IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON FRIDAY, THE 8TH JANUARY 2010 / 18TH POUSHA 1931 WP(C).No. 603 of 2010(A) ------------------------ PETITIONER(S): --------------- BABU BARADWAJ, 32/1858 C(1), SURABHI ROAD, EDAPPALLY, KOCHI-24. BY ADV. SRI.DEEPU THANKAN SMT.G.RANJITA RESPONDENT(S): --------------- 1. KERALA FINANCIAL CORPORATION, HEAD OFFICE, VELLAYAMBALAM, REPRESENTED BY ITS MANAGING DIRECTOR. 2. KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD., KESTON ROAD, KOWDIAR, THIRUVANANTHAPURAM, REPRESENTED BY ITS MANAGING DIRECTOR. 3. STATE OF KERALA, REPRESENTED BY THE PRINCIPAL SECRETARY, FINANCE DEPARTMENT, GOVT.SECRETARIAT, THIRUVANANTHAPURAM. 4. BIJU KURIAN, SKYLARK, MEENANGADI P.O., WAYANAD DISTRICT. 5. DR.K.V.RAFFI, S/O. N.P.MAMMOO, SUBAIDA, MANZIL, MARAYUR AMSOM, KUTHUPARAMBU DESOM. STANDING COUNSEL SRI.R.S.KALKURA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08/01/2010 ALONG WITH WPC NO. 24763 OF 2003 AND WP(C) NO.27667 OF 20003 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R. RAMACHANDRA MENON, J. ----------------------------------------------- WP(C) No. 603 of 2010, 24763/2003 & 27667/2003 --------------------------------------------- Dated, this the 8th day of January, 2010 J U D G M E N T WP(C) 603/2010 has been filed by the petitioner in WP(C) 24763/2003, who himself happens to be the 4th respondent in the other case, i.e., in WP(C) 27667/2003. The subject matter involved in all these three cases, more or less is the same and all these cases are dealt with together. 2. WP(C) 603/2010 challenges the sale of the property which belonged to the Company in which the petitioner was a Director (which was effected in the year 2006) mainly contending that the petitioner 'suspects' serious foul play in the sale proceedings. Reliance is placed on the fact that the very same property was subjected to sale in the year 1996, when it was sold for a sum of Rs.90.37 lakhs but since the successful bidder did not effect the payment in toto, the property was re possessed by the respondent/KFC and later sold in the year 2006 for a much lesser sum of Rs.60.01 lakhs. 3. WP(C) 24763/2003 has been filed by the very same petitioner in WP(C) 603/2010 challenging the Revenue Recovery WP(C) No.603/2010, 24763/2003 & 27667/2003 2 proceedings being pursued against him, on different grounds, in respect of the very same transaction whereby the Company of which the petitioner was a Director turned to be defaulter in satisfying the due amounts to the respondents. It is also contended that the property in question had already been conveyed by the petitioner and his wife (who was also stated as having rights and interest in property in question) to the petitioner in the other case, i.e., in WP(C) 27667/2003. In fact the latter case has been filed by the petitioner therein contending that he was only a 'bonafide purchaser' of the property from the petitioner in WP(C) 24763/2003 and that the property in question which is owned, possessed and enjoyed by the petitioner therein (ever since the execution of Ext.P2 sale deed by the petitioner in the other case, who was vendor) is not liable to be attached or sold in satisfaction of the liability owed by the Company or the Director (petitioner in the other cases). 4. With regard to the challenge raised against the sale in WP(C) 603/2010, the property which was subjected to sale admittedly belonged to the Company by name Calicut Printing Complex Ltd., of which the petitioner was one of the 8 Directors. It is not stated any where in the Writ Petition whether the Company is still in existence. The sale conducted by the authorities concerned has not been stated as subjected to challenge WP(C) No.603/2010, 24763/2003 & 27667/2003 3 by the Company and in any view of the matter the Company is not a party to this Writ Petition; which by itself places much a hurdle on the way of the petitioner as to the 'locus standi' and maintainability. 5. Admittedly, the sale took place way back in the year '2006' and the petitioner has chosen to approach this Court only in the year '2010' suspecting foul play in the sale proceedings. It has been conceded by the petitioner in the Writ Petition that he had approached the public information officer of the 1st respondent by filing Ext.P1 petition dated 26.10.2007 seeking for clarification/information, invoking the provisions under the RIT Act, 2005; which in turn was considered and answered by the authority concerned, vide reply dated 09.11.2007. Obviously the petitioner did not cherish any further doubt or suspicion with regard to the alleged foul play in the sale proceedings, after the receipt of the requisite information vide Ext.P1 served in November 2007; but he has approached this Court only in the year 2010 as if driven by some revelation that the sale is still in bad and hence is liable to be challenged. There is inordinate delay on the part of the petitioner, besides the question of 'locus standi' in challenging the sale proceedings conducted in '2006'; for which absolutely no explanation has been offered which causes another hurdle on the way. WP(C) No.603/2010, 24763/2003 & 27667/2003 4 6. It is further contended that the property by virtue of its lie, location and topography and situated in the heart of the Calicut town would fetch very high market value, but the sale conducted in the year 2006 was for an abysmally low sum of Rs.60.01 lakhs, while the sale conducted in the year 1996 was for 90.37 lakhs. Learned counsel for the petitioner submits that even by the farthest stretch of imagination, the market value of the property could never have gone down to such an extent, which is stated as another reason to interfere with the sale and in support of the foul play suspected. 7. Admittedly the person who bid the property in the year 1996 did not satisfy the entire sale consideration; under which circumstance, the property was taken back by the creditor and the same was subjected to sale again. This by itself shows that the successful bidder himself was not able to satisfy the price quoted by him, which presumably might be the reason why no other bidder turned up later, quoting more amount. In any view of the matter, in the absence of concrete evidence as to the alleged fraud or foul play, no decision can be rendered on mere conjunctures and surmises. But for the vague allegations made by the petitioner, no other material has been produced before this Court to suspect any such situation; more so when the Company has not turned up to challenge the WP(C) No.603/2010, 24763/2003 & 27667/2003 5 sale or sale proceedings including the value fetched in the sale. There is absolutely no merit in the Writ Petition and accordingly, interference is declined in WP(C) 603/2010. 8. Coming to WP(C) 24763/2003, the petitioner has raised mainly 4 grounds to support the contentions against the steps pursued by the respondents invoking the power under the Kerala Revenue Recovery Act; firstly contending that, it is highly barred by limitation. It is stated that the property was actually sold to the Writ Petitioner in WP(C) 27667/03 as per Ext.P2 sale deed executed on 26.03.2003 and hence it is contended secondly, that no Revenue Recovery proceedings were pending as on that date, in respect of the said property and hence the sale is immune. Thirdly, it is contended that the petitioner in WP(C) 24763/2003 who was only one of the 8 Directors of the Company Calicut Printing Complex Ltd. and that the Director is not personally liable in respect of the dues of the Company. The 4th and the last submission is that the petitioner and his properties (the Director and his personal property) can be proceeded against, only after realisation of the amounts from the Company and its assets and since the sale originally effected in 1996 did not take place and as the Company's properties were sold only in the year 2006, the sale effected in the year 2003 was never to be touched in any manner. WP(C) No.603/2010, 24763/2003 & 27667/2003 6 Learned counsel appearing for the Writ Petitioner in WP(C) 27667/2003 fully supports the contentions raised by the petitioner in the other case WP(C) 24763/2003 and submits that the petitioner therein being a bonafide purchaser, was not liable or responsible in respect of the liability of the petitioner in the other case or that of the Company. It is also asserted that the property purchased by the said petitioner for valuable sale consideration as borne by Ext.P2 sale deed, is not liable to be declared as null and void and that the steps taken by the concerned respondents to the contrary are not correct or sustainable. 9. The learned counsel appearing for the KSIDC, with specific reference to the separate counter affidavit filed in WP(C) 24763/2003 and 27667/2003 submits that the contentions raised by the petitioners that the proceedings are time barred and that there is no personal liability for the Director/petitioner in WP(C) 24763/2003 are not correct or sustainable. It is revealed from the pleadings raised in the counter affidavit that the petitioner/Director had approached this Court earlier by filing OP 8465/2003 and had obtained an interim stay on 14.03.2003 when the Revenue Recovery proceedings were initiated against him and his properties. Immediately after obtaining the stay, the concerned petitioner sold the properties belonging to him, to the petitioner in WP(C) WP(C) No.603/2010, 24763/2003 & 27667/2003 7 27667/2003 (as per Ext.P2 sale deed referred to therein) which in fact is sold contrary to the stipulation under Section 44 of the Kerala Revenue Recovery Act. It is also stated that OP 8465/2003 was dismissed subsequently on 15.07.2005 and the judgment has become final. 10. With regard to the plea of limitation, it is brought to the notice of this Court that the Revenue Recovery proceedings were initiated against the petitioner/Director not in the year 2001 or 2003 as contended by him, but as early as in 1993 as borne by Ext.R1(b) requisition issued in this regard. It is also stated that the debt due to the KSIDC was secured by mortgage of immovable property, for which the period of limitation was 'twelve' years and not 3 years. The specific averments raised in the counter affidavit as mentioned above, with regard to the initiation of the Revenue Recovery proceedings have not been effectively rebutted from the part of the petitioners by filing any reply affidavit. The only contention put forth is that no Revenue Recovery proceedings were pending as on the date of execution of Ext.P2 sale deed in WP(C) 27667/2003, with regard to the particular property concerned. For the purpose of convenience of reference the stipulation contains under Section 44 (2) of the Revenue Recovery Act is extracted below. S 44 (2) : Any transfer of immovable property made by a defaulter after public revenue due on any land from him has WP(C) No.603/2010, 24763/2003 & 27667/2003 8 fallen in arrear, with intent to defeat or delay the recovery of such arrear, shall not be binding upon the Government. It is very much clear from the statutory prescription as above, that the restriction imposed is not with respect to any particular property and that the ban is equally applicable to all the properties owned, possessed and enjoyed by the persons concerned, for which the transfer is forbidden. Obviously, since the machinery under the Revenue Recovery Act was made to run immediately after 04.06.1993, i.e., pursuant to Ext.R (1) (b) requisition, the steps taken by the respondents, proceeding against the property in question, are very much within the four walls of law and is not assailable under any circumstance. 11. With regard to the contention that the petitioner in WP(C) 24763/2003 being a Director of the Company is not personally liable for the liability of the Company, it has been stated in crystal-clear terms in paragraph 4 of the counter affidavit filed in WP(C) 24763/2003 by the 1st respondent (in the other case as well) that, in respect of the loan availed by the Company, the petitioner had also executed a 'personal guarantee' as borne by Ext.R1(a). This being the position, there is absolutely no statutory bar in the proceedings involved. 12. Coming to the last contention that the Director as well as the personal properties of the Director of a Private Limited Company can be WP(C) No.603/2010, 24763/2003 & 27667/2003 9 proceeded against, only after arriving at a finding that satisfaction of liability cannot be obtained from the Company; it has to be noted that the said contention also does not hold any water at all; in view of the fact that the case of the petitioner stands on a different pedestal, in so far as he has executed a personal guarantee and the respondents can proceed on the basis of such personal guarantee. In the above facts and circumstances, the contention raised by the petitioner in WP(C) 24763/2003 are devoid of any merit or bonafides. For the very same reason, the relief prayed for in WP(C) 27667/2003 filed by the person who purchased the property from the petitioner in the other case also fails, as it is rather consequential in nature. 13. Incidentally, it is also relevant to note that the recovery proceedings being pursued by the respondents against the property of the petitioner in WP(C) 24763/2003 were originally sought to be resisted by the petitioner stating that the said property situated in Kozhikode did not exclusively belong to him and that the building situated thereon actually belonged to his wife. It was in the said circumstance, that the proceedings were intercepted earlier and finally, it was brought on record that the petitioner had shifted his residence to Thiruvananthapuram and after obtaining the interim order from this Court on 14.03.2003 in OP WP(C) No.603/2010, 24763/2003 & 27667/2003 10 8465/2003, the said property was sold to the petitioner in WP(C) 27667/2003 as per Ext.P2 sale deed dated 26.03.2003. Even though there is a contention for the respondents that the said transaction is pursuant to a fraudulent exercise, this Court does not express anything on merits in this regard. However, this Court cannot but omit to mention that the specific pleading raised in WP(C) 24763/2003 as well as in WP(C) 603/2010 (paragraph 3 of WP(C) 603/2010) is that the property in Kozhikode stood in the name of the petitioner as well as his wife and that the said property was disposed of much earlier by the petitioner and his wife. As a matter of fact, the said statement does not appear to be correct, in so far as Ext.P2 sale deed in WP(C) 27667/2003 is seen executed only by the petitioner in the other two cases and not joining hands with the wife. That apart, the contents of Ext.P2 sale deed also reveal in un- equivocal terms that the sole vendor therein was having absolute and exclusive right over the property and in the building situated thereon. In any view of the matter, since this Court does not propose to go into the nature of the transaction, as to whether it was fraudulent or not, but for confining the observations and interference with regard to the legality of the transaction and the sustainability of the steps pursued by the respondents invoking the machinery under the Revenue Recovery Act, WP(C) No.603/2010, 24763/2003 & 27667/2003 11 the said question is left open. In the above facts and circumstances, the challenge raised in all the above three Writ Petitions fails and interference is declined. All the Writ Petitions are dismissed accordingly. P. R. RAMACHANDRA MENON JUDGE dnc