Jharkhand High Court
Adityapur Industrial Area Development ... vs M/S Vijayshree Autocom Limited Through ... on 6 May, 2022
Author: Rajesh Kumar
Bench: Rajesh Kumar
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Civil Review No.21 of 2020
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Adityapur Industrial Area Development Authority through its Managing Director, Now Regional Director Jharkhand Industrial Area Development Authority, Adityapur Region, Dr. Neha Arora, aged about 34 years, having its office at Vikash Bhawan, P.O. & P.S.- Adityapur, District-Seraikella-Khersawan ...... Petitioner Versus
1. M/s Vijayshree Autocom Limited through its Authorized Signatory Mr. Swadhin Chandra Mahato, at Plot No. A-25 Industrial Estate, Industrial Area, Adityapur, PO & PS- Adityapur, District- Seraikella-Kharsawan.
2. Kaizen Auto Pvt. Ltd., having its registered office at Plot No.A-25, P.O. & P.S.- Adityapur, Dist.- Seraikella Kharsawan, Industrial Estate Adityapur, Jamshedpur , Jharkhand through its Official Liquidator, Mongol Tower, 4th Floor, Kanta Toli Chowk, Ranchi.
3. Govind Promoters Pvt. Ltd. Through one of its Directors, Shri Devendra Kumar Mantri son of late Babu G.P. Mantri, resident of 3A, Ronaldshay Road, Alipore, Kolkata-700027.
...... Respondents
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CORAM: HON'BLE MR. JUSTICE RAJESH KUMAR
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For the Petitioner : M/s Ajit Kumar, Sr. Adv.
Dr. Ashok Kr. Singh, R.C.P. Sah and Shahid Yunus,
Advs.
For the Respondents : M/s I. Sinha, Piyush Poddar, H. K. Mehta and
Manjushri Patra, Advs.
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The matter was taken up through Video Conferencing. Learned counsel for the parties had no objections with it and submitted that the audio and video qualities are good.
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101/ 06.05.2022: Present civil review petition has been filed against the order dated 28.06.2019 passed by this Court in C.P. Case No.04 of 2003 whereby following order has been passed:
"Heard counsel for the parties.
The only issue raised today in this case is the order of cancellation of lease dated 06.04.2005 by the Adityapur Industrial Area Development Authority (hereinafter referred as the 'AIADA') whereby the lease deed in favour of the company in liquidation has been cancelled. The said order has been issued vide Memo No. 839 dated 06.04.2005.
It has been argued by the counsel appearing on behalf of the AIADA that since the company was in default in making payment, violated the condition of the lease agreement, and as such, they were noticed vide show cause notice dated 17.12.2004, but no response has been received. Thereafter, second show cause notice has been issued on 02.02.2005 but that was also in vain, as no response has been given and the AIADA Authority were satisfied that the condition of lease has been violated and as such, the same has been cancelled vide order dated 06.04.2005 contained in Memo No. 839. It has been pleaded that since it is an original property of the AIADA and as such, they have right to cancel the lease agreement. Further as the condition of the lease agreement has been violated, the order of cancellation is justified.
On the other hand, it has been argued by the learned counsel for the petitioner-company that the present Company Petition has been filed on 11.09.2003 and winding up order has been passed by this Court on 22.02.2008. As per the mandate of Section 441 (2) read with Section 537 of the Companies Act, 1956, property of the company under liquidation comes under the jurisdiction of the Company Court and no order can be passed without permission of the Court. Since the impugned order has been passed without permission of the Court and as such, it is wholly unauthorised and nullity. For this purpose, he has relied upon the following judgments:
i. In the case of Vaishu Engineering Industries Vs. A.P. Industrial Development, reported in (2008) 81 SCL 368 A.P. ii. In the case of Karnataka State Electronics Development Corporation Ltd., Vs. the Official Liquidator passed by High Court of Karnataka at Bangalore in Original Side Appeal No. 31 of 2004 on 21.06.2005 .
iii. In the case of Singh and Sons and Ors. Vs. Official Liquidator U.P. and Ors, passed by High Court of Allahabad in Special Appeal No. 1147 of 2018 on 06.02.2019.
iv. In the case of Official Liquidator of Commercial Ahmedabad Mills Ltd. Vs. Manager, State Bank of India and Ors, passed by High Court of Gujarat in Company Application No. 575 of 2016 in Official Liquidator Report No. 12 of 2006 in Company Petition No. 117 of 1989 on 03.03.2015.
v. In the case of Sunita Vasudeo Warke Vs. Official Liquidator and Ors, passed by High Court of Bombay in Appeal No. 737 of 2012 in Official Liquidator's Report No. 145 of 2011 in Company Petition No. 827 of 2007 in Company Petition No. 327 of 1997 with Company Petition No. 870 of 1999 on 11.01.2013.
vi. In the case of Bank of Maharashtra Vs. Official Liquidator, Navjivan Trading Finance Pvt. Ltd, passed by High Court of Gujarat in Appeal Nos. 17, 18 & 19 of 1996 and in Company Application Nos. 36 of 1978, 185 and 205 of 1995 with Civil Application Nos. 28, 29, 30 of 1996 on 02.12.1998.
vii. In the case of Rajratna Naranbhai Mills co. Ltd (In Liquidation): by its Official Liquidator Vs. New Quality Bobbin works, passed by High Court of Gujarat in Company Application No. 71 of 1971 in Company Petition No. 21 of 1966 on 24.12.1971.
viii. In the case of Sarju Thakur Vs. Registrar of Companies and Ors, passed by High Court of Patna in Letters Patent Appeal No. 90 of 1988 on 22.04.1996.
ix. In the case of Horst Kurves GmbH Vs. Essar Oils Ltd, passed by High Court of Gujarat in O.J. Appeal No. 24 of 2001 in Company Application No. 127 of 2001 in Company Petition No. 265 of 2000 with Civil Application No. 170 of 2001 on 04.09.2001."
The learned counsel for the official liquidator has submitted that in pursuance of the order of winding up, a report has been filed on 21.07.2008 wherein following prayer has been made:-
(i) The official liquidator may be permitted to take possession of assets & properties in the presence of petitioning creditor and with the help of District Administration.
(ii) A registered valuer from the list of Valuers given at Annexure 'E' may be appointed to evaluate the assets and properties and to prepare the list of assets at the time of taking possession.
(iii) The Ex-Director of the company may be directed to hand over all the books, records and assets & properties of the company in liquidation.
(iv) The Ex-Director may be directed to appear before the official liquidator under Rule 130 of the Companies (Court) Rule, 1959 and to file Statement of Affairs with the official liquidator as required under Section 454 of the Companies Act, 1956.
(v) The guards appointed by the Ex-Management may be discharged, and Six more guards and one Security Supervisor of M/s Puja Detectives & Security Services Pvt. Ltd. may be allowed to be posted @ Rs.2000/-
per head per month for guards and Rs.3000/- for Security Supervisor. Plus supervision charge @10% and Service Tax as applicable.
Further, as per the direction of this Court, steps has been taken and ultimately possession has been taken on 18th October 2008 and 19th October, 2008. The report of the official liquidator dated 08.05.2019 is reproduced:-
1. That, on consideration of Winding up Petition presented by Petitioning Creditor of the Company on 11-09-2003, M/s. Kaizen Auto Pvt. Ltd. (hereinafter referred to as 'the company') was ordered to be wound up by this Hon'ble Court on 22.02.2008, and the Official Liquidator attached to this Hon'ble Court became liquidator thereof.
Thus, possession of the assets and property of the company (in liquidation) which were deemed to be in possession of the Hon'ble High Court with effect from 11-09-2003 by virtue of Presentation of Winding up Petition, was taken over by the Official Liquidator on 18th and 19th October, 2008.
2. That, all facts relevant to the process of liquidation proceedings as up to 26-09-2018 have already been taken on record by the Hon'ble Court.
3. That in brief reception of the matter relating to the process of the sale of the assets of the company in liquidation, it is submitted that advertisements for sale of the assets were published in newspapers three times- on 18-06-2017 in terms of order dated 10-02-2017, on 22-09-2017 in terms of order dated 15-09-2017 and on 30-05-2018 in terms of order dated 18-05-2018 followed by a Corrigendum dated 05- 09-2018 in terms of order dated 31-08-2018.
4. That in response to advertisement dated 22-09-2017 two bids had been received and the sale had been held on 10-11-2017 which had not yielded any result due to quoting of very low prices, and thus the sale had been scrapped by the Hon'ble Court. Consequently the Earnest Money Deposits of the two bidders were returned.
5. That sale Notice dated 30-05-2018 was published after revaluation of the assets but sale could not be held stalled in the interest of affairs of the company and intervention of the Petitioning Creditor of the company in liquidation, as a result of which, a Corrigendum to the sale notice dated 30-05-2018 was published on 28-07-2018.
6. That, ultimately after publication of sale notice dated 30-05-2018 and Corrigendum to the said Sale Notice dated 28-07-2018 ten offers have been received. Out of the ten bids, six bids are lying with the Official Liquidator in sealed covers and other four bids have already been submitted before in Hon'ble Court. The Earnest Money Deposits of the remaining four bidders amounting to Rs.32.00 lakhs have been kept by the Official Liquidator in a separate EMD Account in the form of Short Term Auto Renewable Fixed Deposit. Which in this regard, it is quite necessary to be considered that over six months time has already passed after receipt of the offers which implies that the validity of the Demand Drafts is already over.
7. That from the perspective that the Demand Drafts have already become invalid, the Hon'ble Court may consider to allow the Official Liquidator to return the Demand Drafts of the bidders who approach the Official Liquidator for the same on condition that they would resubmit the fresh Demand Drafts as and when called for by the Official Liquidator subject to orders of the Hon'ble Court.
8. That, in the light of circumstances stated above, it is relevantly submitted that M/s. Govind Promoters Pvt. Ltd., the Petitioning Creditor of the Company (in liquidation) who is also in the fray of bidding to purchase the assets and property of the company on grounds that it is ready to take over the same against settlement of its dues besides paying the expenses incurred by the Official Liquidator.
9. That, the matter of Adityapur Industrial Area Development Authority the matter of cancellation of lease of the land of the company in liquidation causing controversy is already under consideration before the Hon'ble High Court.
10. That, Since the date of taking over possession, an expenditure of Rs.39,29,530/- as upto February 2019 has been incurred by the Official Liquidator towards security expenses and incidental expenses which were likely to be recouped from the sale proceeds of the assets and property of the company (in liquidation) and surmounting by way of monthly recurring security expenses of Rs.30,503/-.
11. That two of the bidders who have submitted their bids have already approached the Official Liquidator for return of their Earnest Money Deposits. In such a situation, it is felt that the EMDs of all the bidders should be returned to evade further idling of the EMD amounts of the bidders, with condition to deposit the EMD at the time of consideration of the sale by the Hon'ble High Court, if deemed fit.
12. That the Hon'ble Court may consider about the plight of the expenditure incurred by the Official Liquidator for the Company and accordingly pass suitable orders for recovery of expenditure incurred by the Official Liquidator either from the Petitioning Creditor or AIADA as the Hon'ble Court may consider just in the matter."
Heard counsel for the parties.
The issue involved in the present writ petition is regarding jurisdiction of the AIADA Authority, who had passed the impugned order dated 06.04.2005. Relevant provision of Section 441 (2) of Company Act, 1956 read with Section 537 are quoted hereinbelow:-
"441. Commencement of winding up by Tribunal -
(1) ......................
(2) In any other case, the winding up of a company by the Tribunal shall be deemed to commence at the time of the presentation of the petition for the winding up."
"537. Avoidance of certain attachments, executions, etc., in winding up by Tribunal.-
(1) Where any company is being wound up by Tribunal -
(a) any attachment, distress or execution put in force, without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Tribunal of any of the properties or effects of the company after such commencement] shall be void.
(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government."
Thus, it is evident that winding up proceeding will be deemed to have been initiated from the date of presentation. The date of presentation is on 11.09.2003 and the order of winding up has been passed on 22.02.2008. It will be deemed that the winding up proceeding has been initiated on 11.09.2003 and the entire property of the company under litigation has come under control of the Company Court and no order could have been passed without permission of the Court. The order dated 22.02.2008 passed by this Court in the present petition is quoted herein below:-
"Mr. Nilesh Kumar, appearing for opposite party, submitted that he informed his client but it has not responded.
Mr. Mittal, appearing for the petitioner, with reference to earlier orders, submitted that the opposite party is trying its best to delay the matter.
Heard.
In the facts and circumstances, it is directed that steps be taken for winding up of Kaizen Auto Pvt. Ltd. The Official Liquidator, Jharkhand High Court is appointed as Liquidator to proceed in the matter and to take all steps, in accordance with law, and submit report.
The Official Liquidator, Jharkhand High Court will also take over all the assets of the Company as also books of accounts, register, ledger, etc. of the Company. The opposite party will co-operate in the matter.
The office is directed to forward the notification of winding up to the Official Liquidator in Form 50 under Rule 109 of the Companies (Court) Rules, 1959, and will also forward the winding up order under Form 52 of Rule 111 of the Companies (Court) Rules, 1959, immediately.
The Official Liquidator, Jharkhand High Court is granted leave to advertise gist of the winding up order in the newspaper, namely, Prabhat Khabar (Hindi), Jamshedpur Edition of the cost of which shall be borne by the petitioner against the bill, as may be, submitted by the advertising agency. If petitioner offers to get it published, it may be allowed to do so."
Judgment reported in (2008) 81 SCL 368 A.P in the case of Vaishu Engineering Industries Vs. A.P Industrial Development. The relevant portion is quoted hereinbelow:-
22. ".....The Division Bench, after considering the contentions elaborately, held the word "after the commencement of winding up" in Section 537 (1) (a) of the Companies Act, 1956, must be read as meaning after the presentation of the petition for winding up of the company and not after the winding up order. Section 537 read with Section 441 (2) of the Act fixes the date of the commencement of the winding up as the date of the presentation of the petition for winding up and not the winding up order. The object of Section 537 is to preserve the assets of a company for fair and equitable distribution to all the creditors and to generally negative all possibilities of a preference between creditors inter se from the date of commencement of the winding up proceedings. The words "is being wound up" in Section 537 (1) may be suggestive of a process, but the starting point of that process has been clearly laid down by Section 441 of the Companies Act, and the language of Section 537 has to be understood by reference to Section
441. The doctrine of "relating back" has been imported and the date of commencement of winding up has been given a fixed meaning.
From the above discussions, it is evident that the Company Petition has been filed on 11.09.2003 and the winding up order has been passed on 22.02.2008 and as such, the entire property of the company has come under the control of Company Court w.e.f. 11.09.2003. Section 537 of the Act mandates that the property of the company under liquidation cannot be disturbed without permission of the Court, if any, action or order has been passed by any person concerning the said property, shall be void.
In the present case the order of cancellation of lease agreement passed by the AIADA Authority dated 06.04.2005 is without permission of the Court and as such, the impugned order has been passed without authorization and in contravention of Section 537 of the Companies Act, 1956. It is also relevant to note that as per official liquidator, possession has been taken on 18th October, 2008 and 19th October, 2008, but the objection has been raised by the AIADA Authority before this Court, for the first time by filing counter affidavit dated 26.11.2018. Through this counter affidavit, the impugned has been brought on record.
Be that as it may, since the impugned order is without jurisdiction and is in teeth of Section 537 of the Companies Act, 1956 and as such, the same is null and void. Accordingly, it is declared that impugned order of cancellation dated 06.04.2005 passed by the AIADA Authority is null and void and will have no implication as if it has never been passed and it has not affected in any manner the lease granted in favour of the company under liquidation.
The official liquidator is directed to proceed with the sale of the property of the company under the provisions of the Companies Act, 1956 and for this purpose, the required steps should be taken for the entire property of the company under liquidation.
As jointly prayed for, list this case on 19.07.2019."
The issue has been taken in the present civil review petition is that the aforementioned order has been passed without considering the order of the Hon'ble Apex Court reported in the case of Phatu Rochiram Mulchandani v. Karnataka Industrial Areas Development Board reported in (2015) 5 SCC 244.
Objection has been raised that although petition is in the form of review but it is an appeal in disguise of revision. Further objection has been raised that the Company Court does not have power of review as the same has not been assigned by the statute.
Be that as it may, Adityapur Industrial Area Development Authority (AIADA) has filed supplementary affidavit. Paragraph Nos.2 and 3 of the said supplementary affidavit are quoted herein below:
"2. That project of Auction purchaser, M/s Vijayshree Autocom Limited had already been passed by petitioner on 21/07/2020 vide letter No.817/AR measuring total area of land 24,575 Sq. ft. (9,750 Sq. ft. +11,730 Sq. ft. + 3,125 Sq. ft.). It is further submitted that allotment and lease deed of 9,750 Sq. ft. of land has already been done by the petitioner in favour of Auction purchaser, M/s Vijayshree Autocom Limited.
3. That present Civil Review No.21/2020 was heard on 22/04/2022 before the Hon'ble Court. During the midst of argument it was the view of the Hon'ble Court that in this peculiar circumstances the petitioner request the Hon'ble Court to observe that order dated 28/06/2019 passed in C.P.Case No.04/2003 shall not be cited in future in any other case as precedent, now the petitioner shall take steps for allotment of land in favour of M/s. Vijayshree Autocom Limited as per JIADA Regulation 2016 for the area 11,730 Sq. ft. and 3,125 Sq. ft. of land within 10 days of the passing of the Hon'ble Court's order."
There is consensus between the parties to implement the order. It is settled principle of law that the Court always decides the issue involved in the case. The present issue has been decided on the basis of peculiar facts of the case. Further, the auction has already been held.
In view of the above facts and submission of the parties, present civil review petition is hereby disposed of, observing that any observation made herein is in relation to this case only and should not be treated as precedent.
Adityapur Industrial Area Development Authority is directed to comply the order within two weeks from today.
Since civil review petition has been disposed of, I.A. No.1400 of 2020, which is filed for condonation of delay, also stands disposed of.
In view of the order passed in the present civil review petition, I.A. No.6399 of 2020 has also become infructuous. Accordingly, it is dismissed as infructuous.
(Rajesh Kumar, J.) Ravi/