1993 (7) TMI 304 - HC - Companies Law

Issues Involved:
1. Extension of the proposed date of sale by the court receiver.
2. Validity of the order dated August 13, 1984, granting the court receiver the power to sell the mortgaged property.
3. Locus standi of the appellant to challenge the sale order.
4. Compliance with Section 60 of the Transfer of Property Act and Order 34 of the Civil Procedure Code.
5. Conduct and delay by the appellant in challenging the sale order.

Detailed Analysis:

1. Extension of the Proposed Date of Sale by the Court Receiver:
The learned single judge extended the proposed date of sale by the court receiver by four weeks when the fifth defendant applied for an interim order. The notice of motion was disposed of with no order as to costs. The appellant, being aggrieved by this order, preferred the present appeal.

2. Validity of the Order Dated August 13, 1984:
The appellant challenged the order dated August 13, 1984, which confirmed the appointment of the court receiver with the power of sale of the properties. The court observed that the appellant had been aware of this order for nine years and had participated in several meetings regarding the sale of the property. No appeal was filed challenging the power of sale conferred on the court receiver. The court found no merit in the appellant's challenge, stating that the order was not a nullity and was binding unless set aside by an appeal.

3. Locus Standi of the Appellant:
The court questioned the appellant's locus standi to challenge the order of August 13, 1984. The appellant, being a guarantor and a shareholder, was not entitled to challenge the sale order in a mortgage suit. The court emphasized that the mortgagor and mortgagee had no grievance regarding the order, and the appellant, as a shareholder, could not be considered a mortgagor or entitled to redeem the mortgage. The appellant, as a guarantor, had not discharged the mortgage debt and thus had no right to the security created in favor of the mortgagee.

4. Compliance with Section 60 of the Transfer of Property Act and Order 34 of the Civil Procedure Code:
The appellant argued that the equity of redemption could only be extinguished by act of parties or a court decree, relying on Section 60 of the Transfer of Property Act and Order 34 of the Civil Procedure Code. The court found this argument fallacious, stating that the order of sale was not a nullity and was passed by a court with jurisdiction. The court noted that the official liquidator did not oppose the sale, and the mortgagor had acquiesced in the sale of the property. The court held that the order was not contrary to the provisions of Section 60 or Order 34, as the mortgagor had given up the right to redeem the property.

5. Conduct and Delay by the Appellant:
The court criticized the appellant's conduct and delay in challenging the order of August 13, 1984. The appellant had been aware of the order for nine years and had participated in several meetings regarding the sale of the property. The court found no explanation for the delay and noted that the appellant had not produced any higher offer for the property despite being given time to do so. The court dismissed the notice of motion, emphasizing that the appellant had not pressed any of the reliefs asked for in the motion but had only addressed the validity of the order of August 13, 1984.

Conclusion:
The appeal was dismissed with costs, and the court directed the court receiver to fix an appropriate schedule for the sale of the properties. The court also granted higher costs under rule 606(2)(a) of the High Court O.S. Rules, quantified at Rs. 5,000, due to the conduct of the appellant and the lengthy arguments advanced on points not urged before the learned single judge.

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