V.Manoj Kumar Prabhu v. Official Liquidator - Kerala High Court, 27 Jun 2023

Judgment

IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.55/2023 in Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Petitioner/Applicant:- M/s.South Indian Scrap Traders, 32/366P, Opp. Juma Masjid, Puthiya Road, Palarivattom, Kochi, Kerala – 682 025, Represented by the Proprietor Shri.P.A.Mohammed Ali, Residing at Pallachi (H), Arkakkadavu, Vennala P.O., Kochi – 682 028.

Respondents/Respondents:

Official Liquidator, High Court of Kerala, Company Law Bhavan, 3rd Floor, Thrikkakara P.O., Kochi – 682 021.

M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV/585B, Azeekode, Eriad Block, Thrissur – 680 666, Represented by its Director, Shameer P.H.

Company Application under Rule 9 of the Companies (Court) Rules, 1959 filed by the applicant above named praying for an order that :-

Co.Appl.55/23 & connected 2 1. In view of the failure of the 2nd Respondent Company in the instant petition to adhere to the terms and conditions of the E-auction and orders of Hon'ble High Court, cancel the letter dated 02.02.2023 issued by the 1st Respondent Official Liquidator in favour of the 2nd Respondent Company in the instant petition, confirming the sale in favour of the latter hold the EMD paid by them as standing forfeited;

2. In view of the failure of the 2nd Respondent Company in the instant petition to adhere to the terms and conditions of the E-auction and orders of Hon'ble High Court, and in light of the Petitioner/Applicant's status as the 2nd Highest Bidder, confirm the sale of assets in favour of the Petitioner/Applicant.

This Company Application coming on for orders on this day upon hearing Sri.E.K.Nandakumar (Sr) and M/s.M.Gopikrishnan Nambiar, K.John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C.Abraham, Raja Kannan and Pooja Menon , Advocates for the applicant, Sri.K.Moni, Standing Counsel for the Official Liquidator, Sri.M.P.Sreekrishnan, A.Muhammed Musthafa & Sony Benny, Advocates for R2 and the Government Pleader, the Court passed the following:-

Co.Appl.55/23 & connected 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Applicant:- M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV/585B, Azheekode, Eriyad Block, Thrissur – 680 666, Represented by Director Sameer P.H.

Respondent:

The Official Liquidator, (M/s.Travancore Rayons Limited - In Liquidation), High Court of Kerala, Ernakulam, Pincode – 682 031.

Addl.R2.

M/s.South Indian Scrap Traders, 32/366P, Opp. Juma Masjid, Puthiya Road, Palarivattom, Kochi, Kerala – 682 025, Represented by the Proprietor Shri.P.A.Mohammed Ali, Residing at Pallachi (H), Arkakkadavu, Vennala P.O., Kochi – 682 028.

Addl.R2 impleaded as per order dated 12/04/2023 in Co.Appl.No.1/2023 in Co.Appl.55/23 in Co.Appl.53/23 in C.P.No.14/2002

Co.Appl.55/23 & connected 4 Company Application under Rule 6 and 9 of the Company Court Rules filed by the applicant above named praying for the issue of a direction to the Official Liquidator High Court of Kerala to accept the payment of Rs.37 crores covered by demand draft number 663085 dated 03/04/2023 drawn on M/s.South Indian Bank Ltd. Kodungallore Branch towards part payment of the bid amount covered by annexure A communication and to extend the time for payment of the balance amount by another month.

This Company Application coming on for orders on this day upon hearing Sri.M.P.Sreekrishnan & Sri.Amal George, Advocates for the applicant, Sri.K.Moni, Standing Counsel for the Official Liquidator and Sri.E.K.Nandakumar (Sr) and M/s.M.Gopikrishnan Nambiar, K.John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C.Abraham, Raja Kannan and Pooja Menon, Advocates for R2, Sri.S.Manu, the DSGI and the Government Pleader, the Court passed the following:-

Co.Appl.55/23 & connected 5 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.67/2023 in Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Applicant/Third Party:- V.Manoj Kumar Prabhu, aged 51 years, S/o.Late D.V.Viswanatha Prabhu, Director, M/s.Veeyem Distributors Private Limited, having its Registered Office at 2/646, Godown Road, Cheranalloor, Ernakulam, Pin – 682 034, residing at Villa No.26, Noel Fragranz, Shihab Thangal Road, Thrikkakara P.O., Kochi, Pin – 682 021.

Respondents/Applicant and Respondents 1 and 2:

M/s.South Indian Scrap Traders, 32/366P, Opposite to Juma Masjid, Puthiya Road, Palarivattom, Kochi, Kerala – 682 025, Represented by the Proprietor Shri.P.A.Mohammed Ali, Residing at Pallachi (H), Arkakkadavu, Vennala P.O., Kochi – 682 028.

Official Liquidator, High Court of Kerala, Company Law Bhavan, 3rd Floor, Thrikkakara P.O., Kochi - 682 031.

M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV/585B, Azeekode, Eriad Block, Thrissur, Represented by its Director, Shameer P.H.

Company Application under Rule 9 of the Companies (Court) Rules, 1959 read with Order 1 Rule 8A and 10(2) of Code of Civil Procedure filed by the applicant above named seeking to be impleaded in the above Company Application as additional respondent No.3.

Co.Appl.55/23 & connected 6

This Company Application coming on for orders on this day upon hearing Sri.George Poonthottam (Sr.), Sri.K.P.Sujesh Kumar & Smt.Keerthi K.Narayan, Advocates for the applicant, Sri.E.K.Nandakumar (Sr) and M/s.M.Gopikrishnan Nambiar, K.John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C.Abraham, Raja Kannan and Pooja Menon, Advocates for R1, Sri.K.Moni, Standing Counsel for the Official Liquidator and Sri.M.P.Sreekrishnan, A.Muhammed Musthafa & Sony Benny, Advocates for R3, the Court passed the following:-

Co.Appl.55/23 & connected 7 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.70/2023 in Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Applicant/Additional Respondent sought to be impleaded:

M/s.Beena Steels, Mudikkal, Mudikkal P.O., Perumbavoor, Ernakulam District – 683 547, Represented by its Proprietor Ramees M.Moideen.

Respondents/Applicant and Respondents:

M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV-585B, Azheekode, Eriad Block, Thrissur – 680 666, Represented by its Director Shameer P.H.

Official Liquidator, High Court of Kerala, Company Law Bhavan, 3rd floor, Thrikkakara P.O., Kochi - 682 021.

Co.Appl.55/23 & connected 8 Company Application under Rule 9 of the Companies (Court) Rules, 1959 filed by the applicant above named praying for an order that :

1. In view of the failure of the 1st Respondent Company in the instant petition to adhere to the terms and conditions of the E-Auction and orders of Hon'ble High Court, cancel the letter dated 02.02.2023 issued by the 2nd Respondent Official Liquidator in favour of the 1st Respondent Company confirming the sale in their favour and order that EMD paid by them stands forfeited;

2. In view of the failure of the 1st Respondent Company to adhere to the terms and conditions of the E-Auction and orders of Hon'ble High Court, and in light of the petitioner/applicant's offer to purchase the assets for Rs.75 Crores, confirm the sale of assets in favour of the Petitioner/Applicant for Rs.75 Crores.

This Company Application coming on for orders on this day upon hearing Sri.P.K.Ibrahim & Sri.Sreeji K.B., Advocates for the applicant, Sri.M.P.Sreekrishnan, A.Muhammed Musthafa & Sony Benny, Advocates for R1, Sri.K.Moni, Standing Counsel for the Official Liquidator and Sri.E.K.Nandakumar (Sr) and M/s.M.Gopikrishnan Nambiar, K.John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C.Abraham, Raja Kannan and Pooja Menon, Advocates for R3, the Court passed the following:-

Co.Appl.55/23 & connected 9 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.75/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Applicant:

Krishnaraj Rubbers Pvt. Ltd., 13 Third Cross Main Road, Kalyanasundaram Nagar, Karumandapam Tiruchirappalli 620 001, Represented by authorised representative Mr.Ziyad Hamsa.

Respondents:

Official Liquidator of Travancore Rayons Limited, High Court of Kerala, 'Company Law Bhavan', 3rd floor, B.M.C. Road, Thrikkakara P.O., Kochi - 682 021.

Shafasil Traders and Contractors Pvt. Ltd., Door No.14/585-A, 14/585-B, Anchappalam Road, Azhikode, Thrissur – 680 666.

Company Application under Rule 9 of the Companies (Court) Rules, 1959 filed by the applicant above named praying for an order :

Co.Appl.55/23 & connected 10

1. To set aside the bid allotted to H-1 Respondent No.2 vide order dated 02.02.2023.

2. Consider the offer granted by Applicant herein before this Hon'ble Court.

3. If the prayer (2) is not granted, in the alternate this Hon'ble Court may order for re-auction of the assets stated in Lot 1 of Schedule No.1 of Annexure 3 Terms and Conditions.

4. Pass such other relief/order that this Hon'ble Tribunal may deem fit in the facts and circumstances of the present case.

This Co. Application coming on for orders on this day upon hearing Sri.Pradeep Joy, Smt.Dharmya M.S. & Smt.Anjaly Ann Joseph, Advocates for the applicant.

Sri.K.Moni, Standing Counsel for the Official Liquidator & Sri.M.P.Sreekrishnan, Advocate for R2, the Court passed the following:-

Co.Appl.55/23 & connected 11 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.79/2023 in Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Petitioner/Applicant:- M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV/585B, Azheekode, Eriyad Block, Thrissur – 680 666, Represented by its Director, Padinjareveetil Abdul Jabbar Muhammed Sageer.

Respondents/Respondents:

Official Liquidator, (M/s.Travancore Rayons Limited - In Liquidation), High Court of Kerala, Ernakulam, Pincode – 682 031.

M/s.South Indian Scrap Traders, 32/366P, Opp. Juma Masjid, Puthiya Road, Palarivattom, Kochi, Kerala – 682 025, Represented by Proprietor Shri.P.A.Mohammed Ali, Residing at Pallachi (H), Arkakkadavu, Vennala P.O., Kochi – 682 028.

Company Application under Rule 6 and 9 of the Companies (Court) Rules, filed by the petitioner above named praying for an order to issue a direction to the Official Liquidator High Court of Kerala to accept the payment of Rs.36,23,30,000/- covered by Manager's Cheque number 003678 dated 19/05/2023 drawn on HDFC Bank Edappally Branch towards payment of the full balance of the bid amount of Rs.73,40,30,000/- and to kindly extend the time for the payment of balance bid amount till such date.

Co.Appl.55/23 & connected 12 This Company Application coming on for orders on this day upon hearing Sri.M.P.Sreekrishnan & Sri.Amal George, Advocates for the applicant, Sri.K.Moni, Standing Counsel for the Official Liquidator and Sri.E.K.Nandakumar (Sr) and M/s.M.Gopikrishnan Nambiar, K.John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C.Abraham, Raja Kannan and Pooja Menon, Advocates for R2, the Court passed the following:--

Co.Appl.55/23 & connected 13 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.87/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Respondents/Respondents:

Official Liquidator, High Court of Kerala, Company Law Bhavan, 3rd Floor, Thrikkakara P.O., Kochi - 682 031.

M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV/585B, Azeekode, Eriyad Block, Thrissur – 680 666, Represented by its Director, Shameer P.H.

Company Application under Rule 9 of the Companies (Court) Rules, 1959 filed by the applicant above named seeking to permit the applicant to deposit the bid amount and to confirm the sale in their favour.

This Company Application coming on for orders on this day upon hearing Sri.George Poonthottam (Sr.), Sri.K.P.Sujesh Kumar & Smt.Keerthi K.Narayan, Advocates for the applicant, Sri.K.Moni, Standing Counsel for the Official Liquidator and Sri.M.P.Sreekrishnan, A.Muhammed Musthafa & Sony Benny, Advocates for R2, the Court passed the following:-

Co.Appl.55/23 & connected 14 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Others (Co.Appl. No.1/2023) in Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Applicant:

Krishnaraj Rubbers Pvt. Ltd., 13 Third Cross Main Road, Kalyanasundaram Nagar, Karumandapam Tiruchirappalli 620 001, Represented by authorised representative Mr.Ziyad Hamsa.

Respondents 1.

Shafasil Traders and Contractors Pvt. Ltd., Door No.14/585-A, 14/585-B, Anchappalam Road, Azhikode, Thrissur – 680 666.

Official Liquidator of Travancore Rayons Limited, High Court of Kerala, 'Company Law Bhavan', 3rd floor, B.M.C. Road, Thrikkakara P.O., Kochi - 682 021.

Company Application under Rule 9 of the Companies (Court) Rules, 1959 filed by the applicant above named praying for an order:

1. To permit the Applicant herein to implead in the Com.Appl. No.53/2023 in Co.Pet. No.14/2002.

Co.Appl.55/23 & connected 15

This Company Application coming on for orders on this day upon hearing M/s.Pradeep Joy, Dharmya M.S., Anjaly Ann Joseph and Rohan Kumar, Advocates for the applicant, Sri.M.P.Sreekrishnan, A.Muhammed Musthafa & Sony Benny, Advocates for R1, Sri.K.Moni, Standing Counsel for the Official Liquidator, the Court passed the following:-

Co.Appl.55/23 & connected 16 IN THE HIGH COURT OF KERALA AT ERNAKULAM (Original Jurisdiction) In the matter of the Companies Act, 1956 and In the matter of M/s.Travancore Rayons Ltd.(in Liquidation) Co.Appl. No.1/2023 in Co.Appl. No.53/2023 in Co.Pet.14/2002 Before:

The Honourable Mr. Justice DEVAN RAMACHANDRAN Tuesday, the 27

th day of June, 2023/6

th Ashada, 1945

Applicant/Third Party/Additional Respondent:- Yazh Industries, 340, Somanur road, Opp KVB Bank, Karumathapatty, Coimbatore, Tamilnadu, Pin – 641 659, Represented by its Partner Sumathi.

Respondents/Applicant and Respondents 1 and 2:

Official Liquidator, High Court of Kerala, Company Law Bhavan, 3rd Floor, Thrikkakara P.O., Kochi – 682 021.

M/s.Shafasil Traders and Contractors (P) Ltd., XIV-585A, XIV/585B, Azheekode, Eriad Block, Thrissur – 680 666, Represented by its Director Shameer P.H.

Co.Appl.55/23 & connected 17 Company Application under Rule 9 of the Companies (Court) Rules, 1959 read with order 1 Rule 8A and 10(2) of Code of Civil Procedure filed by the applicant above named seeking to be impleaded in the above company application as additional respondent No.4.

This Company Application coming on for orders on this day upon hearing Sri.Pradeesh Chacko and Sri.Shaji Chirayath, Advocates for the applicant, Sri.E.K.Nandakumar (Sr) and M/s.M.Gopikrishnan Nambiar, K.John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C.Abraham, Raja Kannan and Pooja Menon, Advocates for R1, Sri.K.Moni, Standing Counsel for the Official Liquidator and Sri.M.P.Sreekrishnan, A.Muhammed Musthafa & Sony Benny, Advocates for R3, the Court passed the following:-

Co.Appl.55/23 & connected 18 DEVAN RAMACHANDRAN, J.

-------------------------------------------------- Co.Appl.Nos.55/2023, 53/2023, 67/2023, 70/2023, 75/2023, 79/2023, 87/2023, Others (Co.Appl.1/2023) & Co.Appl.No.1/2023 in Co.Appl.No.53/2023 in Co.Pet.No.14/2002 -------------------------------------------------- Dated this the 27th day of June, 2023 O R D E R The Travancore Rayons Ltd., a company incorporated under the provisions of the Companies Act, 1956, has been ordered to be liquidated by this Court, through order dated 27.02.2019.

The Official Liquidator, in due course, settled the terms and conditions for sale of the movable assets of the company through e-auction; and the auction was thus confirmed on 24.01.2023 in favour of ‘Shafasil Traders and Contractors Private Ltd.’ (hereinafter referred to as ‘Shafasil Traders’), the highest bidder.

The highest bidder was intimated by the Official Liquidator about the confirmation of the auction in its favour on 02.02.2023;

and as per the approved terms of e-auction, they had 30 days time, namely until 03.03.2023, to deposit the balance auction amount, after

Co.Appl.55/23 & connected 19 deducting Rs.17,00,000/- being the Earnest Money Deposit (EMD).

However, instead of making the deposit of Rs.73,23,30,000/-, which is the admitted auction amount after deducting the EMD, the highest bidder - ‘Shafasil Traders’, filed C.A.No.39/2023 with the following prayer:

“This Hon’ble Court to direct the Official Liquidator of the Hon’ble Court to permit the Applicant to remit 10% of bid amount as stipulated in Annexure-A forthwith and balance amount within three months in three instalments, and permit him to execute the work in proportion to the amount remitted in the above Company petition in the interest of justice.” (emphasis supplied) 5.

A learned Judge of this Court considered this application on 02.03.2023 and issued 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 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.

Co.Appl.55/23 & connected 20 The application stands disposed of.” 6.

It is thus obvious that the prayers sought for by “Shafasil Traders” had been accepted and they were given 30 days time from the date of order, to deposit the balance auction amount, which is to mean 90% of it, because the said Company had sought that they be allowed to deposit 10% forthwith.

However, “Shafasil Traders”, thereafter, filed CA No.53/2023, producing along with it a Demand Draft (DD) dated 03.04.2023, for an amount of Rs.37 Crores, averring specifically that they were facing financial constraints and incapacitated from making payment of the total amount.

It appears that the afore application was considered by this Court on 05.04.2023 and the above mentioned DD was handed over by the learned counsel for “Shafasil Traders” to the Official Liquidator – who, in anticipation of the orders of this Court, accepted the same;

and it transpires that he had also encashed the same.

While so, various other Company Applications tagged along with the above said application of “Shafasil Traders”, were filed by erstwhile bidders and others, offering much higher amounts than what

Co.Appl.55/23 & connected 21 has been received by the Official Liquidator in the auction.

10.

Perhaps being alerted by the afore developments, “Shafasil Traders” then filed CA No.79/2023, averring that, since the above mentioned DD was allowed to be accepted by the Official Liquidator on 05.04.2023, they should be permitted to remit the balance amount of Rs.36,23,30,000/-, which they assert they have drawn a cheque dated 23.05.2023.

11.

However, since this Court had neither allowed “Shafasil Traders” to deposit the DD with the liquidator, nor had issued any authorisation given to the latter to encash it, an order was issued on 07.06.2023 to the following effect:

“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 accurate

Co.Appl.55/23 & connected 22 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.

1, 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 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.” 12.

Today, Sri.M.P.Sreekrishnan – learned counsel for “Shafasil Traders”, submitted that his client has not accepted money from the Official Liquidator because, they intend to press three Company Applications filed by them for orders.

13.

Sri.M.P.Sreekrishnan, vehemently argued that, under Clause 13 of the Terms and Conditions of the approved E-Auction, it is

Co.Appl.55/23 & connected 23 always open to this Court to delete, amend or modify such; and that it is this, which had been done by a learned Judge of this Court, while issuing the order dated 02.03.2023 in CA No.39/2023. He submitted that since his client was given a month’s time by this Court to deposit the bid amount – even though a request was made for three months, and making it clear that it will be “subject to all exceptions and keeping it open”, it was fully available to his client to approach this Court again, seeking more time because, they had proved their bonafides by placing on record the DD dated 03.04.2023 for a sum as large as Rs.37 Crores. He argued that when this amount had been accepted by the official Liquidator, his client’s request, for further time to deposit the balance amount of Rs.36,23,30,000/-, ought to be allowed. He contended that the averments in CA No.53/2023, read with those in CA No.79/2023, would render his client wholly deserving of the reliefs pleaded for, particularly because, as said above, it is up to this Court to relax or modify the terms of the E-Auction.

14.

That being so, even though I am considering all the afore Company Applications together, it is without doubt that, as far as those other than CA Nos.53/2023 and 79/2023, the applicants therein

Co.Appl.55/23 & connected 24 seek that they be impleaded in the Company Petition and that their better offers be accepted by this Court. Prima facie, it does not require expatiation that this Court cannot be relegated to the position of an auctioneer, so as to then consider larger and better offers in preference to “Shafasil Traders”. I will, however, deal with this issue in more detail, after answering the contentions of the said Company, because if their pleas are accepted, other Applications would become irrelevant.

15.

The facts involved in this case are without any dispute and, in fact, are expressly conceded.

16.

The auction of the movable assets of the Company in liquidation was confirmed on 24.01.2023 and intimated to “Shafasil Traders” on 02.02.2023. They, admittedly, had thirty days time, as per the approved Terms of the E-Auction, to deposit Rs.73,23,30,000/-, being the balance of the auction amount of Rs.73,40,30000/-, after adjusting the EMD amount of Rs.17 lakhs – which was to expire on 03.03.2023.

17.

However, instead of doing so, “Shafasil Traders” filed CA No.39/2023 on 01.03.2023, which was then considered by this Court

Co.Appl.55/23 & connected 25 on 02.03.2023, allowing the prayers as sought for therein; and thus granting 30 days more time to deposit the balance amount, making it clear that if this is not done, the provisions of law as applicable to the auction will be considered at an appropriate time.

18.

Going by the prayers in CA No.39/2023, “Shafasil Traders” sought permission to deposit 10% of the balance bid amount forthwith and the balance in three installments. This request was only accepted in part by this Court, granting 30 days time to pay the balance, and that too in a lumpsum. As said above, it was made clear in the said order that if this is not complied with, the provisions of law, as applicable to the auction would become attracted.

19.

Apodictically, therefore, when the order of this Court dated 02.03.2023 was issued, it was for “Shafasil Traders” to have deposited 10% of the balance auction price before the official Liquidator immediately and the balance within 30 days, which is to mean, on or before 03.03.2023. But “Shafasil Traders” did not do either of the above, but filed CA No.53/2023 on 03.04.2023, seeking that they be allowed to pay Rs.37 Crores, which they produced as a DD of the same date and “to extend the time for payment of the balance

Co.Appl.55/23 & connected 26 amount by another month”(sic). This application was considered on 05.04.2023, but no orders were issued because, by then, some of the other Company Applicants raised objections, saying they have filed, or intend to file, separate applications; and the matter was, thereafter, adjourned to another day for consideration.

20.

While so, “Shafasil Traders” filed CA No.79/2023 on 25.05.2023, asserting that this Court had permitted the Official Liquidator to accept the DD for Rs.37 Crores; thus praying that the said Authority be directed to accept the balance amount of Rs.36,23,30,000/-, which they said they were willing to offer him by way of a cheque, bearing No.003678, dated 19.05.2023, drawn on HDFC Bank, Edapally branch.

21.

As I have already indited above, the averments in CA No.79/2023 - to the effect that this Court had permitted the Official Liquidator to accept the DD – were not true and it was therefore, specifically stated so in the order dated 07.06.2023, which is extracted above.

22.

In the afore scenerio, when one examines the plea of “Shafasil Traders”, it is indubitable that, as per the terms of the E-

Co.Appl.55/23 & connected 27 Auction, their 30 days period – to pay the entire auction amount – expired on 03.03.2023. Another 30 days time was given to them by this Court to deposit the balance after 10% of the auction amount – which they offered to remit forthwith; and this period expired on 02.04.2023 or 03.04.2023, depending upon whether 03.03.2023 is to be accounted for.

23.

As I have already said above, on 03.04.2023, C.A.No.53/2023 was filed by ‘Shafasil Traders’, seeking further time to deposit the balance and virtually admitting – it being not even averred to such effect – that 10% of the auction amount had not been remitted as undertaken by them until then.

24.

To make matters worse, even though C.A.No.53/2023 was pending before this Court without orders, they filed C.A.No.79/2023, offering to pay the balance amount of Rs.36,23,30,000/- by way of a cheque dated 23.05.2023. Going by the date in this cheque, it is much beyond even the period they had asked for in C.A.No.53/2023.

25.

The afore certainly, therefore, places ‘Shafasil Traders’ in a piquant situation. They have conceded before this Court – through various averments in the afore three applications – that they were not

Co.Appl.55/23 & connected 28 able to raise funds required to honour the bid amount in time, due to financial constraints. Of course, they explain that they had other commitments, including with the company in liquidation.

26.

However, it is now well settled – by various judgments of this Court, as also that of the Honourable Supreme Court – that the terms of an auction have to be construed strictly, subject to only the exceptions available in law. Even when this Court has reserved to itself the power to modify or delete the said conditions, this can be done only for valid and compelling cause, to be edificed on legal imperatives.

27.

In the case at hand, apart from financial crisis, ‘Shafasil Traders’ do not state any other reason for seeking repeated extensions and in not complying with the deadlines fixed; and obviously, it would not require this Court to speak elaborately while denying them the reliefs sought for, especially when they had participated in the auction, being fully aware of the strict dates applicable.

28.

Before I conclude, I must certainly address another argument of Sri.M.P.Sreekrishnan – learned counsel for ‘Shafasil Traders’, that since his client has proven their bonafides by making

Co.Appl.55/23 & connected 29 substantial payment, the jurisdiction of this Court under Clause 13 of the terms of E-Auction could be validly invoked by them, which is to say, for its modification or amendment. Here again, I must say that this Court cannot find in favour of ‘Shafasil Traders’ for the following reasons:

a) They did not remit 10% of the bid amount, which they agreed to do before this Court, even after Co.Appl.No.39/2023 was disposed of;

b) They did not remit the balance amount in full even within the 30 days period granted by this Court in Co.Appl.No.39/2023 and;

c) They did not even offer the balance amount of Rs.36,23,30,000/- within a period of one month from the date on which Co.Appl.No.53/2023 was filed, though it was the only period asked for by them.

29.

The afore being said, the request of ‘Shafasil Traders’ for further extensions can never be considered or found tenable for another reason. This is because, had the other bidders been aware that they would also obtain extended time frames for honouring the bid amount, it is certainly possible that they would have offered much

Co.Appl.55/23 & connected 30 higher price than what they bid. It is solely because they were guided by the impression – which is justified from the terms of E-Auction – that the time frames fixed therein are inflexible, except in exceptional circumstances, that many of them may have not offered higher amounts. This is perceptible because, they have now approached this Court, through other Company Applications, offering much higher amounts than what has been offered by ‘Shafasil Traders’.

30.

In the afore circumstances, it is without doubt that Co.Appl.Nos.53/2023 and 79/2023 cannot find my favour and no orders can be issued therein as prayed for. Consequently, ‘Shafasil Traders’ is at liberty to obtain back the amount of Rs.37 Crores now retained and deposited by the Official Liquidator in terms of the directions of this Court dated 07.06.2023. As regards the EMD, they would be at liberty to approach the Official Liquidator for appropriate orders, which he will consider as per the approved terms of the E- Auction.

31.

That now brings me to other Company Applications tagged along.

32.

As I have already indited above, the applicants in these

Co.Appl.55/23 & connected 31 applications assert that they are willing to offer larger amounts than what has been bid by ‘Shafasil Traders’. As indicated earlier, this Court is incapacitated from dealing in any manner with the conduct of auction; and it is for the Official Liquidator to take necessary action, if the highest bidder fails to honour its commitment. The applicants, therefore, would certainly have to move the Official Liquidator appropriately, if they are interested in any relief; though, prima facie, as a normative rule, it would be for the said Authority to call for a fresh auction in terms of law, after getting necessary approval from this Court.

These applications are also, therefore, devoid of merit and are consequently, dismissed.

Sd/- SAS/ACR/RR DEVAN RAMACHANDRAN JUDGE