2012 (9) TMI 498 - HC - Companies Law

Winding up of company carrying a project of colonization - Applications for further develop the colony demarcate the plots and allot - Held that - Considering the size of the land the 143 claimants of the plots in the said Yojana do not constitute the entire body of plot holders in the said Yojana / proposed colony thus the question of entrusting the development of the entire land / project comprising of vast land other than which the appellants have agreed to purchase and which belongs to the company in liquidation, does not arise - Official Liquidator has rightly contended that the appellants being the purchasers of handful of plots, cannot be expected to bear the development cost of the entire land. Since the appellants have been found to be bona fide purchasers and even Sale Deeds exist in their favour, at the time of putting the land / Project to auction, the learned Company Judge should, without undermining the value of the land / Project, explore the possibility of doing the same on as is where is basis i.e. with the highest bidder acquiring the Project with commitments in favour of the appellants.

Summary

Issues:
Dismissal of company applications for winding up of a company in liquidation, direction sought by appellants for development and allotment of land, constitution of Committee for project report, inability of Official Liquidator to develop land, appellants' request to develop land themselves, feasibility of appellants developing land, identification of plots sold to appellants, exploration of auctioning land with commitments to appellants, consideration of compensation for appellants.

Analysis:
The judgment pertains to the dismissal of company applications by sixty appellants seeking the winding up of a company in liquidation and direction for development and allotment of land purchased by them. The Company Judge had earlier constituted a Committee to report on the project, which highlighted various issues such as incomplete development work, lack of layout plans, and the need for substantial expenditure for development. Consequently, the Company Judge directed refund of amounts paid by appellants with interest instead of allotment of land.

The appellants contended that they should be allowed to develop the land themselves, but the Official Liquidator stated the impracticality due to lack of demarcation and estimated high developmental costs. The appellants argued for demarcation based on existing infrastructure at the site. However, it was noted that the appellants constituted a minority of plot holders, and expecting them to bear the entire development cost was deemed unreasonable.

The Court found that the relief sought by the appellants was not feasible, considering the impracticality of their proposed directions to the Official Liquidator. Instead, the Court suggested exploring the possibility of auctioning the land with commitments to appellants, albeit with the understanding that additional payments might be required from the appellants to maintain the land's value and benefit other creditors. The judgment emphasized the need for a workable proposal from the appellants in this regard.

In conclusion, the appeal was dismissed, with no costs awarded. The judgment highlighted the complexity of the situation, the limitations of the Official Liquidator, and the need for a practical approach to address the appellants' concerns while safeguarding the interests of all parties involved.