High Court of Judicature at Madras
D. MURUGESAN & V. PERIYA KARUPPIAH, JJ.
The Director of Industries and Commerce
Versus
P.N. Kumar & Another
Original Side Appeal No.227 of 2008
Decided on : 24-11-2008
Liquidation - Allotment Dispute - Companies (Court) Rules, 1959 - Rule 6 and 9 - [LIQUIDATION] - [Allotment Dispute] - [Companies (Court) Rules, 1959, Rule 6, 9] - The court discussed the dispute regarding the allotment of land to a company in liquidation and the application of Rules 6 and 9 of the Companies (Court) Rules, 1959. The court found that the Company Court's jurisdiction to pass orders is limited to the relief sought in the application and cannot be extended beyond what is pleaded before the Court by the applicant himself. The direction for assignment of the land was set aside as it was issued without appreciation of the rival contentions and without deciding the entitlement of the company to have a sale deed in respect of the property.
Fact of the Case:
The dispute arose from the allotment of land and a shed to a company in liquidation. The company sought a direction to the Official Liquidator to pay a defaulted amount and obtain a sale deed for the property. The Court found that the Company Court's jurisdiction is limited to the relief sought in the application and cannot be extended beyond what is pleaded before the Court by the applicant himself.
Finding of the Court:
The Court found that the direction for assignment of the land was issued without appreciation of the rival contentions and without deciding the entitlement of the company to have a sale deed in respect of the property. The direction was set aside, and the Original Side Appeal was allowed.
Issues: The issues revolved around the Company Court's jurisdiction to pass orders beyond the relief sought in the application and the entitlement of the company to have a sale deed in respect of the property.
Ratio Decidendi: The Company Court's jurisdiction is limited to the relief sought in the application and cannot be extended beyond what is pleaded before the Court by the applicant himself. Any direction issued must be in conformity with the relief sought in the application.
Final Decision: The portion of the order directing the assignment of the land to the company was set aside, and the Original Side Appeal was allowed. No costs were awarded, and the connected miscellaneous petition was closed.
(Original Side Appeal under Clause 15 of Letters Patent r/w Order XXXVI, Rule-11 of Original Side Rules, praying to set aside the judgment and decree dated 01.03.2007 made in C.A.No.1327 of 2005 in C.P.No.61 of 1992.)
D. Murugesan, J.
The Original Side Appeal questions the Judgment and Decree dated 01.03.2007 made in C.A.No.1327 of 2005 in C.P.No. 61 of 1992, whereby the learned single Judge, while rejecting the said application taken out by one Mr. P.N. Kumar, the Director of M/s. Sears Electronics Limited, seeking for a direction to the Official Liquidator to pay a sum of Rs.2,05,806/- to the Director of Industries and Commerce, Government of Tamil Nadu, in respect of the allotment order under reference in No.41179/EL3/87, dated 29.09.1987 and to get the sale deed in favour of M/s. Sears Electronics Limited, a company in liquidation, directed the assignment of the land comprised in Plot No.2, in Dr.Vikram Sarabhai Instronics Estates, Thiruvanmiyur, Chennai-41 measuring an extent of 0.75 Acres to M/s. Sears Electronics Limited.
2. The dispute revolves on the following facts:
By way of an order of allotment No.41179/EL3/87, dated 29.09.1987, a shed No.Type II 39, in Dr. Vikram Sarabhai Instronics Estate, Chennai, was allotted to SIPCOT and thereafter, the allotment was transferred to M/s. Sears Electronics Limited at a tentative cost of Rs.3,21,375/-As the final cost was not fixed, the title continued to vest in the Department of Industries and Commerce. Since the company did not pay a sum of Rs.2,05,806/- even towards tentative cost, in terms of para – 8 of the terms and conditions of the allotment, a show cause notice was issued to Mr. A.K. Bhattacharya, the Managing Director and Mr. P.N. Kumar, the Director of the company. In spite of such notice, the company defaulted payment and therefore, by exercising the conditions under para – 9 of the terms and conditions of the agreement, action was taken to cancel the hire purchase agreement.
3. In the mean time, the company entered into a joint venture agreement with M/s. Electronics Corporation of Tamil Nadu, Government of Tamil Nadu Undertaking and though it was doing well till 1992, in view of the slash in the business due to competition and introduction of colour televisions in the market, they could not carry on their business thereafter. One of the creditors of the company by name M/s. Elcompca Electronics Industries Private Limited filed a company petition for winding up of the company, since the company was not in a position to settle their claim and winding up order was passed on 26.11.1993 in C.P.No. 61 of 1992. The Official Liquidator also took charge of the property and assets of the company, which are all situate in Madras and Mumbai.
4. In the above circumstances, the Director of the Company by name Mr. P.N. Kumar, approached the Company Court by filing company application in C.A.No.1327 of 2005 in C.P.No.61 of 1992 seeking for a direction to the Official Liquidator to pay a sum of Rs.2,05,806/- to the Director Industries and Commerce in respect of the allotment order No.41179/EL3/87, dated 29.09.1987 and to get the sale deed in favour of M/s. Sears Electronics Limited, the company in liquidation, represented by the Official Liquidator. The said application was purportedly taken under Order XIV, Rule 8 of the Original Side Rules, r/w Rule - 9 of The Companies (Court) Rules, 1959. By the order under appeal, the learned single Judge found that in as much as the company had defaulted and notice dated 09.03.2005 was issued citing clause 8 of the hire purchase agreement, calling upon the company to show cause, why the allotment should not be cancelled forfeiting the earnest money deposit and though by letter dated 18.03.2005, the 1st respondent herein had communicated to the Official Liquidator for payment of Rs.2,05,806/- which was due and payable to the department by the company, such amount was not paid, found no ground to accept the prayer in the applicatio
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