9911796707
TMI Blog1995 (1) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... osts were quantified at Rs. 8,11,188.25. Thereafter, the bank filed an execution petition (E.P. No. 275 of 1990) in the Sub-Court, Ernakulam. Notice was issued to the official liquidator and the company in the execution proceedings. But, the official liquidator did not file any objections. The case was posted on April 11, 1990, July 25, 1990, and November 24, 1990, awaiting objections from the official liquidator. Since no objection was filed, the execution court on November 24, 1990, directed the bank to produce draft sale papers. The proclamation was settled on June 4, 1991, and the court directed the proclamation to be published for sale of the property on August 1, 1991. But the sale had to be postponed till September 27, 1991, as per the direction of this court. On September 27, 1991, the reserve price was fixed by the executing court at Rs. 2,10,37,148.59 for immovable properties and Rs. 10,00,000 for movable items. Permission was also given to the decree-holder to bid at the court sale. But, there were no bidders on September 27, 1991, and the sale was adjourned. Thereafter, the execution court revised the reserve price and reduced it to Rs. 1 crore and 10 lakhs after taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be set aside and the property should be put to fresh auction sale by this court. While the matter stood thus, Penta Properties, represented by its managing partner filed a petition (M.C.A. No. 89 of 1994) praying therein to vacate the order passed in M.C.A. No. 6 of 1991, staying the confirmation of the sale. It is stated that considering the fact that the confirmation of the sale alone is stayed by this court, the applicant made an offer to the bank agreeing to buy the properties for a total amount of Rs. 1,85,00,000. The applicant has also agreed to discharge the entire amount quantified by the official liquidator as payable to the workers of the company less the amount available with the official liquidator from the sale proceeds of other assets of the company. The above offer was accepted by the board of directors of the bank in their meeting held on May 18, 1994. On the basis of the acceptance of the offer, the applicant has deposited with the bank a sum of Rs. 10 lakhs on May 20, 1994, and a further sum of Rs. 90 lakhs on June 23, 1994, by way of advance towards the sale price. Thereafter a formal agreement was entered into between the bank and the applicant on Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or referred to in the petition filed by him. The prayer is not maintainable in law as the properties have already been sold in execution of a decree by a court of competent jurisdiction which is not so far challenged in the manner provided in law. What is mortgaged is a plot of land which is described as having an extent of 24 acres 60 cents lying within well-defined boundaries and the entire premises where the factory is situated. The excess area of 1.75 acres now alleged to be there is not separately demarcated or identifiable. Even if there is some excess in the area, that has to be treated as an inseparable part of the property mortgaged. The proceeding has to be disposed of by following the principles laid down in the Code of Civil Procedure in the matter of setting aside the sale of property in court auction in execution of a decree validly passed by a civil court of competent jurisdiction. None of the grounds recognised in law for setting aside a sale is available in the present case. A former director of the company in liquidation has filed a counter-affidavit supporting the prayer of the official liquidator. It is stated that the immovable properties charged to the Fede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. One Shri A.D. Devassia has offered to pay of Rs. 3.5 crores as price for the assets of the company as per his affidavit filed in M.C.A. No. 109 of 1994. This shows that the price of the property is much higher than the price offered by Penta Properties. The workmen would have got all their dues with interest thereon, if there had been sale of the property at a proper rate. One Shri P.V. Mohanan filed a petition (M.C.A. No. 70 of 1994) stating that he is prepared to purchase the property at a higher price than what is offered by Penta Properties. In M.C.A. No. 109 of 1994, one A.D. Devassia, who claims to be a businessman, prays for an order permitting him to purchase the entire immovable properties at a cost of 3.5 crores. Since there was no proper publication of the sale by the executing court it was not possible for him to participate in the execution sale. All the M.C. As. were heard together. The sole question that arises for consideration is whether the sale held by the execution court is liable to be set aside by this court. Learned counsel for the applicant in M.C.A. No. 89 of 1994 (Penta Properties), has contended that once execution of the decree was allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is pending in any court other than that in which the winding-up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court." This court stayed the confirmation of the sale before any such order was passed by the civil court. Thus, the proceeding is deemed to be now pending in the company court after this court passed the order staying the confirmation of sale and for withdrawal and transfer of the execution proceeding to this court. In view of clause ( a ) of sub-section (2) and subsection (3) of section 446 of the Act this court was competent to pass such an order. It is pointed out that the application for setting aside the sale having not been made within 60 days as required under section 127 of the Limitation Act on the date of sale, the same is barred by limitation. In support of this contention, learned counsel relies on the decision of the Madras High Court in Official Liquidator, Radel Services P. Ltd. v. Southern Screws P. Ltd. [1988] 63 Comp. Cas. 749 . It is laid down in that decision that though the application can be filed in exercise of the option provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e execution proceedings is not necessary. It has been laid down that since an execution application was only a continuation of a suit, and the control of the High Court would enure during the execution proceeding also, it was unnecessary to obtain fresh sanction of the High Court for the institution of the execution proceedings. It would be giving effect to a technicality divorced from the true object of the section to hold that even in a suit filed or prosecuted with the sanction of the court, the decree may not be enforced by a successful party without fresh leave. By following these decisions, the Punjab and Haryana High Court in Shri Ram Saran Sharma v. Bank of India [1990] 69 Comp. Cas. 544 held that once the permission of the company judge during the pendency of the parent suit against the company under liquidation was taken under the provisions of section 446 of the Act, no fresh sanction for execution of the decree passed in such suit was required under section 537 of the Act. Since the decision of the Punjab and Haryana High Court is based on the principle of law laid down by the Supreme Court, it is unnecessary to refer to any other decision. The principle as laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts rank under clause ( c ) of the proviso to sub-section (1) of section 529 pari passu with such dues ; shall be paid in priority to all other dues. (2) The debts payable under clause ( a ) and clause ( b ) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions." A secured creditor, who can realise his security by remaining outside the winding up will now act in association with the official liquidator, who will represent the workmen. By this section, the workmen of the company in liquidation have been made secured creditors in respect of their claims against the company when the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. Hence, even if the bank remains outside the winding up of the company, the workmen's portion will be deducted from what is realised and applied rateably for the discharge of workmen's dues. It is true that Penta Properties have undertaken to pay the workmen's dues over and above the sale price of the property. But, the official liquidator as the custodi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the execution court cannot be sustained. Hence, for the reasons stated above, the sale is set aside. The official liquidator is directed to take steps to publish a fresh proclamation of sale in at least two leading dailies of local language published in the State and two other leading English dailies having nation-wide circulation, besides affixing copies of the proclamation in the premises of the High Court as well as of the company and in the notice board of the Municipal Office having jurisdiction of this area, by describing the property in full and by quoting the upset price at Rs. 3.5 crores. The intending bidders shall deposit Rs. 50 lakhs with the official liquidator in cash or bank draft, drawn in favour of the official liquidator as earnest money at least seven days before the date notified for auction sale. For auction sale a specific date shall be mentioned in the sale proclamation which shall not be earlier than thirty days of its publication, on the condition that the sale is subject to confirmation by this court. The said auction sale shall be held in the office of the official liquidator in the presence of the Joint Registrar of the High Court. With the above ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
