Calcutta High Court
M/S. Dunlop India Limited (In ... vs Kanti Commercials Private ... on 8 November, 2023
OD-1
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
IA NO. ACO/1/2023
WITH CP/233/2008
In APOT/415/2023
IN THE MATTER OF -
M/S. DUNLOP INDIA LIMITED (IN LIQN.)
-AND-
KANTI COMMERCIALS PRIVATE LIMITED
-VS-
THE OFFICIAL LIQUIDATOR, HON'BLE HIGH COURT AT CALCUTTA
BEFORE :
THE HON'BLE JUSTICE ARINDAM MUKHERJEE
AND
THE HON'BLE JUSTICE BISWAROOP CHOWDHURY
Date : November 8, 2023.
[Vacation Bench]
Appearance:
Mr. Krishnaraj Thaker, Adv.
Mr. Chayan Gupta, Adv.
Mr. Suvranil Saha, Adv.
... for the appellant
Mr. Soumya Mazumdar, Adv.
Mr. Shaunak Mitra, Adv.
Mr. Zulfiqar Ali Al Quaderi, Adv.
Mr. Indrajeet Banerjee, Adv.
... for Salasar Towers Pvt. Ltd.
Ms. Tanushree Dasgupta, Adv.
... for the Official Liquidator
The Court : The appellant claims to be a contributory. Although
the Official Liquidator disputes such status of the appellant and says it is a
creditor but it is prima facie evident that there is some stake of the
appellant in the Company (in liquidation) either as a contributory or as a
creditor. Thus, at this stage, the appellant cannot be eliminated from
challenging the order impugned. The appellant says that by the order dated
19th October, 2023 the learned Single Judge has directed the sale of some of
the immovable properties belonging to the company (in liquidation) as per
the list provided by the Official Liquidator. This order was passed without
affording the appellant a right to represent. The Official Liquidator although
was aware of the existence and involvement of the appellant also did not put
the appellant on notice. Thus, the appellant in the stay application has
made a prayer for leave to appeal.
After considering the facts and circumstances of the case and the
nature of the order assailed, we have no doubt in our mind that the
appellant is a person aggrieved as it is likely to be effected by the order
dated 19th October, 2023. Being a person aggrieved, the appellant is granted
leave to prefer the instant appeal in terms of prayer (a) of the stay
application.
The appellant also prays for stay of operation of the order dated
19th October, 2023.
The appellant says that the advertisement for the sale has been
done admittedly more than two years back. The advertisement, therefore,
had been done on the basis of a valuation report which is at least two years
old. The valuation report was also not with the Official Liquidator as the
order records that the Official Liquidator is permitted to see the valuation
report and take steps by 4:30 p.m. yet the Official Liquidator had published
advertisement for sale on 19th October, 2023. The appellant says that the
sale is conducted by the Official Liquidator in violation of the provisions of
Rules 6, 272 and 273 of the Companies (Court Rules) 1959 (hereinafter
referred to as the 'said Rules'). The appellant further says that in view of the
provisions of Rule 6 of the said Rules the provisions of Order 21, Rules 84
and 85 of the Code of Civil Procedure, 1908 (in short CPC) are embedded
into the said Rules. The appellant refers to the sale notice and says that the
time limit prescribed for paying the 25% of the sale price has to be deposited
immediately upon the offer is accepted as per Order 21 Rule 84 of CPC but
the time prescribed in the advertisement and sale notice are different. Rule
85 of Order 21 of CPC says that the entire balance purchase money has to
be paid within 15th day from the sale of the property but the tiem in the sale
notice is again different. Referring to Clauses 8.3, 8.4 and 8.5 of the sale
notice at page 91 of the stay application, the appellant says that there is
complete violation of the said Rules. The appellant then refers to a judgment
of the Hon'ble Supreme Court reported in (2023) 6 SCC 391 (Gas Point
Petroleum India Ltd. vs. Rajendra Marothi & Ors.) and submits that these
provisions have been held to be mandatory provisions. The appellant
therefore concludes that the direction for sale as given in the order
impugned is contrary to the well-known legal procedure and in violation of
the mandatory provisions, as a consequence whereof the same should be set
aside.
The appellant, in respect of the direction given in the order
impugned for payment to the worker says that it has no difficulty in
accepting the same provided there is statutory compliance as required under
Rules 167, 168, 169 and 74 of the said Rules.
The appellant also says that the Official Liquidator also did not
bring to the notice of the Learned Single Judge that a review application
filed by the appellant is pending, wherein on 23rd September, 2021 the
following direction was given :
"Any steps taken will abide by the result of this application."
According to the appellant, the Court in seisin of the review
application is the final authority to decide on the sale aspect of the assets of
the company (in liquidation). Had this order been brought to the notice of
the Learned Single Judge then a different order may have been passed.
On behalf of the Official Liquidator, it is submitted that appeal is not
maintainable as the appellant is not a contributory and have filed claim
before the Official Liquidator as a creditor. The Official Liquidator also says
that though the property was put into auction on 7th November, 2023 as
directed in the order dated 19th October, 2023 but no offer matching the
reserve price has been received as yet and as such the date has been
extended till 10th November, 2023. The Official Liquidator also says that the
appellant is a fence sitter and has approached the Court at a belated stage
to disrupt the sale to be conducted in terms of the orders of the Court.
Mr. Majumdar, learned Advocate, appears on behalf of Salasar Towers
Private Limited, who claims to be 50 per cent owners of the immovable
property situated and lying at 46B, Chowringhee Road, Kolkata - 700 071.
Mr. Majumdar, learned Advocate, submits that this Court by its order dated
3rd February, 2021 has given his client an opportunity to match the highest
bidder. The submissions on behalf of Salarsar Towers at this stage is
inconsequential unless the sale is conducted. However, in view of the fact
that the winding-up proceedings having reached at a representative
character, we have heard Salarsar Towers.
The more we look into the matter, the more we are astonished
regarding the manner in which the Official Liquidator has conducted itself in
dealing with a company (in liquidation) which is none other than Dunlop
India Limited, the products of which doyened the Indian roads and aviation
fields over the decades. Despite there being specific direction from 2021, the
Official Liquidator did not take any steps to complete the sale process. On
the contrary, after publishing the sale notice, took no steps till late 2023.
The action of the Official Liquidator in failing to comply with the orders of
the Court remains unexplained. The learned Single Judge has correctly
recorded her dismay regarding the conduct of the Official Liquidator and
probably to eliminate any further delay has directed sale of the property on
immediate basis.
After hearing the parties and considering the materials on record, we
are of the view that even if the conduct of the Official Liquidator is
deplorable, the sale of the properties of a company [in liquidation] cannot be
conducted in violation of the statutory rules which has held in Gas Point
(supra) to be mandatory. It is well-settled as in Nazir Ahmed Vs. The
Emperor AIR 1936 PC 253 which has been consistently followed by the
Courts in India that if a statute provides for doing an act in a particular
manner, the same has to be done in such order or not at all. In the instant
case the statutory rules the provisions of which has been held mandatory
are of statutory force to fit into the premises of Nazir Ahmed (Supra). If the
sale is permitted to proceed on the basis of a defective sale notice with a
reserve price fixed at least two years before, the entire sale process in the
instant case will be subject to challenges and further challenges at
subsequent stages which will not enure to the benefit of any of the
stakeholders. There is every likelihood that title in an auction sale with
inherent defects may not be confirmed subsequently. Keeping in mind all
these aspects, there may not be a buyer when the properties are to be sold
in distress sale. We are, therefore, of the view that the appellant has been
able to make out a strong prima facie case. The balance of convenience and
inconvenience is in favour of the appellant and in favour of staying the sale
as directed by the order dated 19th October, 2023. The stay is also necessary
to prevent multiple judicial proceedings and prejudice to the appellant being
a stakeholder either in the form of a contributory or a creditor as the case
may be. The order dated 19th October, 2023 to the effect it directs sale of the
immovable properties of the company [in liquidation] is stayed. So far as
payments of the workers are concerned, the same are also required to be
made strictly in compliance with the provisions of The Companies (Court)
Rules, 1959. The stay shall continue for a period of three weeks from date.
The matter be placed after the Puja Vacation before the appropriate Bench
subject to its convenience.
The appellant is also permitted to file the supplementary affidavit, as
preyed for, before the regular Bench when the matter is taken up next with
a copy thereof be served to all the stakeholders. It is made clear that the
appellant shall serve a copy of the stay application to all the stakeholders, if
not already served as also a copy of this order.
(ARINDAM MUKHERJEE, J.)
(BISWAROOP CHOWDHURY, J.)
RS/SN/S.Das
