1 l. IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL ORIGINAL ORIGINAL CIVIL JURISDICTION CIVIL JURISDICTION CIVIL JURISDICTION COMPANY COMPANY COMPANY APPLICATION NO.885 OF 2006 APPLICATION NO.885 OF 2006 APPLICATION NO.885 OF 2006 inin in COMPANY COMPANY COMPANY APPLICATION APPLICATION APPLICATION (L) NO.701 of 2000 (L) NO.701 of 2000 (L) NO.701 of 2000 IN IN IN COMPANY COMPANY COMPANY PETITION PETITION PETITION NO.273 OF 1998 NO.273 OF 1998 NO.273 OF 1998 Sobhagymal Sobhagymal Sobhagymal Sanghvi Sanghvi Sanghvi ...... Petitioner Petitioner Petitioner vs vs vs DSJ DSJ DSJ Finance Corporation Ltd Finance Corporation Ltd Finance Corporation Ltd ...... thr.Official thr.Official thr.Official Liquidator, Bombay High Court Liquidator, Bombay High Court Liquidator, Bombay High Court and and and 1.1.1. DSJ DSJ DSJ Communication Ltd Communication Ltd Communication Ltd 2.2.2. Dataline Dataline Dataline Research Technologies (I) Ltd Research Technologies (I) Ltd Research Technologies (I) Ltd 3.3.3. Boom Boom Boom Trading and Investments Trading and Investments Trading and Investments Mr.Santosh Mr.Santosh Mr.Santosh D.Raje D.Raje D.Raje for Petitioner in C.A. No.885/06 for Petitioner in C.A. No.885/06 for Petitioner in C.A. No.885/06 Ms.K.V.Gautam,Dy.O.L.present Ms.K.V.Gautam,Dy.O.L.present Ms.K.V.Gautam,Dy.O.L.present Mr.R.D.Suvarna Mr.R.D.Suvarna Mr.R.D.Suvarna in C.A.No.330/06 in C.A.No.330/06 in C.A.No.330/06 CORAM CORAM CORAM : : : DR.D.Y.CHANDRACHUD, J DR.D.Y.CHANDRACHUD, J DR.D.Y.CHANDRACHUD, J DATED DATED DATED : : : 15th June, 2007 15th June, 2007 15th June, 2007 P.C. P.C. P.C. 1.1.1. Company Application No.330 of 2006 has been Company Application No.330 of 2006 has been Company Application No.330 of 2006 has been taken taken taken out out out by C.D.Securities Services Network Ltd, a by C.D.Securities Services Network Ltd, a by C.D.Securities Services Network Ltd, a security security security agency for a direction to the Official agency for a direction to the Official agency for a direction to the Official Liquidator Liquidator Liquidator to to to pay an amount of Rs.7,78,302/-, being pay an amount of Rs.7,78,302/-, being pay an amount of Rs.7,78,302/-, being security security security charges for the period 6th May, 1999 to charges for the period 6th May, 1999 to charges for the period 6th May, 1999 to 31st 31st 31st January, 2006 and to allow the agency to January, 2006 and to allow the agency to January, 2006 and to allow the agency to withdraw withdraw withdraw its security personnel. The security its security personnel. The security its security personnel. The security personnel personnel personnel have have have been deployed at a property which is been deployed at a property which is been deployed at a property which is described described described as A/23, 2nd Floor, Green Park, New as A/23, 2nd Floor, Green Park, New as A/23, 2nd Floor, Green Park, New Delhi. Delhi. Delhi. The second Company Application (Company The second Company Application (Company The second Company Application (Company Application Application Application No.420 of 1007 has been taken out on No.420 of 1007 has been taken out on No.420 of 1007 has been taken out on behalf behalf behalf of three applicants for a direction to the of three applicants for a direction to the of three applicants for a direction to the 2 Official Official Official Liquidator to remove the seal from the Liquidator to remove the seal from the Liquidator to remove the seal from the premises. premises. premises. The Official Liquidator took possession The Official Liquidator took possession The Official Liquidator took possession of of of the aforesaid premises on 6th May, 1999. The the aforesaid premises on 6th May, 1999. The the aforesaid premises on 6th May, 1999. The original original original respondent respondent respondent DSJ.Finance Corporation Ltd was DSJ.Finance Corporation Ltd was DSJ.Finance Corporation Ltd was ordered ordered ordered to to to be wound up on 29th September, 1998. An be wound up on 29th September, 1998. An be wound up on 29th September, 1998. An application application application (Company Application No.420 of 2007 or (Company Application No.420 of 2007 or (Company Application No.420 of 2007 or original original original Company Application (Lodging) No.701 of Company Application (Lodging) No.701 of Company Application (Lodging) No.701 of 2000) 2000) 2000) was taken out by the three applicants (1) was taken out by the three applicants (1) was taken out by the three applicants (1) D.S.J.Communication D.S.J.Communication D.S.J.Communication Ltd (2) Dataline Research Ltd (2) Dataline Research Ltd (2) Dataline Research Technologies Technologies Technologies India Ltd (3) Boom Trading and India Ltd (3) Boom Trading and India Ltd (3) Boom Trading and Investments Investments Investments for a direction to the Official for a direction to the Official for a direction to the Official Liquidator Liquidator Liquidator to remove the seal from the premises. to remove the seal from the premises. to remove the seal from the premises. In In In the affidavit in support it was averred that by the affidavit in support it was averred that by the affidavit in support it was averred that by a communication dated 11th January,,2000 to the communication dated 11th January,,2000 to the communication dated 11th January,,2000 to the Official Official Official Liquidator the applicants had drawn the Liquidator the applicants had drawn the Liquidator the applicants had drawn the attention attention attention of the liquidator to the fact that the of the liquidator to the fact that the of the liquidator to the fact that the premises premises premises did not belong to the company in did not belong to the company in did not belong to the company in liquidation liquidation liquidation but but but to the applicants. In pursuance of to the applicants. In pursuance of to the applicants. In pursuance of a letter of the Official Liquidator demanding the letter of the Official Liquidator demanding the letter of the Official Liquidator demanding the documents documents documents of title, the applicants by a of title, the applicants by a of title, the applicants by a communication communication communication dated 15th February, 2000 furnished dated 15th February, 2000 furnished dated 15th February, 2000 furnished the the the registered documents on the basis of which the registered documents on the basis of which the registered documents on the basis of which the applicants applicants applicants claimed their right, title and interest claimed their right, title and interest claimed their right, title and interest toto to the premises. the premises. the premises. 2.2.2. On 16th August, 2002 a learned Single Judge of On 16th August, 2002 a learned Single Judge of On 16th August, 2002 a learned Single Judge of this this this Court (S.J.Vajifdar, J) noted that in the Court (S.J.Vajifdar, J) noted that in the Court (S.J.Vajifdar, J) noted that in the affidavit affidavit affidavit in in in support of the Company Application the support of the Company Application the support of the Company Application the applicants applicants applicants had set out in detail the manner in had set out in detail the manner in had set out in detail the manner in which which which the the the applicants had acquired rights in respect applicants had acquired rights in respect applicants had acquired rights in respect 3 of of of the premises and there was nothing on record to the premises and there was nothing on record to the premises and there was nothing on record to indicate indicate indicate to the contrary. An interim order was to the contrary. An interim order was to the contrary. An interim order was passed passed passed by the learned Single Judge directing the by the learned Single Judge directing the by the learned Single Judge directing the Official Official Official Liquidator to deseal the premises but Liquidator to deseal the premises but Liquidator to deseal the premises but while while while doing so it was observed that the Official doing so it was observed that the Official doing so it was observed that the Official Liquidator Liquidator Liquidator shall permit the applicants to take shall permit the applicants to take shall permit the applicants to take possession possession possession of the premises subject to each of them of the premises subject to each of them of the premises subject to each of them filing filing filing an undertaking not to dispose of, alienate, an undertaking not to dispose of, alienate, an undertaking not to dispose of, alienate, encumber encumber encumber or create any third party rights and/or or create any third party rights and/or or create any third party rights and/or interest interest interest in or upon the aforesaid premises till in or upon the aforesaid premises till in or upon the aforesaid premises till further further further orders orders orders of the Court. Certain consequential of the Court. Certain consequential of the Court. Certain consequential directions directions directions were issued for storage of the goods were issued for storage of the goods were issued for storage of the goods referred referred referred to in the report of the Official to in the report of the Official to in the report of the Official Liquidator. Liquidator. Liquidator. 3.3.3. Now, it is an admitted position before this Now, it is an admitted position before this Now, it is an admitted position before this Court Court Court that the applicants did not immediately or that the applicants did not immediately or that the applicants did not immediately or for for for that matter within a reasonable time file an that matter within a reasonable time file an that matter within a reasonable time file an affidavit affidavit affidavit of undertaking as directed in the order of undertaking as directed in the order of undertaking as directed in the order of of of 16th August, 2002 that they would not alienate 16th August, 2002 that they would not alienate 16th August, 2002 that they would not alienate or or or create any third party rights in the premises. create any third party rights in the premises. create any third party rights in the premises. The The The Official Liquidator thereupon moved a report Official Liquidator thereupon moved a report Official Liquidator thereupon moved a report before before before the learned Company Judge on 19th February, the learned Company Judge on 19th February, the learned Company Judge on 19th February, 2003 2003 2003 seeking ratification of his action in seeking ratification of his action in seeking ratification of his action in appointing appointing appointing security guards and for a direction to security guards and for a direction to security guards and for a direction to the the the applicants in Company Application No. 420 of applicants in Company Application No. 420 of applicants in Company Application No. 420 of 2007 2007 2007 to pay security charges until the Company to pay security charges until the Company to pay security charges until the Company Application Application Application was was was disposed of or until possession was disposed of or until possession was disposed of or until possession was taken taken taken from the liquidator in pursuance of the ad from the liquidator in pursuance of the ad from the liquidator in pursuance of the ad interim interim interim order whichever was earlier. The order whichever was earlier. The order whichever was earlier. The 4 liquidator’s liquidator’s liquidator’s report contained a specific statement report contained a specific statement report contained a specific statement that that that notice of the report was furnished inter alia notice of the report was furnished inter alia notice of the report was furnished inter alia toto to the applicants. Dr.Justice S.Radhakrishnan the applicants. Dr.Justice S.Radhakrishnan the applicants. Dr.Justice S.Radhakrishnan (then (then (then sitting as a Company Judge) allowed the sitting as a Company Judge) allowed the sitting as a Company Judge) allowed the report report report of the liquidator in terms of prayer clause of the liquidator in terms of prayer clause of the liquidator in terms of prayer clause (a). (a). (a). As a result, the action of the liquidator in As a result, the action of the liquidator in As a result, the action of the liquidator in appointing appointing appointing security guards was ratified and the security guards was ratified and the security guards was ratified and the applicants applicants applicants were directed to pay security charges were directed to pay security charges were directed to pay security charges until until until they took possession of the premises. A Copy they took possession of the premises. A Copy they took possession of the premises. A Copy of of of the order of the Courtwas furnished to the the order of the Courtwas furnished to the the order of the Courtwas furnished to the applicant’s applicant’s applicant’s advocate by a letter dated 11th advocate by a letter dated 11th advocate by a letter dated 11th November, November, November, 2003 with a request to comply with the 2003 with a request to comply with the 2003 with a request to comply with the orders orders orders of the court. The applicants however, did of the court. The applicants however, did of the court. The applicants however, did not not not deposit the charges. The applicants filed an deposit the charges. The applicants filed an deposit the charges. The applicants filed an undertaking undertaking undertaking as directed in the order of this court as directed in the order of this court as directed in the order of this court dated dated dated 16th August, 2002 not to create any third 16th August, 2002 not to create any third 16th August, 2002 not to create any third party party party rights only on 19th December, 2003 which was rights only on 19th December, 2003 which was rights only on 19th December, 2003 which was nearly nearly nearly 16 16 16 months after the date of the order of the months after the date of the order of the months after the date of the order of the Court. Court. Court. However, the direction contained in the However, the direction contained in the However, the direction contained in the order order order of Dr. Justice S.Radhakrishnan dated 8th of Dr. Justice S.Radhakrishnan dated 8th of Dr. Justice S.Radhakrishnan dated 8th October, October, October, 2003 for depositing security charges was 2003 for depositing security charges was 2003 for depositing security charges was not not not complied with. Even after the undertaking was complied with. Even after the undertaking was complied with. Even after the undertaking was filed, filed, filed, there is nothing on record to indicate that there is nothing on record to indicate that there is nothing on record to indicate that intimation intimation intimation was was was furnished to the Official Liquidator furnished to the Official Liquidator furnished to the Official Liquidator of of of the fact of the filing of the undertaking in the fact of the filing of the undertaking in the fact of the filing of the undertaking in court. court. court. On 24th March, 2004 the Official Liquidator On 24th March, 2004 the Official Liquidator On 24th March, 2004 the Official Liquidator was was was for the first time informed that an affidavit for the first time informed that an affidavit for the first time informed that an affidavit on on on behalf of the applicants was filed in Court. behalf of the applicants was filed in Court. behalf of the applicants was filed in Court. Though Though Though the letter states that a copy was served on the letter states that a copy was served on the letter states that a copy was served on the the the liquidator, liquidator, liquidator, learned counsel appearing on behalf learned counsel appearing on behalf learned counsel appearing on behalf 5 of of of the applicants fairly stated before this Court the applicants fairly stated before this Court the applicants fairly stated before this Court that that that the applicants are unable to substantiate the applicants are unable to substantiate the applicants are unable to substantiate their their their contention that a copy of the affidavit was contention that a copy of the affidavit was contention that a copy of the affidavit was served served served on the liquidator after it was filed. on the liquidator after it was filed. on the liquidator after it was filed. Therefore, Therefore, Therefore, at any rate it was only on 24th March, at any rate it was only on 24th March, at any rate it was only on 24th March, 2004 2004 2004 that the applicants chose to intimate the that the applicants chose to intimate the that the applicants chose to intimate the Official Official Official Liquidator about the filing of the Liquidator about the filing of the Liquidator about the filing of the undertaking. undertaking. undertaking. In fact, even the undertaking was In fact, even the undertaking was In fact, even the undertaking was filed filed filed after a significant delay after the order of after a significant delay after the order of after a significant delay after the order of this this this court dated 16th August, 2002. court dated 16th August, 2002. court dated 16th August, 2002. 4.4.4. The security charges payable to the security The security charges payable to the security The security charges payable to the security agency agency agency have remained unpaid. There can be have remained unpaid. There can be have remained unpaid. There can be absolutely absolutely absolutely no reason or justification for no reason or justification for no reason or justification for non-payment non-payment non-payment of of of the security charges which have been the security charges which have been the security charges which have been verified verified verified by the Official Liquidator to be due and by the Official Liquidator to be due and by the Official Liquidator to be due and payable. payable. payable. The liquidator asserts that the liability The liquidator asserts that the liability The liquidator asserts that the liability toto to pay the security charges must lie with the pay the security charges must lie with the pay the security charges must lie with the applicants applicants applicants while on the other hand the applicants while on the other hand the applicants while on the other hand the applicants contend contend contend that they are not liable to pay the that they are not liable to pay the that they are not liable to pay the security security security charges in the first place since the charges in the first place since the charges in the first place since the premises premises premises in question did not belong to the company in question did not belong to the company in question did not belong to the company inin in liquidation but to the applicants themselves. liquidation but to the applicants themselves. liquidation but to the applicants themselves. Now, Now, Now, in in in so far as this contention of the applicant so far as this contention of the applicant so far as this contention of the applicants isisis concerned, concerned, concerned, it is apparent from the order of this it is apparent from the order of this it is apparent from the order of this Court Court Court dated 16th August, 2002 that permission as dated 16th August, 2002 that permission as dated 16th August, 2002 that permission as granted granted granted to the applicants to receive the possession to the applicants to receive the possession to the applicants to receive the possession of of of the premises subject to their filing an the premises subject to their filing an the premises subject to their filing an undertaking undertaking undertaking as directed. The applicants have only as directed. The applicants have only as directed. The applicants have only themselves themselves themselves to blame for the delay that took place to blame for the delay that took place to blame for the delay that took place 6 on on on their part in filing an undertaking in their part in filing an undertaking in their part in filing an undertaking in compliance compliance compliance with the order of the Court dated 16th with the order of the Court dated 16th with the order of the Court dated 16th August, August, August, 2002. An affidavit was filed only on 19th 2002. An affidavit was filed only on 19th 2002. An affidavit was filed only on 19th December, December, December, 2003. Immediately after the filing of 2003. Immediately after the filing of 2003. Immediately after the filing of the the the undertaking, it was for the applicants to move undertaking, it was for the applicants to move undertaking, it was for the applicants to move the the the Official Liquidator with a request to remove Official Liquidator with a request to remove Official Liquidator with a request to remove the the the seal seal seal on the premises by producing a copy of the on the premises by producing a copy of the on the premises by producing a copy of the affidavit affidavit affidavit which was to be filed on the record of which was to be filed on the record of which was to be filed on the record of the the the Court. As already noted above, the applicants Court. As already noted above, the applicants Court. As already noted above, the applicants have have have fairly stated before this Court through fairly stated before this Court through fairly stated before this Court through counsel counsel counsel that there is nothing to indicate that the that there is nothing to indicate that the that there is nothing to indicate that the Official Official Official Liquidator was served with a copy of the Liquidator was served with a copy of the Liquidator was served with a copy of the affidavit affidavit affidavit or that at an earlier point of time, the or that at an earlier point of time, the or that at an earlier point of time, the Official Official Official Liquidator Liquidator Liquidator was made aware of the filing of was made aware of the filing of was made aware of the filing of such such such an affidavit before 24th March, 2004. In an affidavit before 24th March, 2004. In an affidavit before 24th March, 2004. In these these these circumstances, the applicants are liable to circumstances, the applicants are liable to circumstances, the applicants are liable to pay pay pay the security charges until 24th March, 2004. the security charges until 24th March, 2004. the security charges until 24th March, 2004. Fairly,the Fairly,the Fairly,the liability liability liability to do so has not been disputed to do so has not been disputed to do so has not been disputed before before before the Court by counsel appearing on behalf of the Court by counsel appearing on behalf of the Court by counsel appearing on behalf of the the the applicants. There is however, merit in the applicants. There is however, merit in the applicants. There is however, merit in the submission submission submission urged on behalf of the applicants that urged on behalf of the applicants that urged on behalf of the applicants that the the the liability liability liability to pay the security charges cannot be to pay the security charges cannot be to pay the security charges cannot be foisted foisted foisted on them for any period after 24th March, on them for any period after 24th March, on them for any period after 24th March, 2004. 2004. 2004. The Official Liquidator ought to have taken The Official Liquidator ought to have taken The Official Liquidator ought to have taken immediate immediate immediate steps for desealing the premises in steps for desealing the premises in steps for desealing the premises in compliance compliance compliance with the order of the learned Single with the order of the learned Single with the order of the learned Single Judge Judge Judge dated 16th August, 2002 after his attention dated 16th August, 2002 after his attention dated 16th August, 2002 after his attention was was was drawn on 24th March, 2004 to the lodgment of drawn on