2012 (11) TMI 452 - HC - Companies Law

Court Directs KIADB to Execute Sale Deed for Allotted Land

The Court granted the application for direction to execute a sale deed for the allotted land by KIADB. KIADB was directed to execute and register the sale ... Scheme of arrangement approved by the Court - execution of sale deed upon payment of dues - specific performance of court approved scheme - effect of long possession and non execution of lease cum sale agreementScheme of arrangement approved by the Court - execution of sale deed upon payment of dues - Whether KIADB is bound to execute and register the sale deed in favour of the applicant pursuant to the court approved scheme, subject to payment of dues claimed by KIADB. - HELD THAT: - Clause 11 of the scheme, as approved by this Court, provided that upon the scheme becoming effective the company shall pay the dues of KIADB and KIADB shall execute the sale deed in favour of the company (para 5). The Court observed that the approval of the scheme in Company Petition No. 109/2007 did not alter that clause and, since KIADB was impleaded and present when the scheme was considered, any objection to the manner of conveyance ought to have been raised then; absent such objection the scheme must be implemented as approved (paras 6-7). KIADB therefore is entitled to recover the dues before executing the sale deed, but cannot refuse execution where the scheme mandates conveyance upon payment (para 7). The Court further noted that though no lease cum sale agreement was executed, the company had been in physical possession of the land since 1972 and possession continued through the liquidation and scheme approval; given the long lapse and the Court's acceptance of the scheme, non execution of a formal lease cum sale agreement did not preclude enforcement of the scheme obligation (paras 9-10). KIADB had not produced material to show cancellation of allotment for breach; accordingly KIADB could not object to execution of the sale deed when the scheme required it (para 10). The Court permitted verification of the amount due and recorded that KIADB claimed a specified sum as payable; it directed that upon deposit of that sum by the applicant the KIADB must execute and register the sale deed within the stipulated timeframe (paras 11-12). [Paras 7, 9, 10, 11, 12]The Court directed KIADB to receive the dues stated by it and, upon payment by the applicant within two weeks, to execute and register the sale deed in favour of the applicant within four weeks of such deposit; the application is allowed.Effect of long possession and non execution of lease cum sale agreement - Whether absence of a formal lease cum sale agreement or lapse of any lease period prevents implementation of the conveyance mandated by the approved scheme. - HELD THAT: - The Court observed that the allotment preceded physical possession on 23 8 1972 and the applicant remained in possession until winding up in 1985, after which the official liquidator continued in possession; the long period of possession spanning decades renders the mere non execution of a lease cum sale agreement immaterial in the present context (para 9). Given the scheme's acceptance by the Court which envisaged revival and reconveyance on payment of dues, and the absence of material from KIADB showing cancellation of allotment for breach, the Court held that non execution of the formal agreement did not bar enforcement of the scheme's conveyance obligation (para 10). [Paras 9, 10]Non execution of a lease cum sale agreement and the lapse of any putative lease period did not preclude KIADB from being obliged to execute the sale deed pursuant to the court approved scheme, subject to payment of dues.Party impleaded at scheme approval and estoppel from later objection - Whether KIADB, having been impleaded and present when the scheme was considered and approved, could later oppose implementation of the clause requiring execution of the sale deed. - HELD THAT: - The Court noted that KIADB was impleaded as a respondent in the petition under Sections 391-394 and was present when the scheme was considered; any objection to the manner of conveyance should have been raised at that stage so the Court could consider it during approval (para 7). In the absence of such objection, KIADB cannot now be permitted to frustrate implementation of the approved scheme insofar as it requires conveyance upon payment of dues (para 10). [Paras 7, 10]KIADB, having been before the Court at the time of scheme approval and having failed to raise the objection then, cannot refuse to execute the sale deed required by the approved scheme, other than by claiming and recovering the dues lawfully due to it.Final Conclusion: The application is allowed: KIADB is directed to accept the dues claimed and, upon deposit of the amount by the applicant within two weeks, to execute and register the sale deed in favour of the applicant within four weeks; the related interlocutory application is disposed of with liberty to file afresh if necessary. Issues:Application for direction to execute sale deed for allotted land by KIADB.Analysis:1. The applicant sought direction for the execution of a sale deed by KIADB for the land allotted to them, as per the scheme of arrangement approved by the Court. The land in question was 7 acres 1 gunta, allocated to the applicant by KIADB. The applicant faced financial difficulties, leading to a winding-up petition, and a scheme was approved by the Court for the transfer of the land to the applicant.2. KIADB opposed the application, stating that without a lease-cum-sale agreement and compliance with lease terms, the sale deed could not be executed. They argued that since the lease period had lapsed, the request for a sale deed was not valid.3. The Court examined the scheme of arrangement approved by it, which mandated the payment of dues by the applicant to KIADB for the execution of the sale deed. The Court noted that the scheme was comprehensive, outlining payment terms to creditors and revival of the company's activities on the allotted land.4. The Court highlighted that objections to the scheme should have been raised earlier during the approval process. Since KIADB did not contest the scheme at that stage, the Court emphasized the need for implementation as approved. KIADB was entitled to receive dues before executing the sale deed.5. Legal precedents were cited to support the validity and implementation of approved schemes without hindrance. The Court emphasized the need for adherence to approved schemes and the obligations outlined therein.6. The Court considered the absence of a lease-cum-sale agreement but noted that the applicant had possessed the land since 1972, and the Court's intervention in 1985 did not alter the applicant's possession. The Court found KIADB's objection to the sale deed invalid due to the extended possession period.7. KIADB provided the outstanding amount due from the applicant, and upon payment of Rs. 3,07,651, KIADB was directed to execute and register the sale deed promptly. The Court granted the application, instructing the applicant to deposit the sum within two weeks for the deed's execution within four weeks.8. Another application (C.A. 370/2012) was disposed of as it was deemed unnecessary for consideration at that time, with the option to file a fresh application if needed.