2004 (4) TMI 319 - HC - Companies Law

Issues Involved:
1. Determination of whether the sale certificate issued by the official liquidator is a conveyance or a sale certificate under the Indian Stamp Act.
2. Assessment of the applicability of Article 18 or Article 23 of Schedule IB to the Indian Stamp Act to the instrument in question.
3. Evaluation of the authority of the official liquidator to issue a sale certificate.
4. Consideration of whether the sale by inviting tenders constitutes a public auction.
5. Analysis of the Chief Controlling Revenue Authority's direction for valuation of plant and machinery and its implications.

Issue-wise Detailed Analysis:

1. Determination of whether the sale certificate issued by the official liquidator is a conveyance or a sale certificate under the Indian Stamp Act:
The court examined whether the sale certificate issued by the official liquidator should be classified as a conveyance or a sale certificate under the Indian Stamp Act. The Assistant Commissioner (Stamp) had determined that the instrument was a conveyance and thus dutiable under Article 23. The court noted that a sale certificate, unlike a conveyance, does not itself transfer title but is merely evidence of the sale. The court concluded that the sale in liquidation is a sale by the liquidator and not by the court, as the title to the property is transferred by the act of the liquidator.

2. Assessment of the applicability of Article 18 or Article 23 of Schedule IB to the Indian Stamp Act to the instrument in question:
Article 18 applies to instruments where property is sold in a public auction by an officer empowered by law, with duty payable on the purchase money shown in the instrument. Article 23 applies to conveyances, with duty payable on the higher of the sale consideration or market value. The court found that the official liquidator, while empowered to sell the property, does not have the statutory authority to issue a sale certificate. Consequently, the instrument in question was deemed a conveyance under Article 23.

3. Evaluation of the authority of the official liquidator to issue a sale certificate:
The court examined whether the official liquidator has the authority to issue a sale certificate. It was determined that the liquidator acts as an agent of the company and can execute deeds on behalf of the company under Section 457(2)(i) of the Companies Act. However, the power to issue a sale certificate must be specifically conferred by statute, which is not the case here. Therefore, the liquidator does not have the authority to issue a sale certificate.

4. Consideration of whether the sale by inviting tenders constitutes a public auction:
The court analyzed whether the sale by inviting tenders qualifies as a public auction. It was concluded that a sale by sealed tenders is distinct from a public auction. The court referenced Rule 273 of the Companies (Court) Rules, which differentiates between public auctions and sales by inviting sealed tenders. The court held that the sale by inviting tenders in this case did not constitute a public auction, thus Article 18 was not applicable.

5. Analysis of the Chief Controlling Revenue Authority's direction for valuation of plant and machinery and its implications:
The Chief Controlling Revenue Authority had directed the valuation of the plant and machinery sold. The court noted that the authority had not addressed the petitioner's contention that the plant and machinery, sold as separate lots, should not be clubbed together for determining the market value. The court set aside the order and directed the Chief Controlling Revenue Authority to first decide whether the value of the plant and machinery can be combined with the land's value before proceeding with the valuation. The court also allowed the petitioner to raise additional contentions before the authority.

Conclusion:
The court partially allowed the writ petition, setting aside the order of the Chief Controlling Revenue Authority and directing it to decide the matter afresh in accordance with the law, considering the issues raised by the petitioner. The court emphasized the need for an expeditious decision within six months.

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