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TMI Blog2012 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... n) were sold at an open auction held in court on March 2, 2012. The company in liquidation has a manufacturing facility in Maniktala with substantial machinery and equipment in the line of printing business. The company is also a tenant at a building in the Sealdah area. The Sealdah tenancy covered five rooms spread over the second and third floors of the building at 127/1 AJC Bose Road. At the time that the sale of the company in liquidation was taken up, the owners of the Sealdah property presented an application in the nature of disclaimer by way of CA No. 169 of 2012. The owners of the Maniktala property at 237 A & C Maniktala Main Road, whereat the company in liquidation is a tenant, were also represented. There were two principal bidders in the fray who lasted the distance. Rabindranath Saha bid Rs.4.50 crore over and above the liability of the company in liquidation. On the same terms, the next highest offer was of Gulshan Sony of Rs.4.20 crore. Both offers were considerably higher than the valuation of the assets of the company in liquidation. The sale was on the basis of the company being taken over by the highest bidder as a going concern. The order of March 2, 2012 in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed by the court. In most cases it would be the banks as secured creditors, in whose favour the plant and machinery were hypothecated, that would suffer. The practice has been arrested in recent years and is only allowed with stricter controls and more as an exception than the rule. Shortly after the AOP (India) Private Ltd went into liquidation pursuant to an order dated March 8, 2006, at the behest of some employees of the company in liquidation a committee of management was set up by the company court by an order of July 2, 2008 to carry on the business of the company in liquidation. It appears that the employees roped in one Rabindranath Saha to fund the operations. It is equally possible that Saha took control of the business of the company with some employees of the company as his front. An appeal was preferred from the order dated July 2, 2008 by the Mullick landlords of the Maniktala property which was dismissed on November 25, 2008. Buoyed by the success of the gimmick in this day and age, the one or more persons who had hatched the gameplan set about charting out a course to perpetuate their illegitimate control of the company's assets and valuable properties without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of record nor be able to assert the extent of indebtedness of a company or make any admission in such regard on behalf of the company." The order recorded that though the second petitioner to CP No. 253 of 2009 claimed to be the holder of 36% shares in the company, "this is a false impression ... (since) ... upon a company going into liquidation, its shares are not transferable and the transfers are void unless specific approval in such regard is obtained from the Court presiding over its winding up." The order documented that Bank of India, a secured creditor of the company in liquidation, claimed a sum in excess of Rs.19 lakh and insisted that without such payment being made upfront the bank would not consider any purported scheme for continuing the business of the company in liquidation. The order dated March 8, 2010 also noticed that Saha had fallen out with Bose and Saha had only harsh and unkind words for Bose. The order perceived that it was Bose who had engineered the misadventures that were CA No. 383 of 2007 and CP No. 253 of 2009 and dismissed both matters upon assessing costs of 2000 GM to be paid by Bose to the official liquidator. On March 11, 2010 a further applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of the sale. The sale of the company as a going concern was taken up along with an application by the landlords of the Sealdah property, CA No. 169 of 2012, seeking a direction on the official liquidator to disclaim the Sealdah property. The landlords of the Maniktala property were also represented in course of the sale. Mr Kaushik Banerjee, Advocate, appeared for Gulshan Sony who turned out to be the second higher bidder after Saha, for taking over the company in liquidation as a going concern. On March 2, 2012, the landlords of the Maniktala and Sealdah properties claimed that substantial sums remained due to them and it appeared that even though the business of the company was conducted under the aegis of court orders, no rent or occupation charges had been tendered for the use of the properties during such period. It is one of the hazards involved in the court allowing informal arrangements for the business of companies in liquidation being carried on; some prosper, while many other suffer. In this case the landlords of the two properties received no return on their capital for the months that some few had use of the company's premises and its assets. The secured creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed in favour of the highest bidder, subject to the balance earnest deposit and balance consideration being tendered within the times specified in the order. In the event of default on the part of the highest bidder, his initial or earnest deposit was to stand forfeited and the second highest bidder was to step in with a further default clause operating on the second highest bidder for the forfeiture of the initial or the earnest deposit. Saha had put in an initial deposit of Rs. 5 lakh and, upon a the request made on his behalf, he was given time to put in the balance earnest deposit representing 20 per cent of the bid amount; with further time to put in the remaining consideration. Sony furnished an initial deposit of Rs.5 lakh and, upon Saha's default in putting in either the balance deposit or the remaining consideration, Sony was permitted to put in the balance deposit and the residual purchase money within the times as specified in the order. Within a few weeks of the order of March 2, 2012, Sony appeared in person in the company court to complain that he had been led up the garden path to make an abnormally high bid for a company that was not worth the amount. He all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooms, 2 rooms would be returned to the Landlord of the said premises and 3 rooms on the 2nd floor would be given to the company. However, I did not agree to any such terms and prompted him not to agree to that. I found that Mr. Somen Bose who is a Manager of the company in liquidation was also present there and was instructing Mr. Kaushik Banerjee to give bid though I had not authorized Mr. Somen Bose to act on our behalf. The situation was such that we did not understand as to what order is being passed to such bid. Mr. Kaushik Banerjee, Advocate did not pay heed to me and asked me to keep quiet otherwise I will be arrested and asked me to go and step back. As this was my first visit to the Court I was scared to do anything because I was told that if I say anything I will be arrested. 8. After the said order dated 2nd March, 2012 was passed when I came out of the Court Room Mr. Kaushik Banerjee and Mr. Ashim Sarkar congratulated me for being the second highest Bidder. I told them I had not agreed to the terms and on what basis he agreed to such terms. Mr. Somen Bose who was standing there told us that even if you lose Rs.5 lac it does not matter and it would be a learning process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not go to the office of the official liquidator on March 1, 2012 but remained downstairs on the pavement outside the building on Old Post Office Street while his cousin and, later, a clerk in the employment of advocate that Sony had contacted, pleaded his case in the office of the official liquidator such that Sony's bid could be accepted and presented before court on the next day. Sony has also insisted that it was Sarkar who asked him to contact Mr Banerjee and accompanied him to Mr Banerjee's chambers. Sarkar has countered that he had suggested four names out of which Sony chose Mr Banerjee and, though he had directed Sony to Mr Banerjee's chambers, he had not accompanied Sony to Mr Banerjee. It is also evident from Sarkar's evidence that he knew Bose who was able to contact him on his mobile telephone. It is this nexus between Bose and Sarkar, which cries out from the oral evidence, that may hold the key. Sony was present in court when the sale was conducted. Sony was aware that counsel representing him had made a bid of Rs.4.20 crore over and above the liability of the company in liquidation which was to be taken over by him. Saha's bid was Rs.4.5 crore over and above the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dispassionate executioner. Sarkar delved into his experience in court and gambled that Sony would not have the gumption to carry a complaint against his lawyer to the court; or an overburdened court would skim the matter at the surface and take an uninformed, ad hoc decision without attempting to fathom what may actually have transpired. Sarkar counted the odds well and took a calculated risk that almost came off. That Sarkar pointed Sony to Mr Banerjee is beyond doubt. As to whether Mr Banerjee was aware of the scheme hatched by Sarkar is unclear and the lack of clarity may have more to do with Sony's inability to present the case as he has appeared in person and his only endeavour has been to take back his money and run. But it cannot be conclusively said on the basis of the oral testimony available to court that Mr Banerjee was a party to the heinous strategy that a lowly clerical employee in the office of the official liquidator orchestrated for a seemingly invisible master. Saha has said in his voluntary statement submitted to court that he had made the initial bid on March 2, 2012 with the support of his partners in business; that he continued to bid higher to match and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of money is the court time wasted, both in course of the sale and in the matters arising therefrom. On the positive side, the matter has been an eye-opener of sorts. The shady goings-on in the office of the official liquidator and the unholy nexus between some persons manning that office and persons connected with companies in liquidation have come out in the open. As to whether such unholy nexus extends to a more venerable class of persons, or a few from such revered class, may not have been established in the present matter but ample suspicion in such regard has been raised. The court needs to be more careful in the conduct of court sales and the extent of credence that it would attach to those habitually appearing in such matters. For years, lawyers of reasonable standing and reputation have been reluctant to be associated with sale matters conducted in the company court, particularly on behalf of the regular bidders. It is not unusual for steady company practitioners to be conspicuous in their absence on Friday afternoons and for another set of lawyers to be in regular attendance in sale matters. In the light of the conduct of those informally running the business of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l liquidator. The balance amount will stand forfeited, for Sony not asserting himself at the time of the sale and causing the matter to be blown up beyond it was necessary, and be retained by the official liquidator to be available for distribution to the creditors of the company in liquidation in accordance with law. iii) Saha will be refunded a sum of Rs.4 lakh out of the deposit of Rs. 5 lakh that he has made with the official liquidator. The balance amount will stand forfeited, for Saha having failed to honour his bid but having cited some mitigating circumstances, and be retained by the official liquidator to be available for distribution to the creditors of the company in liquidation in accordance with law. iv) The Official liquidator will invite offers for sale of the assets of the company in liquidation upon a fresh valuation of the assets by an empanelled valuer other than the one who had been engaged to value the company as a going concern. The expenses for the valuation will be decided at the time of sale, but an initial ad hoc payment of Rs.10,000/-may be made to the valuer from out of the official liquidator's Establishment Charges Account. Advertisements should be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidation till the conclusion of the sale and the handing over thereof to the rightful persons upon consulting the secured creditors and, for such purpose, the secured creditors will have to bear the expenses therefor; such expenditure will be regarded as liquidation expenses and have priority at the time of disbursements. The official liquidator will brook no resistance in shutting out all from having any access to the assets of the company in liquidation with police assistance, if necessary, except for allowing inspection under strict supervision to prospective purchasers at the times to be specified in the sale notice. If the applicants in CA No. 464 of 2012 and CA No. 476 of 2012 desire the Maniktala property to be protected from now till the conclusion of the sale and the handing over of the company's assets to the rightful persons, they will cause the official liquidator to engage security guards thereat against the expenses therefor to be borne by them. ix) The order dated March 2, 2012 stands modified to the extent indicated herein and as would be in consonance with the observations and directions as contained in this order. x) It is recorded that both the owners of the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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