Kerala High Court · 2024

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN & THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN TUESDAY, THE 12TH DAY OF MARCH 2024 / 22ND PHALGUNA, 1945 RP NO. 1268 OF 2023 JUDGMENT DATED 31.10.2023 IN Co.Appeal NO.6 OF 2023 OF HIGH COURT OF KERALA ---------------------- REVIEW PETITIONER/APPELLANT/APPLICANT :- SUSHIL VIJOY ARORA, AGED 48 YEARS S/O. LATE K.V.ARORA J.M. TOWERS, TEMPLE ROAD, VADUTHALA, COCHIN, PIN – 682 023 BY ADV K.RAVIKUMAR RESPONDENTS/RESPONDENTS/RESPONDENTS :- 1 2 THE OFFICIAL LIQUIDATOR HIGH COURT OF KERALA ERNAKULAM REPRESENTING M/S. BST LTD. (IN LIQUIDATION), COMPANY LAW BHAVAN, THRIKKAKARA, PIN – 682 021. THE VILLAGE OFFICER MARUTHA ROAD VILLAGE OFFICE KALLEPPULLY.P.O., PALAKKAD, PIN – 678 005 SRI.K.MONI, SC SRI.SAIGY JACOB PALATTY, SR.GP THIS REVIEW PETITION HAVING COME UP FOR ADMISSION ON

19.2.2024, ALONG WITH RP.1238/2023, THE COURT ON 12.3.2024 DELIVERED THE FOLLOWING: R.P. Nos.1238 and 1268 of 2023 -: 3 :- ANU SIVARAMAN, J. & C. JAYACHANDRAN, J. ------------------------------------------------------------------ R.P. Nos.1238 and 1268 of 2023 --------------------------------------------------------- Dated this the 12th day of March, 2024 O R D E R Anu Sivaraman, J. These review petitions are filed by the parties to Co.Appeal No.6/2023. By the judgment sought to be reviewed, this Court had held that the Official Liquidator was liable to pay interest for the period from 27.12.2021 to 08.03.2022 to the purchaser of the property. It is the contention of the Official Liquidator in this review petition that the delay in executing the sale deed was not contumacious so as to justify grant of interest for the amount deposited by the 1st respondent as consideration for the purchase of the property brought to sale in the company case.

2. This Court had considered the fact that the property was brought to sale on 23.8.2017 and that the sale was confirmed on

18.11.2017. The entire sale consideration had been paid only on

10.7.2019 and the possession of the property was handed over on

27.11.2019. Thereafter, it was only on 27.12.2021 that land tax was paid in respect of the property and the sale deed was R.P. Nos.1238 and 1268 of 2023 -: 4 :- executed on 8.3.2022. The learned single Judge found that the Official Liquidator had taken all efforts for expeditious handing over of the property and for speedy execution of sale deeds and that there was no requirement of payment of interest. However, in view of the fact that the entire preparations for conduct of the sale including payment of land tax was completed on 27.12.2021, this Court held that the further delay from 27.12.2021 to

8.3.2022 for execution of the sale deed stands unexplained and therefore, interest is to be paid by the Official Liquidator to the purchaser for the said delay at the rate of 6% per annum.

3. The review petition filed by the Official Liquidator states that there was considerable appreciation of the value of the property and that there were frequent communication during the period from 27.12.2021 to 8.3.2022 and that it was only after orders were passed by the Company Court that the sale deed could have been executed. It is submitted that between the said dates, the draft of the sale deed had been submitted which was revised and approved only on 4.2.2022 and communicated to the purchaser. Thereafter, it was only on the basis of the orders passed on 9.2.2022 in C.A. No.51/2021 and C.A. No.80/2021 that R.P. Nos.1238 and 1268 of 2023 -: 5 :- the execution of the sale deed was fixed and the sale deed was executed on 8.3.2022. It is submitted that it was pursuant to the order passed in C.A. No.19/2022 on 2.3.2022 that the Company Court had directed execution of the sale deed on 8.3.2022 based on the revised land and building value as per Annexures I, II and III in C.A. No.19/2022. It is, therefore, contended that the awarding of interest on account of the delay for 70 days was not proper.

4. On the other hand, in R.P. No.1268/2023, it is contended that the review petitioner had remitted an amount of Rs.24,55,529/- towards interest for delayed payment of sale consideration and that in the said circumstances, there was absolutely no justification in not awarding interest to the review petitioner for the entire period of delay. It is contended by the learned counsel for the review petitioner that the review petitioner had been required to remit the land tax for the first time only by Annexure VII letter dated 05.11.2021 and that the land tax was remitted soon thereafter on 27.12.2021. It is submitted that since all the steps for the execution of the sale deed were not completed by the official liquidator in time, the R.P. Nos.1238 and 1268 of 2023 -: 6 :- interest ought to have been paid for the entire extent of the delay as sought for.

5. We have considered the contentions advanced. It is true that the petitioner in C.A. No.52/2023 had paid the entire sale consideration on 10.07.2019 and possession of the property was handed over on 27.11.2019. It is also clear that he was required to pay the interest for the delayed payment of the sale consideration. However, it has to be noticed that the sale in question was one conducted by the official liquidator who could have conducted the sale only strictly in accordance with the orders passed by the company court. The question with regard to the role of the company court in liquidation proceedings was considered by the honourable Supreme Court in Navalkha & Sons vs Ramanya Das & Ors [(1969) 3 SCC 537]. It was held that the court is the custodian of the interests of the company and its creditors and the sanction of the court required under the Companies Act has to be exercised with judicial discretion, regard being had to the interests of the company and its creditors as well. It was held that where the acceptance of the offer is subject to confirmation of the court, the offerer does not, by mere R.P. Nos.1238 and 1268 of 2023 -: 7 :- acceptance, get any vested right in the property so that he may take automatic confirmation of the offer. In Lica (P.) Ltd. vs Official Liquidator And Another [(2000) 6 SCC 76], it was held that every sale by an official liquidator is subject to confirmation by the company court and that the court has discretion in the matter of confirming the sale and permitting the execution of the sale deed. It was held that the said discretion has to be exercised keeping in view the interest of the company and the creditors and the workman to whom the sale proceeds would be applied. It is therefore clear that the delay on the part of the purchaser in permitting the sale consideration and the delay on the part of the official liquidator in executing the sale deed cannot be considered on the same parameters.

6. It is submitted in the review petition filed by the official liquidator that even after the payment of the sale consideration, the steps required for executing the sale deed were not carried out by the purchaser. It is clear that the payment of arrears of land tax was a mandatory requirement for the execution of the sale deed. It is only after the official liquidator have required the payment of land tax by Annexure VII that the land tax had been R.P. Nos.1238 and 1268 of 2023 -: 8 :- remitted on 27.12.2021. Thereafter, the draft of the sale deed had been submitted. It is submitted that the purchaser himself had, on several occasions, sought modifications/amendments to the draft sale deed including requests received after passing the order in C.A. No.80/2020 on five occasions, that is, 11.12.2020,

01.04.2021, 07.05.2021 and 31.01.2022. The draft sale deed was ultimately approved only on 04.02.2022 and communicated to the purchaser. Thereafter, it was on the basis of orders passed on

09.02.2022 in C.A No.51/2021 and C.A. No.80/2021 that the execution of the sale deed was fixed and the sale deed was executed on 08.03.2022. The official liquidator clearly contends in his review petition that it was pursuant to the order passed in C.A. No.19/2022 on 02.03.2022 that the company court had directed the execution of the sale deed and the sale deed was executed on 08.03.2022.

7. Having considered the contentions advanced, we are of the opinion that the grant of interest for the period from 27.12.2021 to 08.03.2022 was also not justified. This is in view of the fact that the sale deed was executed on 8.3.2022 on the basis of the order of the company court dated 2.3.2022. Since the sale deed R.P. Nos.1238 and 1268 of 2023 -: 9 :- could not have been executed before the said date, we are of the opinion that the finding in the judgment under review was vitiated by an error of fact apparent on the face of the record. Further, there was considerable appreciation in the value of the property between the date of conformation of the sale and the date of execution of the sale deed. The purchaser cannot be said to have suffered any legal injury due to the delay in executing the sale deed since possession was, admittedly, handed over on

27.11.2019. We are, therefore, of the opinion that the judgment requires a review. Having considered the contentions advanced on either side and having perused the documents placed on record, R.P. No.1268/2023 filed by the purchaser is dismissed. R.P. No.1238/2023 is allowed. The judgment is recalled. Company Appeal No.6/2023 shall stand dismissed. JUDGE Sd/- ANU SIVARAMAN JVT/NP.20.2.2024 Sd/- C. JAYACHANDRAN JUDGE