Delhi Stock Exchange Assocn. Ltd. v. Ujala Leasing Ltd.

1. The property bearing No.111, Pratap Chamber, First Floor, Gurdwara Road, Karol Bagh, New Delhi was put to auction. The reserved price of the property was fixed at Rs.40,15,200/-. Pursuant to the proclamation for sale, bids were received and on 05.10.2011, an open bid was held in Court and the highest bid of Rs.42,00,000/- was received. The highest bid and the second highest bid were accepted by the Court.

2. On 08.11.2011, an application was received from M/s. Tirupati Jewelers offering to pay a sum of Rs.50,00,000/- for the said property. By order of 08.11.2011, the applicant M/s. Tirupati Jewelers was directed to deposit a sum of Rs.50,00,000/- with the Registry of this Court and the said amount was directed to be kept 2014:DHC:2435 Co.P.386/2000 2 in a nationalised bank for a period of 60 days. The amount was deposited.

3. Since a sum of Rs.50,00,000/- was offered as against the highest bid of Rs.42,00,000/-, the Court, on 17.11.2011, directed issuance of fresh advertisement for the sale of the property. It was directed that the expenses for conducting the sale would be borne by the applicant. By Judgment dated 15.12.2011, the application of M/s. Tirupati Jewelers was disposed of directing fresh auction keeping the reserved price at Rs.50,00,000/-. The Court had noted that the valuer had valued the property at Rs.63,83,200/- and since no bid had been received, the reserved price was reduced to Rs.40,00,000/-.

4. The Judgment dated 15.12.2011 was challenged before the Supreme Court by the Auction Purchaser and the Supreme Court stayed the sale of the property. Subsequently, by order dated 09.09.2013, the special leave petition was disposed of noting that M/s. Tirupati Jewelers was willing to pay Rs.70,00,000/- for the property. The Supreme Court directed the Official Liquidator to hold an auction afresh with the reserved price of Rs.70,00,000/-.

5. On 25.11.2013, it was noted that the highest offer received was Rs.70,00,000/- from M/s. Tirupati Jewelers. The order of 25.11.2013 noted that no bid was received for the property in response to the sale notice and M/s. Tirupati Jewelers had reiterated the offer of Rs.70,00,000/-.

6. M/s. Tirupati Jewelers, on 16.12.2013, in the Special Leave Co.P.386/2000 3 Petition prayed before the Supreme Court for grant of some more time to deposit the balance amount. The Supreme Court permitted M/s. Tirupati Jewelers to approach this Court/Official Liquidator for considering the said request. The Supreme Court by order dated 06.12.2013 directed that the offer submitted by M/s. Tirupati Jewelers should be accepted by the Official Liquidator subject to the modification i.e. for consideration of the request for enlargement of time to pay the balance amount.

7. As per the applicant, the amount of Rs.50,00,000/- was deposited by the applicant with this Court and it was directed to be kept in an FDR by the order of 08.11.2011 and had earned interest of Rs.9,09,196/- as on 07.03.2014. The applicant M/s. Tirupati Jewelers has, thus, filed the present application seeking adjustment of the interest accrued over the deposit of Rs.50,00,000/- made by the applicant. The applicant has thus contended that since the applicant has to pay a sum of Rs.70,00,000/-, the applicant should be given a benefit of the interest accrued over the said amount of Rs.50,00,000/-.

8. As per the applicant, the applicant had deposited a sum of Rs.50,00,000/- in terms of the directions of this Court. The bid of the applicant was directed to be accepted by the Supreme Court by the order dated 06.12.2013. Learned counsel for the applicant submitted that in case the bid of the applicant had not been accepted, the sum of Rs.50,00,000/- deposited by the applicant alongwith accrued interest thereon would have been refunded to Co.P.386/2000 4 the applicant. Further, the applicant contends that the highest bid that had been received for the property was Rs.42,00,000/- and the applicant had offered Rs.50,00,000/-. If the bid of the applicant had been accepted, the applicant would have got the property as well as the appreciation in value of the property. Since the bid of the applicant was not accepted and was kept pending, there was no liability of the applicant to pay the said amount of Rs.50,00,000/and, thus, the interest that has accrued on the said amount enures to the credit of the applicant.

9. Learned counsel for the Official Liquidator has submitted that the amount of Rs. 50 lacs, that was deposited pursuant to orders of this Court is an amount which was deposited for the benefit of the official liquidator and towards the sale consideration of the property and as such any interest accrued on the said amount should enure to the benefit of the company in liquidation. Further it is contended that since the highest bid of Rs. 42 lacs was accepted, but was set aside only on the offer received from M/s. Tirupati Jewellers and the said applicant was permitted to deposit the sum of Rs. 50 lacs. The interest accrued on the said amount should thus enure to the person to whom the said amount is paid. He further submits that if the sale has not been set aside, the sum of Rs. 42 lacs would have been credited to the account of the company and as such any interest earned thereon would have also been credited in the account of the company.

10. I have considered the submissions of the counsels. The facts, as Co.P.386/2000 5 noted above, show that the highest bid originally received on 05.10.2011 was for a sum of Rs. 42 lacs. The offer made by the applicant was of a higher amount of Rs. 50 lacs. Even this offer was not finally accepted. Based on the offer, the sale was set aside and a fresh auction was directed to be held keeping the reserved price of Rs. 50 lacs. Before the Supreme Court, the offer was further revised by the applicant to Rs. 70 lacs. Even this offer of Rs. 70 lacs was not finally accepted and the Supreme Court directed a fresh auction to be held keeping the said figure of 70 lacs as the reserved price.

11. In the fresh auction held, no bids were received and the applicant reiterated the offer of Rs. 70 lacs. The offer of Rs. 70 lacs made by the applicant was directed to be accepted by the Supreme court on 6.12.2013. Pursuant to the orders of the Supreme Court, directing the acceptance of the offer, the applicant has deposited the sum of Rs. 70 lacs in this Court i.e. a sum of Rs.50 lacs, which was deposited in terms of the order dated 8.11.2011 and Rs.20 lacs thereafter.

12. The bid that has been accepted is for a sum of Rs. 70 lacs. The amount deposited by the applicant though is Rs.70 lacs, but has earned interest of a sum of Rs. 9,09,196/- as on 7.3.2014. Thus, the total amount available today is approximately Rs.79,09,196/-. The bid directed to be accepted by order dated 6.12.2013 is in the sum of Rs.70 lacs and only that amount is liable to be credited to the account of the company. The amount in excess of Rs.70 lacs is Co.P.386/2000 6 an amount that has been earned on the deposit made by the applicant and, thus, enures to the benefit of the applicant.

13. Another aspect of the matter is that in case the bid of the applicant had not been accepted then the applicant would have been refunded the amount of Rs. 50 lacs along with the interest accrued thereon. This clearly shows that the interest earned on the deposit of Rs. 50 lacs enures to the benefit of the applicant.

14. The original highest bid was only Rs.42 lacs, and it is because of the intervention of the applicant that the Official Liquidator has been able to get a enhanced amount of Rs.70 lacs. Even, if the arguments of the Official Liquidator were to be accepted, that if the original bid of Rs. 42 lacs had been accepted the amount would have been credited to the account of the company but still the company would not have earned as much as the company has now earned i.e. a sum of Rs. 28 lacs, over the highest bid of Rs. 42 lacs in a period of just over 2 years and 3 months.

15. In my view, the interest earned on the deposit of Rs.50 lacs, i.e. the sum of Rs. 9,09,196/- enures to the benefit of the applicant and thus is liable to be refunded to the applicant. The application is thus allowed.