Research › Search › Judgment

Madras High Court · body

2010 DIGILAW 5187 (MAD)

1st Petitioner v. 2nd Respondent

2010-11-29

P.JYOTHIMANI

body2010
Judgment : The respondent company in the company petition, C.P.No.224 of 2004 viz., M/s.Makkara Leathers Manufacturing Company (P) Limited, 72, Harrington Road, Chetput, Chennai 600 031 was ordered to be wound up by this Court on 21.8.2006 and the Official Liquidator was appointed as the Liquidator of the company with direction to take charge of assets of the company in liquidation. 2. Pursuant to the said order, the Official Liquidator has taken up all movable and immovable assets situate in three places, viz., Kancheepuram, Ambattur and Ranipet, by order dated 11.4.2008. This Court directed the Official Liquidator to effect publication in The Hindu and Daily Thanthi for sale of four items of properties, in which Item No.1 relates to 48 cents of land situate in No.129, Pammal Village, Gandhi Road, Pallavaram Taluk, Kancheepuram District, for which the upset price was fixed at Rs.170 lakhs and that was referred to as Lot-A. In respect of the said Lot-A, one Mrs.K.Dhanalakshmi offered to purchase for Rs.1.75 crores subject to verification as to the common passage available. This Court in the order dated 13.6.2008, in respect of Lot-A passed the following order: “Mrs.K.Dhanalakshmi, No.47, Spartan Nagar, Mogappair,Chennai-37, is ready to offer a sum of Rs.1.75 crores in respect of Lot-A vacant land, subject to verification as to the common passage available. The Official Liquidator is directed to verify the same and report on 17.6.2008. He is also directed to return the EMD in respect of the unsuccessful bidders”. The said order also relates to other lots. 3. The said land in Lot-A is comprised in survey No.122/1A1A1F1 and one M/s.Gaja Shoes, who is stated to be the adjacent owner considered to be a necessary party for the purpose of providing pathway to the above said property sold through the Official Liquidator and therefore, it was directed to be issued notice through the Official Liquidator by order of this Court dated 27.6.2008. There was a subsequent direction on 16.7.2008 by this Court to the Tahsildar, Tambaram Taluk to visit the place and ascertain the pathway for the property and a further order was passed on 18.8.2008 again directing the Tahsildar to measure the land and give pathway to the companys property to create passage. There was a subsequent direction on 16.7.2008 by this Court to the Tahsildar, Tambaram Taluk to visit the place and ascertain the pathway for the property and a further order was passed on 18.8.2008 again directing the Tahsildar to measure the land and give pathway to the companys property to create passage. In the meantime, since the offeror Mrs.Dhanalakshmi was not prepared to fulfill her offer, her offer as well as the adjacent property owner Mrs.Suman Jadhav was cancelled and EMD received from them were directed to be returned. 4. On 2.9.2008, there was a further direction to the Official Liquidator to issue notice to the original vendor of the property who sold the same to the company under liquidation as well as to the adjoining property owner to ascertain whether there is any independent document permitting the common usage of the pathway. Before this Court, the adjacent owner viz., M/s.Gaja Shoes accepted to purchase the property for Rs.1.20 crores and sought time for payment till 30.10.2008. Even though the upset price was fixed at Rs.1.75 crores, taking note of the fact that there is no document for the passage to reach the land concerned and inasmuch as the adjacent owner has come forward to purchase the land, this Court, to avoid indefinite postponement of sale due to want of passage for the property, has accepted the offer made by the adjacent owner for Rs.1.20 crores by granting time up to 30.10.2008. 5. The said purchaser deposited Rs.27 lakhs before the Official Liquidator on various dates. The said purchaser sought for some more time for payment of Rs.93 lakhs up to 2.2.2009 and this Court directed, by order dated 6.1.2009, to pay the said amount by 2.2.2009, failing which interest will have to be paid. He has again gone back from the offer due to the financial difficulties, however, by letter dated 26.3.2009 addressed to the Court, he undertook to provide common passage of 7 mts. width from the southern side compound wall within the plot size of 41,778 sq.ft. stating that by allowing such common passage they would be giving up 4874.1 sq.ft. covered by 211 ft. in length and 23.1 ft. by breadth from southern side of the compound wall. width from the southern side compound wall within the plot size of 41,778 sq.ft. stating that by allowing such common passage they would be giving up 4874.1 sq.ft. covered by 211 ft. in length and 23.1 ft. by breadth from southern side of the compound wall. Taking note of the fact that it was due to the offer given by the adjacent owner, there was a delay in bringing the property for sale, this Court by order dated 30.3.2009, directed the Official Liquidator to release Rs.20 lakhs to the said adjacent owner and to retain Rs.7 lakhs for postponing the sale. 6. By a subsequent order dated 16.11.2009, this Court directed for fresh advertisement to be issued in respect of the above said Lot-A including other properties based on which, the Official Liquidator issued an advertisement in The Hindu on 22.11.2009, inviting offers. One Mr.S.P.Palaniappan of Ranipet made an offer for Rs.1,71,00,000/-. But this Court, having found that the earlier offeror, Mrs.Dhanalakshmi had offered for Rs.1.75 crores, informed the same to the said offeror, who subsequently agreed to purchase the property for Rs.1.75 crores even though there was a confusion regarding pathway and the said offer was accepted in the order dated 2.12.2009. It is seen that Mr.S.P.Palaniappan who originally paid the EMD of Rs.17,10,000/-, paid the difference of EMD of Rs.40,000/- subsequently to the Official Liquidator on 7.12.2009 and the said offeror also requested the Official Liquidator to settle the dispute regarding the common passage to the property of the company in liquidation. 7. As stated above, it was based on the undertaking given by the adjoining owner M/s.Gaja Shoes through its proprietrix Mrs.Suman Jadhav regarding the common passage and requesting for compensation, a subsequent order dated 30.3.2009 was passed by this Court, the operative portion of which is as follows: “4. It may be noted that because of the offer given by the adjacent owner, the property was not brought for sale. Anticipating the payment and going by the assurance, this Court did not bring the property for sale on earlier occasion when the purchasers defaulted. Hence, the claims of the creditors could not be satisfied. It may be noted that because of the offer given by the adjacent owner, the property was not brought for sale. Anticipating the payment and going by the assurance, this Court did not bring the property for sale on earlier occasion when the purchasers defaulted. Hence, the claims of the creditors could not be satisfied. However, taking note of the contents of the letter given by the purchaser and the accommodation given by the adjacent owner, the Official Liquidator is hereby directed to release a sum of Rs.20 lakhs and retain a sum of Rs.7 lakhs for postponing the sale." The Official Liquidator paid the compensation of Rs.20 lakhs to M/s.Gaja Shoes on 9.4.2009. In spite of payment, even after lapse of nearly one year, the said M/s.Gaja Shoes have not acted as per its undertaking by executing necessary document for providing pathway to the property. 8. It is seen that originally the land in question which is belonging to the company in liquidation and which is the subject matter of sale through the Official Liquidator and adjacent three plots were comprised in the same survey No.122/1A1A1F1 and was then divided into four plots and sold by the original owners to four companies. Out of them, immediately eastern side plot was sold to one M/s.Southern Sulphates and Chemicals Private Limited stated to be a sister concern of M/s.Gaja Shoes, which later merged with M/s.Gaja Shoes. The next adjacent plot on further eastern side was sold to M/s.Gaja Shoes, while the plot on the western side of the plot of company in liquidation was sold to M/s.Turner Service India Private Limited. M/s.Gaja Shoes Limited had earlier made an offer and based on its undertaking this Court directed payment of Rs.20 lakhs as compensation for providing a common passage to reach the land in question. M/s.Gaja Shoes Limited had earlier made an offer and based on its undertaking this Court directed payment of Rs.20 lakhs as compensation for providing a common passage to reach the land in question. But, subsequently, on discussion by the Official Liquidator with M/s.Southern Sulphates and Chemicals Private Limited which is situate just adjacent on the eastern side of the land belonging to the company in liquidation, the said company took a stand that it was not connected with M/s.Gaja Shoes Limited, while it was the case of Official Liquidator that both M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited are coming under one and the same management, and therefore, there was a direction to the Official Liquidator to have a common discussion with the said companies to find out the possibility of providing a common passage since M/s.Southern Sulphates and Chemicals Private Limited who independently claimed an amount of Rs.20 lakhs for providing a common passage. 9. The Official Liquidator filed a report on 22.04.2010, stating that on inspection it was found that there was a discrepancy in the measurement of adjacent lands belonging to M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited. It was reiterated that M/s.Gaja Shoes Limited agreed to give a pathway for the entire extent of 4874.1 sq.ft. based on the undertaking and on getting compensation of Rs.20 lakhs from this Court. The Official Liquidator has therefore stated that there is no necessity for requesting M/s.Southern Sulphates and Chemicals Private Limited, who is not found to be the owner of the said land. It was also informed by the Official Liquidator to this Court in the said report that M/s.Gaja Shoes Limited to whom compensation was paid on its undertaking to provide pathway had in fact mortgaged its property with Canara Bank, Park Town branch, Chennai and the said mortgage covers the pathway also and the said M/s.Gaja Shoes Limited has failed to disclose about the mortgage while receiving compensation. 10. It was also informed by the counsel appearing for the said M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited that they are prepared to return the amount of Rs.20 lakhs received as compensation. 10. It was also informed by the counsel appearing for the said M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited that they are prepared to return the amount of Rs.20 lakhs received as compensation. This Court by order dated 27.4.2010, while recording the said statement made by the counsel appearing for M/s.Gaja Shoes Limited to refund the amount of Rs.20 lakhs, directed the Official Liquidator to ascertain the actual position regarding the alleged mortgage over the said plot with Canara Bank and Indian Bank respectively. However, it appears that in spite of the efforts taken, the banks have not chosen to co-operate and having found that both the adjacent land owners viz., M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited have no subsisting right over the said adjacent lands and also taking note of the fact that the proposed purchaser S.P.Palaniappan was not interested in purchasing the same since the dispute regarding the pathway has not been settled and has sought permission to withdraw the offer and for repayment of EMD, the Official Liquidator was directed to return the EMD to the said S.P.Palaniappan of Rs.17.50 lakhs with interest at the rate of 7.5% p.a. from the date of payment. The order passed by this Court on 7.07.2010 is as follows: “This order pertains to Lot-A of the property advertised in the Hindu dated 22.11.2009. The learned counsel appearing for the adjacent owners, owners of plots A and B, who were directed earlier by this Court in the order dated 27.4.2010 to return the amount of Rs.20 Lakhs with interest received by them as compensation in respect of granting of a passage, are directed to refund the said amount with interest to the Official Liquidator on or before 21.7.2010. 2. It is now brought to the notice of this Court that the adjacent plot owners themselves have no right over the property and it is not possible for them to give a passage so as to enable the purchaser to enjoy the property. According to the learned counsel appearing for the proposed purchaser, the proposed purchaser (S.P.Palaniappan) is not interested in the sale and therefore, seeks permission for withdrawal of the earnest money amount of Rs.17,50,000/-. 3. According to the learned counsel appearing for the proposed purchaser, the proposed purchaser (S.P.Palaniappan) is not interested in the sale and therefore, seeks permission for withdrawal of the earnest money amount of Rs.17,50,000/-. 3. Considering the above said facts and circumstances of the case, the Official Liquidator is directed to refund the earnest money deposit amount of Rs.17,50,000/-to the proposed purchaser (S.P.Palaniappan) with interest at the rate of 7.5% per annum from the date of payment. Post the matter on 21.7.2010." 11. The Official Liquidator in his report dated 29.7.2010, after narrating the entire episode, brought to the notice of this Court that it is because of the conduct of said two neighbours viz., M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited, the proposed sale had to be deferred. Moreover, it is, on evidence, clear that the said M/s.Gaja Shoes Limited has deliberately suppressed the encumbrance created by it in respect of its adjacent land by mortgaging the same with the bank, but has given an undertaking to provide a common passage knowing fully well that it has no right to do so without the specific approval from the bank which has got a charge for repayment over the land belonging to the said company. 12. The reply filed by M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited jointly dated 10.8.2010 to the above said report of the Official Liquidator dated 29.7.2010 makes it very clear that they are coming under one and the same management and the company in liquidation viz., M/s.Makkara Leathers Manufacturing Company (P) Limited which is also stated to be their sister concern has been using the passage to pluck coconuts from the trees standing on its plot. M/s.Gaja Shoes Limited having deliberately accepted to purchase the property by making a higher offer and also by paying Rs.27 lakhs as EMD, has failed to act as per the undertaking in which event, as per the publication effected for sale on the direction of this Court, the said company should lose the entire EMD of Rs.27 lakhs by forfeiture. 13. It was, after forfeiture, based on the undertaking given by the said M/s.Gaja Shoes Limited, this Court directed the Official Liquidator to pay an amount of Rs.20 lakhs only as compensation for providing pathway and not as a refund of part of EMD amount. 13. It was, after forfeiture, based on the undertaking given by the said M/s.Gaja Shoes Limited, this Court directed the Official Liquidator to pay an amount of Rs.20 lakhs only as compensation for providing pathway and not as a refund of part of EMD amount. In such circumstances, when the said M/s.Gaja Shoes Limited has deliberately failed to act as per the undertaking, it is certainly mandatory on the part of the said company to refund the amount. In fact, the refund of the amount has to be made as per the order passed by this Court on 30.3.2009. It is unfortunate that even as on date, the amount has not been returned by M/s.Gaja Shoes Limited. The conduct of M/s.Southern Sulphates and Chemicals Private Limited in claiming further amount of Rs.20 lakhs can only be termed as fraudulent, when it is nothing but a sister concern of M/s.Gaja Shoes Limited which has agreed to give an extent of 4874.1 sq.ft. of land which is actually the passage for reaching the land of the company in liquidation, and received compensation. Therefore, the further claim of Rs.20 lakhs can only be termed to be a tactics played by the said company by putting pressure on the Official Liquidator so as to make this Court to believe that making payment is the only course possible for the sale of the land in question. 14. In fact, based on the stand taken by M/s.Southern Sulphates and Chemicals Private Limited, this Court at one point of time was to believe that M/s.Southern Sulphates and Chemicals Private Limited and M/s.Gaja Shoes Limited are independent entities and that there was some substance in the claim of M/s.Southern Sulphates and Chemicals Private Limited, and directed the Official Liquidator to investigate further. On investigation, the Official Liquidator found that even the said M/s.Southern Sulphates and Chemicals Private Limited had mortgaged its property to a bank, apart from the fact that both M/s.Gaja Shoes Limited and M/s.Southern Sulphates and Chemicals Private Limited are sister concerns. The said stand of the Official Liquidator stands fortified by the fact that against the report of the Official Liquidator, both the companies have filed a joint affidavit specifically stating that the original owners sold the property in four plots to the sister concerns, thereby accepting that M/s.Gaja Shoes Limited, M/s.Southern Sulphates and Chemicals Private Limited are sister concerns. 15. The said stand of the Official Liquidator stands fortified by the fact that against the report of the Official Liquidator, both the companies have filed a joint affidavit specifically stating that the original owners sold the property in four plots to the sister concerns, thereby accepting that M/s.Gaja Shoes Limited, M/s.Southern Sulphates and Chemicals Private Limited are sister concerns. 15. The question whether the company under liquidation, viz., M/s.Makkara Leathers Manufacturing Company (P) Limited is also a sister concern is not a material fact for the purpose of deciding the issue involved in this case. In the report dated 29.7.2010, the Official Liquidator clearly made out various expenses incurred by him as per the orders of this Court in effecting publication regarding the property in question. As per his report, a sum of Rs.4,38,328/- has been spent by him, as supported by the details furnished by the Official Liquidator in the Annexure-B to the said report. 16. It is also not in dispute that because of the conduct of the said company viz., M/s.Gaja Shoes Limited, the matter was prolonged, with the result the last intending purchaser Mr.S.P.Palaniappan had to go back from his proposal and this Court ordered to return the EMD paid by him with 7.5% p.a. interest. 17. Since the advertisement, as stated above, effected in the newspapers was relating to other two properties also, the Official Liquidator has claimed pro-rata advertisement charges of Rs.1,46,109/- out of the total advertisement charges of Rs.4,38,328/- with 18% p.a. interest from the date of advertisement viz., 22.11.2009. Of course, the Official Liquidator has sought for a direction to M/s.Gaja Shoes Limited to compensate the Official Liquidator because there is delay in settling the creditors of the company in liquidation with interest at the rate of 18% p.a. on Rs.1.75 crores and also to punish the owners of the adjacent land owners for giving a fake letter to the Hon’ble Court for providing pathway to the land of the company in liquidation. 18. Even the objection dated 29.7.2010 and also the objection dated 10.8.2010 filed by the Official Liquidator are not denied by the neighbouring companies. While it is admitted that M/s.Gaja Shoes Limited is bound to refund Rs.20 lakhs, it has only denied the claim of interest at 18% p.a. stating that it is arbitrary. 18. Even the objection dated 29.7.2010 and also the objection dated 10.8.2010 filed by the Official Liquidator are not denied by the neighbouring companies. While it is admitted that M/s.Gaja Shoes Limited is bound to refund Rs.20 lakhs, it has only denied the claim of interest at 18% p.a. stating that it is arbitrary. There is absolutely no difficulty to conclude that the conduct of the said M/s.Gaja Shoes Limited is not only amounting to deliberate suppression of material facts, but also misleading the Court resulting in postponement of sale of the property, which has certainly resulted in the loss to large number of creditors of the company in liquidation, whose claims are pending for a long time. The very purpose of the winding up proceedings of the company in liquidation is for the benefit of creditors and no one has any right to thwart or stop such action to be taken at the earliest point of time. The said M/s.Gaja Shoes Limited has deliberately suppressed the material facts and consequently caused delay in selling the property of the company in liquidation, and it is unfortunate that in spite of having given an undertaking to provide a passage and then, having gone back from that, after it came to light that it has no independent right to give such an undertaking, no steps have been taken by the said M/s.Gaja Shoes Limited to refund the amount even till date, which cannot be acceptable by any stretch of imagination. 19. Even though the said M/s.Gaja Shoes Limited has got the obligation not only to return the money along with interest, but also to bear the expenditure incurred in the entire process of advertising, I do not find it proper to consider the claim of the Official Liquidator to compensate against the delay caused in settling the creditors of the company in liquidation as it is hypothetical in nature, though is an appreciable claim. 20. As far as taking action against the said persons who have given the fake letter before this Court for providing pathway to the land in question, after fully knowing that they have no such right is concerned, I am of the view that it should be left open to the Official Liquidator to take appropriate action afresh with details so as to enable this Court to decide about the alleged commission of perjury. 21. 21. For the above said reasons, the following orders are passed: i) M/s.Gaja Shoes Limited represented by its counsel Thiru D.Mukundan, having its Office at Corium House, 5th Floor, No.58, Harrington Road, Chetput, Chennai-31 shall return the entire amount of Rs.20 lakhs with interest at the rate of 18% p.a. from 27.4.2010 till the date of payment to the Official Liquidator. ii) M/s.Gaja Shoes Limited shall remit to the Official Liquidator the pro-rata advertisement charges of Rs.1,46,109/-with interest at the rate of 18% p.a. from 22.11.2009 till the date of payment. iii) M/s.Gaja Shoes Limited and M/s.Southern Sulphates and Chemicals Private Limited are jointly directed to pay costs of Rs.1 lakh. iv) All the above said amounts shall be paid to the Official Liquidator within a period of two weeks from the date of receipt of copy of this order, failing which, on reference, appropriate orders will be passed by this Court. v) In respect of the claim of Official Liquidator for payment of compensation against delay in settling the creditors, the said claim is rejected. vi) The official Liquidator shall file a detailed application with necessary proof and documents to enable this Court to take action for the alleged false statement made in the letter issued by the adjacent owners to this Court.