KASTURBHAI MULCHAND Vs. PROVISIONAL LIQUIDATOR OF THE AHMEDABAD SHREE RAMKRISHNA MILLS COMPANY LIMITED

JUDGEMENT

(1.) This appeal is directed against the order passed by the learned Company Judge in Company Application No. 80 of 1987 on 4th September, 1987 granting the plant and machinery of the Company on lease to the second respondent. The facts giving rise to this appeal, briefly stated, are as under.

(2.) The Company, Messrs Shree Ramkrishna Mills Company Limited, was ordered to be wound up and the Official Liquidator was appointed the Provisional Liquidator of the Company. After the said winding up order was passed on 23rd April 1987, the third respondent moved Company Application No. 80 of 1987 for running the unit on leave and licence basis. On receipt of the said application, the learned Company Judge directed advertisements to issue in the ' Times of India' (Ahmedabad and Bombay Editions) and 'Gujarat Samachar' (Ahmedabad Edition) inviting applications/offers in sealed covers from members of the public desirous of running the unit on leave and licence basis. It was directed that the offers in sealed covers should reach the Liqidator on or before 14th August 1987 together with a Demand Draft of Rs. 25,000/-. The offers so received by the Liquidator were to be submitted to the Court on 17th August 1987 on which date further orders were expected to be passed. In response to this advertisement, the third respondent alone made an offer of Rs. 5,000/- per month for running the unit on leave and licence basis. This offer was raised to Rs. 12,000/- per month on 19th August, 1987 after some discussion. Thereafter before the offer could be finally accepted, the second respondent appeared before the learned Company Judge and informed him that he was interested in running the unit on leave and licence basis and was prepared to offer a higher sum by way of monthly licence fees. Thereupon the learned Company Judge directed him to deposit Rs. 25,000/- in Court to show his bona fides. The second respondent deposited the said amount of Rs. 25,000/- in Court and offered a monthly rent of Rs. 13,000/- for the unit. Thereafter the learned Company Judge asked the second and third respondents to submit their final offers in writing and accordingly the second respondent offered Rs. 21,000/- as monthly licence fees as against the offer of Rs. 15,251/- made by the third respondent. The learned Company Judge by his impugned order dated 4th September 1987 accepted the offer of the second respondent and directed the Liquidator to grant the unit to the second respondent for a period of two years with effect from 1st November 1987. Certain incidental directions were also given as regards further deposit, furnishing of bank guarantee, preparing an inventory etc. The deposit of Rs. 25,000/- made by the third respondent was ordered to be refunded to him not later than 10th September 1987. It may be mentioned that this order was passed overruling the objection of the fourth respondent, the secured creditor, to the grant of the unit on leave and licence basis. The fourth respondent had, therefore, made it clear that it desired to remain outside the winding up proceedings.

(3.) The appellant before us is a shareholder of the Company in liquidation. He contends that the learned Company Judge committed two grave errors, namely, (i) in disposing of the Company Application without any advertisement being issued in the Times of India (Bombay Edition) as per the Court's order of 23rd July, 1987 and (ii) in permitting a party accidentally present in Court in submitting an offer and thereby participating in the process of the grant of unit on leave and licence basis. According to him the procedure adopted by the learned Company Judge was not warranted by rules and has resulted in prejudice to the Company which could have secured a higher return by way of licence fee if a fresh advertisement was issued. He, therefore, contends that the order passed by the learned Company Judge accepting the belated offer of the second respondent is clearly arbitrary and violative of Article 14 of the Constitution. He has lastly added that he is prepared to offer a higher rent/licence fee and abide by all the terms and conditions imposed by the learned Company Judge.