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TMI Blog2012 (12) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... iddheswari, at one point of time, belonged to the same group having factory on a plot of land contiguous to each other. Subsequently, Siddheswari changed hands. Siddeswari came to the present management. Anantapur was wound up by this Court vide order dated October 9, 2002. The Official Liquidator took possession of the assets. At that time the original promoter group was having the control of Anantapur and Siddheswari as well. When the Official Liquidator went to take possession, they felt difficulty in absence of appropriate boundary demarcating the land belonged to the company in liquidation as also Siddheswari. The Official Liquidator came to know from the records of the Revenue Authority that the company in liquidation, owned 11.73 acres of land. When the Official Liquidator attempted to take possession of the said land measuring about 11.73 acres Siddheswari objected. They subsequently made application for disclaimer of two acres of land which, according to them, being possessed by the company in liquidation. Despite several attempts, the land could not be demarcated. The Official Liquidator appointed valuer who valued the property as per the physical measurement as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es being made in the office of the Land Revenue. The learned Judge relied on the report of the Official Liquidator in this regard. By an order dated January 17, 2011 the learned Single Judge directed sale of the land belonging to the company in liquidation privately to Siddheswari at and for a sum of rupees thirty-seven lakhs. His Lordship did not hold any public auction. His Lordship's order, as we find from pages 441-445 of the paper book, was the result of frustration and inordinate delay in beneficial winding up of the company. According to His Lordship, despite attempts being made for years together the land could not be demarcated. His Lordship assigned four reasons that are quoted below:- "a) the applicant is prepared to pay purchase price matching valuation, b) as the land cannot be demarcated, it would be difficult to find a better purchaser in the market, c) Section 457(1)(C) empowers the Official Liquidator to sell land by private treaty in appropriate cases. d) The secured creditors, represented today, do not have any objection." Being aggrieved, the workers approached the learned single Judge. By that time the determination got changed and another learned Judge h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. reported in 2000 Volume-V Company Law Journal Page-135 and in the case of United Bank of India -VS- Bharat Electrical Industries Ltd. reported in 1993 Volume-76 Company Cases Page-317 to contend, the balance of convenience would deserve retention of the order of sale particularly when the secured creditors did not object to it. Mr. Dhruba Ghosh, learned counsel, appearing for the workers, contended, the sale by a private treaty was contrary to earlier orders of the Court and the learned Judge should not have adopted such exceptional mode particularly when the revenue records would speak for more land belonging to the company in liquidation than what was claimed by Siddheswari. He contended, the workers had a valid claim ranking pari pasu with the secured creditor. Hence, they were having locus standi to challenge the same and insist the Official Liquidator to go for public auction to have the best possible price. Distinguishing the cases, Mr. Ghosh contended, the decision of the learned Single Judge in case of Pradip Kumar Dasgupta (supra) would also support his contention as the learned Single Judge failed to assign cogent reason as to why he would ignore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing discretion that was permitted under Section 457 (1)(c) of the Companies Act of 1956, it could be undone without appropriate reason. In any event, the order of review/recall passed by a Coordinate Bench was liable to be set aside as the learned Judge did not have appropriate authority to do so. He distinguished the cases cited at the Bar to say that in case of Lica (P) Ltd. (supra) sale was not concluded. He refers to paragraph-38 of the decision in the case of FCS Software (supra) to contend, it would rather support his argument. He would end up his argument by summing it up on the following issues: (i) The order was bad being passed by a Coordinate Bench; (ii) No reason was disclosed to upset the sale; (iii) The purchaser having altered his status by pending huge sum, would be a relevant factor that was ignored by the learned Judge. (iv) The Official Liquidator assisted the learned Judge by submitting a report prior to passing of the order dated January 17, 2011. Hence, he was not entitled to change his stand on the change of determination that too, without any valid reason. On instruction, Mr. Banerjee lastly contended, he was initially having instruction to off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less and until there was an ex facie apparent error on the face of the record. Moreover, if it was to be done, it should be done by the same Judge if he was available. To that extent, we are with Mr. Banerjee. We cannot at the same time ignore the submission of the workers. They were clamouring for their dues. They were not present right on the date of sale. They had their locus standi in insisting upon the Official Liquidator to attempt fresh sale by public auction to get the best possible price so that they could realise their dues ranking pari pasu with the secured creditor. It is true, secured creditors did not object. In their wisdom they did not do so. That would not debar the workers to make their application as they did. The learned Judge, while recalling the order, considered the fact that the sale that was cancelled by the order dated January 11, 2010 recognized the value of the land at and for a sum of Rs.70 lacs received by the Official Liquidator. The learned Judge while passing the said order, directed refund as the Official Liquidator could not hand over 11.73 acres of land that would not mean, the company did not have the land at all. The land revenue records wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reduction of price as they could not get actual area of land that was offered for sale. The learned Judge directed refund of a sum of rupees seventy lacs that, according to His Lordship, was the value of the land, that was offered by Bharat Metal and confirmed by Court. If Bharat Metal would not have approached, the controversy, that is arising today, would not have been there at all. Hence, if we restore rupees seventy lacs as on January 11, 2010 being the date of the order when Official Liquidator was asked to refund the said sum together with reasonable interest for the period when Official Liquidator was out of pocket to the extent of rupees seventy lacs we feel, it would meet ends of justice. Hence, the sum of rupees thirty-seven lacs that was paid by Siddheswari should attract interest at the rate of six per cent per annum on and from January 11, 2010 till the date of payment of the said sum to the Official Liquidator. The balance sum of rupees thirty-three lacs would also carry interest at the same rate on the reducing balance on and from January 11, 2010 till the respective dates of payment. We thus direct as under: i) The appellant Siddheswari would pay Rs.20 lacs b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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