TMI Blog2008 (12) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (hereinafter called as KFSC) to sell the assets of the 1 st respondent - liquidated company in association with the official liquidator and the 2nd respondent - Karnataka State Industrial Investment Development , Corporation (KFSC' in short). The Court has observed in the said Order that protection of pari-pasu in favour of workmen will be passed at the time of confirmation of the bid when the amount is deposited by the bidder. (b) In pursuance of the said order, KSFC, along with official liquidator, issued sale notification for the sale of the land and building of the first respondent company bearing Sy.No.85 of KIADB Industrial Area, Hoskote, Bangalore Rural District which is under liquidation. The said sale notification was published in the daily newspapers namely Economic Times, and Vijay Times dated 2.11.2006 fixing the reserve price of the said property at ₹ 450 lakhs. Pursuant to the sale advertisement, offers were received by the official, liquidator and the Executive Director of KSFC. The third respondent's offer was , higher than the amount mentioned in the sale notification published in the aforesaid newspapers. Its offer was ₹ 700 lakhs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Court with regard to mode of conduct of sale and hence the sale of the said property by the Official liquidator by inviting offers without obtaining any direction from this court as to the mode of sale, amounts to material irregularity in conducting tile sale of the assets in question. 4. The learned Counsel for the appellant further contends that the sale of the assets in question was conducted by publishing sale notification in the aforesaid newspapers omitting to mention therein the name of KSIIDC and it was in violation of the direction issued by the learned Company Judge and therefore, the sale of the assts question suffers from material irregularity and hence the sale is liable to be seta side. Further, it is urged by the learned counsel for the appellant that KSIIDC initiated insolvency proceedings against the appellant as he was a guarantor for the loan amount of ₹ 3,33,75,488/- availed by the first respondent - Company and the said amount could have been easily realised by the official liquidator from if the said properties were sold in a proper auction. Thus he contends that the learned Single Judge has failed to appreciate that the appellant was directly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007 was written by the KSFC to the KIADB requesting the Board to execute the necessary sale deed in favour of third respondent in respect of the schedule property as per the order of this Court. Subsequently, as per the terms of the sale, this respondent was asked by the KIAD to remit a sum of ₹ 33,23,757/- toward the allotment consideration for the leasehold rights in respect of the schedule property and the respondent remitted the same on 28.2.2007. Further, the KIADB, by its letter dated 28.2.2007 transferred the leasehold rights over the schedule property subject to certain conditions in favour of third respondent. The possession certificate of the schedule property has also been endorsed by the KIADB on 12.3.2007. Thereafter,, the KIADB has executed the lease-cum sale agreement in favour of third respondent on 10.4.2007 and the same has been registered in the office of the Sub-Registrar, Hosakote on 12.4.2007. Third respondent has commenced implementation of the project for which the schedule property was purchased and completed levelling and cleaning of the schedule property and the process of marking boundaries and fencing the schedule property has also been completed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with costs. 8. In support of the aforesaid submissions, the learned Sr.Counsel has placed reliance upon the following two decisions: a) AIR 2000(5) SCC 274(Union Bank of India - vs - Official Liquidator, HC of Calcutta 86 Others. b) AIR (1990) 4 SCC 406 - Ashoka Marketing Ltd., -vs- P.N.B. 9. Sri Deepak, learned counsel appearing for first respondent - Official Liquidator herein, Sri Puttige R. Ramesh, learned counsel for 2' respondent, Sri S.G. Pandith, learned counsel for 4th respondent and Sri A.C. Chetan, learned counsel for 5th. respondent have adopted the .submission of Sri Uday Ho112,.. the learned counsel for 3rd respondent. 10. With reference to the above said rival legal contentions, the following substantial questions of law would arise for our consideration: a) Whether the impugned order is vitiated In not noticing the relevant material fact namely, the direction issued by the learned Company Judge in Company Application No.394/04 on 14.7.2006 permitting the KSFC to sell the assets in association with the official liquidator and KSIIDC?. b) Whether the sale of the assets of the liquidated company by inviting offers from the prospective purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dding immediately after opening the tender/s. The sale Is subject to confirmation by he Hon ble High Court of Karnataka. The Hon ble High Court of Karnataka/ KSFC/QL reserve s) the right to cancel or reject or negotiate any offer without assigning any reason thereof, The purchaser has to bear KIADB arrears, BESCOM arrears any other statutory dues. Further information arid terms and conditions of sale can be obtained from. KSFC/OL. 13. From a careful reading of the said sale notification published in the Deccan Herald newspaper by the official liquidator, it is clear that assets of first respondent are notified for conducting sale in public auction as required under the Rules, but the sale notification is very vague. Plot No.6 in Sy.No.85 of KIADE3 Industrial Area, Hoskote is leased, subject to certain term and conditions, in favour of the 1 st respondent liquidated company vide lease-cum -sale agreement dated 29.6.1983 executed by the KIADI3. Tue loan was raised by the liquidated company from the KSFC and KSIIDC to manage the leasehold rights. It is an undisputed fact that, it is not specifically mentioned in the sale notification that leasehold rights in respect of immov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the said plot itself, in view of the fact that the plot belonged to the KIADB and as such it was not its asset. Therefore, the sale in respect of lease hold rights of the aforesaid immovable property belonging to KJADB is totally impermissible under the provisions of the Companies Act. Accordingly, we answer the above substantial questions of law in favour of the appellant. 15. The framed Company Judge, vide order dated 14.7.2006 permitted the .KSFC to sell the assets of the first respondent - liquidated Company in association with the Official Liquic1Jand the 2d respondent. KSIIDC with a further observation that protection of parl pasu charge in favour of the workman will be passed at the time of confirmation of bid when the amount is deposited by the debtor. By a careful reading of Rule-273 of the Companies (Court) Rules, 1959, it is clear that every sale of the property shall be held by the official liquidator, or, if the Judge shall so directs by an agent or an auctioneer approved by the Court, and subject to such terms and conditions if any, as may be approved by the Court. It is further clear from the said Rule that all sales shall be made by the public auction or by in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leasehold rights in respect of immovable property of Plot No6 of Sy.No.85 of KIADB of KIADB property as it is not the property of the liquidated company as it did not acquire ownership right. Therefore, the procedure followed by them in conducting the sale of assets or the KIADB upon which liquidated company had got lease hold rights only the said leasehold rights of 1m move bic property of the KIADB is not notified by the official liquidator as the Liquidated Company did not acquire the ownership right upon the property by getting the sale deed executed in its favour from the KIADB. Therefore, the sale and confirmation of the property Is not legal and valid in law. Therefore, for the reasons stated supra, we are of the view that the appellant must succeed in this appeal 19. Further, the sale of leasehold rights of liquidated company in respect of Plot No.6 in Sy.No.85 belonging to KIA B along with the entire plot itself pursuant to the said sale notification by the official liquidator and KSFC is brought under sale without any authority inasmuch as the liquidated company was not the absolute owner of the said plot and the ownership thereto was still with KTADE3 and the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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