as to the auction purchasers. Now the IFCI/respondent FI is directed to ensure that all the outstanding liabilities of the various state authorities/employees of the applicant company be paid to them in compliance of the terms and conditions of the tender document before issuing the final sale certificates in favour of the auction purchasers. Order accordingly. This issue is also decided in favour of the respondent FI and against the applicant Company.";