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Judgment
Jayant Patel, J.—The present application is preferred by the applicants for the relief inter alia to direct the Official Liquidator to refund the amount of Rs. 87,79,168.70ps. with interest @ 18% p.a.
Heard Mr. A.L. Shah with Mr. Munshi for the applicants and Mr. Yadav for Official Liquidator, Mr. Desai for respondet No. 3 - S.B.I., Mr. Dave for respondent No. 2, Mr. Vasavada for respondent No. 4, Mr. Soparkar with Ms. Vaibhavi Parikh for respondent No. 5 and Ms. Pathak for the State Government.
It appears that as per the applicants, the land sold to them vide advertisement and ultimately confirmed by this Court as per the order dated 05.03.2004 was to be admeasuring 62310 Sq.Mtrs. In support of the submission, the applicants have relied upon the valuer''s report and also the recital in the order, which refers to the area of 62310 Sq.Mtrs. and further the recital in the conveyance deed which has been executed. The contention of the applicant is that out of the said area of 62310 Sq. Mtrs., the land admeasuring 6718 Sq. Mtrs. is already sold by the company in liquidation long back to one Paras Textiles Pvt. Ltd. - respondent No. 5 herein vide registered sale deed in the year 1975. It was, therefore, submitted that the said area is wrongly included in the holding of the company in liquidation and consequently incorporated in the sale process. It is submitted that the applicant has offered the price and has paid the price on that basis and therefore when on actual site the area is less by 6718 Sq.Mtrs., the Official Liquidator should be directed to refund the amount on proportionate basis at the rate of Rs. 1291.92 per Sq.Mtr. and as per the applicant, the total amount comes to Rs. 87,79,168.70ps. and the same amount be directed to be refunded with interest at the rate of 18%. Mr. Shah, during the course of the hearing stated before the Court that though applicant has demanded 18% interest per annum, the applicant would be satisfied if the interest as earned by the Official Liquidator over the said amount is ordered to be refunded to the applicant together with the principal amount.
Whereas, on behalf of Official Liquidator it was submitted that the conditions of the sale deed provided for ''as is where is and whatever there is basis'' and therefore the applicants now cannot raise the dispute for the measurement or actual area not available. In support of the contention, the learned Counsel for Official Liquidator has relied upon condition No. 11 of the terms and conditions for offer which provided for the express condition of ''as is where is and whatever there is basis'' and also the condition No. 14 which expressly provided that the purchaser shall accept the tenure of the land area as they actually exist on the date of confirmation of sale and the vendor shall not be bound to compensate him in respect of difference in the tenure or in the area or to incur the costs of ascertaining the correct area or tenure thereof or such other expenses in connection therewith. It was therefore submitted that in view of the said two conditions, the purchaser and applicant would not be entitled to any refund or return of the amount. However, in the report of the Official Liquidator, it has been admitted that the area of 6718 Sq.Mtrs. is in possession of Paras Textiles Pvt. Ltd. - respondent No. 5 herein and the area is sold by the company in liquidation to Paras Textiles Pvt. Ltd., but it has been contended that it was the duty of the applicant to get it verified and if there is failure or lapse on the part of the applicant, Official Liquidator may not be directed to refund the amount.
The learned Counsels appearing for the secured creditors Mr. Desai and Mr. Dave as well as Mr. Vasavada for the Workers'' Union contended that what has been sold is the property of the company in liquidation and not the property of the Paras Textiles Pvt. Ltd. and it was submitted that the actual area, even if it is less, the amount cannot be ordered to be refunded. They have also relied upon the condition of the tender agreement. Mr. Desai, learned Counsel for respondent No. 3 bank additionally contended that the affidavit in reply, which has been filed on behalf of District Inspector of Land Record, copy whereof is served upon him, contains a different sketch than the sketch tendered to the Court and therefore this Court may not consider the record which is produced by D.I.L.R. with the said affidavit dated 2nd July, 2009.
It deserves to be recorded that whenever any property is sold by the Official Liquidator of any company in liquidation, the element of fairness in the transaction is a must. Further, the general principles of the contract for sale of immovable property may not apply but if it is under a mistaken belief or if both the parties viz. Official Liquidator as well as the purchaser have relied upon the material as if the property belongs to the company in liquidation and have entered into the transaction, thereafter at the later stage, it is found that the property was not the same or is falling short of in the area, the same would be required to be made good as per the normal principles of law of contract. It is only if by virtue of the express conditions of the tender agreement or the sale or by any decision of this Court, in view of peculiar circumstances, if found not permissible, the same would not be available to the parties to the contract.
Examination of the facts of the present case in light of the aforesaid position shows that the valuer when prepared the valuation report has taken into consideration that the actual area of the land is admeasuring 62310 Sq.Mtrs. The said part is apparent from the valuer''s report wherein the plot area is described and it has been specifically mentioned as under:
Plot Area:
The land-plot area of the Bansidhar Mill is 62,310.00 Sq.Mtrs.
Further in the very valuation report, while giving valuation, the rate is calculated per Sq.Mtr. and the same is applied to the total area and the value is assessed of Rs. 7,96,78,912/- of the land in question. Not only that but in the order passed by this Court for sale confirmation dated 05.03.2004 at para 5 the area mentioned is about 62310 Sq.Mtrs. Further, even in the conveyance deed which has been executed by Official Liquidator in favour of the applicants the area mentioned is 62310 Sq.Mtrs. Therefore, it is apparent that both the parties viz. the Official Liquidator in capacity as the vendor and the applicant in capacity as the purchaser have proceeded on the basis that the area of the land is 62310 Sq.Mtrs. and the same is conveyed in favour of the applicant against the consideration of Rs. 8,05,00,000/-.
In the report of the Official Liquidator dated 23rd August, 2006 at para 5 it has been stated that the area of 6718 Sq.Mtrs. is of the ownership of Paras. Further at para 6-D it has been stated as under:
It is found that 6,718 Sq.Mtrs. of the land is included in the total area of land of 62,310 Sq.Mtrs. which was sold to Shayona but 6718 Sq.Mtrs. of the land is found to have been wrongly included in 62,310 Sq.Mtrs. of the land as it was already sold by the company to Paras by way of a Registered Conveyance Deed executed on 14.08.1975 i.e. much prior to the date of winding up order. Therefore, Paras is found to be legal owner of 6,718 Sq.Mtrs. of the land and in rightful possession thereof. That therefore, this area of land neither can be sold nor Shayona or its nominee can be put in possession thereof. That therefore, Shayona and its nominee would be entitled for 55,592 Sq.Mtrs. of the land only.
It is true that in the subsequent paragraph of the report, Official Liquidator has relied upon the condition of the tender agreement and the decision of the Apex Court which shall be dealt with hereinafter. But, the pertinent aspect is that the factum of ownership of the land admeasuring 6718 Sq.Mtrs. by Paras Textiles Pvt. Ltd. and inclusion thereof in the area of 62310 Sq.Mtrs. has been admitted by the Official Liquidator though company in liquidation did not own the area admeasuring 6718 Sq.Mtrs.
The aforesaid is coupled with the circumstance that in the Town Planning Scheme which was sanctioned as back as on 01.07.1971 the area allotted under the final plot to the company in liquidation was admeasuring 62310 Sq.Mtrs. Thereafter, in the year 1975 a registered sale deed has been executed by the company in liquidation vide serial No. 11136, copy whereof is produced with the affidavit-in-reply of respondent No. 5 - Paras Textiles Mills Pvt. Ltd. Therefore, out of the total area admeasuring 62310 Sq.Mtrs. of the company in liquidation allotted as per the final plot under the T.P. Scheme, the area of 6718 Sq.Mtrs. is sold by the company in liquidation to the respondent No. 5 - Paras Textiles Pvt. Ltd. in the year 1975 much earlier than the process of winding up or the winding up order. Therefore, the said aspect has also come on record.
It may also be recorded that in addition to the above, this Court by earlier interim order had directed the office of DILR to place the record showing the measurement of the actual area. In response thereto, in addition to the affidavit, the officers of DILR were directed to remain personally present with the record. Thereafter, on 09.07.2009, the following order was passed by this Court after hearing both the sides.
Pursuant to the earlier order passed by this Court, Mr. J.D. Charel, DILR is present with the record. It has been stated that as per the measurement of 2004, for which the map is produced, is the area including the area under occupation of respondent No. 5 and the same was 62310 sq. mtrs. It is also stated that thereafter in the year 2006 when the measurement was prepared as per the second map, the area, which was in actual occupation of Shree Bansidhar Spinning and Weaving Mills Limited is 53252 sq. mtrs., and the are, which was in occupation of Paras Textiles Pvt. Ltd. - respondent No. 5 is excluded. The officer has relied upon Hissa Form No. 4 prepared on 23.9.2006.
Ms. Parikh, learned AGP seeks time to file affidavit for placing on record the area of the land purchased by respondent No. 5 from the Mill Company and other details. The learned AGP states that the affidavit shall be filed in this regard together with the Hissa Form No. 4, showing the actual position.
S O to 20.7.2009.
Thereafter, by subsequent affidavit dated 14.07.2009 the said Hissa Form is placed on record which is in furtherance to the declaration made before this Court. The said record clearly goes to show that the actual measurement of the land in possession of Bansidhar Mills Ltd. (company in liquidation) is 53252 Sq.Mtrs., if the area of respondent No. 5 as owner, admeasuring 6718 Sq.Mtrs., is excluded. It is an admitted position that the area of 2340 Sq.Mtrs. though is in possession of respondent No. 5 is in capacity as the tenant of the company in liquidation. If the said area of 2340 Sq.Mtrs. is added to the actual measurement of 53252 Sq.Mtrs., as per the District Inspector of Land Record, the available area is 55592 Sq.Mtrs. As against the same the area for which the reference is made in all the proceedings of the sale is admeasuring 62310 Sq.Mtrs. Therefore, less by 6718 Sq.Mtrs., which is stated to have been sold long back by the company liquidation and purchased by the Paras Textiles Pvt. Ltd. - respondent No. 5 herein, consequently, the total area of 55592 Sq.Mtrs., has been received by the applicant under the sale.
The aforesaid clearly goes to show that Official Liquidator as well as the purchaser both were under the mistaken belief that the area for which the offers are invited and has been sold of the company in liquidation is admeasuring 62310 Sq.Mtrs. and thereafter when the applicant raised the dispute, the said factum of actual measurement of 55,592 Sq.Mtrs. for which the possession could be given is admitted by the Official Liquidator and it is also admitted that the area of 6718 Sq.Mtrs. is already sold long back and the possession thereof is with the Paras Textiles Pvt. Ltd. - respondent No. 5 herein as the owner and the possession thereof cannot be given.
The contention of the Official Liquidator as well as of the secured creditor and the workers'' union on the aspect of tender condition Nos. 11 and 14, even if examined, it appears that the condition No. 11 reads as under:
The sale of the properties of the company shall be on as is where is and whatever there is basis and the Official Liquidator will not transfer the title except the title which the company was having prior to its liquidation.
Therefore, the plain and simple reading of the said condition would mean that whatever the title exists of the land is to be transferred and not beyond that. But, such condition cannot be read to convey the title of a property which does not belong to the company in liquidation at all, Official Liquidator cannot project the said condition to contend that even if the actual area or the measurement is less or is falling short of than the land to which the purchaser was made to believe, the purchaser would not at all be entitled for any refund. Such an attempt on the part of Official Liquidator or by the secured creditor or the workers'' union when the matter is on the aspect of lesser area in the measurement then sold to the purchaser, can hardly be countenanced. Of course, the aforesaid observations are subject to the view taken by the Apex Court in the decision as well as of this Court in the decisions, which shall be referred to hereinafter and dealt with appropriately.
Condition No. 14 which is also pressed in to service reads as under:
The purchaser shall accept the tenure of the land area as they actually exist on the date of confirmation of sale and the vendor shall not be bound to compensate him in respect of difference in the tenure or in the area or to incur the costs of ascertaining the correct area or tenure thereof or such other expenses in connection therewith.
The aforesaid condition only protects the Official Liquidator against the compensation in case if it is found that the tenure of the land of the company in liquidation is not full or there is some lacuna in the area based on such tenure. It cannot be read to operate as a bar for refund of the sale consideration in the event the actual area is found to be less and more particularly, when the Official Liquidator also proceeded on the basis that the land which has been sold is admeasuring 62310 Sq.Mtrs. and the purchaser having acted upon the same. In the present case the compensation for defect in the tenure or defect in the area is not prayed. Therefore, condition No. 14 would not be of any help to Official Liquidator nor will it support the contention of the secured creditor or the workers'' union.
The aforesaid goes to show that neither the condition No. 11 nor condition No. 14 can be read to operate as a bar to the purchaser to get back the proportionate sale consideration in the event if it is found that the actual area is less than the area which is purchased by him.
Official Liquidator has relied upon the decision of the Apex Court in case of Paul Brothers and Ors. v. Ashim Kumar Mondal and Ors. reported in AIR 1991 SC 796, which was a case where the property was under the possession of the tenant. If a portion of the property which was under the possession of the tenant, if sold by the Company Court, the purchaser will step into the shoes of the company which was landlord. Therefore, it would not defeat the sale nor the purchaser may be entitled to refund of the consideration in proportion to the area which was under the possession of the tenant.
Further, the aforesaid decision has been considered by this Court (Coram: K.A. Puj, J.) in Company Application No. 21 of 2004, decided on 12.07.2004, and after considering the above referred decision, this Court took the view that if the properties described is containing certain quantity without any qualification and the actual quantity turns out to be less, the purchaser is, as a general rule entitled to an abatement out of his purchase money for the deficiency, whether there is or is not, the usual conditions to compensation. The aforesaid decision of this Court (Coram: K.A.Puj, J.) has been subsequently considered by this Court (Coram: Anant S. Dave, J.) in Company Application No. 404 of 2005 decided on 27.06.2006 and more or less similar question came up for consideration as in the present case before this Court. In the said case the area purchased was 25,336.45 Sq.Mtrs. whereas the actual area for which the possession was said to have been handed over and some encroachment, was not exceeding 20,000 Sq.Mtrs. and the actual area was found to be less by about 25%. This Court observed at para 16 to 18 as under:
I have perused the relevant records including the letter dated 28.02.2005 passed by the learned Company Judge and terms and conditions on which the sale came to be confirmed. By the above order, it is clear that M/s. Shayona Land Corporation, the highest offerer was declared as successful bidder and the sale of Lot No. III i.e. composite offer i.e. entire assets, including the land, building plant and machinery M/s. Maheshwari Mills Ltd. (company in liquidation), sale came to be confirmed for consideration of Rs. 12.51 crores and mainly two conditions are important i.e. (1) and (13). Accordingly the sale is on ''As is where is and whatever there is basis'' and condition No. 13 was giving leeway to purchaser for raising objection as to the title or consideration of the property or any part thereof, where there is substantial difference in the correct measurement of the land. The upset price for the land admeasuring 25,336.45 sq mtr was Rs. 4.60 Crores and for rest of the assets Rs. 7.25 crores and the composite lot contained upset price of Rs. 11.85 crores. The claim of successful bidder lodged in the Company Application No. 404 of 2005 is on the ground that delivery of possession is of less area of the land than actual advertised and paid for. Out of total consideration of Rs. 12,51,00,000/-, an amount of Rs. 7.25 Crores was for movable properties and the balance amount of Rs. 5.26 Crores was for the land admeausring 25,336.45 sq mtr of land as per re- advertisement. It is born out from the record that Valuer Shri Naresh K. Shah submitted his valuation report on the basis of relevant documents as it is reflected from his letter dated 04.08.2005 addressed to the Official Liquidator. The above opinion was based on his inquiry to documentary evidence like sale Banakhat etc. and at no point of time actual physical measurement was undertaken by him. This fact was confirmed before this Court, when he was directed to remain personally present and explained the basis, norms and parameters of his report by this Court. Two surveys undertaken by the office of the City Survey Superintendent-I, Ahmedabad office and report submitted on 29.10.2005 by the said above office to the Official Liquidator alongwith measurement-sheet and further explanation by letter dated 05.01.2006 about actual physical measurement taken by the surveyor of the office, forming part of the Official Liquidator report dated 18.01.2006 clearly indicate that the successful bidder was having possession of less than 20,000 sq mtr of area. Even upon a doubt raised by the TLA, once again measurements were taken in presence of the representative of successful bidder, representative of the Official Liquidator and the representative of the TLA and it was submitted by the City Survey Superintendent-I, Ahmedabad office in his report dated 27.03.2006 that under no circumstances the area was more than 19,611.00 sq mtr. in possession of the purchaser. Both these reports of surveyor of City Survey Superintendent-I Office, Ahmedabad reveal that the successful bidder Shayona Land Corporation is not having land more than 20,000 sq mtr in any case. Even reference made by TLA in the last affidavit filed in Company Application No. 221 of 2005 indicates about total area of 22,576 sq mtr as reflected in Para:3 of the affidavit-in-reply dated 12.04.2006. Therefore, it is found from the perusal of the records of this case and particularly survey undertaken by the representatives of City Survey Superintendent-I, Ahmedabad office of Government of Gujarat, are of the land of the company in liquidation is not more than 22,576 sq mtr, even if claim of TLA is taken into consideration. There is no doubt that the above land and other assets came to be purchased by the successful bidder on the basis of ''As is where is and whatever there is basis'' , but condition No. 13 of the order dated 28.02.2005 passed in O.L.R. No. 9 of 2005 in Company Petition No. 221 of 2001 gives leeway to the purchaser to raise objection only in case where there is substantial difference in the correct measurement of the land. In the present case, the readvertised area of the land is 25,336.45 sq mtr and possession of the land given to successful bidder is 18,602.00 sq mtr and other area of 1,009.00 sq mtr, of which, possession is not taken over by the successful bidder, if counted together, would make total area of 19,611.00 sq mtr. Thus about 5725 sq mtr of land less than contracted and/or advertised is given which come to 25% less area.
According to the opinion of this Court, the above difference is substantial and for which the purchaser is entitled to raise his dispute and grievance. Even if considering 1,009.00 sq mtr of area not found in possession of the successful bidder which forms part of the staff quarters, temple, Dargah etc. then also, the area would be 19,611.00 sq mtr. If liberal view is taken then also as per existing municipal by-laws etc. is taken into consideration and the counter claim made by the TLA is of other piece of land of about 2565 sq yard is not forming contracted area of the land. This Court in a similarly situated case has considered a case of the applicant to reduce the sale price, proportionately to the shortfall of the area of land contracted by an order dated 12.07.2004 in Company Application No. 21 of 2004, where the learned Single Judge has considered ''As is where is whatever there is basis'' interpreted in Paul Brother''s case reported in AIR 1991 SC 796 and accepted plea of the purchaser to reduce the price accordingly.
According to the opinion of this Court, the difference of area of land is substantial, as born out from two measurements undertaken by the City Survey Superintendent-I, Ahmedabad, in presence of respective parties. The are of 1009 sq mtr, which is not found in possession of the successful bidder, containing staff quarters, temple, Dargah etc., if counted then the total area would be 19611.00 sq mtr. Therefore, in any case the successful bidder has less than 20,000 sq mtr of land. It is to be kept in mind that had there been marginal difference in the area of land in possession of the successful bidder, this Court would not have exercised its powers on the basis of Clause-13 of the terms and conditions of sale as incorporated. For example, out of advertised land of 25,336.45 sq mtr., if area given to the successful bidder being less by 5% of the total area, it would not have been considered as substantial and no order could have been passed. Five percent of the total area of 25,336.45 sq mtr comes to approximately 1250 sq mtr (5% of 25000 Sq mtr approximately) for which no exercise could have been undertaken by this Court. The objection on the part of the T.L.A. that area of 2565 sq yard is not admeasured by the surveyor, do not form the part of the area as contracted. The applicant-successful bidder is in possession of the area and even 1009 sq mtr of area of encroachment is also added, the total area in possession of the applicant is 19,611 sq mtr. Thus, there is a short fall of 5,725.45 sq mtr of land given short of the contracted area to the successful bidder. That out of the above area 5725.45 sq mtr, 1250 sq mtr (5% of 25000 sq mtr approximately) of area of land is to be deducted, for which no order could have been passed, relying on Clause-13 of the terms and conditions not being substantial difference, for which dispute could have been raised. Thus, the applicant has established his case for the refund of the claim of 4,475.45 sq mtr of area short of contracted area of land multiplied by Rs. 2076 per sq mtr which comes to Rs. 92,91,034.20 paise and accordingly the Official Liquidator is directed to refund the amount as above within 10 days from the receipt of the order passed by this Court.
The aforesaid shows that this Court took the view that if the area is less by 5% of the total area it would not be considered as substantial and no order of refund would be required. But, if it exceeds 5%, the refund would be required minus the area of 5%. The aforesaid view was taken in light of the condition of ''as is where is basis and whatever there is basis'' and also the difference in the actual measurement, if any, then the area for which the offers were invited or was sold to the purchaser. It has also been stated by the learned Counsel for the applicant that the aforesaid decision of this Court in Company Application No. 404 of 2005 was carried before the O.J. Bench but has not been reversed. The SLP was also preferred by the applicant therein before the Apex Court, which ultimately has been withdrawn. The pertinent aspect is that the applicant in the proceedings of Company Application No. 404 of 2005 is the same as of the present application.
Under these circumstances, it appears that if the same view is taken based on the above referred decision of this Court, in any case the applicant would not be entitled for the refund up to the extent of 5%, i.e. for the land admeasuring 3115 Sq.Mtrs. of the total area of 62310 Sq.Mtrs. If the said area is deducted out of the area of 6718 Sq.Mtrs. for which the refund is claimed by the applicant, the net area would come to 3603 Sq.Mtrs. and the sale consideration was at the rate of Rs. 1291.92 per Sq.Mtr., the amount, therefore, would come to Rs. 46,54,787.76ps.
Mr. Shah, learned Counsel appearing for the applicant attempted to distinguish the decision of this Court in Company Application No. 404 of 2005 on the ground that in the said case the fact was not that the company in liquidation had already sold the property to some third party and the property was not belonging to the company in liquidation. He, therefore, submitted that the view taken by this Court for non entitlement of the refund up to the extent of 5% of the difference in the area, may not apply in the present case.
The basis of the view taken by this Court in the above referred decision is the difference between the area sold by the Official Liquidator under the supervision of the Company Court and the actual measurement on site. Therefore, whether the area exceeding the actual area is owned by the company in liquidation or owned by any third party would not make any difference in the applicability of the view taken by this Court. Therefore, the attempt made by Mr. Shah cannot be countenanced.
In view of the aforesaid, the Official Liquidator shall refund the amount of the sale consideration for the land admeasuring 3603 Sq.Mtrs. at the rate of Rs. 1291.92 per Sq.Mtr., total Rs. 46,54,787.76ps.
As the interest has not been awarded in Company Application No. 404 of 2005 vide order dated 27.06.2006, though was claimed, I find that no departure deserves to be made in the present case. Hence, no orders for interest.
Application allowed to the aforesaid extent.
At this stage, Mr. Desai as well as Mr. Vasavada for the respective parties pray that the operation of this order be stayed for some time so as to enable the respective client to approach before the Higher Forum.
Considering the facts and circumstances, the operation of this order is stayed for a period of three weeks from today.