1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. COMPANY APPLICATION NO. 668 OF 2009 IN COMPANY PETITION NO.412 OF 1985 Midland Bank P/c. ...Petitioner. Vs. The Official Liquidator & Ors. ...Respondents. And ICICI Bank Limited. ...Applicant. .... Mr.Mustafa S. Doctor with Mrs. Surve i/b. M/s. Little & Co. for the Applicant. Mr.Bhavesh Parmar for Respondent No.4. Mr. P. Rama Rao, O.L. present. ..... CORAM : DR.D.Y.CHANDRACHUD, J. November 26, 2009. P.C. An amendment has been proposed to the Company Application. The amendment is allowed in terms of the draft tendered. The amendment shall be carried out within a period of one week from today. 2. The Official Liquidator conducted a sale of the immovable properties belonging to Madhavnagar Cotton Mills Ltd., the Company 2 in liquidation. The immovable property consists of land which is situated at Sangli. The Liquidator issued a public notice inviting applications for the sale of the property on an “as is where is and whatever there is” basis on 19th November 2004. Serial No.2 of the said notice, consisting of Lot No.IV, Sub lot No.3 comprises of Survey No.203(4). Serial No.3 which was Lot No.IV, Sub lot No.5 comprised of Survey Nos.197, 198, 199(1-4), 2001(1-5), 202(1) and 203(1). The terms and conditions of sale provided that Lot No.IV, Sub lot No. 5 admeasures 92,470 sq.mtrs. and Lot No.IV Sub lot No.3 admeasures 15,685.67 sq.mtrs. Both the Applicant and the Fourth Respondent submitted bids. The Applicant had submitted a bid for Lot No.IV Sub lot No.5, whereas the Fourth Respondent submitted a bid for Lot No.IV, Sub Lot No.3. On 30th January 2004, an order was passed by the Court confirming the sale. As a result, the Applicant became entitled to the land comprised in Lot No.IV, Sub Lot No.5, whereas the Fourth Respondent became entitled to the land in Lot No.IV, Sub lot No.3. 3. The Fourth Respondent moved a Company Application, 3 Company Application 367 of 2005. It appears that the grievance of the Fourth Respondent was that Survey No.203(4) of which he was declared to be the purchaser, admeasures about 6100 sq.mtrs., in actuality, whereas in the terms and conditions of sale, the area was shown to be 15,685.67 sq.mtrs. An order was passed on the Company Application by a Learned Single Judge of this Court, calling upon the Fourth Respondent to produce documents of title/ownership or the revenue record before the Liquidator for the rectification of the mistake and the Liquidator was directed to rectify the mistake, if any. In pursuance of the order of the Learned Company Judge, the Official Liquidator issued a communication dated 16th August 2005 to the Fourth Respondent, notifying the Fourth Respondent that upon examining the revenue record, he was being allowed Survey No. 202(1) instead of Survey No.203(4), in the Deed of Conveyance. Now, Survey No.202(1) forms part of the land which was sold to the Applicant. The Applicant was not joined as a party to the earlier Company Application. A meeting was held before the Official Liquidator on 10th August 2009. Company Application 668 of 2009 was taken out by ICICI Bank Ltd. There was an exchange of 4 correspondence between the Applicant Bank and the Official Liquidator. A meeting was held before the Liquidator on 12th August 2009. The Liquidator recorded that it was necessary to ascertain from the revenue record/Tahsildar the total area of land owned by the Company and the area occupied in each of the Survey numbers that were the subject matter of the sale. The Liquidator presented a report dated 31st August 2009 to this Court seeking a direction to the Tahsildar, Miraj to provide information in regard to the area as mentioned in the revenue record. By an order dated 10th September 2009, a Learned Single Judge directed the Tahsildar to submit his report. 4. The Tahsildar, Miraj, has submitted a report dated 3rd November 2009. The report of the Tahsildar shows that Survey No. 202(1) admeasures 15,300 sq.mtrs., whereas Survey No.203(4) admeasures 6100 sq.mtrs. The total area owned by the Company in liquidation is 1,01,000 sq.mtrs. Deducting the area of Survey No. 202(1) which admeasures 15,300 sq.mtrs. from the land which is owned by the Mills, the balance works out to 85,700 sq.mtrs. What 5 was purchased by the Applicant was an area admeasuring 92,470 sq.mtrs., under the terms of the sale, whereas what is actually now in possession of the Applicant is 85,700 sq.mtrs., leaving a shortfall of 6,770 sq.mtrs. -5. The shortfall in the land handed over to the Applicant has arisen as a result of the Liquidator's communication dated 16th August 2005 upon the order of the Court dated 15th April 2005. What the Liquidator has done is to allow the claim for substitution by the Fourth Respondent of Plot No.202(1) in place and stead of Survey No. 203(4) which was actually knocked down in favour of the Fourth Respondent. One option before the Court would have been to recall the order dated 15th April 2005 since that order was passed without impleading the Applicant, ICICI Bank. The earlier order dated 15th April 2005 affects the interest of the Bank since, acting on the basis of that order, the Liquidator has substituted Plot No.202(1) which was purchased by the Bank, with Plot No.203(4) which is purchased by the Fourth Respondent. One of the prayers in the Company Application is for recalling the order dated 15th April 2005. However, 6 during the course of the hearing, Counsel appearing on behalf of the Applicant has stated that the Applicant does not wish to press the prayer for recalling the order dated 15th April 2005. All that the Applicant now seeks is that the price which has been paid by the Applicant should be reduced pro rata to restitute the Applicant for the shortfall of 6770 sq.mtrs., in the land which has been actually allotted to the Applicant. -6. The material before the Court clearly indicates that there was a lapse on the part of the Official Liquidator in notifying the areas of the Survey numbers which were put up for sale. Survey No. 203(4), as the report of the Tahsildar shows, admeasures only 6100 sq.mtrs. However, in the terms and conditions of sale, the area of the aforesaid Survey number is shown to be 15,685.67 sq.mtrs. The terms and conditions of sale do not separately contain the exact area of Survey No.202(1) which as the Tahsildar's report shows, admeasures 15,300 sq.mtrs. Had the Official Liquidator taken the elementary precaution of verifying the area of the Survey numbers put up for sale and tallying them with the revenue record, the error 7 would not have taken place. As a result of the order dated 15th April 2005 the Fourth Respondent has now been allotted Survey No.202(1). Counsel appearing on behalf of the Fourth Respondent states that though the area which has been allotted, namely, 15,300 sq.mtrs., is still less than what was stated in the Terms of sale, the Fourth Respondent does not assert any claim for refund at this stage. -7. The Applicant has filed an affidavit dated 24th July 2009. In paragraph 9 of the affidavit, the Applicant has stated that it is now getting 85,700 sq.mtrs., as opposed to 92,470 sq. mtrs. in view of the fact that the Applicant has been allotted Survey No.203(4) in lieu of Survey No.202(1). The Applicant has paid a total consideration of Rs. 315.50 lakhs which works out to Rs.341.20 per sq.mtr. There being a shortfall of 6770 sq.mtrs., the Applicant has sought a proportionate reduction in the sale consideration by an amount of Rs.23,09,868/-. -8. The sale was undoubtedly conducted on an “as is where is whatever there is basis”. If the strict condition of the sale as aforesaid were to be applied, the Applicant Bank would get, as a matter of fact, 8 more than what was sold to it under the terms and conditions of sale, whereas the Fourth Respondent would suffer a reduction. Counsel appearing on behalf of the Bank stated that in fairness, the Bank does not press such an extreme position. To my mind, the ends of justice require that the administrative lapse which has taken place in the office of the Official Liquidator should not be allowed to affect the substantive rights of parties. The Court has the jurisdiction to pass an order that would advance substantial justice. -9. In the circumstances, the Company Application shall stand disposed of by directing the Official Liquidator to grant to the Applicant a proportionate reduction in the sale consideration based on the actual area of land which is sold to the Applicant, computed with reference to the report of the Tahsildar, Miraj dated 3rd November 2009. As noted earlier, the Applicant has quantified the refundable amount at Rs.23,09,868/-. The Liquidator is directed to verify the position and to refund the difference that is due and payable to the Applicant. In order to quantify the amount, the Official Liquidator shall hold a meeting of the parties on 7th December 2009 and 9 thereafter, proceed to make his determination within a period of one week. The Liquidator has stated in the meeting held on 31st August 2009 that funds of the Company are available from which payment can be made. The Liquidator shall do so within a period of two weeks of the date of the determination. The Liquidator shall thereupon proceed to execute the Deed of Conveyance within four weeks. The Company Application is accordingly disposed of. ....