IN THE HIGH COURT OF KERALA AT ERNAKULAM
Co.Appeal.No. 2 of 2010()
1. P.S.VINCENT, PUTHUMADASSERY HOUSE,
... Petitioner
Vs
1. K.Y.ABDU, S/O.YOOSUF RAWTHER,
... Respondent
2. THE OFFICIAL LIQUIDATOR,
3. KERALA STATE INDUSTRIES DEVELOPMENT
For Petitioner :SRI.RAJU JOSEPH
For Respondent :SRI.K.MONI
The Hon'ble MR. Justice A.K.BASHEER
The Hon'ble MR. Justice P.Q.BARKATH ALI
Dated :01/03/2010
O R D E R
A.K. BASHEER & P.Q. BARKATH ALI, JJ.
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Company Appeal No.2 of 2010
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Dated this the 1st day of March, 2010
JUDGMENT
Basheer, J.
This appeal is directed against the order passed by the learned
Company Judge in two Applications filed in Company Petition No.2 of
2003.
2. By the impugned order the Company Court has directed
that the revised offer made by respondent No.1 herein who was the
applicant in Company Application No.398/2009 for Rs.1,05,01,000/-
( Rupees one Crore five Lakh one thousand) be accepted and the
assets of the company in liquidation, which were notified for sale, be
sold to the said applicant.
3. The grievance of the appellant who was not a party to the
Company Application referred to above, is that his offer of
Rs.1,09,75,000/- ( Rupees One Crore Nine Lakh Seventy Five
Thousand) ought to have been accepted by the Company Court not
only for the reason that his offer was higher than what was offered by
respondent No.1, but also since he was not given an opportunity to
make a further offer or atleast to explain the position.
Co.Appeal No.2/2010 2
4. Relevant facts may be briefly noticed.
5. It is not in dispute that certain movable and immovable
assets of the company in liquidation ( M/s. Elcera Substrates Ltd)
which is the subject matter of C.P.No.2/2003, were put to sale by the
Official Liquidator. It appears that initially, the highest offer received
from two bidders separately for the immovable assets and the plant
and machinery put together was only for Rs. 64,93,800/- ( Rupees
Sixty Four Lakhs Ninety three thousand eight hundred). In the
meanwhile respondent No.1 approached the Company Court and filed
I.A.No.398/2009 making an offer of Rs.1,00,01000/- for the movable
and immovable assets and the plant and machinery. Appellant filed
I.A.No.380/2009 offering a total sum of Rs. 88,00,000/-. On a query
made by the Company Court as to whether the two bidders were
prepared to make a better offer, respondent No.1 enhanced his offer
and raised it to Rs.1,05,01,000/- and appellant enhanced it to
Rs. 92,52,100/-.
6. At this stage the Company Court directed the Official
Liquidator to issue a fresh tender notification for sale fixing the sum of
Rs.1,05,01,000/- as the upset price and to see whether there was any
better offer.
7. It was at this stage that the appellant raised his offer to
Co.Appeal No.2/2010 3
Rs.1,09,75,000/- for the movables, plant and machinery and
immovable assets. But while making the said offer, the appellant put
forth four conditions which in effect were as follows :
1) All documents in respect of the land
must be "cleared".
2) All electricity dues must be discharged
by the Official Liquidator and it must be ensured
that new electric connection is provided in his
name.
3) He should be absolved of all statutory
liabilities like telephone, sales tax, Insurance ,
Provident Fund etc.
4) Document of title must be executed
either in his own name or in favour of the person
to be nominated by him.
8. Respondent No.1 did not revise his earlier offer of
Rs. 1,05,01,000/-. The offers made by the appellant and respondent
No.1 were placed before the Company court by the Official Liquidator
along with his report. The Liquidator in his report stated that condition
No.2 put forth by the appellant cannot be countenanced or accepted
under any circumstances. But as regards the other three conditions,
the Liquidator did not make any suggestion and left it to the discretion
of the court.
9. When the matter came up for consideration, the learned
Co.Appeal No.2/2010 4
Judge took the view that the offer made by the appellant cannot be
accepted in view of the conditions attached to the same. The learned
Judge therefore directed that the revised offer of Rs. 1,05, 01,000/-
made by respondent No.1 be accepted and the assets of the company
be sold to him.
10. As mentioned earlier, the appellant takes exception to the
above order passed by the learned Company Judge on two grounds
which we have already referred to above.
11. Sri.Raju Joseph, learned counsel for the appellant submits
that the appellant ought not to have been penalised even assuming he
had committed any indiscretion. The appellant had only given
expression to his anxiety. His only intention was to ensure that he did
not incur any other liabilities. The appellant being an uneducated
person, his conduct ought to have been considered in its right
perspective. At any rate, the appellant ought to have been given an
opportunity to offer an explanation, in which event, he might have
even reconsidered the matter and probably would have withdrawn
those conditions.
12. In this context, learned counsel invites our attention to the
provisions contained under Section 55 of The Transfer of Property Act
1882 and particularly to Clause (g) of the above section. Section 55
Co.Appeal No.2/2010 5
lays down the rights and liabilities of buyer and seller of an immovable
property. It postulates that in the absence of a contract to the
contrary, the buyer and seller of immovable property respectively, are
subject to the liabilities, and have the rights, mentioned in the rules
enumerated in the Section, or such of them as are applicable to the
property sold.
13. Clause of sub section 1 further postulates that the seller is
bound among other things :
(g) to pay all public charges and rent
accrued due in respect of the property up to the
date of sale, the interest on all encumbrances on
such property due on such date, and, except
where the property is sold subject to
encumbrances, to discharge all encumbrances on
the property then existing.
14. It is contended by the learned counsel that a perusal of the
conditions incorporated by the appellant in Annexure A tender
document will unambiguously show that all these conditions were in
essence what was contained in Clause ‘g’ of Section 55. While
conceding that the properties were sold ” IN AS IS WHERE IS AND
WHATEVER THERE IS” condition, it is contended by the learned
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counsel that it was incumbent on the seller, the Official Liquidator, to
ensure that the buyer was not saddled with any unhidden liabilities at
a later stage. This was only what the appellant intended when the “so
called” conditionalities were put forth.
15. Learned counsel has also pressed into service Section 57 of
The Transfer of Property Act in support of the above contention. The
provision in the above Section only postulates that where immovable
property subject to any encumbrances, whether immediately payable
or not, is sold by the court in execution of a decree, or out of court,
the court may, if it thinks fit, on the application of any party to the
sale, direct or allow payment into court such dues in the manner
provided therein. It can be seen that the above provision relates to
sale by court of an immovable property which is subject to any
encumbrance . The section mandates that such encumbrances shall
be discharged in the manner provided in the section.
16. We are afraid that the attempt of the learned counsel to
seek the aid of Section 57 in his case is totally misconceived.
17. As regards the contention based on Clause ‘g’ of Section
55, it may be noticed that it is one of the several obligations cast on a
seller of an immovable property to discharge all public charges and
rent accrued due in respect of the said property up to the date of sale.
Co.Appeal No.2/2010 7
But where the property is sold subject to encumbrances, the situation
may be different as is discernible from the above sub clause. We do
not propose to deal with that aspect of the matter any further since in
our view the issue can be dealt with dehors the aid of the above sub
clause.
18. As rightly pointed out by the learned counsel for
respondent No.1, the appellant had put his signature under
endorsement referring to the terms and conditions. He had
unequivocally stated that he has unconditionally accepted the terms
and conditions of the sale. As mentioned earlier, one of the general
terms and conditions of sale stipulated that the assets were being sold
in “as is where is and whatever there is”. Clause ‘ d ‘ of the terms and
conditions reads thus :
“The assets are sold on the assumption that the
tenderer/s have inspected the assets, know what they
are tendering for, whether they have inspected or not
and the principle of ‘Caveat Emptor’ will apply.”
19. According to the learned counsel, the phraseology ” AS IS
WHERE IS AND WHATEVER THERE IS” will not take within its ambit
the defect in title or any other unseen liability that may be attached to
the property. Learned counsel contends that the above clause would
Co.Appeal No.2/2010 8
only relate and refer to the physical condition of the asset and nothing
more. For instance he points out that a successful tenderer may not
be entitled to complain about the defect or poor quality of the movable
property like machinery etc., if it was not in a working condition.
Similarly, if the immovable property like land turns out to be totally
rocky and unusable for any agricultural purposes, the successful
tenderer cannot be heard to say that he did not bargain for such a
land. It is further pointed out by the learned counsel that tenderer
may not also be entitled to complain, if any easementary right is
attached to the land under the Easments Act 1882.
20. In short it is pointed out by the learned counsel that
neither the liquidator nor respondent No.1 can take shelter under the
above clause incorporated in the tender notification.
21. It is true that the appellant was not formally given an
opportunity by the liquidator to reconsider the matter and to state
whether he stuck to the conditions incorporated by him to the offer in
response to the tender. However, it has to be noticed that a fresh
tender notification was issued by the Official Liquidator as suggested
by the Court since there was wide disparity between the first offer and
the last one. As mentioned earlier, while the first offer made by
another person was for about Rs.65 lakhs, the offer made by
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respondent No.1 on the first occasion was Rs.1,00,01,000/-. Still
later, respondent No.1 enhanced his offer to Rs.1,05,01,000/-. It was
noticing the above wide disparity in the offers made by the tenderers
that officials of the Company Court had directed the Official Liquidator
to issue a fresh tender notification. In response to the notification,
the appellant had made an offer of Rs.1,09,75,000/-. The learned
Company Judge, after considering these two offers made by
respondent No.1 and appellant, took the view that the offer made by
the appellant need not be accepted since certain conditionalities were
attached.
22. The short question that arises for consideration is whether
any interference is warranted in the view taken by the learned
Company Judge.
23. At first blush the contentions raised by the appellant may
appear to be quite attractive. As has been noticed already 3 of the 4
conditions put forth by the appellant may not have any implementation
or complications as such. However the second condition with regard to
the liabilities, if any, to the Electricity Board could not have been
countenanced at all, as pointed out by the official liquidator in his
report before the Company Court. Still a stipulation made by the
condition imposed by the appellant that the official liquidator must
Co.Appeal No.2/2010 10
ensure that the power connection was made available to him once the
sale is confirmed.
24. As regards the above contention, the Official Liquidator
reported before the Court that it was unaccepted.
25. Sri.Raju Joseph, learned counsel for the appellant,
contends that even assuming the conditions put forth by the appellant
were unacceptable, the Official Liquidator ought to have afforded an
opportunity to him to be heard. It is further contended by the learned
counsel that the Official Liquidator ought to have considered the offer
made by the appellant de hors those conditions.
26. As has been noticed already, the appellant had made an
endorsement accepting all the terms and conditions of the tender
notification as could be seen from Annexure-A notification itself. The
four conditions were written by the appellant in his own handwriting
beneath the above endorsement. Clause (j) of Annexure-A notification
makes it abundantly clear that ” terms and conditions of sale will form
part of every tender and shall be signed and submitted along with each
tender in token of acceptance of the terms and conditions of the sale”.
Even if we accept the contention raised by the appellant as regards the
clause relating to “AS IS WHERE IS AND WHATEVER THERE IS”, it
cannot be said that the appellant might have been ignorant of the
Co.Appeal No.2/2010 11
other terms and conditions in Annexure-A notification. The learned
Company Judge has, apparently keeping in view all the above aspects
of the matter, decided not to accept the offer made by the appellant.
Though there is some merit in the contention raised by the appellant
as regards failure of the Official Liquidator to issue notice to him, we
are not persuaded to disagree with the view taken by the learned
Company Judge. The appellant could not have imposed certain
conditions precedent while submitting his tender papers. We have also
kept in view the circumstance leading to issuance of Annexure-A
notification before which respondent No.1 had made his offer.
27. As has been noticed already, the offer of Rs.1,05,01,000/-
made by respondent No.1 was treated as the upset price by the
company court. It is true that respondent No.1 had not chosen to
offer a higher bid in response to Annexure-A notification. Under
normal circumstances, if the appellant had not imposed any
conditionalities, he might have walked away with the bid. But,
unfortunately, he decided to impose certain conditions, may be for his
own reasons. As rightly held by the learned Company Judge, the
appellant was not entitled to have the cake and eat it too. We do not
find any reason to interfere with the order passed by the company
court.
Co.Appeal No.2/2010 12
There is yet another aspect of the matter. It is beyond
controversy that the sale was confirmed on 4th January, 2010 and the
properties, both movable and immovable, were delivered to
respondent No.1 on the same day. It is contended by respondent
No.1, which is not controverted, that he had also sold the movables to
a third party. It is also on record that respondent No.1 has entered
into an agreement for sale of certain portions of the entire immovable
property as well.
The appeal fails. It is accordingly dismissed.
A.K. BASHEER, JUDGE
P.Q. BARKATH ALI, JUDGE
mt/sv/mns/aks
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