Appeal Nos
636 37 of 1993 From the Judgment and Order dated 202
1992 of the Calcutta High Court in Appeal No 493 of 1990
Harish Salve and Indranil Ghosh for the Appellants
P Chidambarani
Lahoty Ms section Khazanchi K 
J Heard the counsel for the parties
Leave granted in both the SLPs
We shall first deal with the appeal arising from SLPc No 537792 1068 The appeal is directed against the order dated 431992 passed by a Division Bench of the Calcutta High Court modifying its earlier order of November 13 1990
The controversy in this appeal pertains to the terms of sale of the assets of a Company in liquidation
A few facts are necessary to be stated to appreciate the controversy
Neptune Paper Mills NPM was directed to be wound up by the Company Court on August 41987
The Official Liquidator took possession of the assets of the company under the orders of the Court
NPM had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India ICICI WBIDC and IDBI on security of its assets
In view of the default committed by it in repayment the financial institutions FIs recalled their loans in April 1988 with the result all the loans in their entirety became due at once
On August 8 1988 the FIs were granted leave to file a suit under Section 446 of the 
A suit was filed by them in September 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too
In January 1990 the company court directed the sale of the assets of the company in liquidation
Before making the said order the court had obtained a valuation of the said assets
The valuation was at Rs 4 crores
Sale notices were published from time to time in response to which certain offers were received the highest of them being Rs 690 crores
For one or the other reason no offer was accepted and sale notice published again
It would be appropriate at this stage to notice the terms of the sale notice which led to the sale in favour of the respondent Buxa Holdings Limited since re named as Kanoi Agrotech Limited hereinafter referred to as Buxa
The Sale notice published in the newspaper The Hindu  dated 10th April 1990 reads as follows PUBLIC NOTICES Sale Notice Sale Notice Sale Notice In the matter of Neptune Paper Mills Ltd in Liquidation That in terms of the order of the Hon ble High Court Calcutta dated 3490 take notice the sale of the above 1069 named company as going concern and as is where is and whatever there is basis will be held at 200 pm on 17490 in the open Court of the Hon ble Company Judge High Court Calcutta
The bids of such sale will be started from 690 crores
The successful bidders must deposit 10 of histheir bids in the Court at the time of sale
The balance amount of the sale price may be paid by instalments as would be fixed by the Hon ble Court Calcutta ie deferred payments of instalments will be considered
The Purchaser shall have to enter into an agreement and or memorandum of understanding with the employees  union in the same line with which has already been entered into with one of the bidders in court
The bidder may have inspection of the assets of the company on applications to Official Liquidator before the sale of date
Terms and condition along with the list of assets will be available at the office of the undersigned during the office hours
Official Laiquidator High Court Calcutta Dated the 10th April 1990
 The significant thing to notice is that the sale notice did not specify the number of instalments nor did it specify the period within which the entire consideration was to be remitted
All that it stated was that 1 the said company in liquidation will be sold as a going concern on as is where is and whatever there is basis 2 the bids will start from 690 crores 3 the successful bidder must deposit 10 of his bid at the time of the sale 4 the balance amount of the sale price may be paid by instruments as would fixed by the Hon ble Court Calcutta ie deferred payment of instalments will be considered and 5 the purchaser shall have to enter into an agreement and understanding with the employees  union on the same lines as has been entered into previously by one of the bidders
In pursuance of the said sale notice certain offers were received including the one by Buxa
Its offer was in a sum of Rs6 crores subject to certain terms and conditions stipulated therein
In short it proposed to pay the said amount in instalment  Rs45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale
When the matter 1070 was taken up by the learned Company Judge on 17th September 1990 only two parties remained in the field
They were asked to raise their bids
Buxa raised its offer to Rs 8 crores the higher of the two
The learned Judge accepted its offer subject to the condition that the balance consideration after deduction 10 earnest money which was to be deposited immediately shall be paid in instalments prescribed by him
The learned Judge directed that for the first two years following the sale Rs 60 lakhs shall be paid each year
Thereafter half yearly instalments of Rs30 lakhs shall be paid until the entire eat nest money is paid off
No interest was stipulated
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited
Certain other conditions were also stipulated but it is not necessary to notice them for the purpose of this appeal
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and prejudicial to the interest of the FIs an appeal was preferred by them before the Division Bench
On a consideration of relevant circumstances the Division Bench came to the opinion that it would not be appropriate for it to set aside the sale and that no useful purpose will be served by postponing the sale of the assets any further
At the same time it was of the opinion that some more safeguards should be provided to protect the interest of the F1s Accordingly it effected the following modifications in the terms of sale i The balance consideration namely Rs7 crores 20 lakhs the earnest money of Rs 80 lakhs was already deposited shall be paid in the following manner for the first two years the instalments payable each year shall be Rs 60 lakhs thereafter half yearly instalments in a sum of Rs 40 lakhs each shall be paid till the entire consideration is paid off
The first instalment shall be paid by 10th June 1993 and the last instalment by 30th June 2000 AD ii In case of default in payment of any one instalment the official liquidator shall be entitled to take possession of the assets sold
In such an eventuality the entire earnest money and other instalments paid till then shall stand forfeited
iii Buxa shall provide a revolving bank guarantee in favour of the official liquidator for a sum of Rs 60 lakhs till all the instalments are paid
The bank guarantee shall be furnished within three weeks from the date of the order and shall be kept alive till the entire consideration is paid off
It Is not necessary to notice the other terms and conditions
This order was made on November 13 1990
1071 Aggrieved by the order of the Division Bench FIs
approached this Court by way of a Special Leave Petition SLP 1492990 which was disposed of on 19111990 under the following order  Taken on Board on being mentioned
We have heard Mr Gopal Subramanium for the petitioner and counsel for the respondents
We are of the view that some of the allegations which Mr Subramanium makes can be appropriately dealt with by the High Court in the case the High Court is moved again but at present we do not think it would be advisable to interfere with the order of the High Court
We gather today is fixed as the date of which the possession of property would be transfered from the official liquidator to the purchaser
To secure the interest of the Financial institutions the petitioner we are of the view that until the High Court makes its order the purchaser shall be taken to be the receiver and shall be accountable to be a receiver Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order
In this application the FIs prayed that the order dated 13th November 1990 be recalled the sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs 72 crores at once
It was submitted by the FIs
that the company in liquidation has been directed to be sold by the company court free from all encumbrances that the financial institutions have a charge for Rs 8 crores on the assets of the company in liquidation and the granting a period of 10 years for paying the balance consideration in instalments is highly prejudicial to the interest of the F Is
Not taking adequate security from the Buxa for proper payment of balance consideration it was submitted was also prejudicial to their interest
At the time of arguments however their counsel did not press the request for setting aside the sale
His main submission was that Buxa be directed to pay the entire balance consideration immediately and that till the payment is made it should be directed to furnish a bank guarantee besides interest  15 per annum
Alternately it was submitted that the number of instalments granted be reduced sharply with a provision for interest thereon
The Division Bench disposed of the said application by its order dated 2021992
It held that 1 the FIs
secured creditors by their acts and conduct have come within the winding up and
therefore the 1072 assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage
2 The purchaser Buxa has taken possession of the assets sold has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factory
3 In the above circumstances the FIs
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation
4 The only question that survives for consideration is whether the time for making the payment should be curtailed and whether some interest should be directed to be paid by the purchaser
The application was disposed of with the following directions a The purchaser Buxa shall pay in the year 1992 a sum of Rs 80 lakhs in six bimonthly instalments payable on the last day of February April June August October and December
b In the year 1993 the sum payable shall be Rs 85 lakhs
In 1994 it shall be Rs 90 lakhs and in 1995 Rs 95 lakhs
In the year 1996 and thereafter the annual amount payable shall be Rs one crore till the entire consideration is paid off
c The revolving bank guarantee shall be equal to the amount payable in each of the said years
d Along with the last instalment the purchaser shall pay a lumpsum of Rs 25 lakhs as and by way of interest
e The purchaser shall not encumber alienate or transfer assets purchased by him so long as the entire consideration is not paid
This does not however prevent it from raising monies by hypothecation mortage or by creating charge on the said assets
f In default of payment in any two of the bimonthly instalments the Official Liquidator shall take possession of the assets sold and all the amounts paid till then shall stand forfeited
A few other directions were made which not being relevant herein need not be noticed
In this appeal it is contended by Sri Salve learned counsel for the appellants that the procedure followed by the High Court for selling the 1073 assets of the company in liquidation is not fair and proper and that its has caused grave prejudice to the interest of financial institutions
He submitted that by granting such liberal instalments the present price of the assets sold is no more than Rs 4 crores whereas the total amount due to the financial institutions is more than Rs 12 crores
He submitted that either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration
On the other hand Sri P Chidambaram learned counsel for the purchaser submitted that it is not open to this court at this stage to effect any modification in the terms of the sale
The purchaser in any event is not agreeable to any further modification
If this court proposes to effect any modification in the terms of sale the purchaser should be left free to withdraw his offer and to walk out
The learned counsel submitted that Buxa s offer of Rs 6 crores which was ultimately raised to Rs 8 crores was subject to the conditions contained in its offer
True it is that Buxa accepted the terms and conditions stipulated by the Company Judge which were different from those stipulated by it
But this was by its consent
As a matter of fact with a view to save its investment which it had already made by the date of the judgment of the Division Bench it even agreed to certain further modifications being made by the Division Bench on both the occasions
The purchaser is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration
He submitted that the purchaser has invested huge sums of money and has reemployed almost all the workers and that it is not in a position to bear any further financial burden
11 Before we deal with the contentions urged by the learned counsel we feel constrained to make certain observations with respect to the terms of the sale notice issued by the court
While we agree that there is no standard or uniform pattern to be followed in such matters it would be appropriate for the court to adopt such procedure as would avoid a situation where the courts is put to the task of negotiating the terms of sale with the parties
That would not be consistent with the dignity of the court
It would also give room for avoidable criticism and comment
It would have been better if the sale notice itself had prescribed the number of instalments which would be granted to the purchaser besides other terms and conditions and then invited offers on that basis
Alternately the court could have invited the offers subject to such conditions as the offerers may 1074 prescribe and then have them evaluated by a qualified person and select the most appropriate one
If none of them are found acceptable and if the court thought it appropriate it could also allow the bidders to submit revised offers and then have them evaluated
We are not saying that these are the only two methods
There may be others
Our object is only to emphasise that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties
The sale notice in this case merely stated that the balance consideration may be paid in instalments as would be fixed by the court
The number and duration of instalments and other allied terms like bank guarantee nature and terms of default clause payment of interest on instalments were all left to be determined by the court
It is true that in this case the bid of Rs 6 crores was got enhanced to Rs 8 crores with lesser number of instalments that offered by the purchaser all as a result of persuasive efforts by the Company Judge
Even so it has given room for the argument that had it been known beforehand that so many instalments would be granted without stipulation of interest several higher offers could have been received
We are not prepared to agree with Mr Chaidambaram learned counsel for Buxa that this court has no power at this stage to modify the number of instalments
Nor do we see any basis for Buxa to take up the stand that either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment
This it cannot do for more than one reason
Firstly the sale notice itself stated that the balance amount of the sale price may be paid by instalments as would be fixed by the Hon ble court Calcutta ie deferred payment of instalments will be considered
What the High Court of Calcutta could do can equally be done by this court sitting in appeal
Secondly the purchaser had repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may be imposed by the Court
We may refer to the stand taken by the counsel for the purchaser before the Division Bench as recorded in its order dated 13th November 1990
It reads thus Mr Mukherjee learned Advocate appearing on behalf of the purchaser has submitted that the sale in this case was sale of assets of the Mill as a going concern and not merely sale as scrap
The Court had power to grant such instalments whether it was specifically provided in the terms and conditions as advertised or not
In this connection he has drawn our attention to clause 10 of the Terms
He has 1075 submitted in the present case the court had granted such instalments for such period and on such terms after considering all the facts para 7
He has submitted that in any event if this court is not inclined to approve the confirmation of the sale on the terms and conditions as prescribed by the Trial Court it may allow such confirmation in favour of his clients to remain but provide for some modification andor addition to such term and conditions if this court think it fit and proper
In this context he has submitted that so far as the instalments are concerned the quantum may be increased so that all the instalments are paid by the year 2000 AD instead of 2002 AD as directed by the impugned order
So far as the guarantee is concerned he has submitted that the court can provide for similar guarantee as provided for in other cases for sale by court in cast of default
He also submitted that it may be provided that the charge of the secured creditors be shifted to the sale proceeds and that the sale which was free from encumbrances should be subject to this that his clients should approach the financial institutions for further financial held para 8   Even before the second Division Bench which passed the impugned order the purchaser did not take up the stand that the court has no power to modify the terms and conditions of sale
All that its counsel submitted was that having regard to the facts and circumstances of the case the instalments should not be reduced
The impugned order records the contention of the purchaser s counsel in the following words It is submitted by Mr Mukherjee learned counsel for the purchaser that having regard to the commitments of the company and the fact that former employees have been re employed and the company has to consistently run on a profitable basis it would not be possible to reduce the instalments any further
 Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company we are of the opinion that certain modifications should be made in the number of instalments in which the balance consideration shall be paid
But before we do so we must refer to a particular fact which discloses the unfair conduct of the purchaser Buxa
According to the impugned order the purchaser had to pay a sum of Rs 80 lakhs in the year 1992 in bimonthly instalments
It paid only a total sum of Rs 28 lakhs
The excuse now put forward for nonpayment of the 1076 balance of 52 lakhs is the order of status quo  passed by this court Having entertained the SLP filed by the financial institutions this court K Jayachandra Reddy and late RC Patnaik JJ passed the following order on 1451992 Heard both the parties
Status quo to be maintained
The second respondent in SLPC 537792 shall not encumber alienate or transfer the assets of the company in liquidation purchased by him
Respondent No2 shall however maintain accounts and as and when required produce the same before the Court
Post the matter before an appropriate Bench on 2171992
Meanwhile if the parties alone chose to file affidavits they may file
As the matter before us is at an interlocutory stage it need not be treated as part heard
 It is evident from a reading of the order that the order to maintain status quo did not and could never have meant stay of instalments payable by the purchaser in accordance with the impugned order
To say so would amount to placing a totally unreasonable and unwarranted interpretation upon the said order
It would be unfair above all
The purchaser has been put in possession of the assets purchased by him and no fetter whatsoever was ever placed by the said order upon his possession or enjoyment of the property purchased by him
The idea behind the order was that the purchaser should not transfer alienate or encumber assets purchased and that he should maintain the accounts and produce them before the court
The order directing that status quo to be maintained has to be understood in the said context
We must say that after some debate Mr Chidambaram agreed fairly that his client s interpretation of the said order was wrong that he retreats his default and that he is prepared to pay the said amount of Rs 52 lakhs along with such interest as may be prescribed by this Court
It is directed that the purchaser shall pay the said amount of Rs 52 lakhs due for the year 1992 in terms of the impugned order along with an amount 107 of Rs 6 lakhs representing the interest on the said amount consolidated ie a total of Rs 58 lakhs on or before 5th March 1993
This payment shall be in addition to such other amounts as may be payable in accordance with the impugned order as modified by us herein
Now coming to the modification of the terms imposed in the order under appeal the only modification we wish to make is in the number of instalments
After the payment of the aforesaid Rs 52 lakhs due in the year 1992 the total balance consideration will be Rs 580 crores
This amount shall be paid in full by the end of the year 1996 in equal bi monthly instalments
The instalments shall be payable by the last day of February April June August October and December in each year
This means that each instalment excepting the last instalment shall be in a sum of Rs2416000
The last instalment shall be in such sum as to make up the total shortfall payable on that date ie Rs 2016000
There shall be no other modification in the terms and conditions prescribed in the order under appeal including those relating to default and interest
Having regard to the facts and circumstances of the case there shall be no order as to costs
For the reasons given above the appeal arising from SLP C No 673692 filed by the purchaser is dismissed
No costs
GNR Appeal dismissed


Summary:
Section 2a of the UP Krishi Utpadan Mandi Adhiniyam of 1964 defined agricultural produce 
The words gur rab shakkar Khandasari and jaggery  were added in the said definition by UP Act No 10 of 1970
A Division Bench of the Allahabad High Court referred the question whether gur lauta and raskat and rab salawat are liable to the law of market fee under the UP Krishi Utpadan Mandi Adhiniyam of 1964 to a Full Beach
The Full Bench held that gur lauta and raskat and rabgalawat and salawat were not an agricultural produce  within the meaning of the Act and other Benches followed the Full Bench
In the appeals to this Court it was contended on behalf of the appellants that when gur khandsari and shakkar have been added in the definition of agricultural produce  rab galawat
or rab salawat being the inferior forms of the rab are necessary an agricultural produced within the definition of agricultural produce
On behalf of the respondents it was contended that the Full Bench was right in taking the view that molasses are a different product which looses its original character and being a residual article after solidification of the natural article ie sugarcane juice it cannot be said to be an agricultural produce that molasses itself being not an agricultural produce gur lauta and raskat prepared from molasses cannot be held to be an agricultural produce
Allowing the appeals this Court HELD 1
A persual of the definition of agricultural produce  under Section 2a of the Act shows that apart from items of produce of agriculture horitculture viticulture apiculture sericulture pisciculture 1037 1038 animal husbandry or forest as are specified in the Schedule the definition further includes admixture of two or more such items  and thereafter it further includes taking any such item in processed from  and again for the third time the words used are land further includes gur rab shakkar khandsari and jaggery
1041C 2
It is a well settled rule of interpretation that where the legislature used the words means  and includes  such definition is to be given a wider meaning and is not exhaustive or restricted to the items contained or included in such definition
1041D 3
The meaning of agricultural produce  in the above definition is not restricted to any products of agriculture as specified in the Schedule but also includes such items which come into being in processed form and further includes such items which are called as gur rab shakkar khandsari and jaggery
1041E 4
Gur lauta or raskat and rab salawat made from sugarcane or from molasses shall fall within the definition of agricultural produce  as contained in Section 2a of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam and are exigible to market fee
The view taken by the Full Bench of the High Court is not correct 1042C 1043D Rathi Khandsari Udyog etc
vs State of UP  Ors etc
   Kishan Lal and Ors
vs State of Rajasthan  Ors
 1990 2 SCR 142 and Bharat Trading vs State of UP  Ors WP C No 9982 decided on 31st March 1992 referred to