Back
IN THE HIGH COURT OF CALCUTTA
I.P. Mukerji, J.
Arindam Investments Pvt. Ltd. - Petitioner
Versus
AI Champdany Industries Ltd. (Formerly Known as Anglo India Jute Mills Ltd.) - Respondent
G.A. No. 2950 of 2014 C.S. No. 220 of 2008
Decided On : 13-11-2014
For the Petitioners:Jishnu Saha, Senior Advocate and Abhijit Guha Roy, Advocate.
For the Respondents:Ranjan Deb, Senior Advocate and Manju Bhuteria, Advocate.
In the absence of proof of fraud, a corporate body is free to dispose of its property at whatever price it thinks fit.
Headnote:
Attachment of Assets - Sale of Property - The court granted leave to the defendant to sell a property subject to certain conditions, holding that in the absence of proof of fraud, the defendant, being a corporate body, is free to dispose of its property at whatever price it thinks fit.
Fact of the Case:
The defendant sought leave to sell a flat, which was opposed by the plaintiff on the grounds of undervaluation and lack of necessity.
Finding of the Court:
The court found that the plaintiff failed to establish fraudulent intent on the part of the defendant and that the principal claim of the plaintiff had already been secured. It granted leave to the defendant to sell the property subject to specific conditions.
Issues: The main issue was whether the defendant should be allowed to sell the property, considering the opposition from the plaintiff.
Ratio Decidendi: In the absence of proof of fraud, the court held that the defendant, being a corporate body, is free to dispose of its property at whatever price it thinks fit.
Final Decision: The court granted leave to the defendant to sell the property at a specified price and imposed conditions regarding the utilization and protection of the sale proceeds.
I.P. Mukerji, J.
In this matter, the Appellate Court, by its order dated 31st March, 2014 had, inter alia, directed the defendant to file an affidavit giving details of its fixed assets and those which they intended to sell. The Court stipulated that no further asset of the defendant could be disposed of without the leave of the trial court. A schedule of assets is at page 73 of the petition.
2. The defendant, by this application, wants leave of this court to sell a flat at Alipore measuring 3,200 sq.ft. approximately mentioned in the said schedule. Therein, the value of the flat is shown as Rs. 895.36 lakhs. The flat is proposed to be sold for Rs. 4.60 crores
3. When this application was moved on 19th September, 2014, this court passed an order that the applicant/defendant would be at liberty to enter into negotiations for sale of this flat, take all steps with regard to its sale but they should not conclude it except with the leave of this court.
4. Mr. Saha, learned Senior Advocate appearing for the defendant, submits that the entire principal claim of the plaintiff has been secured by bank guarantee and fixed deposit.
5. Mr. Deb, learned Senior Advocate for the plaintiff, submitted that the flat was being sold at a gross under value compared to the market price disclosed in the schedule.
6. He opposes the prayers in the petition. He shows me certain averments in the affidavit in opposition. It is stated therein that the defendant has many creditors and that it is in poor financial condition, a substantial part of its assets is mortgaged or hypothecated to financial institutions. The flat is not so encumbered. Hence the defendant wants to sell the flat and appropriate the sale proceeds, according to Mr. Deb. He also submits that according to the averments made in the petition, there is no need to sell the flat. Hence this application should be rejected.
7. Mr. Saha goes to the extent of submitting that the entire sale proceeds would be kept in a term deposit with the bank.
8. Ordinarily, a creditor is not allowed to attach the assets of his debtor, unless he obtains a decree. He can only attach and sell the properties of the debtor by executing the decree. The exception is the provision of Order 38 in the Code of Civil Procedure regarding attachment before judgement. In that case, the plaintiff has to positively establish a fraudulent intent on the part of the defendant to dispose of its assets so as to deprive the defendant of the fruits of the decree.
9. In my opinion, no such case has been made out by the plaintiff to show such fraudulent intent on the part of the defendant. Unless a fraudulent intention as stated above is proved, this Court cannot go behind the negotiation disclosed between the defendant and an intending purchaser for sale of the flat. In this case, in the absence of proof of fraud, the defendant being a corporate body, in my opinion, is free to dispose of its property at whatever price it thinks fit.
10. Furthermore, the principal claim of the plaintiff Rs. 4.39 crore has already been secured. According to a statement annexed to the affidavit in opposition as annexure A, it appears that the plaintiff has a further claim of Rs. 3,63,16,150/-, against the defendant on account of interest at the rate of 15% per annum simple interest from 31st October, 2008 to 30th September 2014.
11. Considering the above submissions of the parties, I think it would be just and equitable to grant leave to the defendant to sell the property at Rs. 4.60 crores subject to the following conditions :-
(i) The sale should be completed by 31st March, 2015.
(ii) The defendant company will be entitled to utilise Rs. 60 lakhs out of it in the usual course of its business, only.
(iii) Rs. 4 crores will be kept in a term deposit with State Bank of India, High Court Special Branch, Kolkata in the name of the company earning the highest available rate of interest. This sum cannot be appropriated by the defendant or attached by any other pe
