M/s.TCI Distribution Centres Ltd. v. The Official Liquidator, High Court, Madras

the same to the purchaser;(b) to direct the Official Liquidator to engage the servicesof the concerned revenue officials to locate the lands,survey and to fix the boundaries and to lay revenue stonesand deliver possession thereof;(c) to direct the Official Liquidator not to disburse thesale proceeds to the creditors till handing over of balancedocuments, surveying of lands and laying of boundary stones;and(d) to direct the Official Liquidator to return the saleconsideration with interest in the event of non-compliance ofhanding over of balance documents, surveying and laying ofboundary stones within the time fixed by this Hon'ble Court.4. All the applications came to be filed under the followingcircumstances.The applicant in all those applications, who is the appellantherein, namely, M/s.TCI Distribution Centers Limited, was thepurchaser, in view of the highest bid made by him in the auctionconducted by this Court on 06.02.2008, in respect of 41.12 acres offree hold land belonged to M/s.Fidelity Industries Limited (underliquidation). The said auction following a publication effected bythe Official Liquidator, High Court, Madras, in respect of thoselands, which are situate in two villages, namely, Kilai and Ulundai.The auction conducted on 06.02.2008. The appellant/applicant, who wasthe highest bidder ,purchased the land for a sum of Rs.15.20 crores.The sale was also confirmed by the Court in favour of theapplicant/appellant. When a direction was issued for the payment ofdifference of the earnest money deposit and the balance of saleconsideration within 90 days in two instalments, after remitting thebalance of earnest money deposit, the applicant/appellant made arequest for furnishing the title deeds and the field map relating tothe property. The Official Liquidator was also directed to collectthe documents from the company under liquidation and furnish the samealong with the field map and on 20.03.2008, the appellant/applicantremitted the first instalment of the sale consideration. When thematter came up for hearing on 24.03.2008, the appellant/applicantmade a request to furnish copies of documents and to order survey oflands. But, there was a direction to the appellant/applicant to remitthe balance of sale consideration as per the schedule. Theappellant/applicant paid the second and last instalment on30.04.2008 though the due date for second instalment was on05.05.2008. On the said date, the company under liquidation handedover some documents pertaining to the property and on 30.04.2008,there was a direction to hand over possession of the property and https://hcservices.ecourts.gov.in/hcservices/ also the documents and conveyance. The IDBI handed over only 26documents covering an extent of 20 acres and the other documents werenot delivered. When the appellant/applicant made a request on03.06.2008, the Official Liquidator handed over 26 documents. Thedate of handing over possession was fixed on 12.06.2008. When theapplicant was present for taking possession the property, it wasfound that it was a barren land and there were no boundary stones.The Official Liquidator had also prepared the minutes for handingover physical possession on the said date but he has not handed overphysical possession of the properties with boundaries. However, theappellant/applicant has taken possession of the property in fullfaith. On a perusal of the documents, the appellant/applicant was notable to identify the correct location of the lands. He approached theOfficial Liquidator, requesting for handing over of documents andsurveying of lands and also requested not to disburse the saleconsideration to any secured creditors. Though theappellant/applicant has paid the full sale consideration, he wasunable to take possession of the entire property and also theoriginal documents were not available. Under these circumstances, theappellant/applicant filed all the above applications for the saiddirections to the Official Liquidator.5. The learned single Judge, on scrutiny of the materialsavailable, took a view that all those applications were misconceivedand there was absolutely no ground to interfere with the sale, whichwas confirmed by the Court, and hence, made an order of dismissal ofall those applications. Hence all these appeals at the instance ofthe applicant.6. Advancing the arguments on behalf of the appellant/applicant,Mr.P.S.Raman, learned senior counsel would submit that the commonorder under challenge is contrary to the provisions of the CompaniesAct and Rulesu, more particularly when it conferred absolute powerson the Official Liquidator, sanctifying any illegality committed byhim and removing all obligations cast on him under Section 455 of theCompanies Act; that the Official Liquidator appointed in respect ofthe company in liquidation is required to submit a statement or apreliminary report of the company under liquidation to the court inand whereby the affairs, assets, etc.are required to be investigatedand verified and hence, the finding recorded by the learned singleJudge that it was not possible for the Official Liquidator toinvestigate into the title of the properties brought to auction wasliable to be set aside since it is contrary to the provisions and theobjects of the Companies Act; that the discrepancies as stated by theappellant in the affidavit dated 8th September, 2008 were found by theappellant subsequent to the payment of entire sale amount; that it ispertinent to note that the same goes to the root of the matter,amounting to misrepresentation thereby vitiating the same; thattherefore, the Court should have set aside the sale and directed the https://hcservices.ecourts.gov.in/hcservices/ refund of the amount with interest, damages and costs to theappellant; that there was a positive assertion by way of annexure tothe tender terms and conditions as regards the description of theimmovable property and that the same was admittedly erroneous and onthe basis of the same, an offer was made by the appellant andtherefore, the auction sale was liable to be set aside.7. Added further the learned senior counsel that there was abreach of duty on the part of the Official Liquidator under theprovisions of the Companies Act in so far as to the identification ofthe properties and making representations as to the company inliquidation's interest therein, which was evident from the fact thatthe description of the property mentioned in the tender terms andconditions were erroneous and prepared without application of mindand without any basis and hence, the offer made in furtherance of thesame by the appellant and accepted by the Court was liable to berecalled and set aside; that the words 'as is where is and whateverthere is basis' cannot apply to the facts of the case or to a salemade by the Court in exercise of the powers conferred under theprovisions of the Companies Act, more particularly to immovableproperties and sanctify the act of the Official Liquidator in mis-describing the property or including the survey numbers of landswhich admittedly cannot or never belonged to the company underliquidation and thereby exposing the auction purchaser, i.e. theappellant, to loss; that subsequent to the acceptance of the bid ofthe appellant and payment of the amount representing the earnestmoney deposit, the appellant had moved a memo seeking forverification of the title deeds, which was opposed by the OfficialLiquidator that the same could be done only after remittance of theentire amount and therefore, holding that the appellant had ampletime prior to the remittance of the amount to investigate title, wascontrary to the facts and the same cannot be the reason fordismissing the applications or denying the relief to the appellantand that the learned single Judge has not appreciated the series oforders passed in C.A.No.1983 of 2007 by the court subsequent to theconfirmation and prior to passing of the order under challenge. 8. Added further the learned senior counsel that ITCOTConsultancy and Services Limited was entrusted with the work ofvaluation and preparation of the report; that the said agency hasbeen paid amount towards their services; that based on their report,the Official Liquidator has brought the properties for sale and fixedthe upset price and thus, the order of the learned single Judge thatin so far as holding that the Official Liquidator could notinvestigate into the title of the property was factually incorrectand the dismissal of the applications is liable to be set aside onthis ground; that in the valuation report prepared by ITCOTConsultancy and Services Limited, they have categorically stated thatthe valuation of the said property was arrived without any land https://hcservices.ecourts.gov.in/hcservices/ documents and the ownership of the land was determined from theprevious owners, which was suppressed by the Official Liquidator inthe tender terms and conditions and hence, the sale was vitiated;that the statement made by the Official Liquidator in the terms totender were misleading and based on the same, the appellant hadoffered to purchase the property; that when admittedly therepresentations made by the Official Liquidator during negotiationswhich had led to the contract were not true, the sale was void; thatthe Official Liquidator was duty bound to disclose the interest ofthe company in liquidation to the properties brought for auction;that the Statute imposes and casts an obligation on the part of theOfficial Liquidator to verify the title of the company in liquidationto the property brought for sale; that in the absence of the same,any sale made in furtherance of any such representation, that isfound to be untrue, is void entitling the offerer or purchaser torescind the sale at any point of time; that subsequent to tenderingof the entire sale amount and after handing over symbolic possession,the boundaries were sought to be fixed by the purchaser i.e.theappellant pursuant to the orders passed by the Court and that duringthe same, several mis-discrepancies, as set out in the memo andextracted in the order, were found rendering the sale void and thosediscrepancies were well within the knowledge of the OfficialLiquidator, who did not bring it to the notice earlier; that evenprior to the completion of the sale and remittance of the amount, theappellant had sought for fixing of boundary stones as there was nodemarcation of the property, which was opposed by the OfficialLiquidator on the ground that the relief sought for at that point oftime was luxurious; that having opposed the memo filed for fixingboundary stones and furnishing title deeds, it was not open to theOfficial Liquidator to oppose the applications; that the duty is castupon the Official Liquidator to disclose the every aspect, moreparticularly when the said disclosure, if not done, would affect thejudgment of the bidders; that any sale by the court is one on goodfaith, trust and confidence and classified as Contract of Uberrimaefidel and therefore, when the auction purchaser reposes confidenceand faith on the representations made in the court sale and the samebeing ipso facto, accepted as true and no opportunity, whatsoever,provided to the purchaser to scrutinize the title and when therepresentations found to be false, the sale was liable to be setaside. 9. The learned senior counsel would further submit that theFirst Leasing Company, who claimed themselves to be the securedcreditors, have failed to furnish the documents of the title inrespect of entire 41.12 acres and that much after the payment of theentire consideration and after directions from the court, the titledeeds were given by IDBI to the Official Liquidator, that too, onlyin respect of 20.18 acres and, hence, there was no opportunity toverify the title deeds in the facts of the case and it cannot be put https://hcservices.ecourts.gov.in/hcservices/ against the appellant, more particularly to deny the relief; that theOfficial Liquidator was in a fiduciary position owing a duty to makefull disclosure of all material facts known and available with him;that the fact that the non-availability of title deeds ought to havebeen incorporated in the statement made in the tender sale andtherefore, the sale was liable to be set aside; that the reliefsought for in C.A.No.1953 of 2008 was for tracing of original titledeeds, which was opposed and registered by the Official Liquidator;that the property is in the custody of the court and that theOfficial Liquidator was bound to furnish all the documents to thepurchaser; that in the absence of the same and the tendernotification speaking contrary, the sale was liable to be set aside;that the learned Judge failed to note that by an order dated13.03.2003 the company was ordered to be wound up and that as late asNovember 2007, the application for sale was preferred; thattherefore, the Official Liquidator had ample time and should haveinvestigated the title of the company in liquidation to theproperties and prepared a report as to the properties belonging tothe company in liquidation; that for the act of negligence andlethargy on the part of the Official Liquidator, the innocentpurchasers, who have participated in the auction based on therepresentation made in the tender terms and conditions, cannot befastened with liability or exposed to damage and loss; that it is nota case where the doctrine of caveat emptor could be applied; that itis not correct that section 55 of the Transfer of Property Act wasnot applicable to the sale made by the Official Liquidator; that itis also not correct that the provisions of Order 21 Rule 90 to 92 ofC.P.C. were not applicable to the sale made by Official Liquidator inexercise of the powers of the Companies Act.10. Added further the learned senior counsel that it is also notcorrect to state that the rough sketch submitted along with thetender terms and conditions showing the property to be contiguous andhaving entrance from the main road, did not amount to anyrepresentation; that based on the same, believing the land to becontiguous and having access from the main road, an offer was made bythe appellant and that when the same was not true, the appellant wasentitled to rescind from the sale; that the appellant, at no point oftime, wanted to walk out of the sale for any reason, moreparticularly the reasons set out by the learned single Judge as toglobal recession; that it is pertinent to point out that the reliefssought for in C.A.Nos.1953 to 1955 of 2008 seeking for curing of thedefects were resisted by the Official Liquidator and therefore, theappellant was entitled for the relief of setting aside the sale; thatthe Official Liquidator has contended in his written statement thatthe sale was not in further of the advertisement and was in voluntaryoffer by the appellant and if to be so, the Official Liquidator couldnot contend that in the publication made it was mentioned that thesale was ‘as is where is and whatever there is basis’; that the https://hcservices.ecourts.gov.in/hcservices/ learned single Judge has erred in coming to the conclusion that therewas no mistake in the minds of the parties which would vitiate thecontract of sale and in this regard, failed to appreciate several ofthe representations in the tender terms and conditions wereadmittedly erroneous and the Official Liquidator has suppressed thesame; that the pre- contractual representations in the form of tenderterms and conditions were lacking good faith and amounted to willfulmisrepresentations and therefore, the sale was liable to be setaside; that at no point of time, the passing of high tension wire andconstruction of an overhead tank and T.V.room by the Government andthe property has no access was ever brought to the knowledge of theappellant and hence, the sale was vitiated; that the land was vacantland without any boundaries and the Official Liquidator havingengaged services of an agency to finalise the description andownership of the property and arrive at the valuation, ought to havedisclosed the existence of high tension wire,d the construction ofoverhead tank, TV room etc. and thus, the sale was vitiated by fraud,misrepresentation and mistake of facts and therefore, void enablingthe purchaser appellant to seek for refund of the purchase money andunder such circumstances, all the appeals have got to be allowed.11. Learned senior counsel appearing for the appellant took theCourt to the different reports and affidavits filed by the OfficialLiquidator before and after the sale in question. The learned seniorcounsel, in support of his contention relied on a decision of theApex Court in THE AHMEDABAD MUNICIPAL CORPORATION OF THE CITY OFAHMEDABAD ..vs.. HAJI ABDULGAFUR HAJI HUSSENBHAI (1971(1) SCC 757).12. Contrary to the above contentions, Mr.Arvind P.Datar, thelearned senior counsel representing the Official Liquidator (1strespondent) would submit, inter alia, that when the company is woundup, the duty of the Official Liquidator is to take into custody ofthe properties of the company; but the properties do not vest withthe Official Liquidator and he could act only as per the records ofthe company under liquidation; that the Official Liquidator cannothold any guarantee or warranty when he sells the properties of thecompany under liquidation; that in case of auction sale, there is nowarranty of title and issuance of a notification by the OfficialLiquidator was only an invitation to treat and the offer is actuallymade by the bidder and the acceptance is by the auctioneer, namely,the Official Liquidator; that only on acceptance, the contractbecomes complete; that the auction purchaser is expected toinvestigate into the title before making such offer; that in theinstant case, the notification was issued and publication was alsomade on 16.12.2007; that after long interval of such publication, theappellant has purchased the property and that during the interregnumperiod, the appellant should have made necessary enquiry in respectof title and possession of the properties and if not done, it was hisfault and he should not find fault with the Official Liquidator; https://hcservices.ecourts.gov.in/hcservices/ that in the instant case, the Official Liquidator has not suppressedany fact; that since at the time of publication and also notice oftender, it was specifically stated that 'as is where is and whateverthere is basis' and thus, there was no deception or misrepresentationmade. Placing reliance on the decision of UNITED BANK OF INDIA ..vs..OFFICIAL LIQUIDATOR AND OTHERS (1994)1 SCC 575), the learned seniorcounsel would submit that the sale by the Official Liquidator did notmean that he held out a warranty or guarantee in respect of theproperty sold and it was distinguishable from the sale effected bythe individuals selling immovable properties.13. Added further the learned senior counsel that if theOfficial Liquidator has not willingly or deliberately made any falsestatement, the Court cannot interfere; that in the instant case, whatwas done by the Official Liquidator was placing a report before theCourt with all available records of the company under liquidation andseeking an order of sale of the property; that it is also not in thecase of the appellant that an attempt to deceive was made by theOfficial Liquidator; that the Official Liquidator is not the person,who is making the sale of the property; that he was only aninstrument in the hands of the Court; that there was no relationship,much less, fiduciary relationship between the Official Liquidator andthe auction purchaser and that even if the statements made fall underthe category of negligence, that would not be sufficient to set asidethe sale.14. Added further the learned senior counsel that under section460(6) of the Companies Act, any such conduct of the OfficialLiquidator can be the subject matter of the decision by the Court, ifthe party aggrieved approaches the Court and that when an auctionsale is conducted by the Official Liquidator though pursuant to theorders of the Court, the execution proceedings, as envisaged underOrder 21 of Civil Procedure Code, have no application. Placingreliance on a decision of THE AHMADABAD MUNICIPAL CORPORATION ..vs..HAJI ABDUL GAFUR HAJI HUSSENBHAI (1971(1) SCC 757, the learnedsenior counsel would further add that in the instant case, thedoctrine of caveat emptor (purchaser beware) is applicable and Order21 Rule 91 of C.P.C. has no application to the present facts of thecase. The learned senior counsel also pointed out that even if thejudgment debtor had no salable interest at all in the property sold,the same is not covered by the doctrine of Caveat Emptor as what iscontemplated in Order 21 Rule 91 C.P.C. is different; that even Order21 Rule 90 C.P.C. cannot be applied to the present case since forapplication of the said provision, not only some materialirregularity should be there, but also it should have causedsubstantial injury; that the law would require a specific plea andproof for the substantial injury; but, in the instant case, there wasneither pleading nor proof therefor and that under suchcircumstances, even Order 21 Rule 90 C.P.C. cannot be pressed into https://hcservices.ecourts.gov.in/hcservices/ service by the appellant. 15. The learned senior counsel would further submit that had theauction purchaser acted in a reasonable and prudent manner, thesediscrepancies could have been discovered earlier and there was anopportunity for him to drop out from the sale even before making thebalance of sale consideration; that in the absence of pleadings thatsteps were taken by the appellant for verification of the title,inspection of site etc., it would be quite clear that the appellantwas only taking advantage of the fall in prices of the immovableproperties and thus, it was an attempt to back out from the offermade by him and the same cannot be permitted and if permitted, itwill cause much prejudice to the creditors both secured andunsecured; that it was made clear in clause 12 of the terms andconditions that the buyers were to satisfy themselves about thecondition of the property; that it cannot be stated that there wasany mistake, much less, material mistake regarding the nature of thelands; that the parties have fully understood the subject matter ofthe sale before it was effected; that the Official Liquidator has tolook after 450 companies in the entire State, which are in thecontrol and supervision of this Court; that while disposing of theassets either movable or immovable, it would not be practicallypossible for the Official Liquidator to scrutinize the correctness ofthe title, measurement of the properties, defects, if any, in theassets; that it remains to be stated that the Official Liquidator hasno personal knowledge to the property at all; that only after passingof the order of winding up, he got the control of the property andthat in many of the cases, the erstwhile Directors do not co-operateand they do not place all the material records for perusal,inspection and for further proceedings. 16. Added further the learned senior counsel that it is true,certain discrepancies were pointed out by the appellant; but they didnot carry any merit for setting aside the sale; that even theaverments in the affidavit filed by the appellant would clearlyindicate that they have taken possession of the property; that noperson shall purchase the property without making inspection of thesame; that the appellant has complained about the overhead tank, TVroom, etc; that on inspection, the appellant should have noticed thesame and in so far as the entry point is concerned, it was originallya poramboke and the same was being used by the company in liquidationfor its passage and the same state of affairs continues; that so faras the land to an extent of 2.16 acres is concerned, according tothe appellant, it was classified as 'Cherry Natham'; that till thetime of sale, in all the revenue records, the said property was foundas agricultural land and the ownership was with the company inliquidation and if there was any classification later, the OfficialLiquidator cannot be found fault with or there was no mistake on hispart when he issued the tender notice; that it is not correct to https://hcservices.ecourts.gov.in/hcservices/ state that the properties are not contiguous or in different placesand the field map would clearly indicate that the entire extent of41.12 acres situate in two villages as one piece of land; that in sofar as the complaint made by the appellant that the documents inrespect of the entire landed property was not handed over isconcerned, admittedly, 26 original documents were actually handedover; that in respect of the other documents, the First LeasingCompany of India Limited has given the certified copies of all thedocuments of title pertaining to the entire property; that in so faras the original documents are concerned, excepting 26 documents whichwere actually handed over to the appellant, the remaining cases werein the custody of Apple Credits, one of the creditors of the companyin liquidation; that it is also pertinent to point out that the saidApple credit company has filed an application before the CompanyCourt showing the Official Liquidator as sole respondent forrecovery of the dues and hence, it remains to be stated that thecompany was under winding up proceedings and it is quite natural thatall the documents of title would not be with the company inliquidation and in the instant case, part of the documents wereactually handed over and part of the documents were in the custody ofthe Apple Credit Company, which has sought for recovery of money inthe proceedings before the Company Court; however, the certifiedcopies of all the documents were handed over by the First LeasingCompany of India Limited to the appellant, which fact cannot bedenied; that under such circumstances, the non-delivery of documentswas nothing but a reason invented by the appellant to wriggle out ofthe contract; that out of 41.12 acres of land, the documents were notavailable only in respect of 0.27 cents, which is extremely meagreand that the sale made by the Official Liquidator was pursuant tothe orders of the Court and the Official Liquidator is not in anyfiduciary relationship with the appellant. 17. Learned counsel appearing for the 3rd respondent put forthhis submissions in his sincere attempt of sustaining the order underchallenge. He has also relied on the following decisions:KARAMCHAND APPLIANCES PVT.LTD ..vs.. BHARAT CARPETS LTD (INLIQUIDATION AND OTHERS (103 COMPANY CASES 552 (DELHI)INTERNATIONAL COACH BUILDERS LTD., ..vs. KARNATAKA STATEFINANCIAL CORPORATION (2003) 2 COMPANY LAW JOURNAL 166(SC)DIVYA MANUFACTURING CO.(P) LTD..vs.. UNION BANK OF INDIA ANDOTHERS (2000) 6 SCC 69ITC LTD ..vs.. GEORGE JOSEPH FERNANDAS AND ANOTHER (1989) 2SCC 118. The Court has paid its anxious consideration on the https://hcservices.ecourts.gov.in/hcservices/ submissions made by the learned senior counsel on either side andmade a scrutiny of all the materials available. 19. An order dated 14.06.2001 was made by this Court in CompanyPetition No.526 of 2000, whereby M/s.Escorts Finance Limited,Chennai, was ordered to be wound up and the Official Liquidatorattached to this Court has become the Official Liquidator of theCompany. A direction was also issued to take charge of all theproperties and effects of the company. The Official Liquidator filedhis report on 20th June, 2007, which reads as follows:"3. In compliance of the above said order, the OfficialLiquidator took possession of Company’s movable andimmovable properties situated at various places.Subsequently as directed by the Hon'ble Court, the OfficialLiquidator has valued the said properties through ITCOT". 20. Pursuant to the orders of this Court, the OfficialLiquidator requested ITCOT, Chennai, to value the properties inquestion, namely, 41.12 acres of land of the company in liquidationsituated in Kilai and Ulundai villages. In paragraph 7 of the reportof the Official Liquidator dated 20.06.2007, it was stated asfollows: "7. It is submitted that the sale of another property avacant land to an extent of 41.12 acres belonging to thecompany in liquidation, situated at in various surveynumbers in Killai and Ulundai Village, Sriperumpudur,Thiruvallur District was confirmed for an amount ofRs.14.00,000,000/- in favour of Shri S.Yusuf Siddique, thehighest bidder, who subsequently failed to remit the balancesale consideration and this Hon’ble Court by an order dated26.04.2007 in C.A.No.392/2007 forfeited the EMD ofRs.2,00,000/- received from Shri S.Yusuf Siddique anddirected the Official Liquidator to obtain fresh valuationreport from ITCOT for auctioning the said property.Accordingly, the Official Liquidator has got the propertyvalued afresh through ITCOT on 28.05.2007 and received thevaluation report in a sealed envelope, which is in thecustody of the Official Liquidator and will be submittedbefore this Hon’ble Court, at the time of hearing of thisapplication".All the above reports of the Official Liquidator would indicate thathe has taken actual delivery of possession of the lands in questionand all the movable and immovable assets of the company inliquidation except the property mentioned above and another propertysituate at Adyar, were sold.21. A perusal of the valuation report given by ITCOT for the https://hcservices.ecourts.gov.in/hcservices/ land in question, as found in page 1 to 8 of the paper book, wouldindicate the following:LOCATION OF THE PROPERTY:I. Village and Survey No.: 1. Kilay Village-294 295 296 297 330 2. Ulundai Village- 368 369 370373375II. Boundaries of the property:North: Wet landSouth: Village Road leading to Kilay VillageEast: Mango TreesWest: Munivardhan Naidu landIII. Type of road available at present: Village road leading to Kilay VillageIV. Extent of land considered for valuation: 41.12 acresOut of the extent of 41.12 acres of land purchased by the companyfrom the open market, 13.28 acres of land is coming under UlundaiVillage and 27.84 acres of land is coming under Kilay Village.22. A perusal of the rough sketch attached to the report in page6 of the paper book, would indicate that the entire land of 41.12acres, which was under valuation, was shown as one piece of land. Itwas also stated therein that the individual survey numbers and theextent of land in each village were shown in the Annexure. As thetitle deeds of the property was not provided to ITCOT, it relied uponthe documents made available with the previous owners of the land toascertain the extent. It was further stated that since the OfficialLiquidator Office has not provided ITCOT with any land documents, theextent of land, as ascertained from the provisos owner, has beentaken as the base for this report. The valuation report alsocontained 49 items of land totaling to an extent of 13.28 acres indifferent survey numbers in Ulandai village. Equally, item Nos.50 to98 totaling to an extent of 27.84 acres were shown in differentsurvey numbers in Kilai village.23. From the very reading of the report of the ITCOT, it will bequite clear that the title deeds pertaining to the property were https://hcservices.ecourts.gov.in/hcservices/ never handed over for valuation and the ITCOT had relied upon thedocuments made available with the previous owners of the land toascertain the extent and the same was used as the basis for thereport. According to the report, there was a village road leading toKilai Village. But, it could be seen from the available materials,though there is a road, the starting point of the road is actuallyblocked by the property in possession of the Government department.The rough sketch would indicate as if the entire land of 41.12 acreswas contiguous and also in one piece. But the field map in the handsof the Court would clearly indicate that the properties are in twodifferent villages. 24. Apart from that, with regard to the survey numbers, as foundin paga 8, S.No.294/1G measuring an extent of 1.18 acres; item No.12to 21 relates to survey No.330/6A1, 330/6A2, 330/6A3, 330/6B,330/6B2, 330/6B3, 330/6C1, 330/6C2, 330/6D1 and 330/6E1. All thesepieces of land, as could be seen from the map, are actually notsituate in the Ulandai village. Thus, the survey numbers and theextent of lands given by ITCOT attached to the report, were wrong andmisleading. By placing the sketch along with said valuation report,the Official Liquidator, sought the permission of the Court forsale of the property. Pursuant to the orders of the Court, a salenotice was made in 'THE Hindu' and 'DAILY THANTHI' on 16.12.2007,where it was stated that the land mentioned in the Schedule belongingto M/s.Fidelity Industries Limited (in liquidation) on "As is whereis and whatever there is basis". In the description schedule, it wasshown as "41.12 acres of free hold vacant land" which cannot butmean that the ownership was with the company in liquidation. Tenderforms were issued, as found in page Nos.12 to 15 of the paper book.A perusal of the terms and conditions found in the tender formshows that the property has been described as vacant land to theextent of 41.12 acres, annexing the very same survey numbers andextent of lands, which were originally attached to the valuationreport, that is, all wrong and misleading statements regarding thesurvey numbers along with the extent of properties, were actuallyfound in the description of property annexed to the terms andconditions.25. It cannot be denied that the appellant/auction purchaser,when he came forward to purchase the property in auction, should haverelied on the particulars regarding the extent, survey numbers, etc.,of the properties in question. Needless to say, the particularsregarding the extent and measurement were material particulars. TheCourt ordered sale. At the time of confirmation of sale, the firstE.M.D. deposit was made on 06.02.2008 while the balance was paid on12.02.2008. Out of the total sale consideration of Rs.15.20 crores,the 1st instalment was paid on 20th March 2008 and the secondinstalment was due on 05.05.2008 but the same was made on 30.04.2008.The learned single Judge, by order dated 06.02.2008, confirmed the https://hcservices.ecourts.gov.in/hcservices/ sale in favour of the appellant and also directed the OfficialLiquidator to receive Rs.1.50 crores deposited by the appellant byway of demand draft towards the part of earnest money deposit. Thematter was called on 13.02.2008 for compliance. On 13.02.2008, itwas represented by the Official Liquidator that as directed by theCourt, the appellant, being the successful bidder, has paid thebalance earnest money deposit of Rs.2 lakhs only and the Court madethe following order:"2. Therefore, call this matter on 24.03.2008 forreporting compliance of the payment of first 50% of thebalance sale consideration. In the meantime, the OfficialLiquidator is directed to get copy of the documents which aresaid to be in the possession of Industrial Development Bank ofIndia.3. Learned Special Government Pleader (Civil Side) isalso directed to get the Field Map of the two properties,namely, Ulandhai Village in Tiruvallur Taluk and KillaiVillage in Sriperumbudur Taluk and hand it over to theOfficial Liquidator. Since the successful purchaser desirousof scrutinizing the Field Map, the Special Government Pleaderis directed to get the same at the earliest, not later than06.03.2008 and hand it over to the Official Liquidator. TheOfficial Liquidator on getting the document from IndustrialDevelopment Bank of India and Field Map from the SpecialGovernment Pleader, may hand over the same to the successfulbidder by the Official Liquidator.4. Call on 24.03.2008".26. Since the said direction of the Court was not complied withby the Official Liquidator, there arose necessity for the appellantto file a memo on 24.03.2008, where it was reported that till thatdate the documents and the field map of the property were not handedover to the purchaser and the bankers of the purchaser wererequesting for the same at the earliest for their local scrutiny andsanction of the loan. It was also further averred in the memo that asper the physical inspection, it was noticed that in one corner of theproperty, a High Tension Electric Tower was located/High Tension Wirewas passing and hence, the appellant sought the directions againstthe Official Liquidator to collect the documents from IDBI pertainingto the property sold and hand over the same to the purchaser, todirect the Tahsildar, Sriperumbudur and Tiruvellore to give acertified copy of the field sketch of the survey numbers of theproperty, to permit the purchaser to survey the land and submit adetailed report.27. On this memo, an order came to be passed by the Court on https://hcservices.ecourts.gov.in/hcservices/

30.04.2008, which reads as follows:"....Thus, he made the final payment totalling in all to asum of Rs.15,20,00,000/-. In the circumstances, the OfficialLiquidator is directed to hand over possession of theproperty of an extent of 41.12 acres situated at Kiloy(Sriperumbudur Taluk) and Ulundai (Tiruvallur Taluk).At this juncture, it is pertinent to point out that even this date,all documents pertaining to the property have not been handed over bythe Official Liquidator to the appellant. 28. Much reliance was placed to a letter addressed by theappellant on 20th June 2008 to the Official Liquidator stating to theeffect that the appellant has taken possession of the entire propertyand all documents in the hands of the Official Liquidator werehanded over. The said letter dated 20.06.2008 reads as follows:"In compliance to the order dated 30.04.2008 you havehanded over the possession of the property and 26 originaldocuments pertaining to the subject property on 12.06.2008.In respect of the possession of the property, it was noticedthat the land is in irregular shape and no boundary stonesare available anywhere in the site and the lands are locatedat two villages. Though there was difficult in identifyingthe correct location and the extent of lands without theboundaries, we have taken possession of the property on goodfaith".29. This letter would clearly indicate that though it was statedthat the possession of the property was taken, the properties couldnot be identified and the possession was also taken on good faith. Itwas also stated in the very same letter that only 26 documents weregiven and that would be to an extent of approximately 20 acres andthe documents pertaining to the balance of 21 acres and odd were nothanded over to the appellant and the delay in handing over of thedocuments and the correct extent of the land fixing the boundarieswas causing huge loss to the company day by day and even in thatletter, the appellant has requested the Official Liquidator to handover the correct extent of land with boundaries by engaging theservices of the concerned revenue officials to locate the lands, fixthe boundary and to survey the lands and also to hand over theoriginal documents in respect of remaining 21 acres of land and notto disburse the sale consideration to the secured creditors, pendingissues. Under such circumstances, the said applications, namely,Company Applications 1953 to 1956 of 2008 were taken, seeking theabove mentioned reliefs, on 30th June 2008. 30. Pending applications, on 16th July 2008, the learned single https://hcservices.ecourts.gov.in/hcservices/ Judge has made the following order:"2. In the circumstances,the Official Liquidator ishereby directed to take the assistance of the Tahsildar ofTiruvellore Taluk and Sriperumbundur Taluk to survey the landsand file a report on 28.07.2008. The successful purchaser hasagreed to bear the charges for surveying the land...."31. The appellant has also filed additional affidavitscomplaining of non-delivery of the records and the vast discrepanciesfound in the survey numbers and also the land. When a report wascalled for from the Official Liquidator, he filed a report inOctober, 2008, which indicated the following facts;"When the land was surveying with the help of surveyor, thediscrepancies were noticed.(a) In so far as the piece of land at Ulundai village isconcerned,(i) it is a fact that a big pylon carrying high tensionwires (40,000 volt.) was erected in S.No.375/11 and hightension wire going through S.No.375/10 and 375/9 and thetotal land involved was 0.59 acres. The same came in onecorner of the land as per the Survey and the Field Map;(ii) As per the revenue records, the land of 0.09acres in S.No.353/9 was not demarcated when the StateGovernment allotted some lands to local individuals, awater tank and TV room (community) was also constructed.This vacant land was coming at one end of the landvirtually projecting out of the land of the company, ascould be seen from the field map produced;(iii) an extent of 0.13.5 acres in S.No.369/2 stoodin the name of individuals which was in the middle of theimpugned land. The purchaser can verify the revenuerecords thoroughly and if it was in the name of anindividual he might negotiate with the concernedindividuals for purchase;(iv) The purchaser also brought to the notice of theOfficial Liquidator the discrepancies found in the revenuerecords vis-a-vis documents furnished to them. As both thelands were in the name of the Company, the purchaser mighttake up the matter with the revenue authorities toindicate the correct survey numbers,extent of land etc.,in their records. This Court may also direct the revenueauthorities to do the needful. https://hcservices.ecourts.gov.in/hcservices/ (v) In so far as the documents in respect of 20acres, it was submitted that the Ex-Directors have nothanded over all the documents to the Official Liquidatornor they have informed the Official Liquidator whom thedocuments might be available. The Ex-Directors have notco-operated with the Official Liquidator in that regard.In so far as the execution of 0.68 acres in S.No.375/9,375/10, 375/11 and 353/9, the Court might determine theissue and give directions accordingly. (b) In so far as the land at Kilai village is concerned, (i) the land to an extent of 2.33 acres of S.No.330/7as per the documents and 2.16 acres as per the revenuerecords is classified as 'Cherry Natham' and the purchaserhas requested re-classification of the said land which waspossible only by the State Government. Hence, the Courtmight consider issuing a direction to the Government ofTamil Nadu for re-classification of the land in accordancewith law. Since the land is situate in the middle of theland purchased, the purchaser will be put to hardship, ifnot reclassified. (ii) It is also the fact that the entry/entrance tothe site part of S.No.330 is designated as Government landand does not belong to the company in liquidation. Thisis the only entrance available to the impugned lands.Hence, the Court might direct the Government of TamilNadu to consider giving the land on lease or sell the landto the purchaser as the case might be, as desired by thepurchaser.32. The Official Official Liquidator at the final part of thereport has stated as follows:"That the Official Liquidator submits there are somany discrepancies pointed out by the purchaser based onthe documents furnished by the Official Liquidator andRevenue records etc., it is not clear why ITCOT who hasvalued the lands has not pointed out even one discrepancyespecially regarding entrance to the land and the landdesignated as 'Cherry natham'.In the light of the foregoing circumstances and asthe sale is to the value of Rs.15.20 crores, the purchaseris raising many serious issues, it is submitted that theFirst Leasing Company of India Limited the securedcreditor who is having exclusive charge on the land may be https://hcservices.ecourts.gov.in/hcservices/ served notice of this application as well as the OfficialLiquidator's report seeking detailed response as to howthey lent money on the strength of this impugned land. Sofar their role in confirmed to demand the money from theOfficial Liquidator". 33. The very reading of the above report filed by the OfficialLiquidator, who moved the initial report stating that he has takenpossession of the property and pursuant to which it was sold to theappellant, makes it evident that there was a high tension wire goingthrough the survey fields in question, covering 0.59 acres in Ulundaivillage and 0.09 acres was demarcated for a water tank and TV room,which was also constructed, 0.13.5 acres of land was in the name ofthe individuals; that in so far as the return of documents in respectof 20 acres, the Official Liquidator could not secure the documentsand hence, he could not hand over possession to the purchaser and inso far as the land at Kilai village was concerned, 2.16 acres, a partof the land in question, was classified as 'Cherry Natham' and forthe purposes of re-classification, the Court has to make necessarydirections to the Government of Tamil Nadu and if not re-classified,the purchaser would be put to hardship since it is in the middle ofthe land sold; that in so far as entry/entrance to the site, it wasdesignated as a Government land and did not belong to the company andhence, the Court could issue a direction to the Government of TamilNadu to give that piece of land on lease or sell the land to theappellant purchaser. The crowning circumstance noticed by the Courtis that the Official Liquidator has stated that while suchdiscrepancies were noticed, it was not clear why ITCOT gave such avaluation report and how First Leasing Company of India Limited, thesecured creditor, has availed loans on the strength of the impugnedland.34. It is contended by the respondents before the learned singleJudge and equally here also that the sale was not in furtherance ofthe sale notice and even assuming that the sale took place as such,there was a long interval available for the appellant purchaser toverify all information and particulars regarding the property inquestion, since it is a case where the doctrine of Caveat Emptor(purchaser beware) would apply and not the doctrine of Uberrimaefidel (in good faith). As could be seen from the availablematerials, originally on 04.01.2008 there was only one bidder and inview of the deficiency of offers, the same was adjourned to01.02.2008, that was, on the representation on behalf of theprospective buyers on 24th January, 2008 and hence, it would be quiteclear that the offer made by the appellant was in furtherance of thesale notice.35. As rightly contended by the learned senior counsel for therespondents that it is not a contract in Uberrimae fidel since there https://hcservices.ecourts.gov.in/hcservices/ was no fiduciary relationship between the Official Liquidator on theone side and the appellant purchaser on the other side. It is alsotrue that the purchaser cannot rest his case under Order 21 Rule 91of C.P.C.to set aside the sale. In the judgment reported in (1971)1SCC 757 (cited supra), the Supreme Court has held as follows:"3. To begin with it was contended that there is nowarranty of title in an auction sale. This generalcontention seems to us to be well-founded because it isaxiomatic that the purchaser at auction sale takes theproperty subject to all the defects of title and thedoctrine caveat emptor (let the purchaser beware) appliesto such purchaser. The case of the judgment-debtor havingno saleable interest at all in the property sold such as iscontemplated by Order 21 Rule 91 CPC is, however, differentand is not covered by this doctrine".36. Placing reliance on a judgment rendered by the Apex Court inUNION BANK OF FINDIA ..vs.. OFFICIAL LIQUIDATOR (1994)1 SCC 575 andalso making emphasis on 'as is where is and whatever there is basis',the learned senior counsel for the 1st respondent would submit thatthe sale by the Official Liquidator did not mean that he held out anywarranty or guarantee in respect thereof and hence, it wasdistinguishable from the sale effected by the individuals sellingimmovable properties. It would be more apt and appropriate toreproduce the following part of the judgment of the Apex Court;"13. In our view, the complete answer to Triputi’sallegation in regard to the failure of the OfficialLiquidator to hand over to it possession of certainproperties which were sold to it, which, according to it,the company in liquidation did not even own, is contained inclause 2 of the Terms and Conditions of Sale upon the basisof which the property and assets of the company inliquidation were sold by the Official Liquidator to Triputiunder the orders of this Court. Clause 2 reads thus:"2.The sale will be as per inventory list on‘as is where is basis’ and subject to theconfirmation of the Hon’ble Supreme Court of India.The Official Liquidator shall not provide anyguarantee and/or warranty in respect of the immovableproperties and as to the quality, quantity orspecification of the movable assets. The intendingpurchaser must satisfy themselves in all respect asregards the movable and immovable assets, as to theirtitle, encumbrances, area, boundary, description,quality, quantity, and volume etc. and the purchaserwill be deemed to offer with full knowledge as to the https://hcservices.ecourts.gov.in/hcservices/ description, area etc. of the properties and defectsthereof, if any. The purchaser shall not be entitledto claim any compensation or deduction in price onany account whatsoever and shall be deemed to havepurchased the property subject to all encumbrances,liens and claims including those under the existinglegislation affecting labour, staff etc. The OfficialLiquidator shall not entertain any complaint in thisregard after the sale is over. Any mistake in thenotice inviting tender shall not vitiate the sale."(emphasis supplied)14. When the Official Liquidator sells the property andassets of a company in liquidation under the orders of theCourt he cannot and does not hold out any guarantee orwarranty in respect thereof. This is because he must proceedupon the basis of what the records of the company inliquidation show. It is for the intending purchaser tosatisfy himself in all respects as to the title,encumbrances and so forth of the immovable property that heproposes to purchase. He cannot after having purchased theproperty on such terms then claim diminution in the price onthe ground of defect in title or description of theproperty. The case of the Official Liquidator selling theproperty of a company in liquidation under the orders of theCourt is altogether different from the case of an individualselling immovable property belonging to himself. There is,therefore, no merit in the application made on behalf ofTriputi that there should be a diminution in price or thatit should not be made liable to pay interest on the sum ofRs 1 crore 98 lakhs.37. A reading of the above clause in the said judgment wouldindicate that based on the terms and conditions of sale, the propertyand assets of the company in liquidation were sold and that thesale would be as per inventory list on 'as is where is basis' andsubject to the confirmation of the Hon'ble Supreme Court of India.The clause also made it clear that the Official Liquidator shouldnot provide any guarantee or warranty in respect of the immovableproperties and as to the quality, quantity or specification of themovable assets and it also made clear in the terms that the intendingpurchaser must satisfy themselves in all respect as regards themovable and immovable assets, as to their title, encumbrances, area,boundary, description, quality, quantity and volume etc., and thepurchaser would be deemed to offer with full knowledge as to thedescription, area, etc. of the properties and defects thereof, ifany. But in the instant case, the collateral terms and conditionsissued by the Official Liquidator in the present case read asfollows: https://hcservices.ecourts.gov.in/hcservices/ "12. All the prospective buyers desirous of submittingtender for purchase of the assets are to satisfy themselvesabout the condition of the assets."38. In the judgment rendered by the Supreme Court in (1994)1 SCC575) wherein the terms and conditions stipulated, the Apex Court hasmade it clear that the intending purchaser should satisfy in respectof the title, description encumbrances, area, boundary, description,quality, quantity, etc. and the purchaser would be deemed to offerwith full knowledge as to the same. But, in the instant case, inthe terms and conditions as shown above it was stated that thepurchasers were to satisfy themselves about the conditions of theassets. It is true that the Official Liquidator did not hold out awarranty or guarantee when a sale of an immovable property was madeby him. It was urged by the respondents' side that it is a fit casewhere the doctrine of caveat emptor (purchaser beware) would apply tothe present facts of the case. The Court is of the considered opinionthat this doctrine, which is ordinarily applicable, cannot beextended to a case, where the vendor did not have title to theproperty. As could be seen above, in respect of a piece of land inthe middle of the land to an extent of 2.16 acres, it is described as'Cherry Natham', and the title of the property, during the relevanttime. was not with the company in liquidation. Apart from that, thepiece of land situate in the front point of the road was actuallyGovernment poramboke in which also the company under liquidation didnot have the title over the property. Further, in respect of somepieces of land, the title of the property vested with individualowners, who had nothing to do with the company under liquidation.Under such circumstances, the Court is of the considered opinion thatthe doctrine of caveat emptor cannot be extended to the present case.The Official Liquidator is required to disclose all material factswithin his knowledge and should not suppress any of the informationregarding the nature, description, extent of the property, the non-availability of the title deeds, interest of the company inliquidation in the properties and also the encumbrances if any. Asindicated above, the descriptions of the properties, as found in thesale notice, pursuant to which the offer was made by the purchaserand the sale by the Official Liquidator, were erroneous. 39. The Official Liquidator has taken the services of ITCOT forvaluation of the property and on the strength of its report, theupset price was fixed. The report of ITCOT would clearly indicatethat the sale deeds were not produced by the Official Liquidator andon inspection and verification of the property, the report wasprepared on the basis of the enquiry made with the previous owners.Even the rough sketch produced shows that the property did not havethe frontage. It was the contentions put forth by the respondents'side that in the sale notice it was made clear that the property was https://hcservices.ecourts.gov.in/hcservices/ sold 'as is where is and whatever there is basis' and, hence,whatever be the discrepancies found, the appellant purchaser shouldnot complain but take the property as it is. No doubt, the salenotice contained the clause 'as is where is and whatever there isbasis'. But, the Official Liquidator should not be permitted totake shelter under the clause in a case where the company underliquidation had no title to sell in respect of the part of theproperty and there were lot of mis-descriptions in respect of theproperty and the survey numbers were found to be different. Eventhe Official Liquidator has candidly admitted that an extent of 2.33acres of land in S.No.330/7 was classified as Cherry Natham and theCourt has to issue a direction to the Government for re-classification of the land in accordance with law. It is pertinentto point out that he has stated in the report that the said land isin the middle of the land purchased and the purchaser would not beput to hardship, if not reclassified. He has also stated that theentry/entrance to the site part of S.No.330 was designated asGovernment land and it did not belong to the company in liquidationand that was the only entrance available to the impugned land andhence, the Court has to give a direction to the Government of TamilNadu to consider giving the land on lease or sell the land to thepurchaser. The court is afraid to allow the Official Liquidator toget shelter under the clause that the property was sold 'as is whereis and whatever there is basis' or under the doctrine of CaveatEmptor.40. In so far as the possession of the property is concerned,the Official Liquidator approached this Court for sale of theproperty with a report that he has taken possession of the immovableproperty of the company along with the materials available. Equally aletter dated 20.06.2008 was addressed by the appellant/purchaser tothe Official Liquidator stating that pursuant to the order dated30.04.2008, the possession of the property was handed over alongwith 26 original documents; but it was difficult to identify thecorrect location and the extent of the lands without theboundaries; but they have taken possession of the property on goodfaith. All the materials placed before the Court would clearlyindicate that neither the Official Liquidator, as per the report,has taken possession nor the appellant/purchaser has taken actualpossession of the property though it was recorded so and hence, itwill be quite clear that the Official Liquidator was under themistaken belief that the possession of the entire property was in thehands of the company in liquidation and he sought permission of theCourt for sale making such a report and equally on the belief thatthat possession of the entire land was with the company inliquidation, the appellant/purchaser also made his offer. Thus, bothof them were under the misapprehension and also made a mistake as tothe possession of the property and thus, it was a common mistake.Thus, both parties to the sale were under a mistake in respect of https://hcservices.ecourts.gov.in/hcservices/ possession of the property which was one of the essential ingredientsof the sale. It is not a case where the parties were disputing as tothe value of the property. The mistake noticed was a common one toboth the parties entertained as to the possession of the entireproperty and a part of the property, as pointed out above, wasactually in the hands of the Government and also with third parties.It is true that a sale has been made in respect of 41.12 acres ofland in respect of the notified survey number and extent thereon. Butit is certain that the Official Liquidator cannot execute any salecertificate in respect of the survey numbers and extents which werenot originally sold.41. An identical situation arose before the High Court of Bombayin JAIKISANDAS BALCHAND PAMNANI AND ANOTHER ..vs.. MUNICIPALCORPORATION OF GREATER BOMAY AND OTHERS reported in AIR 1991BOMBAY 345, in which case the auction sale made by the OfficialLiquidator was sought to be set aside under Order 21 Rule 90 C.P.C.,on the basis of the mis-description of the property in the saleproclamation and the sale was set aside on that ground. Order 21,Rule 90 of C.P.C.reads as follows:Order XXI: Execution of Decrees and others:90. Application to set aside sale on ground of irregularityor fraud: (1) Where any immovable property has been sold inexecution of a decree, the decree holder, or the purchaser,or any other person entitled to share in a rateabledistribution of assets, or whose interests are affected bythe sale, may apply to the Court to set aside the sale onthe ground of a material irregularity or fraud in publishingor conducting it.(2) No sale shall be set aside on the ground ofirregularity or fraud in publishing or conducting it unless,upon the facts proved, the Court is satisfied that theapplicant has sustained substantial injury by reason of suchirregularity or fraud.(3) No application to set aside a sale under this ruleshall be entertained upon any ground which the applicantcould have taken on or before the date on which theproclamation of sale was drawn up".42. For the application of the above provision, the party, whois seeking to set aside the sale, must specifically plead and provethat there was not only the material irregularity but he has alsosuffered substantial injury. It was contended by the appellant'sside that the provision under Order 21 Rule 90 of C.P.C.has gotapplication to the present facts of the case, since there was not https://hcservices.ecourts.gov.in/hcservices/ only material irregularity but also there was substantial injury tothe appellant. But the respondents contended contrary. In theinstant case, it is noticed that in the description of the immovableproperty, there was a positive assertion by way of Annexure to thetender terms and conditions and, as narrated above, they werethoroughly erroneous, misguiding and misleading. The act of theOfficial Liquidator in mis-describing the property and including thesurvey numbers of land, which admittedly did not belong to thecompany under liquidation, can neither be ratified nor sanctified onthe ground that he was only an instrument in the hands of the Courtin making the auction sale and also he could act only on theinformation available to him at the time of issuing tender for saleand making publication therefor. 43. Much was commented by the respondents that there wassufficient time in the hands of the appellant/purchaser, duringwhich, he should have investigated the title and all relevantparticulars about the property, which he offered to purchase. It ispertinent to point out that subsequent to the acceptance of the bidand payment of initial earnest money deposit, the appellant has fileda memo seeking for verification of the title deeds, but it was theOfficial Liquidator, who opposed the same that the purchaser could bepermitted only after the remittance of the entire sale consideration.Contrarily, after payment of the entire sale consideration by theappellant, the Official Liquidator has taken a different stand thatonly 26 documents were available in respect of the property and thesale was made only 'as is where is and whatever there is basis' andhence, the purchaser could not make any complaint thereof. Thecontention put forth by the respondents that in view of thevoluminous work, the Official Liquidator could not investigate intothe title of the properties, cannot be accepted even for a moment forthe simple reason, in the instant case, he has engaged the servicesof ITCOT Consultancy and Services Limited, with whom the valuation ofthe property was entrusted and the agency has also been paid for thatpurpose. While there is a statutory obligation on the part of theOfficial Liquidator to verify the title of the properties of thecompany in liquidation, which is brought for sale, the OfficialLiquidator has miserably failed in his duty. He has neither verifiedthe title of the properties, which are brought for sale, norpossession of the property even after the valuation report was filedby ITCOT. From the above, it is quite clear that the OfficialLiquidator has not even verified the report of the ITCOT, but placedbefore the Court along with his report and has obtained an order forsale of the property. The report filed by the Official Liquidator,as shown above, would stand a good piece of evidence as to the mis-description of survey number and ownership of the property. Had theOfficial Liquidator made a disclosure of all the material aspectsafter the payment of the earnest money deposit, the Court would nothave ordered the sale and if there was disclosure, the appellant https://hcservices.ecourts.gov.in/hcservices/ could not have ventured into make an offer. Even after the paymentof earnest money deposit, he has filed a memo seeking reliefs andthere were directions issued by the Court to the Official Liquidatorto do, but the Official Liquidator, instead of following the ordersof the Court, filed a detailed report accepting the discrepancies,along with making an admission that the land to an extent of twoacres and odd was classified as 'Chery Natham', which is in themiddle of the property, and the same has to be re-classified and thatin so far as the entry point was concerned, the property belongs tothe Government. The contention put forth by the appellant is that inrespect of 2.16 acres classified as Cherry Natham, though it could bere-classified, there was a proposal for exchange made by theGovernment. But, at this juncture, it is pertinent to point out thatthe re-classification of Cherry Nathan was possible if the privateowner was willing to provide for extension of village site inexchange for a land at the disposal of the Government. In so far asthe entry point of the road is concerned, the Official Liquidator inhis report has stated that the Court, if felt necessary, may issuedirections to the Government to consider the same either for sale orlease out the same to the appellant. The appellant has specificallyaverred in para 13 of the affidavit, which reads as follows: "13. It is submitted that unless the Hon'ble Courtgive suitable directions we will be put to great loss andhardships. Further if the Official Liquidator is not ableto handover all the documents and locate the lands bysurveying within a period of two weeks, we seek thisHon'ble Court to nullify the sale and refund of saleconsideration with interest..".From the said averments made in the affidavit, it will be quiteclear that the appellant has pleaded material irregularity and alsothe substantial injury caused to him. The said averments would standa good proof for the same. Under such circumstances, the respondentscannot be permitted to say that necessary requisites for settingaside the sale were not pleaded and proved.44. The contention put forth by the respondents' side that thevalue of the property has fallen down and under such circumstances,the applications were a device by the appellant in order to wriggleout of the contract, cannot be accepted for the two reasons, firstly, even before making payment of the balanceof earnest money deposit, the request for handing overpossession and for making survey and also for delivery ofdocuments was made by the appellant; but at that juncture,it was resisted by the Official Liquidator that it couldbe done only after the payment of the entire saleconsideration; and https://hcservices.ecourts.gov.in/hcservices/ secondly, the appellant has taken four applications,namely, (a) to trace the original documents pertaining tothe property and hand over the same, (b) to engage theservices of revenue officials to locate the lands and fixthe boundaries; (c) not to disburse the sale proceeds tothe creditors till handing over of the balance ofdocuments; and (d) in the event of the non-compliance ofthe above, to issue a direction to the Official Liquidatorto return the sale consideration along with interest.This would be the indicative of the fact that the intention of theappellant was not to come out of the contract but to stick to thesale, if he was given possession and documents pertaining to theproperty. On the contrary, the Official Liquidator vehementlyopposed the first three reliefs. Under such circumstances, theappellant had no option but to press the fourth relief, namely,setting aside the sale and refund of the consideration amount andhence, the said contention put forth, cannot be accepted.45. In view of the material irregularities noticed, which wouldgo to the root of the sale effected by the Official Liquidator, andthe appellant, who believed the sale tender notice and the report ofthe valuer, which were with mis-descriptions, suppression ofnecessary material particulars and suggestive of things, which werenot available, made the offer to purchase and despite the memos andorders of court neither the title deeds pertaining to the propertywere given nor he was put in actual possession and thus, he hasincurred the substantial injury. Under such circumstances, the Courtis of the considered opinion that it has to exercise its inherentpowers conferred under Rule 9 of the Companies (Court) Rules, 1959,which reads as follows:"9. Inherent Powers of Court:Nothing in these Rules shall be deemed to limit or otherwiseaffect the inherent powers of the Court to give suchdirections or pass such orders as may be necessary for theends of justice or to prevent abuse of the process of theCourt".46. Hence, for the reasons stated above, the auction sale madeby the Official Liquidator on 06.02.2008 is set aside andsubsequently confirmed by the Court is also set aside and theOfficial Liquidator is directed to return the sale consideration tothe appellant. The Court is of the considered opinion that it is nota fit case, the Court could order interest on the sale considerationtill the time of passing of the order, since the company is alreadyunder liquidation. https://hcservices.ecourts.gov.in/hcservices/ In the result, O.S.A.No.88 of 2009 is allowed, setting aside thesale with direction to the Official Liquidator to return the entiresale consideration along with accrued interest in the bank deposit,to the appellant purchaser, within a period of four weeks herefrom,in default, the sale consideration shall carry interest at the rateof 12% therefrom.Since the relief is granted to the appellant in O.S.A.No.88 of2009, all other appeals do not arise for consideration and aredisposed of. Consequently, connected M.P.is closed. The parties shallbear their costs. The above order will not impede the OfficialLiquidator to approach the learned single Judge for fresh auctionsale, taking into consideration the aforesaid observations and afterfollowing all procedural formalities, as required in law. Sd/- Asst.Registrar/true copy/ Sub Asst.RegistrarglTo1.The Sub Assistant Registrar, Original Side, High Court, Madras.2.The Official Liquidator, Kuralagam, Esplanade, Chennai-1.+4 cc to Mr.R.Senthilkumar, Advocate, SR.No.45399+2 cc to Mr.S.R.Rajagopal, Advocate, SR.No.45084Common judgment in O.S.A. Nos.85to 88 of 2009VSN {CO}TP/24.9.2009.