IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
O.J.APPEAL No. 146 of 2008
In
COMPANY APPLICATION No. 327 of 2006
In
COMPANY APPLICATION No. 240 of 2005
For Approval and Signature:
HONOURABLE MR.JUSTICE RAVI R.TRIPATHI
HONOURABLE MR.JUSTICE N.V. ANJARIA
========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
=========================================================
DEVGANGA TRADERS - Appellant(s) Versus
O L OF MAHENDRA MILLS LTD & 5 - Opponent(s)
========================================================= Appearance :
MR AL SHAH with MR AB MUNSHI for Appellant(s) : 1, OFFICIAL LIQUIDATOR for Opponent(s) : 1, MR JS YADAV for Opponent(s) : 1, MR BH BHAGAT for Opponent(s) : 2, MR INDRAVADAN PARMAR for Opponent(s) : 3, MR VIBHUTI NANAVATI for Opponent(s) : 4, MR MD RANA for Opponent(s) : 5, MR NAVIN K PAHWA for Opponent(s) : 6, MR DS VASAVADA for Majoor Mahajan Sangh, Kalol-Intervener =========================================================
CORAM : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI
and
HONOURABLE MR.JUSTICE N.V. ANJARIA
Date : 03/10/2012
ORAL JUDGMENT
(Per : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI)
1. The present appeal is filed by the appellant- original applicant-Devganga Traders being aggrieved by common judgment and order dated 12.08.2008 passed by the learned Company Judge (Coram: Hon'ble Mr.Justice C.K.Buch, as he then was) in Company Application No.327 of 2006, whereby the learned Company Judge was pleased to refuse to grant extension as prayed for by the present appellant.
2. The matter is having a little chequered history, which, so far relevant for the controversy involved in this appeal, is as under:-
2.1 The Company Court was pleased to pass an order for winding up of Mahendra Mills Ltd. on recommendations by BIFR by order dated 24.01.2001. There was some litigation in the form of Company Petition No.301 of 2001, wherein an order was passed allowing renewal of the lease period in respect of the leased property to STTL (Sonria Technical Textiles Ltd.) and also ordered that it will be open for the lessee to purchase the same, but not at the price lower than the market price.
2.2 One shareholder named Mr.Balkrishna Thakkar filed OJ Appeal No.43 of 2005 challenging order dated 14.06.2005 passed in Company Application No.310 of 2005. The said shareholder (Mr.Balkrishna Thakkar) also filed OJ Civil Application No.217 of 2005 in OJ Appeal No.43 of 2005 and prayed for stay of auction proceedings for the sale of the said property which was to take place before the Company Court. The Division Bench of this Court passed an order in OJ Civil Application No.217 of 2005 in OJ Appeal No.43 of 2005 and granted ad interim stay against auction proceedings of the Kalol property pending before the Hon'ble Company Court. The relief granted by the Division Bench was in terms of para-10-A, which reads as under:-
“10 A. pending the admission hearing and final disposal of the present appeal your Lordship be pleased to stay and suspend further proceedings of auction of the properties of Mahnedar Mill Ltd. (in liquidation) pending before the learned Company Judge in Company Petition No.152 of 2000.”
2.3 As a subsequent development, the Hon'ble Company Court confirmed the sale of the said Kalol property in favour of the present appellant-applicant for a consideration of Rs.10.20 crores on the terms and conditions approved earlier and the terms recorded in order dated 22.02.2006 passed in Company Application No.240 of 2005. The learned Company Judge in para-6 of the said order stated as under:-
“6. In view of the above, as the offer of M/s. Devgan Traders of Rs. 10.20 Crores is being the highest offer, the same deserves to be accepted and is accepted on the conditions as stated hereinafter in addition to the conditions incorporated in the terms of the tender.
1) to 3) xxxxx 4) The possession of the property shall be handed over to the auction purchaser within three days from the date of the payment of full consideration to the OL. If the auction purchaser does not pay the balance amount of purchase consideration to the OL, the OL shall terminate the sale and forfeit the deposit after obtaining permission of this Court.
These conditions and the other conditions in respect of the payment of the purchase considerations are without prejudice to the rights of the OL for further auction in accordance with law.”
2.4 It is not in dispute that the present appellant- applicant-Devganga Trader did not pay the sale consideration as was contemplated under the terms and conditions of the tender and the terms and conditions prescribed by this Court by order dated 22.02.2006 confirming the sale. In this regard, payment schedule as provided by the order confirming the sale is relevant and the same is reproduced for ready perusal:-
“6. 2) The auction purchaser shall pay 25% of the purchase consideration on or before 10th March, 2006. The amount of Earnest Money Deposit shall be adjusted in the last payment. The balance amount of the consideration shall be paid within three months thereafter.”
2.5 The order also provided in para-6-20) as under:-
“6. 20) The purchaser shall be at the liberty to submit the draft Sale Deed to the OL after deposit of 25% of the sale consideration and the OL shall execute the Sale Deed after its approval by this Court.”
2.6 It is not in dispute that 25% amount which was to be paid on or before 10.03.2006 was paid by the present appellant-applicant and as per the period prescribed by the order, the last date for payment was 09.06.2006. As the appellant-applicant could not pay remaining amount, it filed Company Application No.327 of 2006 and prayed for extension In this regard, it will be relevant for our purpose to consider the exact prayer made in this Company Application. The prayer is in Judges Summons-para-(a), which reads as under:-
“(a) That the delay in making payment of the balance purchase consideration amount be condoned and the period for making payment of the balance purchase consideration amount be extended up to and inclusive of 31st of August, 2006.”
(emphasis supplied)
2.7 This Judges' Summons is dated 22.06.2006. In the affidavit in support of Judges' Summons also, it is mentioned that:-
“(1) ..... Of the total purchase consideration of Rs.10.20 crores the Applicant was required to pay 25% thereof by 10th March, 2006. 25% of the total purchase consideration of Rs.10.20 crores comes to Rs.2.55 crore which the Applicant has duly paid before the 10th March, 2006. As required by the said order dated 22-2-2006. The balance amount of Rs.7.25 crore (Rs.7.65 crore less 41 lac being EMD already lying with the Official Liquidator) was required to be paid within three months of 10-3-2006 that is to say by 11-6-2006.”
2.8 It is thereafter mentioned in para-(3) as under:-
“(3) It is humbly submitted that the Applicant could not pay the balance amount of the purchase consideration within the prescribed time on account of serious sickness in the family of one
of its active partners and also on account of other reasons beyond its control. The Applicant humbly submits that it will pay up the balance purchase consideration within the next about two months, that it to say on or before 31st August, 2006. The Applicant humbly submits that it is ready and willing to pay interest at such rate as the Hon'ble Court may deem reasonable for the period of delay in making the payment of the balance amount of the purchase consideration. The Applicant humbly submits that in view of what is stated above, the prayers made in the Judge's summons may please be granted.”
2.9 For our purpose, it will be relevant as to what orders were passed on this application (Company Application No.327 of 2006). On perusal of record, it is found that on this Company Application No.327 of 2006, an order was passed on 27.07.2006, which reads as under:-
“Heard Shri A.L.Shah, learned Senior Counsel appearing with Shri Raju Kothari, learned advocate for the applicant and the Official Liquidator attached to this Court.
At the outset, Shri A.L.Shah, learned counsel has drawn my attention to the letter dated 10th July, 2006 addressed by Deputy General Manager (Legal) to the Official Liquidator, attached to this Court, that being a lead bank, it had no objection for grant of time as sought by M/s. Devganga Traders, the applicant herein, subject to payment of interest not below prime lending rate i.e.11% at present. It is also reflected from the another letter dated 07th July, 2006 addressed by the Deputy General Manager to the I.D.B.I.
In view of the above, Shri A.L.Shah, learned counsel for the applicant has submitted that out of Rs.7.25 crores to be paid subject to the final adjustment to the EMD amount, the demand draft dtd.26.07.2006 of Rs.1 Crore drawn in favour of Official Liquidator Mahindra Mills, is ready and to be paid accordingly and the balance amount will be paid on or before 31st August, 2006 with a request to fix the interest at 9%.
However, since the UCO bank, respondent no.6 herein is not served, Fresh Notice qua respondent no.6 only, returnable on 08.08.2006. Direct Service permitted. The draft of Rs.1 crore is handed over to the Official Liquidator.”
2.10 After the aforesaid order was passed, another order came to be passed on 18.08.2006, which reads as under:-
“Mr. A.L. Shah, learned counsel for the applicant, has handed over a cheque for Rs.1 crore dated 17.8.2006 drawn in favour of the Official Liquidator for Mahendra Mills Limited, which is ordered to be kept with the Official Liquidator. He has also requested that time limit for making remaining payment may be extended upto 15th September 2006 in view of the flood-situation prevailing in the State. Time to make the remaining outstanding dues is extended upto 15.9.2006. S.O. To 30.8.2006.”
2.11 On perusal of the aforesaid two orders, it is clear that the Court granted extension up to 15.09.2006 and no other order is brought to the notice of this Court to show that any further extension was granted for payment of balance purchase consideration.
2.12 It is the case of learned Advocate Mr.A.L.Shah appearing with learned Advocate Mr.A.B.Munshi for the appellant-applicant that it was on account of pendency of OJ Appeal No.43 of 2005 that the payment was not made and the whole thing remained pending. Learned Advocate for the appellant-applicant submitted that an order was also passed on 30.08.2006 in Company Application No.327 of 2006, whereby the appellant-applicant was permitted to pay a sum of Rs.2 crores by Demand Draft. The relevant part of the order reads under:-
“2. By order dated 18th August 2006, banker's cheque worth Rs. 1 Crore dated 17th August, 2006 drawn in favour of the Official Liquidator for Mahendra Mills Limited was handed over to the Official Liquidator. Today, Shri A.L. Shah, learned Counsel appearing for the applicant has presented a cheque dated 30th August 2006, as assured on earlier occasion.
3. However, the Deputy Official Liquidator attached to this Court states that the bank of Official Liquidator namely Punjab National Bank has refused to accept the same being outstation cheques not as per prevailing banking norms.
4. In view of the above, Shri A.L. Shah, learned counsel for the applicant states that his client would deposit Demand Draft for Rs.2 Crore and the cheque dated 17th August 2006 for the amount of Rs.1 Crore and cheque dated 30th August 2006 for the amount of Rs.1 Crore be returned to him.
5. In view of the above, the Deputy Official Liquidator is directed to hand over the cheque of Rs.1 Crore dated 17th August 2006 to the learned advocate appearing for the applicant and cheque dated 30th August 2006 offered today of Rs.1 Crore is also returned to Shri A.L. Shah, learned counsel, to be replaced by Demand Draft of Rs.2 Crore. ”
2.13 OJ Appeal No.43 of 2005 and OJ Civil Application No.217 of 2005 were dismissed by the Division Bench of this Court by judgment and order dated 01.08.2008. The Hon'ble Company Court rejected Company Application No.327 of 2006 by order dated 12.08.2008, against which the present OJ Appeal came to be filed.
2.14 In this OJ Appeal, a party named 'Anjana Constructions' filed OJ Civil Application No.205 of 2009 for being impleaded as party. That OJ Civil Application came to be allowed by order dated 14.07.2009 and the applicant (Anjana Constructions) was permitted to intervene in the appeal. Being aggrieved by order dated 14.07.2009, the present applicant-appellant approached the Hon'ble the Apex Court by filing Special Leave to Appeal (Civil) No.5415 of 2010. This Special Leave to Appeal came to be disposed of by the Hon'ble the Apex Court by order dated 28.04.2011. The Hon'ble the Apex Court was pleased to observe as under:-
“We do not see as to how the applicant before the Division Bench could be aggrieved by such an order and, accordingly, we are not inclined to interfere with the same in the special leave petition. However, the subject matter of the case relates to the auction of certain properties in a winding up proceeding through the Official Liquidator. The petitioner's bid which was initially accepted by the learned Company Judge, was subsequently rejected on account of the fact that the petitioner was unable to put in the balance sale price, as directed by the Court. It is against the said order that the appeal was preferred by the petitioner herein before the Division Bench and the same is pending. By virtue of an interim order passed in the appeal, the entire proceedings before the Company Judge was stayed. In effect, the auction has been stayed.
The applicant in I.A. Nos.2-3 has come forward before this Court with a bid of much higher amount than was quoted by the petitioner herein and also by Anjana Constructions, the respondent No.1 herein.
Having considered the submissions made on behalf of the respective parties, we are of the view that the appeal before the Division Bench of the High Court should be heard and disposed of early so that the auction proceedings may either be confirmed in favour of the petitioner or the matter can be reconsidered by the learned Company Judge. Accordingly, we dispose of the special leave petition and the connected interlocutory applications and request the Division Bench of the Gujarat High Court to dispose of the pending appeal filed by the petitioner herein, being OJA No.146 of 2008, within one month from the date of communication of this order. This request is being made particularly on account of the fact that the company is in liquidation and the dues of the workmen and various creditors are required to be paid. In the appeal, the respondent No.1 has already been given leave to intervene. Likewise, the applicant in I.A. Nos.2-3 of 2011, will also be entitled to intervene and make submissions in the appeal for which a formal application is to be made and the same is to be allowed by the Appellate Court. If the appeal is heard and decided against the petitioner herein, the matter should then be remanded to the learned Company Judge for holding a fresh auction, within three months from the date of receipt of the order of the Appellate Court. Needless to say, the auction is to be conducted in accordance with law and after proper publication of the intended auction. ”
2.15 It is after the aforesaid order of the Hon'ble the Apex Court that OJ Appeal No.146 of 2008 came to be heard and decided by judgment and order dated 20.06.2011. The OJ Appeal came to be partly allowed and the direction given by the learned Company Judge of not extending the period to make balance payment was confirmed. The Division Bench was pleased to set aside the other direction regarding holding of auction. The Division Bench was pleased to give liberty to the Official Liquidator to submit appropriate report before the learned Company Judge and the learned Company Judge was required to consider the said report and issue suitable direction in accordance with law.
2.16 It is against this order that the appellant- applicant approached Hon'ble the Apex Court by filing Special Leave to Appeal (Civil) No.27544 of 2011. The said Special Leave to Appeal came to be disposed of by the Hon'ble the Apex Court by order dated 17.10.2011. A short order, which is reproduced for ready perusal:-
“On a conjoint reading of Paragraph 3 of the impugned judgment with the Order at Page 32 of the Special Leave Petition (Annexure-P/1) dated 22nd February, 2006, we grant leave to the petitioner to move the High Court for review.
Subject to what is stated above, we permit the petitioner to withdraw this petition. The Special Leave Petition is, accordingly, dismissed as withdrawn.
(emphasis supplied)
2.17 After disposal of the Special Leave to Appeal by way of withdrawal, the appellant-applicant approached this Court and filed review application being Misc.Civil Application No.35 of 2012. Learned Advocate for the appellant-applicant submitted that as there was delay, Civil Application for condonation of delay was also filed, which was allowed and the Misc.Civil Application (for review) was taken up for consideration. The said Misc.Civil Application came up for consideration of the Division Bench of this Court, which disposed of the same by judgment and order dated 23.08.2012. After setting out all the facts in detail, the Division Bench disposed of the Misc.Civil Application in following terms:-
“17. It is true that if any party to the proceedings has not raised any type of such objection, then such may not be heard to raise the objections at the later stage after having partly lost in the matter, but such question has simultaneously been falling on the spear of judicial discipline. We find that if the order is recalled and the appeal is reheard and the Division Bench hearing the O. J. Appeal is left with the liberty to finally express the view on the aspects of development arisen qua the property in question after this Court passed the order and also the further adjudication about the rights of the parties, if any, on account of the alteration of the rights, such would meet with the ends of justice. We also find that if such a clarification is not made, it may adversely affect the rights of the parties to the proceedings, who acted in bonafide by way of implementation of the orders or by way of participation in bonafide thereafter. Therefore, it appears to us that if such aspect is left to be examined by the Bench hearing the O. J. Appeal and to finally conclude on the same, such would meet with the ends of justice. Hence, the following order:-
(a) The Order dated 20.6.2011 passed in O.
J. Appeal No.146 of 2008 is reviewed and recalled with the further observation and direction that such reviewing and recalling of the order shall not automatically put an end to the rights of the parties for the action taken pursuant to the order dated 20.6.2011 and thereafter. It will be open to the parties to the proceedings as well as to the third party, if any, to contend that the right is so created, be maintained and the action taken after the order dated 20.6.2011 by the OL and the further incidental action thereto by all concerned may also be saved and may not be upset or nullified. Such aspects of any action taken after 20.6.2011 till the pronouncement of the present order shall be finalized at the time of final hearing of O. J. Appeal No.146 of 2008.”
3. Learned Advocate for the appellant-applicant submitted that the aforesaid order, in so many words, gives right to the present appellant-applicant to raise contention at the time of hearing of OJ Appeal No.146 of 2008. In this regard, he laid emphasis on the following words:-
“17 (a) ..... that such reviewing and recalling of the order shall not automatically put an end to the rights of the parties for the action taken pursuant to the order dated 20.6.2011 and thereafter.”
3.1 Learned Advocate for the appellant-applicant submitted that the Court, while recalling order dated 20.06.2011, was very clear in its mind and therefore provided that, 'by review or recall of the said order (20.06.2011), rights of the parties will not come to an end'. Learned Advocate for the appellant-applicant submitted that meaning thereby the right of the applicant to have the property on such terms and conditions as may be prescribed by this Court at the time of hearing and deciding of OJ Appeal No.146 of 2006 is available to the applicant under this order. Learned Advocate for the appellant-applicant-submitted that, that is why the Court further stated that:-
“17. (a) It will be open to the parties to the proceedings as well as to the third party, if any, to contend that the right is so created, be maintained and the action taken after the order dated 20.6.2011 by the OL and the further incidental action thereto by all concerned may also be saved and may not be upset or nullified. ”
3.2 Learned Advocate for the appellant-applicant submitted that the Division Bench while reviewing and recalling its order dated 20.06.2011 specifically reserved 'right to contend' in favour of the parties and the present applicant is very much a party to the proceedings and therefore, its right to contend is also reserved by the Court. Learned Advocate for the appellant-applicant submitted that the Court was pleased to observe that:-
“17. (a) ..... Such aspects of any action taken after 20.6.2011 till the pronouncement of the present order shall be finalized at the time of final hearing of O. J. Appeal No.146 of 2008.”
(emphasis supplied)
3.3 Learned Advocate for the appellant-applicant submitted that this means that applicant's right of getting the property on payment of the remaining amount of sale consideration, on such terms and conditions as may be prescribed by the Court while finally deciding OJ Appeal No.146 of 2008, is very much maintained by the Court.
4. In between order dated 20.06.2011 and 23.08.2012, the Official Liquidator filed Official Liquidator's Report No.114 of 2011 before the Hon'ble Company Court seeking permission to terminate the sale confirmed by this Court and to forfeit the amount deposited by the appellant-applicant. The Official Liquidator also sought permission to auction the land – property of the company in liquidation. Official Liquidator's Report No.114 of 2011 was filed on 29.06.2011, which came to be considered and an order was passed on 29.07.2011. The learned Company Judge was pleased to grant relief prayed for in the said Official Liquidator's Report, as is clear from the order. The relevant part of the order reads as under:-
“29. In view of and as consequence of the breach on account of non-payment of balance amount of sale consideration; the OL, as per the terms of tender and para 6(4) of the order dated 22.2.2006, is entitled to take action as per and in accordance with clause 17 and para 6(4) of the order dated 22.2.2006 and the permission as contemplated by the said order therefore deserves to be granted and is hereby granted.”
(emphasis supplied)
4.1 The learned Company Judge was further pleased to order that:
“30. So far as the relief prayed for in para 24(2) is concerned it is clarified that the request for permission to auction sale the land and property in question can be considered only after the valuation of the land and property in question is made available before the Court.”
4.2 Besides Official Liquidator's Report No.114 of 2011, the Official Liquidator also filed Official Liquidator's Report No.116 of 2011 before the Hon'ble Company Court for fixation of upset price and to fix the date of auction. The Official Liquidator suggested the upset price to be Rs.50 crores. The said Official Liquidator's Report No.116 of 2011 was filed on 05.07.2011 and on that Official Liquidator's Report, the learned Company Judge passed order on 04.10.2011, giving certain directions, which are as under:-
“14.1 It is clarified that the below mentioned directions and present order are passed with a view to ensuring that the process of getting fresh valuation and subsequent process for disposed of property may not be delayed, more particularly, because on earlier occasion, the Apex Court has desired that the proceedings pertaining to the property in question may conclude on an early date. The relevant observations by the Apex Court read thus;
“This request is being made particularly on account of the fact that the company is in liquidation and the dues of the workmen and various creditors are required to be paid. In the appeal, the respondent No.1 has already been given leave to intervene. Likewise, the applicant in I. A. Nos. 2-3 of 2011, will also be entitled to intervene and make submissions in the appeal for which a formal application is to be made and the same is to be allowed by the Appellate Court. If the appeal is heard and decided against the petitioner herein, the matter should then be remanded to the learned Company Judge for holding a fresh auction, within three months from the date of receipt of the order of the Appellate Court.”
14.2 The Official Liquidator is permitted to engage service of a Government approved valuer for the purpose of obtaining valuation report of the property in question.
14.3 The Official Liquidator shall request the valuer to submit a detailed valuation report, containing the basis of the conclusion and suggestion, as early as possible in respect of the property in question.
14.4 Immediately after the report of the valuer is received, it would be open to the Official Liquidator to take out appropriate proceedings seeking further directions as may be considered necessary and appropriate.
14.5 It is clarified that unless the fresh report of the valuer is received, it would not be appropriate and/or in the interest of any of the parties that the upset price may be fixed and/or further steps with regard to auction sale may be permitted. The said aspects will be taken up only after the report of the valuer is received.”
(emphasis supplied)
4.3 Being aggrieved by the order passed by the learned Company Judge in Official Liquidator's Report No.114 of 2011, the present appellant-applicant filed OJ Appeal No.19 of 2012. The said OJ Appeal came to be withdrawn under order dated 26.03.2012. Para-2 of the said order reads as under:-
“2. Learned counsel for the appellant states that he has filed review petition against the order of learned Single Judge which is pending before the learned Single Judge. In this view of the matter, the appeal is dismissed as withdrawn. Liberty is granted to the appellant to file an appeal after review petition is decided.”
5. These facts are set out to give an idea about the controversy involved in the matter. These facts were necessary to set out so as to make it clear that the Court was aware of the controversy involved in the matter. As such, a short question which falls for consideration of this Court is as to whether the appellant-applicant, in whose favour a sale came to be confirmed by order dated 22.02.2006 on certain terms and conditions as provided in the tender and as provided by the learned Company Judge in order dated 22.02.2006, having committed default, can now be heard to say that:-
I. time to make payment of the remaining sale consideration be extended on such terms and conditions as may be deemed fit by this Court. The indication was that on payment of interest on such rates as deemed proper by this Court.
II. Alternatively it was suggested that in the event the Court finds it not acceptable the aforesaid course of action then in that case, the applicant should be allowed to retain the portion /part of the property to the extent he was able to pay price and the remaining property may go back to the Official Liquidator, who may then deal with the property in accordance with law, meaning thereby selling the same by auction.
6. The matter is heavily contested by learned Advocate for the secured creditors, learned Advocate for the workers and necessary assistance is provided by learned Advocate for the Official Liquidator.
7. Learned Advocate for the workers submitted that according to the information available to him, today, the property in question is worth not less than Rs.100 crores by any standard. Learned Advocate for the Official Liquidator submitted that a valuation report dated NIL December 2011 is to the effect that the property is worth Rs.123.56 crores (approximately) as the land is valued at Rs.7800 per sq. mtr. Learned Advocate for the workers submitted that so far the workers are paid only 10% of their claims and for all these years, they are waiting for their dues to come. Learned Advocate for the workers submitted that as on the date of winding up, claim of the workers was Rs.17.8 crores.
8. This Court cannot lose sight of the fact that, 'even if the entire amount of Rs.17.8 crores is paid to these workers at the earliest, that will not wipe-off the agony which they have undergone for all these years'. It is only one whose shoe pinches knows the pain of that pinch and by any description of pain, one cannot get the exact idea of the pain one has undergone.
8.1 If this Court accepts any of the submissions /suggestions /reliefs sought for by the appellant-
applicant then one thing is clear that workers will remain high and dry and will not get anything towards their claims and therefore, this Court, on careful consideration and taking into consideration all possible aspects of the matter, rejects the submissions /suggestions /prayers made by the applicant. In doing so, the Court is further supported by the submissions made by learned Advocate for the secured creditors and assistance rendered by learned Advocate for the Official Liquidator.
8.2 To start with, the judgment and order by which the sale was confirmed was very clear. In judgment and order dated 22.02.2006, the learned Company Judge did prescribe time-table for payment in sub-para-2) of para-6 and consequences of non-compliance of the same in sub- para-4), coupled with Clause-17 of the tender.
8.3 The applicant having failed to comply with the payment time-table then filed Company Application No.327 of 2006, wherein it is clear from the prayer made in the Judges' Summons and the affidavit filed in support of the Judges' Summons that what was prayed was extension of time only up to 31.08.2006 and the reason set out for seeking such extension was in para-(3) of the affidavit, wherein it was stated that, “on account of serious sickness in the family of one of its active partners and also on account of other reasons beyond its control”. This Court has an additional reason to deny the prayer /relief to the appellant-applicant because the prayer for extension of time stood granted in favour of the applicant as extension was granted up to 15.09.2006. It will not be inappropriate to remind oneself that extension sought for was only up to 31.08.2006, whereas the Court granted extension up to 15.09.2006 and therefore, on that short ground, the appellant-appellant must fail in getting any relief from this Court.
8.4 The submission made by learned Advocate for the appellant-applicant that he could not act within the period extended because there was OJ Appeal No.43 of 2005 pending and it was decided that Company Application No.327 of 2006 (praying for extension) will be considered after OJ Appeal No.43 of 2005 is decided, which came to be decided only on 01.08.2008, this makes the case of the appellant-applicant no better, because if the bonafides of the appellant-applicant are to be tested, it has not been placed on record that between 11.06.2006, which was the last date for payment as per the sale confirmation order and 15.09.2006, till which date the extension was granted, any substantial payment was made by the applicant, except making an application to permit him to make payment.
8.5 Coming to the niceties of law, by order of recall (dated 23.08.2012), the Division Bench made it very clear in Clause-(a) of para-17 that:-
“(a) The Order dated 20.6.2011 passed in O. J. Appeal No.146 of 2008 is reviewed and recalled with the further observation and direction that such reviewing and recalling of the order shall not automatically put an end to the rights of the parties for the action taken pursuant to the order dated 20.6.2011 and thereafter. It will be open to the parties to the proceedings as well as to the third party, if any, to contend that the right is so created, be maintained and the action taken after the order dated 20.6.2011 by the OL and the further incidental action thereto by all concerned may also be saved and may not be upset or nullified. ”
(emphasis supplied)
8.6 So far as submission of learned Advocate for the appellant-applicant that while recalling order dated 20.06.2011, right of the appellant-applicant to ask for the property on payment of remaining sale consideration, on such terms and conditions as may be prescribed by this Court and its right to contend before this Court, is saved, is not acceptable because 'recalling order' meant for protecting rights of the parties which might have been created after order dated 20.06.2011 and before order of recall passed on 23.08.2012. Admittedly, no right is created in favour of the appellant-applicant after 20.06.2011. Whatever rights the applicant is having, are flowing from order dated 22.02.2006. The question which is required to be answered by this Court is whether in light of the clear terms and conditions prescribed in the tender and prescribed by para-6 of order dated 22.02.2006, any right of the applicant survived and the answer of this Court is, 'NO'.
9. Learned Advocate for the secured creditors submitted that the aforesaid observations /directions of the Division Bench in order dated 23.08.2012 will be applicable to the following actions which have taken place between 20.06.2011 and 23.08.2012.
I. Sale is terminated by order dated 29.07.2011 passed in Official Liquidator's Report No.114 of 2011.
II. Forfeiture of the deposit is ordered.
III. Fresh valuation of the property has taken place.
IV. More than one Intervener have come forward to offer price, ranging between Rs.42 crores to Rs.50 crores for the same property, details of which are as under:-
A. KBC Enterprise filed OJCA No.215 of 2011, offering price of Rs.42 crores.
B. Shree Ganesh Marketing Pvt. Ltd. filed OJCA No.273 of 2011, offering price of Rs.45 crores.
C. Anajana Construction filed OJCA No.205 of 2009, offering price of Rs.45-50 crores.
D. Kamla Amrut Infrastructure filed OJCA No.282 of 2011, offering price of Rs.48 crores.
9.1 Learned Advocate for the secured creditors vehemently submitted that it is a settled position of law that 'Company Court is a custodian of the property for the benefit of the workers and secured creditors'. He submitted that it is the prime duty of the Company Court to see that the property of the company going into liquidation fetches maximum amount so that its debts can be satisfied to the maximum extent. In the present case, the total dues of the company in liquidation are around Rs.100 crores, to be precise as stated hereinabove, the dues of the workers are Rs.17.8 crores, as on the date of winding up and of other secured creditors are to the tune of Rs.116 crores, as on the date of winding up. In light of that, to accept the prayer of the appellant-applicant to allow him to take this property for Rs.10.20 crores, for which he of his own missed the bus in the year 2006, will not be possible under any circumstances. Learned Advocate for the secured creditors invited attention of the Court to a decision of the Hon'ble the Apex Court in the matter of Divya Manufacturing Company (P) Ltd. Tirupati Woolen Mills Shramik Sangharsha Samity & Anr. Vs. Union Bank of India & Ors., Official Liquidator & Ors., reported in (2000) 6 SCC 69. Learned Advocate for the secured creditors invited attention of the Court to paras-12 to 16, of which a quote from para-12 and para-16 are reproduced hereunder:-
“12. xxxxx ”6. ..... That is because the Court is the custodian of the interests of the company and its creditors and the sanction of the Court required under the Companies Act has to be exercised with judicial discretion regard being had to the interests of the Company and its creditors as well.
13. to 15 xxxx “16. Further, there is a specific condition No.11 in terms and conditions of sale as quoted above which empowers the Court to set aside the sale even though it is confirmed for the interests of creditors, contributories and all concerned and/or public interest. In this view of the matter, it cannot be said that the Court became functus officio after the sale was confirmed. As stated above, neither the possession of the property nor the sale deed was executed in favour of the appellant. The offer of Rs.1.30 crore is totally inadequate in comparison to the offer of Rs.2 crores and in case where such higher price is offered, it would be in the interest of the Company and its creditors to set aside the sale. This may cause some inconvenience or loss to the highest bidder but that cannot be helped in view of the fact that such sales are conducted in Court precincts and not by a business house well versed with the market forces and price. Confirmation of the sale by a Court at grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court. In the present case, the Court has reviewed its exercise of judicial discretion within a shortest time.
(emphasis supplied)
9.2 Learned Advocate for the secured creditors also relied upon a decision of the Hon'ble the Apex Court in the matter of Shradhha Aromatics Private Limited Vs. Official Liquidator for Global Arya Industries Limited & Ors., reported in (2011) 6 SCC 207. Learned Advocate for the secured creditors invited attention of the Court to paras-2, 3 and 4 of the said judgment. Incidentally, the judgment in the case of Divya Manufacturing Company (P) Ltd. (supra) is relied upon by the Hon'ble the Apex Court, quoting para-13 of the said judgment, wherein the Hon'ble the Apex Court did say that:-
“4. xxxx “13. ..... The real criteria is that the property of the Company in liquidation should fetch maximum price. ”
The Hon'ble the Apex Court also observed that:-
“4. xxxx “13. ..... Irrespective of the fact that whether any such condition is there or not, the Court is well within its power to reconsider its decision especially when a higher amount is offered and ultimately, it is in the advantage and benefit of the secured creditors and workers.”
10. It will not be out of place to mention here that line of judgments are to the effect that even in the matters of confirmed sale, if the Court is told that there is another party, who is offering a substantial higher amount, the Court can always look into that. In the present case, the appellant-applicant is a defaulter, who did not stand up to the promise and did not pay the remaining amount of sale consideration even during the time for which he was seeking extension. The excuse put forward of pendency of OJ Appeal No.43 of 2005 is not found to be of such a substance which will tilt the balance in favour of the appellant-applicant.
11. In view of the aforesaid discussion, this Court is of the opinion that no relief can be granted to the appellant-applicant. In the result, the appeal fails and the same is dismissed.
12. In view of the direction issued by the Hon'ble the Apex Court in Special Leave to Appeal (Civil) No.5415 of 2010 dated 28.04.2011, the learned Company Judge is requested to give due priority to the Report of the Official Liquidator which may be filed within 15 days from today, if not filed already and proceed with the same as expeditiously as possible.
13. At this juncture, learned Advocate Mr.A.L.Shah for the appellant-applicant requested that it may be clarified that the learned Company Judge, while passing order in Official Liquidator's Report No.114 of 2011 dated 29.07.2011, meant that, there could be forfeiture of only Earnest Money Deposit and not the entire sale consideration because simplicitor dismissal of this appeal may be construed to mean that the entire amount which is paid by the present appellant-applicant stands forfeited. He submitted that this request is required to be made because it is suggested by the learned Advocate for the Official Liquidator that the appellant-applicant is not entitled to refund of anything and if at all the amount is ordered to be refunded, it should be only after deducting interest @ 15% from the said amount. Learned Advocate for the appellant-applicant invited attention of the Court to the relevant discussion in para-18 of the said order, which reads as under:-
“18. The terms of the tender including clause No.17, inter alia, prescribe that in the event the auction purchaser does not pay the balance amount of sale consideration, the OL shall terminate the sale and forfeit the deposit. There is no dispute between the parties that the term “deposit” in clause No.17 and para 6(4) of the order dated 22.2.2006 means Earnest Money Deposit (EMD) paid by the bidders at the time of tendering the bids.“
14. This Court, after careful consideration, directs the Official Liquidator to refund the amount deposited by the appellant-applicant towards sale consideration. The Court makes it further clear that the appellant-applicant will not be entitled to refund of Earnest Money Deposit. It is also made clear that this refund will be without any interest payable thereon. The amount shall be refunded only after the property is put to sale and the sale price is realized by the Official Liquidator.
(Ravi R.Tripathi, J.)
*Shitole
(N.V.Anjaria, J.)