{"id":108997,"date":"1993-10-06T00:00:00","date_gmt":"1993-10-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/united-bank-of-india-vs-official-liquidator-on-6-october-1993"},"modified":"2018-03-17T01:20:56","modified_gmt":"2018-03-16T19:50:56","slug":"united-bank-of-india-vs-official-liquidator-on-6-october-1993","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/united-bank-of-india-vs-official-liquidator-on-6-october-1993","title":{"rendered":"United Bank Of India vs Official Liquidator on 6 October, 1993"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">United Bank Of India vs Official Liquidator on 6 October, 1993<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1994 SCC  (1) 575, \t  JT 1993 (6)\t116<\/div>\n<div class=\"doc_author\">Author: B S.P.<\/div>\n<div class=\"doc_bench\">Bench: Bharucha S.P. (J)<\/div>\n<pre>           PETITIONER:\nUNITED BANK OF INDIA\n\n\tVs.\n\nRESPONDENT:\nOFFICIAL LIQUIDATOR\n\nDATE OF JUDGMENT06\/10\/1993\n\nBENCH:\nBHARUCHA S.P. (J)\nBENCH:\nBHARUCHA S.P. (J)\nKULDIP SINGH (J)\n\nCITATION:\n 1994 SCC  (1) 575\t  JT 1993 (6)\t116\n 1993 SCALE  (4)19\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p>The Judgment of the Court was delivered by<br \/>\nBHARUCHA,  J.- The Naskarpara Jute Mills Co. Ltd. was  wound<br \/>\nup  under the orders of the High Court at Calcutta  on\tJuly<br \/>\n28,  1981  and\tthe Official Liquidator\t was  appointed\t its<br \/>\nliquidator.\n<\/p>\n<p>2.The  company had taken on lease from\tBharat\tAbhyudaya<br \/>\nCotton Mills Ltd. about 7 bighas of land under a deed  dated<br \/>\nJuly  2,  1931.\t The lease was for 99  years  and  permitted<br \/>\nrenewal\t on the same terms for another 99 years.   The\trent<br \/>\nunder the lease was Rs 1200 per annum.\tOn September 25,<br \/>\n<span class=\"hidden_text\">578<\/span><br \/>\n1935 the lessor&#8217;s interest in the said land was purchased by<br \/>\nBrij Mohan Saraogi who settled the same upon a trust  called<br \/>\nthe  Brij  Mohan  Saraogi  Charitable  Trust.\tThe  company<br \/>\nattorned  to the Trust as its tenant in respect of the\tsaid<br \/>\nland.\tAt the time when the winding-up petition  was  filed<br \/>\nthe  company had been in default of rent and  consent  terms<br \/>\nhad been arrived at whereunder the company had undertaken to<br \/>\npay the arrears.\n<\/p>\n<p>3.On  August 13, 198 1, the United Bank of India filed\ta<br \/>\nsuit  against  the  company  in\t liquidation  after   having<br \/>\nobtained  the  leave of the court under Section 448  of\t the<br \/>\nCompanies  Act for a decree in the sum of Rs  1,81,07,623.64<br \/>\nwith interest up to July 3 1, 1981. Upon the application  of<br \/>\nthe  Bank the Official Liquidator was appointed Receiver  of<br \/>\nthe goods, stocks and assets hypothecated by the company  in<br \/>\nliquidation   to  the  Bank  and  all  immovable   property,<br \/>\nincluding the said land and the factory premises which stood<br \/>\nupon it, which had been mortgaged to the Bank.\n<\/p>\n<p>4.On  October 8, 1982 the High Court, in  the  winding-up<br \/>\nproceedings directed the sale of the property and assets  of<br \/>\nthe company in liquidation.  The sale was to be effected  by<br \/>\nthe  Official Liquidator as directed by the  court.   Public<br \/>\nadvertisements\twere issued consequent upon such  directions<br \/>\nand  sealed offers received on December 3, 1982.  The  Trust<br \/>\nopposed\t the sale, so that consideration of the\t offers\t was<br \/>\ndeferred.   On\tJanuary\t 25, 1982 the  Trust  wrote  to\t the<br \/>\nOfficial Liquidator asking him to disclaim the said land and<br \/>\nsurrender  its\tpossession  to\tthe  Trust  because  it\t was<br \/>\nburdened  with onerous covenants.  On January 3 1, 1983\t the<br \/>\nTrust  took out a Judge&#8217;s Summons asking the High  Court  to<br \/>\ndirect\tthe  Official Liquidator under Section\t535  of\t the<br \/>\nCompanies  Act\tto  disclaim the said land  because  it\t was<br \/>\nburdened  with\tonerous\t covenants.  The  Bank\topposed\t the<br \/>\nJudge&#8217;s\t Summons  and  pleaded\tthat the  said\tland  was  a<br \/>\nsecurity  for the loans that it had advanced to the  company<br \/>\nin  liquidation\t and  that it should  be  available  to\t the<br \/>\nsecured and unsecured creditors; the covenants of the  lease<br \/>\nwere  not onerous and there was a saleable interest  in\t the<br \/>\nsaid  land.  On February 4, 1983 the Company Judge  directed<br \/>\nthe Official Liquidator to return the offers to the  parties<br \/>\nwho  had made them.  On July 7, 1983 the Company Judge\tmade<br \/>\nthe  Judge&#8217;s  Summons  absolute and  directed  the  Official<br \/>\nLiquidator   to\t disclaim  the\tsaid  land  and\t hand\tover<br \/>\npossession thereof to the Trust.\n<\/p>\n<p>5.The  Bank  appealed against the order\t of  the  Company<br \/>\nJudge.\tThe Division Bench which heard the appeal  dismissed<br \/>\nit.   It held, inter alia, that the lease of the  said\tland<br \/>\nstood  forfeited and\/or terminated by reason of the  Trust&#8217;s<br \/>\nnotice\tdated January 25, 1983.\t It held that no  notice  in<br \/>\nwriting\t to  the company in liquidation for  remedy  of\t the<br \/>\nbreach was necessary because the Trust did not want to\tfile<br \/>\na  suit\t for  ejectment.  The Division\tBench  rejected\t the<br \/>\ncontention  based  upon\t Section  114  of  the\tTransfer  of<br \/>\nProperty  Act because the Official Liquidator was not  in  a<br \/>\npositiot  to  apply  for any relief  against  forfeiture  by<br \/>\ntendering arrears of rent and interest.\t As the lease  stood<br \/>\nforfeited,  the said land ceased to be a part of the  assets<br \/>\nof the company in liquidation and the company in liquidation<br \/>\nhad  from the date of the notice of termination no right  or<br \/>\ninterest therein.  It could not therefore, be transferred<br \/>\n<span class=\"hidden_text\">579<\/span><br \/>\nor  sold by the Official Liquidator.  Inasmuch as, in  spite<br \/>\nof  forfeiture\tof the lease, the  Official  Liquidator\t was<br \/>\ncontinuing in possession of the said land, he was liable  to<br \/>\npay   mesne   profits  for  such  wrongful   possession\t  or<br \/>\noccupation.   Further, on account of arrears of rent a\thuge<br \/>\namount\twas due to the Trust.  Therefore, the said land\t was<br \/>\nonerous.\n<\/p>\n<p>6.It may be mentioned that the Bank had desired to pay to<br \/>\nthe  Trust  the\t arrears  of rent  but\tthe  Division  Bench<br \/>\ndeclined to permit it to do so.\n<\/p>\n<p>7.The  Bank thereupon filed a special leave  petition  to<br \/>\nappeal against the judgment and order of the Division Bench.\n<\/p>\n<p>8.There\t  are  several\torders\tof  this  Court\t in   the<br \/>\nproceedings which need to be referred to.  Special leave  to<br \/>\nappeal\twas  granted on January 27, 1986  and  the  judgment<br \/>\nunder  appeal  was  stayed.  On\t January  28,  1987  learned<br \/>\ncounsel\t appearing  for the various workers&#8217; unions  of\t the<br \/>\ncompany\t in  liquidation  said that  the  unions  wanted  to<br \/>\nexplore\t the possibility of taking over the interest of\t the<br \/>\nTrust with the object of running the mills of the company in<br \/>\nliquidation.   They stated that their clients would  explore<br \/>\nthe  possibility  of buying the interest of  the  Trust\t for<br \/>\nabout  Rs 30 lakhs.  On April 30, 1987 the Court  passed  an<br \/>\norder which said, inter alia, this:\n<\/p>\n<blockquote><p>\t      &#8220;We have heard this matter in part today.\t  In<br \/>\n\t      order to arrive at a proper adjustment of\t the<br \/>\n\t      rights  of  the parties judicially  we  direct<br \/>\n\t      that  the land and assets of  Naskarpara\tJute<br \/>\n\t      Mills  Co. Ltd. (in liquidation) and  as\talso<br \/>\n\t      the leasehold land which is the subject-matter<br \/>\n\t      of this appeal be sold by the Liquidator as  a<br \/>\n\t      going concern as quickly as possible by August<br \/>\n\t      31, 1987.\t The Official Liquidator, High Court<br \/>\n\t      Calcutta\t should\t take  immediate  steps\t  to<br \/>\n\t      implement\t this  order  and out  of  the\tsale<br \/>\n\t      proceeds,\t after meeting the expenses of\tsale<br \/>\n\t      which are financed by the appellant Bank,\t the<br \/>\n\t      Liquidator will pay for the time being subject<br \/>\n\t      to  adjudication\tof  all the  rights  of\t the<br \/>\n\t      parties,\ta sum of Rs 7.5 lakhs to Brij  Mohan<br \/>\n\t      Saraogi Charitable Trust (Respondents 2 and  3<br \/>\n\t      the Trustees of the said Trust) in respect  of<br \/>\n\t      their rights, claimed over the 7 bighas and 15<br \/>\n\t      kattas  of land.\tThe said leasehold  property<br \/>\n\t      shall  be sold free of leasehold rights  along<br \/>\n\t      with  the other entire assets of\tthe  company<br \/>\n\t      consisting  of  movables and immovables  as  a<br \/>\n\t      going concern without dismantling any  portion<br \/>\n\t      and  on &#8216;as is where is basis&#8217;.  More  than  9<br \/>\n\t      lakhs  is\t claimed to have been  paid  to\t the<br \/>\n\t      Official Receiver by the Bank.  Further amount<br \/>\n\t      is  to  be  given\t by  the  Bank\tto  Official<br \/>\n\t      Liquidator\/Receiver  for conducting the  same.<br \/>\n\t      These  sums are to be paid to the Bank at\t the<br \/>\n\t      first  instance  out  of\tthe  sale  proceeds.<br \/>\n\t      After payment to the Bank the Liquidator\twill<br \/>\n\t      pay  for the time being a sum of Rs 7.5  lakhs<br \/>\n\t      to  the trustees of the said trust in  respect<br \/>\n\t      of  their right claimed over the 7 bighas\t and<br \/>\n\t      15  kattas  of  land  and\t the  balance\tsale<br \/>\n\t      proceeds\tto be invested in Term Deposit\twith<br \/>\n\t      United  Bank  of India till  determination  by<br \/>\n\t      this Hon&#8217;ble Court.&#8221;\n<\/p><\/blockquote>\n<p>On  May\t 9, 1988 the offer of one Shyam\t Sundar\t Agarwal  to<br \/>\npurchase  the  assets  and  properties\tof  the\t company  in<br \/>\nliquidation was accepted.  The Court said:\n<\/p>\n<p><span class=\"hidden_text\">580<\/span><\/p>\n<p>&#8220;The consideration price will be Rs 2,60,00,000 out of which<br \/>\nShyam  Sundar Agarwal will pay Rs 30 lakhs within two  weeks<br \/>\nfrom today with the United Bank of India in the name of\t the<br \/>\nOfficial Liquidator.  The balance amount will be paid in  24<br \/>\nequal  monthly\tinstalments.   Shyam  Sundar  Agarwal\twill<br \/>\nfurnish bank guarantee for Rs Two crores and thirty lakhs to<br \/>\nthe  satisfaction  of the Liquidator  concerned\t within\t six<br \/>\nweeks  from today.  All the dues of the workers present\t and<br \/>\npast  will  be\tsettled by Shyam  Sunder  Agarwal  with\t the<br \/>\nworkers who are represented by various unions by Mr A.K. Sen<br \/>\nand P.K. Banerjee appearing for unions and they agree to run<br \/>\nthe  mill  in adjustment with him as a going  concern.\t The<br \/>\nmonthly instalments as aforesaid will be deposited with\t the<br \/>\nUnited Bank of India in the name of the Official Liquidator.\n<\/p>\n<p>\t      Shyam  Sundar Agarwal will not be\t liable\t for<br \/>\n\t      any  past liability except in respect  of\t the<br \/>\n\t      workers&#8217;\tdues.  If the State of\tWest  Bengal<br \/>\n\t      has any rights on land about which there is no<br \/>\n\t      adjudication,  this order will  not  prejudice<br \/>\n\t      such   rights,   if  any.\t   The\t appropriate<br \/>\n\t      authorities    namely    the    Municipalities<br \/>\n\t      concerned\t and other authorities\twill  render<br \/>\n\t      all  assistance to the person concerned  i.e.,<br \/>\n\t      Shyam   Sundar  Agarwal  for   restoring\t all<br \/>\n\t      electricity  and water connections on  payment<br \/>\n\t      of  such arrears and the\tOfficial  Liquidator<br \/>\n\t      will  ensure that such payment is\t made.\t The<br \/>\n\t      possession  will\tbe  given  to  Shyam  Sundar<br \/>\n\t      Agarwal\tafter\tdepositing   Rs\t  30   lakhs<br \/>\n\t      forthwith.   In default of making any  of\t the<br \/>\n\t      payments or in default of furnishing the\tbank<br \/>\n\t      guarantee or in the default of payment of\t any<br \/>\n\t      two instalments in the manner indicated  above<br \/>\n\t      or  in not keeping the bank  guarantee  alive,<br \/>\n\t      the  Official Liquidator will take  possession<br \/>\n\t      and the amount deposited will stand forfeited.<br \/>\n\t      In  such\ta case or in case the  mill  is\t not<br \/>\n\t      started  within a period of eight\t weeks\tfrom<br \/>\n\t      today  the transaction will fall\tthrough\t and<br \/>\n\t      the   parties  including\tDr  L.M.   Singhvi&#8217;s<br \/>\n\t      clients  and Mr U.C. Law&#8217;s clients will be  at<br \/>\n\t      liberty to apply to this Court for appropriate<br \/>\n\t      directions.&#8221;\n<\/p>\n<p>An  order was made on July 20, 1988, whereby  extensions  of<br \/>\ntime  were  given to the said Agarwal for  payment  and\t for<br \/>\nfurnishing  bank  guarantees.  On September 20,\t 1988,\tsome<br \/>\nmore  time was given to him to furnish bank guarantees.\t  On<br \/>\nNovember  30, 1988, time to furnish a bank guarantee and  to<br \/>\nmake  the  payment of Rs 10 lakhs was again  extended.\t The<br \/>\nsaid Agarwal not having made payments as directed,  contempt<br \/>\nproceedings were initiated against him.\t On August 27, 1992,<br \/>\nbailable  warrants  were issued to secure  his\tpresence  in<br \/>\nCourt since he had not appeared.  The Court stated:\n<\/p>\n<blockquote><p>\t      &#8220;It is not disputed that out of the sale price<br \/>\n\t      of  Rs  2,60,00,000 (Rupees Two  crores  sixty<br \/>\n\t      lakhs) a sum of Rs 62,00,000 (Rupees  Sixtytwo<br \/>\n\t      lakhs) has been paid before December 31, 1988.<br \/>\n\t      The  balance  of Rs 1, 98,00,000\t(Rupees\t One<br \/>\n\t      crore  ninety-eight lakhs) is yet to be  paid.<br \/>\n\t      By  this order, we give option to the  alleged<br \/>\n\t      contemnors  to  deposit  the said\t sum  of  Rs<br \/>\n\t      1,98,00,000  (Rupees  One\t crore\tninety-eight<br \/>\n\t      lakhs)  with  the Registry of  this  Court  by<br \/>\n\t      September 16, 1992.  The question of<br \/>\n<span class=\"hidden_text\">\t      581<\/span><br \/>\n\t       interest on the said amount shall be  decided<br \/>\n\t      with  the main case.  The entitlement  of\t the<br \/>\n\t      Bank to receive the amount and the  obligation<br \/>\n\t      of  the contemnors to pay the same shall\talso<br \/>\n\t      be subject to the decision of this Court.&#8221;\n<\/p><\/blockquote>\n<p>It had transpired that the said Agarwal was acting on behalf<br \/>\nof  Triputi  Jute  Industries (hereinafter  referred  to  as<br \/>\n&#8216;Triputi&#8217;)  and contempt notices were issued to it  and\t its<br \/>\nDirectors.  On October 20, 1992, the Court recorded that the<br \/>\nmodalities of payment of Rs 1,98,00,000 and 15% interest had<br \/>\nbeen  suggested\t by counsel appearing on behalf\t of  Triputi<br \/>\nwhich  it  considered  prima  facie  proper.   Triputi\t was<br \/>\npermitted to deposit Rs 30,00,000 in Court by the next\tday.<br \/>\nOn  October  21, 1992, the Court  recorded  the\t undertaking<br \/>\ngiven by Triputi, thus:\n<\/p>\n<blockquote><p>\t      &#8220;The  purchaser Triputi Jute  Industries\tLtd.<br \/>\n\t      through  their Director namely Shri Ram  Ratan<br \/>\n\t      Choudhury\t (one of the contemnors)  and  their<br \/>\n\t      Principal\t Officer  namely  Shri\tPritam\t Kr.<br \/>\n\t      Jhawar  undertake\t to  pay the  amount  of  Rs<br \/>\n\t      1,98,00,000 in the following manner:\n<\/p><\/blockquote>\n<blockquote><p>\t      (a)Rupees\t Fifteen lakhs have already  been<br \/>\n\t      deposited in the Registry of this Court  today<br \/>\n\t      i.e.  October 21, 1992.  A further sum  of  Rs<br \/>\n\t      15,00,000 shall be deposited with the Registry<br \/>\n\t      of this Court by 4.00\tp.m.  tomorrow\ti.e.<br \/>\n\t      October 22, 1992;\n<\/p><\/blockquote>\n<blockquote><p>\t      (b)A further sum of Rs 70,00,000 (either by<br \/>\n\t      way  of demand draft or cash) to be  deposited<br \/>\n\t      with  the Registry of this Court on or  before<br \/>\n\t      December\t31,  1992.   Balance  amount  of  Rs<br \/>\n\t      98,00,000 would be paid together with interest<br \/>\n\t      due  on the total amount Rs  1,98,00,000\t@15%<br \/>\n\t      p.a.  with effect from January 1, 1989  in  12<br \/>\n\t      equal  monthly instalments.   Each  instalment<br \/>\n\t      shall be deposited before the end of the month<br \/>\n\t      i.e. the first instalment shall be paid on  or<br \/>\n\t      before  January  31, 1993 and  all  subsequent<br \/>\n\t      instalments in similar manner.\n<\/p><\/blockquote>\n<blockquote><p>\t      We accept the undertaking given to this  Court<br \/>\n\t      which  we have reproduced above.\t We  further<br \/>\n\t      direct that the amount of Rs 1,98,00,000\twith<br \/>\n\t      interest\tshall be paid in terms of the  above<br \/>\n\t      undertaking  within the time specified in\t the<br \/>\n\t      undertaking.    Simply  because  one  of\t the<br \/>\n\t      Directors\t   (contemnors)\t  has\tgiven\t the<br \/>\n\t      undertaking  it would not mean that the  other<br \/>\n\t      contemnors   or\tthe  Directors\t have\tbeen<br \/>\n\t      discharged  from their liability.\t They  shall<br \/>\n\t      equally remain responsible personally as\twell<br \/>\n\t      as  in their capacity as the Directors of\t the<br \/>\n\t      Company to discharge their liability of paying<br \/>\n\t      the amount.&#8221;\n<\/p><\/blockquote>\n<p>On  October  22,  1992, the Court noted\t the  contention  of<br \/>\nlearned counsel for the Trust that he was entitled to  claim<br \/>\nthe  price of the said land which had been sold\t to  Triputi<br \/>\nand  his submission that he should be given part payment  in<br \/>\nrespect\t thereof out of the amount which had been  deposited<br \/>\nby Triputi.  The Court said that it was of the view that the<br \/>\nrights\tof the Trust, as of all other creditors, had  to  be<br \/>\ndetermined  either  by the Court or by any  other  authority<br \/>\nunder  the  directions\tof the Court and  that\tit  was\t not<br \/>\ninclined for the<br \/>\n<span class=\"hidden_text\">582<\/span><br \/>\namount\tto go into the question.  On September 8, 1993,\t the<br \/>\nCourt  noted  that pursuant to its order  dated\t August\t 27,<br \/>\n1992,  the sum of Rs 1 crore 98 lakhs had been deposited  in<br \/>\nCourt by Triputi and that the various contentions raisedby<br \/>\nthe parties were now ripe for final adjudication.\n<\/p>\n<p>9.First, as to the appeal.  We have heard Mr G.L.  Sanghi<br \/>\nfor the Bank and DrA.M. Singhvi for the Trust.\tDr  Singhvi<br \/>\nis,  we\t think, right in saying that this Court&#8217;s  order  of<br \/>\nApril 30, 1987, really makes the appeal infructuous because,<br \/>\nwith a view to arriving at a proper adjustment of the rights<br \/>\nof  the parties judicially, this Court, with the consent  of<br \/>\nthe  Trust,  directed the Official Liquidator  to  sell\t the<br \/>\nassets\tand  properties\t of  the  company  in\tliquidation,<br \/>\nincluding  the\tsaid  land, and\t it  directed  the  Official<br \/>\nLiquidator  to\tpay to the Trust the sum of  Rs\t 7.5  lakhs,<br \/>\nsubject to adjudication of all the rights of the parties, in<br \/>\nrespect\t of  Trust&#8217;s rights over the said land.\t  The  Court<br \/>\nmade it clear that the said land was to be sold free of\t the<br \/>\nlease.\t The  surviving\t issue,\t therefore,  as\t Dr  Singhvi<br \/>\nrightly\t pointed  out, and which Mr Sanghi  did\t not  really<br \/>\ndispute, was that it was for the Court to assess what should<br \/>\nbe paid by the Official Liquidator from out of the funds  of<br \/>\nthe  company  in liquidation to the Trust as and by  way  of<br \/>\ncompensation for its rights in the land.  As we have pointed<br \/>\nout, the said land, though of a substantial size, is subject<br \/>\nto  a  99  year lease entered into in July  193\t 1,  with  a<br \/>\nrenewal\t clause for a further 99 years at a rent of only  Rs<br \/>\n1200  per  annum.   That the lease extends  for\t another  37<br \/>\nyears, that it is liable to renewal for a further 99  years,<br \/>\nand  all  at  the meagre rental of Rs 1200  per\t annum\tmust<br \/>\nsubstantially depress the value of the lessor&#8217;s interest  in<br \/>\nthe  said land.\t In our view, therefore, the Trust would  be<br \/>\namply  recompensed  if it received as compensation  for\t the<br \/>\ndisposal  of its rights in the said land and for arrears  of<br \/>\nrent the sum of Rs 10 lakhs from the Official Liquidator out<br \/>\nof  the\t funds of the&#8217; company in  liquidation.\t  The  Trust<br \/>\nhaving already received the amount of Rs 7.50 lakhs pursuant<br \/>\nto  the order dated April 30, 1987, we shall now direct\t the<br \/>\nOfficial  Liquidator to pay to the Trust the balance  amount<br \/>\nof  Rs\t2.50 lakhs within 12 weeks from today  in  full\t and<br \/>\nfinal settlement of the Trust&#8217;s claim against the company in<br \/>\nliquidation  of\t whatsoever nature in respect  of  the\tsaid<br \/>\nland.\n<\/p>\n<p>10.While  the  aforesaid  direction will  dispose  of  the<br \/>\nappeal,\t we would like to say, having heard counsel  on\t the<br \/>\nmerits\tof  the appeal, that we are not satisfied  that\t the<br \/>\nDivision Bench appreciated the purpose of the provisions  of<br \/>\nSection 535 of the Companies Act.  Thereunder the High Court<br \/>\nmay  give leave to the Official Liquidator to disclaim\tland<br \/>\nof  any tenure which is part of the property of the  company<br \/>\nin  liquidation\t if it is burdened with\t onerous  covenants.<br \/>\nThe intention of Section 535 is to protect the creditors  of<br \/>\nthe  company in liquidation and not mulct them by reason  of<br \/>\nonerous covenants.  The power under Section 535 is not to be<br \/>\nlightly\t exercised.  Due care and circumspection have to  be<br \/>\nbestowed.   It must be remembered that an  order  permitting<br \/>\ndisclaimer, while it frees the company in liquidation of the<br \/>\nobligation to comply with covenants, puts the party in whose<br \/>\nfavour\tthe  covenants are, to\tserious\t disadvantage.\t The<br \/>\nCourt  must  therefore, be fully satisfied  that  there\t are<br \/>\nonerous covenants, covenants which impose a heavy<br \/>\n<span class=\"hidden_text\">583<\/span><br \/>\nburden upon the company in liquidation, before giving  leave<br \/>\nto disclaim them.\n<\/p>\n<p>11.We  are of the view that the High Court ought  to  have<br \/>\nappreciated  that it was rather unlikely that the party\t who<br \/>\nhad  the  benefit  of  onerous\tcovenants  would  apply\t for<br \/>\ndisclaimer   and   ought  to  have   viewed   the   Official<br \/>\nliquidator&#8217;s  application to disclaim made pursuant  to\t the<br \/>\nTrust&#8217;s\t letter\t to him in that behalf, in that\t light.\t  We<br \/>\nfind  it  difficult  to see how such a large  area  of\tland<br \/>\nleased\tto the company in liquidation for 99 years with\t the<br \/>\noption of renewal for a further 99 years for the meagre rent<br \/>\nof  Rs 1200 per annum can be said to be land  burdened\twith<br \/>\nonerous covenants.  We do not think that the High Court\t was<br \/>\njustified  in  debating\t and holding  in  proceedings  under<br \/>\nSection 535 that the lease of the said land had been validly<br \/>\nterminated so that the Official Liquidator became liable  to<br \/>\npay  mesne profits to the Trust, and that this coupled\twith<br \/>\narrears of rent, in five figures made the lease onerous.  We<br \/>\nare  also  of  the view that the Bank&#8217;s\t offer\tto  pay\t the<br \/>\narrears\t of rent to the Trust should have been\taccepted  by<br \/>\nthe  High  Court.  The Bank to protect and  keep  alive\t its<br \/>\nsecurity, had put Official Liquidator in funds in regard  to<br \/>\nother  matters\tand was eager to meet this  liability.\t Had<br \/>\nthis   been  done  valuable  property  of  the\tcompany\t  in<br \/>\nliquidation   could   have  been  retained   so\t  that\t its<br \/>\nundertaking, which stood on the said land, could have\tbeen<br \/>\nsold   as  a  running  concern,\t as  has  been\t done\tupon<br \/>\nintervention   of  this\t Court,\t for  the  benefit  of\t its<br \/>\ncreditors.\n<\/p>\n<p>12.We  now  consider the contempt proceedings on  the  one<br \/>\nhand  and the application on behalf of Triputi on the  other<br \/>\nfor diminution of the sale price by reason of the fact that,<br \/>\naccording  to Triputi, the Official Liquidator had not\tbeen<br \/>\nable   to  hand\t over  to  Triputi  possession\tof   certain<br \/>\nproperties  that    were  sold by him to it,  which,  it  is<br \/>\nalleged, the company in liquidation did not own.  The amount<br \/>\nof  Rs 1 crore 98 lakhs having been paid, what\tthis  really<br \/>\nboils  down to is whether Triputi should be made  liable  to<br \/>\npay interest at the rate of 15% per annum thereon.\n<\/p>\n<p>13.  In\t  our  view,  the  complete  answer   to   Triputi&#8217;s<br \/>\nallegation in regard to\t the   failure\t of   the   Official<br \/>\nLiquidator  to\thand  over  to\tit  possession\tof   certain<br \/>\nproperties  which were sold to it, which, according  to\t it,<br \/>\nthe company in liquidation did not even own, is contained in<br \/>\nclause 2 of the Terms and Conditions of Sale upon the  basis<br \/>\nof  which  the\tproperty  and  assets  of  the\tcompany\t  in<br \/>\nliquidation were sold by the Official Liquidator to  Triputi<br \/>\nunder the orders of this Court.\t Clause 2 reads thus:\n<\/p>\n<blockquote><p>\t\t    &#8220;2.\t The sale will be as  per  inventory<br \/>\n\t      list on &#8216;as is where is basis&#8217; and subject  to<br \/>\n\t      the confirmation of the Hon&#8217;ble Supreme  Court<br \/>\n\t      of  India. The Official Liquidator  shall\t not<br \/>\n\t      provide  any  guarantee  and\/or  warranty\t  in<br \/>\n\t      respect of the immovable properties and as  to<br \/>\n\t      the quality, quantity or specification of\t the<br \/>\n\t      movable assets.  The intending purchaser\tmust<br \/>\n\t      satisfy  themselves in all respect as  regards<br \/>\n\t      the movable and immovable assets, as to  their<br \/>\n\t      title,\tencumbrances,\t area,\t   boundary,<br \/>\n\t      description, quality, quantity, and<br \/>\n<span class=\"hidden_text\">\t      584<\/span><br \/>\n\t      volume  etc. and the purchaser will be  deemed<br \/>\n\t      to  offer\t with  full  knowledge\tas  to\t the<br \/>\n\t      description,  area etc. of the properties\t and<br \/>\n\t      defects thereof, if any.\tThe purchaser  shall<br \/>\n\t      not  be entitled to claim any compensation  or<br \/>\n\t      deduction\t in price on any account  whatsoever<br \/>\n\t      and  shall  be deemed to\thave  purchased\t the<br \/>\n\t      property\tsubject to all\tencumbrances,  liens<br \/>\n\t      anti claims including those under the existing<br \/>\n\t      legislation affecting labour, staff etc.\t The<br \/>\n\t      Official\tLiquidator shall not  entertain\t any<br \/>\n\t      complaint\t in  this regard after the  sale  is<br \/>\n\t      over.   Any  mistake in  the  notice  inviting<br \/>\n\t      tender   shall   not   vitiate   the    sale.&#8221;<br \/>\n\t      (emphasis supplied)\n<\/p><\/blockquote>\n<p>14.When\t the  Official Liquidator sells the  property  and<br \/>\nassets of a companyin  liquidation under the orders of\tthe<br \/>\nCourt  he  cannot  and does not hold out  any  guarantee  or<br \/>\nwarranty  in  respect  thereof.\t This  is  because  he\tmust<br \/>\nproceed upon the basis of what the records of the company in<br \/>\nliquidation  show.   It is for the  intending  purchaser  to<br \/>\nsatisfy\t  himself   in\tall  respects  as  to\tthe   title,<br \/>\nencumbrances and so forth of the immovable property that  he<br \/>\nproposes to purchase.  He cannot after having purchased\t the<br \/>\nproperty on such terms then claim diminution in the price on<br \/>\nthe  ground  of\t defect\t in  title  or\tdescription  of\t the<br \/>\nproperty.   The case of the Official Liquidator selling\t the<br \/>\nproperty of a company in liquidation under the orders of the<br \/>\nCourt is altogether different from the case of an individual<br \/>\nselling immovable property belonging to himself.  There\t is,<br \/>\ntherefore,  no\tmerit in the application made on  behalf  of<br \/>\nTriputi\t that there should be a diminution in price or\tthat<br \/>\nit  should not be made liable to pay interest on the sum  of<br \/>\nRs 1 crore 98 lakhs.\n<\/p>\n<p>15.It is true, as was pointed out by Mr A.K. Sen,  learned<br \/>\ncounsel for Triputi, that on August 27, 1992, this Court had<br \/>\nsaid that the question of interest on the sum of Rs 1  crore<br \/>\n98  lakhs  would be decided with the main case.\t  What\tmust<br \/>\nalso  be  noted\t is the\t unequivocal  undertaking  given  on<br \/>\nOctober\t 21,  1992  by Triputi to  Court,  which  the  Court<br \/>\naccepted,  wherein  it\twas stated, &#8220;Balance  amount  of  Rs<br \/>\n98,00,000  would be paid together with interest due  on\t the<br \/>\ntotal  amount  Rs 1,98,00,000 @ 15% p.a.  with\teffect\tfrom<br \/>\nJanuary\t 1, 1989 in 12 equal monthly instalments&#8221;.  We\thave<br \/>\nalready\t referred to the various orders of this Court  which<br \/>\nindicate  quite clearly with what reluctance and  over\twhat<br \/>\nspan  of time Triputi paid the sum of Rs 1 crore  98  lakhs;<br \/>\nthat   itself\tmakes  the  payment  of\t  interest   thereon<br \/>\nappropriate.\tCoupled\t  therewith   is   the\t undertaking<br \/>\naforementioned.\t We are, therefore, of the view that Triputi<br \/>\nmust pay interest upon the amount of Rs 1 crore 98 lakhs  at<br \/>\nthe rate of 15% per anum from January 1, 1989 till  payment.<br \/>\nSuch  payment shall be made within 12 weeks from today.\t  We<br \/>\nmake it clear that in the event that the amount of  interest<br \/>\nas aforementioned is not paid within 12 weeks from today, it<br \/>\nshall  be open to one or more of the aggrieved\tpar-ties  to<br \/>\ntake   appropriate  proceedings\t against  Triputi  and\t its<br \/>\nDirectors.\n<\/p>\n<p>16.  Civil  Appeal No. 405 of 1986 is disposed of  with\t the<br \/>\nfollowing direction:The judgment and order under appeal<br \/>\nis set aside.  The Official Liquidatorshall  pay  to   the<br \/>\nBrij  Mohan  Saraogi Charitable Trust and  the\tTrust  shall<br \/>\nreceive\t the  sum  of Rs 10 lakhs out of the  funds  of\t the<br \/>\ncompany in<br \/>\n<span class=\"hidden_text\">585<\/span><br \/>\nliquidation  in\t full  and final settlement  of\t its  claims<br \/>\nagainst\t the company in liquidation of whatsoever nature  in<br \/>\nrespect of the said land.  The sum of\tRs 7.50 lakhs having<br \/>\nalready been received by the Trust pursuant to this  Court&#8217;s<br \/>\norder  dated  April  30, 1987, the  Official  Liquidator  is<br \/>\ndirected  to pay to the Trust the balance amount of Rs\t2.50<br \/>\nlakhs within 12 weeks.\n<\/p>\n<p>17.Upon\t  Contempt  Petition  No.  53  of  1989\t  in   the<br \/>\naforementioned\tCivil Appeal No. 405 of 1986 the only  order<br \/>\nis  that Triputi Jute Industries shall pay to  the  Official<br \/>\nLiquidator  interest  on the sum of Rs 1 crore 98  lakhs  at<br \/>\nthe rate of 15 per cent per annum from January 1, 1989\ttill<br \/>\npayment within 12 weeks from today.  In the event that\tsuch<br \/>\npayment is not made within 12 weeks from today, it shall  be<br \/>\nopen  to  one  or  more of the\taggrieved  parties  to\ttake<br \/>\nappropriate proceedings against Triputi and its Directors.\n<\/p>\n<p>18.The amount of interest as aforesaid shall be paid  into<br \/>\nthe account of the Official Liquidator with the United\tBank<br \/>\nof  India, Calcutta.  The amount of Rs 1 crore 98 lakhs\t and<br \/>\nof interest as aforesaid shall be disbursed and\/or  utilised<br \/>\nby  the Official Liquidator under the orders of the  Company<br \/>\nJudge.\t All  further proceedings in  liquidation  shall  be<br \/>\nunder the directions of the Company Judge.\n<\/p>\n<p>19.All other civil miscellaneous applications and  interim<br \/>\napplications in Civil Appeal No. 405 of 1986 do not  survive<br \/>\nand are dismissed.\n<\/p>\n<p>20.  There shall be no order as to costs.\n<\/p>\n<p><span class=\"hidden_text\">586<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India United Bank Of India vs Official Liquidator on 6 October, 1993 Equivalent citations: 1994 SCC (1) 575, JT 1993 (6) 116 Author: B S.P. Bench: Bharucha S.P. (J) PETITIONER: UNITED BANK OF INDIA Vs. RESPONDENT: OFFICIAL LIQUIDATOR DATE OF JUDGMENT06\/10\/1993 BENCH: BHARUCHA S.P. (J) BENCH: BHARUCHA S.P. (J) KULDIP SINGH (J) [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-108997","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>United Bank Of India vs Official Liquidator on 6 October, 1993 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/united-bank-of-india-vs-official-liquidator-on-6-october-1993\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"United Bank Of India vs Official Liquidator on 6 October, 1993 - Free Judgements of Supreme Court &amp; 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