2003 (1) TMI 517 - HC - Companies Law

Issues Involved:
1. Challenge to the order passed by a learned Single Judge on the report of the official liquidator.
2. Requirement and retention of premises by the official liquidator.
3. Payment of compensation by the official liquidator.
4. Auction and sale of movables in the premises.
5. Legal implications of the change in the rent control law.
6. Jurisdiction and conduct of the interveners.

Issue-wise Detailed Analysis:

1. Challenge to the Order Passed by a Learned Single Judge:
The appellants challenged the order of the learned Single Judge (Karnik J.) dated 21-12-2001, which declined to confirm the sale of movables to the appellants and directed the official liquidator not to hand over possession of the premises. The appeal was against the Single Judge's decision that went beyond the report of the official liquidator and previous orders by other judges.

2. Requirement and Retention of Premises by the Official Liquidator:
The premises in question were given to Amar Dye-Chem Ltd. on a leave and licence basis. After the company was directed to be wound up, the official liquidator was permitted to retain a part of the premises for keeping records until the company was completely wound up. The official liquidator initially stated that the premises were required for two years and would be vacated after that period. However, the premises were not returned even after the extended period, leading to further legal proceedings.

3. Payment of Compensation by the Official Liquidator:
The official liquidator was not regular in paying the compensation for the premises. Orders were passed directing the liquidator to make regular payments, and the appellants were allowed to take possession of the part of the premises not in possession of the liquidator. Despite these orders, the remaining part of the premises was not returned to the appellants after the stipulated period.

4. Auction and Sale of Movables in the Premises:
The official liquidator conducted an auction sale of the movables lying in the premises, and the appellants gave the highest bid, which was accepted. However, during the confirmation of the sale, two former directors of the company offered a higher bid, leading the learned judge to decline the confirmation of the sale to the appellants. Later, these interveners declined to maintain their higher offer, indicating non-bona fide conduct.

5. Legal Implications of the Change in the Rent Control Law:
The learned Single Judge (Karnik J.) considered the change in the legal position due to the repeal of the Bombay Rent Act, 1947, and its replacement by the Maharashtra Rent Control Act, 1999. The judge opined that the official liquidator was now entitled to claim consideration for surrendering possession. However, this submission was not raised in the liquidator's report and was beyond the scope of the learned judge's jurisdiction.

6. Jurisdiction and Conduct of the Interveners:
The interveners, former directors of the company in liquidation, led the learned judge to believe that they were seriously interested in buying the movables, which resulted in the judge not confirming the sale to the appellants. Their subsequent refusal to maintain their offer demonstrated a lack of bona fide intentions and caused unnecessary legal complications.

Conclusion:
The appeal was allowed, and the order dated 21-12-2001, passed by the learned Single Judge (Karnik J.), was set aside. The sale of the movables to the appellants was confirmed for the amount of Rs. 3,40,000. The official liquidator was directed to hand over possession of the remaining part of the premises within four days upon receipt of the amount from the appellants. The interveners were ordered to pay costs to the appellants for their non-bona fide conduct.

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