K. A. PUJ, J. ( 1 ) THE Official Liquidator has filed this report seeking direction from this Court to the purchaser, viz. Sainath Disposals to pay the balance amount with 18% interest and take delivery of assets. The Official Liquidator has sought the permission to forfeit the amount paid by the purchaser and to invite fresh tenders for sale of assets. ( 2 ) THE Official Liquidator has submitted in his report that by an order dated 05. 09. 1991 passed by this Court, the Company viz. M/s. Mermaid Chemicals Pvt. Ltd. was ordered to be wound up and he was appointed as Liquidator thereof with usual powers under the Companies Act, 1956. He has further submitted that by an another order dated 20. 03. 1997 passed by this Court in Company Application No. 277 of 1996, he was permitted to sell all the properties of the Company in liquidation. ( 3 ) THE O. L. has further submitted that pursuant to the advertisement issued in the Newspapers, he has received only two offers for Lot No. II i. e. Plant and machinery and other movable assets. No offer was, however, received for Lot No. I i. e. land and building and Lot No. III i. e. entire assets of the Company in liquidation. He has further submitted that after auction proceedings were over, he has received an offer of Rs. 8,25,000/- for entire assets of the Company without earnest money deposit from M/s. Sainath Disposals of Baroda. He has placed the said offer of M/s. Sainath Disposals before this Court, alongwith auction proceedings by way of O. L. Report No. 98 of 1999 and this Court vide its order dated 23. 12. 1999 accepted the highest offer of Rs. 21 Lacs quoted by M/s. Sainath Disposals in the auction proceedings conducted in the open Court. ( 4 ) THE Official Liquidator has further submitted that pursuant to the confirmation of sale in favour of M/s. Sainath Disposals, an amount of Rs. 5 Lacs, being the first instalment was deposited by the said party as per the terms and conditions of sale and requested the O. L. to give inspection of the assets of the Company in liquidation. The total amount deposited by the purchaser including earnest money deposit was Rs. 6,25,000/ -. The purchaser, thereafter, moved Misc. 5 Lacs, being the first instalment was deposited by the said party as per the terms and conditions of sale and requested the O. L. to give inspection of the assets of the Company in liquidation. The total amount deposited by the purchaser including earnest money deposit was Rs. 6,25,000/ -. The purchaser, thereafter, moved Misc. Civil Application No. 10 of 2000 for setting aside / reviewing / reconsidering the order of confirmation of sale passed on 23. 12. 1999. While disposing off the said application on 08. 05. 2000, this Court has extended the time to make payment of balance amount upto 31. 07. 2000. The Official Liquidator, thereafter, wrote a letter to the purchaser on 26. 05. 2000 demanding the balance payment as per this Courts order. Instead of depositing the balance amount of sale proceeds, the purchaser in his reply letter dated 28. 05. 2000 informed the Official Liquidator that though the front shutter of the factory premises was sealed, back shutter was broken and materials and spare-parts were lifted out. It was also stated that materials as per the list were not available and, therefore, asked for the refund of the amount deposited so far. The purchaser wrote another letter on 13. 06. 2000 to the Official Liquidator that materials have been stolen from the factory premises when security staff of security agency was present and it was done in consultation with the Official Liquidator. ( 5 ) THE Official Liquidator has further submitted that being aggrieved by the order dated 08. 05. 2000 passed by this Court in Misc. Civil Application No. 10 of 2000, the purchaser filed O. J. Appeal before the Division Bench of this Court. The said appeal was dismissed by an order dated 17. 01. 2001. However, liberty was granted to the purchaser to approach the learned Company Judge for extension of time for depositing the balance amount on the ground that he was willing to take away the entire property on "as IS WHERE IS WHATEVER THERE IS BASIS" as it stands on the date of order. Even after one month from the date of the Division Bench order, the purchaser neither made any payment nor any request for extension of time was made and hence the Official Liquidator has filed the present report on 15. 02. 2001 seeking above referred direction. Even after one month from the date of the Division Bench order, the purchaser neither made any payment nor any request for extension of time was made and hence the Official Liquidator has filed the present report on 15. 02. 2001 seeking above referred direction. ( 6 ) THOUGH notice on this O. L. R. was issued by this Court on 28. 02. 2001, nobody had appeared on behalf of the purchaser for quite some time. Hence, this Court has passed an order on 08. 08. 2001 directing the purchaser as to why amount of Rs. 6,25,000/- deposited qua the bid of purchase of properties of the Company should not be forfeited as he has failed in depositing the remaining amount within stipulated time. In the meantime, a letter by RPAD was received by the Court and while directing the Registry to keep the said letter on file of this case, this Court passed an order on 28. 12. 2001 and observed that considering the nature of allegations made in the letter received by the Court and the annexures attached with the said letter, this O. L. R. shall have to be disposed of by a speaking order. The Court has, therefore, directed the purchaser to arrange for his appearance on the next date of hearing, otherwise, this Court shall pass appropriate orders including forfeiture of the entire amount paid by the bidder / purchaser. ( 7 ) IT appears from the record that Mr. M. M. Tirmizi, the learned advocate has filed his appearance on behalf of the purchaser and an affidavit in reply was filed on 02. 02. 2002. It was stated in the said affidavit that the back side door of the factory premises of the Company situated at Plot No. 162 was already broken and machinery and tools were stolen. It was further stated that the security officials employed by the Official Liquidator had either connived or had joined hands with those who committed theft. It was further stated that because of the said theft, the total cost of the materials was reduced to a great extent and whatever machinery was left behind, was made useless due to pilferage. It was further stated that the security officials employed by the Official Liquidator had either connived or had joined hands with those who committed theft. It was further stated that because of the said theft, the total cost of the materials was reduced to a great extent and whatever machinery was left behind, was made useless due to pilferage. The respondent No. 2 has also made allegations against GIDC which had removed fencing on the three sides of the building and large scale digging was done and the Cement pipes were laid down through the premises of the Company in liquidation. The respondent No. 2 has further stated that he was ready and willing to purchase and pay for the same provided he may be given what he had bid for. ( 8 ) THEREAFTER on 12. 02. 2002, pursuant to the direction of this Court, the Official Liquidator has submitted that the Valuation Report of the plant and machineries along with other assets of the Company in liquidation was made as on 16. 04. 1998 and copy thereof was produced on record. The Official Liquidator was further directed to get another inspection made and to submit an inventory report as to which of the items mentioned in the report as on 16. 04. 1998 were available at the site on that day. Pursuant to this direction, the Official Liquidator has filed his report on 17. 09. 2002. He has stated in the said report that he has sent his representative to the site on 30. 04. 2002 along with Valuer Shri Mukesh Shah for verification and preparing of fresh inventory so as to find out as to whether any item was missing. The Official Liquidator has also attached the report of the Valuer dated 04. 09. 2002 wherein he has observed that certain items amounting to Rs. 79,000/- were found missing and certain items which could not be inventoried for want of light and access to the building, amounting to Rs. 79,500/- were also found in excess of earlier valuation report dated 16. 04. 1998. ( 9 ) BASED on the aforesaid report of the O. L. as well as fresh inventory taken out by the Valuer, this Court has passed an order on 02. 07. 2003 observing that it is too strange a coincident that against the six items worth Rs. 04. 1998. ( 9 ) BASED on the aforesaid report of the O. L. as well as fresh inventory taken out by the Valuer, this Court has passed an order on 02. 07. 2003 observing that it is too strange a coincident that against the six items worth Rs. 79,000/- missing, the Valuer shall find out another six items worth as much. Further, the O. L. has already deployed security. Nevertheless, the articles have been missing from the Companys premises. Both these incidents call for an investigation. The Court has further observed that since Mr. Laskari, the proprietor of M/s. Sainath Disposals has not come before the Court inspite of several notices, it appeared that he was not interested in the said purchase any further and justiciable so. The Court has, therefore, directed that the sale of the assets of the Company confirmed in favour of the said Sainath Disposals be cancelled. The O. L. was directed to refund the entire amount received from M/s. Sainath Disposals including the amount of earnest money deposit to the said M/s. Sainath Disposals. While passing this order of refund of the amount paid by M/s. Sainath Disposals, the Court has further observed that several articles of significant value have been found missing. The land and building also have been damaged and the complaint was also lodged against the O. L. personally. The Court has further directed the O. L. to call upon the security agency for explaining the loss of articles and also to call upon the Valuer as to how he happened to miss enlisting six items referred to in the Valuation Report dated 04. 09. 2002. The O. L. was directed to submit his further report within four weeks from the date of the said order i. e. 02. 07. 2003. ( 10 ) PURSUANT to the aforesaid order, the O. L. has filed his report on 29. 07. 2003. In his report, he has submitted that an amount of Rs. 6,25,000/- was paid to M/s. Sainath Disposals on 14. 07. 2003. He had written a letter to the Security Agency calling for explanation of lost articles vide his letter dated 07. 07. 2003 and in response to this letter, the Security Agency has given its reply on 15. 07. 2003. 6,25,000/- was paid to M/s. Sainath Disposals on 14. 07. 2003. He had written a letter to the Security Agency calling for explanation of lost articles vide his letter dated 07. 07. 2003 and in response to this letter, the Security Agency has given its reply on 15. 07. 2003. It was stated by the Security Agency in the said letter that no theft was committed in the premises of the Company in liquidation and whatever items were there earlier, are there even today and not a single item was missing. The O. L. has further submitted that he also wrote a letter to the Valuer on 07. 07. 2003 and in response to the said letter, the Valuer has replied on 26. 07. 2003. In the said reply, the Valuer has raised several issues. He has submitted that the unit was in closed condition - without any electricity connection. The daylight available inside the room is negligible and he has to depend on battery light in most of the case. Due to closed condition, the inside condition of the shed becomes risky and there was likelihood of some animals like snake, bees, scorpios etc. due to which proper access and identification became difficult. In such cases, he has to depend on personal judgment after having glimpse of a Machine. He has further submitted that the inventory in 1998 was taken by him personally whereas the inventory of 2002 was taken by his Engineer Mr. Gandhi. Since different persons were involved and no reconciliation was done between two, the error in question has been made. Majority of Machines were without number plate. The Machines listed in missing items and extra items are of small size and are of portable nature. While doing inventory in 2002, the building was found in heavy damaged condition due to earthquake of January 2001. The flooring and walls were observed in broken condition. It is likelihood that some of the missing items might have been displaced from their respective position due to earthquake. The access for inspection was also very risky and his Engineer Mr. Gandhi could not check each and every Machine minutely due to the risk of falling of structure. Over and above inadequacy of light was there. Due to all these reasons, the Valuer has submitted that there was an error in identifying and reporting of Machines by their technical names. Gandhi could not check each and every Machine minutely due to the risk of falling of structure. Over and above inadequacy of light was there. Due to all these reasons, the Valuer has submitted that there was an error in identifying and reporting of Machines by their technical names. Otherwise quantity wise the machines are same in number and there is no addition or deduction in them during four years of time and hence fear of theft is ruled out as per his opinion. If it is required to reconcile the inventory with reference to earlier one, he is prepared to do it in presence of the representative of the O. L. ( 11 ) CONSIDERING the aforesaid report of the O. L. and the explanation of the Valuer as well as Security Agency, this court has passed an order on 31. 1. 2005 directing the valuer as well as security person to remain personally present in the Court. The court was at pain to state in the order that the O. L. has simply forwarded two replies received from the Valuer as well as Security Agency along with his report, without offering any comments or making any suggestions in respect of the explanation received from the Valuer as well as Security Agency. The Valuer has simply put forward a plea regarding mistake whereas the Security Agency has denied that the theft was committed. As a result of the alleged discrepancy found in the items in two Valuation Reports, the sale which was confirmed in favour of the purchaser was cancelled and the entire procedure will have to be undergone denovo. The O. L. has placed on record the minutes of the meeting of the sale committee held on 19. 1. 2005 , wherein, it was decided to appoint other Valuer to carry out fresh valuation and the representative of the Bank has also agreed to take up the matter with their higher up on receiving the details of expenses regarding Security Charges payable to them. The sale committee has also decided to give fresh advertisement in the "gujarat Samachar", Ahmedabad edition in Gujarati Script and "the Economic Times", Ahmedabad edition in English Script and the O. L. was authorised to fix up the sale programme. ( 12 ) MR. The sale committee has also decided to give fresh advertisement in the "gujarat Samachar", Ahmedabad edition in Gujarati Script and "the Economic Times", Ahmedabad edition in English Script and the O. L. was authorised to fix up the sale programme. ( 12 ) MR. R. A. Mishra, learned advocate appearing for the secured creditors - Canara Bank, respondent No. 1 has submitted that both the security agency as well as valuer have committed fraud and it is only because of their negligence and carelessness, the entire sale was cancelled. He has further submitted that the Security Agency as well as the Valuer should be taken to the task and whatever loss that may be suffered as a result of the fresh sale, the same should be recovered from the Valuer as well as Security Agency. Mr. Mishra further pointed out that security agency has also failed to draw the attention of the O. L. about the breaking of the shutter from the back side of the premises in question. Mr. Singh, the partner of the concerned security agency, who is present in the Court has submitted that no such shutter was broken. The photographs which are produced however clearly show the broken door. The Valuer who is present in the court has submitted that he has taken all care in taking inventory as well as valuation of the property in question. It was only because of the damaged condition of the building and lack of adequate light and other facilities and having no access to the premises, the items were not properly identified. He has, therefore, submitted that no liability should be fastened on him for cancellation of the sale. ( 13 ) FROM the foregoing facts, certain important issues arise for this Courts consideration. The role of the office of the O. L. , the Valuer, the Security Agency and the auction purchaser - all are at stake. It appears that in a very systematic and planned manner, first of all, the order regarding refund of EMD and other payment was obtained from this Court and when explanation was sought for from the Security Agency as well as the Valuer, the plea regarding mistake was put forward. It appears that in a very systematic and planned manner, first of all, the order regarding refund of EMD and other payment was obtained from this Court and when explanation was sought for from the Security Agency as well as the Valuer, the plea regarding mistake was put forward. The Valuer as well as the Security Agency have failed to discharge their duty in proper manner and the O. L. has also not taken proper care by not placing the correct facts before this Court and by not taking and/or suggesting proper actions against the Valuer as well as Security Agency. The Valuer being an export in his field should have taken proper care before submitting his report. Here in the present case, it is an admitted position that in earlier report of 1998, certain items were not considered. It is also an admitted position that the items which were considered were not found subsequently. An inventory was taken in 2002. The Valuer has simply stated that items worth Rs. 79,000/were missing. As against this, items worth Rs. 79,500/were found which were not incorporated in the earlier report. In such a situation, the Valuer is certainly answerable as to why he has not taken into consideration the items which were found subsequently. He cannot justify his action by saying that a mistake was committed in identifying the Machineries. This lame excuse would not help him in any manner and if no such efficiency or competency is shown by him in preparing the Valuation Report and/or Inventory, he is not fit to undertake such exercise any further. The O. L. shall have to think twice before recommending the name of such Valuer for valuing or making inventory of the assets of the properties of the Company in liquidation. ( 14 ) AS far as the role of the Security Agency is concerned, it is a common experience by now that they are only interested in preparing their bills and did not take any care for protection of the assets of the Company in liquidation. Several instances of theft have come across in the matters of Companies which have gone into liquidation despite the fact that the Security work of such Companies was assigned to Security Agencies. In most of the cases, the Security Staff itself is involved. Several instances of theft have come across in the matters of Companies which have gone into liquidation despite the fact that the Security work of such Companies was assigned to Security Agencies. In most of the cases, the Security Staff itself is involved. It is also by now an established fact that deployment of the Security Staff is merely on paper and in reality, only few persons are deputed and salaries and wages are claimed much in excess of their actual strength. It is the duty and the function of the O. L. to keep close watch over all these issues and place the correct facts before the Court. Periodical checking of the Security Staff, ascertainment of their actual strength, personal verification, keeping all necessary records at his office - all these things are required to be looked into by the office of the O. L. It is very sorry state of affairs that even the office of the O. L. is also not free from any blames. He is either interested in continuing this mess or he has no desire to set right the things and render useful services as an officer of the Court. Be that as it may, the cancellation of sale in the present case, is the outcome of the joint and combined efforts undertaken in the most dubious and suspected manner by all these persons, namely, the purchaser, the Valuer, the Security Staff and the O. L. and it is difficult to ascertain the quantum of their involvement in the matter. ( 15 ) SINCE the sale is already cancelled by this Court and fresh procedure will have to be undertaken, the O. L. is hereby directed to entrust the work of identification of machineries and prepare fresh inventory with the help of the Valuer Mr. Mukesh Shah himself. It is, however, made clear that no fees should be charged for this purpose as it is only because of his mistake, this exercise will have to be undertaken. So far as the expenses which are to be incurred for publication of advertisement etc. , the same are directed to be recovered from the security agency in question and the O. L. is directed to issue the advertisement as per the decision taken in the sale committee meeting held on 19. 01. 2005 after finalising the sale programme. So far as the expenses which are to be incurred for publication of advertisement etc. , the same are directed to be recovered from the security agency in question and the O. L. is directed to issue the advertisement as per the decision taken in the sale committee meeting held on 19. 01. 2005 after finalising the sale programme. The Court makes it clear that the Official Liquidator shall bring to the notice of this Court the observations made hereinabove with regard to the Valuer and the Security Agency while making his recommendation for their appointment in any other Company in liquidation. ( 16 ) THIS OLR stands disposed of accordingly. .