After executing lease cum agreement of sale and after receiving entire consideration, it is not just and proper to pay objections for sale conducted by Official Liquidator in a company windup Petition = An industrial shed standing on a plot of land of the company was sold, in that process, in favour of the 2nd respondent M/s Haryana and Steel Center (KDM) Private Limited, who emerged as the best bidder for a sum of Rs.69.50 lacs. When the Official Liquidator was taking steps to liquidate the said industrial plot, it should be noted that the Andhra Pradesh Industrial Infrastructure Corporation Limited, the fore-runner and predecessor-in-interest of the present appellant when the combined State of Andhra Pradesh was in existence, filed Company Application No. 622 of 2006 seeking leave of the Company Court for resumption of possession of the industrial shed bearing No. D- 74 of a plinth area of 30 x 60 standing on an industrial plot measuring 1416.85 square yards in Phase-V, Industrial Development Area, Jeedimetla, Ranga Reddy District. That Application No. 622 of 2006 was dismissed on merits by the Company Court on 01.08.2006. It is thereafter, the asset has been liquidated.=The APIIC has also executed a registered lease-cum-agreement of sale deed on 14.02.1985 and in pursuance thereof, vacant possession was delivered of the industrial shed together with the land appurtenant thereto on 13.03.1985 to the company under liquidation. In that view of the matter, we find no error of jurisdiction carried out by the learned Company Judge in dismissing Company Application No. 1225 of 2013 and then, allowing Company Application No. 767 of 2013, but however, we hasten to add that the learned Company Judge may not be justified in directing the APIIC or for that matter, its successor, the present appellant, to execute a sale deed in favour of the 2nd respondent. Instead, the learned Company Judge ought to have directed the 2nd respondent purchaser who has stepped into the shoes of the company under liquidation, to take necessary steps and follow-up action in terms of the registered lease-cum-agreement of sale dated 14.02.1985 and it shall be open to the 2nd respondent purchaser to secure a proper conveyance deed in its favour from the appellant upon tendering the penal costs of Rs.1,000/-.

THE HONBLE SRI JUSTICE NOOTY RAMAMOHANA RAO AND THE HONBLE MRS. JUSTICE ANIS                    

O.S.A. Nos. 21 of 2015 and batch

04-01-2016

Telangana State Industrial Infrastructure Corporation Limited (TSIIC  Ltd.)
(formerly Andhra Pradesh Industrial Infrastructure Corporation
Limited).Appellant

M/s Lamino Paper Products Limited (in liqn.), Rep. by its Official Liquidator &
others..Respondents

Counsel for the appellant : Sri P. Roy Reddy

Counsel for the 1st Respondent:  Sri Anil Kumar
Counsel for the 2nd respondent :  Sri D. Jaganmohan Reddy
Counsel for the 3rd respondent :  Sri A. Krishnam Raju

<GIST:

> HEAD NOTE:  

? Cases referred
1994 Company Cases (vol.70) 262


THE HONBLE SRI JUSTICE NOOTY RAMAMOHANA RAO            
AND
THE HONBLE MRS. JUSTICE ANIS    
O.S.A. Nos. 21 AND 29 OF 2015  

COMMON JUDGMENT: (per Honble Sri Justice Nooty Ramamohana Rao)        
      These Original Side Appeals preferred under Clause 15 of the
Letters Patent are directed against the order and judgment
rendered by the learned Company Judge in Company Applications  
No. 767 and 1225 of 2013.
      The appellant is Telangana State Industrial Infrastructure
Corporation Limited, a public sector undertaking entrusted with
the task of providing industrial infrastructure for securing rapid
industrialization and economic growth.  The 1st respondent in
O.S.A.No. 21 of 2015 is a company under liquidation.  One of the
debtors of the said company initiated winding up proceedings
against it by instituting for the said purpose Company Petition No.
14 of 2000.  After due enquiry and upon being satisfied that the
company is not in a position to liquidate its debts, the Company
Court, by its order, dated 08.12.2001, ordered for its winding up.
It is pursuant to the said order, the Official Liquidator has taken
charge of its assets, books of records and deeds and started taking
steps for liquidating the company.  An industrial shed standing on
a plot of land of the company was sold, in that process, in favour of
the 2nd respondent M/s Haryana and Steel Center (KDM) Private 
Limited, who emerged as the best bidder for a sum of Rs.69.50
lacs.  When the Official Liquidator was taking steps to liquidate the
said industrial plot, it should be noted that the Andhra Pradesh
Industrial Infrastructure Corporation Limited, the fore-runner and
predecessor-in-interest of the present appellant when the
combined State of Andhra Pradesh was in existence, filed Company  
Application No. 622 of 2006 seeking leave of the Company Court
for resumption of possession of the industrial shed bearing No. D-
74 of a plinth area of 30 x 60 standing on an industrial plot
measuring 1416.85 square yards in Phase-V, Industrial
Development Area, Jeedimetla, Ranga Reddy District.  That
Application No. 622 of 2006 was dismissed  on merits by the
Company Court on 01.08.2006.  It is thereafter, the asset has been
liquidated.
       Company Application No. 767 of 2013 has been moved
seeking a direction to the Andhra Pradesh Industrial Infrastructure
Corporation Limited (APIIC), Hyderabad to execute a sale deed in
favour of the 2nd respondent purchaser.  The background fact
relevant is that the APIIC has allotted an industrial shed standing
on a plot of land in Phase V, IDA, Jeedimetla in favour of the
company under liquidation. The APIIC has also executed a
registered lease-cum-agreement of sale deed on 14.02.1985 and in
pursuance thereof, vacant possession was delivered of the
industrial shed together with the land appurtenant thereto on
13.03.1985 to the company under liquidation.  When the company  
under liquidation proposed to raise financial support by way of
creating charge/mortgage on the said industrial plot, APIIC
tendered No Objection Certificate on 13.03.1985 in favour of the
Andhra Pradesh State Financial Corporation (APSFC) and  
accordingly, the industrial plot has been mortgaged in favour of the
APSFC and the company under liquidation availed the financial
support offered by the APSFC.  However, in spite of the No
Objection Certificate granted in favour of the APSFC on
13.03.1985, the APIIC cancelled the allotment of the industrial
shed on 06.11.1986 and requested the company under liquidation 
to surrender possession of the industrial plot.  However, most
crucially, the APIIC has received payment affected by the APSFC in
a sum of Rs.1,17,550/- and a further amount of Rs.28,019.90 Ps.
representing the sale consideration amount of the shed together
with outstanding interest amount receivable by the APIIC.  Upon
receipt of this money, the APIIC has gone on record by addressing
a communication on 09.06.1987 to the company under liquidation 
offering to restore the allotment, subject to payment of a sum of
Rs.1,000/- representing the nominal penal charges leviable for
restoration of allotments, which stood cancelled earlier.  The whole
controversy now generated is that this amount of Rs.1,000/-
representing the penal costs has not been tendered by or on behalf
of the company under liquidation.  Hence, the successor body of
APIIC, namely the appellant herein, would urge that the allotment
of the industrial plot and shed in favour of the company under
liquidation stood cancelled as long back as on 06.11.1986 itself
and hence, the Company Court could not have ordered the 
appellant to execute a sale deed.  The learned Advocate General
assisted by Sri P. Roy Reddy, learned Standing Counsel for the
appellant would also urge that the industrial plot was not sold in
favour of the company under liquidation.  It was merely leased out
and an agreement of sale was only entered into.  Therefore, while
liquidating the assets of the company under liquidation, the
Official Liquidator could not have transferred anything better than
the title that was held by the original allottee, namely the company
under liquidation.
      This argument was resisted by Sri Anil Kumar, learned
counsel for the Official Liquidator and Sri Jaganmohan Reddy,
learned counsel for M/s  Haryana and Steel Center (KDM) Private
Limited, the auction purchaser, by pointing out that when once the
entire consideration value has been received on behalf of the
company under liquidation by the APIIC, what remained thereafter
was a mere execution of a conveyance deed duly conveying right,
title and interest over the said industrial plot in favour of the
company under liquidation.  Since the Court has sold the said
asset of the company under liquidation by way of public auction as
a part of the winding up exercise carried out by it, the auction
purchaser steps into the shoes of the company under liquidation
and stands at par in all respects with it.  It is only, therefore,
appropriate that a regular deed of conveyance is required to be
executed by the appellant, being the successor to the APIIC.
      While considering Company Application No. 622 of 2006,
this Court has traversed the entire breadth and length of the
controversy and for the reasons assigned therein, rejected the plea
of the APIIC for resumption of possession of the industrial plot on
merits.  The prime ground that weighed with this Court for
rejecting Company Application No. 622 of 2006 on 01.08.2006 was
that the APIIC has tendered No Objection Certificate to the
company under liquidation to enable it to mortgage the industrial
plot with the APSFC as part of capital mobilization exercise by the
company under liquidation and in due consideration and deference
thereof, the APSFC has tendered the entire consideration amount
forming part of the registered lease-cum-agreement of sale deed,
dated 14.02.1985.  Thus, the entire consideration for sale of the
industrial plot in favour of the company under liquidation has also
been received by the APIIC. That apart, it has also received
Rs.28,019.90 Ps. towards interest for delayed payment of the sale
consideration as the said agreement has provided for such
payment of interest.  Thus, in all respects, entire sale
consideration amount for conveying title over the industrial plot in
favour of the company under liquidation has been received by the
APIIC.  In fact, it has also acted thereon and by its communication
dated 09.06.1987 has accepted to restore the allotment of plot in
favour of the company under liquidation, subject, of course, to the
condition that the company under liquidation shall pay the penal
charges of Rs.1,000/- for restoration.  Therefore, the APIIC, by its
conduct exhibited on 09.06.1987, is estopped from resiling there
from.  May be that the company under liquidation, though
asserted that it has also paid the penal charges of Rs.1,000/-, is
not in a position to produce concrete material in proof thereof, but
however, we cannot lose sight of the fact that the company under
liquidation has dealt with the asset as belonging to it and
possessed by it, subject to the same terms and conditions as are
stipulated in the original registered lease-cum-agreement of sale
dated 14.02.1985.  The APIIC or for that matter, its successor, the
appellant herein, cannot maintain the position that the original
allotment having been cancelled on 06.11.1986, they can resume
possession of the industrial plot and/or that they cannot be
compelled to act any further in terms of and in accordance with
the lease-cum-agreement of sale, dated 14.02.1985, for, it is
subsequently the APIIC accepted the amount representing the full
sale consideration together with interest thereon.  Hence, the APIIC
by its own conduct abandoned the course of cancellation of the
allotment of the industrial plot in favour of the company under
liquidation, and forfeited its right of resumption of the possession
thereof.  If APIIC preferred to stay on course of cancellation of the
allotment, it could not have accepted the sale consideration
amount together with interest at all.  The APIIC cannot blow hot
and cold simultaneously.  In equity, what, at best, in the given
circumstances, the appellant can urge is payment of Rs.1,000/- for
a formal closure of the contentious issue.
      We are satisfied that the Company Court has acted in right
earnest in liquidating the asset, after deciding Company
Application No. 622 of  2006.  In fact, Sri Anil Kumar, learned
counsel for the Official Liquidator is right in relying upon the
principle enunciated by the Supreme Court in United Bank of
India v. Official Liquidator , wherein after considering as to how
the assets of a company under liquidation are put to sale by the
Official Liquidator on as is where is basis,  the Supreme Court
has held as under:
               When the official liquidator sells the property and
assets of a company in liquidation under the orders of the
court he cannot and does not hold out any guarantee or
warranty in respect thereof.  This is because he must proceed
upon the basis of what the records of the company in
liquidation show.  It is for the intending purchaser to satisfy
himself in all respects as to the title, encumbrances and so
forth of the immovable property that he proposes to purchase.
He cannot after having purchased the property on such terms
then claim dimunition in the price on the ground of defect in
title or description of the property.  The case of the official
liquidator selling the property of a company in liquidation
under the orders of the court is altogether different from the
case of an individual selling immovable property belonging to
himself.  There is, therefore, no merit in the application made
on behalf of Triputi that there should be a dimunition in price
or that it should not be made liable to pay interest on the sum
of Rs.1 crore 98 lakhs.

      In that view of the matter, we find no error of jurisdiction
carried out by the learned Company Judge in dismissing Company
Application No. 1225 of 2013 and then, allowing Company
Application No. 767 of 2013, but however, we hasten to add that
the learned Company Judge may not be justified in directing the
APIIC or for that matter, its successor, the present appellant, to
execute a sale deed in favour of the 2nd respondent.  Instead, the
learned Company Judge ought to have directed the 2nd respondent 
purchaser who has stepped into the shoes of the company under 
liquidation, to take necessary steps and follow-up action in terms
of the registered lease-cum-agreement of sale dated 14.02.1985
and it shall be open to the 2nd respondent purchaser to secure a
proper conveyance deed in its favour from the appellant upon
tendering the penal costs of Rs.1,000/-.
      With this modification, the Appeals, which are otherwise
meritless, fail and they are accordingly, dismissed. No costs.

-----------------------------------------
NOOTY RAMAMOHANA RAO, J        
-------------
ANIS, J
04th January 2016

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