2007 (5) TMI 338 - HC - Companies Law

Summary

Issues Involved:
1. Actions and conduct of the official liquidator.
2. Sale and valuation of the company's assets.
3. Advertisement and sale notice.
4. Rights and claims of the West Bengal Small Industries Development Corporation Ltd. (WBSIDC).
5. Purchaser's position and claims.
6. Court's directive to the official liquidator for further inquiry.

Detailed Analysis:

1. Actions and Conduct of the Official Liquidator:
The court scrutinized the actions of the official liquidator, highlighting that his conduct required strict scrutiny. The liquidator's decision to sell the company's assets based on a valuer's report, which explicitly excluded certain sheds, was questioned. The court emphasized that the liquidator should have noted the valuer's exclusion of the sheds and explained any oversight.

2. Sale and Valuation of the Company's Assets:
The company in liquidation had use of land at the Kalyani Industrial Estate. The valuer's report indicated that sheds S2 to S6 were let out by the Government of West Bengal and not owned by the company. Despite this, the official liquidator proceeded to include these sheds in the sale of the company's assets. The court noted that the valuer's report clearly stated that the valuation of the land did not arise as it was government property.

3. Advertisement and Sale Notice:
The sale notice issued by the official liquidator contained terms and conditions that protected him from any mistakes. The advertisement invited offers for the sale of movable and immovable assets, including the sheds S2 to S6, without any reservation indicating that these sheds could not be sold. The court observed that the advertisement misled the purchaser into believing that the entirety of the immovable assets, including the sheds, was being offered for sale.

4. Rights and Claims of the West Bengal Small Industries Development Corporation Ltd. (WBSIDC):
WBSIDC, claiming ownership of the Kalyani Industrial Estate, applied under section 535 of the Companies Act for a direction to the official liquidator to disclaim the sheds. The application was rejected, but the appellate court recognized WBSIDC's right to recover its land. The court noted that WBSIDC could take steps to recover possession of the land in accordance with the law.

5. Purchaser's Position and Claims:
The purchaser claimed that it made an offer based on the advertisement and expected to receive the entirety of the land described. The purchaser argued that if it had known that part of the land or sheds would not be allotted, it might not have bid the amount it did. The court acknowledged that the purchaser's understanding was based on the misleading advertisement.

6. Court's Directive to the Official Liquidator for Further Inquiry:
The court directed the official liquidator to explain how the sheds were included in the sale description and advertisement despite the valuer's report excluding them. The liquidator was instructed to submit a report within six weeks, detailing how possession of the sheds was made over and why the court was not specifically informed about the exclusion of the sheds in the valuer's report.

Conclusion:
The application by the official liquidator was dismissed, and the receiver was discharged. The court emphasized the need for the official liquidator to clarify the discrepancies in the sale process and submit a detailed report. The court's decision aimed to ensure accountability and transparency in the actions of the official liquidator.