OFFICIAL LIQUIDATOR KARNATAKA HIGH COURT Vs. ACHAMMA JOSEPH

JUDGEMENT

(1.) This is an application by the official liquidator under s. 446(2)(b) of the Companies Act, 1956, praying for a decree against the respondent. Smt. Achamma Joseph, in the sum of Rs. 25,000 together with interest 18 per cent. per annum from date of payment of advance by the managing director of the company in liquidation (M/s. Bangalore Refractories and Ceramics Private Ltd.) (hereinafter referred to as "the company") and thereafter at 6 per cent. per annum till date of realisation together with court costs and current interest. Respondent and her counsel remained absent after notice on October 13, 1978. The respondent was placed ex parte by an order made by Venkataramiah J., and the application was decreed ex parte on October 20, 1978, by an order made by him. However, that order came to be set aside in Company Application No. 130/1978 by Venkatachaliah J. While setting aside the ex parte order and decree, the learned judge partially decreed the Company Application No. 102/1978 in the sum of Rs. 15,000 which claim was admitted by the respondent and left it open for the disputed amount of Rs. 10,000 to be decided in the proceedings.

(2.) The official liquidator has stated in his application that the company and the respondent entered into an agreement of sale dated March 6, 1975, for purchase of dry land measuring 3.20 guntas approximately, with a pump house and shed standing thereon, situated in Bhattarahalli village, Hoskote Taluk, bearing S. No. 27. The land was agricultural land and the price agreed as consideration was for Rs. 40,000 per acre plus Rs. 2,000, being the value of the pump house. On the date of the agreement, the promoter of the company paid by a cheque drawn in favour of the respondent the sum of Rs. 25,000 as an advance towards the agreed sale consideration. The agreement of sale provided for the respondent-vendor to get the necessary sanction from the appropriate revenue authorities for the conversion of the land for non-agricultural use (industrial purpose). It further provided that the sale should be duly completed and registered in accordance with law before 30th September, 1975, in two lots and the balance of sale consideration was to be paid at the time of the sale of the first lot and thereafter the second lot of the schedule property was to be completed within one month therefrom. The cost of the transaction of sale including stamp duty was required to be met by the purchaser-company. It further provided that if the vendor failed to obtain conversion of the land, the agreement would stand lapsed on the dates specified and the buyer should within a week thereafter receive refund of the advance paid without further claim for any damages. It also provided that if the company failed to complete the transaction within the time stipulated and provided the conversion sanction had been obtained by the vendor by then, the vendor should forthwith determine the agreement on the expiry of the due date, viz., September 30, 1975 and forfeit Rs. 10,000 out of the buyer's advance paid towards the sale consideration.

(3.) It is further alleged that the respondent-vendor failed to secure the sanction of the appropriate authority for the conversion of the same land for industrial use within the stipulated time and, therefore, the agreement lapsed on 30th September, 1975, rendering the respondent-vendor liable to refund the sum of Rs. 25,000 within a week from the said date. It is also stated that the managing director of the company, Mr. R. P. Agarwal, obtained the necessary sanction from the Deputy Commissioner, Bangalore, on October 8, 1975. Thereafter, in spite of repeated personal visits and requests as well as letter dated December 4, 1976, December 31, 1976, and January 17, 1977, followed by legal notices dated February 14, 1977, and April 4, 1977, the respondent-vendor failed to complete the sale in favour of the company or refund the advance amount to the company. In the result, the company could not proceed with the construction of the building for the factory though all preparations in that behalf had been made. In these circumstances, it is alleged that the respondent committed total breach of agreement dated March 6, 1975, and, therefore, the company was entitled to refund of the advance consideration paid in the sum of Rs. 25,000.