The Hindu Business Line : ‘Mill shareholder had no locus standi to question property sale’

Corporate - Sick Units
Industry & Economy - Courts/Legal Issues
States - Tamil Nadu
‘Mill shareholder had no locus standi to question property sale’

Our Legal Correspondent

Chennai, Nov 22 A minority shareholder in the Coimbatore Pioneer Mills Ltd, a sick unit before the Board for Industrial & Financial Reconstruction (BIFR), “has no locus standi to challenge an order of BIFR for sale of assets of the company”, the Madurai Bench of Madras High Court has held.

The petitioner, Mr V. Venkatachalam, who claimed to have 30 shares out of 100,000 shares of the company, and who prayed for quashing order of BIFR, had nowhere in his affidavit disclosed his particular interest for coming to this court with writ petition, Mr Justice K. Chandru ruled while dismissing the petition.

If petitioner stated that the company had not been run properly, it was open to him to approach the company court in terms of the Companies Act, 1956. Even for filing a petition, petitioner was not having enough shares.

According to the petitioner, the mill had become sick unit, and matter was taken to BIFR under Sick Industrial Companies (Special Provisions) Act, 1985. The mill could not be rehabilitated by any scheme, and ultimately it had come to the stage where property of mill had to be sold to meet demands of secured creditors, who had all consented for such sale.

The petitioner contended that there was no transparency in sale and property being sold was under-valued. When questioned on his locus standi in coming to this court, petitioner submitted that he was a shareholder and ex-employee of the company. But real interest of petitioner was not disclosed in the affidavit, the judge held.

The judge further said that even though a contention was raised that the sale was not in the company’s interest, this court was unable to go into issue at the instance of the petitioner. The petitioner alleged in his affidavit that Asset Sale Committee of State Bank of India had not followed any prescribed procedure in holding auction of property. The basis for making such averments was not substantiated.

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