Allowed

Official Liquidator of P G Textile Mills Co. Ltd. (in Liquidation) v. Idbi Bank Ltd.

Gujarat HC16 Feb 2022OLR/20/2021

Case brief

AI extract

What is this about?

The Gujarat High Court permitted the Official Liquidator to file a first appeal against a 2003 decree in a civil suit where the Liquidator was not originally impleaded and to seek restoration of a defaulted suit under Order 9 of the CPC, holding that the liquidator's interests must be adjudicated.

What did the court decide?

The Official Liquidator is permitted to file a first appeal against the decree dated 03.03.2003 in Civil Suit No. 1880 of 1984 and to file an application for restoration of the suit under Order 9 Rule

Official Liquidator of P G Textile Mills Co. Ltd. (in… — Company and Corporate | Gujarat HC (2022)

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/OFFICIAL LIQUIDATOR REPORT NO. 20 of 2021 With CIVIL APPLICATION (FOR JOINING PARTY) NO. 1 of 2021 In R/OFFICIAL LIQUIDATOR REPORT NO. 20 of 2021

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FOR APPROVAL AND SIGNATURE:

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HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

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2 To be referred to the Reporter or not ?

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3 Whether their Lordships wish to see the fair copy of the judgment ?

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4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

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OFFICIAL LIQUIDATOR OF P G TEXTILE MILLS CO LTD (IN LIQUIDATION)

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Versus

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IDBI BANK LTD

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Appearance:

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MS KJ BRAHMBHATT(202) for the Applicant(s) No. 1 MR MK VAKHARIA(1483) for the Respondent(s) No. 4,7 NOTICE SERVED for the Respondent(s) No. 1,10,2,5,6,8,9 NOTICE UNSERVED for the Respondent(s) No. 11,3

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CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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Date : 16/02/2022 ORAL JUDGMENT

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Heard learned advocate Ms. K.J.Brahmbhatt for

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the applicant, learned advocate Mr.

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M.K.Vakharia for respondent Nos. 4 and 7, and

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Page 1 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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learned advocate Mr. Tirthraj Pandya for the applicants of Civil Application No. 1 of 2021 through video conference.

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By this application, the Official Liquidator has prayed as under:

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“A. This Hon’ble Court may be pleased to permit the Official Liquidator under section 446 read with section 457(1)(a) of the Civil Procedure Code with necessary applications in the District Court at Vadodara challenging the Judgement and decree dated 03.03.2003 passed by City Civil Court, Vadodara in Regular Civil Suit No. 1880 of 1984 as well as permit the Official Liquidator to file necessary application before concerned Civil Court at Vadodara for restoration of RCS/1880/1984 and recalling of order dated 23.11.1992 passed below Exh 1 under Order 9 Rule 8 & 9 of Civil Procedure Code,1908.”

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Learned advocate Ms. Brahmbhatt for the Official Liquidator submitted that this case has a chequered history starting from 1984. It was submitted that M/s. P.G.Textile Mills Company Ltd (In Liquidation) filed Regular Civil Suit No. 1880 of 1984 against the applicants of Civil Application No. 1 of 2021 with a prayer to restrain defendants Nos. 1 to 8 in the Civil Suit from entering into open land of the ownership and of the possession of

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Page 2 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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the Company (In Liquidation) situated at Survey Nos. 856, 857/1, 857/2, 859, 848 and 844 and to restrain to use such land for residential purpose and to restrain the defendant from making any construction over the said land or to give it on lease or sale in any manner.

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3.1 It was submitted that the said suit was filed by the Company (In Liquidation) on 05.12.1984 in the Court of Civil Judge (S.D.) at Vadodara.

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3.2 It was submitted that the Company (In Liquidation) was ordered to be wound up by order dated 23.06.1989 passed by this Court in Company Petition No. 75 of 1989 and the Official Liquidator was appointed as Liquidator of the Company (In Liquidation) with a direction to take over the possession of the assets of the Company situated at Pani gate, near Bhadra Kacheri, Vadodara.

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3.3 Learned advocate Ms. Brahmbhatt

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submitted that the Official Liquidator came to be served with a copy of the Company Application No. 8 of 2019 filed by respondent Nos. 4 to 11 herein with a prayer to direct the Official Liquidator of M/s. Anand Cotspin

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Page 3 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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Ltd not to include the aforesaid land having total area of 10875 sq.mtr purchased by them in the liquidation proceedings of M/s. Anand Cotspin Limited.

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3.4 On perusal of the averments made in the said application, the Official Liquidator was made aware that respondent Nos.4 to 11 purchased the said land of the Company (In Liquidation) from applicants of the Civil Application No. 1 of 2021 in the year 2013 on the basis of the decree passed by the Civil Court in the counter claim filed in Civil Suit No. 1880 of 1984 by the applicants of Civil Application No. 1 of 2021 on the ground of adverse possession vide decree judgement and decree dated 3^rd March,2003 passed by the 3^rd Joint Civil Judge (S.D.), Vadodara.

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3.5 It was pointed out by Ms. Brahmbhatt that the Official Liquidator therefore made inquiry with regard to Regular Civil Suit No. 1880 of 1984 from the court of Civil Judge (S.D.),Vadodara and came to know that the said Regular Civil Suit No. 1880 of 1984 was dismissed for default by the Court vide order dated 23.11.1992 and the counter claim in the suit was kept pending for adjudicating

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Page 4 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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which was decreed vide decree dated 03.03.2003.

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3.6 It was also pointed out by learned advocate Ms. Brahmbhatt that on 17.07.1996 the Official Liquidator executed the sale deed in favour of M/s. Anand Cotspin Limited (In Liquidation). It was pointed out from the recital in sale deed dated 19.07.1996 that the said land was sold by the indenture of sale dated 19.05.1980 by the Official Liquidator being the properties of Baroda Spinning and Ginning Mill (In Liquidation) together with the building standing thereon and the machinery described in the schedule thereto and the residential bungalow known as Green Villa to M/s. PG Textile Mills Company Ltd. (In Liquidation) pursuant to the order passed by this Court on 21.12.1971 in Company Petition No. 6 of 1967 and the conveyance deed executed on 19.05.1980 in favour of M/s. P.G. Textile Mills Co. Ltd in respect of the aforesaid property being Survey Nos. 842, 843, 848/1, 848/2, 856, 857/1, 857/2 and 858 situated at Bhadra, Mauje-Vadodara Kasba, Tal-Vadodara in the registration and District and sub-District of Vadodara was registered with the Sub-registrar of Assurance at Vadodara under Serial No. 3064 of 1980.

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Page 5 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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3.7 It was further pointed out from the recital made in the said sale deed that this Court passed order dated 23.06.1989 to wind up M/s. PG Textile Mills Co. Ltd (In Liquidation) as per the opinion of the Board of Industrial and Financial Reconstruction under section 20(2) of the Sick Industrial Companies (Special Provision) Act,1985.

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3.8 It was pointed out that as per the order passed by this Court on 27.07.1990 after valuation being carried out of the aforesaid property, vide further order dated 26.04.1991 passed in Company Application Nos. 54 of 1991 and 198 of 1989 in Company Petition No. 75 of 1989, sanctioned the sale of the aforesaid land and building of M/s. P.G.Textile Mills Co. Ltd(In liquidation) in favour of M/s. Anand Cotton Corporation of Rs. 69,72,796/and M/s. Anand Cotton Corporation was put into possession of the said land and building to run the textile mill.

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3.9 It was further pointed out that M/s. Anand Cotton Corporation filed Application No. 749 of 1993 in Company Petition No. 75 of 1989 to substitute M/s. Anand Costspin Ltd as the purchaser in whose favour the sale deed

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Page 6 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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was executed as per order dated 05.10.1993 passed by this Court and accordingly the conveyance deed was executed by the Official Liquidator on 19.07.1996 in favour of M/s. Anand Costpin Ltd.

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3.10 Learned advocate Ms. Brahmbhatt further pointed out that even the M/s. Anand Cotspin Ltd was also ordered to be wound up by order dated 20.03.2003 in Company Petition No. 205 of 1998.

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3.11 Learned advocate Ms. Brahmbhatt further pointed out that after obtaining the decree by the applicants of the Civil Application No. 1 of 2021, Regular Civil Suit No. 842 of 2007 was filed before the 6^th Additional Senior Civil Judge, Vadodara against M/s. Anand Cotton Corporation which was decreed in favour of the applicants of Civil Application No. 1 of 2021 by decree dated 23.01.2008. It was submitted that thus the applicants of Civil Application No. 1 of 2021 are having decree of ownership and possession of the land in question firstly passed in counter claim Regular Civil Suit No. 1880 of 1984 on 03.03.2003 and secondly as per the decree passed in Regular Civil Suit No. 842 of 2007 on 23.01.2008.

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Page 7 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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3.12 It was submitted that this Court granted permission to the Official Liquidator vide order dated 10.12.2020 to file First Appeal under section 96 of the Code of Civil Procedure,1908 along with necessary application to challenge the judgement and decree dated 23.01.2008 passed by the Civil Court, Vadodara in Regular Civil Suit No. 842 of 2007 in Official Liquidator Report No. 64 of 2020 in Company Petition No. 205 of 1998.

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3.13 It was submitted that the aforesaid order dated 10.12.2020 passed by the Company Judge was challenged by the applicants of Application No. 1 of 2021 i.e. original plaintiffs of Civil Suit NO. 842 of 2007 preferring O.J. Appeal No. F/8156 of 2021 along with an application for leave to appeal being Civil Application No. 882 of 2021.

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3.14 It was submitted that the Division Bench of this Court [Coram: Hon’ble Dr. Justice Vineet Kothari and Non’ble Mr. Justice B.N.Karia]by order dated 09.06.2021 dismissed the Civil Application and the O.J.Appeal by observing as under:

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Page 8 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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“5. Having heard learned counsel for the Appellants / Applicants and learned counsel for Official Liquidator, we are not inclined to entertain the said Original Jurisdictional Appeal by granting leave to the present Appellants / Applicants for the following reasons:

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(a) By the order dated 10.12.2020, the learned Company Judge has only granted prayer 8(A) of said OLR No.64 of 2020 and the Official Liquidator has been permitted to file First Appeal to claim Company's rights over the land in question, for the company in liquidation namely, M/s. Anand Cotspin Limited (In Liquidation) against which said Ex parte Decree dated 23.01.2008 was obtained by the Plaintiffs. The order dated 10.12.2020 passed by the learned Company Judge is only an administrative order passed by the learned Company Judge permitting the Official Liquidator to avail the right of appeal on behalf of the company in liquidation and this administrative order does not affect any rights of the present Appellants and therefore, they don't have any right of hearing before passing of such order by learned Company Judge and it cannot be said to be wrong or illegal in any manner. Secondly, the present Applicants can very well oppose the First Appeal itself when filed at the appropriate forum, if they can do so on merits.

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Therefore, such administrative order is not required to be interfered by the

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Page 9 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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Division Bench of this Court in the present Original Jurisdictional Appeal nor the Applicants deserve to be granted any such leave to appeal.

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Therefore, we are not inclined to entertain this Appeal or grant leave to appeal to the present Appellants / Applicants because that in our opinion will unnecessarily spill the litigation on a wrong route, which we consider wholly unnecessary and uncalled for.

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Therefore, with these observations, the Application namely, R/Civil Application No.882 of 2021 for seeking leave to appeal is rejected. Consequently, O.J. Appeal No.8156 of 2021 arising out of OLR No.64 of 2020 is also dismissed. No costs.”

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3.15 It was therefore submitted that when this Court has already granted permission to file First Appeal against Judgement and Decree dated 23.01.2008 passed in Civil Suit No. 842 of 2007 pertaining to the same property for which Regular Civil Suit No. 1880 of 1984 was filed by M/s. P.G.Textile Co. Ltd (In Liquidation) wherein the plaintiffs of Regular Civil Suit NO. 842 of 2007 were the defendants Nos. 1 to 8.

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3.16 It was therefore submitted by learned advocate Ms. Brahmbhatt that the

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Page 10 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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prayers made in this Official Liquidator Report No. 20 of 2021 be granted permitting the Official Liquidator to file First Appeal challenging the judgement and decree dated 03.03.2003 passed by the Civil Court, Vadodara in Counter claim of Regular Civil Suit No. 880 of 1984 as well as to file necessary application before the concerned Civil Court at Vadodara for restoration of Regular Civil Suit No. 1880 of 1984 recalling the order dated 23.11.1992 passed below Exh-1 under Order 9 Rules 8 and 9 of the Code of Civil Procedure 1908.

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On the other hand, learned advocate Mr. Mehul Vakhariya appearing for the respondent Nos. 4 to 11 submitted that such permission is not required to be granted under sections 446, read with section 457(a) of the Companies Act,1956 after lapse of more than 29 years. It was submitted that sheer negligence and carelessness on the part of the Office of the Official Liquidator for not taking any action in spite of having knowledge about the decree passed in the year 2003 in counter claim filed by the applicants of the Civil Application No. 1 of 2021 as well as the plaintiffs of Regular Civil Suit NO. 842 of 2007.

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Page 11 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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4.1 It was further submitted that in 2013, respondents No. 4 to 11 have purchased the some part of the land in question property from the applicants of the Civil Application No. 1 of 2021 original defendants of the Regular Civil Suit No. 1880 of 1984 and the plaintiffs of Regular Civil Suit No. 842 of 2007 as they were having the decree of ownership and possession in their favour and therefore, after lapse of more than 29 years, the title of the respondent Nos.4 to 11 should not be disturbed in any manner as any order permitting the Official Liquidator to file First Appeal or an application for restoration of Regular Civil Suit No. 1880 of 1984 by this Court would amount to condoning the delay of 29 years and the Official Liquidator cannot be permitted to initiate action beyond the period of limitation as per the provisions of the law of limitation.

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4.2 Learned advocate Mr. Vakhariya further submitted that respondent Nos.4 to 11 are in possession of the property in question since 2013 and the possession should not be disturbed in any manner whatsoever.

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4.3 Learned advocate Mr. Vakharia also invited the attention of the Court to the

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Page 12 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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order dated 21.08.2018 passed by this Court in Official Liquidator Report No. 1 of 2015 in Company Petition No. 205 of 1998 to point out that the Official Liquidator submitted before this Court that the land in question do not belong to the Company (In Liquidation) i.e. Ms. Anand Cotspin Ltd on the basis of the title report obtained from the advocate of the Official Liquidator.

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Learned advocate Mr. Pandya for the applicants of Civil Application No. 1 of 2021 who have preferred the application for joining party submitted that the applicants are necessary and proper party for adjudication of this application.

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5.1 Considering the fact that the applicants are the original defendants in Regular Civil Suit No. 1880 of 1984 and are plaintiffs of Regular Civil Suit No. 842 of 2007, they are ordered to be joined as respondents No. 12 to 19 in the Company Application.

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5.2 Mr. Pandya further submitted that the land in question was never the property of the company (In liquidation). It was submitted that there is a decree in favour of the respondent Nos. 12 to 19 and hence the land in question ceases to be the property of

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Page 13 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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the company (in liquidation) and therefore the prayer made by the Official Liquidator in this report should not be granted for filing appeal after more than 19 years from the date of passing of the decree in the year 2003 in counter claim filed by respondent Nos. 12 to 19 who are the original defendants in Regular Civil Suit No.1880 of 1984.

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5.3 In support of his submissions learned advocate Mr. Pandya relied upon the decision of the Supreme Court in case of Erach Boman Khavar vs. Tukaram Shridhar Bhat and anr reported in ( 2013) 15 SCC 655 to submit that the leave of the Court is not the condition precedent for initiation of a civil action or legal proceedings because section 446 does not expressly provide for annulment of proceedings that is undertaken without the leave of the Court.

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5.4 It was submitted that the Apex Court has held that only because the leave of the Court is not obtained even after initiation of the proceedings, such proceedings would not become invalid and that the only object for taking the permission of the Court is to see that the interest of the Company is safeguarded so that its rights and claims are

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Page 14 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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not adjudicated without the knowledge of the Company Court. It was therefore submitted that the Official Liquidator ought to have initiated the proceedings immediately after the decree was passed in the year 2003 and therefore once the decree has become final, land in question ceases to be the property of the company (In liquidation).

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Having considered the rival submissions of the learned advocates for the respective parties and having perused the documents on record, it appears that it is not in dispute that this Court by order dated 10.12.2020 granted permission to file First Appeal under section 96 of the Code of Civil Procedure 1908 with necessary application to challenge the judgement and decree dated 23.01.2008 passed by the Civil Court, Vadodara in Regular Civil Suit No. 842 of 2007 filed by the respondent Nos.12 to 19, who were also the original defendants in Regular Civil Suit No. 1880 of 1984 filed by M/s. P.G.Textile Co. Ltd (In Liquidation).

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It is also emerging from the record that the Civil Application No. 882 of 2021 seeking leave to appeal against the order dated 10.12.2020 in O.J.Appeal No. F/8156 of 2020

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Page 15 of 17

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was not entertained by the Division Bench of this Court by rejecting the same by order dated 09.06.2020 as stated here-in-above.

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In such circumstances, when this Court has already permitted the Official Liquidator to file First Appeal to challenge the Judgement and Decree dated 23.01.2008 passed by the Civil Court in Regular Civil Suit No. 842 of 2007, then the Official Liquidator is required to be permitted to file First Appeal challenging the Judgement and Decree dated 03.03.2003 passed in the counter claim allowed by the Civil Court in Regular Civil Suit No. 1880 of 1984 and at the same time, the Official Liquidator is also required to be permitted to file necessary application for recalling the order dated 23.11.1992 passed below Exh-1 of Regular Civil Suit No. 1880 of 1984 under Order 9 Rules 8 and 9 of the Code.

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9.It is pertinent to note that the Official Liquidator was never made a party and no application was filed and in such circumstances, Civil Court passed order dated 23.11.1992 dismissing Regular Civil Suit No. 1880 of 1984 for default and Judgement and Decree dated 03.03.2003 in counterclaim in the said suit without the leave of the Court under section 446 of the Companies Act,1956.

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Page 16 of 17

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C/OLR/20/2021 JUDGMENT DATED: 16/02/2022

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The Official Liquidator is therefore permitted to file First Appeal challenging the Judgement and Decree dated 03.03.2003 passed in the counter claim allowed by the Civil Court in Regular Civil Suit No. 1880 Of 1984 as well as to prefer application under Order 9 Rules 8 and 9 of the Code of Civil Procedure,1908 for recalling the order dated 23.11.1992 passed by the Civil Court dismissing the Regular Civil Suit No. 1880 of 1984 for default.

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The Official Liquidator is also permitted to appoint the lawyer at the Civil Court, Vadodara to file First Appeal as well as necessary application as permitted.

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The Official Liquidator Report along with Civil Application is disposed of.

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(BHARGAV D. KARIA, J)

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JYOTI V. JANI

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Page 17 of 17

Official Liquidator of P G Textile Mills Co. Ltd. (in Liquidation) v. Idbi Bank Ltd.

Case brief

What is this about?

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Official Liquidator of P G Textile Mills Co. Ltd. (in Liquidation) v. Idbi Bank Ltd.

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