IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30-09-2011 Coram THE HONOURABLE MRS. JUSTICE R. BANUMATHI and THE HONOURABLE MR. JUSTICE B. RAJENDRAN O.S.A. Nos. 135 and 305 of 2011 and M.P. Nos. 1 and 1 of 2011 O.S.A. No. 135 of 2011:- J. Sekar .. Appellant/3rd party Versus 1. R. Vijayakumar No.9, 19th Street, Ashtalakshmi Nagar Alapakkam, Chennai – 600 016 2. Mr. M. Ravindran Senior Advocate/Administrator Anubhav Group of Companies 3. The Official Liquidator High Court, Madras .. Respondents/Applicant & Respondents 1 & 2 O.S.A. No. 305 of 2011 1. The Official Liquidator High Court, Madras as Official Liquidator for Anubhav Plantations Ltd (in liquidation) 2. M. Ravindran Senior Advocate, Administrator, Anubhav Group of Companies (in liquidation) .. Appellants/Applicant & 2nd Respondent Versus R. Vijayakumar .. Respondent/Ist Respondent O.S.A. No. 135 of 2011:- Appeal filed under Order XXXVI Rule 9 of O.S. Rules and under Section 483 of the Companies Act, 1956 read with Clause 15 of the Letters Patent against the Judgment and decree dated 21.02.2011 made in C.A. No. 243 of 2004 in C.P. No. 133 of 2009 on the file of this Court. O.S.A. No. 305 of 2011:- Appeal filed under Order XXXVI Rule 1 of O.S. Rules and under Section 483 of the Companies Act, 1956 read https://hcservices.ecourts.gov.in/hcservices/ with Clause 15 of the Letters Patent against the Order dated 21.02.2011 in Company Application No. 243 of 2004 in C.P. No. 130 of 1999 on the file of this Court. O.S.A.N o. 135 of 2011 For Appellant : Mr. R. Murari For Respondents : Mr. R. Thiagarajan for R1 Mr. M. Ravindran, Senior Counsel for Mr. B. Manoharan for R2 Official Liquidator for R3 O.S.A. No. 305 of 2011 For 2nd Appellant : Official Liquidator for Ist Appellant Mr. M. Ravindran, Senior Counsel for Mr. B. Manoharan For Respondent : Mr. R. Thiagarajan for R1 COMMON JUDGMENT R. BANUMATHI, J. & B. RAJENDRAN, J Being aggrieved by the order in C.A.No.243 of 2004 in C.P.No.130 of 1999 dated 21.02.2011 declining to sell 1.68 acres in Kazhipattur village, third Party/Appellant-J.Sekar has preferred appeal in O.S.A.No.135 of 2011. Being aggrieved by the same order and also the findings that "no amount is payable by the Respondent-R.Vijayakumar", the Administrator of Anubhav Group of Companies and the Official Liquidator have preferred O.S.A.No.305 of 2011. 2. Brief facts relevant for consideration in these appeals are:- (i) Winding up of Anubhav Group of Companies – By the order dated 02.11.1999, the 2nd Appellant-Senior Advocate in O.S.A.No.305 of 2011 was appointed as Administrator to look after the affairs of Anubhav Group of Companies and the Official Liquidator was appointed as the Provisional Liquidator for Anubhav Group of Companies. Thereafter, the Administrator and his team members took possession of records and documents belonging to the Company in liquidation. Perusal of records revealed that M/s.Goodluck Inn Private Limited, represented by the Respondent and in his capacity as Power of Attorney of some land owners agreed to enter into an agreement on 09.05.1996 under which he has agreed to sell 21.18½ acres of lands in Kazhipattur village at the rate of Rs.11,250/- per cent and 50 cents of lands in Muttukkadu village at the rate of Rs.45,000/- per cent for a total sale consideration of Rs.1,91,25,000/- to C.Natesan, Chairman-cum-Managing Director, Anubhav Group of Companies. But the Respondent is said to have received Rs.1,93,00,000/- from https://hcservices.ecourts.gov.in/hcservices/ the Company and executed 39 sale deeds in favour of nominees of C.Natesan. Out of 39 sale deeds, 25 sale deeds were registered and 14 were unregistered for a total extent of 12.32½ acres. (ii) 4.45 acres of Government land – Out of 12.32½ acres, Respondent is said to have conveyed 4.45 acres of Government land. On inspection, it was found that there were more than 250 huts in that land and the Administrator had filed a Memo which was numbered as C.A.No.1450 of 2002. On 16.08.2001, the Court has directed the CBCID to investigate the matter and CBCID filed its report on 09.11.2001 and the Court has directed the CBCID to proceed with the case in accordance with law, against which the Respondent had filed O.S.A.No.401 of 2002 and the said appeal came to be dismissed on 26.02.2002. A criminal case was filed against the Respondent in C.C.No.6535 of 2003 on the file XI Metropolitan Magistrate Court, Saidapet and the Administrator had also given evidence in that case. By the order dated 04.03.2005 made in C.A.No.1450 of 2002, the Court directed the Respondent to pay Rs.20,00,000/- towards final settlement in respect of the Government land measuring 4.45 acres sold by him in S.F.No.20 of Kazhipattur village, though the Respondent had received Rs.50,06,250/- at the rate of Rs.11,250/- per cent. (iii) Sale of 7.87.5 acres at Kazhipattur village – The Administrator has brought the lands measuring 7.87.5 acres at Kazhipattur village for sale. The auction was held in the open Court on 12.11.2003 and Appellant in O.S.A.No.135 of 2011 J.Sekar was the highest bidder for Rs.50,00,000/- and the sale was confirmed in his favour. On remittance of the entire sale consideration of Rs.50,00,000/-, sale deeds were executed in favour of J.Sekar. (iv) C.A.No.1037 in C.P.No.130 of 1999 – Respondent-Vijayakumar has filed this application for setting aside the sale in S.F.No.3 measuring 1.20 acres at Kazhipattur village and the said application came to be dismissed on 19.01.2007, against which Respondent had filed O.S.A.No.129 of 2007 and the same was also dismissed by the order dated 21.10.2008. Against the dismissal of O.S.A.No.129 of 2007, Respondent filed S.L.P. (Civil) No.27454 of 2008 and the same was dismissed on 26.11.2008 by the Apex Court. Thereafter, Respondent filed applications C.A.Nos.82 of 2009 and 241 of 2009 seeking leave to sue against the Company in liquidation and J.Sekar and the same were also dismissed by the common order dated 22.07.2009. Respondent preferred O.S.A.Nos.258 and 259 of 2010 and by the order dated 27.07.2010, both the appeals were dismissed. S.L.P. (Civil) Nos.26160 and 26161 of 2010 preferred by the Respondent also came to be dismissed by the Apex Court on 29.10.2010. (v) C.A.No.243 of 2004 and C.A.No.1701 of 2010 in C.P.No.130 of 1999 – After the sale of 7.87.5 acres of land to the tune of 1.68 acres at Kazhipattur village and Muttukkadu village for which the Respondent had already received the sale consideration. The Administrator had filed a fresh report stating that Respondent received a sum of Rs.1,93,00,000/- from https://hcservices.ecourts.gov.in/hcservices/ the Company in liquidation and that the Administrator was able to realise only a sum of Rs.50,00,000/- by way of sale of 7.87.5 acres of land and Rs.20,00,000/- paid by the Respondent in respect of the claim made by the Administrator in C.A.No.1450 of 2002. Thus the Administrator was able to recover a sum of Rs.70,00,000/- only and the balance is to be recovered. The Administrator sought for a direction to sell 1.68 acres at Kazhipattur and 50 Cents in Muttukadu villages. Adopting his own method of calculation, in the application, the Administrator has stated that Respondent has to pay a sum of Rs.43,43,125/- and hence the land measuring 1.68 acres at Kazhipattur village and 50 cents in Muttukkadu village have to be brought for sale by the Court auction. 3. Respondent has resisted the application contending that as per the direction of the Court in C.A.No.1450 of 2002, he has paid Rs.20,00,000/- in full and final settlement of all the claims and having received the payments in final settlement of the Administrator's claim, the issue cannot be re-opened. According to Respondent, no amount is payable by him. 4. Upon consideration of rival contentions, in the impugned order, the learned Judge held that the Administrator had not produced the receipts showing payment of Rs.40,00,000/- to the Respondent. Referring to the order in C.A.No.1450 of 2002, learned Judge held that payment of Rs.20,00,000/- was in final settlement of the amount and that the same had become final. Learned Judge further held that the receipts and bank statement filed by the Respondent would make clear that what was received by the Respondent from C.Natesan was Rs.1,70,00,000/- (sic) and that payment of Rs.40,00,000/- was not received by the Respondent on the date of agreement [09.05.1996] and therefore, Respondent need not to pay Rs.43,43,125/- as claimed by the Administrator. Learned Judge further held that for the entire money received by the Respondent, Respondent had already executed sale deeds as per the agreement of sale dated 09.05.1996 and nothing further need to be done by the Respondent to the Company and closed the Company Application No.243 of 2004. 5. Being aggrieved by the order declining to sell 1.68 acres, third party J.Sekar who is the purchaser of other properties filed appeal O.S.A.No.135 of 2011. Mr.R.Murari, learned counsel appearing for Appellant-J.Sekar has submitted that there is no independent access to the property which he purchased in the auction and the Appellant could have access only through S.F.Nos.23/1, 2, 4, 25, 95/1a, 1c, 2a & 2b. Learned counsel would further submit that the learned Judge erred in concluding that Respondent had not received Rs.40,00,000/- and therefore, the property in question could not be brought for sale. 6. Learned Administrator-Senior Advocate has submitted that learned Judge failed to consider the acknowledgement of receipt of Rs.40,00,000/- by the Respondent in Clause 3 of the agreement dated 09.05.1996. It was further submitted that learned Judge failed to consider the admission of the Respondent for receipt of https://hcservices.ecourts.gov.in/hcservices/ Rs.1,91,25,000/- on various dates in C.A.No.1037 of 2006 and the same was recorded by the learned Judge in an order dated 19.01.2007 and the same was confirmed by the Division Bench in O.S.A.No.129 of 2007 and also in S.L.P. (Civil) No.27545 of 2008. Contention of Administrator is that learned Judge failed to consider the fact that Respondent admitted the receipt of Rs.1,91,25,000/- and the learned Judge failed to consider the earlier round of litigations and the statement of the Respondent in the earlier proceedings. 7. Taking us through the typed set of papers, Mr.R.Thiagarajan, learned counsel appearing for Respondent has submitted that the order in C.A.No.1450 of 2002 would make it clear that the amount of Rs.20,00,000/- had been received in full and final settlement of the claim made against the Respondent and having received the amount, the Administrator cannot seek to re-open the issue against the Respondent. Taking note of the earlier proceedings, learned Judge rightly held that "no amount is payable by the Respondent to the Administrator pursuant to the agreement dated 09.05.1996" and the impugned order does not suffer from any error. 8. Upon consideration of contentions of Administrator and the Respondent and also the third party-Appellant, the following points arise for consideration in these appeals. ● Whether the learned Judge was right in saying that Respondent had not received Rs.40,00,000/- on 09.05.1996 and that the Respondent need not to pay a sum of Rs.43,43,125/-. ● For the amount so payable by the Respondent, whether the property measuring 1.18 acres in Kazhipattur village and 50 cents of land in Muttukkadu village are to be brought for sale. 9. We have heard the counsel for all the parties concerned. This is a rare phenomena where the Court appointed administrator has failed to bring to the notice of this Court a very vital factor. In fact, we are astonished to find that the administrator and Official Liquidator had not kept the paramount interest of the company in liquidation. Originally, an appeal was filed only by a third party purchaser. At the time of argument in that case, when the Court pointed out that a vital right of the company in liquidation, which is being represented by the Official Liquidator and administrator, has been given a go-bye and detriment is caused to the interest of the company and sought why appeal has not been preferred by the administrator, the learned administrator only stated that hitherto he was under the bonafide impression that when an order is passed by the Court , he is not entitled to file an appeal; but he is only duty bound to bring to the notice of the Court the developments in the matter and he would abide by whatever order is passed by the Court. This is rather unfortunate for the Official Liquidator and administrator to say so in the affidavit. The paramount duty of the Official Liquidator and Administrator is only to safeguard the interest of the company in liquidation. Only after the Court asked the Administrator about his omission to file the appeal, with a petition for condonation of delay, the Administrator https://hcservices.ecourts.gov.in/hcservices/ has chosen to file the appeal. By our order dated 07.09.2011 in M.P.No.1 of 2011 in OSA SR.No.61894 of 2011, we have condoned the delay and thereafter appeal filed by the Administrator came to be numbered and heard along with O.S.A.No.135 of 2011. 10. Let us now take up the vital factor in this case. First of all, the administrator, who has taken the control of the property of the Company in liquidation through the order of the Court, even on the first inspection way back in the year 2000, found out that in the sale agreements executed by the respondent-Vijayakumar in favour of the CEO of the Company namely Natesan, totally 15 acres of land was agreed to be sold out of the total extent of 21.42 acres. In the first inspection, he noted down that out of this 15 acre to be sold, 5.42 acres are government poromboke land. Therefore, a complaint has been given and criminal investigation was sought for. The respondent thereafter obtained Anticipatory Bail. The investigation agency also filed charge sheet and the case is pending. The administrator has also given evidence in the criminal case. With this background, we will analyse how subsequent developments have taken place in this case. 11. In the original agreement executed on 09.05.1996, the sale consideration is fixed at Rs.1,91,25,000/- as under:- Village Extent Total (Rs.) Kazhipattur Village 15 acres @ Rs.11,250/- per cent 1,68,75,000.00 Muttukadu Village 0.50 acres @ Rs.45,000/- per cent 22,50,000.00 TOTAL 1,91,25,000.00 12. Out of the total consideration, Rs.40 lakhs is stated to have been paid as advance at the time of execution of the agreement itself. When we see the agreement, in clause 3, it is clearly stated that Rs.40 lakhs was received and acknowledged by the vendor/respondent herein namely Vijayakumar as advance received. We also find that the words, cheque or demand draft, which were originally typed, were struck off. 13. The respondent denies that he has received Rs.40 lakhs from the company in liquidation. As per the various receipts, which are produced into the Court, he would contend that the sum of Rs.1,70,00,000/- only has been paid and not Rs.1,91,25,000/- or the advance amount of Rs.40 lakhs. At the same time, he would further contend that there is no receipt for Rs.40 lakhs evidencing that the amount was paid by cash or cheque and therefore it is not open to the administrator now to say that the entire sale consideration has been paid by him. Contention of respondent is that out of the total sale consideration of Rs.1,91,25,000/- what was received is less and it is not open to the administrator now to bring the remaining property of 1 acre and 18 cents at Kazhipattur Village and 50 cents of land in Muttukadu Village for auction. 14. In this connection, we have to examine the conduct of the respondent. The respondent earlier executed 39 sale deeds between https://hcservices.ecourts.gov.in/hcservices/ 1996 and 1998 only the land measuring 12.32 1/2 acres out of 15 acres agreed to be sold as per the agreement of sale. Out of 39 sale deeds, 25 sale deeds were registered and 14 were unregistered. It is now brought to the notice of this Court by the administrator that out of 13.25 acres of land, 5.42 acres of land were government poromboke land in Survey No.20. Out of 13.25 acres, sale deed in respect of 97 cents of land were executed in favour of Janaganatha Rao, nominee of Natesan, Chairman and Managing Director of Anubhav Group of Companies, which is also a government land. Out of the total extent of 5.42 acres of land of the Government in Survey No. 20, 4.50 acres of land were sold in favour of the company and 97 cents executed in the name of the nominee. Therefore, the administrator had excluded those sale deeds viz., 13.25 acres – 5.42 acres and the balance of 7.87 1/2 acres only were brought to sale by the administrator through Court. In the publication tenders were called for and after tender, the highest amount in the tender was kept as the base price and auction conducted in the Court, ultimately, the appellant in O.S.A. No. 135 of 2011 emerged as the highest bidder in the auction conducted in Court and he also paid Rs.50 lakhs. Whereas, admittedly, out of the total extent of 15 acres agreed to be sold by the respondent, he has executed sale deed only in respect of land to an extent of 12.32 1/2 acres only in the name of the company and still there remains balance of 2.68 acres of land. It has to be further clarified that earlier, the administrator filed a report stating that only 12.32 1/2 cents of land out of 21.42 acres were sold, but now it is stated that totally 13.25 acres of land were sold to the company, which included 97 cents of land sold in the name of Janarthana Rao. Therefore, it is clear that the administrator had excluded this land of 97 cents from the assets of the company in liquidation. 15. The respondent herein attempted to set aside the sale of 7.87.5 acres of land pursuant to the order dated 12.11.2003 in Company Application No. 211 of 2003, by filing Company Application No. 1037 of 2007. In this application he raised the plea that the auction sale itself cannot be conducted. In this application he restricted his plea only in so far as it relates to the land to an extent of 1.20 acres in Survey No.3 of Kazhipattur Village, which according to him is not covered under any registered document of sale. This application was dismissed on 19.01.2007 against which O.S.A. No. 129 of 2007 was filed before the Division Bench of this Court, which was also dismissed on 21.10.2008, against which he preferred SLP Civil No. 27454 of2008 before the Honourable Supreme Court, which was also dismissed on 26.11.2008. Therefore, the respondent, who did not challenge the entire auction brought by the administrator, has challenged the auction only in respect of a portion of the land measuring 1.20 acres, which was not included in the agreement and it was also negatived upto the Supreme Court. 16. In the meanwhile, the Administrator filed a memo numbered as Company Application No. 1450 of 2002 and this Court directed the C.B.C.I.D. to investigate into the matter in so far as it relates to the sale of Government land by the respondent. On 16.8.2001, a direction was issued to C.B.C.I.D. to proceed with the case in accordance with law. Challenging that order, respondent filed O.S.A. No. 401 of 2002 and the said appeal came to be dismissed on 26.2.2002. Ultimately charge sheet was filed in C.C. No. 6535 of https://hcservices.ecourts.gov.in/hcservices/ 2003. During the investigation relating to sale of the government land agreed to be sold to the respondent, this Court directed to deposit Rs.50 lakhs into the Court by order passed in the anticipatory bail application on 29.04.2002 in Crl.O.P. No. 5460 of 2002 and the order was modified to furnish bank guarantee for Rs.50 lakhs and that was also allowed. 17. After sale of the property namely 7.87.5 acres for Rs.50 lakhs, the respondent filed an application stating that since the value of the property, which is now being sold is only for Rs.6 lakhs and odd per acre, for the Government land, which he has agreed to sell to the company namely 4.20 acres out of 5.42 acres, the value of the same would come to only Rs.27 lakhs and he is prepared to pay the said amount. Pursuant to this application, without any objection by the administrator, even the sum of Rs.27 lakhs arrived at was reduced and the application was allowed and Rs.20 lakhs was received in lieu of the government land sought to be sold. It is pertinent to point out that this land was given for 300 families for putting up hut and this property the respondent wants to sell against which a criminal case, at the instance of the administrator was filed which was pending investigation by the C.B.C.I.D. While so, the administrator did not make any objection nor he has filed any appeal as against this order. This order was passed even as early as in the year 2005. The respondent has utilised the sale price as base price for getting himself relieved from the clutches of the criminal case for the government land agreed to be sold. Though in that order dated 03.03.2005 in C.A. No. 1450 of 2002, only this was stated:- "The administrator has made a claim in this application for a sum of Rs.47 lakhs, being the proportionate value of 4.20 acres, for which the company had entered into an agreement of sale to purchase from the respondent, over which there is a cloud on title. In other words, the company, which had parted with a large sum of money in favour of the respondent, was able to exploit a substantial portion of the land leaving out only 4.20 acres alone. The company paid a sum of Rs.11.25 lakhs per acre to the respondent. Accepting that value, the money refundable by the respondent in respect of that 4.20 acres comes to Rs.47 lakhs. In the meantime, the company had sold, pursuant to the Court's order, about 8.5 acres of land situated in close proximity to the land in question for a sum of Rs.50 lakhs and odd and per acre rate on that sale price comes to Rs.6.70 lakhs only. Learned counsel for the respondent would submit that the claim of the administrator against the respondent in respect of that 4.20 acres can be worked out on the basis of 6.70 lakhs per acre on the basis of which alone the administrator himself sold lands to others. There is reasonableness in the submission made by the counsel for the respondent. If this rate is accepted, then the money to be refunded by the respondent in respect of 4.20 acres of land would come to Rs.27 lakhs. Learned counsel for the https://hcservices.ecourts.gov.in/hcservices/ respondent, by bringing to my notice various difficulties, which the respondent had undergone by entering into the transaction with the company in liquidation and the criminal prosecution his client is facing, would submit that a sum of Rs.20 lakhs would be accepted in full and final settlement of the claim of the administrator. A sum of Rs.20 lakhs by way of a banker's cheque drawn in the name of the official liquidator is also tendered in open Court. 2. Having regard to the entire facts available in this case, I am of the opinion that the sum of Rs.20 lakhs today can be accepted in full and final settlement of the Administrator's claim in C.A. No. 1450 of 2002 against the respondent. Accordingly it is accepted and the payment of Rs.20 lakhs as referred to earlier in open Court is taken as the full satisfaction of the Administrator's claim in C.A. No. 1450 of 2002. The pay order is handed over to the official liquidator in open Court. 18. Out of the 27 lakhs arrived at, Rs.20 lakhs was directed to be deposited i.e., in full satisfaction of the claim in C.A. No. 1450 of 2002 when the applicant in that application has sought for a prayer, which is totally different,which reads as follows:- "Company application praying that this Honourable Court may be pleased to pass an order in respect of 300 huts which had been put up in Survey No.