Continental Textiles Mills Ltd. v. Official Liquidator

1. This application dated 06.11.2023 is moved on behalf of the applicant/M/s. Jupiter Laminators Pvt. Ltd. seeking certain directions from this Court with regard to the property purchased in an e-auction which belonged to the respondent company (in liquidation).

2. Notice of the application has not been served upon the Official Liquidator. However, a copy of the same is directed to be supplied to the learned Senior Standing Counsel appearing for Official Liquidator. Reply to the same is not required.

3. Having heard the learned counsel for the applicant along with the learned Senior Standing Counsel for the Official Liquidator and on upon perusal of the record, I find that the present application is bereft of any merits.

4. Suffice to state that the applicant is the successful bidder, having purchased the property of the respondent company (in liquidation) located at Ahmadabad, in the e-auction held by the Official Liquidator on 23.06.2023 and EMD[1] of 10% of the sale price was deposited by 26.06.2023. This Court, vide order dated 17.08.2023 inter alia dismissed the objections filed by the ex-director of the respondent company (in liquidation), pertaining to the revised market value attached to the property; and the sale in favour of the applicant company was confirmed.

5. It is also an admitted fact that 90% of the balance amount of the sale consideration has since been deposited by the applicant company with the Official Liquidator. In the said backdrop, the applicant approached this Court raising a grievance that certain portions of the property have come to be unauthorisedly occupied by some exemployees/workmen of the company (in liquidation) as also lamenting the fact that certain parts of the property have since been encroached upon by trespassers. Thus, a relief is sought from this Court in the nature of directions to the police at Ahmadabad to take appropriate action against the unauthorised occupants/trespassers in accordance with law.

6. Learned counsel for the applicant alluded to order dated 26.07.2023 passed by this Court, whereby the submissions advanced in connection with the aforesaid aspects of unauthorized occupation and encroachment were considered and inter alia certain directions were passed whereby a Local Commissioner was appointed and was directed to visit the property and submit a detailed report entailing the following aspects:-

7. This application is vehemently opposed by the learned Senior Standing Counsel for the Official Liquidator and attention of this Court is drawn to a report filed by the Official Liquidator bearing OLR No. 55/2023 dated 26.05.2023, which inter alia brings to the fore the status of unauthorized occupation and encroachment by third parties on the property in question. It is fervently urged that the order dated 26.05.2023 appointing Local Commissioner, was only passed so as to verify the aspect of unauthorized occupation and trespassing on the property of the respondent company (in liquidation) and nothing further.

8. Without further ado, I find merit in the submissions advanced by learned Senior Standing Counsel for the Official Liquidator that there was no concealment about the status of the property in question on the part of the official liquidator. The property was auctioned on an „as is where is and whatever there is basis’ and before the e-auction the applicant company had sufficient time and opportunity to ascertain the status of unauthorized occupants and/or trespassers and it is for that reason that the reserved price of the property in question was lowered and possession of the same was delivered to the applicant on 30.10.2023.

9. It is evident from the record that learned counsel for the applicant was very much present on each date of hearing, particularly on 26.07.2023 as well as 17.08.2023, and now the applicant cannot turn around and seek directions from this Court so as to direct the Official Liquidator or for that matter the Police to take action for removal of unauthorized occupants and/or encroachers, in terms of the provisions of Section 452 of the Companies Act, 2013[2].

10. Learned Senior Standing Counsel for the Official Liquidator in this regard has referred to the decision of this Court vide order dated 08.05.2012 in CO.PET.539/1998 tilted „M/s. Tata Iron and Steel Co. Ltd. v. M/s. Jhalani Tools India Ltd.‟, wherein in a somewhat similar set of circumstances as prevailing in the instant matter, it was held that where the land has been auctioned and purchased on an „as is where is and whatever there is basis‟, it was not the duty of the Official Liquidator to initiate action against the alleged unauthorised occupants/trespassers in the property in question.

11. To sum up, when the auction purchaser had purchased the property in question with “open eyes” and with a full disclosure of all

2 Section 630 of Companies Act, 1956 relevant facts on the part of the Official Liquidator, this Court is not inclined to pass any directions in the present winding up proceedings for removal of the alleged unauthorized occupants/trespassers.

12. The present application is dismissed, thereby providing that the applicant company shall be at liberty to pursue remedies as per the process of law and the delay, if any, may be considered for condonation as per law by the appropriate forum.

DHARMESH SHARMA, J. FEBRUARY 01, 2024