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TMI Blog2002 (12) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... t out sale of the assets of the Company in exercise of its power under section 29 of the State Financial Corporation Act, 1951. After one or two attempts, it emerged that the 1st respondent offered an amount of Rs. 42,00,000. Complaining that the principle laid down by the Hon ble Supreme Court in its decision in Mahesh Chandra v. State of U.P. AIR 1992 SC 905 was not followed, one of the Directors of the Company filed W.P. No. 24234/98 in this Court. The said writ petition was disposed of through orders dated 7-9-1998 directing the 2nd respondent to follow the procedure laid down in the Mahesh Chandra s case ( supra ). 3. The appellant herein, who claims to have been nominated by the Company under liquidation, came forward with some offer. However, on the ground that he did not comply with certain conditions, the 2nd respondent confirmed the sale in favour of the 1st respondent. The appellant filed W.P. No. 29628/98 seeking a declaration that the sale and handing over of the possession of the Company in favour of the 1st respondent by the 2nd respondent was violative of principles of natural justice and sought for setting aside of the sale and other consequential relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developments that led to the filing of CA. No. 475/2001, the learned Judge took the view that the sale in question squarely falls under section 537(1)( b ) of the Companies Act and is void on account of non-compliance therewith. However, CA. No. 475/2001 was ordered on the ground that the 1st respondent made payment of the entire sale consideration way back on 22-10-1998 and the 1st respondent may have incurred interest on the amount deposited by him; and in view of the fact that the sale was conducted by statutory body after following the appropriate transparent procedure of law. This order is challenged in this appeal. 7. Sri S. Ravi, the learned counsel for the appellant submits that the confirmation of sale in favour of the 1st respondent cannot be sustained either on facts or in law. He submits that refusal by the 2nd respondent to accept a better offer made by the appellant herein in pursuance of the order of this Court in WP. No. 24324/98 was unjustified. During the pendency of the writ appeal, the appellant made an offer of Rs. 65,00,000 for the same item of property and on the direction of the Division Bench in WAMP No. 251 of 1999 in WA. No. 126 of 1999, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st respondent not to meddle with the properties; and ( e )Permission stood accorded to the Official Liquidator to implead the Ex-Managing Director and other Directors of the Company under liquidation. If still the Company Court was required to adjudicate upon the CA. No. 53/99, it would have been better had the necessary parameters been indicated. Be that as it may, from the following passage of the order of the Division Bench, viz., "We, however, make it clear that we have not gone into the merits of the case as to whether the sale in favour of the 4th respondent was legal and valid. But, we have set aside the sale only on the sole ground that there is an infraction of the statutory provision." It has to be presumed that the final adjudication on the matter was left to be undertaken by the Company Court. In fact that is the only harmonious interpretation that can be placed on the order. If that be so, an effective enquiry can be undertaken by the Company Court only when all the parties concerned are before it. 10. The objection of Sri Ramchandra Rao that the appellant has no locus standi is too difficult to be accepted. Through a catena of judgments, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 42,00,000 is fairly good. Viewed in isolation, no exception can be taken to the same. However, the fact that there was a better offer of Rs. 63,00,000 and an amount of Rs. 30,00,000 was already deposited by the appellant was not brought to the notice of the Company Court. There just cannot be any doubt that had this fact been brought to the notice of the Court, the considerations before the Court would have been different. 14. As far as the object of ensuring proper and higher value for the assets of the Company under winding up is concerned, the stage of the proceedings and the technicalities cannot at all be treated as hindrances. Reference may be made to the judgment of the Hon ble Supreme Court in Divya Mfg. Co. (P.) Ltd. v. UOI [2000] 3 CLJ 390 and Lica (P.) Ltd. (No. 1) v. Official Liquidator [1996] 85 Comp. Cas. 788 . In the first of these cases, the Hon ble Supreme Court took the view that even a confirmed sale can be set aside; if situation demands. The present case does not present such an extreme situation. 15. Having regard to the facts and circumstances stated above, ends of justice will be met if the matter is remitted to the Company Court for fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FR). In view of the orders passed by the BIFR, RCC. No. 8 of 1998 came to be instituted in the Company Court. The A.P. Industrial Development Corporation, the 2nd respondent herein, being one of the creditors of the Company, brought out sale of the assets of the Company in exercise of its power under section 29 of the State Financial Corporation Act, 1951. It is stated that after few attempts, M/s. Trilinga Technical Management Consultant (Pvt.) Limited, the 1st respondent herein, came forward to offer an amount of Rs. 42 lakhs as sale consideration. On an earlier occasion, complaining that the principles laid down by the Apex Court in its Judgment in Mahesh Chandra s case ( supra ) were not followed, the Company represented A. Rajendra Prasad, its authorized signatory, filed W.P. No. 24234 of 1998 praying for the following relief : "...the High Court will be pleased to issue any appropriate writ, order or direction, preferably a writ in the nature of mandamus declaring the action of the respondents 1 and 2 in seizing and selling and conveying the petitioner Company unit viz., Sree Ramalingeswara Agro Processors Pvt. Ltd., in favour of the 4th respondent as illegal and viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said writ appeal was pending, it appears, the Official Liquidator, filed C.A. No. 53 of 1999 assailing the validity of sale of the assets of the Company by the 2nd respondent in favour of the 1st respondent. In the said Company Application, the main complaint was non-compliance of the mandatory provisions of section 537 of the Act. 23. The Division Bench, before which the writ appeal was posted for final hearing, thought it appropriate to hear and dispose of the writ appeal along with C.A. No. 53 of 1999. The Division Bench, by its Judgment and order dated 8-5-2001 disposed of W.A. No. 126 of 1999 and C.A. No. 53 of 1999 holding "Thus, on a reading of the aforementioned provision, it is clear that when the Company is being wound up subject to the supervision of the Court, any sale held without the leave of the Court or any transfer of properties of the company after such commencement shall be void. In other words, the above provision clearly prohibits a sale or any transfer of the property without the specific leave of the Court. Admittedly, in this case, the mandatory provisions have been violated. Further, the learned counsel appearing on behalf of the A.P. Industria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred interest on the amount deposited and also taking into account the fact that the sale effected by the 2nd respondent in favour of the 1st respondent was transparent and fair. Hence this appeal under section 483 of the Act by the appellant herein. 26. In order to hold that this appeal filed by the appellant/third party is maintainable under section 483 of the Act, it becomes necessary for the Court to decide whether the appellant is prejudicially affected by the order impugned in this appeal, whether the 1st respondent and/or the Company Court was under a legal obligation to implead the appellant as a party-respondent in C.A. No. 475 of 2001 and the incidental question whether the appellant herein could be treated as a party concerned within the meaning of that phrase occurring in the order of the Division Bench in W.A. No. 126 of 1999 dated 8-5-2001. 27. Meeting the contention of Sri. S. Ramachandra Rao, learned counsel for the 1st respondent, that this appeal is not maintainable, because of the orders made by this Court in WP No. 29628 of 1998, WA No. 126 of 1999 and that of the Supreme Court in the Special Leave Petition in which proceedings also the appellant soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also true that the Division Bench reserved liberty to the parties concerned to press their respective contentions before the Company Court in C.A. No. 53 of 1999. The appellant herein, it is trite, is not a party to C.A. No. 53 of 1999. Liberty is not a right in the strict sense, but it is a freedom or free will. Liberties are the things, which one may do without being prevented by the law. The sphere of one s legal liberty is that sphere of activity within which the law is content to leave him alone. It is true that the term right is often used, in ordinary parlance, in a wide sense to include such liberty. The interests of unrestrained activity thus recognized and allowed by the law constitute a class of legal rights clearly distinguishable from those, which are recognized and protected by rule of right or rule of law. Rights of one class are concerned with those things which other persons ought to do for a person; rights of the other class are concerned with those which that person may do for himself. The former pertain to the sphere of obligation or compulsion; the latter to that of liberty or free will. Salmond, speaking about the correlative of liberty states "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise. 30. Alternatively, it is also relevant to notice that if by the order impugned in this appeal, some of the rights of the appellant are impaired or affected, undoubtedly, the appellant can seek review of the order impugned in this appeal before the learned Company Judge by making appropriate application. The appellant, without making any such effort before the learned Company Judge, cannot straightaway maintain this appeal, particularly having regard to the fact that the appellant sought nullification of the sale of the assets of the Company in favour of the 1st respondent in WP No. 29628 of 1998, WA No. 126 of 1999 and Special Leave Petition before this Court and the Apex Court and failed everywhere. It is well-settled by the Judgments in J.N. Bowri v. Official Liquidator [1961] 31 Comp. Cas. 220 (Assam), East India Cotton Mills Ltd., In re [1949] 19 Comp. Cas. 61 (Cal.), Vanaspati Industries Ltd. v. Prabhu Dayal Hari Ram [1950] 20 Comp. Cas. 311 (East Punj.) Manoharlal Manilal Shah v. Official Liquidator [1969] 38 Comp. Cas. 643 that an appeal by a person who was not a party to the winding up poceedings is not competent and that an unsuccessful bidder at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral principle of civil law recognized since long that ordinarily where an appeal is provided without specifying who shall be entitled to prefer the appeal, the right of appeal is exercisable only by a party to the proceeding and no person who is not a party to the proceeding can exercise the right of appeal unless leave to appeal is granted by the Court. Lindley, L.J. pointed out in In re Securities Insurance Company [(19/894) 2 Ch. 410, 413], I understand the practice to be perfectly well-settled that a person who is a party can appeal (of course within the proper time) without any leave, and that a person who without being a party is either bound by the order or is aggrieved by it, or is prejudicially affected by it, cannot appeal without leave ." 31. I am in respectful agreement with the opinion of the learned Judges of the Division Bench of the Gujarat High Court in the above case. In the first place, the appellant herein, not being a party either to C.A. No. 53 of 1999 or to C.A. No. 475 of 2001, cannot maintain this appeal. Secondly, the appellant cannot be treated to be a person who is prejudicially affected by the order of the learned Company Judge impugned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the appellant herein, if he so wishes or desires, he has liberty to implead himself as a party respondent either to C.A. No. 53 of 1999 or any other application or applications filed in C.A. No. 53 of 1999 such as C.A. No. 475/2001. Liberty to do something himself cannot be confused with right to claim something from another in performance of a legal obligation cast on the other. 33. In the result and for the foregoing reasons, I hold that this appeal is not maintainable at the instance of the appellant and it is accordingly dismissed with no order as to costs. However, I make it clear that this order shall not come in the way of the appellant herein making any appropriate application before the learned Company Judge, if he is so advised, to implead himself as a party-respondent to C.A. No. 53 of 1999 or C.A. No. 475 of 2001 and seeking review of the order impugned in this appeal. All points raised in this appeal by the parties, including the contention that the attempt of the appellant to set at naught the order made in C.A. No. 475 of 2001 by the learned Company Judge and impugned in this appeal, tantamounts to abuse of process of law having regard to the dismissal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain formalities. The 2nd respondent confirmed the sale in favour of the 1st respondent. Challenging the confirmation of sale, the appellant filed W.P. No. 29628/1998 for a declaration that the sale and the handing over of the possession of the company in favour of the 1st respondent by the 2nd respondent were violative of the principles of natural justice, and sought the sale to be set aside and consequential reliefs to be passed. That writ petition was dismissed by a learned Single Judge of this Court. Aggrieved by the same, the appellant herein filed W.A. No. 126/1999. 38. It appears from the record that when the writ appeal was pending, the Official Liquidator filed C.A. No. 53/1999 challenging the sale of the assets of the company by the 2nd respondent in favour of the 1st respondent. The main grievance of the Official Liquidator was that the mandatory provisions of section 537 of the Companies Act were not complied with. In that application, the Official Liquidator prayed for, ( a ) setting aside the sale by the 2nd respondent, ( b ) direction to the 2nd respondent to deposit the sale proceeds, ( c ) direction to the 2nd respondent to furnish the panchnama in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was dismissed. The learned counsel further submitted that the appellant had agreed to pay a sum of Rs. 65,00,000 as against the offer of Rs. 42,00,000 of the 1st respondent. It is brought to my notice that a sum of Rs. 30,00,000 was also deposited by the 1st respondent in the month of March, 1999. He submitted that though the learned Company Judge held that the 1st respondent might have incurred loss of interest on the amount deposited by it, that observation is not legally correct, since the appellant also sustained loss of interest on the amount deposited by him, though the appellant deposited the amount later in point of time. 42. While opposing the aforesaid argument, learned senior counsel Mr. S. Ramachandra Rao, appearing for the 1st respondent submitted at the Bar that the appeal is not sustainable as the appellant was not a party to C.A. No. 475/2001. It is submitted that since the writ appeal was dismissed, no right accrued to the appellant to get the sale confirmed in his favour. 43. Justice S.R. Nayak held that since no right had accrued to the appellant as the appellant was not a party to the company application, the appeal itself was not maintainable. 44. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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