TaxTMI 
TaxTMI 
2011 (8) TMI 970
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....e company situated at (i) No. 32 and 46 Thiru. Vi. Ka Industrial Estate, Ekattuthangal, Chennai-32, (ii) 3 branch offices situated at No. 4, Pattulos Road, Chennai-2 and (iii) another branch office situated at 118 Manapet, Bathoore Commune Panchayat, Union Territory of Pondicherry and at No. 104, bridge Station Road, Sellur, Madurai-2. 3. The official liquidator has also valued the aforesaid assets and filed sale application. By order dated December 5, 2007, made in C.A. No. 2729 of 2007, this court has directed the official liquidator to sell the immovable properties situated at Madurai and Pondicherry and in this appeal, we are concerned with the property situated at Pondicherry. For the said property in Manapet, the court has fixed the upset price at Rs. 115 lakhs. On January 25, 2008, the court has considered the offer made by the ninth respondent-S. Dorai for a sum of Rs. 1,85,00,000 as the highest offer and confirmed the same in favour of the ninth respondent. In the said property at Manapet, the appellant trust is running a Teachers' Training Institute under the name of Krishnaswamy College of Teachers' Training Institute under agreement of lease and the appellant institute....
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....ts of the company in liquidation. Drawing our attention to the terms of the lease deed, learned senior counsel further contended that the lease rent fixed is a very low amount and the terms are heavily tilted in favour of the lessee which raises serious doubts about the deed. 7. Mr. AR. L. Sundaresan, learned senior counsel appearing for the official liquidator has submitted that the successful bidder-S. Dorai, the ninth respondent remitted earnest money deposit of Rs. 18,50,000 only on various dates and the balance sale consideration of Rs. 1,66,50,000 has not been remitted by the purchaser. Pointing out that the ninth respondent-auction purchaser has not paid the balance sale consideration, learned senior counsel for the official liquidator Mr. AR. L. Sundaresan would further contend that a fresh auction could be conducted by fixing the present market value of the property. It was further submitted that the ninth respondent, being a defaulter, in view of clause 20 of the terms and conditions of public auction, earnest money deposit of Rs. 18,50,000 paid by the ninth respondent is to be forfeited. 8. On behalf of the auction purchaser, learned senior counsel Mr. S. Parthasarathi....
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....period of one year" before the presentation of a petition for winding up, or the passing of a resolution for voluntary winding up of the company shall be void against the liquidator. The said lease deed dated December 22, 2000, is within a period of one year prior to filing of a winding up petition. Even though the official liquidator has not filed any petition to set aside the lease deed dated December 22, 2000, the lease deed being for long period of 30 years, it falls within the prohibition of section 531A. 11. By perusal of the records, it is seen that the appellant has entered into a lease agreement (December 22, 2000) with the company in liquidation-M/s. Union Motor Services Ltd. The official liquidator was appointed and the official liquidator has taken possession of the assets in 2004. Now the official liquidator is the custodian of the property. The purpose of winding up is to facilitate the protection and optimum realisation of the assets with a view to ensure equitable distribution among the creditors. Now the appellant is said to be paying the lease rent to the official liquidator. Learned counsel for the appellant contended that since the appellant is paying the rent ....
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.... at 20 per cent. for every five years. The lease is not free from doubt. We need to consider the bona fides of the transaction in the light of the following : (i) The lease was within a period of one year prior to filing of winding up petition ; (ii) Lease deed (dated December 22, 2000), even though stated to be for thirty years, was not registered ; and (iii) The lease was for a meagre sum of Rs. 5,000 per month with increase at 20 per cent. after a long period of 5 years. 15. Considering the terms of lease in favour of the appellant, we are of the view that the intention of the company appears to be to deny the assets to the secured creditors/creditors by bringing in a tenant. Taking note of the facts and circumstances of the case, by the impugned order, the learned single judge rightly directed the appellant to hand over the property during the first week of July, 2008 to the official liquidator, i.e., not later than July 7, 2008. 16. Considering a case of identical facts and the scope of section 531A of the Companies Act, the learned single judge of the Calcutta High Court in Company Petition No. 217 of 2001, Prudential Capital Markets Ltd. (supra) ....
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....from the general pool to be ultimately available to creditors and dealt with such asset by the impugned transaction. The test that has to be applied in either case has to be one that would hold good for the earliest date of the period covered by either section." 17. We agree with the views taken by the learned single judge of the Calcutta High Court. 18. In the case on hand, the facts are writ large that after filing of the winding up petition, the second lease deed was executed for thirty years period on a meagre rent of Rs. 5,000 per month with minimal increase of 20 per cent. for every five years. But for the stay order granted by the Bench (March 14, 2008), the appellant could not have remained in possession after July, 2008. But for the stay order granted by the Division Bench, the official liquidator would have taken possession of the property and put the assets of the company for the maximum advantage of the secured creditors of the company in liquidation. The large extent of built up area of 8,400 sq.ft and the land surrounding was leased out to the appellant. We find much force in the contention of learned senior counsel for the official liquidator. Keeping in view the i....
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....s". 22. On August 11, 2011, when the matter was listed, the appellant was represented by senior counsel Mr. T. R. Rajagopalan along with Mr. D. Ravichander. On August 11, 2011, the affidavit of the appellant was filed stating that the appellant may be permitted to withdraw the appeal. In the said affidavit, the appellant has stated as under : "4. I state that the trust is running a teachers' training institute in the property, and there is a poor intake of students and the trust feels very hard to run the institute and the further running of the institute will not be in the interest of the trust. Hence, the trust had decided to vacate the property which is the subject matter of appeal within a period of two months, and I undertake to maintain the property in a good manner. 5. Hence, I humbly pray that this hon'ble court may be pleased to permit the appellant to withdraw the appeal as otherwise the appellant will be put to serious loss and untold hardships." 23. In our considered view, the appellant is not justified in filing the memo seeking permission to withdraw the appeal. As we pointed out earlier, but for the stay granted by the Division Bench (March 14, 2008), the officia....
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....n one party gaining an advantage it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the court and the act of such party. There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the court not intervened by its interim order when at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. 21. The court further held : (South Eastern Coalfields Ltd. case [2003] 8 SCC 648, SCC pages 664-65, paragraph 28) : '28. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the courts, persuading the....
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....rmed in his favour. The ninth respondent has remitted only earnest money deposit of Rs. 18,50,000. As per the terms and conditions of the tender-cum-auction, 50 per cent. of the sale consideration has to be paid within 45 days of date of auction, i.e., on or before March 11, 2008 and the balance 50 per cent. will have to be paid within 45 days thereafter. Admittedly, the ninth respondent has deposited only earnest money deposit and thereafter the sale consideration has not been deposited. Admittedly, the ninth respondent has not remitted the balance sale consideration within the stipulated time. In the event of non-payment of balance sale consideration, as per clause (20) of the terms and conditions, the earnest money deposit is liable to be forfeited. 28. Learned senior counsel for the ninth respondent has submitted that because of the stay granted by this court, the ninth respondent was under the bona fide impression that the time is extended for deposit of balance sale consideration. Learned senior counsel would further submit that the ninth respondent is now ready to deposit the sale consideration and if so directed with necessary interest. 29. The above contention does not m....
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....peal filed by the third party was pending and stay was also granted and therefore he could not proceed further. Subsequently, a clarification petition was also filed and the Division Bench, by order dated April 28, 2005, though granted extension of time to pay Rs.60 crores within 30 days, the successful bidder has not remitted the same and in spite of the argument of counsel that the said amount was not paid only due to the order of interim stay granted by this court, the Division Bench held that the subsequent order has not been complied with and consequently, the very sale itself was set aside. 32. In the present case on hand, interim order was granted staying all further proceedings. Subsequently, even in the year 2009, a clarification was sought and this court clarified that the stay was only in respect of dispossession alone therefore the auction purchaser ought to have deposited the amount but it was not done. The fact remains that when the amount has not been paid by the successful bidder before this court, this court, as custodian of the company in liquidation, has every right to cancel the sale even in an appeal filed by a third party. 33. In the case on hand, the earlie....