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COMA/517/2008 14/ 14 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
APPLICATION No. 517 of 2008
In
COMPANY
PETITION No. 242 of 1997
With
COMPANY
APPLICATION No. 518 of 2008
In
COMPANY
PETITION No. 242 of 1997
====================================
MANIBHADRA
SALES CORPORATION - Applicant
Versus
O
L OF HINDUSTAN NITROPRODUCT (GUJARAT) LTD - Respondent
====================================Appearance
:
1. Company Application No.517 of 2008
MR
KS NANAVATI, SENIOR ADVOCATE WITH MR AS SHAH for NANAVATI ASSOCIATES
for Applicant.
MR JS YADAV for Official Liquidator.
2. Company
Application No.518 of 2008
MR
MIHIR JOSHI, SENIOR ADVOCATE WITH MR PAVAN GODIAWALA for
Applicant.
MR JS YADAV for Official
Liquidator.
====================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
Date
: 14/10/2008
COMMON ORAL ORDER
The
applicant of Company Application No.517 of 2008 i.e. Manibhadra
Sales Corporation has taken out this Judge’s Summons seeking
direction of this Court that the applicant be refunded an amount of
Rs. 1 Crore with interest accrued thereon, deposited by the
applicant before the Official Liquidator and an amount of
Rs.39,99,080/- with interest accrued thereon deposited by the
applicant before this Court pursuant to an order dated 23.07.2004
and an amount towards interest accrued on the amount of Rs.2.75
Crores for the period from 02.12.2003 to 10.09.2004 during which
such amount was deposited by the applicant before the Official
Liquidator pursuant to the order dated 24.11.2003 of this Court.
The
applicant of Company Application No.518 of 2008 i.e. Castwell Alloys
Limited, has also prayed for the direction to the Official
Liquidator to refund the amount of Rs. 1,62,75,000/- to the
applicant along with the accrued interest thereon and seeking
permission of this Court to withdraw the amount of Rs.20,05,000/-
along with accrued interest thereon from the Registry of this Court,
pursuant to the judgment of the Hon’ble Supreme Court of India
setting aside the judgment of the Division Bench as well as the
Learned Single Judge of this Court, whereby prayers of the applicant
and another bidder which were allowed by this Court for
re-auctioning after fresh report of Valuer and setting aside the
original confirmation of the bid of the original bidder, was
disallowed by the Hon’ble Supreme Court and the order confirming the
bid of the original bidder i.e. M/s. Valji Khimji came to be
restored.
An
affidavit is filed by Mr. Bhikchand Suvalal Jaiswal in support of
the Judge’s Summons taken out by the applicant of Company
Application No.517 of 2008 and an affidavit is filed by Mr. Dungro
Ram Jat in support of the Judge’s Summons taken out by the applicant
of Company Application No.518 of 2008.
This
Court has passed an order on 06.10.2008 directing the Official
Liquidator as well as the Registry of this Court to place on record
the details of the amount paid and/or deposited by the applicant
either with this Court or with the Official Liquidator, as the case
may be, and the interest accrued thereon till this date. Pursuant
to the said order, the Official Liquidator has filed his report in
both these matters on 08.10.2008. Similarly, Registrar (Inspection)
has also submitted his report before the Court.
As
per the report filed by the Official Liquidator on 08.10.2008 in
Company Application No.517 of 2008, the details of amount deposited
by the applicant towards purchase of assets of the Company are as
under :-
Sr. No.
Date of event
Amount
(Rs.)
01.
06.11.2003
1,00,00,000/-
02.
08.12.2003
2,77,62,500/-
TOTAL
3,77,62,500/-
3.
21.09.2004
? Amount returned in terms of order of this Court.
2,75,00,000/-
Balance
1,02,62,500/-
The
aforesaid amounts were placed in the Bank by way of different FDRs
and an amount of Rs.40,57,629/- (approximately, subject to
confirmation of the same from different Banks where the FDRs were
placed), is received towards interest accrued on the said amount from
time to time.
Similarly,
as per the report filed by the Official Liquidator on 08.10.2008 in
Company Application No.518 of 2008, the details of amount deposited
by the applicant towards purchase of assets of the Company are as
under :-
Sr. No.
Date of event
Amount
(Rs.)
01.
22.09.2004
1,00,00,000/-
02.
08.10.2004
62,75,000/-
TOTAL
1,62,75,000/-
The
aforesaid amounts were placed in the Bank by way of different FDRs
and an amount of Rs.33,76,345/- (approximately, subject to
confirmation of the same from different Banks where FDRs were
placed), is received towards interest accrued on the said amount from
time to time.
Pursuant
to the directions issued to the Registry vide order dated
06.10.2008, the Registrar (Inspection) filed a detailed office note,
wherein it is submitted that the applicant of Company Application
No.517 of 2008 viz. Manibhadra Sales Corporation has deposited an
amount of Rs.41,20,478 i.e. Rs.41,14,478 on 16.08.2004 and
Rs.6,000/- on 30.10.2004 in OJMCA No.175 of 2003 and the applicant
of Company Application No.518 of 2008 viz. Castwell Alloys Limited
has deposited Rs.20,05,000/- i.e. Rs.5,000/- on 27.09.2004 and
Rs.20,00,000/- on 08.10.2004 in Company Application No.311 of 2004
with OLR No.49 of 2003. In all, Rs.61,25,478/- have been deposited
by both the applicants and the entire amount of Rs.61,25,478/- has
been invested in Fixed Deposit by way of bulk investment on
22.05.2006 with State Bank of India, Gujarat High Court Complex
Branch, Sola, Ahmedabad for a period of 3 years in pursuance of
order passed by the Division Bench of this Court on 07.07.2004 in
Special Civil Application No.321 of 2004. It is further stated in
the said office note that the Bank has worked out the interest
amount accrued on the Fixed Deposits payable till 06.10.2008 and
total amount of interest payable comes to Rs.8,05,349/- on the
principal amount of Rs.61,25,478/-.
Heard
Mr. K.S. Nanavati, learned Senior Counsel appearing with Mr. A.S.
Shah for the applicant of Company Application No.517 of 2008 and Mr.
Mihir Joshi, learned Senior Counsel appearing with Mr. Pavan
Godiawala for the applicant of Company Application No.518 of 2008.
Mr. J.S. Yadav, learned advocate appears on behalf of the Official
Liquidator.
It
is the case of the applicants that the applicants were the proposed
buyers of the assets of the Company in liquidation. Upon coming to
know about the sale of the properties of the Company in liquidation,
the applicant of Company Application No.517 of 2008 made an offer
for purchase of the assets of the Company in liquidation for Rs.
3.75 Crores and in order to show their bonafide, they deposited the
amount of Rs. 1 Crore with the Official Liquidator. At the time of
making the application before the Court, the sale was already
confirmed in favour of M/s. Valji Khimji & Company. However,
the sale deed was not executed and the said party has not deposited
the entire purchase consideration before the Official Liquidator.
On hearing the applicant, this Court has passed an order on
24.10.2003 issuing notice to the respondent and directed the
Official Liquidator to maintain status-quo. Pursuant to the order
dated 24.11.2003 passed by this Court, the applicant had deposited
further sum of Rs.2.75 Crores with the Official Liquidator alongwith
interest on the EMD amount of Rs.25 Lacs @ 1.5% p.m. for the period
from 10.04.2003 to 22.10.2003. Thereafter, this Court vide order
dated 23.07.2004 directed the applicant to deposit a sum as interest
@ 15% p.a. on the sale consideration of Rs. 3.25 Crores paid by the
respondent No.1. Pursuant to the said order, the applicant on
31.07.2004 has deposited an amount of Rs.39,99,080/-. Subsequently,
the applicant filed OJ Misc. Civil Application No.175 of 2003 and
this Court has passed an order on 10.09.2004 whereby the order dated
30.05.2003 passed in OLR No. 49 of 2003 in Company Petition No.242
of 1997 was recalled. By the said order, this Court permitted the
applicant to withdraw Rs.2.75 Crores deposited by the applicant
pursuant to the order dated 24.11.2003, leaving behind the balance
of Rs.1 Crore.
So
far as applicant of Company Application No.518 of 2008 is concerned,
it has filed Company Application No.314 of 2004 for recalling the
order of confirmation and for acceptance of its offer for Rs. 5
Crores. The said application was allowed by this Court vide common
order dated 10.09.2004 and the order of confirmation of sale was
recalled. In this very order, the applicant was directed to deposit
an amount of Rs.1,82,80,000/- consisting of Rs. 50 Lacs as earnest
money deposit, Rs.12,75,000/- as non-refundable interest,
Rs.1,00,00,000/- to establish its bonafides and Rs.20,00,000/-
towards loss of interest suffered by the buyer.
The
said order dated 10.09.2004 passed by this Court was carried in
appeal by the buyer before the Division Bench of this Court by way
of OJ Appeal No. 69 of 2004. The said appeal was dismissed by the
Division Bench of this Court on 25.08.2005.
Being
aggrieved by the said order, the respondent No.7 has preferred
Special Leave Petition No.4745 of 2006 before the Hon’ble Supreme
Court and the Hon’ble Supreme Court by an interim order directed to
maintain status-quo. Subsequently, the Hon’ble Supreme Court has
decided the said SLP on 12.08.2008 and it was decided in favour of
the present respondent No.7. The Hon’ble Supreme Court has
confirmed the auction sale dated 30.07.2003 in favour of respondent
No. 7.
By
virtue of the said order, the orders passed by the Learned Single
Judge of this Court as well as the Division Bench of this Court were
quashed and set aside and the offers made by the present applicants
were not accepted and no fresh sale is, therefore, required to be
taken place. In this view of the matter, submission is made on
behalf of the applicants that the amount deposited by way of earnest
money and other amounts towards sale consideration and interest
accrued thereon either before this Court or with the Official
Liquidator are required to be refunded.
Mr.
J.S. Yadav, learned advocate appearing for the Official Liquidator,
on the other hand, has submitted that the applicants have entered
into the auction proceedings at a belated stage and they were
required to pay late entry charges. Subsequently, pursuant to the
order passed by this Court, further amounts were directed to be
deposited. Knowing fully well that the sale is already confirmed in
favour of M/s. Valji Khimji & Company and they are opposing
their applications and still they have made offers and deposited
amount. He has, therefore, submitted that this being the commercial
transaction, interest charged by way of late entry as well as
interest accrued on the amount deposited by them should not be
refunded to the applicants. He has further submitted that there is
no clarification in the order of the Hon’ble Supreme Court with
regard to refund of amount with interest and hence, if at all they
are entitled to such interest, necessary clarification must be
sought from the Hon’ble Supreme Court. He has further submitted
that earlier also, an application was moved by the applicant for
withdrawal of the amount and this Court has not granted that
application and directed the applicant to seek clarification from
the Hon’ble Supreme Court. Considering all these aspects of the
matter, he has strongly urged that so far as the principal amount is
concerned, the same should be refunded. However, the interest
accrued thereon should not be refunded.
Having
heard learned advocates appearing for the respective parties and
having gone through the orders passed by the Court from time to time
including the order of the Hon’ble Supreme Court, this Court is of
the view that when the offers made by the applicants before this
Court for purchase of the properties of the Company in liquidation
are not accepted in view of the decision of the Hon’ble Supreme
Court and no sale is going to take place now, the applicants are
certainly entitled to refund of the amount deposited by them either
with the Registry of this Court or with the Official Liquidator,
along with the interest accrued thereon. It is not the case that
they have backed out from their offers. They are still willing to
participate in the auction sale if it takes place. However, that
contingency would not arise now in view of the decision of the
Hon’ble Supreme Court. The applicants are, therefore, certainly
entitled to the interest accrued on the amounts deposited by them.
As far as late entry charges are concerned, it is true that normally
such charges are not refunded to the applicants. But, here in the
present case, the applicants have made the offers. They are
expecting the fresh sale in view of the much higher offers made by
them. However, in view of the decision of the Hon’ble Supreme
Court, there is no question of any fresh sale now. Further, the
orders passed by the Learned Single Judge as well as the Division
Bench of this Court are quashed and set aside and hence, late entry
charges are also required to be refunded to the applicants. The view
taken by this Court is also in consonance with the provisions
contained in Section 65 of the Indian Contract Act, 1872.
In
view of the peculiar facts and circumstances of the case, the
applicants are entitled to the refund of the entire amount deposited
by them along with interest accrued thereon. The Official
Liquidator as well as the Registry of this Court are, therefore,
directed to refund the amount to each of these two applicants as per
their entitlements as indicated in the reports filed before this
Court. The exact details of payments are to be worked out and
cheques be drawn separately in favour of the applicants, except the
amount of cost awarded by the Court earlier. The refund amount with
interest is directed to be paid to the applicants within 2 weeks
from today. The Official Liquidator as well as Registry are
permitted to encash Fixed Deposit Receipts pre-maturely.
These
applications are accordingly allowed without any order as to costs.
Registry
is directed to place a copy of this order in connected matter.
Sd/-
[K.
A. PUJ, J.]
Savariya
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