2012 (11) TMI 966 - HC - Companies Law

Liquidation of company - auction - sale of the Company as a going concern - marketability of the land - applicant in this application stated that purchaser requires necessary time for making further enquiries relating to the land of the Company. Accordingly a direction upon the Official Liquidator was prayed for, thereby directing him to make further inquiries with regard to the proceedings pending before the Sub-Divisional Land and Land Reforms Officer Held that - State Government have no power to resume the land in question, nor they get any right by way of adding explanation to the aforementioned section - Official Liquidator is authorised and empower to the sale land in question - there is no defect or any dispute about the marketability of the property in question which was sold in auction. However, the applicant is granted one week s time to pay the balance dues

Issues Involved:
1. Enquiries by the Official Liquidator regarding pending proceedings.
2. Status report on the marketability of the land.
3. Extension of time for deposit of balance sum.
4. Marketability and legal status of the land in question.
5. Validity of the auction sale and subsequent proceedings.

Detailed Analysis:

1. Enquiries by the Official Liquidator regarding pending proceedings:
The auction purchaser requested the Official Liquidator to investigate any proceedings pending before the Sub-Divisional Land and Land Reforms Officer (SDLLRO) concerning the land of Rishra Steel Ltd. (In liquidation). The Official Liquidator was directed to make these enquiries and report back to the court. The SDLLRO, Serampore, confirmed that no proceedings were pending, and the land was retained for factory use under Section 6(3) of the West Bengal Estate Acquisition Act, 1953.

2. Status report on the marketability of the land:
The auction purchaser expressed concerns about the marketability of the land due to notices issued by the SDLLRO under the West Bengal Estate Acquisition Act. The court found that the SDLLRO's letters were vague and lacked substantial evidence. The court concluded that the land's marketability was not affected by these notices, as no concrete records or notifications were produced by the state respondents to substantiate any claims over the land.

3. Extension of time for deposit of balance sum:
The auction purchaser sought an extension to deposit the remaining balance of Rs. 19.48 crore, contingent on the Official Liquidator's report on the land's marketability. The court granted the purchaser one week's time to make the balance payment. Failure to do so would result in forfeiture of the amount already deposited.

4. Marketability and legal status of the land in question:
The court examined the legal status of the land, considering the provisions of the West Bengal Estate Acquisition Act and the Urban Land Ceiling Act. It was noted that the land was retained for factory use, and the factory had not been operational since long before the winding-up order in 1990. The court referenced the Supreme Court's judgment in State of West Bengal Vs. Ratnagiri Engineering Pvt. Ltd., which clarified that subsequent events could not affect the land's status under Section 6(3) of the Estate Acquisition Act. The court concluded that the land's marketability was not compromised, and the state's claims were unsubstantiated.

5. Validity of the auction sale and subsequent proceedings:
The auction sale was conducted on an "as is where is" basis, and the purchaser was expected to be aware of any defects or issues. The court held that the purchaser's concerns about the land's marketability were unfounded, as the state failed to provide any substantial evidence to support its claims. The court affirmed the validity of the auction sale and directed the Official Liquidator to execute the necessary documents if the balance payment was made within the stipulated time.

Conclusion:
The court dismissed the auction purchaser's application, finding no merit in the concerns raised about the land's marketability. The purchaser was granted one week's time to make the balance payment, failing which the previous order of forfeiture would stand. The court emphasized that the state's claims were unsupported by evidence, and the land's marketability was not in question.

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