Disposed

Mr.Vipinbhai Kanubhai Patel through P/a Mr.Upendrabhai J. Patel v. Official Liquidator of M/S. Metalco (India) Ltd. and 6 Others

Bombay HC25 Sept 2013CA/17/2012

Case brief

AI extract

What is this about?

The bench addressed applications for possession of a property involvering the Official Liquidator and alleged purchasers. The court noted the property was no longer the liquidated company's asset but declined to direct possession to private parties. The court directed a status quo pending a civil court outcome and allowed leave to proceed with a civil suit.

What did the court decide?

Applications disposed of; no direction to hand over possession; status quo for four weeks; leave granted to proceed in civil suit.

Mr.Vipinbhai Kanubhai Patel through P/a Mr.Upendrabhai… — Company and Corporate | Bombay HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY APPLICATION NO. 17 OF 2012 IN COMPANY PETITION NO. 918 OF 1999

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Mr. Vipinbhai Kanubhai Patel … Applicant.

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V/s.

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Official Liquidator & Liquidator of M/s. Metalco (India) Ltd. & 2. M/s.Champion Surgical Wool Pvt. Ltd. & Ors. ... Respondents.

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WITH

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COMPANY APPLICATION NO. 431 OF 2012 IN COMPANY PETITION NO. 918 OF 1999

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M/s. Champion Surgical Wool Pvt. Ltd., … Applicant. (Third party) Nikunj Exime Enterprises Pvt. Ltd., … Petitioner. V/s. 1. Official Liquidator & Liquidator of M/s. Metalco (India) Ltd. … Respondent. ---

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WITH COMPANY APPLICATION (L) NO. 430 OF 2013 IN COMPANY APPLICATION NO. 431 OF 2012 IN COMPANY PETITION NO. 918 OF 1999

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M/s. Champion Surgical Wool Pvt. Ltd., … Applicant. (Third party)

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Nikunj Exime Enterprises Pvt. Ltd., … Petitioner. V/s.

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Official Liquidator & Liquidator of M/s. Metalco (India) Ltd. … Respondent.

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Mr. B.B. Parekh a/with Dr. Deepti Mukesh, Mr. Samupanna Walavalkar for the Applicants in CA No. 17/2012

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Mr. Varad Deore i/by MMK Law Associates for Respondent Nos. 2 and 3 in CA No. 17/2012 and for the Applicant in CA No. 431/2012 and CA (Ldg.) No. 430 of 2013.

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Mr. J.P. Sen for the Official Liquidator.

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Ms. Rupa Sutar, Assistant Official Liquidator is present.

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CORAM : N. M. JAMDAR, J. DATE : 25 SEPTEMBER, 2013

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P.C. :

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1 Company Application No. 430 of 2013 for leave is not on Board. Taken on Board.

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2 These Applications pertain to a property situated at village Karamsad, Anand-Sojitra Road, Tal. & Dist. Anand, Gujarat. This property is currently in the possession of the official liquidator. Applicant company in Company Application No. 431 of 2012 i. e. Champion Surgical Wool Pvt. Ltd. (Champion Surgical), who claims it as an owner, has sought directions for release and possession of the property.

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3 Mr. Vipinbhai Kanubhai Patel, the Applicant in Company Application No. 17/2012 has sought the same reliefs - that the possession of the property in question be handed over to him and the agreement of sale dated 25^th January, 2010 executed by one Mr. Hasmukhbhai J. Patel as a Power of Attorney of the Director of the Champion Surgical, be validated. Thus Champion Surgical has asserted its rights as the owner of the property and Mr. Vipinbhai K. Patel has ascertained his rights as purchasers of the property from the Champion Surgical.

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4 On 8^th December, 1993, Champion Surgical had leased the property to one Bharat Auto Parts, who sublet the property on 25 January 1994 to M/s. Metalco (India) Pvt. Ltd., i. e. the company under liquidation. A petition came to be filed by Nikunj Exime Enterprises Pvt. Ltd., for winding up of M/s. Metalco India Pvt. Ltd.. The company petition was admitted on 30^th August, 2001 and on the same day, the Official Liquidator was appointed as a Provisional Liquidator. The official liquidator took possession of the property on 18^th January, 2002. The lease in favour of Bharat Auto Parts Pvt. Ltd. and consequently in favour of the Metalco Co. expired on 30^th November, 2003.

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5 The official liquidator appointed a valuer for the purpose of inventory and valuation of the movable and immovable assets. The valuer so appointed by the official liquidator visited the factory premises and an inventory was carried out. In the year 2004, Ms/. Champion Surgical filed an application, claiming the

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ownership of the property and possession from the official liquidator. The company application was dismissed for default on 17^th April, 2007. M/s. Metalco (I) Pvt. Limited was wound up by order the dated 27^th March, 2008. The official liquidator continued to be in possession / charge of the assets and properties of the company under liquidation.

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6 On 6^th August, 2010, the official liquidator was informed by one of the Directors of the company that certain unknown persons were present in the property. The official liquidator received a letter to that effect from the Security Agency on 14 August 2010. The Security Agency by its letter dated 14^th August, 2010 informed that on 12^th August, 2010 some other security guards were present at the site, who claimed that the property is purchased by one Mr. Nakulbhai C. Patel and the property belongs to him. The official liquidator also received an information that certain persons have put their board on the suit property giving notice to the general public that the property is owned by them and tress-passers will be prosecuted.

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7 The official liquidator accordingly placed a report before this court bearing no. 29 of 2011. At the hearing of the report, the notices were given to all concerned and one Krishna Developers appeared and made their submissions. They submitted that the property is sold by M/s. Champion Surgical to one M/s. Krishna Developers (as the first purchaser) and Krishna Developers in turn sold the suit property to one Mr. Vipinbhai K.

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Patel, the second purchaser. It was submitted on behalf of Champion Surgical that they have not sold the property to Krishna Developers and others and the documents relied upon by them are false and fabricated. It was also submitted that the purchasers - Mr. Vipinbhai Patel, Krishna Developers and others were guilty of fabricating the records and they forcibly dispossessed the official liquidator. On behalf of M/s. Krishna Developers, it was urged that Krishna Developer and others had purchased the property from M/s. Champion Surgical by paying a substantial consideration and the allegations that the possession was taken forcibly were denied.

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8 The learned Company Judge (S.J.Kathawalla, J.) considered the rival contentions and disposed of the report by order dated 16 June, 2011. The learned Judge held that it was not the case of the purchasers that they were not aware of the fact that the official liquidator was appointed in respect of the suit property. The learned Judge observed that since M/s. Krishna Developers could not have taken possession of the property, the second purchaser also could not have taken possession of the property from the first purchaser. It was noticed that it was not their case, that they were not aware of the fact that the possession of the suit property was with the official liquidator. The learned Judge strongly disapproved the conduct of Krishna Developers and directed the official liquidator to forthwith take possession. The official liquidator, thereafter took back the possession of the property.

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9 Thereafter Shri Vipinbhai Patel filed the company Application No. 17 of 2012, seeking the reliefs as mentioned above. This application alongwith Company Application No. 431 of 2012, filed by Champion Surgical are taken up for hearing together.

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10 In the order dated 07 February, 2013 passed in these applications, it was noted that official liquidator had not ascertained whether the property can be termed as property of the company under liquidation. There upon the official liquidator sought time to ascertain whether the property belongs to the company under liquidation or not. An additional affidavit -in reply was filed by the official liquidator on 26^th February, 2013. The official liquidator recorded an opinion that the company had taken the property on lease and the lease has expired and the property now does not belong to the company. After the Reply was received, Champion Surgicals filed a civil suit in the Civil Court at Anand, Gujarat in respect of the title of the land in question and for seeking possession thereof. Champion Surgical also filed a company application bearing lodging No. 430 of 2013, seeking leave to proceed against the official liquidator in the suit. Said application was also heard from time to time and though it is not listed on Board today, its papers were called since the other connected matters are being disposed of by this order.

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11 I have heard Mr. Parekh, learned counsel for Mr. Patel, Mr. Deore for M/s. Champion Surgical and Mr. Sen for the official liquidator.

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12 It is an admitted position that the property in question no longer belongs to the company under liquidation. It is also now agreed among the counsel appearing for the respective parties that this court need not adjudicate upon the merits of the rival contentions as regards title of the property. Even otherwise, if the property does not belong to the company under liquidation, the company court will not be in position to decide inter-se regarding title dispute between the parties. The only question arises is to whom the official liquidator should hand over possession of the property. Champion Surgical is claiming it as an owner of the property while Mr. Vipinbhai K. Patel claims it on the ground that he has purchased the suit property.

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13 The learned counsel on behalf of Mr. Vipinbhai K. Patel submitted that the possession of the property was taken by the official liquidator on 24^th June, 2011. It was submitted that Mr. Patel has a valid title to the property and there are no other claimants. He submitted that M/s. Champion Surgical had made a similar application for seeking possession of the property in question and it was dismissed for default and no proceedings were taken out for restoration of the same. The learned counsel sought to rely upon various decisions to contend that the company court has jurisdiction to decide the dispute at hand. The learned counsel relied on the decisions in the case of Smt. Bhadrabati Devi w/o Dinabandhu Tewari vs. Jibanmal Babu & Ors.- ( AIR 1941 Calcutta 163) , Star Engineering Works Ltd., vs. Official

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Liquidator of the Krishnakumar Mills Co. Ltd.,- (Guj.H.C.in 1977 Com.Cas.-31), Official Liquidator, Spark Plugs (I) Ltd., vs. Bank of India - [2007] 135 Comp. Cas 495 (Raj.) and Bangur Brothers Ltd., (in Liqn.) and PDGD Investments & Trading (P) Ltd. , vs. Official Liquidator - (2013) 2 Comp. LJ 387 (Cal.). It was also contended that the claim of M/s. Champion Surgical having been barred, there is no question of granting any relief to them to prosecute the suit as it would amount to revival of their claim. In this regard the learned counsel relied upon the decision of Kerala High Court in the case of Parvathi Chellamms & Anr. vs. Hussain Pillai Mohammed Abdul Khader & Ors . - (AIR 1973 Kerala 208 (V 60 C 73) and the decision of Delhi High Court in the case of Official Liquidator, Security & Finance P. Ltd. , vs. Pushpa Wati Puri - [(1978) 48 Comp. Cas. 386]. It was further urged that while directing Krishna Developers and others to hand over possession to the official liquidator, the Court had observed that if any application is made for restoration of the possession, it will be decided on its own merits. It was submitted that the official liquidator does not have any right to continue in possession and should hand it over to Mr. Patel. Learned counsel submitted to continue in possession will be a needless burden on the official liquidator as he will have to keep on incurring expenses towards security.

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14 On the other hand, the learned counsel for M/s. Champion Surgical submitted that Champion Surgical had not executed any document in favour of Krishna Developers and the

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documents relied upon by them are fabricated . It was submitted that the amount was forcibly transferred by Krishna Developers and others in the account of M/s. Champion Surgical, which amount is still laying in the bank and has not been withdrawn by the Champion Surgical. The learned counsel submitted that however, since the suit has been filed by M/s. Champion Surgical, the arguments as regards title of the property will be made in the suit. The learned counsel submitted that the application filed for possession of the property was dismissed for default and not on merits. The learned counsel submitted that since the official liquidator continues to be in the possession of the property, a formal leave will have to be granted to prosecute the suit.

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15 The learned counsel for the official liquidator submitted that the property cannot be returned to either of them in view of this inter-se dispute and the parties should get suitable orders in the suit. The learned counsel for the liquidator submitted that Krishna Developers and others had forcibly taken possession from the official liquidator and if possession is returned to Mr. Vipinbhai K. Patel inspite of its high handed conduct, it will send a wrong signal to members of public.

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16 As stated above, it is agreed between the parties that the rival contentions as regards their title need not be considered in the present applications. M/s. Champion Surgical has already filed a Civil suit. It is open to Mr. Vipinbhai K. Patel to adopt remedy in

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the civil court. Such proceedings will be decided on its own merits. The suit already filed also will be decided on its own merits.

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17 As far as the question of handing over possession of the property is concerned, I am of the opinion that there shall be no direction to the official liquidator to hand over possession to any of the parties at present, unless the parties get suitable orders from the civil court. As far as Champion Surgical is concerned, the learned counsel appearing on its behalf states that appropriate application will be made in the suit and he is not seeking possession in those proceedings. Thus now only the claim of Mr. Vipinbhai K. Patel for possession remains.

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18 While disposing of the official liquidator's report on 16 June 2011, the learned Company Judge took note of the conduct of Krishna Developers and Mr. Patel. The learned Judge in para 11 of the order dated 16^th June, 2011 observed thus :

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“11. In the circumstances, I am more than prima facie convinced that the first and the second purchaser have wrongly disturbed the possession of the Official Liquidator of this Court qua the said property and have wrongly dispossessed him without obtaining prior permission of the same. Such conduct cannot be tolerated since it will send a wrong signal to the members of the public that they can brazenly disturb the possession of the properties which are custodia legis and then contend through one of the parties that they are bonafide purchasers without notice. The first and foremost step therefore which needs to be taken in this matter is to restore the possession of the said property to the Official

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Liquidator and not to allow the first purchaser or the second purchaser to continue retaining wrongful possession of the said property even upon an undertaking that they will maintain statusquo qua the same. In view thereof, the Official Liquidator is directed to forthwith take possession of the said property and appoint a responsible security agency to post their security guards at the site. The local police at Green Road Anand Gujarat shall render all assistance to the Official Liquidator of this Court to take possession of the said property from the first and/or the second purchaser.

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(emphasis supplied)

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19 The learned Judge noted that it was more than prima facie convinced that the concerned parties took possession of the premises with full knowledge that the premises were in possession of the official liquidator. Even today, there is no explanation given for this behaviour by Mr. Vipinbhai K. Patel except that it should not be held him. The court has, while directing the official liquidator to forthwith take possession back from M/s. Krishna Developers and others, observed that if such behaviour is allowed, it will send a wrong signal. Such blatant interference with the possession of the official liquidator is a conduct bordering on contempt.

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20 It will be mockery of justice, if in spite of a clear evidence that M/s. Krishna Developers and Mr. Patel had taken possession from the official liquidator with full knowledge and though such conduct was strongly deprecated by the Company Court earlier, the possession is simply handed over to them. Further more the title of Krishna Developer and Mr. Vipinbhai K. Patel is being

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contested. The submission of the learned counsel for Mr. Patel that the possession be handed over to it since it was taken from it, overlooks the circumstances in which he came in possession in the first place. It was by ousting the official liquidator that Mr. Patel came in possession.

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21 In view of this position, the request for handing over possession to M/s. Krishna Developers cannot be considered by the Company Court. The observations made by the learned Judge that if any application is made for seeking possession of the property it will be considered on its own merits does not mean that such conduct was condoned. Only indulgence that can be shown is that if any suit or proceedings are filed by Mr. Patel or if in pending suit any order is sought, those will be decided on their own merits.

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22 As far as the company application no. 430 of 2013 is concerned, in view of what is observed above, a leave needs to be granted. However, it is made clear that the leave is granted only because the official liquidator is continuing in possession of the property. It is already observed that the property in question does not belong to the company under liquidation. Thus the leave is granted only for the procedural aspects and it will not be construed as a reflection on merits of the claim of the applicant in the suit or in the proceedings, if any, filed by Mr. Patel.

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23 The learned counsel for M/s. Champion Surgical states that all endeavours would be made to seek appropriate orders from

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the Civil court at the earliest. This assurance is accepted since the official liquidator is continues to be in charge of the property. The company application no. 430 of 2013 for leave is allowed in terms of what is stated above.

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24 The Company Application No. 17 of 2012 and Company Application No. 431 of 2012 are disposed of accordingly in the above terms.

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25 To enable the parties to get their rights effectively adjudicated, the parties will maintain status quo as regards the property in question for a period of four weeks from today.

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Mr.Vipinbhai Kanubhai Patel through P/a Mr.Upendrabhai J. Patel v. Official Liquidator of M/S. Metalco (India) Ltd. and 6 Others

Case brief

What is this about?

What did the court decide?

Mr.Vipinbhai Kanubhai Patel through P/a Mr.Upendrabhai J. Patel v. Official Liquidator of M/S. Metalco (India) Ltd. and 6 Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Parties & counsel

Coram

Case details

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