Gujarat High Court
Vedica Procon Private Limited vs Official Liquidator Of Omex Investors ... on 15 January, 2016
Author: Abhilasha Kumari
Bench: Abhilasha Kumari
O/COMA/387/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY APPLICATION NO. 387 of 2015
In COMPANY PETITION NO. 156 of 1989
===========================================================
VEDICA PROCON PRIVATE LIMITED....Applicant(s)
Versus
OFFICIAL LIQUIDATOR OF OMEX INVESTORS LIMITED....Respondent(s)
================================================================
Appearance:
MR MIHIR H JOSHI WITH MR PRANJAL BUCH FOR SINGHI & CO,
ADVOCATE for the Applicant(s) No. 1
MS AMEE YAJNIK, ADVOCATE for the Respondent(s) No. 1
OFFICIAL LIQUIDATOR for the Respondent(s) No. 1
================================================================
CORAM: HONOURABLE SMT. JUSTICE ABHILASHA
KUMARI
Date : 15/01/2016
ORAL ORDER
1. The present Judges' Summons have been taken out by the applicant, seeking the following directions :
"A) That this Hon'ble Court be pleased to direct the respondent to refund the interest income earned/to be earned on Rs.148 Crores, paid by the applicant for purchase of the property (as defined in the affidavit in support of the Judge's Summons) in Court auction and confirmed by this Hon'ble Court vide its order dated 17.12.2013, from 14.04.2014 to 03.11.2015;
B) Pending the hearing and final disposal of the present application, this Hon'ble Court Page 1 of 19 HC-NIC Page 1 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER be pleased to direct the respondent to place on record of the present proceedings, the details/names of the bank(s); the amount of Rs.148 Crores deposited deposited with the said bank(s); the interest amount earned on the said Rs.148 crores from the date of payment made by the applicant till date; and such other particulars as this Hon'ble Court may deem fit;
C) Pending the hearing and final disposal of the present application, this Hon'ble Court be pleased to direct the respondent not to part with any interest income earned on Rs.148 Crores with any person/stake holders/authorities in any manner whatsoever;
D) That this Hon'ble Court be pleased to issue/pass such further and other directions as this Hon'ble Court may deem fit and expedient."
2. The brief factual background of the matter is as follows.
2.1 M/s.Omex Investors Limited was ordered to be woundup by an order dated 06.03.1990, passed by this Court in Company Petition No.156/1989, and the Official Liquidator attached to this Court was appointed as the Liquidator of the aforesaid Company.
Page 2 of 19
HC-NIC Page 2 of 19 Created On Wed Jan 20 00:51:21 IST 2016
O/COMA/387/2015 ORDER
By an order dated 26.03.2013, the Official Liquidator was directed to put the freehold land of the Company, admeasuring 13895 sq.mtrs., situated at T.P.No.18, F.P.No.32/P, bearing Survey No.25, 27B/1, 31, 38, mouje RajpurHirpur, outside Raipur Gate, Behind New Cloth Market, Opp. Hirabhai Market, Diwan Ballubhai Road, Raipur, Ahmedabad, to auction for sale by inviting offers from the intending purchasers, in sealed covers. The upset price was fixed by this Court at Rs.55 Crores and the Earnest Money Deposit (EMD) at 10% of the said amount. The tender notice containing the Terms and Conditions of the sale inviting offers from the prospective purchasers was advertised in the English and vernacular newspapers. As per the Terms and Conditions, the intending purchasers, along with their offers, were required to deposit Rs.4,50,00,000/ (Rupees Four Crores Fifty Lacs only) as EMD with the Official Liquidator. On confirmation of the sale by this Court, the successful bidder was required to pay 25% of the purchase consideration (excluding EMD) to the Official Liquidator within one month of the confirmation of the sale by the Court. The balance amount of the purchase consideration was Page 3 of 19 HC-NIC Page 3 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER to be paid within three months thereafter, by the successful bidder. The EMD paid by the successful bidder was to be adjusted in the last installment. Immediately on the payment of the full consideration, the Official Liquidator was required to hand over the property to the successful bidder and the Sale Deed in respect of the property was to be executed within one month from the date of the payment of the full sale consideration.
2.2 The applicant paid the requisite EMD before the auction and participated in the auction proceedings held by this Court on 17.12.2013. The applicant was the highest bidder and had made the bid in respect of the property at Rs.148 Crores. One Balleshwar Greens Private Limited ("Balleshwar", for short) was the second highest bidder, which had offered Rs.146 Crores for the said property. By an order dated 17.12.2013, this Court accepted the bid of the applicant and confirmed the sale of the property in favour of the applicant. By the aforesaid order, the Official Liquidator was directed to take appropriate action in respect of the execution of the Sale Deed within one month, as per Condition No.33 of the Terms and Page 4 of 19 HC-NIC Page 4 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER Conditions. Pursuant to the confirmation of the sale of the property by this Court, the applicant paid a sum of Rs.37 Crores, being 25% of the purchase consideration to the Official Liquidator, on 06.01.2014. The Official Liquidator returned the EMD amount to the unsuccessful bidders, including Balleshwar. Thereafter, the applicant preferred Misc. Civil Application No.53/2014, seeking extension of time for the payment of the balance sale consideration. This Court, by an order dated 31.03.2014, permitted the extension of time to the applicant and directed the payment of interest at the rate of 10% per year from 16.04.2014, till the payment of the last installment. However, the applicant did not avail of the benefit of the extension of time granted vide order dated 31.03.2014, but paid the balance amount of Rs.106.50 Crores on 16.04.2014. Thus, the entire sale consideration of Rs.148 Crores was paid by the applicant to the Official Liquidator within the stipulated period of time.
2.3 The possession of the property was handed over by the Official Liquidator to the applicant, on 17.04.2014. On the same day, O.J.Appeal No.9/2014 was Page 5 of 19 HC-NIC Page 5 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER filed by Balleshwar, one of the unsuccessful bidders, which was taken up for hearing by the Division Bench of this Court. By way of the said appeal, Balleshwar had challenged the extension order dated 31.03.2014. The Division Bench, by its judgment dated 17.04.2014, interalia, directed the parties to maintain status quo in respect of the property till the time Balleshwar files an application before the Company Court. Under the circumstances, the possession of the property in the hands of the applicant remained symbolic.
2.4 Aggrieved by the aforesaid judgment dated 17.04.2014, passed by the Division Bench, the applicant filed Misc. Civil Application No.90/2014, seeking the review/modification of the above judgment. By an order dated 22.04.2014, the Division Bench disposed of Misc. Civil Application No.90/2014, with certain modifications. In the meanwhile, on 21.04.2014, Balleshwar preferred O.J.Misc. Civil Application No.89/2014, seeking the recall of the order dated 17.12.2013, passed by the Company Court in Official Liquidator Report No.43/2013, whereby the Page 6 of 19 HC-NIC Page 6 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER auction for the freehold land had been conducted and the applicant had emerged as the highest bidder, with Balleshwar as the second highest bidder. The application was contested by the applicant. This Court, by judgment dated 11.08.2014, recalled the order dated 17.12.2013. Along with the recall, certain directions were issued and the Official Liquidator was directed to take back the possession of the property from the applicant, forthwith. Aggrieved by the judgment dated 11.08.2014, recalling the order dated 17.12.2013, passed by this Court, the applicant preferred O.J.Appeal No.36/2014 before the Division Bench. It may be pertinent to note that during the pendency of the O.J.Appeal, payment had already been made in favour of the workers of the Company in liquidation, out of the sale consideration received by the Official Liquidator. The Division Bench of this Court dismissed the O.J.Appeal preferred by the applicant vide judgment dated 02/04.12.2014. 2.5 Aggrieved by the above judgment of the Division Bench, the applicant filed Special Leave Petitions before the Apex Court, being Civil Appeal Page 7 of 19 HC-NIC Page 7 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER Nos.6165/2015 to 6167/2015. By its judgment dated 13.08.2015, the Supreme Court allowed the appeals and held, interalia, that this Court was not justified in recalling the order dated 17.12.2013, passed by the Company Court. The Supreme Court further directed that the amount deposited by Balleshwar with the Official Liquidator be refunded with interest, if any, accrued thereon. The said amount was, therefore, refunded, with interest, by the Official Liquidator, to Balleshwar.
2.6 Pursuant to the above judgment of the Supreme Court dated 13.08.2015, the applicant, vide letter dated 14.08.2015, requested the Official Liquidator to execute the Sale Deed in its favour. The Official Liquidator, vide letter dated 17.08.2015, informed the applicant that the earlier draft Sale Deed was required to be amended, in light of the observations made in the aforesaid letter and on submitting a fresh Certificate from the Solicitors and the revised draft Sale Deed, necessary orders were required to be obtained by the Official Liquidator from this Court. Thereafter, the Official Liquidator preferred OLR Page 8 of 19 HC-NIC Page 8 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER No.96/2015, seeking approval of the draft Conveyance Deed. This Report was accepted, vide order dated 30.10.2015. Pursuant thereto, the Official Liquidator executed a Sale Deed dated 03.11.2015, in favour of the applicant, which was duly registered. 2.7 In the background of the above facts, the applicant has approached this Court, with the prayers reproduced hereinabove.
3. Mr.Mihir H. Joshi, learned Senior Advocate with Mr.Pranjal Buch, learned advocate appearing on behalf of the applicant, has submitted that from the Terms and Conditions of sale in the tender document, it becomes evident that the successful bidder would be entitled to enjoy the property immediately on payment of the full sale consideration and the title in respect of the said property would also be passed in favour of the successful bidder, within a period of one month from the date of the payment of the full sale consideration. The applicant has paid the full sale consideration within the stipulated period of time, as per the Terms and Conditions. Though an extended period of three months was prayed for and Page 9 of 19 HC-NIC Page 9 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER granted by this Court, however, it is not in dispute that such extended period has not been availed of by the applicant, and the payment has been made as per the Terms and Conditions.
3.1 That the possession of the property was handed over to the applicant by the Official Liquidator on 17.04.2014. However, in spite of being in possession of the property, the applicant could not make any use of it or develop it, as an order of statusquo was passed by the Division Bench of this Court on the same date, in O.J.Appeal No.9/2014 filed by Balleshwar. 3.2 Learned Senior Counsel further submits that the applicant has not been able to develop the property with effect from 17.04.2014, till the execution of the Sale Deed on 03.11.2015, which period amounts to approximately 550 days. On the other hand, the Official Liquidator has earned interest on the amount of Rs.148 Crores, paid by the applicant, which has been deposited in interestbearing Fixed Deposits. Neither could the applicant enjoy, or utilize, the property and nor could it put the sum of Rs.148 Crores Page 10 of 19 HC-NIC Page 10 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER to any other profitable venture. The applicant has, therefore, suffered a great loss of opportunity due to the litigation at the behest of Balleshwar, the unsuccessful bidder. It is, therefore, entitled to receive the interest accrued on the amount of Rs.148 Crores.
3.3 It is next submitted that the amount deposited by Balleshwar during the pendency of the matters before this Court, has been directed to be refunded by the Supreme Court, along with interest accrued thereon. Accordingly, the Official Liquidator has refunded the said amount with interest, to Balleshwar. The applicant, therefore, deserves the same treatment as it has lost the opportunity to develop the property and put the amount of Rs.148 Crores to other profitable use. The applicant, therefore, deserves to be granted the interest amount accrued on the amount of Rs.148 Crores that has been invested in Fixed Deposits by the Official Liquidator.
3.4 On the above grounds, it is submitted that the prayers made in the application be granted.
4. The Official Liquidator has filed his Report Page 11 of 19 HC-NIC Page 11 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER dated 13.01.2016, narrating the entire sequence of events. On the factual side, there is no dispute to any of the contentions raised by the applicant in the Report of the Official Liquidator. In fact, it has been confirmed that the Official Liquidator has received the full sale consideration of Rs.148 Crores from the applicant and the said amount has been invested in different Banks as Fixed Deposits, as reflected in detail in paragraphs34 to 36 of the Report. Even on the legal side, the Official Liquidator has not raised any objections to the claim of the applicant for the grant of the interest amount. The Official Liquidator has neither objected to the claim nor the entitlement of the applicant to receive this amount.
5. Ms.Amee Yajnik, learned advocate for the Official Liquidator has made certain submissions which go beyond the stand of the Official Liquidator in the Report.
5.1 It is submitted by Ms.Yajnik that the applicant has not raised the issue regarding the payment of interest before the Apex Court, when the matter was Page 12 of 19 HC-NIC Page 12 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER before that Court. It is further submitted that there is no delay on the part of the Official Liquidator as the matter was under litigation. Ms.Amee Yajnik has further pointed out that costs have been awarded in favour of the applicant by the Supreme Court, which may also be taken note of.
5.2 Learned counsel for the Official Liquidator submits that the applicant has not quantified the exact amount of interest claimed by it in the Judges' Summons, therefore, the interest received by the Official Liquidator on the Fixed Deposit Receipts deposited in various Banks, is required to be verified through a Chartered Accountant and permission in this regard may be granted by the Court. This aspect has been observed by the Official Liquidator in the Report filed by him.
6. Having heard learned counsel for the respective parties at length and upon perusal of the documents on record, it is clear that there is no dispute regarding the factual aspects of the matter. It is an admitted fact that the amount of Rs.148 Crores has been paid by the applicant within the stipulated period of time, as Page 13 of 19 HC-NIC Page 13 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER per the Terms and Conditions of the sale, and has been invested by the Official Liquidator in various Banks, in interestbearing Fixed Deposits. From the date of the investment in the Fixed Deposits, therefore, the said amount is bearing interest, which is lying unused in various Banks.
7. It is not the case of the applicant that the Official Liquidator is, in any manner, responsible for the delay. The facts of the case are selfspeaking and the present application has not been filed in an adversarial mode, but only for the claim of interest, looking to the facts and circumstance of the case. The chronology of events makes it very clear that as far back as on 17.12.2013, which is the date of the auction conducted by this Court in respect of the freehold land admeasuring 13895 sq.mtrs., the applicant has emerged as the highest bidder, with a bid of Rs.148 Crores. Balleshwar was the second highest bidder. As a result of the litigation that ensued, the applicant has been unable to put the property to any fruitful use for the purpose of development. In addition, the amount of Rs.148 Crores Page 14 of 19 HC-NIC Page 14 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER was blocked up and could not be profitably utilized. Though, ultimately, the applicant emerged successful before the Supreme Court, however, the applicant did suffer loss of opportunity as a result of the events that took place.
8. The Official Liquidator has not stated in his Report that he, or any other party, has any claim upon the amount of interest. The amount of interest which has accrued in the Fixed Deposits during the pendency of the litigation can, therefore, rightly be claimed by the applicant, who is the successful bidder who has made the payment of the entire sale consideration within the specified timeframe. It is not the fault of the applicant that the ensuring litigation deprived him of the use and development of the property, which could have been put to profitable use, in normal circumstances. It may be noted that the unsuccessful bidder, namely, Balleshwar, has been granted a full refund of the amount paid by it, along with interest. In all fairness, if the unsuccessful bidder can be granted the refund of the amount paid by it with interest, there is no reason why the same principle Page 15 of 19 HC-NIC Page 15 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER cannot be applied to the applicant.
9. With regard to the submission advanced on behalf of the Official Liquidator, that the claim of interest was not raised by the applicant when the matter was before the Apex Court, it may be noted that at that stage, the applicant had challenged the order dated 02/04.12.2014, passed by the Division Bench of this Court, confirming the order of this Court, whereby the order dated 17.12.2013, had been recalled. The issue before the Apex Court was the recall of the order conducting the auction sale of the property, in which the applicant had emerged as the highest bidder. In the above context, there was no occasion for the applicant to make a prayer regarding the payment of interest at that point of time, when the matter was before the Apex Court. The issue could only be raised after the execution of the Sale Deed on 03.11.2015, which is later than the order of the Supreme Court.
10. The submission on behalf of learned counsel for the Official Liquidator that costs have been awarded in favour of the applicant by the Supreme Court, has Page 16 of 19 HC-NIC Page 16 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER no bearing in the context of the present application. On the contrary, the award of the costs would indicate that the Apex Court was aware of the difficulties faced by the applicant.
11. Learned counsel for the Official Liquidator has further submitted that the exact quantification of the amount of interest has not been done by the applicant. This aspect has also been observed in the Report of the Official Liquidator. Mr.Mihir H. Joshi, learned Senior Advocate for the applicant, has submitted that it is accepted by the Official Liquidator in the Report that the amount of Rs.148 Crores has been invested by the Official Liquidator in Fixed Deposit Receipts in various Banks, therefore, there can be no objection to the grant of interest accrued upon such Fixed Deposits, to the applicant.
12. Learned advocate for the Official Liquidator has submitted that the Official Liquidator may be permitted to verify the amount through a Chartered Accountant from the Panel maintained by the Official Liquidator, so that the exact amount can be ascertained. Necessary orders in this regard can be Page 17 of 19 HC-NIC Page 17 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER passed.
13. It is significant that the delay in executing the Sale Deed has not taken place due to any act or conduct on the part of the applicant, but has happened for reasons beyond the control of the applicant. It would, therefore, not be just or fair to deprive the applicant of the interest that has accrued on the amount of Rs.148 Crores on account of such delay, especially when the applicant is the one that has suffered loss of opportunity and been unable to develop the land.
14. Considering the totality of the facts and circumstances of the case and for the aforestated reasons, the following order is passed :
The Official Liquidator shall get verified the exact amount of interest that has accrued on the amount of Rs.148 Crores, which has been deposited in Fixed Deposit Receipts, for the period from 14.04.2014 to 03.11.2015, through a Chartered Accountant, from the Panel maintained by him. After verifying the exact amount of interest, the said amount be paid to the applicant, forthwith. The entire exercise shall be Page 18 of 19 HC-NIC Page 18 of 19 Created On Wed Jan 20 00:51:21 IST 2016 O/COMA/387/2015 ORDER concluded within a period of three weeks from the date of the receipt of a copy of this order. The applicant is at liberty to approach this Court if necessity arises.
15. The application is allowed, in the above terms.
(SMT. ABHILASHA KUMARI, J.) Gaurav+ Page 19 of 19 HC-NIC Page 19 of 19 Created On Wed Jan 20 00:51:21 IST 2016