2005 (3) TMI 464 - HC - Companies Law

Summary

Issues Involved:
1. Payment of balance amount by the purchaser with interest.
2. Forfeiture of amount paid by the purchaser and invitation of fresh tenders.
3. Confirmation and subsequent cancellation of sale.
4. Allegations of theft and negligence against the security agency and valuer.
5. Role and responsibilities of the Official Liquidator, Security Agency, and Valuer.

Detailed Analysis:

1. Payment of Balance Amount by the Purchaser with Interest:
The Official Liquidator filed a report seeking direction from the Court for the purchaser, Sainath Disposals, to pay the balance amount with 18% interest and take delivery of assets. The purchaser initially deposited Rs. 5 lakhs as the first installment and requested an inspection of the assets. The total amount deposited, including the earnest money, was Rs. 6,25,000. The purchaser subsequently filed a Misc. Civil Application for setting aside/reviewing the order of confirmation of sale, which was disposed of by extending the time to make the balance payment up to 31-7-2000. However, the purchaser did not make the payment and instead reported theft and missing materials, requesting a refund.

2. Forfeiture of Amount Paid by the Purchaser and Invitation of Fresh Tenders:
Due to the purchaser's failure to deposit the remaining amount within the stipulated time, the Court issued a notice directing the purchaser to explain why the deposited amount should not be forfeited. The purchaser alleged theft and connivance by the security staff, leading to the reduction in the value of materials. The Court directed the Official Liquidator to get another inspection made and submit an inventory report, revealing discrepancies in the valuation reports.

3. Confirmation and Subsequent Cancellation of Sale:
The sale of assets was initially confirmed in favor of Sainath Disposals for Rs. 21 lakhs. However, due to the purchaser's failure to make the balance payment and the reported theft, the Court observed that the purchaser was not interested in the purchase. Consequently, the sale was canceled, and the Official Liquidator was directed to refund the entire amount received from the purchaser. The Court also directed the Official Liquidator to call upon the security agency and valuer for explanations regarding the discrepancies and missing items.

4. Allegations of Theft and Negligence Against the Security Agency and Valuer:
The purchaser alleged that the security staff connived in the theft of materials. The security agency denied any theft, while the valuer cited poor conditions and lack of access during the inventory process. The Court found the explanations unsatisfactory and observed that both the valuer and security agency failed to discharge their duties properly. The Court directed the Official Liquidator to recover the expenses for fresh advertisements from the security agency and to appoint a new valuer for fresh inventory.

5. Role and Responsibilities of the Official Liquidator, Security Agency, and Valuer:
The Court criticized the Official Liquidator for not taking proper care and not placing correct facts before the Court. The Court emphasized the need for the Official Liquidator to keep a close watch over security staff and ensure proper verification and record-keeping. The valuer was held accountable for the discrepancies in the valuation reports, and the security agency was blamed for failing to protect the assets. The Court directed that the observations made regarding the valuer and security agency be considered in future appointments.

Conclusion:
The Official Liquidator Report was disposed of with directions for fresh inventory and valuation without additional fees from the valuer and recovery of advertisement expenses from the security agency. The Court emphasized the need for accountability and proper discharge of duties by all parties involved.