Raj Kumar And Co Pvt. Ltd. (In ... vs The Official Liquidator
2023 Latest Caselaw 1716 Cal/2

                        IN THE HIGH COURT AT CALCUTTA
                            ORIGINAL JURISDICTION
                                 ORIGINAL SIDE


BEFORE:
The Hon'ble Justice Ravi Krishan Kapur

                                   CA 13 OF 2021
                                   CP 269 OF 1968

                      RAJ KUMAR AND CO PVT. LTD. (IN LIQN.)
                                      VS
                           THE OFFICIAL LIQUIDATOR

For the applicant                : Mr. Debnath Ghosh, Advocate
                                   Mr. Sarosij Dasgupta, Advocate
                                   Mr. Souvik Ganguly, Advocate
                                   Ms. Mini Agarwal, Advocate
                                   Ms. Ratnadipa Sarkar, Advocate
For the Official Liquidator      : Mr. Promod Kumar Drolia, Advocate
Reserved on                      : 24.07.2023
Judgment on                      : 28.07.2023
Ravi Krishan Kapur, J.:

   1. This is an application filed by Ganges Rolling Industries Pvt. Ltd.,

      seeking the following reliefs:

              (a) The respondent be directed to forthwith perform its obligations

in terms of the said order dated 25th April, 1990 and to remove the unauthorised occupants from Premises Nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata and to ensure a clear passage of 20 feet from the front portion of the main road so to enable the entry of vehicles into premises Nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata;

(b) Leave be granted to the applicant to deposit and pay the balance sum of Rs.17,25,000/- to the respondent;

(c) Leave be granted to the applicant to submit the draft Deed of Conveyance in respect of premises Nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata to the respondent;

(d) The respondent be directed to forthwith execute and register the Deed of Conveyance in respect of premises Nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata in favour of the applicant as per the draft Deed submitted by the respondent simultaneously with receipt of the balance sum of Rs.17,25,000/-;

(e) The Registrar of Assurances, Kolkata be directed to assess the stamp duty and registration fees payable for registration of the Deed of Conveyance in respect of premises Nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata in favour of the applicant on the basis of the consideration amount of Rs.57,50,000/- as the sale was made by the Hon'ble Court after publication of notice of sale by public auction in the newspapers;

(f) Leave be granted to the applicant to deal with and/or dispose of premises Nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata or any part thereof in the manner the applicant deems fit and proper;

(g) Ad interim orders in terms of prayers above;

(h) Such further order or orders be passed and/or direction or directions be given as this Hon'ble Court may deem fit and proper.

2. Briefly, in or about 1968, one Giridhari Das Kothari filed a winding up

petition being CP No.269 of 1968 against M/s. Raj Kumar Company

Private Limited. By an order dated 21 May 1970, the company, was

directed to be wound up and the Official Liquidator directed to take

over the assets of the company (in liquidation). Originally, the

company (in liquidation) had three immoveable properties. Out of the

three immoveable properties, two of the immoveable properties have

been sold by the Official Liquidator.

3. At the time of passing of the winding up order, the company (in

liquidation) was the owner of an undivided half share of the premises

nos. 232, 232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden

Road, Kolkata and the remaining undivided half share was owned by

Hargobind Prasad Goenka as Karta of his Hindu Undivided Family.

4. Pursuant to the order of winding up, the Official Liquidator took

possession of the assets of the company (in liquidation) including the

half share in Premises nos.232, 232/2, 235, 237, 239, 242, 243 and

244 Picnic Garden Road, Kolkata.

5. Thereafter, one Ashoke Goenka, son of Hargobind Prasad Goenka filed

an affidavit inter-alia contending, that in view of the difficulties in

partitioning the premises, the premises be sold by the Official

Liquidator as a single unit and the said Ashoke Goenka as Karta of

Hindu Undivided Family be paid 50 per cent of the proceeds after

deducting 50 per cent of the expenses to be incurred by the Official

Liquidator in disposing off the same.

6. By an order dated 25 April, 1990, the sale of Premises nos. 232,

232/2, 235, 237, 239, 242, 243 and 244 Picnic Garden Road, Kolkata

(the premises) measuring approximately 8 bighas, 9 cottahs, 12

chittacks and 18 sq. feet including the share of Hargobind Prasad

Goenka (HUF) in the premises was confirmed in favour of the

applicant.

7. For the sake of convenience, the order dated 25 April, 1990 is set out

hereinbelow:

"Sale in favour of Mr. Chatterjee's client, viz., M/s. Ganges Rolling Industries Private Ltd. of No.15, Brabourne Road, Calcutta, is confirmed at Rs.57,50,000/-. It is recorded that the offer of Rs. 56 lacs given earlier by M/s. Damodar Road-ways has been retracted by the offeror and Mr. Banerjee, though offered Rs. 55 lacs on behalf of his client, has instructrions not to proceed any further in the matter of bidding. In that view of the matter, the sale in favour of the concern named above at the above price is confirmed.

Mr. Chatterjee's client has handed over to the Official Liquidator in Court today cheques for Rs.2,30,000/- as also banker's cheques for Rs.3,45,000/- totalling Rs.5,75,000/-. The Official Liquidator is directed to encash the same forthwith. The balance amount of the purchase price, viz., Rs.51,75,000/- shall be paid by the purchaser by

quarterly instalments within a period of 18 months from date. The Official Liquidator, however, is directed to pay 50% of the amounts received by his immediately on encashment thereof to Mr. Sen Barat's client and retain the balance 50% until further orders of this Court.

The Official Liquidator shall make over possession of the premises in question to the purchaser immediately on payment of 50% of the total purchase price by the purchaser, but the Official Liquidator shall keep one guard posted at the premises until the entire purchase price is paid. The salary or monthly emoluments of the guard, however, shall be paid by the purchaser.

There shall be an order of injunction restraining the purchaser from dealing with or disposing of any part of the premises without obtaining prior leave of this Court.

It is recorded that the sale is confirmed in favour of the purchaser or its nominee or nominees and the certificate under the Urban Land Ceiling Act is not a requirement to be complied with by the vendor in the facts and circumstances of the matter under consideration since this is a sale by Court.

The purchaser shall have the liberty to fill up the shallow pond. The Official Liquidator is directed to remove the unauthorised occupants from the premises in question and shall ensure a clear passage of about 20 ft. from the front portion of the main road so as to enable the entry of vehicles into the said premises. The Official Liquidator would be at liberty to obtain necessary assistance from the police authorities and the Officer-in-Charge of the concerned Police Station is directed to render all possible assistance to the Official Liquidator in the matter of removing the unauthorised occupants.

The Official Liquidator is directed to forthwith return the earnest money received from other officers.

All parties including the Official Liquidator, the concerned police authorities and the purchaser to act on a singed copy of this dictated order on usual undertaking."

8. Pursuant to the aforesaid, the applicant was put in actual physical

possession of the entirety of the premises. By an order dated 29 July,

1993, the Court also permitted the applicant to file an application

with the Calcutta Municipal Corporation to fill up the shallow pond in

terms of the order dated 25 April, 1990. Ultimately, by an order dated

25 April, 1996, the applicant was permitted to fill up the same.

Thereafter, by orders dated 27 October, 1995 and 3 November, 1995,

a scheme for revival of the company (in liquidation) was also

sanctioned and the winding up order dated 21 May, 1970 stood

permanently stayed.

9. Subsequently, diverse proceedings were filed by the applicant as

owner, in the acquisition proceedings initiated by the State pertaining

to a portion of the premises. By orders dated 16 March 2017 and 29

March 2017, passed in LA Case No. 162/203, the applicant was inter-

alia granted permission to withdraw the awarded amount of

Rs.51,33,625.84/- as compensation for acquisition of Premises No.

232 & 232/2 Picnic Garden Road. Significantly, the order records that

the applicant is to be treated as a person having an interest in the

land and in the compensation in respect of the acquisition

proceedings.

10. It is contended on behalf of the applicant that a sum of

Rs.40,25,000/- has been paid to the respondent in terms of order

dated 25 April, 1990 and only the balance consideration of

Rs.17,25,000/- remains unpaid. It is further contended that the

unauthorised occupants who were directed to be removed from the

premises have not yet been removed. The passage of 20 feet from the

front portion of the main road to enable entry of vehicles into the

premises has also not been cleared. It is also contended that diverse

orders recognize the applicant to be the lawful owner of the premises

and the sale in respect of the entirety of the premises stood confirmed

in favour of the applicant in terms of the order dated 25 April, 1990. A

Status Report dated 30 November, 2022 filed by the Official Liquidator

also records the applicant to be the lawful owner of the premises. On

the basis of the aforesaid orders and admissions made therein, the

applicant alleges to be the true and lawful owner of the premises and

seeks the aforesaid reliefs. It is also alleged that the entire matter was

being looked after by one Saroj Kumar Chamaria on their behalf who

had expired and the cause papers of this proceeding were untraceable.

Hence, the delay in filing of this application.

11. It is also submitted that in terms of Rules 6 and 9 of the Company

(Court) Rules, 1959, this Court has inherent powers to pass all the

orders as prayed for in this application. The applicant also relies on

Order XXI, Rule 92 read with section 65 of the Code of Civil

Procedure, 1908, to contend that the entirety of the premises vests in

the applicant from the date of sale and the Certificate of Sale, by itself,

does not create any title, but is merely evidence of the sale. As such,

the formality of issuance of a certificate is only a mere

acknowledgement and purely a ministerial act. Hence, the sale

certificate should be issued in favour of the applicant. In support of

such contention, the applicant relies on the decisions of Sadashiv

Prasad Singh vs. Harendar Singh & Ors. (2015) 5 SCC 574, Pattam

Khader Khan vs. Pattam Sardar Khan & Anr. (1996) 5 SCC 48, Sagar

Mahila Vidyalaya vs. Pandit Sadashiv Rao (1991) 3 SCC 588, Arvind

Kumar vs. GOI (2007) 5 SCC 745 and Janak Raj vs. Gurdial Singh

(1967) 2 SCR 77.

12. On behalf of the Official Liquidator, it is submitted that the applicant

is a sister company of the company (in liquidation) and that the

directors of both the companies are closely related. The deponent is

the wife of Ashok Kumar Goenka who had inherited the remaining 50

per cent of the premises after the death of her father-in-law,

Hargobind Prasad Goenka. In any event, in view of the order dated 27

October 1995 passed by this Court, the winding up petition had been

permanently stayed and the company (in liquidation) stood revived. In

such circumstances, this application is not maintainable and is liable

to be dismissed. Moreover, in view of the subsequent conduct of the

applicant in not making payment of the entire consideration, the sale

in terms of the order dated 25 April, 1990 be set aside.

13. By an order dated 25 April, 1990, the sale of the premises for an

aggregate amount of Rs.57,50,000/- stood confirmed in favour of the

applicant. Diverse orders have been passed from time to time treating

the applicant to be the owner of the premises. The actual physical

possession of the premises has also been handed over to the

applicant. The shallow pond has also been filled up. The applicant has

also received the entire compensation alongwith interest in respect of

acquisition proceedings for a portion of the premises.

14. Order XXI Rule 85 of the Code of Civil Procedure, 1908 provides as

follows:

Order XXI

85. Time for payment in full of purchase-money.--The full amount of purchase- money payable shall be paid by the purchaser into Court before the Court closes on the fifteenth day from the sale of the property:

Provided, that, in calculating the amount to be so paid into Court, the purchaser shall have the advantage of any set-off to which he may be entitled under Rule 72.

15. Rule 272 of the Companies Court Rules 1959 reads as follows:

Sale to be subject to sanction and to confirmation by Court - Unless the Court otherwise orders, no property belonging to company which is being wound-up by the Court shall be sold by the Official Liquidator without the previous sanction of the Court, and every sale shall be subject to confirmation by the Court.

16. In terms of the order dated 25 April, 1990, the applicant was directed

to pay the balance purchase consideration in quarterly instalments

over a period of 18 months. The applicant has only paid an aggregate

amount of only Rs.40,25,000/-. Admittedly, there remains an amount

of Rs.17,25,000/- due and payable. The obligation of any purchaser to

ultimately pay the entire purchase consideration within the prescribed

time period is a necessary pre-condition to any sale. To this extent,

the confirmation of sale is in one sense incohate. There is a shortfall

in the sale consideration even after a period of 33 years. The applicant

is solely responsible for such default. The duty to timely pay the

entirety of the purchase consideration in terms of the order dated 25

April, 1990 was squarely on the applicant. Non-payment of the entire

consideration in terms of the order dated 25 April, 1990 renders the

sale a nullity.

17. On a plain reading of section 54 of the Transfer of Property Act, 1882,

the time of payment of price is not necessarily a sine qua non to the

completion of the sale. However, the order dated 25 April, 1990

provided for a stipulated time period for payment which assumes

significance in cases of sale by Courts.

18. Rules 6 and 9 of the Company (Court) Rules, 1959 provides as follows:

R.6:Practice and Procedure of the Court and provisions of the Code to apply - Save as provided by the Act or by these rules the practice and procedure of the Court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these rules. The Registrar may decline to accept any document which is presented otherwise than in accordance with these rules or the practice and procedure of the Court.

R.9:Inherent powers of Court - Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.

19. It is true that on a reading of Rule 9, powers of the widest amplitude

have been given to the Company Court. If the sky is the limit then

there is always the risk of touching the abysmal lows. Discretion when

exercised by any Court of Law means sound discretion guided by law.

Centuries ago, Lord Camden had observed:

"The discretion of a Judge is the Law of Tyrants; it is always unknown; it is different in different Men; it is causal, and depends on Constitution, Temper, and Passion. In the best it is often-times Caprice, in the worst it is every Vice, Folly, and Passion to which human Nature is liable."

[Doe d. Hindson vs. Kersey (1680) 8 How St. Tr 57]

20. The exercise of any discretion must be in good faith, fairly, for the

purpose for which the power is being conferred and without exceeding

the limits of such power. No discretion should be legally unfettered.

The exercise of any discretion cannot be arbitrary, vague and fanciful;

but legal, regular and according to reason. The Rule of Law requires

that no discretion should be unconstrained so as to be potentially

arbitrary. [Tom Bingham, The Rule of Law, Chapter 4].

21. Section 457 of the Companies Act, 1956 read with Rule 272 of the

Company Court Rules, 1959, govern sales by the Official Liquidator.

The duty of the Company Court while conducting a sale under Rule

272 is a more onerous task than an ordinary sale conducted by Court

in executing a decree. In a sale by the Company Court, the Court

holds a fiduciary duty position protecting the interests of all

stakeholders. On the other hand, in sales in execution of a decree the

sale is rarely held without notice to the judgment debtor. Ordinarily,

the judgment debtor in such sales is present to protect its interests.

On the other hand, the Official Liquidator is often a silent spectator in

such proceeding. The conduct of the Official Liquidator also questions

the credibility of the entire process of liquidation. There appears to be

a general sense of indifference in the manner in which the Official

Liquidator conducts the liquidation proceedings.

22. On 30 November, 1992, the Official Liquidator requested the applicant

to make payment of the balance consideration of Rs.17,25,000/-. On

28 April, 1994, the Official Liquidator reiterated the request to the

applicant to make payment of the balance consideration of

Rs.17,25,000/- alongwith 10 per cent interest per annum. The

demand of the Official Liquidator in directing the applicant to pay the

entire consideration alongwith 10 per cent interest keeping in view the

escalated market value of the premises is not only commercially

imprudent, but also wholly without jurisdiction. Surprisingly, the

Official Liquidator had never brought the fact of non payment of the

balance consideration before any Court since the passing of the order

dated 25 April 1990. In this regard, it was submitted on behalf of the

Official Liquidator that both the letters dated 30 November, 1992 and

28 April, 1994 issued on behalf of the Official Liquidator were

misconceived and not tenable in law.

23. There has been a conscious effort to perfect the so very imperfect

marketable title of the applicant and the original owners vis-a-vis the

premises. There are no grounds either pleaded nor which exist which

warrant condonation of the inordinate delay in the applicant being

unable to make payment of the balance consideration after a period of

33 years. There is no question either in law or equity to permit the

applicant to pay the shortfall in price after a delay of 33 years. The

benevolence and magnanimity shown to the applicant must end.

24. All the authorities cited by the applicant are distinguishable and

inapposite. The single most distinguishable fact in this case is that the

applicant has unjustifiably defaulted in making payment of the entire

consideration whilst during the interregnum enjoying all the fruits of

ownership including the right of having withdrawn the entire

compensation money in the acquisition proceedings. In such

circumstances, the contention of the applicant that the order dated 25

April, 1990 gives an indefeasible right of ownership to the applicant as

auction purchaser is rejected. On the contrary, in view of the

escalated market price and the subsequent conduct of the applicant,

it would be a pernicious exercise of discretion to permit any of the

prayers as prayed for in this application. In such circumstances, this

Court cannot remain blind to an obvious and manifest illegality

committed in conducting the sale.

25. On the point of maintainability raised by the Official Liquidator, I find

no substance in the contention that the application is not

maintainable since there is a permanent stay of the winding up

proceedings. The order of permanent stay does not completely

obliterate the winding up order. Company petitions even when

dismissed on merit are traditionally not regarded as dismissed or

disposed of but as permanently stayed. There is a history of more than

a century which goes behind such recording. (Asset Reconstruction

Company (India) Ltd. vs. M/s. Bengal Shelter Housing Development

Limited 2017 SCC OnLine Cal 5833). The effect of a stay or permanent

stay of the proceedings is that the proceeding remains in suspended

animation meaning thereby it is effectively subsisting but inoperative

for the time being. (Sudarshan Chits (I) Ltd. v. O. Sukumaran Pillai,

(1984) 4 SCC 657). This fact would also be evident from the prayers

made in this application wherein the applicant has sought for

directions on the Official Liquidator to inter-alia execute the

conveyance and for other reliefs. In such circumstances, I find no

merit in the objection of maintainability and the same is rejected.

26. In view of the above, the sale in terms of the order dated 25 April,

1990 is declared to be a nullity. The Official Liquidator is directed to

forthwith take actual physical possession of the entirety of the

premises, if necessary, with police assistance [save and except the

portion of the premises acquired by the State] and retain the same

until further orders of Court. The part consideration paid by the

applicant stands forfeited. Notwithstanding repeated efforts to serve

the company even by way of advertisements, the company remained

unrepresented.

27. The Registrar, Original Side is directed forthwith to serve a copy of

this order on the office of the Advocate General, State of West Bengal.

Liberty is granted to the State and any other affected party including

the Official Liquidator to take all necessary steps in accordance with

law also against the applicant, its directors, servants, agents and

assigns inter-alia for recovery of the amount appropriated in the

acquisition proceedings and for filling up the shallow pond.

28. With the aforesaid directions, CA/13/2021 stands dismissed.

(Ravi Krishan Kapur, J.)