MOHAMMED ASHRAF A. U. Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) REPORT No. 88 dated 08/09/2005 is filed by the Official Liquidator, seeking orders for confirmation of the sale of 6.5 cents of land in Sy. No. 403/5 in Ernakulam Village in Kanayannur Taluk, belonging to the former managing director of the Company in liquidation, which was directed to be attached and sold by this Court, conducted by the Official Liquidator, as per order dated 31/03/2005 passed by this Court in the winding up proceedings in the above Company Petition, as also for execution of sale deed in favour of the highest bidder after accepting the balance sale consideration. Company A. No. 539 of 2005 is filed by a person, who allegedly entered into an agreement for sale in respect of the same property with the former Managing Director of the company in liquidation and who has obtained a decree for specific performance of the sale agreement, in OS No. 197 of 2005 of the Additional Subordinate Judge's Court, Ernakulam, for an order setting aside the sale conducted by the Official Liquidator, in respect of the said property. CA No. 435 of 2006 is filed by the same person who filed OS No. 197/2005 for accepting a copy of the agreement of sale on record as evidence in Comp. A. No. 539/2005, in which this Court passed order dated 29/11/2006 withdrawing the decree in the suit and the entire proceedings before the Additional Sub Court, to this Court. MCA No. 112/2008 is filed by the Official Liquidator, to review/set aside the said decree passed by the Additional Sub Court, Ernakulam, in OS No. 197/2005 on the grounds that, the same has been obtained without impleading the Official Liquidator or without obtaining leave of this Court and that the same is vitiated by fraud, collusion and misrepresentation of the plaintiff in that suit and the former Managing Director of the company, the defendant in the said suit, who remained ex parte in the suit. Comp. A. No. 620/2008 is filed on behalf of M/s. Kanoos Business India (P) Ltd., the highest bidder for the property in the auction conducted by the Official Liquidator, seeking confirmation of the sale, acceptance of the balance purchase price and execution of the sale deed in his name. Since these cases are closely interconnected and decision in one would dispose of the other also, they were heard together and are being disposed of together. In his report, the Official Liquidator contends that as permitted by this Court in order dated 31/03/2005, in Report No. 82, he invited tenders for sale of the property, pursuant to which he received six sealed tenders details of which are given in Annexure A. The highest offer is by M/s. Kanoos Business India (P) Ltd. for a sum of Rs. 70,00,584/ - and the second highest offer is Rs. 42,51,121/ -. He further submits that the approved valuer, through whom he conducted a valuation, has valued the property at Rs. 68,25,000/ -. He avers that the reasonability of the offer has been discussed with the President of the Depositors Association of the Company in liquidation and he opined that the highest offer now received is reasonable. He therefore prays that orders may be passed for confirmation of the sale in favour of M/s. Kanoos Business India (P) Ltd., Rukhiya Bagh, Ravipuram Road, Kochi -16 and for execution of the sale deed in favour of the purchaser or his nominee/nominees, after accepting the balance sale consideration.

(2.) THE ex -managing director of the company in liquidation, Sri. Bobby Varghese, has filed objections to the report, claiming that the property does not belong to the company in liquidation and is his personal property, which cannot be sold in the winding up proceedings as an asset of the company in liquidation. According to him, the property originally belonged to his late father, M.U. Varkey as per sale deed No. 144 of 1982 and on his death, the same devolved by succession on Sri. Bobby Varghese, as per the terms of Will dated 05/03/1996 registered as No. 29/1996. He submits that the company in liquidation was incorporated in 1986 and the property was not acquired using money belonging to the company in liquidation. Therefore, the property cannot be sold as an asset belonging to the company in liquidation in proceedings of winding up of the Company, is his contention. He further submits that although by order in Report No. 76, he was directed to hand over the title deeds of the property, the order in report No. 82 was passed without notice to him and without hearing him. He submits that he had filed objections to Report No. 76, in which there was no order for sale and his objections were not also disposed of by passing an order on the same. According to him there is no order fixing personal liability, in respect of the company in liquidation, on him and therefore his personal property cannot be sold for paying off the creditors of the company in liquidation.

(3.) IN Comp. A. No. 539/2005, Sri. A.U. Muhammed Ashraf would contend that the property in question was obtained by Sri. Bobby Varghese as per Annexure B will executed by his father, who obtained the property as part of the properties purchased by him as per Annexure A, A1 and A2 sale deeds in 1982. He would submit that he has entered into Annexure C sale agreement dated 31/03/2002 with the said Sri. Bobby Varghese for purchase of 6.792 cents out of the said properties, 6.5 cents of which is now proposed to be sold by the Official Liquidator. At the time of execution of the agreement, he had paid an amount of Rs. 3 Lakhs as advance sale consideration. Subsequently also amounts were paid towards part sale consideration and altogether an amount of Rs. 10.25 Lakhs were paid by him to Sri. Bobby Varghese, out of the agreed consideration of Rs. 11,77,575/ -, he submits. Since Sri. Bobby Varghese did not honour his part of the agreement, the applicant filed OS No. 197/2005 for specific performance of the sale agreement, which was decreed ex parte directing the applicant to deposit the balance sale consideration and directing the 2nd respondent to execute the sale deed in favour of the applicant. In accordance with the said decree, the applicant had deposited the balance sale consideration in Court also, as evidenced by Annexure F deposit receipt, is his submission. He submits that subsequently the 2nd respondent informed the applicant that because of orders of this Court in CP No. 18/99, he is not in a position to execute the sale deed. According to him, he entered into the sale agreement prior to the winding up order containing the direction to attach and sell the properties and therefore his rights would prevail over the said order. He further submits that in view of the directions in the judgment in MFA No. 629/2002, against the winding up order, whereby it has been observed that "it is for the investigating officer to examine whether the directors had acquired any properties diverting the funds of St. Mary's Finance Ltd. and it's sister concern", only those properties acquired by diverting funds from the company and its sister concern are liable to be proceeded against as per the winding up order. Therefore the sale conducted by the Official Liquidator is liable to be set aside, is the contention of the applicant in Comp. A. No. 539/2005.