Madras High Court
J. Sekar vs R. Vijayakumar on 30 September, 2011
Bench: R. Banumathi, B. Rajendran
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 30-09-2011
Coram
THE HONOURABLE MRS. JUSTICE R. BANUMATHI
and
THE HONOURABLE MR. JUSTICE B. RAJENDRAN
O.S.A. Nos. 135 and 305 of 2011
and
M.P. Nos. 1 and 1 of 2011
O.S.A. No. 135 of 2011:-
J. Sekar .. Appellant
Versus
1. R. Vijayakumar
No.9, 19th Street, Ashtalakshmi Nagar
Alapakkam, Chennai 600 016
2. Mr. M. Ravindran
Senior Advocate/Administrator
Anubhav Group of Companies
3. The Official Liquidator
High Court, Madras .. Respondents
O.S.A. No. 305 of 2011
1. The Official Liquidator
High Court, Madras
as Official Liquidator for Anubhav Plantations Ltd
(in liquidation)
2. M. Ravindran
Senior Advocate, Administrator,
Anubhav Group of Companies
(in liquidation) .. Appellants
Versus
R. Vijayakumar .. Respondent
O.S.A. No. 135 of 2011:- Appeal filed under Order XXXVI Rule 9 of O.S. Rules and under Section 483 of the Companies Act, 1956 read with Clause 15 of the Letters Patent against the Judgment and decree dated 21.02.2011 made in C.A. No. 243 of 2004 in C.P. No. 133 of 2009 on the file of this Court.
O.S.A. No. 305 of 2011:- Appeal filed under Order XXXVI Rule 1 of O.S. Rules and under Section 483 of the Companies Act, 1956 read with Clause 15 of the Letters Patent against the Order dated 21.02.2011 in Company Application No. 243 of 2004 in C.P. No. 130 of 1999 on the file of this Court.
O.S.A.N o. 135 of 2011
For Appellant : Mr. R. Murari
For Respondents : Mr. R. Thiagarajan for R1
Mr. M. Ravindran, Senior Counsel
for Mr. B. Manoharan for R2
Official Liquidator for R3
O.S.A. No. 305 of 2011
For Appellant : Mr. M. Ravindran, Senior Counsel
for Mr. B. Manoharan
For Respondent : Mr. R. Thiagarajan for R1
COMMON JUDGMENT
R. BANUMATHI, J. & B. RAJENDRAN, J Being aggrieved by the order in C.A.No.243 of 2004 in C.P.No.130 of 1999 dated 21.02.2011 declining to sell 1.68 acres in Kazhipattur village, third Party/Appellant-J.Sekar has preferred appeal in O.S.A.No.135 of 2011. Being aggrieved by the same order and also the findings that "no amount is payable by the Respondent-R.Vijayakumar", the Administrator of Anubhav Group of Companies and the Official Liquidator have preferred O.S.A.No.305 of 2011.
2. Brief facts relevant for consideration in these appeals are:-
(i) Winding up of Anubhav Group of Companies By the order dated 02.11.1999, the 2nd Appellant-Senior Advocate in O.S.A.No.305 of 2011 was appointed as Administrator to look after the affairs of Anubhav Group of Companies and the Official Liquidator was appointed as the Provisional Liquidator for Anubhav Group of Companies. Thereafter, the Administrator and his team members took possession of records and documents belonging to the Company in liquidation. Perusal of records revealed that M/s.Goodluck Inn Private Limited, represented by the Respondent and in his capacity as Power of Attorney of some land owners agreed to enter into an agreement on 09.05.1996 under which he has agreed to sell 21.18= acres of lands in Kazhipattur village at the rate of Rs.11,250/- per cent and 50 cents of lands in Muttukkadu village at the rate of Rs.45,000/- per cent for a total sale consideration of Rs.1,91,25,000/- to C.Natesan, Chairman-cum-Managing Director, Anubhav Group of Companies. But the Respondent is said to have received Rs.1,93,00,000/- from the Company and executed 39 sale deeds in favour of nominees of C.Natesan. Out of 39 sale deeds, 25 sale deeds were registered and 14 were unregistered for a total extent of 12.32= acres.
(ii) 4.45 acres of Government land Out of 12.32= acres, Respondent is said to have conveyed 4.45 acres of Government land. On inspection, it was found that there were more than 250 huts in that land and the Administrator had filed a Memo which was numbered as C.A.No.1450 of 2002. On 16.08.2001, the Court has directed the CBCID to investigate the matter and CBCID filed its report on 09.11.2001 and the Court has directed the CBCID to proceed with the case in accordance with law, against which the Respondent had filed O.S.A.No.401 of 2002 and the said appeal came to be dismissed on 26.02.2002. A criminal case was filed against the Respondent in C.C.No.6535 of 2003 on the file XI Metropolitan Magistrate Court, Saidapet and the Administrator had also given evidence in that case. By the order dated 04.03.2005 made in C.A.No.1450 of 2002, the Court directed the Respondent to pay Rs.20,00,000/- towards final settlement in respect of the Government land measuring 4.45 acres sold by him in S.F.No.20 of Kazhipattur village, though the Respondent had received Rs.50,06,250/- at the rate of Rs.11,250/- per cent.
(iii) Sale of 7.87.5 acres at Kazhipattur village The Administrator has brought the lands measuring 7.87.5 acres at Kazhipattur village for sale. The auction was held in the open Court on 12.11.2003 and Appellant in O.S.A.No.135 of 2011 J.Sekar was the highest bidder for Rs.50,00,000/- and the sale was confirmed in his favour. On remittance of the entire sale consideration of Rs.50,00,000/-, sale deeds were executed in favour of J.Sekar.
(iv) C.A.No.1037 in C.P.No.130 of 1999 Respondent-Vijayakumar has filed this application for setting aside the sale in S.F.No.3 measuring 1.20 acres at Kazhipattur village and the said application came to be dismissed on 19.01.2007, against which Respondent had filed O.S.A.No.129 of 2007 and the same was also dismissed by the order dated 21.10.2008. Against the dismissal of O.S.A.No.129 of 2007, Respondent filed S.L.P. (Civil) No.27454 of 2008 and the same was dismissed on 26.11.2008 by the Apex Court. Thereafter, Respondent filed applications C.A.Nos.82 of 2009 and 241 of 2009 seeking leave to sue against the Company in liquidation and J.Sekar and the same were also dismissed by the common order dated 22.07.2009. Respondent preferred O.S.A.Nos.258 and 259 of 2010 and by the order dated 27.07.2010, both the appeals were dismissed. S.L.P. (Civil) Nos.26160 and 26161 of 2010 preferred by the Respondent also came to be dismissed by the Apex Court on 29.10.2010.
(v) C.A.No.243 of 2004 and C.A.No.1701 of 2010 in C.P.No.130 of 1999 After the sale of 7.87.5 acres of land to the tune of 1.68 acres at Kazhipattur village and Muttukkadu village for which the Respondent had already received the sale consideration. The Administrator had filed a fresh report stating that Respondent received a sum of Rs.1,93,00,000/- from the Company in liquidation and that the Administrator was able to realise only a sum of Rs.50,00,000/- by way of sale of 7.87.5 acres of land and Rs.20,00,000/- paid by the Respondent in respect of the claim made by the Administrator in C.A.No.1450 of 2002. Thus the Administrator was able to recover a sum of Rs.70,00,000/- only and the balance is to be recovered. The Administrator sought for a direction to sell 1.68 acres at Kazhipattur and 50 Cents in Muttukadu villages. Adopting his own method of calculation, in the application, the Administrator has stated that Respondent has to pay a sum of Rs.43,43,125/- and hence the land measuring 1.68 acres at Kazhipattur village and 50 cents in Muttukkadu village have to be brought for sale by the Court auction.
3. Respondent has resisted the application contending that as per the direction of the Court in C.A.No.1450 of 2002, he has paid Rs.20,00,000/- in full and final settlement of all the claims and having received the payments in final settlement of the Administrator's claim, the issue cannot be re-opened. According to Respondent, no amount is payable by him.
4. Upon consideration of rival contentions, in the impugned order, the learned Judge held that the Administrator had not produced the receipts showing payment of Rs.40,00,000/- to the Respondent. Referring to the order in C.A.No.1450 of 2002, learned Judge held that payment of Rs.20,00,000/- was in final settlement of the amount and that the same had become final. Learned Judge further held that the receipts and bank statement filed by the Respondent would make clear that what was received by the Respondent from C.Natesan was Rs.1,70,00,000/- (sic) and that payment of Rs.40,00,000/- was not received by the Respondent on the date of agreement [09.05.1996] and therefore, Respondent need not to pay Rs.43,43,125/- as claimed by the Administrator. Learned Judge further held that for the entire money received by the Respondent, Respondent had already executed sale deeds as per the agreement of sale dated 09.05.1996 and nothing further need to be done by the Respondent to the Company and closed the Company Application No.243 of 2004.
5. Being aggrieved by the order declining to sell 1.68 acres, third party J.Sekar who is the purchaser of other properties filed appeal O.S.A.No.135 of 2011. Mr.R.Murari, learned counsel appearing for Appellant-J.Sekar has submitted that there is no independent access to the property which he purchased in the auction and the Appellant could have access only through S.F.Nos.23/1, 2, 4, 25, 95/1a, 1c, 2a & 2b. Learned counsel would further submit that the learned Judge erred in concluding that Respondent had not received Rs.40,00,000/- and therefore, the property in question could not be brought for sale.
6. Learned Administrator-Senior Advocate has submitted that learned Judge failed to consider the acknowledgement of receipt of Rs.40,00,000/- by the Respondent in Clause 3 of the agreement dated 09.05.1996. It was further submitted that learned Judge failed to consider the admission of the Respondent for receipt of Rs.1,91,25,000/- on various dates in C.A.No.1037 of 2006 and the same was recorded by the learned Judge in an order dated 19.01.2007 and the same was confirmed by the Division Bench in O.S.A.No.129 of 2007 and also in S.L.P. (Civil) No.27545 of 2008. Contention of Administrator is that learned Judge failed to consider the fact that Respondent admitted the receipt of Rs.1,91,25,000/- and the learned Judge failed to consider the earlier round of litigations and the statement of the Respondent in the earlier proceedings.
7. Taking us through the typed set of papers, Mr.R.Thiagarajan, learned counsel appearing for Respondent has submitted that the order in C.A.No.1450 of 2002 would make it clear that the amount of Rs.20,00,000/- had been received in full and final settlement of the claim made against the Respondent and having received the amount, the Administrator cannot seek to re-open the issue against the Respondent. Taking note of the earlier proceedings, learned Judge rightly held that "no amount is payable by the Respondent to the Administrator pursuant to the agreement dated 09.05.1996" and the impugned order does not suffer from any error.
8. Upon consideration of contentions of Administrator and the Respondent and also the third party-Appellant, the following points arise for consideration in these appeals.
Whether the learned Judge was right in saying that Respondent had not received Rs.40,00,000/- on 09.05.1996 and that the Respondent need not to pay a sum of Rs.43,43,125/-.
For the amount so payable by the Respondent, whether the property measuring 1.18 acres in Kazhipattur village and 50 cents of land in Muttukkadu village are to be brought for sale.
9. We have heard the counsel for all the parties concerned. This is a rare phenomena where the Court appointed administrator has failed to bring to the notice of this Court a very vital factor. In fact, we are astonished to find that the administrator and Official Liquidator had not kept the paramount interest of the company in liquidation. Originally, an appeal was filed only by a third party purchaser. At the time of argument in that case, when the Court pointed out that a vital right of the company in liquidation, which is being represented by the Official Liquidator and administrator, has been given a go-bye and detriment is caused to the interest of the company and sought why appeal has not been preferred by the administrator, the learned administrator only stated that hitherto he was under the bonafide impression that when an order is passed by the Court , he is not entitled to file an appeal; but he is only duty bound to bring to the notice of the Court the developments in the matter and he would abide by whatever order is passed by the Court. This is rather unfortunate for the Official Liquidator and administrator to say so in the affidavit. The paramount duty of the Official Liquidator and Administrator is only to safeguard the interest of the company in liquidation. Only after the Court asked the Administrator about his omission to file the appeal, with a petition for condonation of delay, the Administrator has chosen to file the appeal. By our order dated 07.09.2011 in M.P.No.1 of 2011 in OSA SR.No.61894 of 2011, we have condoned the delay and thereafter appeal filed by the Administrator came to be numbered and heard along with O.S.A.No.135 of 2011.
10. Let us now take up the vital factor in this case. First of all, the administrator, who has taken the control of the property of the Company in liquidation through the order of the Court, even on the first inspection way back in the year 2000, found out that in the sale agreements executed by the respondent-Vijayakumar in favour of the CEO of the Company namely Natesan, totally 15 acres of land was agreed to be sold out of the total extent of 21.42 acres. In the first inspection, he noted down that out of this 15 acre to be sold, 5.42 acres are government poromboke land. Therefore, a complaint has been given and criminal investigation was sought for. The respondent thereafter obtained Anticipatory Bail. The investigation agency also filed charge sheet and the case is pending. The administrator has also given evidence in the criminal case. With this background, we will analyse how subsequent developments have taken place in this case.
11. In the original agreement executed on 09.05.1996, the sale consideration is fixed at Rs.1,91,25,000/- as under:-
Village Extent Total (Rs.) Kazhipattur Village 15 acres @ Rs.11,250/- per cent 1,68,75,000.00 Muttukadu Village 0.50 acres @ Rs.45,000/- per cent 22,50,000.00 TOTAL 1,91,25,000.00
12. Out of the total consideration, Rs.40 lakhs is stated to have been paid as advance at the time of execution of the agreement itself. When we see the agreement, in clause 3, it is clearly stated that Rs.40 lakhs was received and acknowledged by the vendor/respondent herein namely Vijayakumar as advance received. We also find that the words, cheque or demand draft, which were originally typed, were struck off.
13. The respondent denies that he has received Rs.40 lakhs from the company in liquidation. As per the various receipts, which are produced into the Court, he would contend that the sum of Rs.1,70,00,000/- only has been paid and not Rs.1,91,25,000/- or the advance amount of Rs.40 lakhs. At the same time, he would further contend that there is no receipt for Rs.40 lakhs evidencing that the amount was paid by cash or cheque and therefore it is not open to the administrator now to say that the entire sale consideration has been paid by him. Contention of respondent is that out of the total sale consideration of Rs.1,91,25,000/- what was received is less and it is not open to the administrator now to bring the remaining property of 1 acre and 18 cents at Kazhipattur Village and 50 cents of land in Muttukadu Village for auction.
14. In this connection, we have to examine the conduct of the respondent. The respondent earlier executed 39 sale deeds between 1996 and 1998 only the land measuring 12.32 1/2 acres out of 15 acres agreed to be sold as per the agreement of sale. Out of 39 sale deeds, 25 sale deeds were registered and 14 were unregistered. It is now brought to the notice of this Court by the administrator that out of 13.25 acres of land, 5.42 acres of land were government poromboke land in Survey No.20. Out of 13.25 acres, sale deed in respect of 97 cents of land were executed in favour of Janaganatha Rao, nominee of Natesan, Chairman and Managing Director of Anubhav Group of Companies, which is also a government land. Out of the total extent of 5.42 acres of land of the Government in Survey No. 20, 4.50 acres of land were sold in favour of the company and 97 cents executed in the name of the nominee. Therefore, the administrator had excluded those sale deeds viz., 13.25 acres 5.42 acres and the balance of 7.87 1/2 acres only were brought to sale by the administrator through Court. In the publication tenders were called for and after tender, the highest amount in the tender was kept as the base price and auction conducted in the Court, ultimately, the appellant in O.S.A. No. 135 of 2011 emerged as the highest bidder in the auction conducted in Court and he also paid Rs.50 lakhs. Whereas, admittedly, out of the total extent of 15 acres agreed to be sold by the respondent, he has executed sale deed only in respect of land to an extent of 12.32 1/2 acres only in the name of the company and still there remains balance of 2.68 acres of land. It has to be further clarified that earlier, the administrator filed a report stating that only 12.32 1/2 cents of land out of 21.42 acres were sold, but now it is stated that totally 13.25 acres of land were sold to the company, which included 97 cents of land sold in the name of Janarthana Rao. Therefore, it is clear that the administrator had excluded this land of 97 cents from the assets of the company in liquidation.
15. The respondent herein attempted to set aside the sale of 7.87.5 acres of land pursuant to the order dated 12.11.2003 in Company Application No. 211 of 2003, by filing Company Application No. 1037 of 2007. In this application he raised the plea that the auction sale itself cannot be conducted. In this application he restricted his plea only in so far as it relates to the land to an extent of 1.20 acres in Survey No.3 of Kazhipattur Village, which according to him is not covered under any registered document of sale. This application was dismissed on 19.01.2007 against which O.S.A. No. 129 of 2007 was filed before the Division Bench of this Court, which was also dismissed on 21.10.2008, against which he preferred SLP Civil No. 27454 of2008 before the Honourable Supreme Court, which was also dismissed on 26.11.2008. Therefore, the respondent, who did not challenge the entire auction brought by the administrator, has challenged the auction only in respect of a portion of the land measuring 1.20 acres, which was not included in the agreement and it was also negatived upto the Supreme Court.
16. In the meanwhile, the Administrator filed a memo numbered as Company Application No. 1450 of 2002 and this Court directed the C.B.C.I.D. to investigate into the matter in so far as it relates to the sale of Government land by the respondent. On 16.8.2001, a direction was issued to C.B.C.I.D. to proceed with the case in accordance with law. Challenging that order, respondent filed O.S.A. No. 401 of 2002 and the said appeal came to be dismissed on 26.2.2002. Ultimately charge sheet was filed in C.C. No. 6535 of 2003. During the investigation relating to sale of the government land agreed to be sold to the respondent, this Court directed to deposit Rs.50 lakhs into the Court by order passed in the anticipatory bail application on 29.04.2002 in Crl.O.P. No. 5460 of 2002 and the order was modified to furnish bank guarantee for Rs.50 lakhs and that was also allowed.
17. After sale of the property namely 7.87.5 acres for Rs.50 lakhs, the respondent filed an application stating that since the value of the property, which is now being sold is only for Rs.6 lakhs and odd per acre, for the Government land, which he has agreed to sell to the company namely 4.20 acres out of 5.42 acres, the value of the same would come to only Rs.27 lakhs and he is prepared to pay the said amount. Pursuant to this application, without any objection by the administrator, even the sum of Rs.27 lakhs arrived at was reduced and the application was allowed and Rs.20 lakhs was received in lieu of the government land sought to be sold. It is pertinent to point out that this land was given for 300 families for putting up hut and this property the respondent wants to sell against which a criminal case, at the instance of the administrator was filed which was pending investigation by the C.B.C.I.D. While so, the administrator did not make any objection nor he has filed any appeal as against this order. This order was passed even as early as in the year 2005. The respondent has utilised the sale price as base price for getting himself relieved from the clutches of the criminal case for the government land agreed to be sold. Though in that order dated 03.03.2005 in C.A. No. 1450 of 2002, only this was stated:-
"The administrator has made a claim in this application for a sum of Rs.47 lakhs, being the proportionate value of 4.20 acres, for which the company had entered into an agreement of sale to purchase from the respondent, over which there is a cloud on title. In other words, the company, which had parted with a large sum of money in favour of the respondent, was able to exploit a substantial portion of the land leaving out only 4.20 acres alone. The company paid a sum of Rs.11.25 lakhs per acre to the respondent. Accepting that value, the money refundable by the respondent in respect of that 4.20 acres comes to Rs.47 lakhs. In the meantime, the company had sold, pursuant to the Court's order, about 8.5 acres of land situated in close proximity to the land in question for a sum of Rs.50 lakhs and odd and per acre rate on that sale price comes to Rs.6.70 lakhs only. Learned counsel for the respondent would submit that the claim of the administrator against the respondent in respect of that 4.20 acres can be worked out on the basis of 6.70 lakhs per acre on the basis of which alone the administrator himself sold lands to others. There is reasonableness in the submission made by the counsel for the respondent. If this rate is accepted, then the money to be refunded by the respondent in respect of 4.20 acres of land would come to Rs.27 lakhs. Learned counsel for the respondent, by bringing to my notice various difficulties, which the respondent had undergone by entering into the transaction with the company in liquidation and the criminal prosecution his client is facing, would submit that a sum of Rs.20 lakhs would be accepted in full and final settlement of the claim of the administrator. A sum of Rs.20 lakhs by way of a banker's cheque drawn in the name of the official liquidator is also tendered in open Court.
2. Having regard to the entire facts available in this case, I am of the opinion that the sum of Rs.20 lakhs today can be accepted in full and final settlement of the Administrator's claim in C.A. No. 1450 of 2002 against the respondent. Accordingly it is accepted and the payment of Rs.20 lakhs as referred to earlier in open Court is taken as the full satisfaction of the Administrator's claim in C.A. No. 1450 of 2002. The pay order is handed over to the official liquidator in open Court.
18. Out of the 27 lakhs arrived at, Rs.20 lakhs was directed to be deposited i.e., in full satisfaction of the claim in C.A. No. 1450 of 2002 when the applicant in that application has sought for a prayer, which is totally different,which reads as follows:-
"Company application praying that this Honourable Court may be pleased to pass an order in respect of 300 huts which had been put up in Survey No. 20 which is in the middle of the other survey numbers since the land sold to Mr. R. Vijayakumar has become useless, to take up the rest of the lands by the Government and to persuade the Government to give equal extent of land i.e., 5.51 = acres of land elsewhere in Kazhipattur Village."
19. In the application, though the administrator has clearly stated that the company has paid Rs.47 lakhs to purchase the land, administrator ought not to have agreed to accept only Rs.20 lakhs to relieve the respondent from the clutches of the criminal case.
20. The other conduct of the respondent is after disposal of his earlier Special Leave Petition by the Supreme Court challenging a portion of the sale, he has filed a new application in C.A. No. 82 of 2009 seeking leave to file a civil suit in respect of the sale of 2.80 acres of land out of 7.875 acres. At that point of time, the administrator has filed an application in Company Application No. 241 of 2009 seeking direction to the respondent to handover the documents in so far as 20 cents of land, which he alleges has been left out of the original document in the custody of the respondent. Both these applications were taken up together and by order dated 22.07.2009, the application No. 82 of 2009 filed by the respondent was dismissed and the application filed by the administrator in Company Application No. 241 of 2009 was allowed. As against this, O.S.A. No. 258 and 259 of 2010 were filed and the same were also dismissed. Again, the respondent has taken up the matter before the Honourable Supreme Court in Special Leave Petition (Civil) Nos. 26160 and 26161 of 2010 and the same were dismissed on 29.10.2010.
21. Even though this application was ordered on 03.03.2005, till 2010, the offence, for which the respondent was subjected to criminal investigation, has not been compounded. Thereafter, Company Application No. 1701 of 2010 was filed by the respondent seeking to direct the administrator and official liquidator to file appropriate application for compounding the offence against him under Sections 420, 467, 468, 471 read with 109 and 120-B IPC in C.C. No.6535 of 2002 on the file of XI Metropolitan Magistrate, Saidapet, Chennai and direct the proceedings to be withdrawn on account of order dated 03.03.2005 in C.A. No. 1450 of 2002. Therefore, the respondent filed an application in the year 2010 seeking for a direction to compound the offence, for which also the administrator has not given any objection and that was allowed. It passes one's comprehension as to why the administrator, who has taken initial steps to make a criminal complaint would accept for Rs.20 lakhs and later on even accepted for compounding the offence. When admittedly the case is pending in so far as others is concerned, the respondent, who is the culprit was made to go scot free. This is rather unfortunate. Further, as seen from the records, it is the administrator who has sought the Court permission to record Rs.47 lakhs in lieu of 4.20 acres of land, whereas the purchase price itself, as per the agreement in1996, for the entire extent of 5.42 acres would be more than that.
22. Thereafter, in the report filed on 06.11.2010, the Administrator has admitted the position of having received Rs.20 lakhs in pursuance of the order dated 03.03.2005. Referring to the report of the Administrator, by order dated 06.01.2011, the application filed by the respondent came to be allowed. Relevant portion of the said order reads as under:
"4.A common report dated 06.11.2010 has been filed by the learned Administrator, wherein the learned Administrator has admitted this position of having received Rs.20 lakhs from this applicant towards full and final settlement in respect of the claim made by the administrator against the applicant in C.A.No.1450 of 2002. It is also admitted by him that this payment has been made and received, pursuant to the orders passed by this Court on 03.03.2005.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.Admittedly, on the orders passed by this Court on 03.03.2005, the applicant herein has paid a sum of Rs.20 lakhs towards full and final settlement of his liability to the administrator in respect of the Company Application No.1450 of 2002. Once the payment has been made and received by the administrator, there is no justification on their part to continue the criminal proceedings in C.C.No.6535 of 2002 pending on the file of the XI Metropolitan Magistrate, Saidapet, Chennai, against this applicant.
7.Therefore, I find force in the submissions made by the learned counsel appearing for the applicant that the criminal proceedings ought not to have been proceeded with against this applicant, after the receipt of a sum of Rs.20 lakhs made in full and final settlement of the administrator's claim."
23. In the report dated 06.11.2010, the administrator would only contend that "after sale of 7.87.5 acres of land in Kazhipattur Village, he earlier sought to sell the remaining land having an extent of 1.68 acres at Kazhipattur Village in O.A.No. 243 of 2004 and because of the subsequent proceedings, which went up to Supreme Court, no further steps were taken." In this application, in para-10 of the report, the Official Liquidator would contend that "The administrator filed C.A. No. 243 of 2004 stating that about a sum of Rs.1,03,00,000/- had to be recovered from Mr. R. Vijayakumar and sought for direction to sell 1.68 acres at Kazhipattur and 50 cents of land in Muttukadu Village. Mr. R. Vijayakumar received a sum of Rs.1,93,00,000/- from the company in liquidation. The administrator was able to realise a sum of Rs.50,00,000/- by way of sale of 7.875 acres of land and Rs.20,00,000/- paid by Mr. R. Vijayakumar towards full and final settlement in respect of the claim made by the administrator in C.A. No. 1450 of 2002. Thus, the administrator was able to recover a sum of Rs.70,00,000/- only."
24. In this report, the administrator brings out a new theory for arriving at the balance to be paid by the respondent. In this connection, we should keep in mind that as per the admission of the respondent and as per the records available with the administrator, totally Rs.1,93,00,000/- was received by the respondent. In the earlier report of the year 2004, the administrator says that there is a balance of Rs.1,03,00,000/-. It is pertinent to point out here that the administrator filed a report dated 03.02.2004 and sought for a direction to sell the property. In the opening paragraph of the report, the administrator has stated that the amount, which was paid by the company to the respondent was Rs.1,53,00,000/- between 03.01.1994 to 12.12.1997. Probably, it should be a typographical error and it should be Rs.1,93,00,000/-. Even otherwise, there cannot be any basis for mentioning Rs.1,53,00,000/- because even as admitted by the administor receipts are available, even at that point of time to show that the company has paid Rs.1,70,00,000/- by cheque. Therefore, the amount of Rs.1,53,00,000/- mentioned by the administrator in his report dated 03.02.2004 is incorrect.
25. In the report dated 06.11.2010, the administrator says that for the land, which was sold to the company by the respondent, he takes the agreed purchase price in the agreement of the year 1996 at the rate of Rs.11,250/- per cent in Kazhipattur Village. The administrator takes for calculation of the value of the land sold to the company as follows:-
-- Total area sold to the company 13.29.5 acres
-- Out of the total area, government land sold
(a) to the company 4.23 acres
(b) to Jeganatha Rao, nominee
of Natesan 97 cents
-----------
Total ....... 5.20 acres
-- Balance actual sale of land to Company ....... 7.87.5 acres
-- This 7.87.5 acres has been sold in public auction
-- For this land, administrator arrived at the actual
purchase Price namely 7.875.5 X Rs.11,250/-
per cent = Rs. 88,59,375/-
-- For the balance land sold (to the company and
to Mr. Jeganatha Rao) totalling 5.42 acres
and valued it at Rs.11,250/- per cent as per the
sale agreement and arrived at the value of = Rs. 60,97,500/-
-- Thus, totalling the value for the land sold by
Vijayakumar/respondent to the company at = Rs.1,49,56,875/-
26. For arriving at the price or the value for the land sold by the respondent, the administrator has taken into consideration the entire sale of land, including the government land. In this context, it is pertinent to point out that when the administrator calculates the land value available for sale, originally also, he excluded 97 cents of land as it stands in the name of Jeganatha Rao and not in the name of company, but for arriving at the value for the balance to be received, the administrator includes the value of 97 cents of land and shows this in the value of Rs.1,49,56,875/- as equivalent price of land sold to the company.
27. After arriving at the value of land sold to the company, inclusive of the land of the Government sold to the company as well as to the third party, the administrator deducts this land value arrived from the value of Rs.1,93,00,000/- which was received by the respondent and then comes to the conclusion that--
Actual amount received by the respondent .. Rs.1,93,00,000/-
As per the calculation of the administrator .. Rs.1,49,56,875/-
Balance .. Rs. 43,43,125/-
28. In this connection, it is pertinent to point out here that when the administrator arrives at the value of land sold by the repsondent, the entire sale of 13.29.5 acres was taken into consideration but at the same time, while giving concession before the learned single Judge for calculating the value of the government land and for releasing the respondent from the criminal case, the extent taken is only 4.20 acres, excluding 97 cents sold to Jeganatha Rao, even though money is stated to have been given by the Company. Further, as per the order, the administrator recovered only Rs.20 lakhs for 4.20 acres and not 5.20 acres of land.
29. We fail to understand as to why the administrator should take all the trouble for arriving at a new theory to bring a lesser amount, as due to the company. The predominant role of the administrator and liquidator appointed by the Court is to sub-serve the best interest of the company in liquidation. If that is taken into consideration, all that requires for the administrator to state in the report is -
-- Total amount paid by the company and received by the respondent .. Rs.1,93,00,000.00 -- Amount received from sale in public Auction (7.87.5 = acres) .. Rs. 50,00,000.00 -- Amount received from the respondent for releasing him from the criminal case for government land .. Rs. 20,00,000.00 -- Total amount received .. Rs. 70,00.000.00 -- Balance amount should be .. Rs.1,23,00,000.00
30. While so, we are at a loss to understand as to how the administrator could arrive at the sum of Rs.43,43,125/- when the facts and figures are crystal clear. There is no need or necessity at all for the administrator to take the value or purchase price and also including the government land to show as if it is paid by the respondents and deducting it from the actual sale and show a lesser amount in the report. Coupled with the fact, even in the report in the year 2004, the administrator says the balance is Rs.1,03,00,000/-; But in the report of the year 2010, he says the balance is only Rs.43,43,125/-.
31. It is pertinent to point out here the conduct of the respondent. The respondent admits the value for deduction shown by the administrator at Rs.1,93,00,000/- received by him; but would contend that Rs.40 lakhs advance was not received by him. Does not the sum of Rs.1,93,00,000/- includes the sum of Rs.40 lakhs, because, in the agreement itself, sale price is clearly mentioned as Rs.1,91,25,000/- and the earlier, agreement also is included, this is how, the administrator arrived at the total amount paid to the company at Rs.1,93,00,000/-. But according to the respondent, as seen from the receipts in the typed set of papers, it is only Rs.1,70,00,000/-. Therefore, the respondent could not argue to reduce the sum of Rs.40 lakhs towards non-receipt of advance amount from the balance of only Rs.43,43,125/- as claimed by the administrator to say that he is not liable to pay the same. This is a clear case of undue advantage taken by the respondent to suit his convenience and definitely it is not open for him to putforth such an argument. We are of the view that the administrator should not have worked out the balance as shown in the report dated 06.11.2010, especially when there are two conflicting reports filed by him, one in the year 2004 and the other in the year 2010.
32. The learned administrator, as directed by this Court, states that he does not have any receipt for the sum of Rs.40 lakhs and there was no proof in the records for receipt of Rs.40 lakhs. No proof is required when the respondent himself has acknowledged, accepted in the very written agreement itself that Rs.40 lakhs was received by him. There need not be any receipt for this. From the facts and materials on record, this Court holds that the sum of Rs.40 lakhs as advance has been received by the respondent from the company as per the agreement dated 09.05.1996.
33. In this application, the respondent now takes a curious defence, which goes to the root of the matter. The respondent contends that in the original agreement in the year 1996, the advance stated to be paid namely Rs.40 lakhs was never received by him. For the first time, this denial is raised by the respondent before this Court. We do not find that in any of the earlier proceedings so far, he had stated that Rs.40 lakhs advance was not received by him as per the agreement. Even though the word acknowledgment is mentioned in clause 3 of the agreement, the respondent would contend that since the words, cheque number and DD number were struck down he has never received the sum. To further substantiate his case, the respondent produced various receipts from 12.05.1996 to 12.12.1997 together with the statement of accounts issued by the bank. Based on the records, the respondent would contend that Rs.1,70,00,000/- was received and it was not Rs.1,91,25,000/- as per the agreement and if the sum of Rs.40 lakhs is included, it will be more than Rs.2,10,00,000/- beyond the agreed price and therefore he would contend that he had not received Rs.40,00,000/- at all.
34. In this context, when we see the receipts produced before us, the first receipt produced was dated 12.05.1996, whereas the agreement of sale was entered into on 09.05.1996. Normally, any sale agreement would contain a clause for advance and the advance would be received on the date of execution of the agreement or even on any earlier date. The receipts which are now produced are admittedly after the date of agreement namely 09.05.1996. Those amounts have been only received by cheque and routed through the bank. But the sum of Rs.40 lakhs, which was admittedly paid under agreement the agreement and the words cheque/DD number mentioned in the agreement have been struck down implying that the payment must have been made only in cash. In fact, for striking down the words "cheque number or DD number" the respondent has made his full signature. Therefore, it is clear that the respondent had received the sum of Rs.40 lakhs as advance either on the date of entering into the sale agreement or before. Merely because there was no bank transaction evidencing the sum of Rs.40 lakhs, it cannot now be gainsaid that the respondent has not received the sum of Rs.40 lakhs. The learned single Judge, in our opinion, has erred in holding that the respondent has not received the sum of Rs.40 lakhs at all.
35. Yet another point to be considered is in the earlier proceedings namely the application in C.A. No. 1037 of 2006, the respondent had stated that he has received Rs.1,91,25,000/- which we find in the order dated 19.01.2007 in C.A. No. 1037 of 2006. Further in the order, the learned single Judge clearly observed in para No.10 that "the learned counsel for the respondent, (who is appearing through out right from day one) has admitted that Rs.1,91,25,000/- was received under various agreements." So, this was the agreed amount by the respondent. Now, the respondent would contend that he has not received Rs.40 lakhs. When we analyse the agreement available in the typed set of papers, in page No.3 alone, clause No.3, in the top corner of the page, we find that the amounts namely Rs.1,70,00,000/-, Rs.40,00,000/- and total Rs.2,10,00,000/- were mentioned. This would only clearly indicate that Rs.1,70,00,000/- was received by cheque and the sum of Rs.40,00,000/- was received in cash as advance, for which the explanation offered by the learned counsel for the respondent is that if Rs.40 lakhs is taken into account, it would exceed the agreed amount. Further, he would say that the counsel has written it now. Such an explanation is not acceptable. Be it as it may. The fact remains that an admission was made in the earlier proceedings that Rs.1,91,25,000/- was received by the respondent and therefore, at this stage, it cannot be contended that he has received only Rs.1,70,00,000/-. Further, in none of the earlier petition, it was contended that the advance of Rs.40 lakhs was never received.
36. In this connection, it has to be pointed out that the administrator in his report has conveniently failed to mention anything in detail about the permission to sell 50 cents of land in Muttukadu Village, which is a very important and more valuable property. Even in the year 1996, when the value of the land was Rs.11,250/- per cent whereas the value of the land in Muttukadu was Rs.45,000/- per cent and this was lost track of, though ultimately, permission has been sought for to sell the 50 cents of land. It is pertinent to mention here that definitely, as per the sale agreement, the vendor respondent has not executed the full sale deeds in favour of the company, even though full amount has been received. Therefore, when the actual sale to the company so far was only 12.23 acres and 97 cents in the name of Mr. Jaganatha Rao, which has been excluded by the administrator. Admittedly, out of 15 acres agreed to be sold, an extent of 1.68 acres of land or 2.65 acres, excluding the 97 cents of the land is due to be executed by the respondent along with 50 cents of land at Muttukadu. Whereas, the cost received by the respondent is Rs.1,93,00,000/- which is admitted and when we go by the receipt, it is mentioned as Rs.1,70,00,000/-. Either way, even if it is admitted that Rs.1,70,00,000/- was received, what was recovered is only Rs.70,00,000/- therefore, there is a balance of more than Rs.1 crore. When we consider that Rs.1,93,00,000/- is due and what was received is only Rs.70,00,000/-, still there is a balance of Rs.1,23,00,000/-. In terms of the land, out of the total extent of 15 acres in Kazhipatur Village and 50 cents of land in Muttukadu Village, what was executed was only 12.32 acres in Kazhipattur Village and 50 cents in Muttukadu Village was still now not executed. Even out of 12.32 acres, 4.25 acres of land is government land. There cannot also be any dispute that the respondent has to execute sale deed in respect of atleast 1.68 acres in Kazhipattur Village and 50 cents in Muttukadu Village. For this, there is no explanation forthcoming from the respondent.
37. We are also surprised to note that during the course of argument, the administrator has stated that the 50 cents of land in Muttukadu Village, even can be left out as the respondent had put up construction or building thereon. Merely because the respondent has put up a construction, it will not prevent the administrator from recovering the dues payable by the respondent to the company in liquidation by bringing the property in auction. The dispute is pending from 1999 and the respondent has no legal right to put up any construction and the liquidator should not have kept quiet when the construction was put up by the respondent.
38. Even in the earlier proceedings in O.S.A. Nos. 258 and 259 of 2010, the Division Bench of this Court, by judgment dated 21.07.2010 indicted the conduct of the respondent. In para-5 (ii) of the judgment, the Division Bench quoted the relevant paragraphs of the order passed by the learned single Judge, which are as follows:-
"16. The conduct of the applicant needs to be noted herein. As already referred to in the preceding paragraph, the sale included an extent which belonged to the Government. After a thorough enquiry and a report thereon that the property, a Government poromboke, prosecution was launched against the said Natesan and the present applicant.
19. As far as the present case is concerned, the applicant does not deny the receipt of the sale consideration. He does not deny the fact that he has executed the sale deed, but it awaits registration. Having received the full consideration, the failure to register the document is an act of omission which is otherwise enforceable in law. Hence, the conduct of the applicant herein is only an indication of his intention to somehow make a gain out of his own conduct to the detriment of those who had parted with the money. Having received the consideration and waited for the sale to take place, it is not now open to the applicant to come before this Court to take advantage of his own conduct to challenge the sale. Quite apart from this, having accepted the sale as regards the other documents, which were alsonot registered, singling out the particular property is indicative of the intention, which, admittedly speaks of his conduct. Whatever be the chemistry of this attitude of this applicant, the challenge now made herein lacks bonafide. Hence, I do not find any justification for accepting this plea. Above all these, a person who has received the consideration in full and in fact in excess cannot now be permitted to take advantage of his own acts of commission and omission, seeking to derive support from Section 54 of the Transfer of Property Act. Leaving aside the statutory provision, even as a matter of equity, he does not deserve any indulgence from this Court. I do not find any justification to grant a seal of bind approval to his stand based on Section 54, which would only amount to an affirmation of a reprehensible conduct of this nature.
39. Referring to O.S.A.No.192 of 1997 in its order dated 21.07.2010, the Division Bench has extracted Para No.12 of the judgment in O.S.A.No.192 of 1997 as under:
12. We find the appellant also suppressed material fact that out of the total lands he sold some of the government lands andfor that charge sheet has been served against him. It is also not in dispute that though total land was more than 5 acres, but his claim is only with regard to 1.20 acres and not for the rest of the area, though sold in the same manner. In view of the admitted facts as mentioned above, we find no ground made out to interfere with the order passed by the learned single Judge.
40. Again, Division Bench referred to Para No.49 of the judgment of the learned single Judge, which reads as under:
49. That apart, the conduct of the applicant, which has been narrated above, throughout the previous proceedings shows that certain criminal proceedings are also pending against him and he has been taking different stand in respect of the extent of property. While at one stage he has claimed ownership over an extent of 21 Acres and subsequently over an extent of 7 acres and at one point of time he claimed ownership over 1.20 Acres and he is now restricting his claim over an extent of 2.85 acres of land. The conduct of the applicant shows that he does not deserve any indulgence from this Court, which is expected to take note of the interest of the creditors, preservation of assets of the company while granting such leave."
41. The Division Bench also affirmed the view of the learned single Judge and ultimately held in para-6 as under:
"a Court can refuse leave even to a secured creditor in the exercise of its jurisdiction. It is not as if the Court must grant leave for their asking. The learned single Judge has given the reason why he is not inclined to grant leave. We do not think the discretion has been exercised arbitrarily or illegally. We see no reason to interfere."
42. Thus, the conduct of the respondent has been deprecated by a Division Bench of this Court and it was already clearly held that as far as the payment is concerned, full consideration is given to the respondent. This finding has become final. The matter has also ended finally before the Supreme Court. It is not now open to the respondent to say that he has not received the advance amount as per the agreement. Therefore, it is clear that two Division Bench of this Court and two single Judges of this Court have already held that the conduct of the respondent has to be deprecated.
43. An attempt was made by the counsel for the respondent to demonstrate that the company did not have registered sale deeds to some extent in their favour and what exists are unregistered sale deeds and therefore, there cannot be any immovable property interest right vested or created in the name of the company and consequently, the administrator nor the company had any control over the properties. This point was also raised by the respondent in the earlier round of litigations and that was not accepted and confirmed upto Supreme Court, therefore, it is not open for the respondent now to agitate this point before us.
44. Let us now analyse the impact of the order passed by the learned single Judge closing the application. By virtue of the closing of the application, the respondent namely R. Vijayakumar was allowed to go scot-free from payment of any money payable to the company in liquidation. Whereas, out of the sum of Rs.1,93,00,000/- the company has paid to the respondent and admitted by the respondent in earlier proceedings also, the total amount recovered by the administrator is only Rs.70,00,000/-, with the result, more than Rs.1,23,00,000/- is allowed to be lost by the company. Secondly, out of the total extent of 15 acres agreed to be sold so far only 12.32 = acres is only sold and the balance of 2.67.5 acres was not sold and also 50 cents of land at Muttukadu and this enure to the benefit of the respondent without selling the land. The respondent goes scot free with the ownership of land, which is now worth much more. Further, by virtue of the fact that the respondent now becomes the owner of the remaining land i.e., 1.18 acres in Kazhipattur Village and 50 cents of land in Muttukadu Village, 97 cents of government land has been sold in the name of Jaganatha Rao, which has been excluded by the administrator. Further, the respondent could demand higher amount from the auction purchaser by stating that except this property, there is no other way to reach the auctioned land. Above all, even for the government land, which is unlawfully agreed to be sold, he has been conveniently let off from the criminal case, against which, the administrator did not prefer any appeal or object to the closing of the criminal case initiated against the respondent so that he can move scot free with all the benefits accrued to him. The respondent has admittedly cheated the company in liquidation and played fraud on the Court and he was allowed to go scot free. Even in the earlier proceedings, the Division Bench chided the activities of the respondent. Therefore, in all angles, the respondent has gained maximum of the advantage at the cost of the assets of the company in liquidation. Hence, we find it appropriate to set aside the order passed by the learned single Judge on 21.02.2011 in Company Application No. 243 of 2004 in C.P. No. 130 of 1999 and direct that both the properties namely land having an extent of 1.18 acres in Kazhipattur Village and 50 cents in Muttukadu Village be brought for public auction so that the sale proceeds can be appropriated towards the credit of the company in liquidation.
45. As far as the appeal filed by the third party purchaser in O.S.A. No. 135 of 2011 is concerned, the appellant only pleads that there is no way to reach the property purchased by him in the earlier court auction and therefore he is ready and willing to purchase the remaining property. In fact, the appellant had participated in the tender process and knowing fully well about the nature of the property, he purchased the property for Rs.50,00,000/-. Now, the appellant approached this Court through the administrator by filing C.A. No. 243 of 2004 in C.P. No. 133 of 2009 seeking permission of this Court to sell the property to him instead of bringing the property for sale through public auction. The learned single Judge dismissed the application against which the present appeal is filed. The appellant participated in the tender process and purchased the property after knowing the features of the property. Moreover, the appellant, as a purchaser of portion of the property in the Court auction, cannot have any special right, much less legal right to seek permission to sell the property of the company in liquidation to him without bringing it for sale in public auction. However, we make it clear that the appellant in O.S.A. No. 135 of 2011 is always at liberty to participate in the public auction as and when it is notified by the administrator and we are not inclined to grant the relief of sale of the property to him without public auction.
46. Accordingly, O.S.A. No. 305 of 2011 filed by the Administrator is allowed setting aside the order passed by the learned single Judge on 21.02.2011 in Company Application No. 243 of 2004 in C.P. No. 130 of 1999 and we direct that both the properties namely land having an extent of 1.18 acres in Kazhipattur Village and 50 cents of land in Muttukadu Village be brought for public auction. The learned single Judge is required to fix the present market value of both the properties and thereafter proceed with the public auction after ensuring due publication for sale. In view of the order passed in O.S.A. No. 305 of 2011 filed by the administrator, O.S.A. No. 135 of 2011 filed by the respondent J. Sekar is disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
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