JUDGMENT
Vijender Jain, C.J.
1. C.M. No. 202 of 2007 – The application is allowed and the affidavit of Shri Naresh Chatley filed along with it is taken on record.
Company Appeal No. 16 of 2007.
This is an appeal under Section 483 of the Companies Act, 1956 (for short, ‘the Act’) for setting aside order dated 1.3.2007 passed by the learned Company Judge in Company Application Nos. 631, 641 and 127 of 2006.
2. The facts of the case, in brief, are that one M/s Kanav Steels Private Limited was incorporated as a Company under the Act on 11.2.1985. The name of the said company was changed to M/s Shree Dewan Steels (India) Limited on 31.5.1990 which is the present company which went into liquidation vide order dated 10.2.1999 of the learned Company Judge. The Official Liquidator attached to this Court was appointed as its liquidator.
3. The company in liquidation was deeply in debts. The Central Bank of India, one of its secured creditors, had also filed an application for recovery of the amount due to it before the Debts Recovery Tribunal, which was decided on 17.3.1999.
4. Vide order dated 11.1.2006, the Official Liquidator was permitted to conduct the sale of immovable and moveable assets of the company in liquidation by associating the secured creditors and in pursuance to the said order, one Avtar Singh was found to be the highest bidder of the composite lot, having made bid for Rs. 5.2 crores. An application was filed by the Official Liquidator for confirmation of the sale, which was pending consideration before the learned Company Judge.
5. In the meantime, a dispute was raked up by M/s Rishi Steel Traders, M/s Chatley Steels and Naresh Chatley. The crux of the dispute was that the land actually belonged to M/s Chately Steels and Shri Naresh Chatley. There was a fusion of interest between the two and there was no demarcation of any specific portion of the land and boundary wall existed in respect of the entire land measuring 36 kanals and 16 marlas. M/s Rishi Steels filed a civil suit for declaration and further pleaded that it had got the possession of the land in question through a civil court decree. M/s Rishi Steels had also filed a separate civil suit for recovery of Rs. 2,93,000/- against M/s Chatley Steels which is a proprietorship concern with Naresh Chately as is proprietor. Another suit for recovery of Rs. 6,25,000/- was filed against the company prior to its liquidation. In execution of the decree passed against the proprietorship concern of Naresh Chately, land measuring 7 kanals and 19 marlas was attached before judgment. The suit against the proprietorship concern was decreed ex parte on 29.7.1998 and in execution of the said decree, a public notice was published on 17.7.1999 for sale of land measuring 7 kanals and 19 marlas. In the auction held on 12.11.1999, 4 kanals of the aforesaid land was put to auction and the decree holder was the highest bidder, who gave the bid of Rs. 3,40,000/-. The sale was confirmed by the Executing Court on 18.12.1999 and a sale certificate was issued on 23.2.2000.
6. Company Application Nos. 631 and 641 of 2006 were filed by the shareholders, whereas Company Application No. 127 of 2007 was filed by Naresh Chatley through his attorney Shri Vibhu Raj Jhanji objecting to the sale of assets of the company in liquidation, which was conducted by the Official Liquidator.
7. It has been averred in the aforementioned applications, which are supported by affidavits, that M/s Kanav Steels Private Limited, prior to its change of name, had purchased 27 kanals 5 marlas of land from one Navtej Singh son of Gurcharan Singh. Out of the aforesaid land, 19 kanals 14 marlas was of specific khasra numbers, whereas the remaining land was share of the other khasra numbers. The promoters of the company in liquidation had also purchased land measuring 9 kanals 13 marlas contiguous to the above land measurfng 27 kanals 5 marlas. Six kanals and thirteen marlas of land was purchased in the name of Chatley Steel Private Limited vide two registered sale deeds. Land measuring 1 kanal and 14 marlas is part of the land purchased in the name of Chatley Steels Private Limited vide sale deed dated 12.9.1998, whereas 4 kanals and 18 marlas of land has been purchased on 28.12.1998, land measuring 3 kanals and 1 mark was purchased vide two separate sale deeds in the name of Naresh Chatley, I.e., land 1 kanal & 14 marlas and 1 kanal & 7 marlas on 29.12.1989. The vendor of all the sale transactions is aforesaid Navtej Singh. All the sales have been executed by Navtej Singh on the basis of jamabandi for the year 1983-84.
8. The applicants categorically stated that through the above-said five sale deeds, total land measuring 36 kanals and 18 marlas was purchased for setting up steel plant and after the purchase of the land, boundary wall was raised on the entire area. The site plans were also attached by the applicants.
9. An additional affidavit was also filed along with Company Application No. 146 of 2007, wherein the following averments were made:
That the corporate premises of Sh. Dewan Steels India Ltd. (SDIL) comprised of area 36 kanals 18 marlas boundened with one boundary wall has. three different individual titles namely, SDIL, Chatley Steels Pvt. Ltd. (CSPL) and Naresh Chatley (individually). It was also pointed out that legally CSPL is corporately wedded with SDIL because it is an associate/holding company of SDIL and both these companies inter se are managing/holding company as defined in Sections 2 & 4 of the Act. It was also pointed out that in the land holding of CSPL comprised of 6 kanals 12 marlas denoted by Khasra Nos. 16, 17, 18 & 19 are having the main corporate-Building, weighing bridge (kanda), power poles and transformers, store room and tools etc. over it for the operation of the works, building for SDIL. Therefore, within the corporate premises of 6 kanals 18 marla, there had been unity of possession of the company SDIL, although legally the aforesaid three titles and the khasra Nos. thereto, were distinct within the boundary walls.
10. The above mentioned averments made in the applications and the extract of the affidavit depicted an interwoven web conceived and woven by Naresh Chatley in order to frustrate the Civil Court decrees, as also the process of liquidation.
11. The learned Company Judge negated the sale confirmation by the Civil Court in respect of the assets of the company in liquidation as no permission was sought before proceedings for sale thereof. It was held that the sale conducted by the Official Liquidator in respect of the assets of the company in liquidation would not, in any way, be affected by the proceedings of the Civil Court. The relevant extract of order dated 1.3.2007 of the learned Company Judge is reproduced below:
The sale confirmed by the Civil Court in respect of the assets of the company cannot be taken into consideration as no permission of this Court was sought before proceeding for sale of the assets of the company in liquidation. In fact, such aspect is not disputed by any of the parties. Similarly, the sale of assets of Naresh Chatley by Civil Court will not effect the sale conducted by this Court in respect of the asserts of the company in liquidation. In respect of arguments that actual possession of 4 kanals has been handed over to the purchaser of land adjacent to road in pursuance to the civil court decree and that such delivery of possession is invalid, it is suffice to state that even if possession of specific portion has been handed over to the auction purchaser in pursuance of the execution of the decree passed by the civil court, still it is to be treated as sale of a share of a joint land. The question of actual physical possession to the extent of land purchased by the company in liquidation. Naresh Chatley and Chatley Steels Private Limited has to be settled in partition proceedings.
Thus, on the basis of site plan and the revenue record, it is found that the land was being used by the company in liquidation; Naresh Chatley and Chatley Steels Private Limited in husband like manner. Though it appears that a separate passage was provided for access to the rear portion of the land but that is the arrangement arrived at by the parties for convenient use of the land. The entire land sold by Navtej Singh to three different entities is to be deemed as a sale of a share of suit land only. The specific portion can be obtained by the parties in pursuance of partition of such joint land. In view of the above, the aforementioned company applications stand disposed of.
12. Aggrieved by the aforesaid order of the learned company Judge, Shri Naresh Chatley filed this appeal through his power of attorney holder-Shri Vibhu Raj Jhanji.
13. Upon notice of motion having been issued, the respondents appeared and pointed out that the liquidation process which was initiated in the year 1999 and the sale by way of auction held pursuant to the liquidation proceedings have been held up because of the tactics adopted by the appellant.
14. This Court, on closer scrutiny of the attorney filed by Shri Naresh Chatley, observed that the same was seeped in suspicion as his address had not been disclosed and the concern of the Court was naturally aroused as it was not understandable as to how the same could be attested by the Notary Public in Ludhiana when the essential particulars of the executor were not complete.
15. It was pointed out before this Court that Shri Naresh Chatley was in fact, an absconder and had been declared a Proclaimed Offender as he had not satisfied the debts of many a creditors. In view of this, it became all the more surprising, that how a proclaimed offender could persist with the proceedings and the power of attorney could be executed by the Notary Public in Ludhiana.
16. Upon this, Vibhu Raj Jhanji tried to allay the apprehension of the Court by saying that Naresh Chatley was in the near vicinity of the Court complex and can be produced within half an hour to satisfy the Court, but when after half an hour the matter was taken up, Shri Jhanji made a statement that Shri Chatley was not present and he would produce him in the Court on the next date. The Court also found that the attorney and the person in question, I.e., Naresh Chatley were evasive and doubted their bona fides.
17. On 20.9.2007, while noticing the averments, the following order was passed:
In the power of attorney filed on behalf of Ex-Managing Director, the address Naresh Chatley has not been disclosed. We are also not satisfied with the genuineness of this special power of attorney, in the manner, in which it has been attested by the Notary Public at Ludhiana in view of the fact that the essentials of the particulars of the executor are not complete. Therefore, we would like to have the personal appearance of Ex-Managing Director in this Court after 10 days.
At this stage, attorney of Ex-Managing Director says that he will have him in this Court within half an hour as he is in the near vicinity of the Court complex.
After half an hour, the matter has been taken up again. The Ex-Managing Director Mr. Naresh Chatley is not present. His attorney prays that 10 days time may be granted to produce him in the Court.
We feel the person in question is being evasive and is playing truant with the Court. However, at the request of his attorney, adjourned to 01.10.2007.
Let the Ex-Managing Director be present in Court on the next date of hearing.
18. On 28.9.2007, an application, being C.M. No. 180 of 2007, came up for hearing in which it was pleaded that Vibhu Raj Jhanji cannot attend the Court as he is down with problem of his back. He also sought the exemption of appearance of Shri Naresh Chatley. The following order was passed on that date:
On 20.9.2007 we had observed in the main appeal that in the special power of attorney filed by the Ex-Managing Director Mr. Naresh Chatley, the address has not been disclosed. We had also observed that we were not satisfied with the genuineness of the special power of attorney and the manner in which it has been attested by the Notary Public at Ludhiana in view of the fact that the essentials of the particulars of the executor were not complete. We directed the personal appearance of the Ex-Managing Director in this Court after 10 days.
When that order was passed, Mr. Vibhu Raj Jhanji, Advocate appearing for the Ex-Managing Director said that he will produce the Ex-Managing Director within half an hour in the Court as he was in the near vicinity of the Court complex.
Thereafter, we took up the matter after half an hour and Mr. Jhanji, who was also attorney holder of Mr. Naresh Chatley, made a statement that Mr. Chatley was not present and he will produce him in the Court on the next date of hearing. We had also observed on that day that the person in question was being evasive and was playing hide and seek with the Court. However, at the request of the attorney we adjourned the matter for 1.10.2007.
Today, this application has been moved for exemption of appearance of Mr. Naresh Chatley. On behalf of Mr. Vibhu Raj Jhanji, Ms. Sangeeta Dhanda has put in appearance and states that Mr. Jhanji has sprained his back
Let a medical certificate from a government hospital to that effect be filed.
Re-notify on 1.10.2007.
Copy of the order be given Dasti under the signatures of the Special Secretary of this Court.
On 1.10.2007, Shri Rakesh Khanna, Senior Advocate along with Shri Anshuman Sood and Shri Vibhu Raj Jhanji, Advocates appeared for the appellant and prayed for time to produce Shri Naresh Chatley in Court on the next date of hearing. The following order was passed on that date:
Affidavit has not been properly filed. We do not want to say anything at this stage.
Mr. Khanna prays for some time to produce the appellant in Court on the next date of hearing.
Medical Certificate pursuant to our order dated 28.9.2007 be also filed along with the affidavit.
Re-notify for hearing on 17.10.2007.
19. On 17.10.2007, Shri Anshuman Sood, Advocate, who had appeared as one of the instructing counsels for the appellant, filed an application stating that he had informed Shri Naresh Chatley telephonically on 1.10.2007 itself and the directions of the Court had also been conveyed to him. He also sought the leave of the Court to withdraw from the proceedings as Shri Chatley had not contacted him thereafter. The application was accordingly accepted and the presence of Shri Anshuman Sood, Advocate was discharged.
20. On that day, Shri Vibhu Raj Jhanji stated that he will produce Shri Chatley in the Court if the matter is taken up after half an hour, which prayer was accepted. After half an hour, Shri Chatley put in appearance and tendered his apology for his conduct. This Court directed Shri Chatley to file an affidavit in support of the appeal as sufficient doubt had been created in the mind of the Court that the appeal filed through attorney was not bonafide.
The order passed on 17.10.2007 reads as under:
C.M. Nos. 187 and 188 of 2007.
C.M. allowed. Affidavits of Vibhu Raj Jhanji alongwith documents be taken on record.
Company Appeal No. 16 of 2007.
Present appeal has been filed by Mr. Vibhu Raj Jhanji who is a lawyer as well as attorney of the appellant. On 20.9.2007, while perusing the documents, we had directed the presence of Ex-Managing Director Naresh Chatley as we were not satisfied with the genuineness of the special power of attorney, and the manner, in which the same was attested by the Notary Public at Ludhiana, as the essentials of the particulars of the executor were not complete. At that stage, we had directed the personal appearance of the appellant in the Court. On that day, he made a statement in the Court that he would produce Naresh Chatley, on whose behalf the appeal has been filed, in Court within half an hour as he was in the near vicinity of the Court. The matter was taken up again after half an hour, when a statement was made by Mr. Vibhu Raj Jhanji that Naresh Chatley was not present and prayed for grant of 10 days time for producing Naresh Chatley in Court. At his request, we granted 10 days time and adjourned the matter to 01.10.2007 with a direction that Naresh Chatley be present in Court on the next date of hearing.
In the meanwhile, an application for exemption from personal appearance of Naresh Chatley from the Court was filed by Ms. Sangeta Dhanda, Advocate. On the asking of the Court that why Mr. Vibhu Raj Jhanji has not appeared, she made a statement that Mr. Vibhu Raj Jhanji has sprained his back. On her statement, we directed Mr. Vibhu Raj Jhanji to file his medical certificate to that effect duly issued by a government hospital on 01.10.2007.
On the date fixed I.e., 01.10.2007, the counsel were changed and Mr. Anshuman Sood, Advocate alongwith Mr. Rakesh Khanna, Senior Advocate appeared for the appellant. Mr. Vibhu Raj Jhanji was also present on that date. When we perused the affidavit filed on behalf of Naresh Chatley, we recorded that the affidavit had not been filed properly and we did not want to comment on anything at that stage. However, at the request of Senior Counsel for the appellant who undertook to produce the appellant in the Court on the next date of hearing and on the assurance that medical certificate pursuant to our order dated 28.9.2007 would be filed, the matter was adjourned for 17.10.2007.
Today an application has been filed on behalf of instructing counsel Mr. Anshuman Sood, Advocate that he has informed Naresh Chatley telephonically on 01.10.2007 and conveyed the directions of the Court to him. He has further stated in the application that despite that Naresh Chatley has not contacted him ever since then and has also not given any further instructions in the matter. Along with the application, an affidavit has also been filed by Mr. Anshuman Sood, Advocate. In these circumstances, he has prayed that he may be discharged from appearing in the matter.
Let the application presented in Court be registered.
We discharge Mr. Anshuman Sood, Advocate for appearance on behalf of the appellant in the matter.
At this stage, again Mr. Vibhu Raj Jhanji says that he will produce Naresh Chatley in Court and therefore, matter be taken up after half an hour.
Let the matter be taken up after half an hour.
Mr. Vibhu Raj Jhanji has produced Naresh Chatley in Court.
Naresh Chatley has tendered apology for his conduct.
Let an affidavit in support of the appeal be filed but Naresh Chatley within a period of four weeks.
Re-notify for hearing on 30.11.2007.
Let the amount received in the auction be deposited in an interest bearing account by the official liquidator to safeguard the interest of the auction purchaser.
21. Thereafter, the matter was taken up on 30.11.2007, I.e., the adjourned date, and once again, the counsel for the appellant was changed and one Shri Sandeep Jain, Advocate appeared and pleaded that the matter be adjourned for a few days to enable him to make his final submissions. The prayer was, in the interest of justice, accepted and the matter was adjourned to 4.12.2007.
22. Today, there is another change of counsel and this time, Shri A.K. Matta, Senior Advocate with Sarv Shri K.K. Khurana, Sandeep Jain, M.S. Ratta and Vaibhav Dang, Advocates. Advocates has appeared for the appellant and pleaded that some time may be given to him as Shri Naresh Chatley was interested in amicably settling the controversy and was keen to discharge all his debts and that he would file the statement of accounts, as also the report of evaluation of his assets.
23. The prayer has been declined in view of the peculiar circumstances which have been detailed above. We enquired from the counsel for the appellant as to whether he was prepared to argue the matter on merits to which he pleaded that more time may be given in order to settle the matter.
24. On the other hand, the learned Counsel appearing for the respondents pointed out that this appeal was filed by Shri Vibhu Raj Jhanji, acting as an attorney of Shri Naresh Chatley which is reflected from the memorandum of the parties and that said power of attorney has since been cancelled and in view of this, the appeal does not survive as it is not an appeal in the eyes of law. Reference was also made to the affidavit of Shri Naresh Chatley, which was filed ostensibly pursuant to order dated 17.10.2007 of this Court. Paragraphs 13, 15 and 16 of the said affidavit are reproduced below:
13. That deponent had appointed Shri Vibhu Raj Jhanji as his Special Attorney.
15. That, thereafter, deponent had filed the above titled appeal challenging the correctness of above said order dated 1.3.2007 made by Hon’ble Company Judge. Said Appeal was filed through his said Special Attorney Shri Vibhu Raj Jhanji.
16. That deponent categorically states that he is fully conversant with the facts of the case and that above titled appeal was filed through Shri Vibhu Raj Jhanji upon his instructions and on the basis of facts and information provided by him.
25. A perusal of the above extract of the affidavit of Shri Chatley shows that the appeal was filed by Shri Vibhu Raj Jhanji and nowhere has the deponent stated in the affidavit that he is supporting the contents of the appeal by way of this own affidavit.
26. That having not been done and the power of attorney having been cancelled, the appeal does not remain alive in the eyes of law. No attempts have been made or steps have been taken by Shri Chatley to rectify the legal infirmity which leaves this Court with no alternative but to conclude that the appeal is liable to be dismissed.
27. That apart, we are convinced that Shri Chatley lacks bona fides as the entire exercise seems to be the result of manipulative methods adopted to defeat the orders of the Company Court which had ordered the process of liquidation and also to defeat the rights of the auction purchaser. Shri Chatley is also fugitive from law as he has been absconding and is stated to be a proclaimed offender. In this view of the matter, when he was blatantly played the game of hide and seek with the Court and has made every attempt to hoodwink it, we find no reason to entertain any proceedings in this regard.
28. In the result, the appeal is dismissed. All the miscellaneous applications filed during the pendency of the appeal and which are pending, stand disposed of accordingly.