Court relief for Lodha group

MUMBAI: In a major reprieve for the Mumbai-based developer, the Lodha Group, the Delhi high court has directed the National Textiles Corporation (NTC) to reconsider its decision to reject Lodha's bid of Rs 710 crore for the Finlay Mills at Parel.
"We direct the ASC (Asset Sale Committee of NTC) to reexamine the bid of the petitioner (Lodha)...There is an evaluation available in the records of the respondents at Rs 710 crore, which has been matched by the petition.The bid of the petitioner would, thus, be reexamined by the ASC and the due process followed as envisaged under the scheme of the BIFR," said a division bench of justice Sanjay Kishan Kaul and justice Veena Birbal.
Last year, the same court had stayed NTC from floating fresh tenders for the sale of the 10.4-acre Finlay Mills plot. The court's directive comes in the wake of a writ petition filed by Lodha Group against the NTC and the Union textiles ministry for rejecting its bid for this mill property.
The ASC had rejected Lodha's bid of Rs 710 crore last July. The developer had increased it substantially from its earlier offer of Rs 657 crore. The NTC had set a reserve price of Rs 710 crore, a figure that Lodha promptly matched.
However, the ASC members felt there was still scope to get a better price for the defunct mill. Lodha then sent a legal notice to the NTC on September 5, 2009, asking it to accept the offer. However, the NTC never replied to this notice.
The petitioner said it was led to believe that its offer of Rs 710 crore was rejected due to extraneous factors on account of interference in the functioning of the ASC by the ministry of textiles and other interested parties. Lodha's petition further stated that the decision to call for fresh tenders was taken by the ministry, which wrote to the NTC to this effect in a letter dated August 18, 2009.
The petitioners said the ministry had, in 2007, directed that all decisions of sale of assets are finally and fully rested with the committee. Accordingly, no reference to the ministry of textiles is required and the ASC is fully empowered to take decisions on sale of assets of the company, said Lodha's petition, quoting the ministry's letter to the NTC, dated March 12, 2007.
The court said, "In our considered view, there is a basic fallacy in the decision making process. Be it the ASC, the NTC or the ministry, all three have proceeded on the premise of existence of a reserve price and the highest bid being below the reserved price."
NTC officials had claimed that the tender conditions stipulated that it had reserved the right to reject any offer even if the bid matched the reserve price.