Calcutta High Court
New Tobacco Co. Ltd. (In Liquidation) vs Duncans Industries Limited on 21 May, 2010
Author: Indira Banerjee
Bench: Indira Banerjee
1
ORDER SHEET Sheet No...
C.A. No. 666 of 2006
With
T. No.179 of 2006
C.A. No.68 of 2006
with
C.P. No.621 of 1987
IN THE HIGH COURT AT CALCUTTA
ORIGINAL JURISDICTION
ORIGINAL SIDE
In the matter of:
NEW TOBACCO CO. LTD. (IN LIQUIDATION)
AND
DUNCANS INDUSTRIES LIMITED
...APPLICANT
VS.
RDB INDUSTRIES LTD.& ORS.
BEFORE:
The Hon'ble Justice
INDIRA BANERJEE.
DATE: 21.05.2010
This application filed by Duncans Industries Ltd. is for recalling of the orders
dated 19 th April, 2006 and 26 th July, 2006 passed by this Court, inter alia confirming the
sale of the assets of the company in liquidation in favour of RDB Industries Ltd..
National Tobacco Company of India Ltd. purchased about 3.50 acres of land along
with buildings, Sheds and godowns at Bhabanipuram, Vijaywada, hereinafter referred to
as the Vijaywada property, particulars whereof have been given in the affidavit in support
of the Judges Summons.
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National Tobacco Company of India Ltd. was thereafter amalgamated with Duncan
Agro Industries Ltd. with effect from 1 st January, 1977. The amalgamation had been
sanctioned by this Court by an order dated 18 th January, 1978.
By reason of the amalgamation, the Vijaywada property, it is alleged, stood
transferred to and vested in Duncan Agro Industries Ltd. with effect from 1 st January,
1977.
Thereafter, there was a further scheme of arrangement whereby the tobacco
division of Duncan Agro Industries Ltd. which inter alia included Vijaywada property, was
transferred to and vested in New Tobacco Company of India Ltd., hereinafter referred to
as NTC. The scheme of arrangement was sanctioned by an order dated 31 st July, 1984 of
this Court.
According to the applicant, on 5 th May, 1986, an agreement was executed between
NTC and Duncan Agro Industries Ltd. for sale of the Vijaywada property to Duncan Agro
Industries Ltd. Pursuant to the agreement, Duncan Agro Industries Ltd. was put in
possession of the Vijaywada property. A power of attorney was also executed in favour of
Duncan Agro Industries Ltd. in respect of the Vijaywada property.
Duncan Agro Industries was later amalgamated with Chandchap Fertilizers and
Chemicals Ltd., pursuant to a scheme of amalgamation and the merged entity, that is the
3
applicant, was named Duncan Industries Ltd.. The applicant claims that by reason of the
amalgamation, the applicant is the owner of the said Vijaywada property.
The contention of the applicant that all rights, title and interest in the Vijaywada
property stood vested in the applicant and the applicant became the owner of the said
Vijaywada property, is apparently not legally sustainable. It is well-settled that an
agreement for sale does not, in itself, confer any title to the property agreed to be sold.
An application being Company Petition No.621 of 1987 was filed under Sections
433, 434 and 439 of the Companies Act, 1956, for winding up of NTC. Diverse orders
were, from time to time, passed in the winding up proceedings. By an order dated 25 th
November, 1991, a Single Bench of this Court directed that NTC be wound up.
The order of winding up was, however, later stayed by an order dated 19 th June,
1992 and a Committee of Management was constituted to run NTC for one year, on a
temporary basis, under the Chairmanship of Mr. Mathura Nath Banerjee, Bar at Law.
By an order dated 23 rd February, 1993, of this Court, the Agarpara factory of NTC
was leased out to RDB Industries Ltd., hereinafter referred to as RDB, at a lease rent of
Rs.1.75 crores per annum.
The Committee of Management could not run NTC and accordingly, the order of
stay passed on 19 th June, 1992 stood vacated. On 29 th June, 1995 the assets and properties
4
of NTC, including the Vijaywada property, were sold in Court by public auction. The
offer of RDB of Rs.23 crores was accepted and the said assets and properties were sold to
RDB, on the terms and conditions stipulated in the order dated 29 th June, 1995. The sale
was, however subject to confirmation by this Court.
On or about 17 th December, 2002, the applicant allegedly entered into an agreement
for sale of the Vijaywada property with one Nelakuditi Muralikrishna. According to the
applicant, the purchaser has paid a part of the sale consideration to the applicant.
According to the applicant, NTC never had any right in respect of the Vijaywada
property and any interference with the right of the applicant in respect of the said property
was wrongful and illegal.
On or about 23 rd February, 2006, the applicant was served with a copy of an
application being T.No.88 of 2006 made by the respondent No.1, RDB, praying for the
following reliefs in connection with the Vijaywada property:
"(a) Leave be given to the applicant to serve copies of this application upon the respondents.
(b) Declaration that Vijaywada property also known as Bazawada property being land measuring more or less 3.50 acres with sheds and buildings lying and situates at Bhavanipuram, Vijaywada, earlier known as Bazawada, Sub Registry Bazawada now Vijaywada, District Krishna, Andhra Pradesh, Pin : 521231, Survey No.92/A/1, Assessment No.30254, presently Assessment No.90821 Municipal Ward No.31C, located on Vijaywada/Hyderabad National Highway No.9, was owned by New Tobacco Company Limited now under liquidation and was sold in 5 auction in favour of RDB Industries Ltd. in the auction sale held on 29.06.1995 before this Hon'ble Court.
(c) Sale, if any, of the said Vijaywada property as detailed in prayer (b) above by Duncan Industries Ltd. in favour of the respondent Nos.2 and 3 be or any one else be declared bad, illegal and be set aside;
(d) The respondent Nos.2 to 4 or any each one of them be restrained from dealing with and/or deposing of the said Vijaywada property as detailed in prayer (b) hereinabove in any manner whatsoever.
(e) The respondent Nos.2 to 4 and each one of them be restrained from giving effect or further effect to the purported Agreement for Sale and sale purportedly made by respondent No.4 in favour of the respondent Nos.2 and 3 in any manner whatsoever.
(f) The respondent Nos.2,3 and 4 their servants, agents, nominees, associates or assigns be directed to hand over peaceful and vacant possession of the said Vijaywada property as detailed in prayer (b) hereinabove to the applicant forthwith.
(g) Ad interim orders in terms of prayers above.
(h) Such further order or orders as your Honour may deem fit and proper."
In the said application, RDB obtained an interim order restraining the applicant from dealing with or disposing of the said Vijaywada property. Pursuant to the directions of this Court, the applicant filed its Affidavit-in-Opposition thereto. The said application is pending adjudication.
RDB brought out an application by Judges' Summons dated 17 th April, 2006 inter alia praying for an order that the sale held on 29 th June, 1995 in respect of the assets, properties, licences, goodwill, rights and privileges of NTC in liquidation, as a going concern, free from all charges and encumbrances, in favour of RDB be confirmed, and other consequential orders.
6
When the application was taken up for hearing on 19 th April, 2006, it was submitted on behalf of the United Bank of India, that United Bank of India had been paid a sum of Rs.7.55 crores in full and final settlement of its dues and had no further claims either against NTC in liquidation or against RDB.
Mr. Raj Shekhar Mantha, appearing on behalf of Andhra Bank submitted that all dues of Andhra Bank had been liquidated and that Andhra Bank had no further claim against the company in liquidation or against RDB.
Mr. Prabir Chandra Sen, appearing on behalf of RDB undertook to pay the dues of ex-workmen, who had a claim on account of their dues. There was apparently no other claim against the company in liquidation.
After hearing the Counsel appearing on behalf of the respective secured creditors, RDB, and the Joint Special Officers, this Court passed an order inter alia confirming the sale in favour of RDB.
On 26 th July, 2006, the matter was mentioned on behalf of the Official Liquidator, who submitted that the order of winding up had been stayed by an order dated 19 th June, 1992 whereby a Committee of Management had been constituted to run the company in liquidation. The assets of the company in liquidation were, therefore, not in the custody of the Official Liquidator. On the prayer of the Official Liquidator, the order dated 19th 7 April, 2006 was modified by directing that the Official Liquidator need not be a confirming party to the deed of conveyance.
The applicant has alleged that on 30 th November, 2006, one of the purchasers of the Vijaywada property, Mr. Alapati Rajendra Prasad, informed the applicant that RDB had wrongfully and illegally dealt with the Vijaywada property.
On the basis of such information, the applicant allegedly made enquiries and came to learn of the orders dated 19 th April, 2006 and 26 th July, 2006 inter alia confirming the sale of the Vijaywada property in favour of RDB or its nominee or nominees.
The applicant contends that the orders dated 19 th April, 2006 and 26 th July, 2006 have been obtained, behind the back of the applicant, without serving any copy of the application on the applicant and by suppressing the agreement for sale, pursuant to which the applicant was put in possession of the Vijaywada property.
Mr. Anindya Kr. Mitra, appearing on behalf of the applicant submitted that the winding up order having been stayed, this Court had no jurisdiction to pass any orders for sale of the properties of the company in liquidation. The orders dated 19 th April, 2006 and 26 th July, 2006 were thus without jurisdiction and liable to be recalled. 8
Mr. Mitra further submitted that the application for confirmation of sale held on 29 th June, 1995 was, in any case, barred by the laws of limitation. This Court lacked jurisdiction to pass an order on an application that was barred by limitation.
Mr. Mitra argued that the order of sale, held in June, 1995 had become stale and ceased to be operative after lapse of over 3 years. The concerned parties were required to obtain fresh orders for sale of the assets of the company, at the current market value. The valuation of 1995 could no longer be applied.
Mr. Mitra submitted that the order of sale dated 29 th June, 1995 and the order dated 19 th April, 2006 confirming the sale in favour of the respondent No.1 or its nominee were passed on the assumption that NTC was in liquidation.
Mr. Mitra submitted that the order of winding up had been stayed by an order dated 19 th June, 1992, which was still subsisting. The order of winding up was, therefore, not operative. The Official Liquidator had also not taken custody of any of the assets of the company.
On 26 th July, 2006, the Official Liquidator submitted that the order of winding up had been stayed and the Official Liquidator had nothing to do with the company in liquidation. The aforesaid submission was recorded in the order dated 26 th July, 2006. 9
Mr. Mitra pointed out that no provisional liquidator had ever been appointed in respect of the assets of the company, under Section 456 of the Companies Act, 1956. The Company Court, therefore, did not have jurisdiction under Section 457 to sell assets that were not in custodia legis. The Company Court could only sell those assets which were in the custody of the Court under Section 456 of the Companies Act, 1956.
Mr. Mitra argued that the company not being in liquidation, its assets could only be transferred by sanction of a scheme under Section 391 or 394 of the Companies Act, 1956. No proceeding under Section 391 or 394 of the Companies Act had been initiated.
In support of his submission that before a company was wound up, its assets could only be sold under Section 391 and 394 of the Companies Act, Mr. Mitra relied on the judgment of the Supreme Court in State of West Bengal vs. Pranab Kumar Sur reported in (2003) 9 SCC 490.
Mr. Mitra argued that the orders dated 29 th June, 1995, 19 th April, 2006 and 26 th July, 2006 were without jurisdiction, null and void. Mr. Mitra submitted that the initial sale order passed on 29 th June, 1995 being null and void, the subsequent orders of this Court dated 19 th April, 2006 confirming the sale as also the order dated 26 th July, 2006 were null and void.
Citing the judgment of the Supreme Court in Dwarka Prasad Agarwal (Dead) by Legal Representatives & Anr. vs. B.D. Agarwal & Ors. reported in (2003) 6 SCC 230 and 10 A.R. Antulay vs. R.S. Nayak reported in (1988) 2 SCC 602, Mr. Mitra submitted that the orders dated 19 th April, 2006 and 26 th July, 2006, passed without hearing the applicant, should be recalled.
The propositions of law laid down in the judgments in Dwarka Prasad Agarwal (supra) and in A.R. Antulay (supra) are well-settled. There can be no doubt that where the Court lacks jurisdiction to record a compromise, the order recording the compromise must be recalled, such order being without jurisdiction. There can also be do doubt that this Court has power to pass orders ex debito justitiae, and any legal wrong must be remedied.
Mr. Mitra submitted that it was the duty of this Court to recall the order dated 19 th April, 2006 and 26 th July, 2006 which had erroneously been passed on the assumption that NTC was in liquidation. The delay in drawing the attention of this Court to want of jurisdiction to pass the said orders was of no consequence. Mr. Mitra cited the judgment of the Supreme Court in Official Trustee, West Bengal & Ors. vs. Sachindra Nath Chatterjee & Anr. reported in AIR 1969 SC 823 in support of the proposition that an order without jurisdiction was null and void. Mr. Mitra also referred to the decision of this Court in Steel Construction Company Ltd. reported in 39 CWN 1259.
Mr. Mitra submitted that the order dated 19 th April, 2006 had been obtained by practising fraud upon Court. In any case, the order confirming sale in favour of the respondent No.1, ought not have been passed without first ascertaining whether RDB had paid the full purchase price of Rs.23 crores.
11
Mr. Mitra pointed out that the question of whether the respondent No.1 had paid the full purchase price was in issue in the pending application being C.A. 311 of 1997 made by RDB, where diverse orders had from time to time been passed. A report has been filed by S.R. Batliboy & Company pursuant to orders of this Court. The matter is still pending. The applicant had also filed an application being C.A. 67 of 2003 seeking orders for deletion of certain findings in the report of S.R. Batliboy & Company.
Mr. Mitra submitted that the order of His Lordship the Hon'ble Justice Sujit Sinha (As His Lordship then was), allowing payment of the price of the assets of the company at Rs.10 lakhs per month, was without jurisdiction and void.
Mr. Mitra submitted that by an order dated 23 rd February, 1994 RDB had been directed to pay lease rent at the rate of 1.65 crores per annum, for a minimum period of 3 years. Even though RDB had been in possession of the assets of the Agarpara factory, as lessee from 19 th April, 1994 till the date of confirmation of sale, only Rs.1.25 crores had been paid towards lease rent during the entire period.
Mr. Mitra submitted that until execution of the deed of conveyance, the lessee could not become the owner, and the leasehold rights would not merge with ownership rights. The liability of RDB to pay lease rent continued till execution of deed of conveyance.
12
Mr. Mitra submitted that the liability of RDB for the pre-lease period is yet to be ascertained and until the amount is ascertained, there could be no question of adjustment against purchase price.
Mr. Mitra argued that in the application being T.179 of 2006 there was no prayer for adjudication of the amount payable towards purchase price. There was no prayer for adjudication of whether purchase price had been paid, but only a prayer for execution of deed of conveyance.
Mr. Mitra emphatically argued that there could be no question of any order for execution of the deed of conveyance until and unless this Court arrived at the factual finding that the entire consideration had duly been paid.
Mr. Mitra submitted that the order dated 19 th April, 2006 had been obtained by suppressing material facts and in particular by suppressing the order of stay of winding up passed by His Lordship the Hon'ble Justice Suhas Chandra Sen on 19 th June, 1992, the order of the Hon'ble Justice G.C. Gupta directing investigation by S.R. Batliboy & Company, as also the pending application, namely, T.88 of 2006 filed by RDB with regard to sale of the Vijaywada Property and adjudication of the right of the applicant in respect of the said property.
13
Mr. Mitra submitted that of 10 pending applications only two applications, namely, C.A. No.311 of 1996 and C.A. No.658 of 2005 had been mentioned in the affidavit in support of T No.179 of 2006.
Mr. Mitra submitted that the order dated 19 th April, 2006 had been obtained without notice to the applicant, notwithstanding the fact that the claim of the applicant in respect of the Vijaywada Property, would seriously be affected. The order dated 19 th April, 2006 was not intimated to the applicant, and not even disclosed in the Affidavit-in-Reply affirmed on 21 st July, 2006 in T. No.88 of 2006.
Mr. Mitra submitted that the order dated 19 th April, 2006 which was obtained by perpetrating fraud upon Court was non est, vitiated and a nullity in the eye of law. Reference was made to the judgment in Ram Chandra Singh vs. Savitri Devi & Ors. reported in (2003) 8 SCC 319 where the Supreme Court held that a third party right could not be set at naught by a consent order and to the judgment in S.P. Chengalvaraya Naidu vs. Jagannath reported in (1994) 1 SCC 1 where the Supreme Court held that withholding of vital materials from Court tantamounted to fraud on Court.
Mr. Mitra submitted that the application for confirmation of sale was made by RDB after RDB had breached the conditions of the sale, held 11 years back. Even though in terms of the sale 15% of the purchase price, that is, Rs.3.45 crores was to be deposited within 24 hours, RDB had only deposited Rs.2 crores. Mr. Mitra submitted that the 14 balance 85% was to be paid in 10 instalments at the rate of 8.5%, that is, approximately Rs.2 crores, which RDB could not pay.
Mr. Mitra pointed out that RDB had suppressed the default clause in the order of sale of 1995, in terms whereof deposit of Rs.2 crores was liable to be forfeited, if monthly instalments were not paid.
Mr. Mitra submitted that the assets were valued at Rs.28.92 crores in 1995. By 2006, the value had appreciated substantially. Fresh advertisements were thus imperative to secure the best possible price. Two of the properties, namely, Biccavalu factory and the land at Agarpara which were the subject matter of sale in 1995 had already been sold. The adjustments purported to be made by RDB were dehors the condition of sale and without any order of Court.
Mr. Mitra submitted that in any event, the sale of assets of a company in liquidation had to be at the best available price and in the interest of the unsecured creditors of the company. A sale which is subject to confirmation of Court does not effect any sale until confirmed.
Mr. Sen, appearing on behalf of RDB, pointed out that the allegation that the winding up order had been stayed by the order dated 19 th June, 1992 was not correct. The interim order of stay was of limited duration, just as the scheme was of limited duration. 15
Mr. Sen referred to the consent decree dated 24 th January, 1995 disposing of four suits filed by UBI against the applicant wherein it is recorded that the company was in liquidation. Mr. Sen further pointed out that this Court had, by its order dated 27 th April, 1995 directed publications in leading newspapers of Delhi, Bombay, Madras, Hyderabad and Calcutta, for sale of the assets and properties of the company in liquidation, by auction on 29 th June, 1995. No one objected to such sale.
Mr. Sen submitted that on 23 rd June, 1995 the Hon'ble Division Bench directed that sale of assets of the company in liquidation should take place as scheduled, in terms of the advertisement, but not confirmed. On 29 th June, 1995 this Court recorded sale by auction of all the properties of the company in favour of RDB. On 24 th April, 1996 orders were passed by this Court for payment of remuneration, on the prayer of the Official Liquidator. Such order was passed on the basis that the company was in liquidation.
Mr. Sen submitted that the Official Liquidator was all along aware that the company was in liquidation. In its letter for direction, the Official Liquidator described the company as in liquidation.
Mr. Sen also referred to an order dated 8 th September, 1998 passed by the Division Bench comprising of the Hon'ble Justice Ruma Pal and the Hon'ble Justice Basudev Panigrahi in APO No.992 of 1993 and APO No.1082 of 1993 filed by Andhra Bank where the Division Bench recorded as follows:
"According to the Official Liquidator who is representing the respondent company (which is now in liquidation), all the powers of the 16 Official Liquidator relating to the realisation of the assets of the company in liquidation and disbursement of the same are being exercised by the Joint Special Officers appointed by the Court."
Mr. Sen also referred to the order dated 29 th September, 1999 of the Division Bench comprising of the Hon'ble Justice Ruma Pal and the Hon'ble Justice Dipak Prakas Kundu in APO No. 992 of 1993, filed by the Andhra Bank where the Division Bench recorded as follows:
"The scheme was approved on 9 th June, 1992 and the winding up order was stayed. This scheme ultimately failed. The order of winding up therefore revived. The assets of the company were put up for sale."
Mr. Sen submitted that the Official Liquidator who was present when the order dated 21 st March, 2005 was passed in C.S. No.564 of 1986, did not controvert the submission that the order directing winding up of NTC had been stayed for a year and the duration of stay had expired. The winding up order was thus in full force.
Mr. Sen cited the judgment of the Supreme Court in Andhra Bank vs. Official Liquidator & Anr. reported in AIR 2005 SC 1814, where notwithstanding the stay of winding up, the Supreme Court found that Section 529A of the Companies Act in respect of the claim of the workers of the company in liquidation for preferential payment applied, Mr. Sen argued that Section 529A of the Companies Act, 1956 was only applicable in respect of a company in liquidation. The Supreme Court, however, found that the workers of the company in liquidation could claim preferential payment even though the winding up order has been stayed.
17
Mr. Sen submitted that it was crystal clear that the order dated 19 th June, 1992 whereby the order of winding up dated 25 th November, 1991 had been stayed, stood vacated upon disposal of C.A. No.93 of 1992 by the order dated 23 rd February, 1994. Thereafter various orders had, from time to time, been passed by this Court for completion of valuation and auction or sale of the assets and the properties of the company in liquidation.
Mr. Sen submitted that the Official Liquidator had erroneously submitted that the liquidation proceedings stood stayed. In fact, the Official Liquidator had himself submitted that the company was in liquidation as recorded in the order dated 8 th September, 1998 passed by Their Lordships the Hon'ble Justice Ruma Pal and the Hon'ble Justice Basudev Panigrahi in APO No.992 of 1993.
Mr. Sen pointed out that the applicant had also accepted that the company was in liquidation and took advantage of the same as would be evident from the Memorandum of Understanding dated 27 th December, 1994 between the applicant and RDB.
Mr. Sen pointed out that acting on the basis of the Memorandum of Understanding dated 27 th December, 1994, the applicant obtained a consent decree dated 24 th January, 1995 in respect of four recovery suits filed by UBI, against the applicant. The applicant passed on liability of Rs.12.50 crores out of its decretal dues of Rs.25.50 crores to UBI on RDB. RDB agreed to the consent decree on the basis of the representations made by the applicant.
18
Mr. Sen submitted that the applicant had filed a suit against RDB in this Court being C.S. No. 189 of 1999 wherein it was pleaded that the company was in liquidation. There was no reference to any order of stay of winding up.
Mr. Sen argued that it was not permissible for the applicant to approbate and reprobate. Having taken advantage of the order of winding up and enjoyed benefits treating the company as in liquidation, the applicant was estopped from contending otherwise.
Mr. Sen questioned the locus standi of the applicant to bring out this application inter alia contending that the applicant was neither a creditor nor a contributory of the company. Mr. Sen argued that having allegedly sold the Vijaywada Property to one Nelakuditi Muralikrishna and Alapati Rajendra Prasad, the applicant has no locus standi to institute the instant application.
Mr. Sen argued that even assuming that the applicant had any interest at all, its interest was confined to the Vijaywada Property. The applicant could not claim to be a person aggrieved with regard to sale of the entire assets. The applicant could not, therefore, insist on the order dated 19 th June, 2006 being recalled in its entirety. 19
Mr. Sen pointed out that the Memorandum of Understanding between the applicant Agro Industries Ltd., predecessor in interest of the applicant and RDB inter alia provided as follows:
"Clause-X: Duncans Agro Industries Ltd. shall endeavour to hand over possession of the assets and properties of NTC at Bombay, Vijaywada presently under possession of either of them and/or their associates within a month from the date of withdrawal of the suits by the United Bank of India:
Clause-XII: Duncans Agro Industries Ltd. shall have no right, title and interest in the assets and properties of New Tobacco in any manner whatsoever inspite of making payment as indicated in I hereinabove."
The applicant is not a shareholder in the company in liquidation, nor a creditor and has no interest whatsoever in the company in liquidation. The only claim, if any, of the company is to specific performance of the alleged agreement for sale of the Vijaywada property.
It is not necessary for this Court to adjudicate the nature of the right of the applicant to the Vijaywada property, since a separate application in this regard is pending disposal.
The applicant having no interest in the company, has no locus standi to question the sale or the confirmation of the sale, except to the extent of the Vijaywada property, in respect of which the applicant claims some interest.
20
Whether the applicant, in fact, has any interest at all in the said Vijaywada property and if so, the nature and extent of the interest are issues in the pending application. The main question in this application is whether this Court had jurisdiction to pass the orders dated 19 th April, 2006 and 26 th July, 2006 of which recall has been sought.
It is not in dispute that winding up proceedings had been initiated and were pending in this Court. It is also not in dispute that the order for sale of the assets of the company had been passed way back in the year 1995 in course of winding up proceedings.
In the case of State of West Bengal vs. Pranab Kumar Sur (supra) the sale of assets was not in winding up proceedings. The Supreme Court, therefore, questioned the provision under which the order of sale was passed, affecting the rights of third parties.
Moreover, in this case, the order of winding up had been stayed only for a limited period of one year and the stay expired. This is recorded in the orders of the Division Bench referred to above. Before the assets of the company were sold in 1995, advertisements were issued in all leading newspapers. The applicant did not object to the sale, obviously because the applicant also knew that the company was in liquidation.
It is true, as argued by Mr. Mitra, that irrespective of delay, an order might be questioned as without jurisdiction at any stage. It is well-settled that an order of Court, that is, without jurisdiction is null and void and of no effect and may be challenged at any stage.
21
The question is whether the orders of this Court are without jurisdiction as argued on behalf of the applicants. The orders in question, have been attacked as without jurisdiction, on the ground of the winding up order having been stayed by an order dated 19 th June, 1992. As observed above, the stay stood vacated. The answer to the question has to be in the negative.
The orders for sale of the assets of the company were questioned in appeal. The orders of sale were not interfered with by the Division Bench. The Division Bench found that the company was in liquidation and proceeded on that basis. As a Single Bench, this Court is bound by the findings of the Division Bench.
The applicant has no interest in the company in liquidation and, therefore, has no locus standi to question the confirmation of the sale on the ground of adequacy of consideration. Whether the RDB has paid full consideration or not is also of no concern to the applicant. Be that as it may, in the Affidavit-in-Opposition details of the payments and/or adjustments made by RDB have been disclosed. RDB has apparently paid the entire consideration. The secured creditors did not oppose the confirmation of the sale. No unsecured creditor has come forward to question the orders confirming the sale.
The valuation of the assets has undoubtedly appreciated in 11 years. However, there being successive orders of Court including orders passed way back in 1999 permitting RDB to make payment of balance consideration in instalments and RDB having 22 altered its position by making large payments to liquidate the dues of the company in liquidation as well as the applicant, this Court cannot direct re-advertisement and sale of the assets at its current value by fresh auction to the highest bidder. RDB has been in possession of the assets pursuant to successive orders of Court passed from 1992-93 onwards. Moreover, no contributory or creditor has sought re-sale.
On 27 th December, 1994 a Memorandum of Understanding was executed between the applicant and RDB with regard to settlement of the claims of United Bank of India against NTC, RDB and the applicant.
The Memorandum of Understanding inter alia recorded that NTC was in liquidation. Significantly, the applicant agreed that the applicant would have no right, title or interest in the assets and properties of NTC and also agreed to endeavour to make over possession of the assets and properties of NTC at Bombay and Vijaywada to RDB within a month.
Pursuant to the aforesaid Memorandum of Understanding, four suits instituted by United Bank of India against the applicant and/or its predecessor in interest Duncan Agro Industries Ltd., were settled. The terms of settlement recorded that RDB was making payment of the balance dues of the applicant of Rs.9 crores plus interest as per the said terms of settlement with the ultimate goal of purchasing the assets and properties of NTC through the Court and in part consideration thereof.
23
In view of the order dated 8 th September, 1998 passed by the Division Bench comprising Their Lordships, the Hon'ble Justice Ruma Pal and the Hon'ble Justice Basudev Panigrahi (As Their Lordships then were) in APO 992 of 1993 and APO 1082 of 1993 and the order dated 29 th September, 1999 passed by Their Lordships, the Hon'ble Justice Ruma Pal and the Hon'ble Justice Dipak Prakash Kundu (As Their Lordships then were) in APO 992 of 1993 referred to by Mr. Sen, this Single Bench cannot but hold that the NTC was in liquidation on 29 th June, 1995 when the assets were put to sale. This Court thus had jurisdiction to pass orders of sale and also to confirm the orders of sale.
As observed above, the applicant is neither a contributory nor a shareholder of the company in liquidation and can have no interest in the sale or its confirmation, except to the extent of Vijaywada Property. The applicant cannot question the adequacy of sale consideration or invite this Court to embark upon reconciliation of accounts.
This Court, however, passed the order dated 19 th April, 2006 and 26 th July, 2006 without noticing the fact that an application being T.88 of 2006 filed by RDB with regard to sale of the Vijaywada Property and adjudication of the rights of the applicant in respect of the Vijaywada Property was still pending.
It is not necessary for this Court to go into the merits of the said application. May be, the application is without merit, as argued on behalf of RDB. The fact remains that the application being T. 88 of 2006 filed by RDB was pending. The applicant having been 24 served with the copy of the application being T.88 of 2006, the orders dated 19 th April, 2006 and 26 th July, 2006 ought not to have been obtained without notice to the applicant.
As the applicant's right, if any, is at best over the Vijaywada Property, this Court does not deem it necessary to recall the orders dated 19 th April, 2006 and 26 th July, 2006. This Court deems it appropriate to modify the orders dated 19 th April, 2006 and 26 th July, 2006 by excluding the Vijaywada Property from operation of the same.
The application is thus disposed of by modifying the orders dated 19 th April, 2006 and 26 th July, 2006 to the extent that the same shall not apply to the Vijaywada Property. It is clarified that the orders confirming the sale of the assets of the company in liquidation shall not include the Vijaywada Property.
(Indira Banerjee, J.)