Calcutta High Court
Mahendra Kumar Roongta vs The Official Liquidator on 16 March, 1995
Equivalent citations: AIR1996CAL146, (1995)2CALLT217(HC), AIR 1996 CALCUTTA 146, (1996) 1 CIVLJ 223, (1996) 1 CURCC 506, (1996) 22 CORLA 22, (1995) 4 COMLJ 527, (1995) 2 CALLT 217
ORDER
1. Two applications have been made in the above matter, the first application has been made by the Official Liquidator, inter alia, praying that the respondent purchaser that is Mahendra Kumar Roongta be directed to take over possession of the movable and immovable assets of the company in liquidation upon payment of the costs and expenses incurred by the official Liquidator from the date of sale till the date of taking over possession of the assets in question, after adjusting the apportioned value of the land measuring four kathas and nine chataks. The Official Liquidator has further prayed that in default the sale in favour of the said Mahendra Kumar Roongta be set aside and leave be given to the Official Liquidator to take steps for resale of the assets of the company (in liquidation) by forfeiting the money deposited by the respondent. The Official Liquidator has also prayed for leave to encash the sum of Rs. 9,00,000/- invested in fixed deposit with the bank and for the disbursement of the amount.
2. The second application has been made by the said Mahendra Kumar Roongta, inter alia, praying that the sale of movable and immovable assets of the company in liquidation in favour of the applicant be set aside and the Official Liquidator be directed to refund the sum of Rs. 9,00,000/- together with interest to the applicant.
3. By an order daled April 24, 1985 the company namely Lord Plastics and Glass Works Pvt. Ltd. was directed to be wound up. On 12th December, 1986 a sale notice was issued by the Official Liquidator for sale of shed, building, machinery and equipment etc. and land measuring approximately three bighas 0.8 cottachs of Lord Plastics Glass Works Pvt. Ltd. (In Liquidation) lying at Bhasa P.O. and P.S. Bishnupur District - 24 Parganas, on 19-12-86. On 19th December, 1986 an order was made by the learned Company Judge, wherefrom it appears that the said Mahendra Kumar Roongta gave an offer for Rs. 9,00,000/- which was the highest offer and the Court accepted his offer. The said Mahendra Kumar Roongta was directed to deposit 25% of the sum by 22nd December, 1986 and the balance amunt by 15th January, 1987 with the Official Liquidator. It was also directed that the matter will appear in the list on 16th January, 1987 for confirmation of sale. It is apparent that though the terms and conditions of sale required a prior deposit of 10% of the offered amount by the 18th December, 1986, the said Mahendra Kumar Roongta did not make any prior deposit as required by the terms and conditions of the sale.
4. On 16th January, 1987 an order was made by the learned Company Judge extending the time to make payment of the balance purchase price by a month from date. It was also recorded that the intending purchaser wishes to raise a boundary wall in respect of property at his own cost. It was further ordered that in the event the sale is not concluded in his favour, he will not raise any claim in respect of the expenses for that purpose. Liberty was given to the intending purchaser to raise the boundary wall in the presence of the representative of the Official Liquidator. It appears from the annexure to the affidavit affirmed on behalf of the Official Liquidator that on 20th February, 1987 the Official Liquidator wrote a letter to the Officer-in-Charge, Bishnupur Police Station, inter alia, stating that liberty had been given by Court to the purchaser, Mahendra Kumar Roongta, to raise boundary wall on his own cost. It was further stated in the said letter that it was reported that Mr. Nur Mohammad was creating obstruction at the time of erecting the boundary wall of the land of the company in liquidation and that complaint had been lodged at the police station on 8th February, 1987. It was also stated that on 17th February, 1987 the Hon'ble Court had given leave to the Official Liquidator to seek police help if there is any resistance from the local inhabitants at the time of raising boundary wall of the premises of the company (in liquidation).
5. It is apparent from the aforesaid fact that by the order dated 19th December, 1986 it was directed that the matter will appear in the list on 16th January, 1987 for confirma-
tion of sale. The order dated 16th January, 1987 gave liberty to the intending purchaser to raise a boundary wall in the presence of the representative of the Official Liquidator. The said order referred to the said Roongta as intending purchaser who wishes to raise a boundary wall in respect of the property at his own cost. The said order provided that in the event the sale is not concluded in his favour, he.will not raise any claim in respect of the expenses for raising of the boundary wall. The said order for construction of wall has apparently been made before the confirmation of sale as envisaged by order dated 19th December, 1986 or conclusion of sale as envisaged by order dated 16th January, 1987.
6. It is also apparent that on 8th February, 1987 attempts were made for construction of the wall but obstructions were created by Nur Mohammad and a police diary was lodged on that day. On 17th February, 1987 leave was given to the Official Liquidator to seek police help if there is any resistance from the local inhabitants at the time of raising boundary wall of the premises of the company.
7. It appears from paragraph 9 of the affidavit affirmed by Biman Behari Chow-dhury on 18-1-94 that on 28-4-87 a Judges Summons supported by an affidavit affirmed by Nur Mohammad Mondal was taken out on behalf Nur Mohammad Mondal. The prayers in the said Judge's summons were inter-alia to the effect that the Title Suit No. 2 of 1980 pending in the Court of 6th Munsif at Alipore be transferred to this Court; leave be given to proceed with the said suit; leave to implead the Official Liquidator as party defendant in the said Title Suit No. 2 of 1980 substituting the company in liquidation. Prayers (d) and (e) of the said summons taken out on behalf of the said Noor Mohammad Mondal were as follows:--
"(d) Order of injunction be passed restraining the Official Liquidator and/or his servants and/or agents and/or any other persons claiming under him to sell and/or alienate and/ or transfer and/ or deal with the said land being Plot 'B' herein without making any right of way for the Applicant to and from the said land being Plot 'A' herein from the main road i.e. Diamond Harbour Road;
(e) An order of injunction be passed restraining Official Liquidator and/or his servants and/or agents and/or any other persons claiming under him from constructing any boundary wall either Kutcha or Pucca on the said plot of land being Plot 'B' without making any right of way for the Applicant to and from the said plot being Plot - A herein from the main road. Diamond Harbour Road.
8. On 9-6-87 the learned Company Judge on the said application of Noor Md. Mondal passed in order in terms of prayers (c) and (d) of the Judge's Summons.
9. From the said affidavit affirmed by Biman Behari Choudhury on 18-1-94 it appears that on 3-6-87 an application was moved on behalf of the respondent Mahendra Kumar Roongta inter alia praying for the following reliefs:
"(a) The Officer-in-Charge, Bishnupur Police Station, District - 24 Parganas and the Official Liquidator be directed to comply with the order dated February 17, 1987 by forthwith deputing police personnel to ensure that there is no obstruction or hindrance to the raising of a boundary wall at the land situate and lying a Bhasa, P.O. Bishnupur, District - 24 Parganas being the subject matter of the sale notice Annexure "A" to the affidavit.
(b) The Official Liquidator be directed to appoint a Suveyor for the purpose of measuring the land being the subject matter of the sale notice Annexure "A" to the affidavit and to submit a report to this Hon'ble Court;
(c) An order directing Official Liquidator to refund to the Applicant such sum and/or sums of money as may be found to be representing the difference in the measurement of land between the sale notice and the report to be submitted by the Official Liquidator;
(d) Alternatively, the sale in favour of the Applicant be set aside and the Official Liquidator be directed to refund a sum of Rs. 9.00 Lakhs together with interest thereon at the rate of 18% per annum to the Applicant;
(e) The Official Liquidator be directed to deposit a sum of Rs. 9 lakhs together with interest thereon at the rate of 18% per annum as on May 15, 1987 in a fixed deposit free from lien and subject to further order of this Hon'ble Court;
(f) Injunction restraining the Official Liquidator from disbursing any sum from the amount received from the Applicant as and by way of consideration of the sale;"
10. Pursuant to the aforesaid application of Mahendra Kumar Roongta an order was made on 3-6-87 giving directions for filing affidavits. An interim order was also made on the said date inter-alia, to the following effect:
"In the meantime the Official Liquidator is directed to deposit 9,00,000/- (Nine Lakhs rupees) in Fixed Deposit account at the highest rate of interest payable with the nationalised bank subject to further orders of this Court. There will be an order in terms of prayers (a) and (b). The Official Liquidator will appoint a suveryor at the cost of the petitioner within a week from date and the report of the surveyor is to be furnished by 2-7-87. Fees of the suveryor and all costs to be incurred for the purpose of survey will be paid by the petitioner. The petitioner has submitted that there is a dispute as regards measurement of the land in question.".
11. It appears therefore that on the one hand Mahendra Kumar Roongta obtained an order against the Official Liquidator and the police for compliance with the order dated 17-2-87 in the matter of construction of the boundary wall, on 3-6-87 and on the other hand Noor Md. Mondal had obtained an order of injunction against the Official Liquidator on 9th June, 1987 restraining him from constructing any boundary wall without making any right of way for the applicant Noor Md. Mondal from his land as mentioned in his affidavit to and from the main road i.e. Diamond Harbour Road.
12. From the minutes of the Official Liquidator dated 7-1-88 as annexed to the affidavit of Biman Behari Chowdhury affirmed on 8-7-94 it appears that the portion of the wall was found to be broken. The minutes also recorded that the boundary wall will be constructed as soon as the dates will be intimated by the purchaser.
13. On 23-2-88 the Official Liquidator wrote a letter to Sri Mahendra Kumar Roongta inter alia -- to fix up a suitable date in regard to the construction of the boundary wall and simultaneously to take over the possession of the assets of the Company in Liquidation.
14. On 10th March, 1988 the purchasers Advocate wrote to the Official Liquidator that he had not been informed officially when the Official Liquidator was agreeable to render assistance to the purchaser for the purpose of raising the boundary wall.
15. On 30-7-88 the Advocate on behalf of Roongta wrote to the Official Liquidator inter-alia to the effect that his client had completed the boundary wall at his own costs with great difficulties faced by the local antisocial elements. In spite of the erection of the boundary wall one portion of the wall was broken by one Noor Md. Mondal and his associates. It was also mentioned that the said boundary wall was still wall, on 3-6-87 and on the other hand Noor Md. Mondal had obtained an order of injunction against the Official Liquidator on 9th June, 1987 restraining him from constructing any boundary wall without making any right of way for the applicant Noor Md. Mondal from his land as mentioned in his affidavit to and from the main road i.e. Diamond Harbour Road.
16. From the minutes of the Official Liquidator dated 7-1-88 as annexed to the affidavit of Biman Behari Chowdhury affirmed on 8-7-94 it appears that the portion of the wall was found to be broken. The minutes also recorded that the boundary wall will be constructed as soon as the dates will be intimated by the purchaser.
17. On 23-2-88 the Official Liquidator wrote a letter to Sri Mahendra Kumar Roongta inter alia-to fix up a suitable date in regard to the construction of the boundary wall and simultaneously to take over the possession of the assets of the Company in Liquidation.
18. On 10th March, 1988 the purchasers Advocate wrote to the Official Liquidator that he had not been informed officially when the Official Liquidator was agreeable to render assistance to the purchaser for the purpose of raising the boundary wall.
19. On 30-7-88 the Advocate on behalf of Roongta wrote to the Official Liquidator inter-alia to the effect that his client had completed the boundary wall at his own costs with great difficulties faced by the local antisocial elements. In spite of the erection of the boundary wall one portion of the wall was broken by one Noor Md. Mondal and his associates. It was also mentioned that the said boundary wall was still less than the measurement as given in the sale notice. The measurement given in the sale notice was 3 Bighas and 0.8 Cuttahs the prayer of the Official Liquidator is for taking delivery of less area of land to the extent as aforesaid.
20. It has also been submitted on behalf of the Official Liquidator that sale was in terms of the terms and conditions of sale which, inter alia, provides that the sale will be as per the inventory on 'as is where is and whatever there is' basis and subject to confirmation by the Court. It is difficult for this Court to accept that the orders made by the Court before confirmation of sale i.e. the orders dated 19-12-86 and 16-1-87 were not binding or were not intended to be carried out before delivery and completion of sale. Furthermore, and in any event the orders made before confirmation of sale or even thereafter wi!l override the terms and conditions of sale in so far as provided by the order.
21. It is now being submitted on behalf of the Official Liquidator that the purchaser is bound to take symbolic possession of land in question even without the boundary wall being completed in the portion where right of passage is claimed by the said Noor Md. Mondal. It is to be remembered that the case made out by the Official Liquidator in the affidavits as aforesaid is that Noor. Md. Mondal had obtained an order of injunction against the official liquidator on 9-6-87. The further submission on behalf of the Official Liquidator is that so far as the shortage in measurement of the land as per the surveyors report is concerned, the Official Liquidator is prepared to give rebate in price of the land to the extent of short fall in the measurement of the land and the price of Rs. 9 lakhs may be directed to be reduced to the extent of the shortfall.
22. Theorderdated 19-12-86 records the acceptance of the offer of Mahendra Kumar Roongta. However, the offer of Roongta was made in Court and not in terms of the terms and conditions of sale by making a prior offer in writing and by depositing 10% of the amount, as envisaged in the terms and conditions of sale. The order dated 19-12-86 inter-alia directed Mahendra Kumar Roongta to deposit 25% of the offered amount by 22-12-86 and the balance amount by 15-1-87. By the said order the matter was directed to appear in the list on 16-1-87 for confirmation of sale.
23. On 16-1-87 no confirmation of sale was made out as it appears from the order dated 16-1-87 that at the prayer of the intending purchaser liberty was given to the intending purchaser to raise a boundary wall in the presence of the representatives of the official liquidator. The said order also directed that in the event the sale is not concluded in favour of the intending purchaser, he will not raise any claim in respect of the expenses for that purpose.
24. So far as the power of the Court to set aside the sale is concerned it is to be noted that Clause 11 of the terms and conditions of sale provides as follows:
"11. The High Court may set aside the sale in favour of the purchaser/ purchasers even after the sale is confirmed and the purchase consideration is paid on such terms and condition as the Court may deem fit and proper in the interest and benefit of the creditors, contributories and all concerned and/or public interest."
25. So far as the purchaser is concerned, he had deposited the entire purchase price of Rs. 9 lakhs and there could be no earthly reason for him not to take possession of the assets and/ or to complete the sale.
26. On the date when the sale was held neither the Official Liquidator nor the purchaser knew about the pending suit instituted by Noor Md. Mondal in 1980. The said suit instituted by Noor Md, Mondal was directed to be transferred to this Court by order dated 22-3-90.
27. At the time of hearing of these applications, it was submitted on behalf of the said Noor Md. Mondal that the number of the title suit as mentioned in the order for transfer was not correct with regard to the year of the institution of the suit and as such the records of the suit have not yet come to this Court. Noor Md. Mondal has not yet taken any steps to get the mistake corrected. He is probably not interested in doing so. The Official Liquidator could possibly apply for revocation of the leave to proceed with the suit and/or vacating of orders obtained by Mondal, if the suit itself is not traceable as per particulars given by Noor Md. Mondal The fact remains that in spite of the order dated 22-3-90 the suit as per particulars given by Noor Md. Mondal and as ordered by this Court to be transferred is not traceable nor records have come to this Court.
28. There is no affidavit on record before this Court from which the correct number of the Title Suit instituted by Noor Md. Mondal can be ascertained at this stage. However, submissions have been made on behalf of Noor Md. Mondal, that the records of the suit have not yet come to this court as the number of the suit as to year is not correct.
29. From the facts aforesaid and the orders made by this court from time to time it is quite clear that the boundary wall could not be completed in the portion where Nur Mohammad Mondal has been claiming the right of way. The purchaser did complete the wall under police help but the same was broken at the instance of the said Noor Md. Mondal and it still remains incomplete. There is an order of injunction against the Official Liquidator dated 9-6-87 as mentioned here-in above. The second fact to be taken into consideration is that the land was found to be short by 4 cottahs 9 chittacks then as mentioned in the said notice.
30. It has been submitted on behalf of the purchaser that both the Official Liquidator as also the said purchaser acted under a mistake as to matters of fact essential to the agreement and the agreement if any is void.
31. In this connection the purchaser placed reliance on Section 20 of the Contract Act. Even when orders were made by this Court on 19th December, 1986 and 16th January, 1987 neither the Official Liquidator nor the purchaser were aware about the pending litigation and the claims made by Noor Md. Mondal in respect of a portion of the land. Furthermore, neither the Official Liquidator nor the purchaser was aware with regard to the correct area of the land aforesaid. It was on 8th February, 1987 that it was discovered for the first time that there was resistance by Noor Mohammad Mondal in construction of boundary wall in respect of a portion of land. The court before any confirmation of the sale or conclusion of sale gave liberty to the purchaser to build boundary wall around the property of the company (In Liquidation). The boundary wall was in fact constructed once at the cost of the purchaser but the same was broken at the instance of Nur Mohammad Mondal or his supporters and the same remains incomplete in spite of repeated orders of this Court including those for police help. Furthermore on 9-6-87, Noor Md. Mondal obtained order of injunction as aforesaid and probably it may not be possible to construct the boundary wall, in view of the said order. The area of the land has turned out to be 4 Khattas 9 Chittakas short than what was advertised for sale.
32. Relying on Section 65 of the Contract Act it has been submitted on bahalf of the purchaser that when an agreement is discovered to be void any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for the same to the person from whom he received it.
33. The offer of the purchaser was for a consolidated sum of Rs. 9 lakhs. It has been submitted on behalf of the Official Liquidator that the Official Liquidator is prepared to give a reduction in price to the extent of the shortage in the area of the land. However, it is difficult to assess as to what value the purchaser intended to give to the land and what price as to the shortfall in land can be fixed.
34. The Official Liquidator has also inter-alia prayed that the sale in favour of the purchaser be set aside and leave be given to the Official Liquidator to take steps for resale of the assets of the Company by forfeiting the money deposited by the respondent. The purchaser has also prayed for of the setting aside of sale but he prays that the sum of Rs. 9 lakhs with interest from the date as it was directed to be deposited by the order dated 3rd June, 1987 be directed to be refunded to the purchaser.
35. It is difficult to comprehend that a purchaser who has deposited the entire purchase price intended to purchase a land a portion whereof is subject matter of litigation. It is also difficult to comprehend that if the purchaser would have known about the pending litigation and or the claim of Noor Md. Mondal then also he would have made a similar offer. The order dated 16-1-87, also shows that the court comprehended actual physical possession of land with boundary wall. If the Official Liquidator is unable to give actual physical possession of the entire land, he cannot say that the purchaser should he satisfied with symbolical possession only. It is also not fit and proper that the purchaser should be directed to accept the land even if it is found to be short by 4 Kahhahs 9 Chittakas.
36. In a sale held by or under the supervision of the Court, the Court must see that no injustice is done to the purchaser simply because he has deposited the entire purchase price. From the various orders as mentioned above, it is apparent that what the Court thought of was the making over of actual physical possession. The direction for constructing the wall around the property was to see that actual physical possession is handed over to the purchaser. The order dated 9th June, 1987 obtained by Noor Md. Mondal against the Official Liquidator restraining the Official Liquidator from selling and/or alienating and/or transferring the said land without making any right of way for Noor Md. Mondal to and from his land from Diamond Harbour Road, puts a disability on the official liquidator to allow the wall to be constructed. The suit instituted by Noor Md. Mondal is still pending. The property was directed to be surveyed by this Court at the prayer of the purchaser and it was discovered subsequent to the orders dated 19-12-86 and 16-1-87 that land was short by 4 Khattas 9 Chittakas.
37. The question is, should the purchaser be required to complete the sale in spite of the fact that neither the Official Liquidator nor the purchaser knew about the aforesaid pending litigation prior to the date of sale and should the purchaser be directed to accept the land even where no physical possession of the entire land can be given and where the land itself is found to be short as aforesaid. The aforesaid claims of Noor Md. Mondal the inability of the Official Liquidator to make over the physical possession of the land in its entirety and the shortage of land have come into light after the date when the offer was made and the offer was accepted by this Court. Even the Court was not made aware of the aforesaid facts at the relevant time.
38. In the facts and circumstance of this case I am of the view that the purchaser is at no fault and that he is well within his rights to claim refund of the money along with the interest accrued due thereon from the date when the fixed deposit was made pursuant to order dated 3rd June, 1987 as obtained by the purchaser. Even on 3rd June, 1987 the purchaser had prayed for setting aside of the sale. The said application, I am told is still pending and remains undisposed.
39. No boundary wall could be built around the land as directed by this Court even before the sale was confirmed. No order, of course, has been placed before me that the sale was in fact confirmed after 16th January, 1987. However, even assuming that it was confirmed.
40. I am of the view that in the facts and circumstances of this case the sale should be set aside and the purchaser is entitled to refund of the amount.
41. There will, therefore, be an order that the sale of movable and immovable assets of Lord Plastics & Glass Works (P) Limited (In Liquidation) in favour of the applicant Mahendra Kumar Roongta is set aside and the Official Liquidator is hereby directed to refund the sum of Rs. 9 lakhs along with all accrued interest thereon in the fixed deposits made in pursuance to and as directed by the order dated 3rd June, 1987. The Official Liquidator is directed to encash all the Fixed Deposits in respect of the said sum of Rs. 9 lakhs along with accrued interest thereon and to refund the said amount of Rs. 9 lakhs lying in Fixed Deposit along with accrued interest thereon to Mahendra Kumar Roongta within a period of a three weeks from the date a signed copy of the operative portion of this order is received by him or is served upon him.
42. The Official Liquidator will be at liberty to make premature encashment of such fixed deposits to give effect to this order. The Official Liquidator is directed to take steps for re-sale of the assets of the company (In Liqun) by disclosing the claims and contentions of Nur Md. Mondal in respect of portion of the said land and by disclosing the area of the said land as per the report of the Surveyor appointed pursuant to the orders of this court as mentioned here-in-above. Both the application made by the Official Liquidator pursuant to the summons dated 19th January, 1994 as also the applications made on behalf of Mahendra Kumar Roongta pursuant to the summons dated 19th April, 1994 are disposed of by this order.
43. All parties and the Official Liquidator as also the concerned banks where such deposits are held to act on a signed copy of the operative portion of this judgment, and order.
44. Order accordingly.