M/S OPG POWER GENERATION PRIVATE LIMITED  Vs IFCI LIMITED

W.P.(C) 6267/2015 Page 1 of 10 $~2 (SB)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment: 11th January, 2021
+ W.P.(C) 6267/2015 and CM Nos. 11393/2015, 48006/2018
and 48007/2018

M/S OPG POWER GENERATION PRIVATE
LIMITED ….. Petitioner
Through: Mr Kirti Uppal, Senior
Advocate with Mr Abhinav
Sharma, Ms Isha Bhalla, Mr
Sidharth Chopra and Mr Aditya
Raj, Advocates.
versus
IFCI LIMITED ….. Respondent
Through: Ms Vibha Mikhija, Senior
Advocate with Mr Kush
Chaturvedi and Ms Priyashree
Sharma, Advocates.

CORAM:
HON’BLE MR. JUSTICE VIBHU BAKHRU

[Hearing held through video conferencing]

VIBHU BAKHRU , J. (ORAL)
1. The petitioner has filed the present petition , inter alia , praying
as under:
“a) Issue a writ of certiorari or any other writ, order or
direction of like nature quashing the auction and
sale of the assets of Bellary Steel & Alloys
Limited (Sponge Iron Division) initiated by the
2021:DHC:91

W.P.(C) 6267/2015 Page 2 of 10 Respondent through the public notice dated
08.12.2010 under the Securitization and
Reconstru ction of Financial Assets and
Enforcement of Security Interest Act, 2002
(hereinafter, the “SARFAESI Act ”) and the
Security Interest (Enforcement) Rules, 2002
(hereinafter, the “2002 Rules ”);
b) Issue a writ of certiorari or any other writ, order or
direction of like nature quashing the purchase by
the Petitioner of the assets of Bellary Steel &
Alloys Limited (Sponge Iron Division) initiated by
the Respondent, under the SARFAESI Act and the
2002 Rules;
c) Issue a writ of mandamus or any other writ, order
or direction of like nature directing the
Respondent to refund the sale consideration of Rs.
64.90 Crores paid by the Petitioner towards
purchase of the assets of Bellary Steel & Alloys
Limited (Sponge Iron Division), alongwith interest
@ 18 % thereon and all other costs and
expenditure incurred by the Petitioner; ”
2. The respondent (hereafter „IFCI‟) had issued a publi c notice
inviting offers in the sealed cover on “AS IS WHERE IS BASIS AND
WHATEVER THERE IS BASIS” for purchase of the assets of
Sponge Iron Division of Bellary Steels and Alloys Limited (hereafter
„BSAL‟) located at Villages Bisalahalli and Haddinagundu, District
Bellary in the State of Karnataka , which included land measuring
119.62 acres along with Building and Structures, Plant and Machinery
and Miscellaneous Fixed Assets/Other Current Assets of Sponge Iron
Division, Steel Melting Shop, Bar Rolling Mill , Merchant Rolling
Mill, Oxygen Plant, Captive Power Plants of 2.5 MW and 12 MW.
The assets were in three lots (Lot I, Lot II and Lot III). The reserve
2021:DHC:91

W.P.(C) 6267/2015 Page 3 of 10 price for each lot was fixed separately. The reserve price for the
composite lot unit (Lot I, Lot II and Lot III) was fixed at
₹62,96,93,000/ – (Rupees Sixty two crores ninety six lacs and ninety
three thousand). The bidders were required to deposit an earnest
money of ₹6,29,69,000/ – (Rupees Six crores twenty nine lacs and sixty
nine thousand).
3. The petitione r submitted its bid to purchase the composite unit
for a sum of ₹64.90 crores and also deposited the earnest money
(EMD ) of ₹629.69 lacs being 10% of the re serve price. The
petitioner‟s bid was found to be the highest. The same was accepted
by IFCI on 10. 01.2011 and the petitioner was advised to deposit the
balance amount within a period of fifteen days. The petitioner paid
the sum of ₹9,92,81,000/ – on 11.01.2011 and the balance amount of
₹48,67, 50,000/ – on 25.01.2011. On 29.01.2011 IFCI issued a
possession certificate with regard to the sale of both, movable and
immovable, assets pertaining to the Sponge Iron Division of BSAL .
Thereafter, on 29.04.2011, IFCI executed two separate sale
certificates, one for movable prope rties and the other for immovable
properties sold to the petitioner.
4. The petitioner is aggrieved as it endeavours to clean the plant
and the commence ment of work has been frustrated at various stages.
First, the workers of BSAL had prevented the petiti oner from
commencing any work as the ir arears of salaries and other dues had
not been cleared. The petitioner states that the Employees‟ Union,
namely, Karnataka United General Workers Union (KUGWU) Bellary
2021:DHC:91

W.P.(C) 6267/2015 Page 4 of 10 had prevented the petitioner from carrying on any work. In addition,
one of the family members of the promoters of BSAL have filed a suit
(OS No. 292 of 2014) before the Principal Senior Civil Judge, Bellary
seeking cancellation of the sale in respect of 19.65 acres comprising in
Survey No. 11A, 11B and 10 located at Bisalahalli Village. The
plaintiff therein claimed that the property had been purchased by his
grandfather Mr Nagappa and after his demise, the same had devolved
on various members of the family arrayed as defendant nos. 1 to 11.
The plaint iff claims that BSAL did not have any title over the said
lands. In addition, the petitioner claims that the Gulbarga Electricity
Supply Company Limited (GESCOM) , which is the electricity
provider in the area, has also declined to provide a connection to t he
petitioner as the power supply to BSAL had been disconnected on
06.05.2010 on account of non -payment of arears , which are stated to
be around ₹17.36 crores including interest.
5. The petitioner‟s application for mutating the property in its
name was als o rejected as 99.97 acres of the said property is shown as
the land records as vest ed with the Sta te Government of Karnataka.
6. The petitioner states that on further inquiries it was found that
on 19.04.1997, the Deputy Commissioner, Bellary had passed an o rder
holding that BSAL had acquired agricultural lands in violation of
Section 79B(i) and 79B(ii) of the Karnataka Land Reforms Act, 1961
and had forfeited the said property in exercise of powers under Section
79C( 3) of the Karnataka Land Reforms Act, 1961 . The said order also
indicates that the said land vest ed with the Government of Karnataka.
2021:DHC:91

W.P.(C) 6267/2015 Page 5 of 10 7. The petitioner contends that in view of the said order, IFCI did
not have any right or title in the said land for the same to be auctioned.
8. Ms Vibha Makhija , learned Senior Counsel appearing for IFCI
contended that the petitioner has an equally efficacious remedy under
Section 17 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002 (hereafter
„SARFAESI Act‟) to challenge the auction conducted by IFCI since
the same was a m easure under Section 13(4) of SARFAESI Act . She
referred to the decision s of the Supreme Court in United Bank of
India v. Satyawati T ondon and Ors. : (2010) 8 SCC 110 and Agarwal
Tracom Private Limited v. Punjab National Bank and Ors. : (2018) 1
SCC 626 and o n the strength of the said decisions contended that since
an equally efficacious remedy was available to the petitioner, it would
not be apposite for this Court to entertain the present writ petition.
9. Mr Kirti Uppal, learned Senior Counsel appearing for the
petitioner countered the aforesaid submissions. He submitted that the
remedy under Section 17 of the SARFAESI Act would not be
available as the dispute in the present case does not concern in the
measures taken under Section 13(4) of the SARFAESI Act but relate
to the question whether IFCI had any title in the immovable property
sold/transferred by it . He submitted that, essentially, the dispute in the
present case is that IFCI has sold a property which did not vest with it,
but with the State Governme nt of Karnataka.
10. Mr Uppal also referred to the decision of the Division Bench of
the Allahabad High Court in Rakesh Kumar Kaushal v. State of U.P.
2021:DHC:91

W.P.(C) 6267/2015 Page 6 of 10 thru. Prin. Secy. Finance and Anr. : 2018 SCC OnLine All 5757 in
support of his contention.
11. It is relevant to note that IFCI has not disputed that 99.97 acres
forming a part of the immovable assets sold/transferred by it had
vested with the State Government of Karnataka by virtue of the order
dated 19.04.1997. Concededly, IFCI ha s not taken any steps or action
to challenge the said order. This Court had pointedly asked Ms
Makhija whether there was any dispute as to the existence of the said
order or the forfeiture of the said property (99.97 acres) and vesting
the same with the Sta te Government of Karnataka under the Karnataka
Land Reforms Act, 1961 . She had fairly admitted that there was no
dispute as to the existence of the said order or that the said property
(99.97 acres) had vested with the State of Karnataka. However, s he
subm itted that the same did not affect the IFCI‟s right to take action
under Section 13(4) of the SARFAESI Act and to auction the said
property for enforcement of its right under the SARFAESI Act and the
Rules made thereunder.
12. Ms Makhija submitted that the l and in question (99.97 acres)
situated at Bisalahalli and Haddinagundu, District Bellary, Karnataka
was mortgaged in favour of the lead Bank (IDBI) by deposit of title
deeds on 29.12.1993. Subsequently, the mortgage was extended to
other l enders including IFCI. She stated that the first mortgage on the
said lands was created on 29.12.1993 and the same was also extended
in favour of IFCI on 04.06.1997 . Therefore notwithstanding that the
said property had vested with the State Government of Karnataka on
2021:DHC:91

W.P.(C) 6267/2015 Page 7 of 10 19.04 .1997, the IFCI would have rights in the said property as the
mortgage was created prior to the said order dated 19.04.1997. She
further contended that since the property was sold auctioned on “AS
IS WHERE IS BASIS AND WHATEVER THERE IS BASIS”, the
sale/t ransfer could not be challenged on the ground of any defect in
the title of the said property.
13. The contention that since the property in question was
mortgaged to IDBI in the year 1993 – which was prior to the order
dated 19.04.1997 vesting the part of t he mortgaged property to the
extent of 99.97 acres, with the State Government of Karnataka – IFCI
would have the right to auction the same is unpersuasive. The question
whether IFCI had any right, title or interest in the said lands (99.97
acres of land lo cated in villages Bisalahalli and Haddinagundu) would
have to be examined not with reference to the date when the title
deeds of the said land was deposited with IDBI but on the date of
inviting bids (that is, on 08.12.2010) and on the date of accepting th e
petitioner‟s bid (that is, on 10.01.2011).
14. As noted above, the principal issue to be addressed is whether
on the said dates (08.12.2010 and 10.01.2011) IFCI had any title ,
right or interest in the property in question , notwithstanding that the
said pr operty had vested with the State Government of Karnataka.
And, whether the term of the invitation to bids, “AS IS WHERE IS
BASIS AND WHATEVER THERE IS BASIS”, would absolve IFCI
of any defect or lack of title in the said property.
15. Having stated the above , it is apparent that the essential dispute
2021:DHC:91

W.P.(C) 6267/2015 Page 8 of 10 arises from the action of the IFCI in inviting bids for the property in
question and selling/transferring it to the highest bidder (the petitioner
herein). A plain reading of the Public Notice dated 08.1 2.2010,
indicates that the same had been issued “ In terms of Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI) read with Rule 6, 7, 8 & 9 of Security
Interest (Enforcement) Rules, 2002 ”.
16. In United Bank of India v. Satyawati T ondon and Ors. (supra ),
the Supreme Court had expressed concern s regarding the High Court
interfering with actions taken under the SARFAESI Act despite
availability of statutory remedies under the said statute.
17. There is merit in Ms Makhija‟s contention that the petitioner
has an efficacious remedy under the Section 17 of the SARFAESI Act
against any measure taken by IFCI under Section 13(4) of the
SARFAESI Act or any of the Rules made thereunder.
18. In Agarwal Tracom Private Limited v. Punjab National Bank
and Ors. (supra ), the Supreme Court had observed as under:
“27. The reason is that Section 17(2) empowers the
Tribunal to examine all the issues arising out of the
measures taken under Section 13(4) including the
measures taken by the secured creditor under Rules 8 and
9 for disposal of the secured assets of the borrower. The
expression “ provisions of this Act and the Rules made
thereunder ” occurring in sub -sections (2), (3), (4) and (7)
of Section 17 clearly suggests that it includes the action
taken under Section 13(4) as also includes therein the
action taken under Rules 8 and 9 which deal with the
completion of sale of the secured assets. In other words,
2021:DHC:91

W.P.(C) 6267/2015 Page 9 of 10 the measures taken under Section 13(4) would not be
completed unless the entire procedure laid down in Rules
8 and 9 for sale of secured assets is fully complied with
by the secured creditor. It is for this reason, the Tribunal
has been empowered by Sections 17(2), (3) and (4) to
examine all the steps taken by the secured creditor wi th a
view to find out as to whether the sale of secured assets
was made in conformity with the requirements contained
in Section 13(4) read with the Rules or not?
28. We also notice that Rule 9(5) confers express
power on the secured creditor to forfeit th e deposit made
by the auction -purchaser in case the auction -purchaser
commits any default in paying instalment of sale money
to the secured creditor. Such action taken by the secured
creditor is, in our opinion, a part of the measures
specified in Section 13(4) and, therefore, it is regarded as
a measure taken under Section 13(4) read with Rule 9(5).
In our view, the measures taken under Section 13(4)
commence with any of the action taken in clauses (a) to
(d) and end with measures specified in Rule 9.
29. In our view, therefore, the expression “any of
the measures referred to in Section 13(4) taken by secured
creditor or his authorised officer” in Section 17(1) would
include all actions taken by the secured creditor under the
Rules which relate to the measu res specified in Section
13(4).
30. The auction -purchaser (appellant herein) is one
such person, who is aggrieved by the action of the
secured creditor in forfeiting their money. The appellant,
therefore, falls within the expression “any person” as
specifi ed under Section 17(1) and hence is entitled to
challenge the action of the secured creditor (PNB) before
the DRT by filing an application under Section 17(1) of
the SARFAESI Act.”
19. Although in the above -mentioned case, the Supreme Court was
concerned with the dispute regarding a secured creditor forfeiting the
2021:DHC:91

W.P.(C) 6267/2015 Page 10 of 10 earnest money of an auction purchaser ; the principles enunciated in
the said case would be applicable in the present case as well. This is so
because the petitioner being an purchaser is , essentially, aggrieved of
IFCI‟s action to invite bids and sell the immovable properties (which
vested with the state Government of Karnataka). This sale/transfer was
a measure taken by IFCI under Section 13(4)(a) under the SARFAESI
Act and the Rules made thereunder .
20. This Court is , respectfully unable to concur with the decision of
the Allahabad High Court in holding that Section 17 of the
SARFAESI Act would be inadequate to redress the grievance of an
auction purchaser who had not been handed over the possession of the
property sold to him.
21. In view of the above, the present petition is disposed of with
liberty to the petitioner to approach the Debt Recovery Tribunal under
Section 17 of the SARFAESI Act. If the petitioner files such an
application within a period o f two weeks from date, the concerned
Debt Recovery Tribunal shall consider the petitioner‟s application on
merits uninfluenced by any question of delay and dispose of the same
as expeditiously as possible and preferably within a period of three
months.
22. The petition is disposed of with the aforesaid terms. All the
pending applications are also disposed of .

VIBHU BAKHRU, J
JANUARY 11, 2021 /RK
2021:DHC:91