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TMI Blog2018 (2) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... was a principal lender of the company. Respondent no.3 Kanak Castor Products Private Ltd. had purchased several parcels of the Company's assets which included the lands with the building, plants, machinery, etc. under the Court supervised auction sale. The applicant himself was closely associated with the company under liquidation and undisputably was involved in active management of the company. Because of this close relations between the applicant and the Private Limited Company, few issues have arisen with respect to sale of company's assets which have been raised in the said company petition. According to the applicant, several parcels of lands, a list of which is provided in the Company Application, belonged to the applicant in his personal capacity. These lands totally admeasuring about 23,873 sq mtrs was his private property so duly reflected in the Government records. These properties never became the properties of the company in liquidation and the Official Liquidator therefore, could not have taken the possession of such properties which did not belong to the company nor could he have offered such properties for sale for realisation of the debts of the company. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected, the sale in favour of Kanak Castors Products Private Limited. Therefore, naturally when the land is not sold to Kanak Castors Products Private Ltd., question of superstructure being sold to them does not arise. Apart from that the superstructure was always the personal property of the applicant and it was not the property of the company in liquidation. The Official Liquidator Can examine the accounts and all the past balance sheets and can make a report to the effect that the property was never standing in the name of the company in liquidation even in the books of accounts. Under the circumstances, land bearing Survey No.340/1 with superstructure is required to be returned to the applicant and appropriate directions are required to be issued to cancel the sale deed in favour of Kanak Castors Products Private Ltd. 9. Similarly, on land bearing Survey No.340/2 admeasuring 2428 sq.mtrs. and land bearing Survey No.340/3 admeasuring 2934 sq.mtrs. On this also the present applicant had constructed certain quarters in the year 1996 before the liquidation petition was moved. So far as these lands are concerned, they are the personal properties of the deponent and the constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the applicant. 5. Respondent no.3 appeared before the learned Company Judge and strongly opposed the prayers, particularly, with respect to land bearing survey no. 340/1 with superstructure and superstructures standing on land bearing survey nos. 340/2 and 340/3. In the reply dated 17.8.2010 filed on behalf of respondent no.3, following averments were made : "8. It is further submitted that with regard to residential quarters of Kanak Castors, the same were on survey Nos.340/1, 340/2 and 340/3. The entire bidding process, auction process, etc. were carried out keeping the aforesaid, in view. Thus, the bids and their acceptance were kept in mind, keeping in view the substantial number of quarters of employees who were using them at the relevant point of time. It is denied that these quarters were built by the applicant. These quarters have been built by Minal Oil & Agro Industries limited at their own expense. It is admitted even in the said application that the quarters stood there since 1996. It is submitted that right to use the quarters and to use the land independently in this regard is thus the right of the Company, even if one looks at the period of adverse possession. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest in the land as such. c) Property situated at Moje : Nandasana, Taluka Kadi, SubDistrict Kadi District Mahesana bearing Survey nos.167/1, 167/2, 168/1, 168/2, 169/1, 170, 171, 340/2 and 340/3 in all admeasuring about 20,332 Sq. Mtrs is property in the individual ownership of Shri. Pramodbhai Kanjibhai Patel. Hence the Company in liquidation that is M/s. Minal Oil and Agro Industries Pvt. Ltd. (In Liquidation) has not rights, interests or title in the said property. A copy of Title Search Report dated 02122014 of Shri Chaitanya Joshi, Advocate is annexed herewith and marked as AnnexureB (colly) 5) In view of the above facts and circumstances, the land situate at Survey Nos. 167/1, 167/2, 168/1, 168/2, 169/1, 170, 171, 340/2 and 340/3 in all admeasuring about 20,332 sq. mtrs is property in the individual ownership of Shri Pramodbhai Kanjibhai Patel and not of company in liquidation i.e M/s. Minal Oil & Agro Industries Pvt. Ltd (In Liquidation)." 8. By the time, the order came to be passed by the learned Company Judge, the applicant had given up the claim of ownership qua land bearing survey no.340/1. The learned Company Judge by the impugned judgment allowed the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and respondent No.3 is using the said quarters for its workers since then. This application is filed in the year 2010 i.e. after 6 years since the date of confirmation of sale. Thus, this Court is of the opinion that respondent No.3 is required to be permitted to use the quarters constructed on land bearing Survey Nos. 340/2 and 340/3. Applicant is, therefore, not entitled to get back the possession of Survey Nos. 340/2 and 340/3 situated at village Nandasan, Taluka: Kadi, District: Mehsana, from respondent No.3." 9. The learned Judge disposed of the Company Application with the following observations and directions : "25. Thus, in the facts and circumstances of the present case, this application is partly allowed. The Official Liquidator is hereby directed to handover the possession of the land bearing survey Nos. 167/1, 167/2, 168/1, 168/2, 169/1, 169/2, 170 and 171, situated at village Nandasan, Taluka: Kadi, District: Mehsana, to the applicant within a period of six weeks from the date of receipt of this order. However, so far as lands bearing survey nos. 340/2 and 340/3 with construction made thereon are concerned, as observed earlier, the same are in possession of respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed, counsel submitted that in neither of these two documents there was any reference to the lands bearing survey nos. 340/2 or 340/3 or the superstructures existing thereon. 12. On the other hand, learned counsel Shri Devan Parikh for respondent no.3 strongly opposed this application raising the following contentions : 1) Respondent no.3 had purchased the properties of the company through the Court assisted sale proceedings. The superstructures standing on lands bearing survey nos.340/2 and 340/3 were part of such sale proceedings. On the basis of the valuation reports and the materials made available to the bidders, respondent no.3 had offered the highest price. He submitted that in the advertisement reference to the superstructures belonging to the company must include superstructures standing on land bearing survey nos. 340/2 and 340/3 also. 2) As per the records, the construction of superstructures standing on lands bearing survey nos. 340/2 and 340/3 was carried out by the company. The applicant had not borne the cost and was therefore, not the owner thereof. It was always open for the Official Liquidator therefore, to sale such assets of the company to realise the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereto, although the same could not have been lawfully done without his consent and he thereby induces others to do that from which they might have abstained, he could not question the legality of the act he had so sanctioned, to the prejudice of those who have so given faith to his words or to the fair interference to be drawn from his conduct." ii) In case of Syed Abdul Khader v. Rami Reddy and others reported in (1979) 2 Supreme Court Cases 60, in which the facts were that father of the plaintiff throughout acted in relation to others as the owner of the property though the plaintiff was the real owner of the property. The father executed an agreement to sell the land in favour of defendant no.1. Such transaction was completed in presence of the plaintiff. The sale consideration was put in the hands of the plaintiff. In such background, the Supreme Court held that the plaintiff would be estopped from contesting the validity of sale on the ground that his father had no authority to sell the land. iii) Reliance was also placed on decision of Supreme Court in case of Unoin of India v. Ibrahim Uddin and another reported in (2012) 8 Supreme Court Cases 148 in which it was observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the quarters of workers in land bearing Survey Nos. 340/1 as well as survey nos. 340/2 and 340/3." 16. The learned Company Judge did not allow the prayer of the applicant to handover the possession of the said two parcels of lands mainly on the ground that the respondent No.3 had purchased the land bearing survey No.340/1 with superstructure and when the superstructures made on survey nos. 340/2 and 340/3 is made in such a manner that it would be difficult to separate it, now the applicant at this belated stage cannot claim and is not entitled to get back the possession of land bearing survey Nos. 340/2 and 340/3. 17. We find two primary errors in the view expressed by the learned Company Judge. Firstly, as noted, with respect to the construction of the superstructures on lands bearing survey Nos. 340/2 and 340/3, learned Judge has made somewhat conflicting observations. Secondly, the learned Judge was of the opinion that since respondent no.3 has purchased the land bearing survey no. 340/1 with superstructure and when superstructures made on survey nos. 340/2 and 340/3 are not possible to be separated out, the applicant cannot claim the possession back of the lands bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by respondent no.3 through such auction. We may first refer to the sale deed. It is the sale deed dated 16.6.2005. First page of the document describes it as Deed of Conveyance and carries the following recitation : "DEED OF CONVEYANCE of Non Agricultural land bearing Survey No. 173, 176/1, 176/2, 176/3, 177/1, 177/2, 178/2, 179(2)3, 179/1(4), 188, 189/2 and 340/1 admeasuring 31,719 Sq. mtrs or thereabout of Village Nandasan of Taluka Kadi of District Mehasana along with the Buildings Constructions standing thereon admeasuring 17,173=50 sq mtrs and/or thereabout for a Sale consideration of Rs. 2,80,00,000/( Rupees Two Crores Eighty Lacs Only)" 20. Thus crucially neither the lands bearing survey nos. 340/2 or 340/3 nor the superstructures standing on such lands were part of such sale deed. Same recitation is found in the body of the document at more places than one. For example, the recitation of the document begins with the following : "WHEREAS : 1. The Non Agricultural land bearing the Survey No.173, 176/1, 176/2, 176/3, 177/1, 177/2, 178/2, 179(2)3, 179/1(4), 188, 189/2 and 340/1 admeasuring 31,719 sq. mtrs or thereabout of village Nandasan of Taluka Kadi of District Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sana, admeasuring 31719 sq. mtrs or thereabout together with the buildings and other structures, erections and godowns and movable plant and machinery, equipments, appliances, furniture, machinery, spares and stores, tools and accessories." 23. The advertisement referred to several parcels of lands of village Nandasan, Taluka Kadi of the ownership of the company admeasuring about 31,719 sq mtrs together with the buildings and other structures, erections and godowns and movable plant and machinery, equipments, appliances, furniture, machinery, spares and stores, tools and accessories. When this advertisement therefore, referred to the buildings and other structures and erections and godowns, together with the land, same must be understood in relation to the lands of the company under sale which were specified by giving survey numbers, total area of which came to 31,719 sq mtrs. If there was any intention to put for sale any of the superstructures without the lands, the same would have been so stated in the advertisement itself. It is not unknown but not very common that only superstructure is up for sale without the land underneath such superstructure. Even in such a case, nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany had put up the construction at its own cost. There is nothing on record to suggest that the company was not permitted by the applicant to do so or that the continued possession of the company was hostile to the applicant. Merely because the company put up construction of the residential quarters in the year 1996 and the applicant did not seek eviction thereof for long time, would not result into the claim of adverse possession. In case of Karnataka Board of Wakf v. Union of India reported in (2004) 10 Supreme Court Cases 779, the Supreme Court observed as under : "11. In the eye of law, an owner would be deemed to be in possession of a property so long as there is no intrusion. Nonuse of the property by the owner even for a long time won't affect his title. But the position will be altered when another person takes possession of the property and asserts a right over it. Adverse possession is a hostile possession by clearly asserting hostile title in denial of the title of true owner. It is a wellsettled principle that a party claiming adverse possession must prove that his possession is 'nec vi, nec clam, nec precario', that is, peaceful, open and continuous. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferor had power to make the transfer, had acted in good faith. In the present case, neither the applicant had consented to the transfer of immovable property in question nor the company in liquidation had claimed to be ostensible owner of such property. In fact, by all accounts, the property in question was never transferred to respondent no.3. 27. The ground of delay raised by respondent no.3 is also not valid. There is nothing on record to suggest that in the Court assisted sale, the properties in question were transferred to respondent no.3 or that the same was to the knowledge of the applicant. It was only when in the year 2006, advertisement came to be issued for sale of the properties for the dues of the company, that the applicant made efforts to segregate his properties from those of the company. He thereafter, filed the Company Application. Even if there was some timegap in moving the application, that by itself would not defeat the ownership and title rights of the applicant. Any such delay on his part would not defeat his rights without reference to the period of limitation. 28. The issue can be looked from a slightly different angle. The respondent no.3 claim to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany's remaining debts. The assessment of such cost must be on the basis of scientific exercise undertaken for such purpose. We may also add a caveat that nothing stated in this order or the order that we may pass later on reverting the possession of the lands and the superstructures to the applicant would enable him to seek eviction of the occupants therein without following due process of law. Learned advocate Shri M.B. Gandhi for the appellant agreed that the applicant will pay the assessed cost of construction. 31. On such basis, we pass the following order : 1) The Official Liquidator shall have the cost of construction standing on lands bearing survey nos. 340/2 and 340/3 assessed by a Government approved valuer. The construction is quite an old one. Value of such construction as on date therefore, shall have to be on the basis of the current cost of similar construction reduced by depreciation for the period between the completion of construction till date. We make it clear that the valuer shall not apply the rate of depreciation provided in the Incometax Act which is entirely for different purpose but actual reduction in value of construction with passage of time. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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