TaxTMI 
TaxTMI 
2018 (2) TMI 334
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....ation. Respondent no.2 Exim Bank of India was a principal lender of the company. Respondent no.3 Kanak Castor Products Private Ltd. had purchased several parcels of the Company's assets which included the lands with the building, plants, machinery, etc. under the Court supervised auction sale. The applicant himself was closely associated with the company under liquidation and undisputably was involved in active management of the company. Because of this close relations between the applicant and the Private Limited Company, few issues have arisen with respect to sale of company's assets which have been raised in the said company petition. According to the applicant, several parcels of lands, a list of which is provided in the Company Application, belonged to the applicant in his personal capacity. These lands totally admeasuring about 23,873 sq mtrs was his private property so duly reflected in the Government records. These properties never became the properties of the company in liquidation and the Official Liquidator therefore, could not have taken the possession of such properties which did not belong to the company nor could he have offered such properties for sale for r....
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....d to the present deponent. The land bearing Survey No.340/l was never a subject matter of sale with the Exim Bank being effected, the sale in favour of Kanak Castors Products Private Limited. Therefore, naturally when the land is not sold to Kanak Castors Products Private Ltd., question of superstructure being sold to them does not arise. Apart from that the superstructure was always the personal property of the applicant and it was not the property of the company in liquidation. The Official Liquidator Can examine the accounts and all the past balance sheets and can make a report to the effect that the property was never standing in the name of the company in liquidation even in the books of accounts. Under the circumstances, land bearing Survey No.340/1 with superstructure is required to be returned to the applicant and appropriate directions are required to be issued to cancel the sale deed in favour of Kanak Castors Products Private Ltd. 9. Similarly, on land bearing Survey No.340/2 admeasuring 2428 sq.mtrs. and land bearing Survey No.340/3 admeasuring 2934 sq.mtrs. On this also the present applicant had constructed certain quarters in the year 1996 before the liquidat....
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....structures over survey nos. 340/2 and 340/3 and then the Official Liquidator may handover the physical possession of such lands to the applicant. 5. Respondent no.3 appeared before the learned Company Judge and strongly opposed the prayers, particularly, with respect to land bearing survey no. 340/1 with superstructure and superstructures standing on land bearing survey nos. 340/2 and 340/3. In the reply dated 17.8.2010 filed on behalf of respondent no.3, following averments were made : "8. It is further submitted that with regard to residential quarters of Kanak Castors, the same were on survey Nos.340/1, 340/2 and 340/3. The entire bidding process, auction process, etc. were carried out keeping the aforesaid, in view. Thus, the bids and their acceptance were kept in mind, keeping in view the substantial number of quarters of employees who were using them at the relevant point of time. It is denied that these quarters were built by the applicant. These quarters have been built by Minal Oil & Agro Industries limited at their own expense. It is admitted even in the said application that the quarters stood there since 1996. It is submitted that right to use the quarters a....
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....ibhai Patel. Though it appears that some servant quarters are constructed thereon of the Company in liquidation however that in itself would not confer any right title or interest in the land as such. c) Property situated at Moje : Nandasana, Taluka Kadi, SubDistrict Kadi District Mahesana bearing Survey nos.167/1, 167/2, 168/1, 168/2, 169/1, 170, 171, 340/2 and 340/3 in all admeasuring about 20,332 Sq. Mtrs is property in the individual ownership of Shri. Pramodbhai Kanjibhai Patel. Hence the Company in liquidation that is M/s. Minal Oil and Agro Industries Pvt. Ltd. (In Liquidation) has not rights, interests or title in the said property. A copy of Title Search Report dated 02122014 of Shri Chaitanya Joshi, Advocate is annexed herewith and marked as AnnexureB (colly) 5) In view of the above facts and circumstances, the land situate at Survey Nos. 167/1, 167/2, 168/1, 168/2, 169/1, 170, 171, 340/2 and 340/3 in all admeasuring about 20,332 sq. mtrs is property in the individual ownership of Shri Pramodbhai Kanjibhai Patel and not of company in liquidation i.e M/s. Minal Oil & Agro Industries Pvt. Ltd (In Liquidation)." 8. By the time, the order came to....
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.... The respondent No.3 is also using the said quarters constructed on the land bearing survey No.340/1, 340/2 and 340/3 since long. This Court had confirmed the sale in favour of respondent No.3 in the year 2004 and respondent No.3 is using the said quarters for its workers since then. This application is filed in the year 2010 i.e. after 6 years since the date of confirmation of sale. Thus, this Court is of the opinion that respondent No.3 is required to be permitted to use the quarters constructed on land bearing Survey Nos. 340/2 and 340/3. Applicant is, therefore, not entitled to get back the possession of Survey Nos. 340/2 and 340/3 situated at village Nandasan, Taluka: Kadi, District: Mehsana, from respondent No.3." 9. The learned Judge disposed of the Company Application with the following observations and directions : "25. Thus, in the facts and circumstances of the present case, this application is partly allowed. The Official Liquidator is hereby directed to handover the possession of the land bearing survey Nos. 167/1, 167/2, 168/1, 168/2, 169/1, 169/2, 170 and 171, situated at village Nandasan, Taluka: Kadi, District: Mehsana, to the applicant within a period ....
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....public advertisement dated 15.12.2003 as per which respondent no.3 purchased the properties of the company under a registered sale deed dated 16.6.2005. Drawing our attention to the said advertisement as well as to the sale deed, counsel submitted that in neither of these two documents there was any reference to the lands bearing survey nos. 340/2 or 340/3 or the superstructures existing thereon. 12. On the other hand, learned counsel Shri Devan Parikh for respondent no.3 strongly opposed this application raising the following contentions : 1) Respondent no.3 had purchased the properties of the company through the Court assisted sale proceedings. The superstructures standing on lands bearing survey nos.340/2 and 340/3 were part of such sale proceedings. On the basis of the valuation reports and the materials made available to the bidders, respondent no.3 had offered the highest price. He submitted that in the advertisement reference to the superstructures belonging to the company must include superstructures standing on land bearing survey nos. 340/2 and 340/3 also. 2) As per the records, the construction of superstructures standing on lands bearing survey nos.....
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....y Act, 1882, Supreme Court has observed as under : "9. Application of Section 41 of the Act is based on the law of estoppel to the effect that if a man has represented that the transferor consents to an act which has been done and that he would not offer any opposition thereto, although the same could not have been lawfully done without his consent and he thereby induces others to do that from which they might have abstained, he could not question the legality of the act he had so sanctioned, to the prejudice of those who have so given faith to his words or to the fair interference to be drawn from his conduct." ii) In case of Syed Abdul Khader v. Rami Reddy and others reported in (1979) 2 Supreme Court Cases 60, in which the facts were that father of the plaintiff throughout acted in relation to others as the owner of the property though the plaintiff was the real owner of the property. The father executed an agreement to sell the land in favour of defendant no.1. Such transaction was completed in presence of the plaintiff. The sale consideration was put in the hands of the plaintiff. In such background, the Supreme Court held that the plaintiff would be estopped....
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.... survey Nos. 340/1 i.e. the property of the company in liquidation as well as land bearing survey Nos. 340/2 and 340/3 i.e. the properties of the applicant." 15. At a later portion of the judgment, learned Judge observed as under : "In fact, as observed hereinabove, the applicant himself has constructed the quarters of workers in land bearing Survey Nos. 340/1 as well as survey nos. 340/2 and 340/3." 16. The learned Company Judge did not allow the prayer of the applicant to handover the possession of the said two parcels of lands mainly on the ground that the respondent No.3 had purchased the land bearing survey No.340/1 with superstructure and when the superstructures made on survey nos. 340/2 and 340/3 is made in such a manner that it would be difficult to separate it, now the applicant at this belated stage cannot claim and is not entitled to get back the possession of land bearing survey Nos. 340/2 and 340/3. 17. We find two primary errors in the view expressed by the learned Company Judge. Firstly, as noted, with respect to the construction of the superstructures on lands bearing survey Nos. 340/2 and 340/3, learned Judge has made somewhat conflicting observa....
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....ment and the sale deed. The short question is, was the superstructures up for sale which respondent no.3 purchased during the auction proceedings? 19. Two crucial documents in this respect would be the advertisement inviting offers from interested bidders and the sale deed conveying title in the properties purchased by respondent no.3 through such auction. We may first refer to the sale deed. It is the sale deed dated 16.6.2005. First page of the document describes it as Deed of Conveyance and carries the following recitation : "DEED OF CONVEYANCE of Non Agricultural land bearing Survey No. 173, 176/1, 176/2, 176/3, 177/1, 177/2, 178/2, 179(2)3, 179/1(4), 188, 189/2 and 340/1 admeasuring 31,719 Sq. mtrs or thereabout of Village Nandasan of Taluka Kadi of District Mehasana along with the Buildings Constructions standing thereon admeasuring 17,173=50 sq mtrs and/or thereabout for a Sale consideration of Rs. 2,80,00,000/( Rupees Two Crores Eighty Lacs Only)" 20. Thus crucially neither the lands bearing survey nos. 340/2 or 340/3 nor the superstructures standing on such lands were part of such sale deed. Same recitation is found in the body of the document at more places....
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....up for sale and read as under : "The sale is of pieces or parcels of free hold nonagricultural Lands situate, lying and being at Village Nandasan, bearing Survey Nos. 173, 176/1, 176/2, 176/3, 177/1, 177/2, 178/2, 179/3, 179/4, 188, 189/2 and 340/1 of Moje Nandasan of Kadi Taluka, in the registration subdistrict Kadi, and registration district Mehsana, admeasuring 31719 sq. mtrs or thereabout together with the buildings and other structures, erections and godowns and movable plant and machinery, equipments, appliances, furniture, machinery, spares and stores, tools and accessories." 23. The advertisement referred to several parcels of lands of village Nandasan, Taluka Kadi of the ownership of the company admeasuring about 31,719 sq mtrs together with the buildings and other structures, erections and godowns and movable plant and machinery, equipments, appliances, furniture, machinery, spares and stores, tools and accessories. When this advertisement therefore, referred to the buildings and other structures and erections and godowns, together with the land, same must be understood in relation to the lands of the company under sale which were specified by giving survey nu....
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....n. No one has put up a case that the possession of the company of lands bearing survey nos. 340/2 and 340/3 was hostile to the applicant. By all accounts, the applicant being an active administrator of the company, allowed his lands to be used by the company for construction of the residential quarters of the labourers. Even according to respondent no.3, the company had put up the construction at its own cost. There is nothing on record to suggest that the company was not permitted by the applicant to do so or that the continued possession of the company was hostile to the applicant. Merely because the company put up construction of the residential quarters in the year 1996 and the applicant did not seek eviction thereof for long time, would not result into the claim of adverse possession. In case of Karnataka Board of Wakf v. Union of India reported in (2004) 10 Supreme Court Cases 779, the Supreme Court observed as under : "11. In the eye of law, an owner would be deemed to be in possession of a property so long as there is no intrusion. Nonuse of the property by the owner even for a long time won't affect his title. But the position will be altered when another pers....
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.... consent of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it. Proviso to section 41 is also important providing that the transferee after taking reasonable care to ascertain that the transferor had power to make the transfer, had acted in good faith. In the present case, neither the applicant had consented to the transfer of immovable property in question nor the company in liquidation had claimed to be ostensible owner of such property. In fact, by all accounts, the property in question was never transferred to respondent no.3. 27. The ground of delay raised by respondent no.3 is also not valid. There is nothing on record to suggest that in the Court assisted sale, the properties in question were transferred to respondent no.3 or that the same was to the knowledge of the applicant. It was only when in the year 2006, advertisement came to be issued for sale of the properties for the dues of the company, that the applicant made efforts to segregate his properties from those of the company. He th....