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TMI Blog2012 (11) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... tages. As after the order dismissal of SLP ARC filed another scheme in June, 2011, that was, awaiting disposal before the learned Company Judge. Initially the Court directed the property to be sold as a going concern. Subsequently, it was directed to be sold "as is where is" basis. Accordingly, assets were sold, thus no scope to interference arises. ARC was represented before His Lordship when Deccan and Sylvan were heard on their applications. Thus the learned Judge should have given a hearing to ARC. In any event, such defect is cured by us by giving a full-fledged hearing to ARC on merits. Gourinandan participated in the sale and became the successful bidder. They are supposed to pay the purchase price. On such payment being made Official Liquidator would transfer the right, title and interest. It would then be open for Gourinandan to set up industry with the concurrence of the State by resolution of dispute, if any, they would be having with the State pertaining to the land in question. Official liquidator would not be in any way responsible for the same. The learned Junior Standing Counsel rightly contended, the land revenue issue would be strictly within the domain of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed an order of winding up. Thus the assets came in possession of the official liquidator by virtue of the order of winding up. The Allahabad Bank also filed a suit for recovery of the outstanding dues. ARC filed an application for stay of the winding up proceeding by framing a scheme for revival. The workers in the meantime also entered into negotiation with one G.S Sureka for revival of the company G.S Sureka subsequently brought Sylvan Commercial Private Limited (hereinafter referred to as Sylvan) as his nominee. Allahabad Bank got a decree for Rs. 3.5 crores on April 9, 1987. Subsequently ARC entered into an agreement with Allahabad Bank to pay off their dues in phases. Allahabad Bank supported the scheme framed by ARC. On May 2, 1997 Sureka got possession of the factory on a scheme of revival propounded by him despite objection being raised by Allahabad Bank. ARC as well as Allahabad Bank filed independent appeals. The Division Bench set aside the order appointing Sureka to revive the unit. Sylvan filed a Special Leave Petition that was unsuccessful. Official Liquidator again took possession. The Apex Court dismissed the Special Leave Petition filed by Sylvan on December 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orandum of Understanding with ARC. (ii) The learned Company Judge was not taken in confidence while direction for sale of assets was given and the sale was conducted by another learned Judge. (iii) The sale of any asset of the company belonging to the company in liquidation could only be conducted by learned Company Judge in his administrative capacity. The learned Judge could not have sold the assets not being assigned the power of sale. (iv) An application for direction for sale was assigned to the learned Judge. The learned Judge could not have extended the scope by directing sale to be conducted in His Lordship's Court and thereby conducting the sale to the exclusion of the regular Company Court. (v) Once the application for sanction of the scheme was pending and awaiting its disposal the learned Judge should have waited and directed the application of ARC to be disposed of first before conducting the sale. 5. Elaborating his argument, Mr. Banerjee drew our attention to the order for sale and the order of confirmation of sale. He referred to the decision in the case of Sohan Lal Baid v. State of West Bengal [1989] 2 CLG 433 and in case of United Bank of India v. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the show as per the order of the Court. He would be happy if money was refunded back by the Official Liquidator or anyone intending to run the unit. He contended, the unit was run under the supervision of a retired Judge of this Court. All bills, vouchers and supporting documents were authenticated. Hence Official Liquidator must sell the assets to pay off his dues. Deccan Mr. Jaydeep Kar 9. Mr. Jaydeep Kar, learned counsel appearing for Deccan contended, he was also interested in monies being paid as per the decree that was assigned to him. He referred to his application for sale of the assets that was heard and disposed of by the learned Judge. According to him, the sale conducted by His Lordship was nothing but a follow up action. The sale was conducted as per the Apex Court order on 'as is where is' basis. He also opposed the prayer of Gourinandan to back out from the sale. On the issue of assignment, Mr. Jaydip Kar, learned counsel contended, the Allahabad Bank terminated the MOU as ARC failed to act upon the same as would appear from page 56A of the paper book. ARC already filed a suit against the bank challenging the assignment. Hence, ARC was not entitled to stall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no longer a good law. 14. On the submission of ARC, Mr. Mal contended that the prayer for forfeiture was contrary to the stand of the ARC and they were not entitled to "approbate and reprobate" at the same time. Mr. Mal however, prayed for four weeks' time to pay off the balance consideration. Mr. Mal contended that the provisions of Section 6(3) of the West Bengal Estates Acquisition Act, 1953 was amended with effect from November 9, 2010 wherein explanation II was added that would include the power of the State to call back any land in case of non-user for the purpose for which it was allowed to be retained. ARC In Reply Mr. Banerjee 15. Mr. Ratnanko Banerjee, learned counsel while replying for ARC contended that the decision in the case of Ujjain Nagar Palika Nigam (Supra) did not involve any title. It would relate to payment of the statutory outgoing hence, the said decision would be of no assistance to us. He further contended that from the tenor of the argument advanced by Mr. Saha on behalf of Sylvan and Mr. Kar on behalf of Deccan, the collusion was proved. In any event, Sylvan was not a creditor of the company in liquidation hence, Sylvan could not have prayed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts failed when the scheme propounded by ARC could not succeed. The company is still in liquidation, for beneficial winding up Official Liquidator must sell the assets to pay off the dues of the creditors. Hence, the Official Liquidator was duty bound to take expeditious steps for sale of the assets. Sylvan and Deccan filed applications for direction for sale. Sylvan was not a creditor as rightly submitted by Mr. Banerjee. Sylvan would be free to approach the Official Liquidator in accordance with law. We doubt how their grievance could be met in absence of any specific order from the Apex Court to the said effect. Be that as it may, Sylvan approached the learned Single Judge for a direction for sale of the assets. Even if the application was dismissed that would not change the situation. 20. Coming to the question of Deccan, we find, Deccan got the decree assigned in their favour from the Allahabad Bank. Whether such assignment was right or wrong, is a question to be decided in the pending suit filed by ARC. Deccan also activated the Official Liquidator by asking for sale. 21. Sylvan and Deccan both prayed for distribution of the sale proceeds that, in our view, would not be po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated April 20, 2011 and his subsequent appeals being APO No.249 and APO 250; both against the order of confirmation of the sale dated July 15, 2011 would deserve only order that the sale would not preclude the learned Judge to hear his scheme application whatever its worth may be as on date. As a shareholder he would be having his right to participate in beneficial winding up. That would take care of the four appeals. The Appeal of Gourinandan Gourinandan participated in the sale keeping its eyes wide open. Moment they participated in sale, they were deemed to have been satisfied about the nature, character and status of the land and assets in question on as is where is basis. If we look to the terms and conditions of the sale, we would find Official Liquidator making it clear that he would not be responsible for any defect in the title. We fail to appreciate how Gourinandan could make any complain subsequently. 25. Lot was said on the notice issued under Section 6(3) of the Estates Acquisition Act. Mr. Ghosh appearing for the Official Liquidator rightly contended, such attempt on the part of the State was of no consequence in absence of appropriate leave being obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sylvan, inter alia, praying for sale of assets of the company in liquidation and a direction upon the Official Liquidator to pay off their dues. His Lordship rightly disposed of both the applications vide order dated April 20, 2011. His Lordship should have stopped there asking the Official Liquidator to take routine directions for sale from the regular Company Court that would create the position healthy and sound. 28. Sale is conducted by the learned Company Judge in open Court in administrative capacity. Mr. Kar rightly contended, no such statutory obligation was imposed by the Companies Act, 1956 or the rules framed thereunder. It had a history. If we look back, we would find that in 1970s there had been allegations with regard to the functioning of the office of the Official Liquidator. Under the rules, Official Liquidator was obliged to sell the assets of the company in liquidation and disburse the proceeds amongst the creditors, shareholders, workers and all concerned in terms of Section 529, 529A and 530 of the said Act of 1956. The sale would be subject to the confirmation of the learned Company Judge. To avoid unnecessary allegations and to maintain a transparency, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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