TaxTMI 
TaxTMI 
2010 (5) TMI 388
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....aser. Thereafter the plot was transferred in the name of auction-purchaser). The Company Judge has vide impugned order set aside the earlier order of confirmation of sale passed on 21-3-1996 in C.P. No. 79 of 1995 in favour of the auction purchaser. 2. Brief facts of the case necessary for disposal of the controversy raised in the instant appeal may first be noticed. On 9-6-1972 a plot measuring 6556 sq. yds. situated at C 70 focal Point, Ludhiana was allotted to M/s. Pretty Cycles (P.) Ltd. (for brevity 'the company-in-liquidation'). The said company mortgaged the plot to the Punjab Financial Corporation (for brevity 'the Corporation') in lieu of the term loan vide mortgage deed dated 3-6-1975. The instalments in respect of the plot allotted by Punjab Urban Development Authority (for brevity 'the PUDA') to the company-in-liquidation were not paid. On account of non-payment of the price of the plot, the Estate Officer, PUDA resumed the plot on 15-10-1976. On an appeal filed before Secretary, PUDA, a conditional order dated 12-11-1979 was passed against the order of assessment passed by the Estate Officer. However, the appeal was dismissed on 28-11-1980 because the conditional or....
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....the property. However, the date for calling of the tenders is changed from 28-2-1996 to 29-2-1996 and the tenders shall be opened by the Committee in the presence of the Official Liquidator, who is present in Court and undertakes to attend the meeting, on 29-2-1996 at 3.00 P.M. It will be open to respondent No. 2 to accept or reject any tender or the offer made to come to the conclusion as to whose tender or offer is to be accepted but final letter of acceptance will be given to the successful party only after bringing this fact to the notice of the Court. Adjourned to 7-3-1996. Copy of the order be given dasti on payment of usual charges." 4. On 16-2-1996, the Corporation issued an advertisement (A.6) in the English daily 'The Tribune' clearly stipulating that the Corporation has invited offers in respect of various industrial units for sale on 'as is where is' basis with the note that the sale was subject to confirmation by the Hon'ble High Court regarding the property of the Company-in-Liquidation (M/s. Pretty Cycles (P.) Ltd.). It was also clarified that total area is 6556 sq. yds. and it was on lease. The notice mentioned reserved price to be Rs. 80.21 lakhs. On 29-2-199....
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.... the final bid of M/s. Leisure Wear Fashions (P.) Ltd., was accepted subject to confirmation of Hon'ble High Court of Punjab and Haryana. Before the tenders were opened all the bidders were made clear about the terms and conditions. It was brought to their notice that the sale shall be confirmed by orders of Hon'ble High Court of Punjab and Haryana and that about 40 per cent of the premises had been occupied by the tenant. Though the tenant had no right to remain therein and the Committee members assured them that the Corporation shall make all efforts to get the vacant possession and get vacated the tenants whose status in the premises is like tress passers because the company was not competent to lease out the factory without the consent of the Corporation and there was no consent given by the Corporation for leasing out the premises. The Official Liquidator also explained the position about the status of the tenants and assured that all efforts in legal terms shall be made to get the vacant possession. Decision was also taken by the Sale Committee on the advise of Official Liquidator that payment of outstanding amount, if any, against the land shall be made by the Corporat....
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....oration regarding expeditious disposal of suit, filed by it against respondent No. 3 also deserves to be sympathetically considered. Prospective purchaser purchased the unit of the company (in liquidation) in the sum of Rs. 132 lakhs against the reserved price of about Rs. 109.1 lakhs as assessed by the second valuer. After giving thoughtful consideration I am of the opinion that in the facts and circumstances of this case a direction deserves to be given to the learned trial Court to dispose of the suit as expeditiously as possible preferably within six months. The Official Liquidator, who is defendant No. 1 in the suit and M/s. Engineers Continental respondent No. 3 in this petition and represented by Mr. J.S. Narang, is defendant No. 5 in the suit. These respondents through their counsel have been directed to appear before the trial Court on 4-4-1996 for which date the case is fixed in the Court of Sh. B.R. Garg, Civil Judge, Junior Division, Ludhiana." 6. On 29-3-1996 the auction purchaser-(M/s. Leisure Wear Fashions) was asked to deposit 25 per cent of the auction proceeds. Accordingly a total amount of Rs. 33 lakhs was paid on 30-3-1996. On 7-5-1996 an agreement to sell wa....
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....mpany Court vide its order dated 20-2-1997 sought the explanation of the trial Court for not disposing of the suit. On 5-5-1998, the trial Court passed a decree in favour of the Corporation and the auction purchaser who was a co-plaintiff. 9. Engineer Continental Respondent No. 3 filed an appeal and the Company Court directed the appellate Court to decide the appeal and notice was issued on 21-8-1998 to the Estate Officer, Ludhiana for restoring the plot to the Corporation. On 7-1-1999, the Managing Director of the Corporation and Chief Administrator of PUDA were directed to iron out the differences with regard to restoration of the plot. On 29-1-1999, PUDA agreed to sell the property to the Corporation at the rate of Rs. 600 per sq. yds. and the plot was transferred to them on payment of approximately Rs. 40 lakhs. The aforesaid order dated 29-1-1999 passed in C.A. No. 341 of 1996 reads thus : "Mr. Prabhakar states that PUDA has agreed to sell the plot in question to Punjab Financial Corporation instead of restoring it to the original allottee, at a price of Rs. 600 per sq. yd. The rate offered by PUDA has been accepted by Punjab Financial Corporation. Mr. Prabhakar has plac....
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....f 1996 the prayer was that the resumed plot be transferred to the auction purchaser. The application was awaiting disposal after issuance of notice to the Estate Officer, Ludhiana since the plot was earlier resumed on 15-10-1976. The aforesaid shifting stand of the auction purchaser is evident from the order dated 29-1-1999 which shows that this Court has prevailed upon the Estate Officer, PUDA which has agreed to resale of the plot to the Corporation at the rate of Rs. 600 per sq. yd. and the total amount comes to approximately about Rs. 40 lakhs. The amount was paid out of the sale proceedings of only Rs. 33 lakhs and the balance was met by the Corporation out of its funds in anticipation of payment of balance amount of 75 per cent of the auction purchaser as per stipulated schedule. 14. Mr. G.S. Sandhawalia has further submitted that vide sale agreement dated 7-5-1996 (R 2/1 with reply of the Corporation before Ld. Company Judge at page 85 of the paper book) it was stipulated between the Corporation and the auction purchaser that the transfer was to be effected only after the receipt of full consideration as is evident from clause 5(i) the Corporation has also undertaken to p....
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....ing adopted by the learned Company Judge concerning that possession of the remaining portion may not be delivered to the auction purchaser on account of litigation is also against the record as the learned Judge fails to take into account the following facts: "(a )Learned Company Judge has failed to take into account clause 1, clauses 5(i) and 5(v ) of the Agreement dated 7-5-1996 (at page 85) of the paper book. Relevant clauses for ready reference are extracted and reproduced as under : 1.In consideration of the said sum of Rs. 132 lakhs (Rupees one crore thirty two lakhs only) hereinafter referred to the said sum the transferor hereby agrees to transfer to the purchaser all the property described in the schedule hereto to have to hold the same to the transferee as absolute owners on the terms and conditions hereinafter specified. Till payment of full consideration ownership will remain with the transferor and purchaser shall hold the same as a trustee. Till the payment of entire sale consideration in terms of this agreement. The purchaser shall hold on the said property as trustee on behalf of the transferor and shall be liable for criminal breach of trust if the purchaser ....
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....ion itself. However, the said request was utilised to delay the payment of balance instalments as the date to pay the first instalment was 1-8-1996 and the demand was made by the Corporation on 26-8-1996 and 28-10-1996. (c )Similarly initial prayer in CA 341 of 1996 was that resumed plot be transferred, covered area was falling short, direction for deciding the civil suit regarding ejectment of Engineer Continental-respondent No. 3 from the occupied portion and for re-scheduling payment of instalments, which was acceded to by calling explanation of the trial Court vide order dated 20-2-1996. The Corporation was restrained from taking possession in terms of clause 5(v) of agreement dated 7-5-1996 from the auction purchaser. The civil suit for possession by ejectment was decided on 5-5-1998. It is relevant to notice that auction purchaser-respondent No. 2 was a co-plaintiff in this suit in possession seeking ejectment of Engineering Continent. (d )Even a direction was given by the learned Company Judge on 21-8-1998 to the Appellate Court to decide the appeal filed by Engineering Continental with respect to the aforesaid decree dated 5-5-1998 at the earliest, preferably on the n....
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....s from the date of deposit till the date of payment within a period of two months from the date of passing of the order. However, no price/cost was awarded towards the construction raised by auction-purchaser-respondent No. 2 being offset towards the use and occupation of 60 per cent of the area of the plot by auction purchaser which remained in his possession with effect from 14-5-1996. On further appeal to this Court, vide present petition, the operation of the judgment dated 23-7-1999 was stayed on 1-10-1999 and the appeal was admitted on 14-8-2000 by confirming the interim order. The auction purchaser-respondent No. 2. filed CA No. 5 of 2009 on 15-12-2009 for withdrawal of Company Application Nos. 343 and 344 of 1999 with liberty to pursue CA No. 341 of 1996 which was opposed by the Corporation by filing reply on 28-1-2009. It is quite amusing to note that despite stay order granted by this Court, the auction purchaser has failed to deposit till date any of the due instalments and enjoying the property by paying a paltry amount of 25 per cent earnest money alone. It is pertinent to mention that the appeal of the unauthorised occupant of Engineers Continental-respondent No....
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....ded the part payment of Rs. 33 lakhs made by the auction purchaser-respondent No. 2 be refunded. 19. Having heard the learned counsel for the parties and perusing the record with their able assistance, we are amazed regarding the conduct adopted by the auction purchaser-respondent No. 2. It is unbelievable that the auction purchaser has been permitted by the Corporation to behave in a totally unfair manner. The series of application engaging the Corporation and the Official Liquidator moved by the auction purchaser-respondent No. 2 would show that the litigation has been used as an engine of suppression with a view to avoid payment of balance amount of the sale price. Before we conclude our comments on the auction purchaser-respondent No. 2 it would be interesting to notice the operative part of the impugned order dated 23-7-1999 which reads thus : "On consideration of the matter, I find that it is the conceded position that PFC did not have a valid title to the property at the time of execution of the sale agreement in favour of the applicant, the auction purchaser. It is also the admitted case that a major portion of the property sold to M/s. Leisure Wear Exports Ltd. is in....
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....6 is recalled and CA No. 341 of 1996 is allowed. ** ** ** I have also considered the equities while ordering cancellation of the sale so as to cause least inconvenience to the parties to this litigation. M/s. Leisure Wear Exports had deposited a sum of Rs. 33.03 lakhs being 25 per cent of the sale consideration, more than three years back. This amount deserves to be refunded to the auction purchaser on its surrendering possession of the portion which was delivered to it under the court sale. As regards interest, it could not be much disputed that the PFC is charging interest on the loans granted by it at the rate of more than 18 per cent per annum with quarterly rests. The PFC enjoyed the amount of Rs. 33.03 lakhs for a period of about three years as also the interest thereon, but keeping in view the other circumstances hereinafter noticed, I allow the auction purchaser the interest on the amount deposited by it, at the rate of 12 per cent per annum with quarterly rests and in the same manner as is being charged by the PFC on its term loan. The reduction in rate of interest from 18 per cent to 12 per cent will compensate the PFC about the use and occupation of....
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....el for the parties we are of the view that this appeal deserves to be accepted as the learned Company Judge has not taken into account relevant and material facts while passing the impugned order. Our view is based on the following reasons : "1. The aforesaid line of thinking adopted by the learned Company Judge regarding title of the Corporation in respect of the land in dispute has failed to take into account the following factors: (a )As per CP No. 79 of 1995 and advertisement 16-2-1996 the sale was on 'as is where is' basis with a note that the property was on lease and subject to confirmation. (b )That in the negotiations held on 29-2-1996 with the bidders including the auction purchaser it was brought to the notice of auction purchaser that the outstanding instalments against the reserved plot shall be paid by the corporation out of sale proceeds and not by the purchaser. (c )Unamended CA No. 341 of 1996 was filed with the prayer that resumed plot be transferred in the name of the auction purchaser in which notice was issued to the Estate Officer, Ludhiana since plot was earlier resumed on 15-10-1976 and vide order dated 29-1-1999 with the intervention of the Cour....
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.... respondent No. 3 to handover vacant possession to the auction purchaser, which was disposed of on 21-3-1996 along with C.P. No. 790 of 1995 with a direction to the trial Court to decide the suit jointly filed by the Corporation and the auction purchaser and the tenant was to stop using portion of property No. C-70. The suit was decreed on 5-5-1998. (f )C.A. No. 341 of 1996 was filed on 3-12-1996 by the auction purchaser inter alia with a prayer that trial Court be directed to decide the aforesaid suit within 6 months in which it was mentioned that only 2200 sq. yds. was in possession of the tenant out of 6556 sq. yds. From the facts of this case it is evident that the auction purchaser was throughout aware of the presence of the unauthorised occupant in part of the plot in question, the status of the plot i.e., it stood resumed by PUDA and that the auction purchaser at every opportunity had used the process of Court for getting the possession of the plot. The learned Company Judge while confirming the sale vide order dated 21-3-1996 had directed the learned trial Court to dispose of the suit filed by the Corporation and auction purchaser for possession and also ejectment of ....
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....ting the ownership of the resumed plot by PUDA transferred back on payment of current market price by the Corporation. The Corporation paid a sum of Rs. 40 lakhs i.e., Rs. 7 lakhs from its own funds (balance Rs. 33 lakhs from the sale proceeds) to fulfil its part of the contractual obligation. It is thereafter the auction purchaser had very cleverly pursued his claim for refund by filing an application, supported by an affidavit of Mr. Sanjeev Goyal, on 12-7-1999 for amendment of the prayer. It is thus amply clear that the reasoning adopted by the learned Company Judge that there was delay in getting the full possession and the auction purchaser may not get full possession on account of litigation could not constitute a valid basis for passing the impugned order 30-7-1999." 22. In our considered opinion, it appears that the learned Company Judge has allowed himself to be persuaded by completely overlooking the aforesaid discussed facts on record and the conduct of the auction purchaser amply demonstrated in various applications preferred by him despite taking possession of the vacant part of the property on 14-5-1996 after making on payment of only 25 per cent earnest money. It ....