Appeal No 690 of 1993
From the Judgment and Order dated 2151992 of the Patna High 13 Court in Civil Writ Jurisdiction Case No 1317 of 1990
AK Sen and MP Jha for the Appellant
Uday Singh AK Sinha and A Sharan for the Respondents
The following Order of the Court was delivered Leave granted
The admitted facts in the present case are that by an order dated 16th August 1969 the appellant was appointed by the respondent 2
Bihar School Examination Board  Board  as a Special Officer Stores for a period not exceeding six months in the pay scale of Rs 300 20 400 EB 20 500 with usual allowances
His services however were continued till 10th March 1971 when he was intimated that the said post of Special Officer would be abolished wef 1st April 1971 and consequently his services would stand terminated
The appellant filed a suit and obtained an injunction against the abolition of the post and the termination of his services
In the suit a compromise was arrived at between the Board and the appellant whereby he was to be appointed as Section Officer in the General Cadre and his pay as a Special Officer was to be protected
Pursuant to this compromise the Board passed an Office Order on 20th March 1972 which stated as follows Shri Tej Narain Tiwary who is at present working as Special Officer Stores on purely temporary basis is appointed on the vacant post of Sectional Head Section Officer in the initial pay of the pay scale of Rs 230 15350 EB 20 450 besides dearness allowance
Besides pay he is sanctioned reducible personal pay at the rate of Rs 70 per month
By the same order another Special Officer Vigilance was also appointed to one more vacant post of Sectional Head Section Officer in the same pay with an additional reducible personal pay of Rs 20 per month
The order further stated as follows As per the decision dated 18121971 of the Board the posts of Special Officer Stores and Assistant Vigilance Officer are abolished from the date of issue of this order 14 We are not concerned with the post of Special Officer Vigilance
What is obvious from the above order is that the appellant was working as Special Officer till that time and was appointed in one of the vacant posts of Section Officers with the protection of his pay
We do not know how the amount of Rs 70 per month was arrived at
Read with the note put up by the Secretary of the Board it is apparent that appellant s then pay as Special Officer was to be protected entirely
We presume that it was wholly protected
The point to note is that his pay could be protected whether partially or fully only if he was transferred from one post to another whether on account of the abolition of the former post or as a matter of compulsory transfer
Read with the Office Order dated 20th March 1972 it appears that the Board had adopted the device of first transferring the appellant from the post of Special Officer to the post of Section Officer and then abolishing the post of the Special Officer
It is necessary to note this fact since the Board has interpreted this device as amalgamation of the posts of Special Officer with that of the Section Officer and not as a compulsory transfer from the post of Special Officer to that of Section Officer
Further whether it is construed as amalgamation or as compulsory transfer the legal consequences are the same viz that the appellant would have to be absorbed in the post of Section Officer from the date of his appointment in the post of Special Officer
Since further the Board itself regularised the appointment from the date of appointment as Special Officer viz 16th August 1969 as is evident from its Order of 11th November 1986 no objection can be raised in that behalf However respondents who was promoted to one of the posts of Section Officers on 27th August 1970 has contended that the seniority given to the appellant in the post of Section Officer wef 16th August 1969 ie from the day on which he was appointed as Special Officer was illegal
We may now deal with the said contention
Respondent 5 was an Assistant in the Office of the Board and as stated above was for the first time promoted as Section Officer on 27th August 1970
It appears that for the first time in 1983 a seniority list of Section Officers was prepared but not circulated
In that list respondents was shown at No 23 whereas the appellant was shown at No 33
This was so because two representations made by the appellant to give him seniority from 16th August 1969 stood rejected on 20th April 1977 and 13th March 1978 respectively
It appears that it was for the first time that by the order 15 dated 11th November 1986 the appellant s representation was accepted and he was given seniority from 16th August 1969
Against the said order respondents filed a writ petition which was withdrawn by him on 22nd December 1986 since the learned Advocate General appearing for the Board stated before the Court that by the order dated 11th November 1986 the Board had merely given seniority to the appellant from 16th August 1969 and that grant of this seniority to the appellant had nothing to do with the inter se seniority in the cadre of Section Officers which would be determined later
It appears that thereafter  seniority list of Section Officers was prepared by the Board in which the appellant was shown above respondent 5 and was granted promotion to the post of Assistant Secretary on 20th March 1982 and to that of Deputy Secretary on 29th November 1989
Against the said list of seniority the respondents filed the present writ petition in the High Court primarily challenging the order of llth November 1986 in terms of which the inter se seniority list was prepared
The High Court held that the post of Special Officer occupied by the appellant was a temporary post and was not a cadre post since the said post was abolished and thereafter the appellant was appointed as a Section Officer on 20th March 1972 he would have to rank below respondent 5 who was appointed as Section Officer on 27th August 1970
The High Court also relied on the fact that the Board s case before it was that as a consequence of the abolition of the post the appellant was appointed as a Section Officer
We are of the view that the approach of the High Court is not correct
As stated above the facts reveal that the appellant was appointed in a higher post with a higher salary scale
He was in fact compulsorily transferred from that post to the post of Section Officer and after the transfer by the same order of the 20th March 1972 the post of Special Officer was abolished
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of Special Officer with the cadre posts of Section Officers
As stated earlier the consequence of both the interpretations of the said order is the same viz that the appellant would get seniority from the date of his appointment as the Special Officer
That it is a case of a compulsory transfer or of the amalgamation of post is evident from the fact that the appellant s salary as Special Officer was 16 protected on the said transfer
It is true that there is nothing on record except the order of 20th March 1972 to show that the temporary post of Special Officer which was created for the first time on 16th August 1969 with the appointment of the appellant to it was ever regularised and the appellant was appointed regularly to the same
However on this aspect we must go by the intention revealed in the resolutions and the orders of the Board itself
It cannot be suggested that the Board could not regularise the post and the appointment retrospectively by passing resolutions which in the absence of rules and regulations are equally valid
The Board s intentions in that behalf are clear
It treated the post as regular
The appellant was appointed to it in a substantive vacancy and in accordance with the conditions governing it
There is therefore nothing in the decisions relied upon by the learned Counsel for respondent 5 viz The Direct Recruit Class II Engineering Officers  Association and Ors
vs State of Maharashtra and Ors
  and State of Bihar  Ors etc
vs Akhouri Sachindra Nath  Ors 1991 Suppl
1 SCC 334 which militates against the seniority given to the appellant
We accordingly allow the appeal
There will be no order is to costs
SLS Appeal allowed


Summary:
Neptune Paper Mills NPM was directed to be wound up by the Company Court on August 4 1987
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 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 rile 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 was published again
The sale notice would state 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 instalments as would be fixed by tile 1064 Hon ble Court Calcutta ie deferred payment of instalments will be considered and 5 and 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 Rs 6 crores subject to certain terms and conditions stipulated therein
In short it proposed to pay the said amount in instalments  Rs 45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale
On the date of sale before the learned company Judge 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 deducting 10 earnest money which was to be deposited immediately shall be paid in instalments prescribed by him
It was directed that for the first two years following the sale Rs 60 lakhs shall be paid each year
Thereafter half yearly instalments of Rs 30 lakhs shall be paid until the entire earnest 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
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and pre judicial to the interest of the FIs an appeal was preferred by them before the Division Bench
The Division Bench finding that it would be inappropriate to set aside the sale effected modifications in the terms of sale thereby providing some more safeguards to protect the interest of the FIs
Aggrieved by the order of the Division Bench FIs
approached this court by way of a Special Leave Petition SLP 1492990
This Court taking the view that the allegations made on behalf of FIs can be dealt with by the High Court if it is moved again declined to interfere with the order of the High Court
But with a view to secure the interest of the Financial institutions it passed an order on 191190 that until the High Court makes its order the Purchaser shall be taken to be the receiver and shall be accountable as a receiver
Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order with a prayer that the 1065 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
They further submitted that they have a charge for Rs 8 crores on the assets of the company in liquidation and that granting a period of 10 years for paying the balance consideration in instalments and not taking adequte security from Buxa for proper payment of balance consideration was prejudicial of their interest
The Division Bench disposed of the said application by its order dated 20 2 1992 holding that 1 the FIs
Secured creditors by their acts and conduct have come within the winding up and therefore the 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 factor
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
However it passed directions curtailing the time for payment and providing for payment of interest by the purchaser
In these appeals by special leave it was contended for the Appellants that a the procedure followed by the High Court for selling the assets of the company in liquidation is not fair and proper and that it has caused grave prejudice to the interest of financial institutions b By granting 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 c 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 the purchaserRespondent submitted that it is not open to this court at this stage to effect any modification in the terms of the sale that though with a view to save its investment which it had already made by the date of the judgment of the Division Bench it agreed to certain further modifications being made by the Division Bench it 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 and 1066 that as the purchaser has invested huge sums of money and has reemployed almost all the workers it is not in a position to bear any further financial burden
Modifying the order and dismissing the appeal the Court HELD 1
Though there is no standard or uniform pattern to be followed with respect to the terms of the sale notice issued by the Court it would be appropriate for the court to adopt such procedure as would avoid a situation where the court is put to the task of negotiating the terms of sale with the parties
That 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 he 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 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
These are not the only two methods
But it has to be emphasised 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
In this case the bid of Rs 6 crores was got enhanced to Rs 8 crores with lesser number of instalments than offered by the purchaser all as a result of persuasive efforts by the Company Judge
But it has given room for the argument that had it been known before hand that so many instalments would be granted without stipulation of interest several higher offers could have been received
1073G H 1074A D 2
The contention that the Supreme Court has no power at this stage to modify the number of instalments is untenable
Nor there is 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 the following 1067 reasons 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 has repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may be imposed by the Court
1074E F 3
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 the following modification was made in the number of instalments in which the balance consideration has to be paid 1075F G The total balance consideration of Rs 580 crores remaining due after payment of Rs 52 lakhs due in the year 1992 shall be paid in full by the end of the year 1996 in equal bimonthly instalments
The instalments shall be payable by the last day of February April June August October and December in each year
Each instalment excepting the last instalment shall be in a sum of Rs 24 16000
The last instalment shall be in such sum as to make up the total short fall payable on that date ie Rs 2016000
1077C