1993 (10) TMI 231 - SC - Companies Law

Whether Triputi should be made liable to pay interest at the rate of 15 per cent per annum? Held that - As already referred to the various orders of this court which indicate quite clearly with what reluctance and over what span of time Triputi paid the sum of Rs. 1 crore 98 lakhs ; that itself makes the payment of interest thereon appropriate. Coupled therewith is the undertaking aforementioned. We are, therefore, of the view that Triputi must pay interest upon the amount of Rs. 1 crore 98 lakhs at the rate of 15% per annum from January 1, 1989, till payment. Such payment shall be made within 12 weeks from today. We make it clear that in the event that the amount of interest as aforementioned is not paid within 12 weeks from today, it shall be open to one or more of the aggrieved parties to take appropriate proceedings against Triputi and its directors.

Issues Involved:
1. Winding up of Naskarpara Jute Mills Co. Ltd.
2. Lease of land to the company and its forfeiture.
3. Sale of the company's assets and properties.
4. Bank's appeal against the High Court's order.
5. Contempt proceedings against the purchaser (Triputi Jute Industries Ltd.).
6. Compensation to the trust for its rights in the land.

Detailed Analysis:

1. Winding up of Naskarpara Jute Mills Co. Ltd.:
The Naskarpara Jute Mills Co. Ltd. was wound up by the High Court at Calcutta on July 28, 1981, and the official liquidator was appointed. The company had leased land from Bharat Abhyudaya Cotton Mills Ltd. under a deed dated July 2, 1931, for 99 years with an option for renewal for another 99 years at a rent of Rs. 1,200 per annum. The lessor's interest was later transferred to the Brij Mohan Saraogi Charitable Trust.

2. Lease of land to the company and its forfeiture:
The trust opposed the sale of the company's assets and requested the official liquidator to disclaim the land under section 535 of the Companies Act, arguing it was burdened with onerous covenants. The High Court directed the official liquidator to disclaim the land and hand over possession to the trust. The Division Bench upheld this decision, stating the lease was forfeited due to non-payment of rent and the land ceased to be part of the company's assets.

3. Sale of the company's assets and properties:
The High Court ordered the sale of the company's assets as a going concern. The official liquidator was directed to sell the assets, including the leasehold land, free of leasehold rights. An offer from Shyam Sundar Agarwal to purchase the assets for Rs. 2,60,00,000 was accepted, with specific payment terms and conditions.

4. Bank's appeal against the High Court's order:
The bank appealed against the High Court's order to disclaim the land. The Supreme Court noted that its order dated April 30, 1987, rendered the appeal infructuous as the court had already directed the sale of the assets, including the land, and ordered the official liquidator to pay Rs. 7.5 lakhs to the trust. The court assessed that the trust should receive Rs. 10 lakhs in total as compensation for its rights in the land.

5. Contempt proceedings against the purchaser (Triputi Jute Industries Ltd.):
Triputi Jute Industries Ltd. failed to make timely payments as per the court's orders, leading to contempt proceedings. The court noted that Triputi had paid Rs. 62 lakhs out of the sale price of Rs. 2,60,00,000 and directed it to pay the balance of Rs. 1,98,00,000 with 15% interest per annum from January 1, 1989, within 12 weeks. The court emphasized that the sale was on an "as is where it is basis" and Triputi could not claim a reduction in price due to defects in title or description.

6. Compensation to the trust for its rights in the land:
The Supreme Court directed the official liquidator to pay the trust Rs. 10 lakhs as compensation for its rights in the land, including arrears of rent. The trust had already received Rs. 7.5 lakhs, and the balance of Rs. 2.5 lakhs was to be paid within 12 weeks. The court highlighted that the High Court had misunderstood the purpose of section 535 of the Companies Act, which is to protect creditors from onerous covenants.

Final Directions:
The Supreme Court set aside the High Court's judgment and order, directed the official liquidator to pay the trust the balance amount of Rs. 2.5 lakhs, and ordered Triputi Jute Industries Ltd. to pay interest on the sum of Rs. 1,98,00,000 at 15% per annum from January 1, 1989, within 12 weeks. The amount was to be paid into the official liquidator's account and utilized under the company judge's orders. All other applications were dismissed, and no costs were awarded.

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