IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER & THE HONOURABLE MR. JUSTICE P.Q.BARKATH ALI MONDAY, THE 1ST MARCH 2010 / 10TH PHALGUNA 1931 Co.Appeal.No. 2 of 2010() ------------------------- AGAINST THE ORDER IN COMPANY APPLICATION NOS. 380 & 398 OF 2009 IN C.P.NO. 2/2003 Dated 23/12/2009 .................... APPELLANT/NOT A PARTY IN COM.APPLICATION NO.398/09 ---------------------------------------------------------------------- P.S.VINCENT, PUTHUMADASSERY HOUSE, MUPPATHADOM.P.O, ALUVA-683110, ERNAKULAM. BY ADV. SRI.RAJU JOSEPH RESPONDENT(S): APPLICANT AND RESPONDENTS IN C.A.398/09 ------------------------------------------------------ 1. K.Y.ABDU, S/O.YOOSUF RAWTHER, 13/1181E R.K. PILLAI ROAD, COCHIN-5. 2. THE OFFICIAL LIQUIDATOR, HIGH COURT OF KERALA, ERNAKULAM. 3. KERALA STATE INDUSTRIES DEVELOPMENT CORPORATION, THIRUVANANTHAPURAM. ADV. SRI.K.MONI FOR R2 SRI.T.H.ABDUL AZIZ FOR R1 SMT.MARIAM MATHAI FOR R3 THIS COMPANY APPEAL HAVING COME UP FOR ADMISSION ON 01/03/2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: A.K. BASHEER & P.Q. BARKATH ALI, JJ. ------------------------------------------------------ Company Appeal No.2 of 2010 ------------------------------------------------------ Dated this the 1st day of March, 2010 JUDGMENT Basheer, J. This appeal is directed against the order passed by the learned Company Judge in two Applications filed in Company Petition No.2 of 2003. 2. By the impugned order the Company Court has directed that the revised offer made by respondent No.1 herein who was the applicant in Company Application No.398/2009 for Rs.1,05,01,000/- ( Rupees one Crore five Lakh one thousand) be accepted and the assets of the company in liquidation, which were notified for sale, be sold to the said applicant. 3. The grievance of the appellant who was not a party to the Company Application referred to above, is that his offer of Rs.1,09,75,000/- ( Rupees One Crore Nine Lakh Seventy Five Thousand) ought to have been accepted by the Company Court not only for the reason that his offer was higher than what was offered by respondent No.1, but also since he was not given an opportunity to make a further offer or atleast to explain the position. Co.Appeal No.2/2010 2 4. Relevant facts may be briefly noticed. 5. It is not in dispute that certain movable and immovable assets of the company in liquidation ( M/s. Elcera Substrates Ltd) which is the subject matter of C.P.No.2/2003, were put to sale by the Official Liquidator. It appears that initially, the highest offer received from two bidders separately for the immovable assets and the plant and machinery put together was only for Rs. 64,93,800/- ( Rupees Sixty Four Lakhs Ninety three thousand eight hundred). In the meanwhile respondent No.1 approached the Company Court and filed I.A.No.398/2009 making an offer of Rs.1,00,01000/- for the movable and immovable assets and the plant and machinery. Appellant filed I.A.No.380/2009 offering a total sum of Rs. 88,00,000/-. On a query made by the Company Court as to whether the two bidders were prepared to make a better offer, respondent No.1 enhanced his offer and raised it to Rs.1,05,01,000/- and appellant enhanced it to Rs. 92,52,100/-. 6. At this stage the Company Court directed the Official Liquidator to issue a fresh tender notification for sale fixing the sum of Rs.1,05,01,000/- as the upset price and to see whether there was any better offer. 7. It was at this stage that the appellant raised his offer to Co.Appeal No.2/2010 3 Rs.1,09,75,000/- for the movables, plant and machinery and immovable assets. But while making the said offer, the appellant put forth four conditions which in effect were as follows : 1) All documents in respect of the land must be “cleared”. 2) All electricity dues must be discharged by the Official Liquidator and it must be ensured that new electric connection is provided in his name. 3) He should be absolved of all statutory liabilities like telephone, sales tax, Insurance , Provident Fund etc. 4) Document of title must be executed either in his own name or in favour of the person to be nominated by him. 8. Respondent No.1 did not revise his earlier offer of Rs. 1,05,01,000/-. The offers made by the appellant and respondent No.1 were placed before the Company court by the Official Liquidator along with his report. The Liquidator in his report stated that condition No.2 put forth by the appellant cannot be countenanced or accepted under any circumstances. But as regards the other three conditions, the Liquidator did not make any suggestion and left it to the discretion of the court. 9. When the matter came up for consideration, the learned Co.Appeal No.2/2010 4 Judge took the view that the offer made by the appellant cannot be accepted in view of the conditions attached to the same. The learned Judge therefore directed that the revised offer of Rs. 1,05, 01,000/- made by respondent No.1 be accepted and the assets of the company be sold to him. 10. As mentioned earlier, the appellant takes exception to the above order passed by the learned Company Judge on two grounds which we have already referred to above. 11. Sri.Raju Joseph, learned counsel for the appellant submits that the appellant ought not to have been penalised even assuming he had committed any indiscretion. The appellant had only given expression to his anxiety. His only intention was to ensure that he did not incur any other liabilities. The appellant being an uneducated person, his conduct ought to have been considered in its right perspective. At any rate, the appellant ought to have been given an opportunity to offer an explanation, in which event, he might have even reconsidered the matter and probably would have withdrawn those conditions. 12. In this context, learned counsel invites our attention to the provisions contained under Section 55 of The Transfer of Property Act 1882 and particularly to Clause (g) of the above section. Section 55 Co.Appeal No.2/2010 5 lays down the rights and liabilities of buyer and seller of an immovable property. It postulates that in the absence of a contract to the contrary, the buyer and seller of immovable property respectively, are subject to the liabilities, and have the rights, mentioned in the rules enumerated in the Section, or such of them as are applicable to the property sold. 13. Clause of sub section 1 further postulates that the seller is bound among other things : (g) to pay all public charges and rent accrued due in respect of the property up to the date of sale, the interest on all encumbrances on such property due on such date, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing. 14. It is contended by the learned counsel that a perusal of the conditions incorporated by the appellant in Annexure A tender document will unambiguously show that all these conditions were in essence what was contained in Clause 'g' of Section 55. While conceding that the properties were sold “ IN AS IS WHERE IS AND WHATEVER THERE IS” condition, it is contended by the learned Co.Appeal No.2/2010 6 counsel that it was incumbent on the seller, the Official Liquidator, to ensure that the buyer was not saddled with any unhidden liabilities at a later stage. This was only what the appellant intended when the “so called” conditionalities were put forth. 15. Learned counsel has also pressed into service Section 57 of The Transfer of Property Act in support of the above contention. The provision in the above Section only postulates that where immovable property subject to any encumbrances, whether immediately payable or not, is sold by the court in execution of a decree, or out of court, the court may, if it thinks fit, on the application of any party to the sale, direct or allow payment into court such dues in the manner provided therein. It can be seen that the above provision relates to sale by court of an immovable property which is subject to any encumbrance . The section mandates that such encumbrances shall be discharged in the manner provided in the section. 16. We are afraid that the attempt of the learned counsel to seek the aid of Section 57 in his case is totally misconceived. 17. As regards the contention based on Clause 'g' of Section 55, it may be noticed that it is one of the several obligations cast on a seller of an immovable property to discharge all public charges and rent accrued due in respect of the said property up to the date of sale. Co.Appeal No.2/2010 7 But where the property is sold subject to encumbrances, the situation may be different as is discernible from the above sub clause. We do not propose to deal with that aspect of the matter any further since in our view the issue can be dealt with dehors the aid of the above sub clause. 18. As rightly pointed out by the learned counsel for respondent No.1, the appellant had put his signature under endorsement referring to the terms and conditions. He had unequivocally stated that he has unconditionally accepted the terms and conditions of the sale. As mentioned earlier, one of the general terms and conditions of sale stipulated that the assets were being sold in “as is where is and whatever there is”. Clause ' d ' of the terms and conditions reads thus : “The assets are sold on the assumption that the tenderer/s have inspected the assets, know what they are tendering for, whether they have inspected or not and the principle of 'Caveat Emptor' will apply.” 19. According to the learned counsel, the phraseology “ AS IS WHERE IS AND WHATEVER THERE IS” will not take within its ambit the defect in title or any other unseen liability that may be attached to the property. Learned counsel contends that the above clause would Co.Appeal No.2/2010 8 only relate and refer to the physical condition of the asset and nothing more. For instance he points out that a successful tenderer may not be entitled to complain about the defect or poor quality of the movable property like machinery etc., if it was not in a working condition. Similarly, if the immovable property like land turns out to be totally rocky and unusable for any agricultural purposes, the successful tenderer cannot be heard to say that he did not bargain for such a land. It is further pointed out by the learned counsel that tenderer may not also be entitled to complain, if any easementary right is attached to the land under the Easments Act 1882. 20. In short it is pointed out by the learned counsel that neither the liquidator nor respondent No.1 can take shelter under the above clause incorporated in the tender notification. 21. It is true that the appellant was not formally given an opportunity by the liquidator to reconsider the matter and to state whether he stuck to the conditions incorporated by him to the offer in response to the tender. However, it has to be noticed that a fresh tender notification was issued by the Official Liquidator as suggested by the Court since there was wide disparity between the first offer and the last one. As mentioned earlier, while the first offer made by another person was for about Rs.65 lakhs, the offer made by Co.Appeal No.2/2010 9 respondent No.1 on the first occasion was Rs.1,00,01,000/-. Still later, respondent No.1 enhanced his offer to Rs.1,05,01,000/-. It was noticing the above wide disparity in the offers made by the tenderers that officials of the Company Court had directed the Official Liquidator to issue a fresh tender notification. In response to the notification, the appellant had made an offer of Rs.1,09,75,000/-. The learned Company Judge, after considering these two offers made by respondent No.1 and appellant, took the view that the offer made by the appellant need not be accepted since certain conditionalities were attached. 22. The short question that arises for consideration is whether any interference is warranted in the view taken by the learned Company Judge. 23. At first blush the contentions raised by the appellant may appear to be quite attractive. As has been noticed already 3 of the 4 conditions put forth by the appellant may not have any implementation or complications as such. However the second condition with regard to the liabilities, if any, to the Electricity Board could not have been countenanced at all, as pointed out by the official liquidator in his report before the Company Court. Still a stipulation made by the condition imposed by the appellant that the official liquidator must Co.Appeal No.2/2010 10 ensure that the power connection was made available to him once the sale is confirmed. 24. As regards the above contention, the Official Liquidator reported before the Court that it was unaccepted. 25. Sri.Raju Joseph, learned counsel for the appellant, contends that even assuming the conditions put forth by the appellant were unacceptable, the Official Liquidator ought to have afforded an opportunity to him to be heard. It is further contended by the learned counsel that the Official Liquidator ought to have considered the offer made by the appellant de hors those conditions. 26. As has been noticed already, the appellant had made an endorsement accepting all the terms and conditions of the tender notification as could be seen from Annexure-A notification itself. The four conditions were written by the appellant in his own handwriting beneath the above endorsement. Clause (j) of Annexure-A notification makes it abundantly clear that “ terms and conditions of sale will form part of every tender and shall be signed and submitted along with each tender in token of acceptance of the terms and conditions of the sale”. Even if we accept the contention raised by the appellant as regards the clause relating to “AS IS WHERE IS AND WHATEVER THERE IS”, it cannot be said that the appellant might have been ignorant of the Co.Appeal No.2/2010 11 other terms and conditions in Annexure-A notification. The learned Company Judge has, apparently keeping in view all the above aspects of the matter, decided not to accept the offer made by the appellant. Though there is some merit in the contention raised by the appellant as regards failure of the Official Liquidator to issue notice to him, we are not persuaded to disagree with the view taken by the learned Company Judge. The appellant could not have imposed certain conditions precedent while submitting his tender papers. We have also kept in view the circumstance leading to issuance of Annexure-A notification before which respondent No.1 had made his offer. 27. As has been noticed already, the offer of Rs.1,05,01,000/- made by respondent No.1 was treated as the upset price by the company court. It is true that respondent No.1 had not chosen to offer a higher bid in response to Annexure-A notification. Under normal circumstances, if the appellant had not imposed any conditionalities, he might have walked away with the bid. But, unfortunately, he decided to impose certain conditions, may be for his own reasons. As rightly held by the learned Company Judge, the appellant was not entitled to have the cake and eat it too. We do not find any reason to interfere with the order passed by the company court. Co.Appeal No.2/2010 12 There is yet another aspect of the matter. It is beyond controversy that the sale was confirmed on 4th January, 2010 and the properties, both movable and immovable, were delivered to respondent No.1 on the same day. It is contended by respondent No.1, which is not controverted, that he had also sold the movables to a third party. It is also on record that respondent No.1 has entered into an agreement for sale of certain portions of the entire immovable property as well. The appeal fails. It is accordingly dismissed. A.K. BASHEER, JUDGE P.Q. BARKATH ALI, JUDGE mt/sv/mns/aks Co.Appeal No.2/2010 13