Sterling Lam Limited vs OL of Wood Polymers Ltd. and Others

J.B. Pardiwala, J.—As common questions of law and facts are involved in these appeals and as the judgment and order passed by the learned Company Judge dated 24.07.2009 is also common, both these appeals are taken up for hearing together and are being disposed of by this common judgment.

The Appellant-original applicant seeks to challenge the judgment and order dated 24.07.2009 passed by the learned Company Judge in Company Application No. 416 of 2007 in Official Liquidator Report No. 56 of 2004 in Company Application No. 127 of 1999 with Official Liquidator Report No. 158 of 2008 in Company Application No. 108 of 2005 whereby the learned Company Judge disposed of the applications by issuing directions insofar as the assets of the company are concerned.

The facts relevant for the purpose of deciding these appeals can be summarized as under:

3.1 The Appellant-original applicant is the purchaser of the property of plant and machinery of M/s. Wood Polymers Limited which was ordered to be wound up by an order passed by the learned Company Judge in Company Petition No. 149 of 1996. The Official Liquidator advertised for the sale of the properties of the company. It appears that the Official Liquidator filed his Report No. 127 of 1999 seeking confirmation of sale of all movable assets of the company excluding land, building and records. The learned Company Judge vide his judgment and order dated 14.10.2004 confirmed the sale of all movable assets of the company excluding land, building and records in favour of the Appellant for a total consideration of Rs. 178 lacs.

Record reveals that when the Appellant was in the process of removing the assets sold to him, the Official Liquidator vide his letter dated 04.12.2006 directed the Appellant to stop the work till further communication from his office as in the view of the Official Liquidator, the Appellant while removing the plant and machinery has caused extensive damage to the property of the buildings and also roofs of the buildings. As per the report of the Official Liquidator, the damage caused by the Appellant is estimated to the tune of Rs. 81,51,367/-. This figure was arrived at on the basis of valuer''s report showing the damage which has been caused to various portions of the buildings by the Appellant.

It is at this stage that the Appellant as purchaser of the movable assets preferred Company Application No. 416 of 2007 praying that the Official Liquidator should be directed to withdraw his instructions given by his letter dated 04.12.2006 directing the Appellant to stop the work and be further directed to permit the Appellant to remove all movable assets as per the order of the learned Company Judge dated 14.10.2004 while confirming the sale.

The learned Company Judge took into consideration the report of the Official Liquidator as well as valuer''s report assessing the damage said to have been caused by the Appellant and came to the conclusion that if the plant and machinery, and may be the sheds, are sold to the Appellant, No. removal of plant and machinery or the sheds can be permitted by causing damage to the building structure because building is not sold to the Appellant.

We take notice of the fact that inspite of the notice issued by the learned Company Judge in Official Liquidator Report No. 158 of 2008, the Appellant did not appear and oppose the report.

We have heard learned advocate Mr. Ashok Shah appearing with learned advocate Mr. D.K. Puj for the Appellant and learned advocate Mr. Hiren Modi appearing for the Official Liquidator.

The learned Company Judge while passing the impugned order dated 24.07.2009 observed as under:

The aforesaid goes to show that as per the OL as well as the secured creditors, the purchaser, while removing the plant and machinery, has caused damage to the building and the roof structure of the properties of the company in liquidation. Two options may be available under such circumstances; one is to restore the position of the building by repairing the damage caused and the another is to pay towards loss for damage caused.The report submitted by the OL together with the minutes thereon in the valuation report shows that the damage has been caused. If any of the purchasers during the course of implementation of the contract for purchase of the plant and machinery of the property has caused damage to the property, he cannot get away from the liability to make the damage good or in alternative to get the building repaired at his own cost.

As such, from the communication dated 04.12.2006 of the OL it does not transpire that the OL has expressly prohibited the removal of the sheds, but even if it is considered for the sake of examination that there was prohibition made by the OL to the applicant for removal of the sheds on the ground that the building structure was damaged by the purchaser of the plant and machinery applicant herein, such an action would be justifiable. 11. Hence, I find that the following order would meet with the ends of justice:

(a) The applicant shall deposit an amount of Rs. 18,51,367/- with the OL within four weeks from the date of receipt of the order.

(b) After the amount of Rs. 18,51,367/- is deposited by the applicant with the OL, the applicant purchaser will have the option of getting the damage repaired at his own cost by restoring the position of the status-quo ante prior to the removal of the plant and machinery.

(c) If it is opted by the applicant purchaser to get the damage repaired at his own cost, he may do so and the same shall be verified by the OL and upon the satisfactory report by the expert in the field for restoration of the building, the OL shall be at liberty to refund the amount of Rs. 18,51,367/-.

Having heard learned Counsel for the respective parties and having perused the record of the case and the judgment and order passed by the learned Company Judge, we are of the view that as a matter of fact, there is No. denial to fact that while removing the plant and machinery, serious damage has been caused to the property of the buildings and also roofs of the buildings by the Appellant-purchaser. There is a finding of the fact recorded by the learned Company Judge as regards extensive damage being caused to the property of the buildings and also roofs of the buildings by the Appellant-purchaser and the loss has been estimated to the tune of Rs. 18,15,367/- as per the valuer''s report. We are in complete agreement with the reasonings of the learned Company Judge that if any of the purchasers during the course of implementation of the contract for purchase of the plant and machinery of the property has caused damage to the property, he cannot get away from the liability to make the damage good or in alternative to get the building repaired at his own cost.

In above view of the matters, we do not find any merit in these appeals and the same are hereby ordered to be dismissed with No. order as to costs.