M/S. Archean Granites Ltd vs M/S. Rps Benefit Fund Ltd. & Ors

2. The first respondent Company (`Company' for short), was the owner of an odd shaped (triangular) plot of land bearing No.23, G.N. Chetty Road, T. Nagar, Chennai measuring 9315 sq. ft. The first respondent had mortgaged the said property in favour of Bank of Madura Ltd. in the year 1998 for a loan of Rs.60 lakhs. The first respondent decided to sell the said property to pay its depositors and the secured creditor. It took out advertisements on 22.11.1998 and 21.3.1999 for sale of the property. After considering the responses, on 22.4.1999, the Board of Directors of first respondent passed a resolution to sell the said property to the appellant for a consideration of Rs.1.65 crores and 2 entered into an agreement of sale with appellant on the same day. In pursuance of it, the first respondent, under a Sale Deed dated 13.8.l999, sold the said property to the appellant herein for a consideration of Rs.1.65 crores. The sale deed recited that out of the sale price, Rs.95,80,275/- was paid to the vendor (first respondent); and as the property was subject to a mortgage in favour of Bank of Madura Ltd, Rs.69,19,725/- was retained for payment to the said Bank towards full and final settlement of the dues of the vendor. On 9.9.1999, the appellant paid Rs.10 lakhs towards the Bank's dues. The appellant offered the balance amount due to the Bank by a demand draft under cover of its letter dated 17.9.1999 with a request to the Bank to accept the same and discharge the mortgage.

6. This Court issued notice on the special leave petition on 27.3.2006. During the pendency of the matter before this Court, there were a series of meetings among the creditor Bank (which by then was succeeded by ICICI Bank, the second respondent herein), the official liquidator, and the appellant to arrive at a mutually acceptable solution. On 20.1.2010, the appellant arrived at an understanding with the secured creditor (second respondent Bank) under which the Bank agreed to receive Rs.2.5 crores from the appellant in full and final settlement of its dues against the total outstanding of Rs.3.8 crores (as on 31.12.2009) provided the entire amount was paid on or before 31.3.2010. At a meeting held on 5.11.2009, the appellant also offered to pay a sum of Rs. two crores to the Official Liquidator representing the first respondent by way of settlement to validate the sale.

8. Having regard to the market value as disclosed by the enquires by the official liquidator, we are of the view that what has been offered may not be adequate. Keeping in view the present value of the amount already spent/incurred by the appellant (that is the consideration plus stamp duty paid with the interest thereon), it would be fair and reasonable if the appellant is required to pay Rs.2.5 crores to the ICICI Bank in full and final settlement of the amount due to the Bank and a sum of Rs.3.5 crores to the Official Liquidator representing the first respondent, in all Rs.6 crores. Having regard to the fact that the issue is being examined with reference to an application under section 531A of the Act, and the facts and circumstances, payments as aforesaid would result in a permanent solution doing complete justice among the parties.

9. In view of the above, we allow this appeal in part and set aside the impugned judgment dated 7.10.2005 of the Division Bench of the High Court confirming the order dated 30.4.2002 of the learned Company Judge. The application by appellant for approval and validation of the sale deed dated 13.8.1999 in its favour is allowed subject to the following: 7

(ICICI Bank) on or before 30th March 2010 in full and final settlement of the mortgage loan of first respondent;

(c) On payment of six crores as aforesaid, the second respondent shall deliver the title deeds of the property to the appellant and discharge the equitable mortgage. On such payment, the official Liquidator shall also deliver possession of the property of the appellant.

judgment of the High Court shall stand confirmed.