TMI Blog1993 (2) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... that date, i.e., Rs. 20,16,000. There shall be no other modification in the terms and conditions prescribed in the order under appeal including those relating to default and interest. - CIVIL APPEAL NOS. 636 AND 637 OF 1993 - - - Dated:- 16-2-1993 - K. JAYACHANDRA REDDY AND B.P. JEEVAN REDDY, JJ. Harish Salve and Indranil Ghosh for the Appellant. P. Chidambaram, M.L. Lahoty, Ms. S. Khazanchi, K.C. Gehani and P.S. Jha for the Respondent. JUDGMENT B.P. Jeevan Reddy, J. Heard counsel for the parties. Leave granted in both the special leave petitions. We shall first deal with the appeal arising from S.L.P. (C) No. 5377 of 1992. The appeal is directed against the order dated February 20, 1992, passed by a Division Bench of the Calcutta High Court modifying its earlier order of November 13, 1990. The controversy in this appeal pertains to the terms of sale of the assets of a company in liquidation. A few facts are necessary to be stated to appreciate the controversy. Neptune Paper Mills (NPM) was directed to be wound up by the company court on August 4, 1987. The official liquidator took possession of the assets of the company under the orders of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same line with which has already been entered into with one of the bidders in court. The bidder may have inspection of the assets of the company on applications to official liquidator before the date of sale. Terms and conditions along with the list of assets will be available at the office of the undersigned during office hours. Official Liquidator High Court, Calcutta. Dated the April 10, 1990." The significant thing to be noticed is that the sale notice did not specify the number of instalments nor did it specify the period within which the entire consideration was to be remitted. All that it stated was that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 6.90 crores, (3) the successful bidder must deposit 10 per cent. of his bid at the time of the sale, (4) the balance amount of the sale price: may be paid by instalments as would be fixed by the Hon'ble Court, Calcutta, i.e., deferred payment of instalments will be considered, and (5) the purchaser shall have to enter into an agreement and understanding with the employees' union on the same lines as has been entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s each shall be paid till the entire consideration is paid off. The first instalment shall be paid by June 10, 1993, and the last instalment by June 30, 2000 A. D. ( ii ) In case of default in payment of any one instalment, the official liquidator shall be entitled to take possession of the assets sold. In such an eventuality the entire earnest money and other instalments paid till then shall stand forfeited. ( iii ) Buxa shall provide a revolving bank guarantee in favour of the official liquidator for a sum of Rs. 60 lakhs till all the instalments are paid. The bank guarantee shall be furnished within three weeks from the date of the order and shall be kept alive till the entire consideration is paid off. It is not necessary to notice the other terms and conditions. This order was made on November 13, 1990. Aggrieved by the order of the Division Bench, financial institutions approached the court by way of a special leave petition (Special Leave Petition No. 14929 of 1990), which was disposed of on November 19, 1990, under the following order : "Taken on board on being mentioned. We have heard Mr. Gopal Subramanium for the petitioner and counsel for the respondents. We are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Buxa, has taken possession of the assets sold, has re-employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factory. (3) In the above circumstances, the financial institutions cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation. (4) The only question that survives for consideration is whether the time for making the payment should be curtailed and whether some interest should be directed to be paid by the purchaser. The application was disposed of with the following directions : ( a )The purchaser (Buxa) shall pay in the year 1992 a sum of Rs. 80 lakhs in six bi-monthly instalments payable on the last day of February, April, June, August, October and December. ( b )In the year 1993, the sum payable shall be Rs. 85 lakhs. In 1994, it shall be Rs. 90 lakhs and in 1995, Rs. 95 lakhs. In the year 1996 and thereafter, the annual amount payable shall be Rs. one crore till the entire consideration is paid off. ( c )The revolving bank guarantee shall be equal to the amount payable in each of the said years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on since in such a case it would not be possible for it to run the industry or to pay the consideration. He submitted that the purchaser has invested huge sums of money and has re-employed almost all the workers and that it is not in a position to bear any further financial burden. Before we deal with the contentions urged by learned counsel, we feel constrained to make certain observations with respect to the terms of the sale notice issued by the court. While we agree that there is no standard or uniform pattern to be followed in such matters, it would be appropriate for the court to adopt such procedure as would avoid a situation where the court is put to the task of negotiating the terms of sale with the parties. That would not be consistent with the dignity of the court. It would also give room for avoidable criticism and comment. It would have been better if the sale notice itself had prescribed the number of instalments which would be granted to the purchaser, besides other terms and conditions and then invited offers on that basis. Alternatively, the court could have invited the offers subject to such conditions as the offerers may prescribe and then have them evaluated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of the mill as a going concern and not merely sale as scrap. The court had power to grant such instalments whether it was specifically provided in the terms and conditions as advertised or not. In this connection he has drawn our attention to clause (10) of the terms. He has submitted that the present case the court had granted such instalments for such period and on such terms after considering all the facts. He has submitted that in any event if this court is not inclined to approve the confirmation of the sale on the terms and conditions as prescribed by the trial court, it may allow such confirmation in favour of his clients to remain but provide for some modification and/or addition to such terms and conditions if this court thinks it fit and proper. In this context, he has submitted that so far as the instalments are concerned, the quantum may be increased so that all the instalments are paid by the year 2000 A. D. instead of 2002 A. D. as directed by the impugned order. So far as the guarantee is concerned, he has submitted that the court can provide for a similar guarantee as provided for in other cases for sale by the court in case of default. He also submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate-Bench on July 21, 1992 . Meanwhile, if the parties alone chose to file affidavits, they may file. As the matter before us is at an interlocutory stage, it need not be treated as part heard." It is evident from a reading of the order that the order to maintain status quo did not and could never have meant stay of instalments payable by the purchaser in accordance with the impugned order. To say so would amount to placing a totally unreasonable and unwarranted interpretation upon the said order. It would be unfair above all. The purchaser has been put in possession of the assets purchased by him and no fetter whatsoever was ever placed by the said order upon his possession or enjoyment of the property purchased by him. The idea behind the order was that the purchaser should not transfer, alienate or encumber assets purchased and that he should maintain the accounts and produce them before the court. The order directing that status quo to be maintained has to be understood in the said context. We must say that after some debate, Mr. Chidambaram agreed fairly that his client's interpretation of the said order was wrong, that he regrets his default and that he is prep ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
