JUDGMENT Hon’ble Sunil Ambwani, J.—Heard Shri Navin Sinha, Senior Advocate assisted by Shri Yashwant Verma for Jaiprakash Associate Ltd. (JAL); Shri Ashok Mehta for Official Liquidator and Shri Zaffer Naiyer, Additional Advocate General assisted by Shri Anil Mehrotra, Standing Counsel for the State of U.P. Shri B.K.L. Srivastava, Official Liquidator is also present. 2. M/s U.P. State Cement Corporation Ltd. was wound up by this Court on 8.12.1999 on the recommendation of Board of Industrial and Financial Reconstruction and the Official Liquidator was appointed liquidator of the Company (in liq.). The possession of the unit was taken over on 31.7.2001. An application No. 47788 of 2001 was filed by the State Government on 15.7.2001 to direct the Official Liquidator to take appropriate steps in the light of the winding up orders and to give due consideration to the offer made by M/s Grasim Industries Ltd. so that liability of the Company may be discharged and the interest of workmen and other staff be protected. The application was opposed by the Allahabad Bank and was rejected by the Court on 14.2.2002. The then Advocate General was required to make statement whether the State Government would like to offer the same reliefs and concessions, which were included in the sale of the Company to any other buyer of the unit. The State Government filed an affidavit of Shri S.N. Shukla, Industrial Development Commissioner, U.P. on 1.1.2002. The State Government submitted that the idea of sale was not merely the disposal of the assets by their transfer to a purchaser who has the necessary resources, competence and experience to run the unit. The State Government was primarily concern with the revival of the unit through privatisation. In para 6 of the affidavit, Shri S.N. Shukla, Industrial Development Commissioner states as follows : “(1) That the deponent is presently posted as Industrial Development Commissioner and Principal Secretary, Government of U.P. Lucknow and as such he is fully acquainted with the facts deposed to below. (2) That the present affidavit is being filed in compliance with the order dated 20.12.2001 passed in the aforesaid matter, by the Hon’ble Court. (3) That the State Government’s primary concern has been revival of unit at the earliest though privatization in the interest of the workers. (2) That the present affidavit is being filed in compliance with the order dated 20.12.2001 passed in the aforesaid matter, by the Hon’ble Court. (3) That the State Government’s primary concern has been revival of unit at the earliest though privatization in the interest of the workers. The idea is not merely disposal of assets by their transfer to a purchaser who has the necessary resources, competence and experience to run the unit. (4) That the offer of M/s Grasim Industries has been received after open public tender and they are one of the largest cement producers in the country. (5) That the request made by the State Government to the Hon’ble Court was by way of helping and assisting the Liquidator in the disposal of the Company’s property under Section 457 (1) (c) to save time instead of initiating the process afresh at his level. (6) That the State Government has no objection to this Hon’ble Court exploring the possibility of a higher bid and the State Government would in that event extend the same reliefs and concessions as those offered to M/s Grasim Industries. However, it is submitted that the following concerns of the State Government may kindly be also kept in view while taking a decision in this regard : (i) The process of restarting the Unit may not get unduly delayed. (ii) There is no guarantee for a higher bid and meanwhile we may loose the offer already received. (iii) Besides, the bid amount, the resources, competence, experience and the commitment of the bidder to run the unit also has to be kept in view. (7) That, however, in case it is decided to re-tender then the present offer of M/s Grasim Industries should remain valid and the amount offered by them should be kept as the minimum reserved price. Moreover in case any higher bid is received in all fairness M/s Grasim Industries may be given the first option to purchase the property at that price. (8) That besides the State Government the consent of the Financial Institutions and Banks to extend similar accommodation the new purchaser is also necessary.” 3. Moreover in case any higher bid is received in all fairness M/s Grasim Industries may be given the first option to purchase the property at that price. (8) That besides the State Government the consent of the Financial Institutions and Banks to extend similar accommodation the new purchaser is also necessary.” 3. The Court rejected the application on the ground that the sale could only be made by the Official Liquidator under the supervision of the Court and that efforts of the State Government to sell the assets without associating the Official Liquidator could not be accepted under the Companies Act, 1956. The order dated 14.2.2002 rejecting the application of the State Government was challenged in special appeals. During the pendency of the special appeals, the assets were re-advertised after re-valuation (the third valuation) and that the factory at Churk and mines at Ghurma were also directed to be included in the advertisement. The special appeals were dismissed on 8.12.2004 and the matters were remitted to the Company Judge to carry out advertisement of sale in accordance with the orders passed by it through the ‘Assets Sale Committee’ by global tender. The Official Liquidator sought nominations from IDBI; State Bank of India; Industrial Development Commissioner and Principal Secretary, Government of U.P. and directed the ‘Assets Sale Committee’ to advertise the assets for sale with reliefs and concessions. The ‘Memorandum of Information’ (MOI) was prepared including the factory at Churk and land at Ghurma. The ‘Assets Sale Committee’ considered the bids and shortlisted four bidders who fulfilled the financial and technical qualifications and were major players in the cement industry. Before the financial bidding, queries were made with regard to reliefs and concessions, delivery of physical possession of the assets and benefits to be given to the workmen. The Court found that in the back drop of the case in which the tender documents running into thousand pages and that detailed report of geological surveys and three valuation reports were prepared, the stage was set for bidding and that any further queries may disturb the level playing field. Consequently the applications were rejected. Some of the bidders filed Special Appeals No. 1464 of 2006 and 1465 of 2006 which were dismissed on 16.1.2006 by a long and detailed order. 4. Consequently the applications were rejected. Some of the bidders filed Special Appeals No. 1464 of 2006 and 1465 of 2006 which were dismissed on 16.1.2006 by a long and detailed order. 4. With the consent of parties, the matter was taken up in chamber on 31.1.2006 for financial bidding in which the JAL was declared highest bidder with Rs. 459 crores; M/s Dalmia Cement (Bharat) Limited with Rs. 376 crores; and M/s Lafarge (India) Private Limited with the reserve price of Rs. 271 crores were the next bidders. M/s Grasim Industries Limited did not offer any bid. The highest bid of JAL was accepted. The JAL deposited 25% of the offer on 15.2.2006, and made an offer to deposit the balance in three installments, last of which was due on 19.9.2006. The offer was accepted subject to bank guarantees. The entire amount was deposited and sale was confirmed on the extended date on 11th October, 2006. 5. During all this period Court was busy supervising and guiding the Official Liquidator every week in the audit and finalisation of employees provident fund accounts, taking over and managing schools and hospitals, giving directions for summoning and preservations of the records; mapping and identifying the properties spread over 80 Kms, adjudicating the electricity bills, advertisement and entertainment of the claims of about 5900 workmen, secured and unsecured creditors. The accounts of the provident funds were audited and handed over to Regional Provident Fund Commissioner, Varanasi. 6. Application was made by U.P. State Mineral Development Corporation Ltd. (UPSMDC) and M/s R.P.J. Mineral Ltd. for modifying the order by excluding Blocks V, VI and VII of the Kajrahat limestone mines. The Court caused detailed enquiries with regard to the leases initially executed in respect of blocks V, VI, VII in favour of UPSIDC and then UPSMDC, with its joint venture partner M/s R.P.J. Mineral Ltd. The application was rejected by the order dated 20.9.2006. This judgment was taken in Special Appeal and affirmed, against which a Special Leave Petition was preferred. 7. Application was also made by M/s Sonbhadra Mineral Private Ltd. in joint venture with UPSMDC Ltd. for dolomite mines which was also considered by the Court and rejected by the order dated 30.3.2007. In this matter also a Special Appeal was filed, and thereafter the matter was taken up in Special Leave Petition. The Supreme Court remanded the matter to the appellate Court. In this matter also a Special Appeal was filed, and thereafter the matter was taken up in Special Leave Petition. The Supreme Court remanded the matter to the appellate Court. Both RPJ Mineral Ltd. and M/s Sonbhadra Mineral Ltd have since withdrawn their objections and appeals, and the orders dated 20.9.2006 and 30.3.2007, have become final. 8. The Court appointed a ‘Liquidation Claims Committee’ consisting of a Retired District Judge; a Chartered Accountant and a lawyer of the Court. The claims were invited in the month of June-July 2006 and were considered by the ‘Liquidation Claims Committee’. The Official Liquidator submitted his report accepting the report of the ‘Liquidation Claims Committee’ with regard to proposed dividend out of sale proceeds, and part of the interest earned thereon. The workmen and creditors filed about 99 appeals under Rule 164 of Companies (Court) Rules, 1959 after they were communicated with rejection and part rejection of their claims. All the appeals were heard for about three months, considered and decided on 27.4.2007 partly allowing the claims of secured creditors and the workmen. Thereafter IDBI, and SBI moved applications for modifications and clarifications of their claims which were allowed by the Court and that the Official Liquidator thereafter submitted his report No. 248 of 2007 on October 9, 2007 with the recalculation of the claims of the secured creditors and workmen and has declared dividend payable after applying pari-passu under Section 529-A of the Companies Act, 1956, between secured creditors and workmen @ 1=0.797430. The amount to be distributed to the secured creditors is Rs. 305.63 crores as against their claims admitted for pari-passu at Rs. 383.27 crores. The amount to be disbursed to the workmen is Rs. 116.34 crores as against their claim admitted for pari-passu at Rs. 145.96 crores. Some objections were filed to this report, which were considered and decided on 11.10.2007, and that the report of the Official Liquidator with regard to declaration of interim dividend out of the 99% of the amount realised from the assets after taking into account the liquidation expenses and dividend declared for secured creditors and workmen as overriding preferential claims has become final. The amount is available with the Official Liquidator and is ready to be distributed to the secured creditors and workmen and towards liquidation expenses. The amount is available with the Official Liquidator and is ready to be distributed to the secured creditors and workmen and towards liquidation expenses. The 5918 workmen including large number of widows and children of the workmen, who have died in between, are waiting for their dues since 8.12.1999. Hundreds of workmen died in this interim period of nine years and that almost all the families are on the verge of starvation. 9. At this stage the Application No. 145925 of 2007 filed by JAL has come up for consideration with the following prayers, to : (a) direct the State Government to forthwith renew and transfer the mining leases detailed in Part IV of the MOI in favour of applicant within such appropriate period as this Hon’ble Court may deem fit and proper; (b) consider and dispose of the pending applications and objections relating to the terms and conditions upon which trade tax and related exemptions have been granted as well as the application seeking clarification on the issue of date of possession; and (c) till the disposal of the aforesaid objections, this Hon’ble Court be pleased not to dispose any amount from the sum of Rs. 459 crores deposited by the applicant as sale consideration. 10. On 4.7.2007 the Court was informed that learned Additional Advocate General will argue the case and an adjournment was sought to give reply to the application. A counter affidavit of Shri Atul Kumar Gupta, Infrastructure and Industrial Development Commissioner and Principal Secretary, Government of Uttar Pradesh, Lucknow was filed on 23.7.2007. The JAL has filed rejoinder affidavit of Shri K.M. Abraham. A counter affidavit of Shri M.V.S. Rami Reddy, Secretary, Industries, Geology and Mining Department, Government of U.P., Lucknow was also filed to which JAL has filed rejoinder affidavit on 27.7.2007. 11. The matter was heard on 3.8.2007; 7.8.2007 and on 8.8.2007. Thereafter the State Government took several adjournments. Finally the Additional Advocate General argued the matter on 11.10.2007 and that some clarifications were given by Shri Anil Mehrotra, Standing Counsel today on 12.10.2007. Taking into account the urgency of the matter and expediency to distribute the interim dividend to the workmen and the secured creditors, the matter was allowed to be argued at length and judgment is being dictated in open Court. 12. Taking into account the urgency of the matter and expediency to distribute the interim dividend to the workmen and the secured creditors, the matter was allowed to be argued at length and judgment is being dictated in open Court. 12. Shri Navin Sinha, Senior Advocate, appearing for JAL submits that Section 457 (2)(i)(c) of the Companies Act, 1956 authorises the Court to do all such things which may be necessary for the sale and transfer of the assets. While supervising the liquidation proceedings the Company Court has all the powers to transfer the assets, to conclude the sale, and to distribute the sale proceeds. In these matters, the Company Court acts as a Civil Court in exclusion to the authority of other Courts. Rule 6 of the Companies (Court) Rules, 1959 allows the procedure of the CPC to be followed which includes Order XXI CPC. While exercising such powers the Court can set aside the sale under Order XXI Rule 89 and decide the applications made by the purchaser as well as confirmation of sale under Rules 91 and 92, CPC. The jurisdiction of the Court extends to the stage till decree is satisfied. The Court is also authorised to pass orders with regard to delivery of possession under Rule 95 and all questions relating to right, title or interest are to be decided by the Court under Rules 100 and 101. Shri Navin Sinha has relied upon judgments in Nathulal v. Phoolchand, AIR 1970 SC 546 ; Harnandrai Badridas v. Debidutt Bhagwati Prasad and others, (1973) 2 SCC 467 in submitting that under Section 47, C.P.C decree holder can move executing Court for delivery of vacant possession of immovable property. The confirmation of sale should terminate all questions as to execution of decree and that the legislature has specifically made such rules as Rules 95 to 102 under Order XXI C.P.C. casting a duty on the executing Court which does not come to an end with the confirmation of sale. Any question raised by the judgment debtor at the time of delivery of possession and arising between the parties to suit must be decided by the executing Court. Any question raised by the judgment debtor at the time of delivery of possession and arising between the parties to suit must be decided by the executing Court. In B. Gangadhar v. B.R. Rajalingam, (1995) 5 SCC 238 Hon’ble Supreme Court held that the executing Court would be justified to order the removal of unlawful or illegal construction made pendente lite so that the decree for possession or eviction, as the case may be, effectually and completely executed, and the delivery of possession is given to the decree-holder expeditiously. It is not necessary that a tenant should be made party to the suit when the constructions were made pending suit and tenants were inducted into possession without leave of the Court. In Gannon Dunkerley and Co. Ltd. and another v. Maharashtra Industrial Development Corporation and others, (1996) 3 Comp. L.J 425 (Bom) the Bombay High Court held that under Section 457 (1) (c) of the Companies Act, 1956 the liquidator in a winding up proceedings by the Court shall have power with the sanction of the Court to sell the movable and immovable properties and actionable claims of the company by public auction or private contract. The assets may comprise of lease hold rights of the company. In such cases the Company Court has the jurisdiction and power to issue all necessary ancillary and incidental directions so as to effectuate the mandate contained in Section 457 (1)(c) read with other enabling provisions of the Act. The Company Court has jurisdiction to issue necessary directions to one and all in respect of matters interlinked with the disposal of the property of the company (in liq.) by the official liquidator with the sanction of the Court. 13. The Court desired the Additional Advocate General to make submissions in reply, on the questions whether the Company Court has jurisdiction to allow the prayers made by the JAL. Shri Jaffer Naiyer, Additional Advocate General and Shri Anil Mehrotra went on seeking adjournments after adjournments. Ultimately when the arguments began and they were required to make their submissions, they did not choose to reply to the arguments. Shri Jaffer Naiyer, Additional Advocate General and Shri Anil Mehrotra went on seeking adjournments after adjournments. Ultimately when the arguments began and they were required to make their submissions, they did not choose to reply to the arguments. Shri Jaffer Naiyer would rather submit that the State Government is doing everything possible to discharge their promise given to the Court and that all possible steps have been taken to issue notifications regarding waivers, reliefs and concessions and that the necessary orders subject to restrictions contained by the Forest Conservation Act, 1980, are being issued for the purposes of renewal of leases. He submits that the State Government is committed to the terms of sale subject to restrictions contained in law. 14. Shri Ashok Mehta, appearing for Official Liquidator, submits that the possession of factories, plant and machinery alongwith office and almost all free hold lands have been handed over to JAL. All steps are being taken to remove the encroachments and to hand over the possession of shops. The Official Liquidator had applied for renewal of the mines at Ningha. The Official Liquidator will abide the decisions which may be taken by the Court for handing over the possession to the purchaser, who has paid the sale consideration and the sale is confirmed. 15. I do not find that there is any dispute between the parties with regard to powers of the Company Court to issue directions to complete the process of sale and to pass such orders which may give effect to and discharge the promises made by the State Government in the matter of effective sale of the assets of the company (in liq), necessary to dissolve the company (in liq.). 16. Coming to the prayers made by JAL, I find that basically there are three issues which need to be addressed and resolved by the Court. 16. Coming to the prayers made by JAL, I find that basically there are three issues which need to be addressed and resolved by the Court. The State Government has issued an Office Memorandum on 10.10.2006, a day prior to the date when the sale was confirmed and then a Notification dated 8.11.2006 by which the State Government has notified the pleasure of the Governor to exempt the payment of trade tax to the prospective purchaser of the assets of the unit situated at Dalla and Chunar of the erstwhile U.P. Cement Corporation Ltd. (in liq.) on the turn over for a period of ten years from the date of approval of the Hon’ble Court subject to the conditions; (i) that the said exemptions shall not be in respect of expansion or diversification; (ii) in case VAT is introduced in U.P. there is no commitment in exemption from the provisions of the said Act. In the order of Joint Director, Geology and Mining dated 12.7.2007 approving the mining plan of Nigha marble mines of UP State Cement Corporation Ltd. (in liq.) and for its transfer to JAL with the conditions that out of 87 hectares, 35 hectares of forest land would be transferred only after permission is taken from the Forest and Environment Ministry, Government of India. With regard to other reliefs and concessions, there are some disputes which are sought to be resolved by this application. 17. By the office Memorandum dated 10.10.2006 the State Government has (i) waived the working capital loans of Rs. 165.80 crores to the company (in liq.); (ii) exempted the company from the trade tax dues of Rs. 67.10 crores; (iii) allowed ten years exemption in payment of trade tax from the date of approval by the High Court without any commitment of exemption of VAT; (iv) waived the electricity dues on the Corporation of Rs. 110.70 crores, (v) allowed the electricity to be made available for a period of three years on the specified rates; (vi) allowed the new promoter entitled for exemption of electricity dues in accordance with the present policy of captive generation of electricity; (vii) ten years exemption of payment of limestone royalty from the date of approval given by the High Court. These exemptions are not made available to Ghurma limestones mines and will not also be available for any diversification or expansion; and (viii) waived limestones royalty of Rs. 20.10 crores and agreed to renew limestones mines for Lingha and Kajrahat mines. 18. After hearing the parties, I find that there is no dispute with regard to the fact that the JAL as a confirmed purchaser of the assets of the company (in liq.) after payment of entire sale consideration and is entitled to possession of all the assets of the company (in liq.) and entire waiver of dues, exemption of trade tax and limestone royalty and concessions promised by the State Government as contained in the ‘MOI’ on the basis of which the bids were invited, accepted and sale was confirmed. 19. There are only minor issues to be resolved between the parties and these issues are (i) determination of the date of possession from which the exemptions, reliefs and concessions will be allowed to the purchaser; (ii) the renewal of the mining leases of the areas which are either within the forest areas or within 100 mtrs from the periphery of the forest area; (iii) the modalities and the time period within which the mining leases have been renewed in favour of the company (in liq.) and transferred to the purchaser. 20. Addressing on the question with regard to commencement of reliefs and concessions in respect of trade tax and limestones royalty, Shri Navin Sinha submits that the JAL was promised the reliefs and concessions of trade tax and limestones royalty with effect from the date when possession of the assets are handed over and that the words ‘from the date of possession’ were clearly and expressly written and promised in the advertisement of sale, inviting offers and MOI. In the entire proceedings of sale, the State Government or the Official Liquidator at no stage raised objections with regard to date of possession being starting point of the exemptions. It was for the first time that in the Office Memorandum dated 10.10.2006 that the State Government used the words ‘approval of the High Court’, as starting point of these exemptions. It is contended that the State Government is bound by the promises which were the basis and essence of the contract. It was for the first time that in the Office Memorandum dated 10.10.2006 that the State Government used the words ‘approval of the High Court’, as starting point of these exemptions. It is contended that the State Government is bound by the promises which were the basis and essence of the contract. The purchaser did not intend to purchase the assets at such a high price unless the real and effective exemptions are allowed to the purchaser. 21. Shri Jaffer Naiyer, Additional Advocate General and Shri Anil Mehrotra, on the other hand, submit that the reliefs and concessions were subject to the decision of the State cabinet dated 1.2.2001, which approved to the waivers, exemptions, reliefs and concessions to the prospective purchaser. In these concessions the date of approval of the High Court to the sale was the relevant date for exemptions of trade tax and limestone royalties. He has relied upon para-6 of the affidavit of Shri Atul Kumar Gupta. During the pendency of the proceedings of sale and at the time of highest bid the State Government had requested for clarification to be made through the High Powered Committee. The Court did not allow the State Government to refer the matter to the High Powered Committee. These reliefs and concessions were spelled out clearly in the order of the Court dated February 12, 2002 and that there is no dispute or clarification required in this regard. The State Government always desired that these exemptions should be the incentive to start production as expeditiously as possible and thus starting point of the production were pegged to the date of approval of the sale by the Court. He submits that in this case the acceptance of the highest bid on 30.1.2006, is the date of approval of sale by the Court. 22. I have carefully examined the records and find that the proceedings of sale by the Official Liquidator started after the application of the State Government was rejected. In the affidavit of Shri S.N. Shukla, the then Industrial Development Commissioner, it was clearly stated in pursuance of query made by the Court that the State Government will offer the same reliefs and concessions, which they have offered to M/s Grasim Industries Ltd. to any other purchaser. After rejection of the application and the special appeals the proceedings of sale were initiated. After rejection of the application and the special appeals the proceedings of sale were initiated. The ‘Assets Sale Committee’ was required to finalise the draft of the advertisement of sale by global tender and to prepare the MOI. The ‘Assets Sale Committee’ included the Secretary-cum-Industrial Development Commissioner, Government of U.P. as its member. The ‘Assets Sale Committee’ very clearly held out both in the advertisement of sale and MOI approved by the Court that these reliefs and concessions will be allowed with effect from the date when possession of the unit were handed over to the purchaser. The purchaser is not bound by the earlier orders of the Court and the assurances given by the State Government to Grasim Industries Ltd. that they will offer the same reliefs and concessions to any intending purchaser. The Court is concerned with what was promised in the invitation to offer for sale, and was made part of the sale. In this unique sale, in which waivers, exemptions reliefs and concessions were offered to make the sale more attractive and to sell the assets of the company (in liq) as going concern for an industry, which has experience in production of cement, the terms and conditions of sale will be governed by the documents which were prepared and the terms of the offer, which also detailed the promises. The background in which earlier applications were rejected is not relevant to consider or interpret the offer. The State Government did not, at any stage of the proceedings from the date of rejection of their application upto 10.10.2006, referred to the approval of the High Court as the starting point of the grant of the reliefs and concessions. There is another reason for rejecting the objection taken by the State Government and holding that the exemptions will be applicable from the date of possession. At that stage the State cabinet used the words ‘approval of the High Court’, in the context in which the State Government had decided to move the application for approval of sale to Grasim Industries Ltd. before the High Court. The application was rejected and thus the words ‘approval of the High Court’ will not carry much significance thereafter. At that stage the State cabinet used the words ‘approval of the High Court’, in the context in which the State Government had decided to move the application for approval of sale to Grasim Industries Ltd. before the High Court. The application was rejected and thus the words ‘approval of the High Court’ will not carry much significance thereafter. Even otherwise the words ‘approval of the High Court’ are of no relevance when the sale was made under the supervision of the Court, by inviting bids in which stages of sale included the acceptance of the highest bid and confirmation of sale. The words ‘approval of the sale’ had no significance at all as the sale was being conducted under the supervision of the Court. It is not a case where the Official Liquidator conducted the sale and was required to put up the matter for approval. The bids were invited and accepted by the Court and the confirmation of sale was also made by the Court. In the circumstances, the objections taken by the State Government do not have force. The words ‘approval of the High Court’ in the office Memorandum dated 10.10.2006 are held to be contrary to the promise held out to the purchaser under the advertisement and MOI. The trade tax and limestones royalty exemptions will be applicable to the purchaser ‘from the date of possession and not from the date of approval of the High Court.’ 23. In the present case there may be some difficulty to fix the actual date of possession. There are large number of assets to be transferred to the purchaser including the plant and machinery, land and buildings, at Churk, Dalla and Chunar, spread over about 80 Kms in two revenue district, offices including the office at Lucknow, staff and workers quarters, the areas under unauthorised occupations free hold and lease hold lands and mining areas. The Official Liquidator has started the process of handing over possession of the assets to JAL. The plant & machinery and factory areas have been transferred. A large part of free hold areas have also been transferred to the purchaser. More than 600 quarters, which were earlier occupied by the workmen, schools and colleges and office at Lucknow, have been transferred and are in possession of the JAL. The plant & machinery and factory areas have been transferred. A large part of free hold areas have also been transferred to the purchaser. More than 600 quarters, which were earlier occupied by the workmen, schools and colleges and office at Lucknow, have been transferred and are in possession of the JAL. The workers (about 3000) were allowed to occupy the quarters, upto the date when they were to be given their dues. These workers were under the directions of the Court to vacate the quarters and houses within a reasonable time from the date when they received their wages. They are not allowed to wait till they receive the remaining one per cent of the wages. 24. Shri Navin Sinha submits that large number of squatters unauthorised hutments have come up in the areas and that there are large scale encroachments. A large number of shops has not been handed over and that the ownership of the land on which a jail is under construction and 32 shops are still under dispute. The mining areas have not been handed over. He submits that until the mining areas which are the basic components of sale are handed over after execution of the leases the company may not be treated to be in possession of the assets of the purchaser. 25. The process of handing over possession has begun. The possession of large part of the assets have been handed over to the JAL and that they have effective control over them. About 3000 workers quarters will also be vacated within a short time. The process of renewal of leases has begun. It is admitted that orders of renewal with respect to lime stone lease of blocks VI and VII at Julgul (384 Hec) which were earlier granted to UPSMDC have been passed and mining plans have been approved in respect of leases at Bhalua in blocks V, VII and VII (643.18 Hec). For the leases at Bari Dolomite (630.31 Hec) and the leases at Bagmanwa, Sinduria (dolomite mines), only orders of transfer are awaited. The mining lease at Ningha (marble) (87 Hec) has been approved on 12.7.2007. For the leases at Bari Dolomite (630.31 Hec) and the leases at Bagmanwa, Sinduria (dolomite mines), only orders of transfer are awaited. The mining lease at Ningha (marble) (87 Hec) has been approved on 12.7.2007. This leaves the renewal of leases of limestone mines at Dalla (751 Hec) and limestones lease at Ghurma (Churk) (1266 Hec) in respect of which renewal application was made by the company (In Liq.) on 31.5.1995 and 12.9.1997, and mining plans were approved on 24.6.1997 and 6.8.1996. These leases are to be renewed by the State Government in favour of the company and thereafter transferred to JAL. Shri Navin Sinha has made a statement that JAL does not want to go back on its promise for purchase. It is only interested in expedition of the process of handing over possession of assets and the renewal of the mining leases and its possession. In the circumstances the date of possession has to be the date of effective possession over the assets and not the possession of the last centimeter of the land to the company. The Court further finds that as soon as the possession of remaining 3000 quarters are handed over to the JAL and substantial part of unauthorised occupations and encroachments are removed, JAL will come in effective possession of the assets of the company. The Official Liquidator will then submit report to the Court intimating the date on which the quarters and other areas have been handed over to the JAL and that the Court will then determine the date of possession on the basis of such report subject to the objections to be raised by JAL. 26. This leaves the question of renewal of mining leases. Shri Navin Sinha submits that the assets of the company (in liq.) were sold as a going concern. The bidders were required to have turn over of Rs. 100 crores with experience in the business of manufacturing cement. The JAL has purchased the assets of the company for manufacturing cement. The captive limestones leases were major attraction and essential component of the purchase. Without these leases which provide valuable captive mining, the sale had no meaning to the purchaser. In case the leases are not renewed or are subjected to unreasonable restrictions and objections, the entire sale would become unviable and the contract would be frustrated. The captive limestones leases were major attraction and essential component of the purchase. Without these leases which provide valuable captive mining, the sale had no meaning to the purchaser. In case the leases are not renewed or are subjected to unreasonable restrictions and objections, the entire sale would become unviable and the contract would be frustrated. He has relied upon judgments in M/s Alopi Parshad and Sons. Ltd v. Union of India, AIR 1960 SC 588 and Smt. Sushila Devi and another v. Hari Singh and others, 1971 (2) SCC 288 and submits where a contract to do an act which after the contract is made becomes impossible after the contract is made, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Section 56 of the Indian Contract Act says : “56. A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Where once person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise”. 27. It is submitted that transfer of mining leases with reliefs and concessions were the essential and integral component of the sale and if the leases are not renewed, the entire object and purpose of contract would become impossible and would be frustrated. Paragraph 21 of judgment in M/s Alopi Parshad and Sons Ltd. (supra) is reproduced : “21. Section 56 of the Indian Contract Act provides that : A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful”. Performance of the contract had not become impossible or unlawful; the contract was in fact performed by the Agents, and they have received remuneration expressly stipulated to be paid therein. Performance of the contract had not become impossible or unlawful; the contract was in fact performed by the Agents, and they have received remuneration expressly stipulated to be paid therein. The Indian Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. “The parties to an executor contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. Yet this does not in itself affect the bargain they have made. If, on the other hand, a consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situation which has now unexpectedly emerged, the contract ceases to bind at that point-not because the Court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation. When it is said that in such circumstances the Court reaches a conclusion which is ‘just and reasonable’ (Lord Wright in Constantine Steamship Line Ltd. v. Imperial Smelting Corporation Ltd., 1942 AC 154 at p. 186) or one ‘which justice demands’ (Lord Sumner in Hirji Mulji v. Cheong Yue Steamship Co. Ltd., (1926) AC 497 (510) this result is arrived at by putting a just construction upon the contract in accordance with an ‘implication...........from the presumed common intention of the parties : speech of Lord Simon in British Movie tonews Ltd. v. London and District Cinemas Ltd., 1952 AC 166 at pp. 185 and 186.” 28. In Smt. Sushila Devi and another v. Hari Singh and others (supra) the Supreme Court held in para 11 that if the performance of a contract becomes impracticable or useless having regard to the object and purpose the parties had in view then it must be held that the performance of the contract has become impossible. Para 11 of the judgment is reproduced : “11. In our opinion on this point the conclusion of the appellate Court is not sustainable. Para 11 of the judgment is reproduced : “11. In our opinion on this point the conclusion of the appellate Court is not sustainable. But in fact, as found by the Trial Court as well as by the appellate Court, it was impossible for the plaintiffs to even get into Pakistan. Both the Trial Court as well as the appellate Court have found that because of the prevailing circumstances, it was impossible for the plaintiffs to either take possession of the properties intended to be leased or even to collect rent from the cultivators. For that situation the plaintiffs were not responsible in any manner. As observed by this Court in Satyabrata Ghose v. Mugneeram Bangur and Co. and another, the doctrines of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act. The view that Section 56 applies only to cases of physical impossibility and that where this section is not applicable recourse can be had to the principles of English law on the subject of frustration is not correct. Section 56 of the Indian Contract Act lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties. The impossibility contemplated by Section 56 of the Contract Act is not confined to something which is not humanly possible. If the performance of a contract becomes impracticable or useless having regard to the object and purpose the parties had in view then it must be held that the performance of the contract has become impossible. But the supervening events should take away the basis of the contract and it should be of such a character that it strikes at the root of the contract.” 29. It is submitted that objection in the counter affidavit, that leases cannot be renewed as the major part of these lease area fall within the forest area , overlooks the fact that the area is neither reserved forest or forest and that notification under Section 20 of the Forest Act has not been made. The notification under Section 4 of the Forest Act was made on 30.4.1977. The notification under Section 4 of the Forest Act was made on 30.4.1977. The objection, that out of total mining area of 2168 hectares, 1033 hectrares is the forest area, is not factually correct. The notification under Section 4 of Indian Forest Act, 1927 is by way of a declaration that the State Government has decided to constitute such land as ‘reserve forest’. Section 4 (c) requires the State Government to appoint a Forest Settlement Officer to enquire into and determine the existence, nature and extent of any right alleged to exist in favour of any person in or over any land comprised within such limits. Sections 6 and 7 of the Act provide for proclamation and inquiry by Forest Settlement Officer. Where no claim is preferred under Section 5, the right of such person shall be extinguished under Section 9 and that the final declaration under Section 20 declaring the area as reserve forest is to be published by the State Government after the period fixed under Section 6 of preferring claim has been elapsed and where such claims have been made after the period prescribed for the appeal was expired. Sub-section (2) of Section 20 provides that the date so fixed in notification by the State Government under Section (1), such forest shall be deemed to be reserved forests. 30. In the present case it is contended that the notification under Section 20 has not been made so far. Some objections were filed before the Forest Settlement Officer and that an area 237 hectares, out of 1033.66 hectares, was exempted from the notification by the Forest Settlement Officer to be non-forest area and that a suo-moto appeal in terms of Banbasi Sewa Ashram’s case is pending before the District Judge, Sonbhadra. Some other objections filed by JAL are also pending before the Forest Settlement Officer with regard to remaining land and these objections may take time to be decided. Shri Navin Sinha submits that mining leases were granted and renewed in the same areas even after the notification under Section 4 of the Indian Forest Act, 1927 on approvals of mining plans renewed from time to time. No new area will be brought into mining operations and that no further steps were taken or notification was made after 30.4.1977. Shri Navin Sinha submits that mining leases were granted and renewed in the same areas even after the notification under Section 4 of the Indian Forest Act, 1927 on approvals of mining plans renewed from time to time. No new area will be brought into mining operations and that no further steps were taken or notification was made after 30.4.1977. He submits that the leases of UPSMDC Ltd. were renewed in the same area even after 1977 and promulgation of Forest Conservation Act, 1980. Shri Navin Sinha submits that there is no impediment for renewal of mining leases in respect of area where mining was permitted even after notification which was made on 30.4.1977. He submits that principles of desuetude is applicable where an Act or notification has not been enforced for a long period of time and have become unaccustomed (disuse). In the present case, he submits that for last 30 years no one has invoked the notification under Section 4 of the Indian Forest Act 1927 to deny mining in the area. It is also submitted that in case the entire area is to be treated as forest area, JAL will be saddled with a liability of Rs. 260 crores towards assumed royalties and trade tax making the entire sale unviable and will frustrate the contract. 31. Shri Anil Mehrotra, learned Standing Counsel, on the other hand, submits that the notification under Section 4 of the Indian Forest Act, 1927, is a declaration that the land is reserve forest and that in Banwasi Sewa Ashram v. State of U.P., Writ Petition (2) Civil No. (s) 1061 of 1982 decided on the land covered notification under Section 4 was treated to be within the purview of clearance from appropriate authority under the Forest Conservation Act, 1980. He submits that the JAL itself filed applications before the Forest Settlement Officer for excluding the land and that the Forest Officers of the concerned areas have informed that 1033.66 Hec of the land is forest area. It is submitted that the State Government is bound by the directions issued by Hon’ble Supreme Court in T.N. Godavarman Thirumulpad v. Union of India, which has defined the forest to include all ongoing activity within any forest in any stage, throughout the country. 32. In the present case the notification under Section 4 of the Indian Forest Act, 1927 was made on 30.4.1977. 32. In the present case the notification under Section 4 of the Indian Forest Act, 1927 was made on 30.4.1977. Since thereafter there is nothing on record to show that the Forest Settlement Officer had passed any order thereafter or that after the period of filing objections expired or there is any decision that the area was declared as reserve forest under Section 20 of the Act. In M/s Subhash Stone Products, Sonbhadra v. State of U.P. and others, 2007(3) ADJ 635 (DB). this Court has held in para 11 as follows : “11. Before a land shall be deemed to be a reserve forest the formalities, as required within the Act and stated from Section 5 to Section 19, unless are gone into, such declaration under Section 20 is not possible. Before deeming a particular chunk of land or area of land to be a reserve forest, the Clauses (a), (b) and (c) of Section 20 also describe certain conditions, which have to be necessarily fulfilled. Admittedly, in the present case such declaration, as provided under Section 20 of the Act has not been done and as per para-9 of the counter affidavit the notification under Section 20 of the Act is still pending and is under process. Therefore, to say that the whole area of District Sonbhadra should be deemed to be a reserve forest would be definitely a wrong proposition. The dispensation of the formality of declaration under Section 20 of the Act, as has been dealt with in the aforesaid cases of M/s Yashwant Stone Works (supra), U.P. Gandhi Ismarak Nidhi (supra) and Smt. Pyari Devi (supra) are actually found by the Division Bench of this Court to be in different context as we have already dealt with above. The notification under Section 4 of the Act cannot be alone said to be such step whereby a demarcated chunk of land can be deemed to be a reserve forest unless and until all the formalities, as have been described from Section 5 to Section 19 of the Act, have been gone into. A declaration under Section 20 of the Act has been duly made and published in the official Gazette. A declaration under Section 20 of the Act has been duly made and published in the official Gazette. In Kumar Stone Works (supra) this question whether a notification under Section 20 of the Act is necessary for levying the transit fee by the forest department of the State Government for carrying the forest produce through the land, which is not claimed to be a forest reserve or not, has not been dealt with. Obviously, the respondents without notification under Section 20 of the Act cannot legally claim a chunk of land as forest reserve. Therefore, the ratio, which has been propounded in Kumar Stone Works (supra) is definitely not going to help the respondent’s case. The realization of transit fee by the Forest Department in respect of the carriage of the forest produce through the land, which is not reserve forest, thus is definitely not possible. It is nowhere a case of the respondents that any such Rule for levying transit fee upon the carriage of the goods through non-reserve forest land, has been made by the State Government." 33. The State has not placed on record any notification under Section 20 of the Indian Forest Act, 1927 or any order passed by Hon’ble Supreme Court in T.N. Godavarman Thirumulpad v. Union of India, by which the State may be restrained from renewing such leases or the leases of the company (in liq). The orders passed by the District Judge in suo moto appeals declaring the area to be forest area have not been placed on record. There is no such direction of Hon’ble Supreme Court nor any such order has been placed on record to show that where a mining is being carried out on the land on which notification under Section 4 has been published for last thirty years and leases have been renewed from time to time, the State is precluded from renewing the leases. In Banwasi Sewa Ashram’s case (supra) fresh areas of forest land were sought to be acquired for NTPC, and that requirement was increased to cover larger areas covered by notifications under Section 4 of the Act. These were new areas sought to be acquired for non-forest purposes. 34. In Banwasi Sewa Ashram’s case (supra) fresh areas of forest land were sought to be acquired for NTPC, and that requirement was increased to cover larger areas covered by notifications under Section 4 of the Act. These were new areas sought to be acquired for non-forest purposes. 34. The purchaser of the assets with express promise of renewal of mining leases of the Company (In Liq.) is not asking for grant of fresh leases or bringing fresh areas, either intended to be declared or declared as forest for the purposes of mining. No such fresh area is being included nor any fresh grant is under consideration. It is a case of the renewal and transfer of the expired mining leases in the area which were prospected by the U.P. State Cement Corporation (in liq.) since 1976 upto February 1998, after which production was stopped due to commercial losses. The objection of the State Government for renewal of mining leases in respect of 1033.66 hectares out of 2168 hectares on the ground that it is covered by notification under Section 4 of the Indian Forest Act, 1927, published in the year 1977 as such cannot be sustained. 35. Shri Navin Sinha submits that condition No. (ii) in the notification dated November 8, 2006 stating that there will be no commitment for exemptions in case VAT is introduced in U.P. is wholly superfluous as Value Added Tax has not been introduced in U.P. so far. The draft legislation is pending with the State Government and is still under consideration. The introduction of VAT, its terms and conditions and reliefs and concessions under the proposed legislation are not to be predicted or forecasted by the State Government at this stage. The imposition of the condition in any law to operate in future without knowing its content and reach is wholly unwarranted. The State Government committed an error in introducing a wholly superfluous condition in the notification dated 8.11.2006. 36. The application of JAL is accordingly disposed of with clarifications that exemptions of trade tax and limestones royalties will come into effect from the date of handing over effective possession of the assets of the company (in liq) by the Official Liquidator to the JAL. 36. The application of JAL is accordingly disposed of with clarifications that exemptions of trade tax and limestones royalties will come into effect from the date of handing over effective possession of the assets of the company (in liq) by the Official Liquidator to the JAL. This date of effective possession shall be determined on the report to be submitted by the Official Liquidator, after the workers quarters are vacated and unauthorised occupations and possessions are removed. The word ‘approval of the High Court’ in the notification dated October 10, 2006 are held to be contrary to the offer inviting bids in the advertisement of sale and MOI. The reliefs concessions and exemptions provided in the Office Memorandum dated 10.10.2006 shall be made applicable with effect from the date of possession as interpreted in this order. The condition No. (ii) in the notification dated November 8, 2006 is declared to be wholly superfluous. The exemptions notified by notification dated November 8, 2006 in case of introduction of VAT will be made applicable subject to the terms and conditions and the provisions of the new legislation. The mining leases of the company (in liq) will be renewed by the State Government in favour of company (in liq.) and transferred to JAL without any further delay. The entire formalities with regard to renewal of leases including the preparation of mining plans will be completed within a period of six weeks and the leases will be transferred to JAL within the same period either by the same orders, or by separate orders. 37. The Official Liquidator’s Report No. 248 of 2007 is accepted. The claims of the secured creditors as well as workmen determined by the Liquidation Claims Committee on the basis of the OL’s Report No. 236 of 2007, as modified by the Court on 28.9.2007, on the applications of IDBI and SBI is also accepted and approved. The Liquidation Claims Committee has reconsidered the claims of IDBI and SBI and has prepared fresh calculations in respect of the amount admitted and dividend payable to secured creditors and workmen after excluding the liquidation expenses and keeping Rs. 4.59 crores (1% of the sale consideration) as reserve for any modification or claims which may be made in future. The Liquidation Claims Committee has reconsidered the claims of IDBI and SBI and has prepared fresh calculations in respect of the amount admitted and dividend payable to secured creditors and workmen after excluding the liquidation expenses and keeping Rs. 4.59 crores (1% of the sale consideration) as reserve for any modification or claims which may be made in future. The details of the claims of the 5918 ex-workmen (in three volumes) relating Churk; Dalla and Chunar alongwith their bank account numbers has been prepared with the OL’s Report after they were recalculated in terms of the judgment dated 27.4.2007. With his report No. 248 of 2007, the Official Liquidator has, after carrying out orders dated 28.9.2007, revised the amount payable to the IDBI and SBI and has re-calculated the amount admitted for pari-passu, of secured creditors on term loans, debenture 1st charge on fixed assets, current assets for working capital and dividend payable after applying pari passu between secured creditors and workers. The amount admitted for pari-passu for payment to secured creditors including SBI, Allahabad Bank, LIC, IFCI, Kotak Mahindra Bank and IDBI both with regard to the terms loans and working capital loans has been worked out to Rs. 305.638 crores and amount payable to workmen has been worked to Rs. 116.690 crores. The details of these calculation are given in the report of the Liquidation Claims Committee and the Official Liquidator. 38. The objections to the OL’s Report No. 248 of 2007 have been rejected on 11.10.2007. The application of JAL with regard to certain clarifications with regard to date of possession, modalities and renewal of transfer of leases has been decided by this order. 39. The company (in liq.) was wound up on 8.12.1999 and the possession was taken over on 31.7.2001. After three valuations and long drawn litigations the ‘Assets Sale Committee’ advertised the sale by global tender and that the Official Liquidator under supervision of the Court received the highest bid of Rs. 459 crores, which was substantially higher than the next higher bid and almost double than the bid arranged by the State Government. The bid was accepted on 31.1.2006 and that entire amount was paid and sale was confirmed on 11.10.2006. About 5900 workmen are waiting for settlement of their wages for last eight years. Hundreds of the workmen have died and are represented by their widows and children. The bid was accepted on 31.1.2006 and that entire amount was paid and sale was confirmed on 11.10.2006. About 5900 workmen are waiting for settlement of their wages for last eight years. Hundreds of the workmen have died and are represented by their widows and children. All of them are on the verge of starvation and destitution. It is reported that they could not arrange for education of their children, their parents died without proper medical care, and that their daughters, numbering thousands, have not married as they are awaiting payment of their dues. Finally the time has come for payment. The money is available and the dues have been verified, adjudicated and pari-passu dividend with secured creditors has been declared in accordance with Sections 529 and 529-A of the Companies Act, 1956 and Companies (Court) Rules, 1959. 40. In this background having finalised almost the entire affairs, except few, which do not affect the disbursement, the Official Liquidator is directed to transfer the adjudicated, calculated and approved pari passu dividend to the secured creditors, workmen and the dues of UP Power Corporation within a period of 15 days from today. These amounts shall be paid by way of interim dividend retaining one per cent of the sale consideration for any future claims. The secured creditors shall be paid the amount after they give undertakings by way of affidavit of an officer not below the rank of General/Divisional Manager/Senior Manager of the banks and financial institutions duly authorised by their boards of directors. These affidavits will declare that in case of any change or modification or excess payment or in case of adverse decision in appeal the dividend paid shall be returned and placed back in the account of the Official Liquidator. The Official Liquidator will also pay the amount determined to the U.P. Power Corporation from the liquidation expenses and obtain receipts subject to the appeals filed by the U.P. Power Corporation. The Official Liquidator will transfer adjudicated and determined amounts to the workmen in their bank accounts, the details of which have already been given by him, within 15 days with directions to the banks that they shall not allow the workmen to withdraw this amount until the Court gives an order to that effect. The Official Liquidator will transfer adjudicated and determined amounts to the workmen in their bank accounts, the details of which have already been given by him, within 15 days with directions to the banks that they shall not allow the workmen to withdraw this amount until the Court gives an order to that effect. The Official Liquidator will take help of the State Bank of India, Allahabad for preparing the details with regard to transfer, to the branches of the State Bank of India in which most of the workmen have their accounts and for this purpose bare minimum service charge may be paid to the State Bank of India. The amount shall be allowed to be withdrawn by the workmen on their vacating the quarters allotted to them. The Official Liquidator or his representative will take over possession of these quarters and houses in presence of the representative of the JAL. A declaration to the effect that the vacant possession has been handed over to the Official Liquidator and then to the JAL will be signed by the workmen, representative of the Official Liquidator and JAL. The Official Liquidator will thereafter submit report/s and that upon receiving the report the Court will pass the order releasing the amounts to be withdrawn by the workmen (both who were allotted quarters and those to whom quarters were allotted or were vacated by them) from their accounts. 41. The Official Liquidator will take steps to remove the unauthorised occupations and encroachments. The details in this regard provided by JAL, shall be verified by the Official Liquidator, and forwarded to the District Magistrates and Superintendents of Police Mirzapur and Sonbhadra districts. The District Magistrate and Superintendent of Police of these districts will immediately take steps to remove unauthorised occupants and encroachments. All the Government officials and officers of the police department are directed to vacate the quarters and houses within a period of one month. 42. List again with report of the Official Liquidator on 30.10.2007. Copy of this order shall be given to all concerned by Tuesday i.e. 16th October, 2007. ————