2004 Supreme(SC) 1263

2004(8) Supreme 176
SUPREME COURT OF INDIA
(From Calcutta High Court)
R.C. Lahoti, CJI, G.P. Mathur & P.K. Balasubramanyan, JJ.
Allahabad Bank etc. etc. -Applicants/Appellants
versus
Bengal Paper Mills Co. Ltd. and Ors. etc. -Respondents
I.A.Nos. 9-11
In
Civil Appeal Nos. 4191-4193 of 1991
With
I.A.Nos. 13, 14 and 15
In
Civil Appeal No. 4191 of 1991
Decided on 7-10-2004
Counsel for the Parties :
For the Appearing Parties : Soli J. Sorabjee, Ranjit Kumar, Dushyant A. Dave, Sr. Advocates, R.P. Gupta, Sushendra Kumar Chauhan, Millan Mukherji, Rana Mukherjee, Suchit Mohanty, Siddharth Gautam, Goodwill Indeevar, Ms. Pragya Singh Baghel, Ms. Manik Karanjawala, Dhruv Mehta, Ms. Shalini Gupta, Mohit Chudhary, Advocate for S.K. Mehta, A.D. Sikri, Ranjan Mukherjee, M.T. George, Janaranjan Das, Swetaketu Mishra, Ms. Moushumi Gahlot, Advocate for M/s. Sinha & Das, Advocates, Tara Chandra Sharma, Ms. Neelam Sharma, Ashok Kumar Sil, Advocate (NP), for M/s. Sandersons & Morgans Co., Advocates (NP)/Advocates.

IMPORTANT POINT
Where the sale in favour of the purchaser was set aside by the Court mainly on the ground that the consideration paid was grossly inadequate, the purchaser was held not entitled to award of interest on the purchase price, he being in possession of the property for ten years.

Headnote:Civil Procedure Code, 1908-Order XXI Rules 92, 93-Companies Act, 1956-Section 457(1)(c)-Companies (Court) Rules 1959-Rules 272, 273, 274-Sale of immovable property-Setting aside of sale-Entitlement of purchaser to an order for repayment of his purchase money-Claim of interest purchase price-Company Court granted leave to Official Liquidator to sell assets and properties of the company in liquidation-Sale confirmed and possession given to the purchaser-Purchaser was permitted to pay the price in four quarterly instalments-Sale and its confirmation by the Company Judge was challenged in appeal-High Court in spite of noticing various irregularities and infirmities in the sale and inadequacy of price dismissed appeals-Supreme Court set aside the sale-Prayer made by applicant for refund of Rs. 2 crores paid by it in instalments by way of purchase price-Official Liquidator refused to pay any interest-Applicant was in possession of assets-Possession was returned after about a period of ten years-Whether applicant was entitled to interest on purchase money-(No).

       Held : The Official Liquidator, in winding up proceedings by court, has the power to sell the immovable properties of the company wound up, under Section 457(1)[c] of the Companies Act, 1956. Rule 272 of the Companies (Court) Rules, 1959 provides that an Official Liquidator can sell the property belonging to the company only with the previous sanction of the court and that every sale shall be subject to confirmation by the court. Rule 273 lays down the procedure for sale and Rule 274 deals with the meeting of the expenses of the sale. Order XXI Rule 93 of the Code of Civil Procedure (for short the Code ) provides that where a sale of immovable property is set aside under Rule 92 of Order XXI, the purchaser shall be entitled to an order for repayment of his purchase money with or without interest as the court may direct, against any person to whom it has been paid. It has been held that even though Order XXI Rule 93 of the Code may not ipso facto apply to a sale otherwise other than under the Code, the principle embodied therein can be applied to other sales to order refund of the purchase price with interest while setting aside a sale. But it has to be seen that Rule 93 of Order XXI of the Code gives a discretion to the court setting aside a sale, either to award interest or not to award interest. Considered in the context of that discretion, it is clear from the Judgment rendered by this Court that this Court refused to direct the payment of interest to the applicant even while directing the refund of the purchase price paid by the applicant to the Official Liquidator. In such a situation it is not possible to accede to the prayer of the applicant to order the payment of interest on the purchase price paid by it, based on the principle embodied in Order XXI Rule 93 of the Code on this application for a clarification of the Judgment. In the circumstances of the present applications, we have to proceed on the basis that this Court has exercised its discretion not to award interest on the purchase price in the light of the directions issued by it in that behalf. (Para 10)

       Even on the principle of restitution, the claim of the applicant may not succeed. This is not a case where the applicant was deprived of both his money and the property purchased by him. There was, therefore, no failure of 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. (Para 12)