{"id":203637,"date":"1998-02-27T00:00:00","date_gmt":"1998-02-26T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/shri-narendrakumar-nakhat-vs-ms-nandi-hasbi-textile-mills-ors-on-27-february-1998"},"modified":"2018-04-22T04:21:02","modified_gmt":"2018-04-21T22:51:02","slug":"shri-narendrakumar-nakhat-vs-ms-nandi-hasbi-textile-mills-ors-on-27-february-1998","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/shri-narendrakumar-nakhat-vs-ms-nandi-hasbi-textile-mills-ors-on-27-february-1998","title":{"rendered":"Shri Narendrakumar Nakhat vs M\/S Nandi Hasbi Textile Mills &amp; Ors on 27 February, 1998"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Shri Narendrakumar Nakhat vs M\/S Nandi Hasbi Textile Mills &amp; Ors on 27 February, 1998<\/div>\n<div class=\"doc_author\">Author: Nanavati<\/div>\n<div class=\"doc_bench\">Bench: G.T. Nanavati, Syed Shah Quadri<\/div>\n<pre>           PETITIONER:\nSHRI NARENDRAKUMAR NAKHAT\n\n\tVs.\n\nRESPONDENT:\nM\/S NANDI HASBI TEXTILE MILLS &amp; ORS.\n\nDATE OF JUDGMENT:\t27\/02\/1998\n\nBENCH:\nG.T. NANAVATI, SYED SHAH MOHAMMED QUADRI\n\n\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p>\t\t      J U D G M E N T<br \/>\nNANAVATI, J.\n<\/p>\n<p>     Leave granted.  Heard  learned  counsel  for  both\t the<br \/>\nparties.\n<\/p>\n<p>     The appellant is challenging in these appeals the order<br \/>\ndated  8.10.96\t passed\t by  the    High  Court\t in  Company<br \/>\nApplication No,\t 542\/96 made  in Company  Petition No, 25\/85<br \/>\nand  also   the\t order\t dated\t21.2.97\t passed\t in  Company<br \/>\nApplication No.826\/96.\tThe appellant in Company Application<br \/>\nNo.542\/96 had  prayed for  refund of  Rs.5 lakhs  (being the<br \/>\nearnest money deposit) and Rs.59 lakhs (being 25% of the bid<br \/>\namount\/ sale  consideration) along  with accrued interest on<br \/>\nthe ground  that his  bid having  been cancelled by the High<br \/>\nCourt, he  was entitled\t to get back those amounts. The High<br \/>\ncourt directed the official Liquidator to refund Rs.50 lakhs<br \/>\nand with  respect to  the  remaining  amount  rejected\tthat<br \/>\napplication on 8.10.96. The Syndicate Bank had filed Company<br \/>\nApplication No,\t 743\/96 with  a prayer to award compensation<br \/>\nto it  and not\tto refund the said amounts till then. It was<br \/>\nalso rejected  on the  same day. The bank has not challenged<br \/>\nthat order probably because the whole amount was not ordered<br \/>\nto be  refunded. The  appellant then filed a review petition<br \/>\n(Company Application  No.826\/96)  but  it  was\trejected  on<br \/>\n21.2.97.\n<\/p>\n<p>     The High  Court   rejected the  claim for refund of the<br \/>\nearnest money  on the  ground that  at that stage it was not<br \/>\nproper to  grant it was not proper to grant it as that might<br \/>\naffect the  right of the official Liquidator to forfeit that<br \/>\namount in  case it is held that he has suffered some loss as<br \/>\na result  of the  conduct of  the appellant.  As regards the<br \/>\nclaim of  the Syndicate\t Bank for  damages  the\t High  Court<br \/>\nmerely stated  that &#8220;in\t view of  the order  made in Company<br \/>\nApplication No.\t 542  of  1996,\t this  application  stand  r<br \/>\nejected.&#8221; In  the order passed on Company Application No.542<br \/>\nof 1996\t there is  no discussion  regarding the Bank&#8217;s claim<br \/>\nfor damages or regarding the claim of damages by the General<br \/>\nBody of\t Liquidators on\t account  of  the  dilatory  tactics<br \/>\nadopted by the appellant in the proceedings for confirmation<br \/>\nof sale.  The only  observation made  in that  order is &#8220;the<br \/>\nquestion whether  the amounts due by the applicant by reason<br \/>\nof non-performance of his part of the contract in any manner<br \/>\narises and the damages payable by him could be appropriately<br \/>\nadjudicated at a later stage.&#8221;\n<\/p>\n<p>     Mr. R.F.Nariman,  learned senior  counsel appearing for<br \/>\nthe appellant submitted that the bid of the appellant having<br \/>\nbeen cancelled,\t he became  entitled to\t refund of the whole<br \/>\namount and  the High  Court committed  a grave\terror in not<br \/>\npassing an  order  for\trefunding  the\tsame.  He  drew\t our<br \/>\nattention to  the following  observations made\tby the\tHigh<br \/>\nCourt itself in this behalf :\n<\/p>\n<blockquote><p>     &#8220;As  long\tas  the\t transaction  is<br \/>\n     inchoate  or   incomplete\tfor  any<br \/>\n     reason and\t the acceptance\t of  the<br \/>\n     bid is  cancelled, the  parties are<br \/>\n     relegated tot  he original position<br \/>\n     even though the cancellation of the<br \/>\n     acceptance of  the bid  may  be  on<br \/>\n     account  of   the\tconduct\t of  the<br \/>\n     bidder himself.  By virtue\t of  the<br \/>\n     cancellation of  the acceptance  of<br \/>\n     the bid,  the  offer  made\t by  the<br \/>\n     bidder is\tnot accepted. It is only<br \/>\n     on acceptance  of the offer made by<br \/>\n     the  bidder,  other  clauses  would<br \/>\n     stand attracted.  This is a case wh<br \/>\n     ere  the\tsale  proceedings   were<br \/>\n     cancelled on account of the conduct<br \/>\n     of the  parties in not doing one or<br \/>\n     the other\tacts provided  under the<br \/>\n     terms of  sale. The  act attributed<br \/>\n     to the  applicant is  that\t he  had<br \/>\n     adopted the  stance of  filibusters<br \/>\n     by indulging in dilatory tactics in<br \/>\n     postponing\t the   proceedings   for<br \/>\n     confirmation of  sale. If the Court<br \/>\n     had confirmed the sale, other terms<br \/>\n     and conditions in the offer of sale<br \/>\n     would   have arisen. In the absence<br \/>\n     of such an event of confirmation of<br \/>\n     the sale,\tthe only  conclusion  we<br \/>\n     have to  draw is that the applicant<br \/>\n     is entitled to the entire refund of<br \/>\n     the money.&#8221;<\/p><\/blockquote>\n<p>     He also  submitted that  the Division Bench of the High<br \/>\nCourt while disposing of the said application proceeded on a<br \/>\nwrong assumption  that the order dated 12.4.96 passed by the<br \/>\nlearned Single\tJudge of that High Court was the final order<br \/>\nas can be seen from the following observations made by it:\n<\/p>\n<blockquote><p>     &#8220;The learned  Company Judge made an<br \/>\n     order on  12.4.1996 and  that order<br \/>\n     has  not\tbeen  challenged  in  an<br \/>\n     appeal.  Therefore,  the  applicant<br \/>\n     cannot now\t seek for  refund of the<br \/>\n     entire  amount,  but  only\t to  the<br \/>\n     extent  indicated\tby  the\t learned<br \/>\n     Company Judge.&#8221;<\/p><\/blockquote>\n<p>     Having gone  through the  order dated  12.4.96 we\tfind<br \/>\nthat it was an interim order and the application was ordered<br \/>\nto be  listed again  on 15.4.96.  On that  day\tthe  learned<br \/>\nSingle Judge  had passed  an order for keeping that order in<br \/>\nabeyance and  directing the  secured creditors to file their<br \/>\nobjections.  Thereafter\t  for  certain\t reasons  the\tsame<br \/>\napplication was placed before a Division Bench for passing a<br \/>\nfinal order thereon. Therefore, there was no question of the<br \/>\nappellant challenging  that order  by way  of an appeal. The<br \/>\nHigh Court was, therefore, obviously wrong in observing that<br \/>\nthe appellant  &#8220;cannot now  seek for  refund of\t the  entire<br \/>\namount but  only to  the extent\t indicated  by\tthe  learned<br \/>\nCompany Judge.&#8221;\t We also find that the final order passed by<br \/>\nthe  High  Court  is  not  quite  consistent  with  its\t own<br \/>\nobservations quoted  above. As\tobserved by  us earlier\t the<br \/>\nHigh Court  has not  stated why the balance amount minus the<br \/>\nearnest\t money\t deposit  should  not  be  refunded  to\t the<br \/>\nappellant. The\tbank&#8217;s application for awarding compensation<br \/>\nwas rejected.  Probably it was premature in view of the fact<br \/>\nthat the  appellant&#8217;s application  for refund of the balance<br \/>\namount was already rejected. Even if we proceed on the basis<br \/>\nthat the  appellant had\t indulged in dilatory tactics during<br \/>\nthe proceedings\t for confirmation  of sale  and had  thereby<br \/>\nwasted almost  one year\t it cannot be said with certainly at<br \/>\nthis stage  that he  will be  liable to pay compensation for<br \/>\nthe alleged  loss caused  to the  General Body of Creditors.<br \/>\nThe bank  is a secured creditor and there is nothing to show<br \/>\nthat it\t had made  the application  for and on behalf of the<br \/>\nGeneral Body  of Creditors. Their entitlement to damages and<br \/>\nthe extent  of loss  suffered by them, even if they are held<br \/>\nentitled to  claim damages  on that  count,  is\t yet  to  be<br \/>\ndecided.  In   such  circumstances,  the  court\t having\t not<br \/>\nconfirmed the  sale and\t cancelled the bid of the appellant,<br \/>\nought not to have rejected the claim of the appellant except<br \/>\nin respect  of the  earnest money deposit of Rs.5 lakhs. The<br \/>\nHigh Court  was, therefore,  not right in holding the refund<br \/>\nof the\tremaining  amount  of  Rs.9  lakhs  along  with\t the<br \/>\ninterest accrued  thereon at  the instance  of the Syndicate<br \/>\nBank. If  the bank  is of  the view that it has suffered any<br \/>\nloss as a result of wrongful act of the appellant it will be<br \/>\nopen to\t it to\tadopt an  appropriate  remedy  for  claiming<br \/>\ndamages. Keeping  that right  of the bank open we allow this<br \/>\nappeal partly.\tThat part  of the  order of  the High  Court<br \/>\nwhereby the appellant&#8217;s application for refund of Rs.9 lakhs<br \/>\nbeing the  balance amount  out of  the total deposit of Rs.9<br \/>\nlakhs was  rejected  is\t set  aside  and  we  allow  Company<br \/>\nApplication No.542 of 1996 to that extent. There shall be no<br \/>\norder as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Shri Narendrakumar Nakhat vs M\/S Nandi Hasbi Textile Mills &amp; Ors on 27 February, 1998 Author: Nanavati Bench: G.T. Nanavati, Syed Shah Quadri PETITIONER: SHRI NARENDRAKUMAR NAKHAT Vs. RESPONDENT: M\/S NANDI HASBI TEXTILE MILLS &amp; ORS. DATE OF JUDGMENT: 27\/02\/1998 BENCH: G.T. NANAVATI, SYED SHAH MOHAMMED QUADRI ACT: HEADNOTE: JUDGMENT: 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-203637","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Shri Narendrakumar Nakhat vs M\/S Nandi Hasbi Textile Mills &amp; Ors on 27 February, 1998 - 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\/shri-narendrakumar-nakhat-vs-ms-nandi-hasbi-textile-mills-ors-on-27-february-1998\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shri Narendrakumar Nakhat vs M\/S Nandi Hasbi Textile Mills &amp; 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