Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE THE CHIEF JUSTICE MR. A.J.DESAI & THE HONOURABLE MR.JUSTICE V.G.ARUN MONDAY, THE 7TH DAY OF AUGUST 2023 / 16TH SRAVANA, 1945 CO.APPEAL NO. 4 OF 2023 AGAINST THE ORDER dated 27.06.2023 in Co.Appeal 53/2023 in Co.Petition No.14/2002 OF HIGH COURT OF KERALA APPELLANT:
SHAFASIL TRADERS AND CONTRACTORS (P) LIMITED XIV-585A, XIV/585B, AZHEEKODE, ERIYAD BLOCK, THRISSUR, REPRESENTED BY DIRECTOR MUHAMED SAGEER, S/O. ABDUL JABBAR, AGED 38 YEARS, RESIDING AT PADINJAREVEETTIL HOUSE, AZHEEKODE KODUNGALLORE, THRISSUR, PIN - 680666 BY ADVS.
M.SASINDRAN S.SHYAM KUMAR T.H.ARAVIND NABIL KHADER RESPONDENTS:
1 THE OFFICIAL LIQUIDATOR (M/S. TRAVANCORE RAYONS LIMITED - IN LIQUIDATION), HIGH COURT OF KERALA, ERNAKULAM, PIN - 682031 2 SOUTH INDIAN SCRAP TRADERS 32/366P, OPPOSITE JUMA MASJID, PUTHIYA ROAD, PALARIVATTOM, KOCHI, KERALA, REPRESENTED BY THE PROPRIETOR, SHRI.P.A.MOHAMMED ALI, RESIDING AT PALLACHI HOUSE, ARKAKKADAVU, VENNALA.P.O., KOCHI, PIN – 682028
Co.Appeal No.4 of 2023 2 BY ADV K.MONI, SC, OFFICE OF THE OFFICIAL LIQUIDATOR KERALA ADV.SMT.POOJA MENON FOR R2 ADV.SRI.P.K.IBRAHIM FOR BEENA STEELS -NOT PARTY IN APPEAL THIS COMPANY APPEAL HAVING COME UP FOR ADMISSION ON 07.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Co.Appeal No.4 of 2023 3 JUDGMENT A.J.Desai, CJ This appeal is filed under Section 483 of the Companies Act, 1956 read with Section 5 of the Kerala High Court Act, 1958.
2.
The original applicant has challenged the order dated 27.06.2023 passed by the learned Singe Judge in Co.Appeal No.53/2023 in Co.Petition No.14/2022 by which the learned Judge refused to extend the period for depositing the amount offered by the present appellant towards sale consideration.
3.
The short facts necessary for consideration in this appeal are as under:
That the company namely the Travancore Rayons Limited which is incorporated under the provisions of the Companies Act, 1956 was ordered to be liquidated by this Court through an order
Co.Appeal No.4 of 2023 4 dated 27.02.2019. Accordingly, an Official Liquidator was appointed and he put certain movable assets of the company for sale through e-auction. The present applicant was the highest bidder and accordingly the auction was confirmed on 24.01.2023 in favour of the present applicant and the same was intimated to the applicant on 02.02.2023.
4.
As per the approved terms of e-auction, the highest bidder was supposed to remit the balance auction amount of Rs.73,23,30,000/- within a period of 30 days i.e. on or before 03.03.2023 before the Official Liquidator. The applicant, instead of depositing the aforesaid amount, filed Co.Appl.No.39/2023 seeking permission to deposit 10% of the sale consideration forthwith and grant three months' time to deposit the balance amount. On 02.03.2023 the learned Single Judge considered the application and passed the following order:
“The present application has been filed on behalf of the bidder/tenderer for granting extension in depositing the balance amount so demanded vide
Co.Appeal No.4 of 2023 5 Exhibit A dated 02.02.2023. Mr.Sreekumar.S, learned Senior Counsel assisted by Adv.Martin Jose submitted that this Court vide order dated 24.01.2023, while perusing the report of the official liquidator bearing No.21 of 2023 in Company Petition No.14 of 2002, allowed the confirmation of sale and granted 30 days' time to the bidder to deposit the amount along with the applicable GST with the Official Liquidator. It is contended that 30 days is expiring on 03.03.2023.
Mr.Sreekumar submitted that not only one lot but another lot was also purchased, for that, the entire amount has already been deposited, but since the amount involved is phenomenal, seeks three months' more time.
2.
The prayer is accepted subject to all exceptions and keeping it open, I grant another 30 days' time to deposit the balance amount, failing which, the provisions of the law as applicable to the auction shall be considered at an appropriate time.
The application stands disposed of.” 5.
As per the aforesaid order, 30 days' time was granted to the present applicant to deposit the entire sale amount.
However, instead of depositing the entire amount, the applicant
Co.Appeal No.4 of 2023 6 filed Co.Appl.No.53/2023 seeking permission to pay Rs.37 Crores by way of a demand draft and prayed for extending the time to pay the balance amount of Rs.36,23,30,000/- by another month.
When some other company applicants objected to the application, the matter was kept for hearing and ultimately, the following order was passed on 07.06.2023, which reads as under:
“Sri.M.P.Sreekrishnan appears for the petitioner on a change of engagement.
Among
the
afore
two
applications, Co.Appl.53/2023 has been filed by the petitioner seeking that they be allowed to pay Rs.37 Crores towards sale consideration and to extend the time frame for payment of balance by one month.
As far as Co.Appl.79/2023 is concerned, it has been filed with an averment that a Demand Draft for Rs.37 Crores was handed over to the learned counsel for the liquidator – Sri.K.Moni on 05.04.2023, and that he had accepted the same. It is also averred that the said Demand Draft was encashed by the Official Liquidator on the same day and that this Court had dictated an order allowing the reliefs sought for.
I am afraid that the afore averments are not
Co.Appeal No.4 of 2023 7 accurate because, when Co.Appl.53/2023 was initially considered, no one had filed intervening applications to oppose the prayers therein. However, Sri.K.Moni – learned Standing Counsel for the Official Liquidator, had alerted this Court that another learned Judge of this Court had passed an order in Co.Appl.39/2023, extending the time frame for the petitioner to remit full sale consideration only by 30 days from 02.03.2023. It is noticing the same that this application was deferred on that day without any orders; but it appears to be true that Sri.K.Moni, being under the impression that there was no opposition, had accepted the Demand Draft for Rs.37 Crores from the petitioner, which was later encashed.
I must say that the afore turn of events cannot ipso facto and on its own, grant any rights to the petitioner, particularly when this Court is seized of the matter as to whether they should be given the latitude of further time to pay the sale consideration.
I, therefore, allow the petitioner to accept the amount of Rs.37 Crores from the Official Liquidator, if they are so interested, but making it clear that this will not alter the nature of orders that this Court may consider in due course in Co.Appl.53/2023. If they are so interested, they are at liberty to approach the Official Liquidator, along with a copy of this order, who
Co.Appeal No.4 of 2023 8 will thereupon issue them a cheque for an amount of Rs.37 Crores forthwith.
Sri.M.P.Sreekrishnan sought time till 14.06.2023 to make submissions on these applications on merits.“ 6.
Thereafter, the applicant expressed its willingness to pay the entire amount but the same was rejected by the learned Single Judge by the impugned judgment and hence this appeal.
7.
Heard learned counsel appearing for the appellant and the learned counsel appearing for the respondents.
8.
It is contended by the learned counsel for the appellant that the learned Single Judge had committed an error in not extending the time for making the payment. He would contend that the High Court is vested with the right to rescind, amend, delete or invalidate any of the settled terms and conditions with regard to the auction. Therefore, the learned Single Judge ought to have accepted the willingness expressed by the applicant to deposit the entire amount. It was further submitted by the learned counsel, on instructions, that the applicant is ready and willing to pay interest for the delayed
Co.Appeal No.4 of 2023 9 period. Hence the appeal be allowed and the Official Liquidator be directed to accept the amount.
9.
On the other hand, the learned counsel appearing for the respondents objects to the extension of time for payment. In this context, learned counsel for the respondents would submit that as per the terms and conditions of the approved E-Auction, the highest bidder is bound to deposit the entire amount within a period of thirty days i.e. on or before 03.03.2023. On 02.03.2023, an application was filed by the applicant before this Court for extension of time for depositing the amount. Though the learned Single Judge, by exercising the power as per Clause 13.3 of the Terms and Conditions of the approved E-Auction and granted another 30 days' time to deposit the balance amount, the applicant deposited only an amount of Rs.37 Crores by way of demand draft. The Counsel would submit that the learned Single Judge had rightly refused the prayer of the applicant for further extension of time to make the balance amount.
10.
Learned counsel appearing for the Official Liquidator
Co.Appeal No.4 of 2023 10 has also supported the judgment of the learned Single Judge.
11.
We have heard the rival contentions on either side.
We have also considered the chronology of events in the matter.
12.
It is an admitted fact that the present applicant was supposed to deposit an amount of Rs.73,23,30,000/- within a period of thirty days starts from the intimation of confirmation of the tender which was on 02.02.2023. The amount was to be paid on or before 03.03.2023. It is pertinent to note that the learned Single Judge, by an order dated 02.03.2023, that is, one day prior to the completion of the aforesaid period, granted thirty days time to deposit the entire amount. But, only Rs.37 Crores was paid by the applicant. It is true that, under Clause 13.3 of the Terms and Conditions of the Approved E-Auction, High Court has the right to rescind, amend, delete, invalidate any of the settled terms and conditions. The High Court exercised its power once and extended the time for depositing the entire sale amount, but the applicant failed to comply the same. In such circumstances, we are in complete agreement with the
Co.Appeal No.4 of 2023 11 observations made by the learned Single Judge in the aforesaid judgment. We do not want to interfere with the judgment of the learned Single Judge.
This writ appeal is dismissed.
(sd/-) A.J.DESAI CHIEF JUSTICE (sd/-) V.G.ARUN JUDGE jsr/
Co.Appeal No.4 of 2023 12 APPENDIX OF CO.APPEAL 4/2023 PETITIONER ANNEXURES Annexure A1 A TRUE COPY OF THE C.A.NO. 53 OF 2023 IN C.P.NO. 14/2002 ALONG WITH AFFIDAVIT AND ALL ANNEXURES THERETO