Kerala High Court
Asian Steel Traders vs Official Liquidator on 2 May, 2025
Author: T.R. Ravi
Bench: T.R. Ravi
Company Application No.86 of 2022
2025:KER:33404
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
(Original Jurisdiction)
In the matter of the Companies Act, 1956
and
In the matter of M/s Premier Cable Company Limited.
Co.Appl. No.86/2022 in Co.Pet. No.02/1996
Before:
The Honourable Mr.Justice T.R. Ravi.
Friday , the 2nd day of May 2025 / 12th Vaisakha ,1947
Applicant
Asian Steel Traders , No 22/58 , Kalyana Sundaram Street,
Kathuribai Nagar, West Tambaram, Chennai - 600 045
represeted by its Proprietor , M.A. Khadar Mohideen
Respondent
Official Liquidator,
High Court of Kerala, Company Law Bhavan,
B.M.C. Road , Thrikkakara Post , Kakkanad - 682021
Additional R2 and R3 impleaded
Addl.R2 : UCO Bank ,
Main Branch , Tambu Chetty Street,
Chennai - 600 001
represented by its Manager
(Addl. R2 impleaded as per order dated 20/06/2023 in Others 1/23 in CA
86/22 in CP 2/96)
Company Application No.86 of 2022
2025:KER:33404
2
Addl.R3: UCO Bank, Ernakulam Main Branch
Kaveri Building, Cloth Bazar Road,
Ernakulam , 682031
( Addl. R3 impleaded as per order dated 31/7/2023 in Co. Appl 2/2023
in Co. Appl. 86/22 in CP No. 2/96)
Company Application under Rules 308 and 309 read with Rule 9 of the
Companies (Court) Rules, 1989 filed by the applicant above named praying for an
order that the court may be pleased to grant the following reliefs ;
A. Set aside the sale conducted pursuant to Annexure - A
B. Set aside Annexure - I
C. Direct the Official Liquidator to refund the amount remitted by the Applicant
towards sale consideration deposited as per Annexure -E
D. Award the Applicant the cost of this Application
This Company Application coming on for orders on this day upon hearing Sri
P.B. Krishnan (Sr), Sri P.B. Subramanyan, Sri Sabu George and Sri Manu Vyasan
Peter, Advocates for the applicant ,Sri.K.Moni, Standing Counsel for the Official
Liquidator and Sri H.Ramanan, Advocate for UCO bank,the court passed the
following :-
Company Application No.86 of 2022
2025:KER:33404
3
"CR"
T.R. RAVI, J.
--------------------------------------------
Company Application No.86 of 2022
in
C.P.No.2 of 1996
--------------------------------------------
Dated this the 2nd day of May, 2025
ORDER
The prayer in this application is to set aside the sale conducted under Annexure A tender notification, to set aside the rejection of the request as per Annexure I, and for a direction to the Official Liquidator to refund the amounts deposited by the applicant towards sale consideration as per Annexure E.
2. The 1st respondent issued Annexure A notification inviting sealed tenders for purchasing Copper Ingots (5670 KG) belonging to M/s.Premier Cable Company Ltd. (in liquidation), kept in the main office building of UCO Bank, Chennai Main Branch, Tambu Chetty Street, Chennai, on an "as is where is and whatever there is"
Company Application No.86 of 2022 2025:KER:33404 4 condition. The 1st respondent had also specified the terms and conditions of sale of movable assets of the Company in Company Petition No.2 of 1996, published on 1.6.2022, a true copy of which has been produced as Annexure B. The applicant participated in the tender and was the successful bidder. He deposited the entire sale consideration. Annexure C is the temporary receipt issued on 22.6.2022, evidencing the remittance of the amount. Annexure D is the communication dated 22.7.2022 issued by the Official Liquidator to the applicant, and Annexure E is the receipt issued for Rs.32,51,800/- paid vide demand draft dated 4.8.2022. The 1 st respondent sent Annexure F letter dated 18.8.2022 directing the applicant to be present on 22.8.2022, for receiving the Copper Ingots. On 22.8.2022, when the goods were tested, it was noted that they were obsolete lead scrap and not copper. Annexure G is the mahazar.
3. Since the materials that were available to be delivered were not consistent with what had been advertised for sale, the applicant demanded a refund of the amount. Annexure H is the request made by the applicant to the Official Liquidator. However, by Annexure I letter dated 22.9.2022, the 1 st respondent directed Company Application No.86 of 2022 2025:KER:33404 5 the applicant to take delivery of the assets, stating that the sale was on an "as is where is and whatever there is" condition, made on the assumption that the tenderers have inspected the assets and know what they are tendering for. It was contended that the principle of Caveat Emptor will apply and no complaint of any defect or a default in the said properties, or any claim thereon, for the reason of any error or fault in the description or deficiency in the particulars thereof shall be entertained. The applicant has hence preferred this application.
4. Heard Sri P.B.Krishnan, Senior Advocate instructed by Sri Sabu George on behalf of the applicant, Sri K.Mony, Standing Counsel for the 1st respondent and Sri H.Ramanan, Counsel for Bank.
5. The Senior Counsel appearing for the applicant submitted that the Company in liquidation was wound up vide order dated 18.6.1998. It is submitted that there were 8 bidders and the applicant's bid was found to be the highest. It is stated that the 3 rd respondent ascertained the value, purity, and weight of the assets on the request of the 1 st respondent. The valuation report obtained Company Application No.86 of 2022 2025:KER:33404 6 has been produced as Annexure R2. Annexure R2 shows that the total weight of ingots was 4796.10 KG, which was 873.9 KG less, and the realizable value and the liquidation value of the Cu Alloy ingots based on the test result were stated to be Rs.26,40,294/- and Rs.20,84,443/- respectively. A Copy of the tender proceedings has been produced as Annexure R3. It is submitted that all the bidders included in Annexure R3 submitted quotations after inspecting the Copper Ingots put for sale.
6. The additional 3rd respondent has filed a counter-affidavit stating that the applicant had inspected the asset on 22.6.2022. It is contended that the principle of Caveat Emptor will apply, and that the sale was on an "as is where is and whatever there is" condition.
7. The Senior Counsel pointed out that Annexure R2 would show that the item valued was Copper Alloy Ingots. Annexure R2 states that the purpose of the inspection was to assess the value of Copper Alloy Ingots. Annexure R2 states the method adopted for estimating the value of ingots. The report in para.4 says about the limitations of the test in the following manner:
Company Application No.86 of 2022 2025:KER:33404 7 "4. LIMITATION l totally relied upon the Chemical Analysis test results for determine the Quality and Grade of the Cu Alloy I employed 3 Nos. of unskilled labours along with 300 kg Electronic Scale for Weighment of the Ingots Due to Space constraint the Lot "A" were not Physically Weighed, the Weighment written on the Ingots are assumed to be the Actual Weight.
However, while Liquidating the weighment should be made in external weighment Souce which were Authorised with Appropriate Weighment limit and Accuracy."
8. The counsel pointed out that the bidders were not afforded the facility to test the purity of the ingots or whether the products were copper ingots as generally understood. Reference was made to the dictum in United Bank of India v. Official Liquidator & Ors. [(1994) 1 SCC 575], wherein it was held that, in a sale of assets of the company in liquidation by the Official Liquidator on "as is where is" basis, any mistake in the notice inviting tender will not vitiate the sale. The Senior Counsel also referred to the decision of a Division Bench judgment of the Madras High Court in TCI Distribution Centres Ltd. v. The Official Company Application No.86 of 2022 2025:KER:33404 8 Liquidator and Ors. [2009 SCC OnLine Mad. 1481]. The Division Bench held that the dictum in United Bank of India (supra) cannot be extended to a case where the vendor did not have title to the property. The Division Bench was considering a case where the descriptions in the sale notice were erroneous. The Court held that the act of the Official Liquidator in misdescribing a property can neither be ratified nor sanctified on the ground that he was only an instrument in the hands of the Court, in making the auction sale. The Court held that where material irregularities go to the root of the sale effected by the Official Liquidator, such a sale cannot be sustained, and should be set aside by invoking inherent powers conferred under Rule 9 of the Company Court Rules, 1959.
9. The Senior Counsel relied on the decision of a Division Bench of the Madras High Court in Sorabji Hormusha Joshi and Co. v. V. M. Ismail & Anr. [AIR 1960 Mad. 520] which considered the effect of Section 16 of the Sale of Goods Act. The Division Bench distinguished between "patent defects" and "latent defects", to hold that patent defects are those which can be found on examination by a person of ordinary prudence with the exercise of due care and attention, while latent defects are those which Company Application No.86 of 2022 2025:KER:33404 9 cannot be discovered on such examination. The Court further held that there is an implied condition on the seller's part that the goods are free from latent defects. The Senior Counsel submitted that, in the case on hand, the defects are latent and not patent defects, which could have been identified on mere inspection of the property. The Madras High Court had relied on the judgment of a Division Bench of the Calcutta High Court in G. McKenzie and Co. v. Nagendra Nath Mahalanabis [1945 SCC Online Cal. 24] which dealt with patent defects and latent defects and held that a subsequent discovery of a latent defect may bring the case under Section 16 of the Sale of Goods Act, as a breach of implied condition of merchantability. The Standing Counsel for the 3 rd respondent reiterated their contention that the sale cannot be avoided since it was a sale on "as is where is and whatever there is" condition.
10. CONSIDERATION:
"As is where is and whatever there is" and "caveat emptor"
The implication of the expression "as is where is and whatever there is" was considered by a Three-Judge bench of the Hon'ble Supreme Court in K.C. Ninan v. Kerala SEB, [(2023) 14 SCC 431]. Paragraphs 143 to 148 of the judgment are extracted below:
Company Application No.86 of 2022 2025:KER:33404 10 "143. Thus, the implication of the expression "as-is-where-
is" or "as-is-what-is basis" or "as-is-where-is, whatever- there-is and without recourse basis" is not limited to the physical condition of the property, but extends to the condition of the title of the property and the extent and state of whatever claims, rights and dues affect the property, unless stated otherwise in the contract. The implication of the expression is that every intending bidder is put on notice that the seller does not undertake any responsibility to procure permission in respect of the property offered for sale or any liability for the payment of dues, like water/service charges, electricity dues for power connection and taxes of the local authorities, among others.
144. The view which we take finds support in the judgments of this Court in Paramount Polymers [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., (2006) 13 SCC 101 : AIR 2007 SC 2] and Srigdhaa Beverages [Telangana State Southern Power Distribution Co. Ltd. v. Srigdhaa Beverages, (2020) 6 SCC 404 : (2020) 3 SCC (Civ) 748] . In Paramount Polymers [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., (2006) 13 SCC 101 : AIR 2007 SC 2] , the premises of the erstwhile owner were sold under the State Financial Corporations Act, 1951 on an "as-is-where-is" basis. This Court held that an auction-purchaser cannot be considered an ignorant party and a reasonable enquiry would have put it on notice of the subsistence of such a liability. It was observed : (Paramount Polymers case [Dakshin Haryana Bijli Company Application No.86 of 2022 2025:KER:33404 11 Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., (2006) 13 SCC 101 : AIR 2007 SC 2] , SCC p. 109, para 11) "11. ... Before submitting its bid to the Financial Corporation the first respondent would certainly have inspected the premises and could have come to know that power connection to the premises had been snapped and this information should have put it on reasonable enquiry about the reasons for the power disconnection leading to the information that the previous owner of the undertaking or consumer was in default.
Moreover, the appellant had clearly written to the Financial Corporation even before the sale was advertised by it, informing it that a sum of Rs 64,23,695 was due towards electricity charges to the appellant and when selling the undertaking, that amount had to be provided for or kept in mind. Therefore, any reasonable enquiry by the first respondent as a prudent buyer would have put it on notice of the subsistence of such a liability. The sale was also on "as-is-where-is basis"."
145. In Srigdhaa Beverages [Telangana State Southern Power Distribution Co. Ltd. v. Srigdhaa Beverages, (2020) 6 SCC 404 : (2020) 3 SCC (Civ) 748] , this Court was considering an auction-sale under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("the SARFAESI Act"). The Court Company Application No.86 of 2022 2025:KER:33404 12 analysed Clauses 24 and 26 of the auction-notice, which stipulated an "as-is-where-is" sale with respect to all statutory dues and absolved the authorised officer of all liabilities for any charge, encumbrances and dues, including electricity dues. It concluded that the auction-purchaser was "clearly put to notice" since there was a specific mention of the quantification of dues of various accounts including electricity dues. On the liability of the past owners to bear electricity dues when the sale is on "as-is-where-is" and existence of electricity dues is specifically mentioned, this Court categorically held that the auction-purchasers were bound to inspect the premises and provide for the dues in all respects. This Court observed : (SCC p. 410, para 16.2) "16.2. Where, as in cases of the e-auction-notice in question, the existence of electricity dues, whether quantified or not, has been specifically mentioned as a liability of the purchaser and the sale is on "AS-IS-WHERE-IS, WHATEVER-THERE-IS AND WITHOUT RECOURSE BASIS", there can be no doubt that the liability to pay electricity dues exists on the respondent (purchaser)."
146. To conclude, all prospective auction-purchasers are put on notice of the liability to pay the pending dues when an appropriate "as-is-where-is" clause is incorporated in the auction-sale agreement. It is for the intending auction- purchaser to satisfy themselves in all respects about circumstances such as title, encumbrances and pending statutory dues in respect of the property they propose to purchase. In a public auction-sale, auction-purchasers have Company Application No.86 of 2022 2025:KER:33404 13 the opportunity to inspect the premises and ascertain the facilities available, including whether electricity is supplied to the premises. Information about the disconnection of power is easily discoverable with due diligence, which puts a prudent auction-purchaser on a reasonable enquiry about the reasons for the disconnection. When electricity supply to a premises has been disconnected, it would be implausible for the purchaser to assert that they were oblivious of the existence of outstanding electricity dues.
147. In terms of the legal doctrine of caveat emptor, it becomes the duty of the buyer to exercise due diligence. A seller is not under an obligation to disclose patent defects of which a buyer has actual or constructive notice in terms of Section 3 of the Transfer of Property Act, 1882. However, in terms of Section 55(1)(a), in the absence of a contract to the contrary, the seller is under an obligation to disclose material defects in the property or in the seller's title thereto of which he is aware and which a buyer could not with ordinary care discover for himself.
148. While examining the effect of an "as-is-where-is"
clause, the facts and circumstances of each case individually, along with the terminology of the clauses governing the auction-sales must be taken into consideration, to arrive at an equitable decision.
11. The following principles emerge from the above decision. Company Application No.86 of 2022 2025:KER:33404 14
(a) The seller did not have a duty to disclose patent defects of which the buyer has actual or constructive notice.
(b) The seller must disclose the defects in the property or in his title, which the buyer cannot with ordinary care discover for himself, in the absence of a contract to the contrary.
(c) The terminology used in the clauses in the auction sales notification has to be considered while examining the effect of an "as is where is" clause.
12. Caveat Emptor is the general rule applicable to the sale of goods. Unless there is an express or implied condition or warranty regarding the quality of the goods or there is fraud, the buyer must exercise proper caution. Let us examine the extent to which the buyer should exercise caution in an auction sale, where goods are sold by description, and the auction notification contains an "as is where is and whatever there is" clause.
13. In the Tenth Edition of Brooms Legal Maxims, at page 536, the author has states as follows:
Company Application No.86 of 2022 2025:KER:33404 15 "Sale by description:
1. Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description. If the sale be by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample, if the goods do not also correspond with the description. With this rule, that where the sale is not merely a sale of a specific article, but is a sale of an article by description, the article must answer to that description, we may compare the statement of the civil law, si aes pro auro veneat, non valet: aliter atque si aurum quidem fuerit, deterius autem quam emptor existimarit: tunc enim emptio valet . Generally, if the article tendered agrees, in its nature, with the description, the buyer takes the risk as to its quality; and in this respect there appears to be no difference between a sale of victuals and a sale of any other commodity. There can be no implied warranty as to quality, unless the case falls within one of the classes of cases next to be mentioned."
14. In the case at hand, the description of the goods in the Annexure A auction notification is "Copper ingots". Admittedly, the goods turned out to be "copper alloy ingots". Pure copper and copper alloys are different commercial metals that have different qualities and uses. Hence, the articles available at the site did not answer the description in Annexure A. It is not a case where the article lacked quality, in which case caveat emptor will apply, and Company Application No.86 of 2022 2025:KER:33404 16 the purchaser will have to bear the consequences of the defect in quality. Even if it is to be assumed that the copper ingots and copper alloy ingots are not materially different and the description cannot be faulted, before mulcting the purchaser with the liability to take a defective article by applying the condition "as is where is and whatever there is", it has to be examined whether the issue comes within the purview of Sections 15 and 16 of the Sale of Goods Act which read as follows:
"15. Sale by description.--Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.
16. Implied conditions as to quality or fitness.--Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:--
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to Company Application No.86 of 2022 2025:KER:33404 17 supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose:
Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.
(2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality:
Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith."
15. Section 16 of the Sale of Goods Act deals with the implied condition or warranty as to quality or fitness. The proviso to Section 16(2) says that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed. The Courts have considered the scope and extent of the above provision and held that the Company Application No.86 of 2022 2025:KER:33404 18 defects can be either patent or latent and in cases where there is a latent defect that could not be detected on examination, the purchaser will have to be given the benefit of the implied condition as regards the quality of the goods. G.Mckenzie & Co. (supra) was a case decided by the Calcutta High Court, where a pleader had purchased a Plymouth car of the 1937 model, manufactured by M/s.Chrysler Corporation. The Car was sold by M/s G.Mackenzie & Co. After a few months of purchase, the car broke down. The engine was dismantled and sent for examination. It was noted that several parts were broken. The suit was filed for damages against the seller and their agent, without impleading the manufacturer. The trial court decreed the suit in part against the seller and exonerated the agent. The appeal filed by the seller was dismissed by the First Appellate Court, and the second appeal filed against the judgment was dismissed by the above-referred judgment. The Court considered the issue in the context of Sections 15 and 16 of the Sale of Goods Act. While dealing with the cases where goods are sold by description, the Court in paragraph 6 held that, in cases where a patent defect is found out later, it makes the product Company Application No.86 of 2022 2025:KER:33404 19 unmerchantable ab initio. The relevant portion of paragraph 6 of the judgment is extracted below:
"6. ....... ...... ..... Dr. Pal's next contention was based upon the provisions of sec. 16 of the Indian Sale of Goods Act. In view of the codification of the law in that Act, it is unnecessary for us to discuss the common law principle of caveat emptor and the qualifications engrafted thereon subsequently. The scheme of sec. 16 is to lay down the general principle and then to prescribe the exceptions thereto. The general rule as laid down in that section is a statement of the common law principle of caveat emptor, i.e. to say, that there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. There are four exceptions to this rule, which are enunciated in the four clauses that follow. ....... ...... ........ ....... ...... ........ ....... ...... We are, therefore, not called upon to express any opinion as to whether a contract of sale which does not fall within the first exception by reason of its being a sale of goods under a patent or trade name within the meaning of the proviso to that exception, may or may not fall within the second exception as a contract for sale of goods by description and imply the condition of merchantability. On the footing, therefore, that the present case is one of a sale by description, it cannot be disputed that it is a sale by a seller who deals in goods of that description, and that being so, it must follow that there is an implied condition in the contract of sale that the goods shall be of merchantable quality. The Company Application No.86 of 2022 2025:KER:33404 20 expression "merchantable quality" has not been defined in the Act nor has any exhaustive definition been laid down in any judicial decision. The definition given by Farwell, L.J., in The Bristol Tramways Co.'s [L.R. [1910] 2 K.B. 831 at pp. 839-840.] case does not perhaps fully cover the case of latent defects. When a latent defect is discovered subsequently, it must be regarded as being in existence ab initio. If the defect be such as, if known at the time of sale, will make the article unmerchantable, then it must be accepted that the article Was unmerchantable ab initio. The matter may be viewed from another aspect also. The merchantable quality implied by the second exception may be regarded as part of the description of the article sold. When an article is sold by description, it may be regarded as a sale of an article of that description, which is free from any latent defect which, if known at the time, will make it unmerchantable. When, in such a case, a latent defect of that kind is discovered, it may be said that such an article with such a defect was not the article contracted for, and that the case falls within sec. 15. In this case both the Courts have found as a fact, that the particular car delivered to the Plaintiff was not what a Plymouth car of average quality may be expected to be, and that the defect due to bad workmanship and faulty parts was a latent defect, and that the Plaintiff did not examine the car, and could not have discovered the defect, even if he did, and that the defect made the car unmerchantable. The Appellant is bound by these findings of fact. In the premises it is clear that there Company Application No.86 of 2022 2025:KER:33404 21 has been a breach of the implied Condition of merchantability under the second exception of Sec. 16, or of the implied condition of conformity with description under sec. 15, and in either case the Plaintiff can under sec. 13 treat such a breach as a breach of warranty and claim damages. (emphasis supplied)
16. The Division Bench of the Madras High Court in Sorabji (supra) held as follows:
"28. The proviso to Section 16 of the Act, however, divides all such defects into two kinds, often called patent and latent defects. Patent defects are, those which can be found on examination by a person of ordinary prudence with the exercise of due care and attention. Latent defects are those which cannot be discovered on such examination. There is an implied condition on the seller's part that the goods are free from latent defects; Mc. Kenzie and Co. (1919) Ltd. v. Nagendranath, ILR (1946) 1 Cal 225 : 50 Cal WN
213. This condition exists in regard to patent defects as well, if there has been no examination of the goods by the buyer.
29. If there has been one, the seller's responsibility for them ceases and passes to the buyer. Whether a defect is latent or patent will depend on the nature of the goods and the nature of the defects and the extent of examination needed for its discovery. It is a question of fact in each case. For a case where a latent defect rendered the goods unmerchantable even though there was a thorough examination by the buyer's experts, see AIR 1937 Mad 40."
Company Application No.86 of 2022 2025:KER:33404 22
17. In TCI Distribution Centres (supra), a Division Bench of the Madras High Court, while considering a misdescription in a sale of an immovable property by the Official Liquidator, held as follows:
"39. The Official Liquidator has taken the services of ITCOT for valuation of the property and on the strength of its report, the upset price was fixed. The report of ITCOT would clearly indicate that the sale deeds were not produced by the Official Liquidator and on inspection and verification of the property, the report was prepared on the basis of the enquiry made with the previous owners. Even the rough sketch produced shows that the property did not have the frontage. It was the contentions put forth by the respondents' side that in the sale notice it was made clear that the property was sold 'as is where is and whatever there is basis' and, hence, whatever be the discrepancies found, the appellant purchaser should not complain but take the property as it is. No doubt, the sale notice contained the clause 'as is where is and whatever there is basis'. But, the Official Liquidator should not be permitted to take shelter under the clause in a case where the company under liquidation had no title to sell in respect of the part of the property and there were lot of mis-descriptions in respect of the property and the survey numbers were found to be different. Even the Official Liquidator has candidly admitted that an extent of Company Application No.86 of 2022 2025:KER:33404 23 2.33 acres of land in S. No. 330/7 was classified as Cherry Natham and the Court has to issue a direction to the Government for re-classification of the land in accordance with law. It is pertinent to point out that he has stated in the report that the said land is in the middle of the land purchased and the purchaser would not be put to hardship, if not reclassified. He has also stated that the entry/entrance to the site part of S. No. 330 was designated as Government land and it did not belong to the company in liquidation and that was the only entrance available to the impugned land and hence, the Court has to give a direction to the Government of Tamil Nadu to consider giving the land on lease or sell the land to the purchaser. The court is afraid to allow the Official Liquidator to get shelter under the clause that the property was sold'as is where is and whatever there is basis' or under the doctrine of Caveat Emptor."
18. It can thus be seen that in the case at hand, the available property did not meet the description which was given in the auction notice. It is also evident that even if the description is treated to be sufficient, the goods had latent defects which could not have been identified by the buyer at the time of its inspection. The law is settled, as can be seen from the above-referred judgments, that on the admitted facts, the buyer cannot be non- suited on the ground that the sale is on "as is where is and Company Application No.86 of 2022 2025:KER:33404 24 whatever there is basis". This is not a case where the Official Liquidator can claim shelter under the said clause, and thus the applicant is entitled to succeed.
19. The application is allowed. The sale conducted under Annexure A tender notification is set aside. There will be a direction to the Official Liquidator to refund the amounts deposited by the applicant towards the sale consideration as per Annexure E. Sd/-
T.R. RAVI JUDGE dsn Company Application No.86 of 2022 2025:KER:33404 25 APPENDIX APPLICANT'S ANNEXURES:
Annexure A - True copy of the tender notice published by the Official Liquidator on 01.06.2022 Annexure B- True copy of the terms and conditions of sale of movable asset of the Company published by the Official Liquidator on 01.06.2022 Annexure C - True copy of the temporary Receipt dated 22.06.2022 issued by the Official Liquidator for the remittance of the cost of terms and conditions.
Annexure D - True copy of the communication dated 22.07.2022 issued by the Official Liquidator to the Applicant Annexure E - True copy of the receipt , dated 05.08.2022 issued by the Official Liquidator.
Annexure F - True copy of the communication dated 18.08.2022 Annexure G- True copy of the Mahazar dated 22.08.2022 Annexure H - True copy of the request given by the Applicant to the Official Liquidator Annexure I - True copy of the letter issued by the Official Liquidator on 28.09.2022 RESPONDENTS' ANNEXURES:
Annexure R1- Copy of the Terms and Conditions dated 1.6.22 signed by the applicant.
Annexure R2 - Valuation Report dated 20.12.2022 received from UCO Bank Annexure R3 - Tender Proceedings dated 29.06.2022