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The Madras high court has set aside earlier orders allowing Asset Reconstruction Company (India) Ltd (ARCIL) to take possession and sell the 168.35 acres in Tamil Nadu it had acquired as part of the restructuring of SPIC Petrochemicals Ltd, a subsidiary of Southern Petrochemical Industries Corporation (SPIC).
The order was related to a petition by Chennai Petroleum Corporation Ltd (CPCL), which had formed a joint venture with SPIC to float a project on 1,655.92 acres, including the disputed land. Judge V Ramasubramanian said the issue involved public interest, as despite the acquisition of more than 1,655 acres by the government, invoking the emergency clause, the industry for which the acquisition was made hadn’t come up. Allowing CPCL’s application, the court recalled the earlier order passed in December 20, 2010, which allowed ARCIL to take possession of the 168.35 acres.
In January 1985, CPCL had signed a memorandum of understanding with SPIC for a joint venture to float a public limited company— National Aromatics and Petrochemicals Corporation—after the former received an industrial licence to manufacture o-xylene, benzene and purified teraphthalic acid. The project was named Arochem.
In September 1989, the Tamil Nadu government accorded administration sanction for the acquisition of 1,655.92 acres of patta and poramboke lands in various villages.
However, the project was delayed and later, SPIC floated a company called SPIC Petrochemicals Ltd and entered into an agreement with the state government for the allotment of 168.35 acres from the overall area.
The agreement was subject to the company remitting all acquisition costs and the condition that after the joint venture was implemented, the unit would be integrated with the joint venture. CPCL objected to this. SPIC Petrochemicals availed of credit facilities from ICICI Bank Ltd, offering the 168.35 acres as security for the repayment of the loan.
Later, SPIC Petrochemicals accumulated debt and the court issued a winding-up order against it. ICICI filed a petition with the debt recovery tribunal, Mumbai, for the recovery of about Rs 289 crore; the tribunal appointed a receiver to sell the property. ARCIL received the debts of the company in liquidation and took possession of the land. However, the official liquidator took possession of the property on May, 2010, related to an earlier litigation.
ARCIL moved the court against this move.
“Hundreds of acres of land, acquired hurriedly by the state of Tamil Nadu from thousands of families for the professed object of industrial development and economic growth, were eventually mortgaged with the financial institutions, without an industry coming up thereon; the financial institution is before this court for an auction sale of such land, to realise its dues from the company in liquidation,” the court said.
“Therefore, in such circumstances, it is hard for this court to give a nod for the sale of the property by the secured creditor. The recalling of the order dated December 20, 2013, in a way, will be atonement by this court for upholding the acquisition made 20 years ago, for the benefit of unscrupulous elements,” the order said, adding the recall would enable CPCL to continue its earlier litigation against the land allotment.
Earlier, a division bench had ordered an investigation by the Central Bureau of Investigation into the allotment of land.
