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2015 (5) TMI 692 - HC - Companies LawWinding up of society - Sale of property through auction - A Co-operative society registered under the Multi-State Cooperative Societies Act, 1984 - Gujarat Industrial Development Corporation (GIDC) constituted under the Gujarat Industrial Development Act, 1962 (GID Act), applied to the State Government for acquisition of land for the Society, necessary for such public purpose - Land acquired for public purpose - State objection regarding possession of the land in dispute by filing review/ recall application - The entire cost of acquisition expenses and the entire amount of compensation to the land owners was paid by GIDC and the possession of entire acquired land was directly taken by GIDC from the farmers/land owners - Held that - One thing is clear that the land was acquired by the State Government for GIDC for establishment of petrochemical industry, namely, Petrofils Cooperative Limited and for establishment of township for the employees of the industry. The State Government issued notification under Sections 4 and 6 of the LA Act for acquiring the lands in dispute of villages Ranoli and Undhera. The State Government contributed ₹ 1,000/- towards cost of acquisition and apart from this amount, no amount was spent by the State Government either for acquisition purpose or for payment of compensation. The entire amount of expenses and payment of compensation in pursuance of the consent award was paid by the Society. Contribution of ₹ 1,000/- by the State Government was essential condition for acquisition of land for public purpose and to demonstrate that the cost of acquisition had been borne wholly or in part out of public fund. It could not be disputed by the learned Additional Advocate General appearing for the State Government that the land in dispute was acquired for public purpose for the Society. The Petrofils Cooperative Limited was a joint venture of Government of India and the weavers society known as Petrofils Cooperative Limited for manufacture of polyester filament yarn. The Central Government was holding 84% shares. The argument of learned Additional Advocate General cannot be accepted that merely because the State Government had invested ₹ 1,000/- for acquiring the land for public purpose, would mean that the land belongs to the State Government or the acquired land has vested in the State Government. It only establishes that land acquisition was for a public purpose. Thus, the argument advanced on behalf of State that since it had invested ₹ 1,000/- in acquisition of land, it would become owner of the land is misplaced. The State Government can only become owner if the land in dispute has vested in the State under Section 16 of the LA Act and possession had been taken by the State. In this case, neither the acquired land had vested in the State nor the State ever took possession of the land in dispute. It was clear to GIDC that the land was vested in GIDC free from all encumbrances as entire cost of expenses for acquisition and payment of compensation under consent award passed under Section 11 (2) was paid by the GIDC and the farmers/land holders directly gave possession to the GIDC. At no point of time, possession was taken by the Collector on behalf of the State Government nor there is any material on record to demonstrate that the State Government never took possession or invested any amount except ₹ 1,000/-. Though Section 32 of GID Act was not applicable as the land in dispute had never vested in the State, however, under a bonafide mistake, the GIDC entered into an agreement with regard to Ranoli and Undhera village with the State Government. Almost similar agreement was executed with regard to land situated at village Ranoli. From the agreement extracted above between the State Government and GIDC, it was established that the land had vested in the GIDC free from all encumbrances meaning thereby that the GIDC had become the absolute owner and in possession of the acquired land. The State Government neither in the review petition nor in its affidavits-in-reply filed in this writ petition has produced any evidence or material to demonstrate that possession was taken by the State Government by preparing a Panchnama in the presence of independent witnesses and their signatures were obtained on the Panchnama. As a matter of fact, no evidence with regard to taking over symbolic or actual possession by the State Government or by the Collector, Vadodara has been filed or is on the record. Therefore, the acquired land cannot be deemed to have been vested in the State Government. From the decision in Hari Ram (2013 (3) TMI 596 - SUPREME COURT), it is clear that the land in dispute vested in GIDC under Section 30 (2) of the GID Act free from all encumbrances and the GIDC was in de jura and de facto possession of the land in dispute. The State Government had no right to file a review petition before this Court on the ground that the writ petition was filed without joining the State Government as party as the State Government had no right whatsoever as the land in dispute never vested in the State Government nor the State Government ever took possession over the land in dispute. Therefore, there was no question of vesting the land in the State Government under Section 16 of the LA Act. The GIDC never raised any objection to the auction sale as it was well aware of the auction sale and as a matter of fact, has issued No Objection to the respondent Nos.16 to 18 as it was well aware of the entire proceedings. However, by way of abundant caution, GIDC was also impleaded as party to the writ petition. However, more than two years have passed and due to the review petition filed by the State Government, the respondent Nos.16 to 18 could not enjoy the fruits of the leasehold rights in the land purchased by them, nor could they construct the industry or residential township, the interest of justice demands that the concerned authority shall complete the formalities expeditiously as the GIDC has leased out the land for public purpose to fulfill the object of GID Act. By judgment dated 22.6.2011, this Court had allowed the Liquidator to withdraw the amount deposited with the Court pursuant to the interim orders passed by this Court. The Registrar General of this Court had been directed to release the amount in favour of Liquidator, and the amount deposited pursuant to the order passed by this Court in the present case, after proper verification had been withdrawn by the Liquidator and paid to the Secured Creditors on pro-rata basis and no one has come up to contest this writ petition except the State Government which has no legal right or title over the land in dispute, in our considered opinion, the dispute having been set at rest, this petition is liable to be disposed of so that the respondent Nos.16 to 18 may use the property for the purpose for which they have purchased it in Court auction. - This writ petition is finally disposed of with a direction to the GIDC and other concerned authorities to expeditiously complete the formalities so that the object of Gujarat Industrial Development Act, 1962 is achieved. The State Government and the Collector, Vadodara are directed not to create any hindrance in implementation of the Project by the auction purchasers.
Issues Involved:
1. Appointment and Role of the Liquidator 2. Land Acquisition and Vesting 3. Financial Crisis and Liquidation of the Society 4. Debt Recovery Tribunal (DRT) and Debts Recovery Appellate Tribunal (DRAT) Proceedings 5. Application of the Securitisation Act 6. Constitution and Functioning of the Sale Committee 7. Review Application by the State Government 8. Legal Ownership and Vesting of Acquired Land 9. Public Purpose and Change of Land Use 10. Auction Sale and Confirmation 11. Role of Gujarat Industrial Development Corporation (GIDC) Detailed Analysis: 1. Appointment and Role of the Liquidator: The petitioner was appointed as the Liquidator under Section 90(1) of the Multi-State Cooperative Societies Act, 2002. The petitioner is not an Official Liquidator nor envisaged under the Companies Act, 1956. The Liquidator was tasked with finalizing the liquidation of the Society as per the Central Registrar's directive. 2. Land Acquisition and Vesting: The land required for establishing Petrofils industry and township was acquired by the State Government under the Land Acquisition Act, 1894. The entire cost of acquisition and compensation was borne by GIDC, and the land vested in GIDC free from all encumbrances as per Section 30(2) of the Gujarat Industrial Development Act, 1962. 3. Financial Crisis and Liquidation of the Society: Petrofils Co-operative Limited faced severe financial crises leading to the shutdown of its plants. The Government of India decided to wind up the Society, and a Liquidator was appointed on 11.4.2001 to finalize the liquidation. 4. Debt Recovery Tribunal (DRT) and Debts Recovery Appellate Tribunal (DRAT) Proceedings: Creditors filed applications before the DRT, Ahmedabad for recovery of dues. The DRT directed the Liquidator to pay the decreed amount to IDBI, which was challenged before the DRAT. The appeals were admitted, and interim stay was granted. 5. Application of the Securitisation Act: IDBI issued a notice under Section 13(2) of the Securitisation Act on 16.8.2007 to recover dues. The Liquidator challenged this notice, leading to the constitution of a Sale Committee by the Court to prevent further erosion of the Society's assets. 6. Constitution and Functioning of the Sale Committee: The Court constituted a Sale Committee on 12.12.2008 to oversee the sale of the Society's assets. The Committee included representatives from financial institutions, banks, unsecured creditors, NCDC, and the Department of Chemicals & Petrochemicals. The Committee was responsible for obtaining valuation reports and conducting the auction sale. 7. Review Application by the State Government: The State Government filed a review application on 15.10.2013, arguing that the land acquired for public purpose could only be used for another public purpose with prior State approval. The State and GIDC were not initially made parties to the writ petition. 8. Legal Ownership and Vesting of Acquired Land: The Court held that the land vested in GIDC free from all encumbrances as per Section 30(2) of the GID Act. The State Government's contribution of Rs. 1,000/- did not confer ownership rights. The land never vested in the State under Section 16 of the LA Act as the State never took possession. 9. Public Purpose and Change of Land Use: The land was acquired for public purposes, and the public purpose was not changed by the auction purchasers. The Court noted that once land vests in GIDC, it can be used for any public purpose. The auction purchasers intended to use the land for industrial and residential purposes, consistent with the original public purpose. 10. Auction Sale and Confirmation: The auction sale was conducted under the supervision of the Court and confirmed in favor of the highest bidders. The sale proceeds were deposited with the Court and later released to the Liquidator for distribution among secured creditors. The Court found no irregularities in the auction process. 11. Role of Gujarat Industrial Development Corporation (GIDC): GIDC, as the absolute owner of the land, had the authority to lease and transfer the land. The Court directed GIDC and other authorities to expedite the formalities for the auction purchasers to use the land as intended. Conclusion: The Court dismissed the State Government's review application, affirming that the land vested in GIDC and the auction sale was valid. The Court directed GIDC and other authorities to complete the necessary formalities for the auction purchasers to utilize the land. The State Government's request for a stay of the judgment was rejected.
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