Case: Allahabad Bank Vs. Bengal Paper Mills Co. Ltd.

consideration. By the subsequent order of Court, the sale was set aside; but during the interregnum, the applicant had the benefit of the assets he had purchased. The other contracting party, the company in liquidation was deprived of the use of its assets. The creditors who held the properties as security were deprived of their right to deal with the security or to enjoy the benefits of the security during the interregnum. In fact, the securities available to the creditors were utilized by the auction purchaser-the applicant. In that situation, the applicant might have the obligation to account for the profits. Certainly, while rendering the main Judgment, this Court was conscious of all these aspects while ordering refund only of the purchase price deposited without providing for payment of interest to the purchaser but at the same time leaving it open to the purchaser to work out its claim for the expenses incurred by it before the Company Court. 13. As stated in Goff and Jones The Law of Restitution (sixth edition) the law of restitution is the law relating to all claims quasi contractual or otherwise, which are founded upon the principle of unjust enrichment. It will, therefore, be necessary to investigate that aspect even if we invoke Sections 70 and 72 of the Indian Contract Act. Even if we invoke Section 65 of the Contract Act, the advantages derived by each of the parties will have to determined and quantified in terms of money and any order in favour of the applicant can be made only after undertaking that exercise. This result cannot to achieved by seeking a clarification of the Judgment as now done. 14. It also appears to us that there was a change of position of the parties including the creditors, pursuant to the sale and the applicant being put in possession. In that context, the adequacy of consideration paid by the applicant will be a relevant consideration. As observed in Goff and Jones in paragraph 42-004, "neither common law nor equity normally inquires into the adequacy of the consideration which the purchaser provides. But such an enquiry would be central to any defence solely based on a defence of change of possession, for, it is a defence which operates to discharge, wholly or in part, a defendants duty to make restitution". Be it noted that the sale in favour of the applicant was set aside by this Court mainly on the ground that the consideration paid was grossly inadequate. 15. The upshot of the above discussion is that the prayer for clarification as made cannot be granted. The applications are liable to be dismissed. Hence, they are dismissed. I.A. Nos.13, 14 and 15 in C.A. No.4191 of 1991 16. I.A. No.13/2004 is an application filed by the Bengal Paper Mill Mazdoor Union, the Labour Union of the wound up industry, for a clarification of the Judgment dated 20.4.1999 by directing that the company in liquidation may be sold as a going concern. I.A. No.14 of 2004 is by the same Union seeking permission to file a supplementary affidavit in support of its above prayer. I.A.No.15 of 2004 is by the company which had made an offer for purchase of the assets of the company in liquidation "as is where is" praying for permission to intervene in I.A. No.13 of 2004 filed by the said Union. According to the Union, before the company court an offer had been made by M/s Madhuri Traders Ltd. for purchase of the assets of the company in liquidation as a going concern for a price of Rs.10 crores. But a counter offer was received from M/s. Zoom Traders and Reality Ltd., the applicant in I.A No.15 of 2004, for Rs.17.75 crores for the entire assets of the company in liquidation on "as is where is" basis. In this situation, the company court has directed the parties to get a clarification from this Court as to the mode in which the assets should be sold, whether as a going concern or as property "as is where is", meaning thereby that the purchase will be free to dispose of the land, machinery and other equipments as he pleaded. It is the submission of the Union that the workers of the Union will be benefited if the property is sold as a unit and a going concern and it is in that context that they have filed I.A. No.13 of 2004 for clarification. It is in that application that M/s Zoom Traders & Realty Ltd. wants to intervene, to press its claim for purchase of the assets "as is where is" but not with a view to run the industry or revive the industry.17. We find that these applications are misconceived. The learned company judge was also in error in directing the parties to seek a clarification from this Court. In liquidation, the assets had been sold by the liquidator and the sale was confirmed by the company court. But the same was set aside by this Court. This Court while setting aside the sale and issuing certain other directions, has very clearly directed that "that same shall be resold after a fresh valuation report thereof has been obtained, the reserved bid fixed and due advertisement published". Obviously, this Court intended that a proper price should be fetched for the assets of the company in liquidation. It has left the question to the company court. It is for the company court to take a decision on the fresh sale to be conducted by it. There is no question of any clarification of the directions of this Court. No need for such a clarification arises. The decision, at least in the first instance, has necessarily to be that of the company court as to the mode and manner of sale and the price at which it is to be sold. In this situation, we are satisfied that these applications filed in this Court are misconceived and they are liable to be dismissed. 18.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Learned counsel for the applicant relied on the decision in Motors & Investment Ltd. vs. New Bank of India and others (1997 (11) SCC 271 ) and submitted that in that case the Court ordered payment of interest to the purchaser on the sale being set aside. On an examination of paragraph 6 of the said decision, it is seen that the question was not discussed as such. But the Court did order the interest earned by the purchase price to be refunded to the purchaser or in the alternative to pay interest on the amount at 18 per cent per annum. In the case of Central Bank of India vs. Ravindra and others (2002 (1) SCC 367 ) this Court discussed the concept of interest to point out that it was the payment fixed by agreement or allowed by law for use or detention of money. In other words, what was indicated was that interest was really compensation for the use of the money which the purchaser was deprived of. Going by the principle of compensation indicated in the said Judgment,the question would arise whether the applicant, in the circumstances of this case, when it had enjoyed the assets for about ten years on deposit of the purchase price, would be entitled to any compensation at all, or to compensation with an obligation to account for the profits, an issue, that has to be adjudicated in an appropriate manner and not certainly while considering an application for clarification.I.A. No.13/2004 is an application filed by the Bengal Paper Mill Mazdoor Union, the Labour Union of the wound up industry, for a clarification of the Judgment dated 20.4.1999 by directing that the company in liquidation may be sold as a going concern. I.A. No.14 of 2004 is by the same Union seeking permission to file a supplementary affidavit in support of its above prayer. I.A.No.15 of 2004 is by the company which had made an offer for purchase of the assets of the company in liquidation "as is where is" praying for permission to intervene in I.A. No.13 of 2004 filed by the said Union. According to the Union, before the company court an offer had been made by M/s Madhuri Traders Ltd. for purchase of the assets of the company in liquidation as a going concern for a price of Rs.10 crores. But a counter offer was received from M/s. Zoom Traders and Reality Ltd., the applicant in I.A No.15 of 2004, for Rs.17.75 crores for the entire assets of the company in liquidation on "as is where is" basis. In this situation, the company court has directed the parties to get a clarification from this Court as to the mode in which the assets should be sold, whether as a going concern or as property "as is where is", meaning thereby that the purchase will be free to dispose of the land, machinery and other equipments as he pleaded. It is the submission of the Union that the workers of the Union will be benefited if the property is sold as a unit and a going concern and it is in that context that they have filed I.A. No.13 of 2004 for clarification. It is in that application that M/s Zoom Traders & Realty Ltd. wants to intervene, to press its claim for purchase of the assets "as is where is" but not with a view to run the industry or revive the industry.17. We find that these applications are misconceived. The learned company judge was also in error in directing the parties to seek a clarification from this Court. In liquidation, the assets had been sold by the liquidator and the sale was confirmed by the company court. But the same was set aside by this Court. This Court while setting aside the sale and issuing certain other directions, has very clearly directed that "that same shall be resold after a fresh valuation report thereof has been obtained, the reserved bid fixed and due advertisement published". Obviously, this Court intended that a proper price should be fetched for the assets of the company in liquidation. It has left the question to the company court. It is for the company court to take a decision on the fresh sale to be conducted by it. There is no question of any clarification of the directions of this Court. No need for such a clarification arises. The decision, at least in the first instance, has necessarily to be that of the company court as to the mode and manner of sale and the price at which it is to be sold. In this situation, we are satisfied that these applications filed in this Court are misconceived and they are liable to be dismissed.