Gujarat High Court
Kantilal Ishwardas Patel vs Official Liquidator Of Navjivan Mills ... on 4 July, 2014
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt
O/COMA/97/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY APPLICATION NO. 97 of 2013
In
COMPANY PETITION NO. 160 of 1989
With
CIVIL APPLICATION NO. 320 of 2014
In
COMPANY APPLICATION NO. 97 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
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KANTILAL ISHWARDAS PATEL....Applicant
Versus
OFFICIAL LIQUIDATOR OF NAVJIVAN MILLS LTD (IN LIQUIDATION)
& 5....Respondents
==============================================================
Appearance:
DR SONIA HURRA, ADVOCATE for the Applicant
MR ANIP A GANDHI, ADVOCATE for the Respondent No. 6
MR DS VASAVADA, ADVOCATE for the Respondent No. 3
MR JS YADAV, ADVOCATE for the Respondent No. 1
NOTICE SERVED for the Respondents No. 2 , 4 - 5
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CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
Date : 04/07/2014
Page 1 of 27
O/COMA/97/2013 JUDGMENT
ORAL JUDGMENT
1. The applicant of Company Application No.97 of 2013 has taken out Judges Summons with following prayers;
A. That this Hon'ble Court may be pleased to direct Bank of India and/or Official Liquidator to submit before this Hon'ble Court- Original mortgage/Title deeds/Instrument, if any, in their custody- of the property owned and possessed by applicant herein admeasuing 4890 square meters being southern portion of Survey no.151 (unified) (freehold), Village Saij, Taluka Kalol.
B. That this Hon'ble Court may kindly be pleased to direct the Respondent no.1 to release said property-Survey no.151 (unified) (freehold), Village Saij, Taluka Kalol admeasuring 4890 square meters- from list of the properties listed as property of the M/s Navjivan Mills Ltd. (in liquidation) to be sold by Respondent no.1 as said property is wrongly without application of mind without holding any valid- enforceable registered mortgage deed - is included in the said list of properties by Respondent no.1.
C. That this Hon'ble Court may be pleased to declare that property admeasuring 4890 square meters bearing survey no. 151 (unified), Village Saij, Taluka Kalol is in the possession and ownership of Applicant herein thus casting aside any right, title and interest of Respondent no.2- the Bank of India and Respondent no.1- Official Liquidator of M/s Navjivan Mills Ltd. (in Liquidation).
D. That this Hon'ble Court may be pleased to direct Bank of India to execute sale deed in favor of applicant being owner and in possession of the property admeasuring 4890 square meters being part of Survey no.151 (unified), Village Saij, Taluka Kalol as Bank has no valid enforceable registered mortgage deed to claim any rights/title/interest whatsoever in the said property.
E. That this Hon'ble Court may be pleased to direct the Official Liquidator to execute sale deed in favor of the applicant herein because he Page 2 of 27 O/COMA/97/2013 JUDGMENT is the owner and is in possession of the said property- admeasuring 4890 square meters, approximately, being part of Survey no.151 (unified), of Village Saij, Taluka Kalol as Bank has no valid enforceable registered mortgage deed to claim any rights/title/interest whatsoever in the said property.
F. That this Hon'ble Court may be pleased to direct the District Land Revenue Inspector at District Land Records Office (DLR), Gandhinagar to take site inspection and submit report before this Hon'ble Court about the status of the said property thereby verifying the possession of applicant herein of the said property-
admeasuring 4890 square meters, being southern portion of Survey no.151 (unified), Village Saij, Taluka Kalol-within a short specified period which may be deemed just and fair by this Hon'ble Court as applicant is senior citizen.
G. That this Hon'ble Court be pleased to pass such other and further order/s as deemed just and fair in the facts and circumstances of the case.
In support of prayers, the applicant filed detailed affidavit inter alia contending that the land of consolidated Survey No.151 is purchased by him and two others on consideration and, therefore, the said property admeasuring about 4890 square meters be delisted from the Company i.e. M/s. Navjivan Mills Ltd. (in liquidation), as not being capable of being treated as Company's property any more.
2. Facts in brief leading to filing this application, as could be gathered from the supporting affidavit and other documents, deserve to set out in order to appreciate the real purport and scope of the application.
3. The respondent no.5, inherited land from his Page 3 of 27 O/COMA/97/2013 JUDGMENT ancestors at Kalol. The father of the respondent no.5 was known in the area as owner of M/s. Navjivan Mills Ltd. and as such his properties were containing name as administrator of M/s Navjivan Mills Ltd. in the revenue record. The property bearing Survey Nos.151, 152, 153 and 154 paiki admieasuring about 1 Hectare 17 acres 64 square meters were owned by Shri Subhodhbhai Mangaldas Sheth i.e. father of respondent no.5, in his individual capacity. After demise of Shri Subhodhbhai Mangaldas Sheth, the said property devolved to his widow Smt. Sushilaben Sheth and his sons namely Shri Rajitbhai Subodhbhai Sheth, respondent no.5 herein, Amit Kumar and Shri Sunil Kumar Subhodhbhai Sheth. On partition, the said property came in the exclusive ownership of Shri Rajitbhai Subodhbhai Sheth, and for that Smt. Sushilaben, Shri Amit Kumar and Shri Sunil Kumar put up relinquishing note, which was acted upon by the concerned Talati-cum-Mantri and thus in the revenue record land thereafter stood in the name of respondent no.5. The process of entering the name in the revenue record was carried out after following due procedure including notice under Section 135-D of Gujarat Land Revenue Act, 1972 to the concerned. After the said property devolved on respondent no.5, land admeasuring about 6774 square meters was acquired by the Gujarat State Road Transport Corporation (GSRTC) hereafter and Gujarat Industrial Development Corporation (GIDC). The remaining land admeasuring 4890 square meters out of the said properties on the southern side of Survey Nos.151, 152, 153 and 154 at village Siag, Taluka- Kalol, came to be purchased by the applicant and the sale document was registered in the year 1998. The sale was effected after Page 4 of 27 O/COMA/97/2013 JUDGMENT taking all the precaution required. Public notice was issued on 28.08.1998. Title clearance certificate was received from advocate on 21.09.1998 and after being certified that the title being free from encumbrances, the said sale-deed was executed on 25.09.1998 for a consideration of Rs.4,25,000.00/-. The applicant thereafter moved the concerned Mamlatdar for consolidation of the land bearing Survey Nos.151, 152 and 153 and it was accordingly accepted. During this process also there was no objection from any quarter. The revenue records in the form of Village form no.6 (Hakk Patrak), Village form no.8 and 7 extract, everywhere mutation entry indicate that land belonged to and in possession of the applicant. The revenue records copies have been placed on record of this application. The land, therefore, could not have been shown to be land belonging to the Company (in Liquidation) namely M/s Navjivan Mills Ltd. and advertised for its sale. The application was required to be filed for obtaining appropriate relief in this behalf.
4. Learned counsel appearing for the applicant submitted that in fact the sale was effected on 25.09.1997, the said sale was registered before the competent authority on 28.08.1998 and consolidation was ordered on 04.01.1998. The learned counsel submitted that before purchasing the land in question, everything which was required to be done by a prudent person, was done and, therefore, it would not have been possible for the Official Liquidator to include this property as one of the property in Company (in Liquidation) without there being any proper ascertainment of title deeds etc. Page 5 of 27 O/COMA/97/2013 JUDGMENT
5. Learned counsel appearing for the applicant contended that the title clearance certificate was issued by an advocate after making due search and when it was found out that the property is not in any manner encumbered and the title was clear and marketable, the said title clearance was issued. Now, when the said title clearance is issued, the petitioner could not have expected to make any other inquiries and based thereupon, the purchase was effected. The same purchase was in fact made basis for mutation in the revenue entries and revenue record. The possession of the property is since then with the applicant only and, therefore, the listing of said property as Company's property as M/s Navjivan Mills Ltd., the Company in liquidation, property was patently erroneous, palpably wrong and, therefore, this property is required to be delisted from the list of property.
6. Learned counsel appearing for the applicant contended that assuming without conceding that the property belonged to the Company, then also the purchase of the property in the year 1998 and subsequent development in the form of mutation and entry in the revenue record and enjoyment of the possession on the basis of the bona fide purchase, needs to be taken into consideration for giving appropriate relief, as under the provision of Section 536 of the Companies Act, the Official Liquidator and all the concerned including the secured creditors have miserably failed in asserting their right, title and entitlement over the property in question.
Page 6 of 27O/COMA/97/2013 JUDGMENT 7. Learned counsel appearing for the applicant
thereafter contended that the factum of possession without any interruption for long period of 15 years in itself is sufficient to hold in favour of the applicant, as had there been any claim on the part of the Company or secured creditors, the same could not have been permitted after all these years. The possession is a valid and solid factor against everyone except the rightful owner and, therefore, when the applicant was permitted to enjoy possession of the land after paying sizable consideration on account of the purchase and when the said purchase is made basis for effecting mutation, which was mutation on the revenue record and that mutation was also done after due notices to all the concerned, then in that eventuality the Official Liquidator's attempt to treat the property as Company's property cannot be sustained in any manner. The applicant's counsel, therefore, urged that the appropriate relief be granted.
8. Learned counsel appearing for the applicant submitted that the property was purchased by three persons namely Kantilal Ishwardas Patel i.e. applicant himself and two others namely Shri Dahyabhai Varvabhai Patel, and Becharbhai Shankerbhai Patel, so this purchase was thus a joint purchase of the property and all the concerned revenue records are based upon the registered sale deed which indicate that the property in question was purchased by three persons. Learned counsel for the applicant submitted that two other co-owners' attempt for seeking relief in the form of Company Application No.55 of 2001 Page 7 of 27 O/COMA/97/2013 JUDGMENT and Company Application No.535 of 2003, may not be of any avail to the respondents in resisting the claim of the applicant, as in none of the two proceedings, the present applicant was a party nor was he called upon to indicate and defend his interest in the land.
9. Learned counsel appearing for the applicant thereafter contended that in both these proceedings, as there is no adjudication of the claim of those applicants, the orders disposing of those proceedings also cannot act as an impediment in the way of the present applicant in agitating and urging before this Court based upon his right to retain the land in question.
10. Learned counsel for the applicant submitted that the co-owner's application being Company Application No.55 of 2001 came to be withdrawn with a view to take out appropriate proceeding before the appropriate forum on 06.07.2011 and other co-owner's application being Company Application No.535 of 2003 came to be dismissed for want of prosecution on 27.06.2006. These two orders made by this Court in respect of the two proceedings taken out by the co-owners in their individual capacity cannot work as any sort of bar against the present applicant in maintaining this application, as under any provision of law the orders made in these two proceedings cannot be said to be orders deciding any lis or orders finalizing any dispute, as both these orders referred to hereinabove were orders without adjudication. In the proceedings where the applicant was not a party, then neither those orders nor the proceedings could work as a res judicata against Page 8 of 27 O/COMA/97/2013 JUDGMENT maintaining of the present application by the present applicant.
11. Learned counsel appearing for the applicant submitted that by way of abundant precaution Civil Suit came to be preferred being Civil Suit No.572 of 2013. That action of the applicant also would not debar the applicant from maintaining and urging in this application for appropriate relief as the application is filed first in point of time and later on only by way of abundant precaution, the Civil Suit preferred being Civil Suit No.572 of 2013 and in that suit, so far, no effective order is obtained.
12. Learned counsel appearing for the applicant placed reliance upon the decision of the Apex Court in case of A.P.I.I. Corporation Ltd. Vs. M/s. Team-Asia Lakhi Semiconductor Ltd., Hyderabad, and another, reported in 2014 AIR SCW 75, and submitted that how and in what manner the property of the Corporation could not have been treated as Company's property. In the instant case, the property is purchased bona fide for valuable consideration and the possession of the property for 15 years without any interruption would defeat the claim of the Official Liquidator to treat the property as Company's property.
13. Learned counsel appearing for the applicant relying upon decision of this Court in case of Hawa Controls Vs. O.L. Of Tirupati Folundry P. Ltd. and Others, reported in (2008) 142 Company Cases 528 (Guj.), contended that if the Court comes to the conclusion that the sale is Page 9 of 27 O/COMA/97/2013 JUDGMENT not a fraudulent and bona fide, then the possession is required to be protected.
14. Learned counsel appearing for the applicant thereafter relying upon decision of this Court in case of State of Gujarat Vs. Mali Ranchhod Kheta & Ors. Reported in 1996 (2) GLR 501, submitted that how and in what manner the factum of possession itself is found to be so important and material. The Court has held in unequivocal terms that the factum of possession is itself a valid evidence against entire world except their rightful owner and in the instant case when the possession of the property is lying with the applicant for long period of 15 years and when revenue authorities have also acted upon the sale deed, which have not been objected to by anyone, then the listing of the property as a company's property is erroneous and illegal act on the part of the Official Liquidator, which is required to be quashed and set aside.
15. Learned counsel appearing for the applicant relying upon the decision of the Apex Court in case of Nair Service Society Ltd., Vs. K.C.Alexander and Others, reported in AIR 1968 Supreme Court 1165, contended that the possession is a very important factor and it can legitimately be pressed into service for justifying the title and continuation of the same.
16. Learned counsel for the applicant relying upon decision of the Apex Court in case of N.Subramania Iyer Vs. Official Receiver, Quilon and another, reported in AIR 1958 Supreme Court 1, contended that the onus is on the Page 10 of 27 O/COMA/97/2013 JUDGMENT person who asserts that the transaction was far from being bona fide and not for valuable consideration. In the instant case, neither the Official Liquidator nor the secured creditors or the workmen have, in any manner, discharged the burden of prove. The transaction of sale entered into by the present applicant and the original owner was lacking any bona fide and, therefore, on that ground also the property is required to be delisted.
17. Learned counsel for the applicant thereafter relying upon the decision of the Apex Court in case of United Bank of India Ltd. Vs. Messrs Lekharam Sonaram and Co. and others, reported in AIR 1965 Supreme Court 1591, submitted that in absence of any registered mortgage deed, as required under Section 17 of the Indian Registration Act, the secured creditor of the Company cannot claim any right over the property in question.
18. Learned counsel appearing for the applicant relying upon decisions of this Court made in O.L.R. No.124 of 2011 In O.L.R. No. 120 of 2009 In Company Application No.480 of 2008, decided on 18.01.2012 and Company Application No.507 of 2011 In O.L.R. No.137 of 2010, decided on 17.07.2012 & 19.07.2012, submitted that the guideline prescribed in these two decisions make it incumbent upon Official Liquidator to verify and reach to the truth with respect to the property of the Company. The entire exercise, which were required to be under taken on part of the Official Liquidator, is conspicuously absent, so far as this property is concerned, and therefore, on those ground also it can be said that the property is wrongfully listed by the Official Liquidator to be Page 11 of 27 O/COMA/97/2013 JUDGMENT company's property.
19. Learned counsel appearing for the applicant thereafter relying upon decision rendered by this Court in Company Application No.212 of 2002 In Company Petition No.338 of 1997 decided on 26.03.2003, submitted that in a case where the listing of the property is palpably wrong, as Company's property, then this Court would order delisting forthwith and in the instant case it is more than established that the property never belonged to the Company and when the property is possessed and occupied by the present applicant, the Official Liquidator's action by listing the property as a Company's property be quashed and set aside.
20. Learned counsel for the applicant thus summed up by submitting that the property which is representing undivided interest of three individuals, original purchasers, indicate that it belongs to them as per revenue record and when possession is not disputed or disturbed for long period of 15 years and when the revenue record entry have not been challenged and when there is no whisper about the purchase of the property being fraudulent and when there is no whisper about even the consideration, then all these circumstances would persuade this Court in granting appropriate relief to the present applicant and the application be allowed accordingly.
21. Shri Vasavada, learned counsel appearing for the respondent no.3, contended that the application is required to be dismissed, as the entire transaction of Page 12 of 27 O/COMA/97/2013 JUDGMENT land and subsequent transactions are hit by the provisions of the Companies Act, where the parties were not in any way entitled to deal in the property after the winding up order was made. In the instant case, the Company i.e. M/s. Navjivan Mills Ltd. was ordered to be wound up way back on 22.12.1989 and thereafter any transaction in respect of land purported to be Company's land could not have been validly effected by anyone. He placed heavy reliance upon the provision of Sections 446 and 456 of the Companies Act in support of his submission.
22. Learned counsel Shri Vasavada thereafter contended that so called dispute qua the property and its title also is now not permissible to be raised, as it will hit by the provision of Section 458 of the Companies Act. Shri Vasavada relying upon the decision in case of M/s. J.K. (Bombay) Private Ltd. Vs. M/s. New Kaiser-I-Hind Spinning and Weaving Co., Ltd., and Others, reported in AIR 1970 Supreme Court 1041, contended that no new rights are to be created or acknowledged once the winding up order is effected or uncompleted right, even if exists, cannot be thereafter completed. Relying upon decision, it was emphatically submitted on behalf of the workmen Union that the application is required to be dismissed as the ratio of the said judgment would squarely disentitle the applicant to raise any objection to property being listed as a company's property.
Learned counsel for the applicant, at this stage, submitted that the facts of the judgment cited at the bar namely New Kaiser-I-Hind (supra) would indicate Page 13 of 27 O/COMA/97/2013 JUDGMENT that the property originally belonged to the Company and there was no dispute qua ownership of the Company and in that context Supreme Court's observation that even uncompleted right cannot be completed, but that judgment is not applicable so far as the present case is concerned, as the revenue record and documents would go to show that the Company did not own the property and the property is owned under the Registered sale deed by the present applicant. Ms. Hurra, learned advocate for the applicant further submitted that the labour unions are estopped, as they have acquiesced into the possession, use, ownership etc. and, therefore, at least they would not be entitled to raise any clamour against the claim of the present applicant.
23. Learned advocate Shri Gandhi for the respondent no.6 submitted that the alternative remedy and parallel proceeding cannot be proceeded with the title clearance report. It is silent qua any public notice and, therefore, the same, in fact, is of no use and application is required to be dismissed.
24. Shri Yadav, learned advocate appearing for the Official Liquidator submitted that this application is required to be dismissed on principle of multiplicity of proceedings as well as estoppel, as the applicant who happened to be co-owner of the subject land did not choose to bring other proceedings to their logical conclusion namely Company Application No.55 of 2001 and Company Application No.535 of 2003, though, the matter being Company Application No.535 of 2003 was dismissed for want Page 14 of 27 O/COMA/97/2013 JUDGMENT of prosecution. The other matter being Company Application No.55 of 2001 was in fact requested to be withdrawn only with a view to take out appropriate proceeding before the appropriate forum and that order being an order permitting withdrawal of the application, the co-owner in respect of the same subject land is estopped from reviving the challenge which another co-owner withdrew with a view to file appropriate proceeding before any other forum and naturally in this Court.
25. Shri Yadav, learned counsel for the Official Liquidator further submitted that in fact the two earlier applications and their disposal have not been referred to by the present applicant in the present application nor has he taken care to see to it that the proper disclosure of all the facts are made in this application. The application is required to be dismissed also on the ground of suppression of facts, as the subsequent development and the matters brought on record in form of order of this Court made in earlier matters, clearly indicate that those matters were in respect of this very subject land initiated and instituted by the two co-owners and therefore, suppression of this fact, which has remained unexplained, is required to be viewed and this matter, therefore, on this ground also required to be dismissed. Shri Yadav invited this Court's attention to page no.70, paragraph no.10, wherein it is contended that, in view of the facts, that filing of the aforesaid two proceedings by the co-owners, the 3rd attempt by the present applicant is not maintainable.
Page 15 of 27O/COMA/97/2013 JUDGMENT At this stage, Ms. Hurra, learned counsel for the applicant submitted that this contention is dealt with by the applicant in his rejoinder indicating that those two applicants had independently in their own capacity as the co-owner moved the Court, but that will not in any manner affect the right of the present applicant to bring in this application and maintain the same legally and seek relief from the Court as no principle of res judicata is applicable as the case is not decided and the parties are not same.
Ms. Hurra further submitted that the Official Liquidator should have relied upon his own title i.e. title of the Company instead of finding out loop-holes in the case of the applicant for resisting the claim.
26. Shri Yadav, learned counsel appearing for the Official Liquidator further submitted that without prejudice to the aforesaid contention with regard to none maintainability of the present 3rd round of litigation in respect of the same subject land, he may be permitted to canvass submissions even on merits of the matter, which would indicate that there exists no right, much less, any entitlement of the applicant to hold on to the property in question.
27. Shri Yadav, learned counsel for the Official Liquidator invited this Court's attention to page no.67 and submitted that glaring facts are emerging there from which would persuade this Court in dismissing this matter.
He submitted that the document is said to have been
Page 16 of 27
O/COMA/97/2013 JUDGMENT
executed on 25.09.1998, whereas the fact remains to be noted that the winding up order in respect of the Company in question was issued on 22.12.1989. The property belonged to the Company, as could be seen from the recital on page no.69 and submitted that the properties' origin and its genesis could be said to be known to all and the same was nothing but an attempt to surreptitiously transferred the Company's property for the benefit of its director or other concerned which cannot be said to be in any manner permissible on account of operation of the winding up order right from 22.12.1989. Learned counsel for the Official Liquidator invited this Court's attention to the page nos.69, 70 and 72 in support of this contention.
28. Learned counsel for the Official Liquidator extensively read the averments made in the reply to indicate that how and in what manner the property cannot be said to have been in any manner termed to be property to the individual and not that of a Company.
29. Learned counsel Shri Yadav for the Official Liquidator further submitted that the details of earlier two applications have been narrated on page no.70 in paragraph nos.9 and 10. The Official Liquidator's counsel invited this Court's attention to the document at page no.164 whereunder it is clearly mentioned that the property in question came into possession of the predecessor of the Company i.e. Kalol Spinning and Weaving Ltd. way back in the year 1920. This document is not refuted by anyone. This document cannot be refuted in any Page 17 of 27 O/COMA/97/2013 JUDGMENT manner and therefore, the property's genesis are clearly stressed.
At this stage, Ms. Hurra, learned counsel for the applicant submitted that the advocates appointed by liquidator has clearly opined, as could be seen from page nos.152 to 159 and a letter from Bank of India at page no.163 dated 19.12.1970, that they are acquired by the Government and new mortgage is required to be created for rest of the survey numbers.
30. Learned counsel appearing for the Official Liquidator thereafter invited this Court's attention to the plaint of the Civil Suit, which was filed by the present applicant being Special Civil Suit No.572 of 2013 and submitted that this suit is filed during pendency of this application and as per the provision of Company Act this Could not have been filed under Section 146 of the Companies Act. This could not be filed without permission of the Court joining Official Liquidator, however, the said suit is filed and the prayers are made in that suit which is identical to those prayers qua the property in question. Therefore, this amounts to multiplicity of proceeding and on that ground also the application is required to be dismissed.
31. Learned counsel for the Official Liquidator has submitted that this property in question had never been mortgaged to anyone, but that in itself would not help the applicant to make his case good against the Official Liquidator of the Company as the none availability of the Page 18 of 27 O/COMA/97/2013 JUDGMENT mortgage deed in themselves would not create any title or semblance of title in the applicant, as sought to be made out and, therefore, the application is required to be dismissed.
32. Learned counsel for the Official Liquidator contended that as per the provision of Section 456(2) read with Rule 114 of the Company Court Rules, the Company's property after the winding up order is passed into the custody of the Court and Official Liquidator is the custodian and as Official Liquidator is custodian, no one has right to hold on to the property. The learned counsel for the applicant was incorrect in contending that it was Official Liquidator's duty to go and seek the land from those who have possession of the land.
Apropos this submission of Shri Yadav, learned counsel for the Official Liquidator, Ms. Hurra, learned counsel for the applicant submitted that it is very sad and trite to say that the property, which was inherited by an individual and which has been acknowledged by revenue authorities and which has been sold for valuable consideration to the applicant and two others, is required to be surrendered to after 13 years when Official Liquidator was issuing an advertisement in the year 2001. This in itself indicate that the Official Liquidator's claim is required to be rejected, as the Official Liquidator has not chosen to challenge the sale deed till date.
33. Learned counsel for the Official Liquidator Page 19 of 27 O/COMA/97/2013 JUDGMENT submitted that the documents coming on record indicate that the Company had appointed administrator and the administrator's legal heirs who should have been succeeded to the administrator's personal property only, appears to have managed to show their names in the revenue record and those revenue record entry cannot confer the valid transfer of the sale deed, also indicate that they were aware of the fact and, therefore, the application is required to be dismissed.
34. Learned counsel for the Official Liquidator submitted that by virtue of Section 456(2) read with Rule 114 of the Company (Court) Rules, deeming fiction is created whereunder the date of the winding up of the property of the Company come into the custody of the Court and in turn of the Official Liquidator and, therefore, no one can seek any estoppel or acquiescence against the law, as by operation of law, the property, which belong to Company, which come into the custody of the Official Liquidator, could have been dealt with and possessed by anyone, if such is the case, the possession is wholly illegal and required to be deprecated and the Official Liquidator is permitted to take all the action to recover the same.
At this stage, Ms. Hurra, learned counsel for the applicant submitted that the affidavit of the applicant is placed on record in which the applicant has without prejudice to his right and contention in this application offered that he is ready and willing to deposit Rs.70 lacs which may be ordered to be deposited in Page 20 of 27 O/COMA/97/2013 JUDGMENT any scheduled Bank for a particular term and his possession may not be disturbed. Relevant portion of the affidavit i.e. paragraph no.3, read as under;
I humbly submit that without prejudice to the rights and contentions raised in present proceedings and said Civil Suit no.572 of 2013, I am ready and willing to deposit Rs.70 lacs with the State Bank of India, High Court branch, Sola and said Rs.70 lacs may be kept in fixed deposit with lien marked. Since I have filed a Civil Suit no.572 of 2013 before Civil Court at Kalol by way of abundant caution (annexed at page no.317) wherein Ld. Official Liquidator is Party Defendant, therefore, it is humbly submitted that this Hon'ble Court may be pleased to give appropriate order or direction to the effect that I may be pleased to give appropriate order or direction to the effect that I may be permitted to use and enjoy during my life time the said property being survey no.151 (unified entry), village Saij, Kalol, as I wish and desire, and if I succeed in said Civil Suit no.572 of 2013 the said amount of Rs. 70 lacs with interest, as prevailing rate on fixed deposit, be refunded to the myself; but if I lose in said Civil Suit then the said amount be transferred to the account of company in liquidation with Ld. Liquidator.
Paragraph Nos.2, 4 and 5 of the affidavit indicate justification for such offer, as the land was originally advertised to be sold for Rs.70 lacs only in the year 2001 and, therefore, Official Liquidator cannot insist for today's market price, as the land is in possession of the present applicant and Official Liquidator has not taken out any proceeding for recovery of the possession.
35. The Court has heard learned counsels appearing for the parties and perused the documents placed on record. The fact remains to be noted that the winding up order in respect of M/s. Navjivan Mills Ltd. came to be Page 21 of 27 O/COMA/97/2013 JUDGMENT passed on 22.12.1989. The provision of Section 456(2) of the Companies Act is set out hereunder for ready reference.
Section 456(2)- All the property and effects of the Company shall be deemed to be in the custody of the [Tribunal] as from the date of the order for the winding up of the Company.
It indicate that what is effect of winding up order. Therefore, no one can dispute the fact that at least from 22.12.1989, the properties of the Company were ever they were situated, were not capable of being dealt with in any manner by anyone and any dealing there with would hit by the provisions of the Companies Act, 1956.
36. In the instant case, the applicant has in fact took up two contradictory stands, of course, without prejudice to each other, but that in itself would militate against seeking any relief in the matter. The applicant in one hand contended that the property never belonged to the Company and, therefore, Official Liquidator's action of listing the same for selling it in the year 2001 was illegal and incorrect. Therefore, this property, as it did not belong to Company, Official Liquidator could not have dealt with it or Official Liquidator could not have listed it for selling as he did in the year 2001 and, therefore, the applicant be given proper relief. In alternative a plea is raised that the transaction of selling of this land namely sale deed executed in the year 1998 was executed on a bona fide belief that the property was owned by the respondent no.5, as he inherited it from his father Page 22 of 27 O/COMA/97/2013 JUDGMENT and as the revenue record as well as the title clearance report did not indicate otherwise and as it was bought after passing on consideration, the sale be regularized. These two stands are contradictory, however, it is required to be noted that the same is not tenable in eye of law.
37. The documents which have been placed on record clearly indicate that the property is of the ownership of the Company and the document in the form of sale deed by the original owner, in favour of the Company's predecessor or earlier Company being the Kalol Spinning and Weaving Mill Com. Ltd. is not disputed in any manner. The facts remain to be noted that revenue record and entries in revenue record can never confer title of the property, if there exists none. The present applicant could not show any title which could have been said to be a valid title under which the respondent no.5 could have passed on the property to anyone or any seller like the present applicant. The respondent no.5's name in the revenue record is the sole document or a ground for indicating the title of the respondent No.5, now as it is stated hereinabove, the revenue record alone cannot be a conclusive proof or an evidence for establishing the title. The applicant or the respondent no.5 or anyone claiming thereunder could not establish as to how and in what manner the applicant's ancestors or applicant's father Shri Subhodhbhai came into possession of that land as an owner. In absence of any such title deed indicating acquiring of this land by Subhodhbhai, the document placed on record indicating that the land came in possession of Page 23 of 27 O/COMA/97/2013 JUDGMENT the Company under the document which was executed in the year 1920, cannot be brushed aside by this Court. That seems to be a clear traceable ownership of the land and the transfer of the land, so far as the present Company in liquidation is concerned. In light thereof, the revenue entry will pale into insignificance till the title in Subhodhbhai is established. The applicant cannot claim his title flowing from the defect in title though his name may be there in the revenue record. The Court is not impressed by the submission that the Official Liquidator did nothing, it is of course a matter of concern that the Official Liquidator's office should have taken appropriate steps to recover the property, but that in itself, would not create any enforceable right in the applicant, as applicant did not establish any title under which the property could have been validly transferred or sold to the applicant. The lack of title in the respondent no.5 or for that matter lack of any document, under which the property came to be acquired by his father Subhodhbhai, is required to be viewed in a proper perspective and if the entire matter has been viewed from that angle, then one can safely say that the applicant failed in making out any case for granting any relief to him.
38. The decisions cited at the bar on behalf of the applicant are of no avail to the applicant, as those decisions do not indicate in any manner that the applicant or a person like the applicant succeed only on the strength of revenue record or inaction on the part of the Official Liquidator when the provision in form of Section 456(2) of the Companies Act, is existing and no one can Page 24 of 27 O/COMA/97/2013 JUDGMENT deny the document in the form of passing of the land to the Company and or its predecessor in the year 1920 and in absence of any other document indicating that how the land came to be passed on to Subhodhbhai. The link is missing and that link is very important to persuade this Court not to grant any relief in favour of the applicant.
39. The Court is also of the considered view that the applicant has unfortunately not disclosed the correct facts in the memo of the application in respect of his co- owners filing two proceedings namely Company Application No.55 of 2001 and Company Application No.535 of 2003 and at least in one matter the applicant sought permission to withdraw the application. The suppression of fact on the part of the applicant cannot be said to be in any manner pardonable. The suppression is said to have been suppression, as the applicant has not indicated in any manner that he did not have any knowledge of filing of two other proceedings. The fact remains to be noted that the conspicuous silence over the knowledge or otherwise of filing of two other proceedings on the part of the applicant in these days when the land is a precious commodity, speaks volumes about the factum of suppression and on this ground also the application is required to be dismissed.
40. The Court is also of the considered view that the applicant's co-owners have moved this Court on earlier occasion by way of two separate independent proceedings namely Company Application No.55 of 2001 and Company Application No.535 of 2003. The applicant's counsel's Page 25 of 27 O/COMA/97/2013 JUDGMENT attempt to justify the 3rd attempt on the part of the 3rd co-owner, is required to be rejected on the ground that the principle of fairness and knowledge of filing of proceedings and requirement of coming to the Court with clean hands and scheme of the law of no encouraging sharp practices of taking chance over the same subject matter repeatedly would collectively dissuade this Court in appreciating the 3rd attempt. The subject matter is same i.e. land for which the matter came to be filed being Company Application No.55 of 2001, one more application filed by another co-owner in the year 2003 and the 3rd application is the present one. The applicant has not even indicated that the applicant was agitating for only 1/3rd of land. The attempt of the applicant and the averments made in the memo of the application indicate that it was an attempt to squeeze the entire piece of land purported to have been owned by all the three persons.
41. In that view of the matter, the application is required to be dismissed also on the ground of lack of fairness and requirement of finality in the litigation. The litigation in the form of earlier two applications on the same subject matter had attained finality and, therefore, the present applicant, who chose not to take those litigation results to its logical conclusion, cannot now be permitted to take one more chance in the form of 3rd application, as it would amount to encouraging unscrupulous litigation to take chance with the Court and the system. This is required to be deprecated and the Court records its disapproval to such practice. With these observations the application is dismissed.
Page 26 of 27O/COMA/97/2013 JUDGMENT 42. In view of the aforesaid, the joining party application i.e. Civil Application No.320 of 2014 is
rejected, as it is an attempt to add into the effort of the applicant to resurrect, otherwise to applicant's claim in the same subject matter.
(S.R.BRAHMBHATT, J.) Pankaj Page 27 of 27