TMI Blog2013 (4) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... urements, as mentioned in the Valuation Report. First prayer made by the applicant regarding setting aside of the sale is concerned. - Held that - In view of the facts and circumstances as discussed hereinabove, and as the applicant cannot be made to suffer for lapses committed by the office of the Official Liquidator, the interest of justice would demand that the sale be set aside, and the amount that has been deposited by the applicant which has been invested in a Fixed Deposit, be refunded, with interest. Consequently, the sale, confirmed, is set aside. The Registry is directed to refund the amount deposited by the applicant, that has been invested in a Fixed Deposit, along with interest, upon the applicant making an application for this purpose. The second prayer made by the applicant is for initiation of an inquiry into the manner in which the office of the Official Liquidator has conducted itself by auctioning of the property in question without ascertaining the correct status of the land in question. - Held that - A copy of this order be handed over, learned Assistant Solicitor General of India, for communication to the Secretary, Ministry of Corporate Affairs, Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) That this Hon'ble Court may be pleased to direct the respondents to provide the copy of the lease deed executed by the GIDC in favour of the company in liquidation as also full set of title deeds/ documents relatable to Lot No. VA. (D) That pending the aforesaid clarification by the respondents, time to deposit the balance consideration of 75 per cent, may kindly be extended. (E) Any other and further relief which is just and proper may kindly be granted by this Hon'ble Court." 2. An Affidavit in support of the Judge's Summons has been filed by the applicant, dated 19.10.2 011. It is stated therein that Ahmedabad Manufacturing and Calico Printing Mills Limited (in Liquidation) [hereinafter referred to as "the Company in liquidation"], was ordered to be wound-up by order dated 20.04.1998 passed in Company Petition No.157 of 1995. The Official Liquidator attached to this Court was appointed as Liquidator of the Company in liquidation. Pursuant thereto, the Official Liquidator initiated steps to publish an advertisement in prominent daily newspapers in Gujarati and English. 3. It is the case of the applicant that the advertisement published by the Official Liquidator desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief chronology of events and details of various interim orders passed by this Court in the present application, would be necessary : 5. This Court (Coram: K.M. Thaker, J. ) issued notice to the respondents on 20.10.2011. 6. Thereafter, this Court (Coram: K.M. Thaker, J.) passed an order dated 02.12.2011, containing specific directions to the Official Liquidator and GIDC, including that of filing a Report/ affidavit, giving relevant details regarding the title, possession and ownership of the land bearing Survey No.295. 7. On 15.12.2011, Mr. Manish R. Bhatt, learned Senior Advocate for the applicant submitted before the Court that there appear to be serious errors or irregularities on a large scale, inasmuch as, according to the advertisement, about 13759 square metres of land of the ownership of the Company in liquidation was available for disbursement. Even according to the Sale Confirmation Order, land admeasuring 13759 square metres has been sold and 25% of the total sale consideration has been recovered from the applicant towards sale of the land in question. It has now come to the notice of the applicant that land to the extent of 13759 square metres is not available at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with GIDC for the land bearing Survey No.295, necessary request was made by Calico Chemicals Plastic division for housing quarters and forms were submitted to GIDC on 10.02.1972. That in light of the applications GIDC was pleased to allot 6-A,10-B (Block-1) and 16-C (Block No.6) type housing quarters at southern township on the basis of certain conditions on 29.03.1972. A copy of the possession receipt is duly annexed with reply and marked as Annexure-R1. 4. It is submitted that in light of the said allotment of the housing quarters it was agreed between GIDC and the concerned unit to enter in hire purchase agreement and accordingly several inter se correspondence were made regarding the terms and condition of the offer and agreement and as per the noting of GIDC hire purchase agreement came to be executed on 29.09.1972. A copy of the proforma of the said agreement is duly annexed herewith this reply and marked as Annexure-R2. 5. It is further submitted that in light of the said agreements made since the concerned unit wanted to give common amenities to the occupants of the said unit since IPCL was also allotted the certain blocks and inter se exchange agreement of the poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 20.05.1998 at the time of taking over possession is annexed herewith and marked as Annexure "A"." 11. It has further been stated in the Report dated 28.12.2011 that by letter dated 28.06.2007, the Official Liquidator appointed Shri Vinod R. Trivedi, Government Approved Valuer, to investigate the title of the assets of the Company in liquidation and to submit his Report, which was received on 10.03.2 010. Thereafter, the Sale Proclamation was published on 24.03.2010. The Court did not accept any of the offers received by the Office of the Official Liquidator and directed him to get a fresh valuation done by another Valuer and restart the process. It is further stated that the Official Liquidator then appointed GITCO and one Mr. Bakul Desai, as a Valuer to carry out the valuation process of the assets of the Company in Liquidation, to submit the Report along with details regarding the measurement of the land in question and to prepare sketch/ map showing the location and status of the land. The Report from GICTO and Mr. Bakul Desai was received by the Official Liquidator was placed on record under Official Liquidator's Report No.115 of 2010. On the basis of the said Report, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 575, when sale of the assets and properties of the company (In Liqn.) is made by the Official Liquidator under orders of the Hon'ble High Court, the purchaser has to satisfy himself about title, encumbrances etc. of the properties and the Official Liquidator does not hold any guarantee in this regard. The Hon'ble Supreme Court of India has further held in case cited above that the purchaser cannot demand diminution in price on ground of defect in title or discrepancies of the property. A copy of the Hon'ble Supreme Court of India judgment and order dated 06.01.1993 is annexed herewith and marked as Annexure "J". Therefore, in view of the aforesaid decision of the Hon'ble Supreme Court of India the applicant has no case and the application deserves to be rejected." 13. After the aforesaid Report dated 28.12.2011, the Official Liquidator filed another Report dated 16.01.2012, wherein startling revelations to the following effect have been made: "(2) That, after taking possession of the property in question, the Official Liquidator has carried out valuation of the said property from three valuer i.e. Mr. Vinod R. Trivedi, GITCO and Mr.Bakul Desai, all the reports are on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertisement and the sale was confirmed in his favour. However, in view of the property not being what it is described as, the Official Liquidator looking to the peculiar facts of the case submits that the sale required to be cancelled in the interest of justice. The Official Liquidator sincerely apologies to this Hon'ble Court for the serious inadvertence on the part of the Official Liquidator office and humbly requests to this Hon'ble Court to cancel the sale and permit the Official Liquidator to refund the amount paid by the auction purchaser for the property." 14. The above state of affairs led the Court (Coram: K.M. Thaker, J.) to pass a detailed order on 30.01.2012. In addition to other directions, by this order, the Collector, Vadodara, was directed to examine the entire record, including the revenue record of the lands in question and to submit a Report, stating the present status of the land in question as well as its title and ownership as per the relevant revenue record, and to explain how and when the land changed hands. 15. Consequently, the Collector, Vadodara, filed an affidavit dated 07.05.2012. The relevant paragraph of the affidavit is reproduced herein below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is not the first case in which such defects are noticed. In cases more than one such defects are noticed and have been informed to the OL, however any improvement is not reflected in the report which are being placed in most of the matters. Therefore, it appears that it is necessary that certain directions, as general / broad parameter / guidelines giving at least bear minimum requirements need to be given to OL who should ensure that at least such bear minimum requirements observed and complied while taking possession, inviting bids for sale and inviting claims and they should be placed on record before the Court with reference to the properties in question i.e. properties which are claimed to be of the company in liquidation and at the time of awarding task of valuation to any valuer, specific instructions to provide at least those details may be issued by the OL. Hence, below mentioned directions are passed:- (1) In the first instance the OL shall collect the details of all the properties of the company in liquidation from the record of the Registrar of Companies. (2) Thereafter, further details can be collected from the record of the company which is usually taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of workers and creditors. (10) Immediately after possession is taken, intimation to statutory authority like income tax department, Provident Fund Organization etc., should be send and if there are any claims, they may be called for. (11) After the possession is taken the claims from the workman also should be immediately invited instead of waiting until the properties are sold. (12) When the advertisement for sale of any property is issued, said advertisement should contain exact description including measurement, location, situation etc. of the property in question and the details as to whether there are any encumbrance, encroachment, attachment order etc., also should be mentioned clearly in the advertisement so as to avoid any subsequent dispute with regard to the possession, and / or measurement and title - ownership of the property in question. (13) Periodical report from the security agency should be called for and the said report must contain detailed description of the properties under their supervision and the inventory. The following documents are also required to be placed on record of the Court. (1) Chronology of the dates from the time of presentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No.1 - Official Liquidator and Mr. Rutvij M. Bhatt, learned advocate for respondent No.2 - GIDC. 20. It is submitted by the learned Senior Advocate for the applicant that the land that has been advertised under orders of this Court, based on which the offer of the applicant was accepted, is not available on the spot. This fact is accepted by the Official Liquidator and the GIDC. The Collector, Vadodara, has also stated that land admeasuring 8000 square metres is in the possession of Reliance Industries Limited and could not have been put to auction by the Official Liquidator. 21. It is further submitted that the applicant is a Society consisting of employees of the Indian Oil Corporation who have pooled-in their meagre resources and even taken loans, for purchasing this property, in the hope that they would be able to construct their residences thereupon. It is now found that a substantial portion of the land that they have purchased pursuant to the advertisement and auction, is not available at the site, therefore, the members of the applicant-Society should not be made to suffer for the lapses committed by the office of the Official Liquidator. The amount paid by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been given to believe that 13759 square metres of land was available whereas it now transpires from the Report of the Official Liquidator, and affidavits of the GIDC and the Collector, Vadodara, that 8000 square metres of the said land is in possession of Reliance Industries Limited, and was never a part of the parcel of land belonging to the Company in liquidation. No attempt whatsoever, leave alone a serious attempt, appears to have been made by the office of the Official Liquidator to ascertain the factual position, make proper inspection and inquiry or measurements of the land in question. Further, no inventory of the movable and immovable assets and properties of the Company in liquidation appears to have been made. The explanation given by the Official Liquidator is that he was under a bona fide impression that measurements, as mentioned in the Valuation Report, were correct and he placed reliance upon the same. This explanation is totally unconvincing, as the Official Liquidator is required to have the properties measured through his own office or office of the District Inspector, Land Records, or any other recognized agency, and cannot depend on the Report of the Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinarily have been followed, was not followed. 29. There is no reason why the applicant, whose members have put in their hard-earned money in order to purchase the land in question, should be made to suffer on account of lapses committed by the office of the Official Liquidator. It is probably due to the fact that the Official Liquidator has no plausible explanation to offer and to cover up the lapses of his own office, that a stand has been taken that the sale is required to be cancelled, "in the interest of justice". 30. Insofar as the first substantive prayer made by the applicant regarding setting aside of the sale is concerned, in view of the facts and circumstances as discussed hereinabove, and as the applicant cannot be made to suffer for lapses committed by the office of the Official Liquidator, the interest of justice would demand that the sale be set aside, and the amount that has been deposited by the applicant which has been invested in a Fixed Deposit, be refunded, with interest. 31. Consequently, the sale, confirmed under order dated 18.07.2011, is set aside. The Registry is directed to refund the amount deposited by the applicant, that has been invested in a Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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