Lalit Kumar S/O Purushottamdas ... vs Official Liquidator, High Court ...
2004 Latest Caselaw 34 Bom

JUDGMENT

D.D. Sinha, J.

1. Admit. Heard finally by consent of Shri Dharmadhikari, learned Counsel for the appellant, Miss Sharma, learned Counsel for the respondent No. 1, Shri Madnani, learned Counsel for the respondent No. 2 and Shri Bhangde, learned Counsel for the respondent No. 3.

2. Shri Dharmadhikari, learned Counsel for the appellant, states that M/s Nav Bharat Trading Company had obtained a loan of Rs. 3,60,000/- in the year 1953 from the Laxmi Bank Ltd. Shri Gopaldas Mohta, grand-father of the appellant, was one of the Directors of the above referred Company and he allegedly stood guarantor for the above mentioned loan. It is further alleged that Company Appeal No. 9 of 2003 decided on 13-1-2004. (Nagpur) Shri Gopaldas Mohta had mortgaged two immovable properties known as 'Mohta House' situated at Civil Lines, Nagpur and 'Marble House' situated at Itwari, Nagpur. The aforesaid properties belong to M/s Gopaldasji Bulakidas Mohta, a HUF.

3. Learned Counsel Shri Dharmadhikari further states that respondent No. 1 had filed Official Liquidator's Report No. 80/2002 in Company Petition No. 14/1960 stating therein that a sum of Rs. 2.5 crores approximately is to be received from Mohta family and details of the dues are given in the Official Liquidator's Report No. 11/1993. The respondent No. 1 has stated that Mohta House and Marble House are to be sold through paper advertisement by public auction. The appellant has filed an application praying for redemption of mortgage by scaling down the liability and also stated that dues from the mortgagor are not more than Rs. 40,000/~ and appellant also prayed that he be allowed to redeem the mortgage and deposit the amount of Rs. 40,000/- and the title deeds of the mortgaged properties be re-conveyed.

4. It is submitted by learned Counsel Shri Dharmadhikari that Hon'ble Company Judge proceeded with the matter and passed order on the above mentioned Official Liquidator's Report on 4-7-2003 directing that the Mohta House and Marble House be sold by public auction. The Hon'ble Company Judge fixed the upset price of the Mohta House at Rs. 6 crores and the Marble House at Rs. 4 crores. The appellant being aggrieved by the order passed by the Hon'ble Company Judge on the Official Liquidator's Report No. 80/2002 on 4-7-2003 and 18-7-2003 whereby sale of Mohta House and Marble House is directed, filed Company Appeal No. 7/2003 before this Court. This Court by order dated 19-8-2003 refused to entertain the above mentioned appeal on the ground that application of the appellant praying for permission to intervene is pending before the Hon'ble Company Judge and granted liberty to the appellant to approach the Hon'ble Company Judge by making an appropriate application and further observed that if such application is made, obviously the same would be considered in accordance with law.

5. It is contended by the learned Counsel for the appellant that after order dated 19-8-2003 was passed in the company appeal, appellant filed Company Application No. 127/2003 and raised the ground that liability of M/s Nav Bharat Trading Company Ltd. is about Rs. 40,000/- and the Official Liquidator has not placed any material on record to substantiate the contention that liability of the Mohta family is Rs. 2.5 crores. It is also stated in the said company application that if the properties are sold and third party interest is created in the said properties, appellant along with other family members will be put to irreparable loss and injury. It is further contended that the Hon'ble Company Judge without deciding Company Application No. 127/2003 proceeded to pass the impugned order dated 5-9-2003 and accepted the bid of respondent No. 2 and adjourned hearing of the company application filed by the appellant and directed Official Liquidator to file reply. Being aggrieved by the order dated 5-9-2003 passed by the Hon'ble Company Judge, the appellant has preferred the present appeal.

6. Learned Counsel Shri Dharmadhikari vehemently states that the application, which was filed by respondent No. 3 Shri Ghanshyamdas Mohta for redemption of mortgage and for scaling down the liability was not decided by the Hon'ble Company Judge and without deciding the issue, the Hon'ble Company Judge passed an order on 5-8-1993 directing sale of Mohta House and Marble House. The respondent No. 3 had filed Company Appeal No. 10/1993 challenging the above mentioned order passed by the Hon'ble Company Judge and contended that order directing sale of Mohta House and Marble House without adjudicating liability of M/s Nav Bharat Trading Company was premature and illegal. This Court vide order dated 11-4-2002 set aside the order directing sale of Mohta House and Marble House and directed that matter be decided afresh. It is contended by the learned Counsel for the appellant that the Hon'ble Company Judge without considering this aspect and without adjudicating liability of M/s Nav Bharat Trading Company again directed sale of Mohta House and Marble House by passing orders dated 4-7-2003, 18-7-2003 and 5-9-2003. It is, therefore, contended that these orders are contrary to decision of this Court in Company Appeal No. 10/1993 and, therefore, cannot be sustained.

7. It is further contended by the learned Counsel for the appellant that appellant filed Company Appeal No. 7/2003 against the orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge whereby direction is issued to put properties in question to auction. While disposing of the appeal vide order dated 19-8-2003, this Court granted liberty to the appellant to approach the Hon'ble Company Judge by making an appropriate application for redressal of his grievance since appellant's application for intervention was pending before the Hon'ble Company Judge and also observed that if such application is made by the appellant, the same would be considered in accordance with law. It is submitted by the learned Counsel that in view of specific liberty granted by the appellate Court vide order dated 19-8-2003, the appellant filed Company Application No. 127/2003 before the Hon'ble Company Judge and apart from other grounds, raised the basic ground that liability of M/s Nav Bharat Trading Company is about Rs. 40,000/- and the Official Liquidator has not placed on record material to substantiate his contention that liability of Mohta family is Rs. 2.5 crores. If Mohta House and Marble House are sold and third party interest is created, the appellant and other members of the family would be put to irreparable loss and injury. It is also stated in the company application that the appellant had filed Company Appeal No. 7/2003 challenging orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge and this Court vide order dated 19-8-2003 refused to entertain the appeal and granted liberty to the appellant to approach the Hon'ble Company Judge by making appropriate application for redresssal of his grievance and also observed that if such application is made by the appellant, the same would be considered according to law.

8. It is contended by the learned Counsel for the appellant that in view of above referred observations of the appellate Court in order dated 19-8-2003 passed in Company Appeal No. 7/2003, the Hon'ble Company Judge without deciding Company Application No. 127/2003 filed by the appellant, passed the impugned order dated 5-9-2003 and accepted the offer of Rs. 6.60 crores for Mohta House given by respondent No. 2 M/s Bhagirath Developers Pvt. Ltd. It is, therefore, contended that the impugned order is not only bad in law, but is also inconsistent with the observations made by the appellate Court vide order dated 19-8-2003 in Company Appeal No. 7/2003 and, therefore, same cannot be sustained.

9. On the other hand, Shri Bhangde, learned Counsel for the respondent No. 3, states that the respondent No. 3 is the senior most male member in the family of Gopaldas Bulakidas Mohta H.U.F. The respondent No. 3 is Karta of H.U.F. and is representing H.U.F. for the last 25 years and has taken a decision that it will be in the interest and benefit of the entire family and members of H.U.F. to sell the property which is taken in possession by the Official Liquidator/Court Receiver. The respondent No. 3 himself has put offer for sale of Mohta House. The respondent No. 3 is representing H.U.F. before the Hon'ble Company Judge.

10. Learned Counsel Shri Bhangde further states that application of the appellant for intervention was not allowed by the Hon'ble Company Judge as hearing on the said application was not pressed by the appellant. Even otherwise, as an intervenor, the appellant did not get right to file the appeal. The intervenor can only support or oppose the stand of either of the parties to the proceedings. The intervenor is also not entitled to file any pleadings or claim any independent relief. It is contended by the learned Counsel that the Hon'ble Company Judge has passed the impugned order in Official Liquidator's Report No. 80/2002 and perusal of the order shows that order was passed in response to the invitation and receipts of bid for Mohta House and Marble House. It is further contended that orders for inviting bids for Mohta House and Marble House were passed by the Hon'ble Company Judge on 4-7-2003 and 18-7-2003 and appellant himself participated and concurred for inviting bids and hence, now the order of inviting bids cannot be legally challenged by the appellant particularly when the impugned order dated 5-9-2003 was passed without any objection from the appellant.

11. It is contended by learned Counsel Shri Bhangde that in Official Liquidator's Report No. 80/2002 and in the present proceedings, the appellant himself had filed an application bearing No. 56/2003 dated 25-3-2003 before the Hon'ble Company Court for permission to file offers of proposed purchasers of Mohta House and Marble House. Along with the application, the appellant had submitted the offers, which he claims to have received regarding Mohta House and Marble House and actively participated in the process before the Hon'ble Company Judge and, therefore, appellant is estopped from contending that Mohta House and Marble House cannot be sold. The appellant is further estopped from challenging validity and propriety of the impugned order dated 5-9-2003 whereby Hon'ble Company Judge has accepted bid of respondent No. 2 in respect of Mohta House.

12. Learned Counsel Shri Bhangde submits that in view of order dated 18-7-2003 passed by the Hon'ble Company Judge, it is clear that the appellant himself had made a request to the Hon'ble Company Judge that the time period given in the advertisement dated 4-7-2003 was too short for the parties to submit their offers and to make arrangement for the E.M.D., which has been quantified by the Hon'ble Company Judge. The appellant had requested the Hon'ble Company Judge that one month's time be given so that better offers can be received from the interested purchasers. It is contended that it is because of this request made by the appellant along with the grievance of the Official Liquidator, who also strongly supported the contention and request made by the appellant, the Hon'ble Company Judge was pleased to extend the period of one and half month with a direction to re-advertise for invitation of bids vide order dated 18-7-2003. It is further contended that accordingly fresh advertisement was issued inviting bids for Mohta House and Marble House by Official Liquidator. In response to this advertisement, respondent No. 2 M/s Bhagirath Developers Pvt. Ltd. submitted its bid before the Hon'ble Company Judge on 5-9-2003 and the said offer being the highest offer and same was accompanied by Demand Draft of Rs. 155 lacs towards 25% E.M.D., the bid was accepted by the Hon'ble Company Judge by passing the impugned order dated 5-9-2003. It is submitted that during the course of hearing, the appellant's Counsel Shri M. L. Somalwar was present. There was no dispute or objection raised by the appellant or his Counsel to the offer of respondent No. 2, The Hon'ble Company Judge had enquired even from the Counsel for the appellant as to whether he had got any better offer to which the appellant replied that he had no better offer. It is, therefore, contended that conduct of the appellant amounts to concurrence and acceptance of bid of respondent No. 2 and, therefore, it is not open for the appellant now to raise the grievance against the impugned order dated 5-9-2003 passed by the Hon'ble Company Judge.

13. Learned Counsel Shri Bhangde further submits that controversy in Company Appeal No. 10/1993 was that the respondent No. 3 was claiming that property should not be allowed to be sold by the Official Liquidator. The respondent No. 3 was claiming being Karta of the H.U.F. that he be permitted to sell the property and that the liability be adjudicated. However, after order dated 11-4-2002, there was a specific order dated 4-10-2002 passed by the Hon'ble Company Judge as to whether the respondent No. 3 and Smt. Gangabai both can discharge the liability and that the property can be redeemed in their favour. It was also directed that the respondents will make such an offer, which can be considered. It is contended that thereafter appellant submitted offer dated 25-3-2003 for the properties in question and respondent No. 3 submitted offer for Mohta House at the highest rate. It is submitted that in view of these circumstances, the contention of the appellant that the impugned order is inconsistent with the order passed in Company Appeal No. 10/1993 is incorrect.

14. It is lastly contended by learned Counsel Shri Bhangde that though appellant has challenged the orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge by filing Company Appeal No. 7/2003, the appellate Court refused to entertain the appeal whereby finality is reached to those orders and, therefore, the impugned order dated 5-9-2003 passed by the Hon'ble Company Judge is just and proper.

15. We have given our anxious thought to the various contentions canvassed by the learned respective Counsel for the parties and perused the relevant orders passed by the Hon'ble Company Judge as well as appellate Court. It is not in dispute that in 1960, Laxmi Bank Ltd. went into liquidation and vide order dated 28-6-1960 passed by the Hon'ble Company Judge, winding up of Laxmi Bank Ltd. was ordered and the Official Liquidator was appointed. It is also not in dispute that M/s Nav Bharat Trading Company had obtained a loan of Rs. 3,60,000/- in the year 1953 from the Laxmi Bank Ltd. and Shri Gopaldas Mohta, grand-father of the appellant was one of the Directors of the said Company and he allegedly stood guarantor for the above mentioned loan by mortgaging two immovable properties known as Mohta House and Marble House belonging to M/s Gopaldasji Bulakidas Mohta, H.U.F. It is also not in dispute that the Official Liquidator filed O.L.R. No. 80/2002 in Company Petition No. 14/1960 stating that a sum of Rs. 2.5 crores approximately is to be received from Mohta family and details of the dues are given in O.L.R. No. 11/1993.

16. It is also not in dispute that the Hon'ble Company Judge proceeded with the matter and passed order on the official Liquidator's Report on 4-7-2003 directing that Mohta House and Marble House be sold by public auction. The observations in the order dated 4-7-2003, which are relevant, read thus:

"Earlier on March 24, 2003, an offer came to be made on behalf of M/s Tirupati Builders and Developers and Link House Industries Ltd., Nagpur in respect of two properties, who were duly represented by Mr. Somalwar, Advocate. Today the Karta of the Joint Hindu Family of Gopaldas Bulakidas Mohta has given an offer only in respect of Mohta House, Temple Road, Civil Lines, Nagpur from willing purchasers at the rate of Rs. 1051/- per square feet. According to Mr. Bhangde, this would discharge all the liabilities in the matter and, therefore, he may be permitted to dispose of the property under attachment in favour of the said persons."

Similarly, other observations in the order dated 4-7-2003, which are relevant, read thus :

"Mr. Bhangde particularly pointed out that the offer made by Mr. Somalwar on behalf of his client does not appear to be genuine offer as his client has made correspondence with them, but the fact remains that in none of the case the parties for which Mr. Somalwar appears, have shown any bona fides by coming forward to deposit the substantial amount of the offer."

Other relevant observations in the order dated 4-7-2003 read thus:

"The apprehension of Mr. Bhangde is that if the property is advertised for sale, it would not fetch better price. If that is so, the interest of Mr. Bhangde's client can be secured by fixing the upset price, in terms of the offer received by Mr. Bhangde."

17. On the backdrop of above facts, the Hon'ble Company Judge vide order dated 4-7-2003 directed the Official Liquidator to place an advertisement on 6-7-2003 in daily newspapers Hitvada, Nav Bharat and Lokmat inviting offers along with demand drafts in favour of the Official Liquidator of 25% of the amount of offer as E.M.D. and also fixed the upset price of Rs. 6 crores so far as Mohta House is concerned and Rs. 4 crores so far as marble House is concerned.

18. The above referred observations in order dated 4-7-2003 passed by the Hon'ble Company Judge made it abundantly clear that the appellant, who was represented by Shri Somlawar, Advocate, has not only actively participated in the proceedings before the Hon'ble Company Judge, but also disclosed that on 24-3-2003, he had received offers from M/s Tirupati Builders and Developers and Link House Industries Ltd., Nagpur in respect of properties in question. The offers received by the appellant were placed before the Hon'ble Company Judge and, therefore, it is crystal clear that right from the beginning, the appellant was a consenting party to the proceedings of sale of properties in question in the liquidation proceedings. However, appellant as well as respondent No. 3 wanted to explore possibility of getting better offer by private negotiations rather than putting it to auction and, therefore, in order to safeguard interest of the appellant as well as respondent No. 3, the Hon'ble Company Judge had directed Official Liquidator to place an advertisement by fixing the upset price of both the Houses vide order dated 4-7-2003. In the facts and circumstances of the case, in our considered view, the order dated 4-7-2003 passed by the Hon'ble Company Judge is invited by the appellant as well as respondent No. 3 and they were virtually consenting parties to the said order.

19. Similarly, on 18-7-2003 it was disclosed before the Hon'ble Company Judge that only one offer from Ramdeo Real Estate Private Limited has been received, which was also beyond the prescribed time mentioned in the advertisement and, therefore, a common grievance was made by the Official Liquidator and the learned Counsel appearing for the appellant/intervenor that as the time period given in the earlier advertisement was too short for the parties to submit their offers and to make arrangement for E.M.D., which was quantified by the Hon'ble Company Judge as 25%, one month's time may be granted to invite appropriate offers. It is, therefore, apparent that order dated 18-7-2003 passed by the Hon'ble Company Judge was also invited by the appellant since the time period given in the earlier advertisement was too short for the parties to submit their offers. Since appellant made a request to the Hon'ble Company Judge to grant sufficient time so that proper offers can be received from the prospective purchasers, the Hon'ble Company Judge passed order dated 18-7-2003 whereby the Official Liquidator was directed to re-advertise and invite bids on the same terms and conditions by publishing a public notice in the Hitvada, Lokmat and Nav Bharat from Nagpur and Economic Times published from Mumbai. In the circumstances, we have no hesitation to hold that the appellant not only actively participated in the proceedings, but both the orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge are at the behest of the appellant. The above referred conduct of the appellant shows that he was virtually a consenting party to these orders and it is well settled that if order is based on consent of the party by necessary implication, such party is estopped from making any grievance against such order since such party expressly or by implication, waives or foregoes its right of appeal.

20. It is no doubt true that the appellant filed Company Appeal No. 7/2003 and challenged the orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge. However, it is not in dispute that the appellate Court refused to entertain the appeal and did not disturb these orders passed by the Hon'ble Company Judge, thereby giving finality to these orders. It is pertinent to note that the appellant, who has preferred Company Appeal No. 7/2003, did not make present respondent No. 3 party to the said appeal and, therefore, all these relevant facts could not be placed before the appellate Court and in absence thereof, the appellate Court granted liberty to the appellant to approach the Hon'ble Company Judge by making an appropriate application for redressal of his grievance and it is in such circumstances, liberty came to be granted. Pursuant to such liberty, appellant filed Company Application No. 127/2003 before the Hon'ble Company Judge wherein he has raised the grounds for the first time that liability of M/s Nav Bharat Trading Company Ltd. is about Rs. 40,000/- and the Official Liquidator has not placed any material on record to substantiate the contention that liability of Mohta family is Rs. 2.5. crores.

21. When we consider the sequence of events in the present proceedings, the first order dated 4-7-2003 passed by the Hon'ble Company Judge whereby Official Liquidator was directed to place an advertisement inviting offers was at the behest of the appellant. Similarly, since time for submitting offers was too short, again on 18-7-2003 the appellant requested the Hon'ble Company Judge to extend the time for submitting offers, the Hon'ble Company Judge passed the order dated 18-7-2003 at the behest of the appellant and directed the Official Liquidator to re-advertise and invite bids on the same terms and conditions. The appellant was, therefore, virtually a consenting party to both these orders and, therefore, appellate Courts was justified in refusing to entertain Company Appeal No. 7/2003 filed by the appellant impugning orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge. Declining to entertain Company Appeal no. 7/2003 by the appellate Court resulted in rendering finality to the orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge and, therefore, as a necessary consequence of both these orders, the Hon'ble Company Judge, in our considered view, is justified in passing the impugned order dated 5-9-2003 by which Hon'ble Company Judge has only accepted the highest offer for the Mohta House. As we have already observed hereinabove, in the facts and circumstances of the present case, the appellant not only actively participated in the proceedings throughout, but orders were invited by him and his conduct demonstrates that he is a consenting party to all these orders including the impugned order dated 5-9-2003. Since no grievance was made by the appellant before the Hon'ble Company Judge on 5-9-2003 prior to passing of the impugned order, in our considered view, the Hon'ble Company Judge was justified in passing the impugned order dated 5-9-2003.

22. It is well settled that whenever order is invited by the parties from the Court or if the same is passed at the behest of the parties, such order because of conduct of the parties, is in the nature of consent order and is, therefore, binding on the parties. In the instant case, in view of the facts and circumstances referred to hereinabove, orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge were virtually invited by the appellant as well as respondent No. 3. These orders were passed at the behest of the appellant as well as respondent No. 3 and, therefore, by their implicit conduct, these orders are virtually consent orders. Similarly, it is not the contention of either appellant or respondent No. 3 that these orders were passed either on the basis of misconception of facts or law and, therefore, by very nature of these orders, it will be impermissible to the appellant as well as respondent No. 3 to re-open the issue once again in this regard.

23. Similarly, order dated 5-9-2003 is a consequential order passed by the Hon'ble Company Judge to the above referred orders dated 4-7-2003 and 18-7-2003. It is evident that the direction given by the Hon'ble Company Judge in the impugned order dated 5-9-2003 whereby bid of respondent No. 2 is accepted in respect of Mohta House basically flows from the adjudication, which has taken place and orders dated 4-7-2003 and 18-7-2003 which came to be passed by the Hon'ble Company Judge and hence, the impugned order dated 5-9-2003 is a consequential order and in the facts and circumstances of the present case is also a consent order in that sense of the term and, therefore, appellant and respondent No. 3 are estopped from making any grievance thereof since both of them by necessary implication waived their right to question the propriety or legality of such order.

24. It is no doubt true that in order dated 19-8-2003 passed by the appellate Court in Company Appeal No. 7/2003, liberty was given to the appellant to approach the Hon'ble Company Judge by making application for redressal of his grievance and appellant has approached the Hon'ble Company Judge by filing Company Application No. 127/2003, which is pending for adjudication before the Hon'ble Company Judge and, therefore, it will not be proper for us at this stage to express any opinion in this regard and it will be proper to leave it to the Hon'ble Company Judge to consider the same. However, in our view, merely because the appellant has filed the above referred company application before the Hon'ble Company Judge, the Hon'ble Company Judge was not prohibited from passing the impugned order dated 5-9-2003 since same is based on outcome of earlier orders dated 4-7-2003 and 18-7-2003 passed by the Hon'ble Company Judge at the behest of the appellant himself.

25. For the reasons stated hereinabove, there is no merit in the appeal and hence, the same is dismissed.

26. At this stage, Shri Dharmadhikari, learned Counsel for the appellant, states that this judgment may not be given effect to for a period of fifteen days in order to enable the appellant to approach the Apex Court. Though this request of the appellant is opposed by the other side, we feel that in the interest of justice, it will be proper to grant the same. Hence, the present judgment need not be given effect to for a period of two weeks from today and this protection shall cease to operate from 28th January, 2004.