Madras High Court
Fairdeal Supplies Ltd To Direct The ... vs Singhara Singh And Others Has Referred ... on 23 January, 2024
Comp.A.Nos.490 of 2015 & 581 of 2023
Comp.A.Nos.490 of 2015 & 581 of 2023
RESERVED ON 08.12.2023
PRONOUNCED ON 23.01.2024
C.SARAVANAN, J.
By this common order both these applications are being disposed of. Company Application No. 490 of 2015 has been filed by the office of Official Liquidator to permit the Official Liquidator to sell the land measuring an extent of 7.40 acres in SIV Quarters Area, Sirumugai Village, Mettupalayam Taluk, Coimbatore District and seeking further relief as detaliled below:-
c) Fix the upset price to be mentioned in the Auction sale notice as this Hon'ble Court may deem fit and proper and to meet the charges from out of the funds of the company.
d) Nominate/suggest the names of the news papers in which Auction sale notice has to be published as this Hon'ble High Court, Madras and to meet the advertisement charges from and out of the funds of the company.
e) Approve the terms and conditions of Auction sale and sale notice to be published annexed with this report.1/14
https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023
f) Directing the cost of this application do come out of the funds of the company in liquidation.
g) Pass such or other orders as this Hon'ble Court may deem ?t in the said case.
2. Company Application No. 581 of 2023 has been filed by M/s. Fairdeal Supplies Ltd to direct the Of?cial Liquidator to sell 7.40 acres of land of the Company under liquidation S.F.Nos.38/2A2, 40/2C, 40/3B1B, 40/4, 40/5C2 and 40/6A of Sirumugai Village, Mettupalayam Taluk, Coimbatore District, to the Applicant at the price prevailing as on the date of the execution of the sale deed dated 11.05.2012 executed in favour of the Applicant.
3. The applicant M/s. Fairdeal Supplies Ltd. in Company Application No. 581 of 2023 had earlier purchased a large extent of land measuring an extent of 246.05 acres out of 253.89 acres, pursuant to an order dated 26.03.2009 in Comp.A.Nos.344 and 360 of 2009 of this Court. The applicant M/s.Fairdeal Supplies Limited purchased the assets of the said Company under liquidation for a sum of Rs.101 Crores. The Official 2/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 Liquidator had also executed necessary Sale Deed in favour of the applicant M/s. Fairdeal Supplies Ltd. in Company Application No. 581 of 2023 on 11.05.2012 for the land measuring an extent of 246.05 Acres out of 253.89 Acres that was available for being sold at that point of time.
4. It appears that a symbolic possession of the land in S.F.Nos.39 and 40 was also handed over to M/s.Fairdeal Supplies Limited without corresponding sale deed of conveyance for conveying the aforesaid land in favour of M/s.Fairdeal Supplies Limited.
5. Meanwhile, company Application No. 1048 of 2010 was filed by the Workers union namely South India Viscose National Union of the company under liquidation, company Application No. 1048 of 2010 was filed for a direction to auction the extent of 7.33 Acres of land in S.F.Nos.39 and 40 stating that the aforesaid land was not subject matter of sale concluded in favour of M/s.Fairdeal Supplies Limited, although the entire extent was notified in the auction notice for the sale. It was submitted that the sale deed was restricted to an extent of 246.05 acres out of the aforesaid 3/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 253.89 acres. By an order dated 17.02.2014 Ccompany Application No. 1048 of 2010 was allowed. However, till date the land has not been auctioned pursuant to the order dated 17.02.2014 Ccompany Application No. 1048 of 2010.
6. The matter went up to the Hon’ble Supreme Court at the behest of the Applicant in Company Application No 581 of 2023. The applicant in Company Application No 581 of 2023 is in symbolical possession of the land as it has not been conveyed to it. Applicant, has therefore filed Company Application No. 581 of 2023 for the above direction.
7. Pursuant to the order passed by this Court on 24.11.2023, the applicant has filed an affidavit undertaking to purchase the property at the value arrived by the valuer in its report of Novemeber 2023 which was opened in the court. Para 3 of the order dated 24.11.2023 reads as under:-
3.The report indicates the distress sale value of the property as Rs.1255.40 lakhs. Paragraph No.8.1.9 of the report of M/s.ITCOT Consultancy and Services Limited read as under:-4/14
https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 “8.1.9 Distress Sale Value "Distress Sale Value" is defined as a circumstance where a seller is under compulsion to sell and/or a proper marketing period is not available. The Price obtainable under these circumstances will not meet the definition of Market Value. Rather the price obtainable will depend on the nature of the pressure on the seller or the reasons why proper marketing cannot be undertaken. The Distress Sale Value has to be considered for the Cost of Sale processes like Advertisement, Brokerage and a reasonable time for marketing. In such transactions, payments are deferred in nature and installments are spread over a period of time. In such types of transactions normally the prospective buyer is in a better bargaining position than the seller. It is virtually a buyer's market. Further, the transaction normally happens in a forced-sale situation wherein the seller has to liquidate by compulsion or is in urgent need of funds. All these factors result in a distress-sale scenario. In our professional opinion, the distress sale value for such assets may be in the region of a discount of 10% to 20% over the Fair Market Value.
Considering this, the distress sale value of the subject property is taken at 90% of the fair market value. Accordingly, the distress sale value of the subject land is estimated at Rs.1255.40 Lakhs.” 5/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023
8. Pursuant to the direction, the applicant has filed an affidavit dated 07.12.2023 undertaking to buy the land for Rs.1255.40 Lakhs.. Relevant portion of the affidavit reads as under:-
7. Therefore, the applicant herein in view to cut down losses, is constrained to match the sale value of Rs.1255.40 lakhs as indicated in the valuation report of November, 2023.
8. Under these circumstances, the applicant humbly prays that this Court may be pleased to direct the Official Liquidator to sell 7.40 acres of land of the respondent company in s.f.Nos.38/2A2, 40/2C, 40/3B1B, 40/4, 40/5C2 and 40/6A of Sirumugai Village, Mettupalayam Taluk, Coimbatore District, to the applicant at a price of Rs.1255.40 lakhs and to pass an order.”
9. The Official Liquidator has drawn attention to Rule 273 of the Companies (Court) Rules, 1959. It is submitted that as per Rule 273 of the Companies (Court) Rules, 1959, every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by an agent or an auctioner 6/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 approved by the Court, and subject to such terms and conditions, if any, as may be approved by the Court. It is submitted that all sales shall be made by public auction or by inviting sealed tenders or in such manners as the Judge may direct. It is therefore submitted that sale may be held strictly in accordance with Rule 273 of the Companies (Court) Rule 1959.
10. The learned Senior Counsel on the other hand, referred to Rule 272 and Rule 9 of Companies (Court) Rule 1959. It is therefore submitted that the Court has inherent power and a discretion is vested with the Court to finalize the sale in favour of the applicant.
11. It is further submitted that the property in question forms part of the property which was earlier auctioned earlier pursuant to order of this Court. However, no sale was executed in favour of the applicant earlier as workers were in occupation. It is therefore submitted that the Court may be pleased to accept the offer of the applicant accepting the valuation given by the ITCOT.7/14
https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023
12. I have considered the arguments advanced by the learned Senior Counsel for the applicant and the learned Deputy official liquidator.
13. The Valuation Report of ITCOT indicates that a survey and inspection was conducted on 16.11.2023. The total extent of land available is 7.40 acres and not 7.33 acres that was left over after conveying 256.05 acres of land to the applicant M/s. Fairdeal Supplies Ltd.in Company Application No. 581 of 2023.
14. The land measuring 7.40 acre is located opposite the main factory premises and is located on the main road connecting Mettupalaym- Satyamangalam/Bhavanasagar on Mettupalaym-Satyamangalam State Highway 15.
15. The report also indicates the property has a good frontage on the State Highway of around 450 m. Thus, the property commands a high value. The report has indicated the distress value of the property as Rs.1255.40 Lakh.
8/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023
16. In February 2015, the upset price of the same property was Rs.1208.41 lakh. Although, the applicant inCompany Application No 581 of 2023 has offered to purchase the same at the distress value of Rs.1255.40 Lakh, such offer cannot be aceeded to in the light of the previous orders passed by this Court and by the Hon'ble Supreme Court. That apart there are restrictions under Rule 272 and Rule 273 of the Companies (Court) Rule 1959.
17. Rule 9, Rule 272 and Rule 273 of the Companies (Court) Rule 1959, read as under: -
Rule 9. Inherent powers of Court Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.
Rule 272:Sale to be subject to Rule 273:Procedure at sale- sanction and to confirmation by Every sale shall be held by the Court-
Official Liquidator, or, if the Judge Unless the court otherwise orders, no shall so direct, by an agent or an property belonging to company which auctioner approved by the Court, and is being wound-up by the Court shall subject to such terms and conditions, be sold by the Official Liquidator if any, as may be approved by the without the previous sanction of the Court. All sales shall be made by Court and every sale shall be subject public auction or by inviting sealed 9/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 Rule 9. Inherent powers of Court Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.
to confirmation by the Court. tenders or in such manners as the Judge may direct.
18. Under Rule 273 of the Company (Court) Rules, 1959 every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions, if any, as may be approved by the Court. All such sales shall be made by public auction or by inviting sealed tenders or in such manners as the Judge may direct.
19. Further, inherent Power under Rule 9 of the Company (Court) Rules, 1959 cannot be exercised to deviate from the procedure prescribed under Rule 273 of the Company (Court) Rules, 1959. 10/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023
20. The Hon’ble Supreme Court in State Of Uttar Pradesh vs Singhara Singh And Others has referred to the rule adopted in Taylor v. Taylor, (1875) 1 Ch. D. 426 and Nazir Ahmed v. King Emperor, L.R. 63 I.A. 372 and held that when a statute has conferred a power to do an act and had laid down the method in which that power has to be exercised, it necessorily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted. Therefore, in the matter of sale of properties of the company under Liquidation there cannot be any deviation.
21. As such Company Application No. 581of 2023 cannot be allowed. Therefore, Company Application No. 581 of 2023 is liable to be dismissed. Consequently Company Application No. 490 of 2015 deserves to be allowed.
22. The office of the Official Liquidator is therefore also directed to issue paper publication for bringing the property, through Court Auction for 11/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 the 2nd time fixing the date of auction as 16th February, 2024 before this Court at 2:15 PM fixing the upset price of the property as Rs.1394.89 lakh for 7.40 acres of land in Sirumugai Village, Mettupalayam Taluk, Coimbatore on as is where is condition.
23. Memo dated 23.11.2023 of Deputy Official Liquidator is taken on record. Sale Notice, Tender Form annexed to the Memo dated 23.11.2023 is approved.
24. In the result, Company Application No.490 of 2015 is allowed. In view of the above order passed, Company Application No.581 of 2023 stands dismissed.
23.01.2024 Index : Yes/No kkd 12/14 https://www.mhc.tn.gov.in/judis Comp.A.Nos.490 of 2015 & 581 of 2023 C.SARAVANAN,J.
Kkd Pre-delivery Common Order in Comp.A.Nos.490 of 2015 & 581 of 2023 13/14 https://www.mhc.tn.gov.in/judis