Karnataka High Court
Karnataka Industrial Areas ... vs M/S Electromobiles (I) Ltd on 28 November, 2012
Author: L.Narayana Swamy
Bench: L. Narayana Swamy
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 28th DAY OF NOVEMBER 2012
BEFORE
THE HON'BLE MR. JUSTICE L. NARAYANA SWAMY
CA.No.43/2002
IN
COMPANY PETITION No.16/83
BETWEEN:
Karnataka Industrial Areas
Development Board, No.14/3, II Floor,
Nrupathunga Road, Bangalore,
Represented by its Secretary
Sri.R.Satyanarayana Singh ... APPLICANT
(By Sri.Ashok Haranahalli, Sr.Adv. for Sri.P.V.
Chandrashekar, Advocate)
AND
1.M/s.Electromobiles(I) Ltd
(In liquidation), represented by
The Official Liquidator, High Court of
Karnataka, IV Floor, D and F Wing,
Kendriya Sadan, Koramangala
Bangalore-34.
2.Karnataka State Financial Corporation
KSFC Bhavan, No.1/1, Thimmaiah Road,
Near Contonment Railway Station
Bangalore-52
Rept. By its Authorised Officer. ... RESPONDENTS
2
(By Sri. K.S. Mahadeva and V.Jayaram for O.L.
Sri.Gururaj Joshi, Advocate for R-2)
-0-0-0-0-
This application is filed under Section 446(2)(b) of
the Companies Act, 1956 read with Rule 9 of the
Companies (Court) Rules, 1959 to permit the applicant
to give effect to its order dated 10.12.2001 of
termination of lease (Annexure-G) and consequently to
direct the Official Liquidator to hand over the
possession of 40.25 acres of land at Sy.Nos.285, 286,
287, 290/2, 2147/2, 153 of Belawadi Village and
Sy.Nos.147/2 and 153 of Yelawala Village, Yelawala
Hobli, Mysore Taluk.
This company application coming on for hearing
this day, the Court passed the following:-
ORDER
The applicant-Karnataka Industrial Areas Development Board (in short "KIADB") has filed this application with a prayer to permit the applicant to give effect to its order dated 10.12.2001 of termination of lease (Annexure-G) and consequently to direct the Official Liquidator to hand over the possession of 40.25 acres of land at Sy.Nos.285, 286, 287, 290/2, 2147/2, 153 of Belawadi Village and 3 Sy.Nos.147/2 and 153 of Yelawala Village, Yelawala Hobli, Mysore Taluk.
2. In the earlier instance, the termination order dated 30.1.1987 passed by the applicant-KIADB was challenged before this Court by the Official Liquidator in Application No.446/94 which came to be allowed by this Court by order dated 29.1.1999. Against the said order, an appeal was filed in OSA.No.11/99 and this Court by its order dated 10.4.2001 dismissed the appeal reserving liberty to the applicant to seek the appropriate relief before this Court. In view of the liberty reserved, the applicant-KIADBA passed yet another order of termination of lease dated 10.12.2001, in respect of the land which was allotted to the company which is now wound up, vide its allotment letter dated 26.4.1977 and possession of which was handed over on 15.2.1979 and 25.7.1981 respectively. Hence, the present application with the prayers as aforementioned.
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3. The application is opposed by filing statement of objections by both the Official Liquidator as well as the KSFC. It is the contention of the official liquidator that the very same reasons which were assigned in the earlier termination order dated 30.1.87 have been assigned in the present termination order and that no fresh reasons are assigned. Further, the prayer sought to direct the Official liquidator to hand over possession is also opposed to the provisions of law and decisions of the Supreme Court and this Court. The learned counsel has relied on the following decisions:-
(a) ILR 1996 KAR 3384(M/s.Hanuman Silks and Another .vs. Karnataka Industrial Areas Development Board and others);
(b)(1989) 2 SCC 505 (State of U.P. and others .vs. Maharaja Dharmander Prasad Singh and others);
and 5
(c) AIR 1993 SC 953(Mahesh Chandra .vs. Regional Manager, U.P. Financial Corporation and others). The learned counsel submits that the company is wound up by an order of the Company Court; secondly, the company had paid the entire amount and thirdly, what was allotted was not only the lease but also lease- cum-sale and therefore, the impugned order of the KIADB is opposed to law and is also in contravention of the observations made by the Division Bench of this Court in OSA.No.11/99.
4. The learned counsel for the 2nd respondent- KSFC submits to dismiss this application. Further submits that the Corporation is the financier of the company and it has financed the company to the tune of Rs.33,16,52,002/- and as on 18.11.2011 Rs.13,21,44,000/- is due to be paid to it. Under these circumstances, if the resumption is made in favour of the applicant-KIADB they get double benefit and it 6 would adversely affect the public money of the Corporation.
5. In reply, the learned counsel for the applicant-KIADB has referred to the decision of the Division Bench of this Court in OSA.No.11/89 wherein it is observed at Paragraphs 9 and 10 as follows:-
"Para(9):- The allotted becomes a lease irrespective of the fact whether a lease deed is executed or not. Hence, the Board could not have attempted to resume possession by merely cancelling the allotment, without either terminating the lease or initiating action in accordance with law for possession. Hence, we affirm the order of the learned Company holding that the order of cancellation dated 30.1.1987 is unsustainable but on different grounds".
Para (10):- The remedy of the Board is to terminate the lease and apply to the Company Court for appropriate relief in regard to the land. If and when such 7 application is filed by the Board seeking permission to initiate legal action for taking back possession or seeking delivery of the land from the Court, the Company Court will consider the validity of the action of the Board."
Therefore, the learned counsel submits that in view of the liberty reserved, the applicant-KIADB has passed the termination order which is not in contravention of the decision of the Division Bench. He has also relied on the decision of the Supreme Court in Indu Kakkar .vs. Haryana State Industrial Development Corporation Limited and another (AIR 1999 SC 296) at paragraphs 15 and 17.
Reliance is also placed on the decision in Co.A.No.41/02 in Co.P.No.18/94 disposed of on 3.9.2009 wherein in a similar circumstances this Court has observed as follows:-
"The enrichment of the company-in- liquidation at the cost of the Board is not just and legal. Hence, the termination of 8 the allotment by the Board has been complete. The resumption of the land and taking possession of the land from the Official Liquidator is a mere formality and it is this formality which is sought to be undertaken by recourse to the present application. The application in CA.41/02 is therefore allowed."
He has also relied on the decision reported in M/s.Sakow Industries Private Limited (In liquidation) .vs. Official Liquidator, High court, Calcutta reported in 1987 TAX.L.R. 1613 at Paragraph
14. Further, referring to Section 34(B) of the Karnataka Industrial Development Act, 1956, the learned counsel submits that the said provision enables the applicant-KIADB to terminate the allotment of land in favour of the Company.
6. I have heard the learned counsel for the parties.
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7. On an application made by the Company, vide allotment letter dated 26.4.1977 an extent of 69.25 acres of land in Plot No.2 of Rayapura Village of Hubli Dharwad Industrial Area was allotted to the company in liquidation. Possession certificate to an extent of 35.29 acres was handed over on 15.02.1979 and to an extent of 4.36 acres on 25.7.1981. The allotment letter stipulated certain conditions for compliance. Clause (7) of the allotment contemplates that the company should commence business within a period of 24 months from the date of the allotment letter. In the meanwhile, Co.P.No.16/83 was filed under Section 433 (e) and (f) read with Section 434 of the Companies Act and the company petition came to be allowed on 9.4.1987. In view of the order passed by the Company Court the land and entire property of the Company stood vested with the Official Liquidator. Virtually, the official liquidator stepped into the shoes of the company. When such being the case the applicant-KIADB cancelled the allotment on the ground that the company did not 10 commence production within the time stipulated under Clause(7) of the conditions of allotment. The said termination was set aside by the company Court. Thereafter, the same has been affirmed by the Division bench of this Court. Now the question would be whether the applicant-KIADB is entitled to pass the termination order and seek for resumption of the land by following the procedure known to law. No fresh reasons are assigned in the termination order. According to the learned counsel for the official liquidator for resumption of the land the applicant- KIADB has to approach the civil Court and in support of this contention, the learned counsel has relied on several judgments. However, to the question as to whether the termination order dated 10.12.2001 is challenged in any Court of law much less before this Court, the official liquidator fairly submits that the same has not been challenged before this Court. Therefore the fact remains that the termination order dated 10.12.2001 has remained unchallenged. As long 11 as the order, statute or its constitutionality etc., is unchallenged the presumption is the order, statute is valid in the eye of law. If the same analogy is applied to the fact of this case, since the order of termination dated 10.12.2001 has not been challenged either by the official liquidator or the Corporation, one cannot find any fault in the said order. The submission of the official liquidator that the objections filed for granting permission to act upon the termination order itself is a challenge and no fresh challenge is required to be made cannot be accepted since challenge should be made by making necessary application before this Court in which notice has to be issued to the other side and arguments have to be addressed on the validity of the termination order. In the absence of the same, there was no occasion for this Court to examine its validity. In the decision reported in Indu Kakkar .vs. Haryana State Industrial Development Corporation Limited and another (AIR 1999 SC 296) the Supreme Court at paragraphs 15 and 17 has held as under:- 12
"15. It is, therefore, clear from the said reply that allottee did not dispute that it has not taken any steps towards implementation of the proposed industrial unit. So the petitioner who is only a transferee of the allottee cannot claim any other right which even the allottee did not have.
17. All that Section 32 of the Transfer of Property Act provides is that "in order that a condition that an interest shall cease to exist may be valid, it is necessary, that the event to which it relates be one which could legally constitute the condition of the creation of an interest." If the condition is invalid it cannot be set up as a condition precedent for crystallization of the interest created. The condition that the industrial unit shall be established within a specified period failing which the interest shall cease, is a valid condition. Clause 7 of the Agreement between the parties, is therefore, valid and is binding on the parties thereto."13
In M/s.Sakow Industries Private Limited (In liquidation) .vs. Official Liquidator, High court, Calcutta reported in 1987 TAX.L.R. 1613 wherein at Paragraph 14 it is held as follows:-
"The Official Liquidator is not in a better position. The Company still exists. The question of whether it is still an asset of the Company. We are of the opinion that having regard to such termination it is no longer an asset of the Company and it is no longer available to the Company. Had the Company been alive and if its contract had been terminated in such a matter, the Company could not have assigned or sublet the same."
In similar circumstances, this Court in CA.No.41/02 in Company Petition No.18/94 disposed of on 3.9.2009 has held as follows:-
"The resumption of the land and taking possession of the land from the Official Liquidator is a mere formality 14 and it is this formality which is sought to be undertaken by recourse to the present application."
In an appeal filed against the said order in OSA.No.4/10, the Division Bench of this Court has upheld the observations of the learned Single Judge(the judgment of the Division Bench is pending consideration before the Supreme Court).
8. In the absence of validity and legality of the impugned order of termination dated 10.12.01 having been challenged, there was no occasion for this Court to examine the same. Under these circumstances, the present application requires to be allowed. Hence, I pass the following:-
ORDER Application No.43/02 is allowed. The applicant-
KIADB is permitted to give effect to its order dated 10.12.2001 of termination of lease as per Annexure-"G".
The Official Liquidator is directed to hand over 15 possession within a period of three months' from the date or receipt of a copy of this order.
Insofar as the claim of the 2nd respondent-KSFC is concerned, they are permitted to agitate the same in any proceedings known to law.
Sd/-
JUDGE *alb/-.