KARAMCHAND APPLIANCES PRIVATE LIMITED Vs. BHARAT CARPETS LIMITED

JUDGEMENT

(1.) This applicaon, by M/s Karamchand Aliances Pvt. Ltd., the auction purchaser of the land, building, plant and machinery belonging to M/s Bharat Carpets Limited, the company in liquidation, inter alia, seeks setting aside of sale of the said assets in favour of the applicant company and refund of the entire amount deposited by the applicant, pursuant to order dated 17/12/1996, with the Official Liquidator together with interest, damages and costs.

(2.) Pursuant to the advertisement issued by the Official Liquidator on 21 September 1996, for sale of assets of the company in liquidation, including leasehold land measuring 25222 sq.yds approximately and freehold land measuring 15000 sq.yds approximately, on "as is where is basis", three parties, including the applicant, gave their bids but subsequently, vide order dated 13/12/1996, another party namely, S.Bhupinder Singh was also permitted to participate in the bidding. Keeping in view the area of the property, the Court considered it appropriate to go in for open bidding, in which only the said S.Bhupinder Singh and the applicant company participated. The bid of S.Bhupinder Singh was for Rs.6.05 crores and that of the applicant for Rs-6.03 crores. The highest bidder was directed to deposit 20% of the bid amount by noon of 16/12/1996, failing which, the applicant, the second highest bidder, was required to deposit 20% of the bid amount. The balance payment by the successful bidder was to be made in terms of the advertisement for sale. It appears that S.Bhupinder Singh failed to make the said deposit and, therefore, applicant's hid was accepted. They were granted time to deposit the stipulated amount by the same evening i.e., 16/12/1996, which was done and their bid was finally confirmed on 17/12/1996. While accepting the bid, the Court directed that the remaining amount of the bid as per clause 7 of the terms and conditions of the sale shall be deposited by the applicant within a period of one year from that date in quarterly equal instalments with prevailing rate of interest from the date of acceptance of offer, failing which the entire money deposited by them shall stand forfeited and the Official Liquidator will be at liberty to re-auction the property in question. The applicant was also required to furnish bank guarantee for the deferred payment amount.

(3.) The present application is for recall of this order, on the ground that it stands vitiated completely because the foundation of the said order is based on the bid submitted by the applicant, which in turn was based on mis-representation and mistakes of fact in the advertisement, inviting the bids. According to the applicant there was complete mis-understanding on the part of the Official Liquidator in respect of the nature of the assets owned by the company in liquidation and the information furnished in the advertisement was incorrect inasmuch as: (i) out of total 15000 sq.yds, stated to be freehold land, only 2400 sq.yds is actually freehold; (ii) out of the balance 12600 sq.yds of the so represented freehold land, 12229 sq.yds is of leasehold nature and in respect of balance of approx.371 sq.yds, there are no records; (iii) though there are two power of attorneys in respect of 12229 sq.yds freehold land in favour of Mr. R.N.Gupta, the ex-Managing Director of the company in liquidation, authorising him to execute the sale deed, neither the original nor copies of the agreements for sale are traceable; (iv) the said power of attorneys have been executed as far back as in the year 1975 and it is not clear whether the original land owners or their attorneys, who had executed the said power of attorneys are still alive and that the power of attorneys have not been revoked; (v) no explanation whatsoever is available for inordinate delay in execution of the said sale deeds, which gives rise to a legitimate apprehension as to the efficacy of the said power of attorneys; (vi) it is not certain whether the conversion of the land use has been effected or not; (vii) as regards the leasehold land, on verification of the revenue records it has been found that instead of 25222 sq.yds, as mentioned in the advertisement, only 24744 sq.yds of land is possessed by the company in liquidation; (viii) the lease- deed pertaining to the said leasehold land imposes a restriction on the lessee not to sub-lease any portion of the said land without prior written permission of the lessor, namely, M/s Arya Pratinidhi Sabha.