Judgment:
Hemant Gupta, J.
1. This order shall dispose of C.A. No. 631 of 2006 filed on behalf of the shareholders, namely, Shri Tej Swaroop Matta, Nirmal Kumari Matta and Priyanka Matta in total holding 3,22,600 shares of the company in liquidation. C. A. No. 641 of 2006 has been again filed by Shri Tej Swarup Matta objecting to the sale of the assets of the company in liquidation. C.A. No. 127 of 2007 is filed by Shri Naresh Kumar Chately through his attorney Shri Vibhu Jhanji on the ground that he has been director of the company in liquidation and that he along with his mother and wife are the major shareholders in the company. The averments made in all the applications are similar in nature.
2. M/s. Kanav Steels Private Limited was incorporated as a company under the Companies Act, 1956 (hereinafter to be referred as 'the Act') on February 11, 1985. The name of the said company was changed to M/s. Shree Diwan Steels (India) Limited on May 31,1990 (hereinafter to be referred as 'the company'). M/s. Kanav Steels has purchased land measuring 27 kanals 5 marlas vide registered sale deed dated December 28, 1989. The order of winding up dated February 10,1999, was passed whereby the company was ordered to be wound up and the official liquidator attached to this Court was appointed as its liquidator.
3. The Central Bank of India is one of the secured creditors of the company in liquidation. The said bank has filed an application for recovery of the amount due and payable to it before the Debts Recovery Tribunal, Jaipur, which was decided on March 17, 1999. In pursuance of the orders passed by this Court on January 11, 2006, the official liquidator was permitted to conduct the sale of all the movable and immovable assets of the company in liquidation by associating the secured creditors. In pursuance of the said order, one Avtar Singh has been found to be the highest bidder of the composite lot for Rs. 5.2 crores. The application filed by the official liquidator for confirmation of sale is pending consideration before this court.
4. It has been further pointed out that one Rishi Steel Traders has got the possession of the land in execution of the decree of the civil court by giving wrong khasra numbers and, in fact, given khasra numbers of the land owned by another entity, i.e., M/s. Chately Steels and the company. It is pointed out that the claim raised by the secured creditors, particularly IFCI, is undue and illegal and that the official liquidator has raised an inflated claim on account of security/sundry charges in respect of the company in liquidation. It has been pointed out that Avtar Singh in connivance with M/s. Rishi Steels and tacitly with creditor--Central Bank of India--are getting the prime portion of the land auctioned through the present sale proceedings.
5. In C.A. No. 631 of 2006, an additional affidavit dated September 20, 2006, was filed in support of the application disputing the conduct of sale by the official liquidator. In C.A. No. 127 of 2007, averments are similar to the additional affidavit filed on September 20, 2006. C.A. No. 641 of 2006 is on the same lines as in C.A. No. 631 of 2006.
6. It has been pointed out in the aforesaid applications supported by affidavits that M/s. Kanav Steels Private Limited, prior to its change of name, has purchased 27 kanals 5 marlas of land from one Navtej Singh, s/o Gurcharan Singh. Out of the aforesaid land, 19 kanals 14 marlas was of specific khasra numbers whereas the remaining land was share of the other khasra numbers. It is also pointed out that the promoters of the company (now in liquidation) had also purchased the land measuring 9 kanals 13 marlas contiguous to the above land measuring 27 kanals 5 marlas. 6 kanals 12 marlas was purchased in the name of Chately Steel Private Limited vide two registered sale deeds. Land measuring 1 Kanal 14 marlas is part of the land purchased in the name of Chately Steels Private Limited vide sale deed September 12, 1988, whereas 4 kanals 18 marlas of land has been purchased on December 28, 1988; land measuring 3 kanals 1 marlas was purchased vide two separate sale deeds in the name of Shri Naresh Chately, i.e., land 1 kanal 14 marlas and 1 kanal 7 marlas on December 29, 1989. The vendor of all the sale transactions is abovesaid Navtej Singh. All the sales have been executed by Navtej Singh on the basis of jamabandi for the year 1983-84.
7. It is categoric case of the applicants that through the abovesaid five sale deeds total land measuring 36 kanals 18 marlas was purchased for setting up steel plant and that after the purchase of the above land, boundary wall was raised on the entire area. A site plan has been attached by the applicants. The said site plan is annexure A2 in C.A. No. 631 of 2006 and annexure A6 in C.A. No. 127 of 2007. Still, another site plan has been attached by the applicant with affidavit dated September 27, 2006, which is annexure A2. Annexures A6 and A7 are other site plans attached with the additional affidavit, i.e., the site plans produced before the civil court in respect of the suits filed by one Rishi Steels. Some of the relevant paragraphs from C.A. No. 127 of 2007 read as under:
5. That, thus, through the abovesaid 5 sale deeds total land measuring 36 kanals 18 marlas was purchased for the purpose of setting up the steel plant.
6. That after the purchase of the above land measuring 36 kanals 18 marlas boundary wall was raised on the said entire area.
7. That a site plan showing the above stated entire land measuring 36 kanals 18 marlas with depiction of khasra numbers and showing three purchasers/owners in different colours is annexure A6.
8. That in the meantime the name of the said company M/s. Kanav Steels (Private) Limited was changed to M/s. Shree Dewan Steels Limited on May 31, 1990.
9. That, thereafter, in 1994 the company in liquidation M/s. Shree Dewan Steels Limited had set up another steel plant on the said entire land measuring 36 kanals 18 marlas, situated at village Bhat-tian, district Ludhiana.
8. The applicant has filed additional affidavit vide C.A. No. 146 of 2007 wherein the following averment has been made:.that the (corporate premises of Shri Dewan Steels (India) Ltd. (SDIL) comprised of area 36 kanals 18 marlas bounded with one boundary wall has three different individual titles namely SDIL, Chat-ley Steels Pvt. Ltd. (CSPL) and Naresh Chatley (individually). It was also pointed out that legally CSPL is corporately wedded with SDIL because it is an associate/holding company of SDIL and both these companies inter se are managing/holding company as defined in Sections 2 and 4 of the Act. It was also pointed out that in the land holding of CSPL comprised of 6 kanals 12 marlas denoted by khasra numbers 16, 17, 18 and 19 are having the main corporate-building, weighing bridge (kanda), power poles and transformers, storeroom and tools, etc., over it for the operation of the works, building for SDIL. Therefore, within the corporate premises of 36 kanals 18 marlas, there had been unity of possession of the company SDIL, although legally the aforesaid three titles and the khasra numbers thereto, were distinct within the boundary walls....
9. It has also been pointed out that M/s. Rishi Steels of mandi Gobindgarh has filed two suits. The first suit for recovery of Rs. 2,93,000 was against M/s. Chately Steels, a proprietary concern, and Shri Naresh Chately as its proprietor. Another suit for recovery of Rs. 6,25,000 was filed against the company prior to its liquidation. In execution of the decree passed against a proprietary concern of Shri Naresh Chately, land measuring 7 kanals 19 marlas was attached before judgment. The suit against the proprietary concern was decreed ex parte on July 29, 1998 and in execution of the said decree, publication notice was issued on July 17, 1999, for the sale of land measuring 7 kanals 19 marlas. In the auction held on November 12, 1999, 4 kanals of the aforesaid land was put to auction and the decree-holder was the highest bidder who has given the bid of Rs. 3,40,000. The sale was confirmed by the executing court on December 18, 1999 and sale certificate was issued on February 23, 2000. It is pointed out that on the basis of said sale, purchaser allegedly trespassed into the premises of the company in liquidation on August 26, 2000. It is alleged that since the sale was of a specific khasra number, the auction purchaser could not take possession of the land which exclusively belongs to the company in liquidation.
10. It is also pointed out that an application was filed by the official liquidator alleging trespassing into the premises of the company in liquidation on the basis of auction of the assets of the proprietary concern of Naresh Chately bearing C.P. No. 50 of 2003. In the said petition, it was alleged that the Central Bank of India has misled this Court with reference to a site plan produced before the official liquidator and this court. On the basis of the aforesaid misrepresentation, C.P. No. 50 of 2003 was dismissed by this Court on August 31, 2006. In the aforesaid case, finding has been recorded that the auction purchaser has been delivered the possession by the bailiff in execution of warrant of possession issued by the civil court and the possession of the property delivered to the auction purchaser is separate and distinct than the land measuring 27 kanals 5 marlas which is property of the company in liquidation.
11. In respect of the second suit, ex parte decree was passed against the company in liquidation on July 20, 1998. In pursuance of such decree, auction was conducted on April 29, 1999. The decree-holder was permitted to participate in the auction and was found to be the highest bidder in the auction conducted on April 29,1999. The sale was subsequently confirmed. It is alleged that the said sale could not be effected by the civil court in view of the winding up order passed by the company in liquidation.
12. Shri I.S. Ratta, learned Counsel for the applicant, has vehemently argued that specific khasra numbers were purchased by the company, Naresh Chately and by another company Chately Steels Private Limited. Since the sale was of a specific khasra number, the sale conducted by the official liquidator, in respect of the land situated in one compact block of 27 kanals 5 marlas is illegal. It was also argued that the possession of 4 kanals of land handed over and upheld by this Court is unjustified. It is contended that since the sale is of specific khasra numbers, the land situated in different khasra numbers adjacent to the main road has been wrongly claimed by the auction purchaser from the civil court. The sale has to be effected by the official liquidator only of specific khasra numbers which were purchased by the company. In an application for production of jamabandi for the year 1993-94 and 1998-99, learned Counsel for the applicant has sought to plead that the revenue records at the time of auction of land is required to be examined. In the said revenue record, specific khasra numbers are stated to be in possession of the company and, therefore, only those khasra numbers could be put to sale.
13. Shri Ratta, learned Counsel for the applicant, has placed strong reliance on the jamabandi for the year 2003-04 wherein M/s. Kanav Steels is reflected as person in possession of a specific portion of land 19 kanals 14 marlas. A perusal of the said jamabandi further shows that the owners are shown in joint possession of the remaining land of their respective shares.
14. Shri Vibhu Jhanji, General Attorney of Shri Naresh Chately, has contended that there was a corporate marriage in respect of land of the company in liquidation, Naresh Chately and M/s. Chately Steels. There was no demarcation of any specific portion of land and, in fact, boundary wall existed in respect of the entire land measuring 36 kanals 16 marlas. The entire land purchased by three separate entities is so intertwined with each other that the sale of a compact block as projected by the official liquidator on the basis of site plan produced by the Central Bank of India is not correct.
15. On the other hand, learned Counsel for the bank has submitted that while creating the mortgage, the site plans were submitted by the promoters/directors of the company. The said site plan shows different portions in possession of the company in liquidation, Chately Steels and of Naresh Chately. The said site plan shows a passage to the land of the company in liquidation from the main road. Therefore, the sale has been rightly conducted by the learned official liquidator and the civil court.
16. On the other hand, learned Counsel for the auction purchaser has relied upon a Full Bench judgment of this Court reported as Bhartu v. Ram Sarup [1981] PLJ 204, a Supreme Court judgment reported as Mange Ram v. Ram Chander [2002] 3 RCR 303 and Apt Singh v. Karam Singh [2004] 4 RCR 386 to contend that sale of a specific khasra numbers by a co-sharer is a sale out of a joint khewat, therefore, it is contended that even if a specific khasra number has been sold, still it is a sale of a share of the joint land.
17. After hearing learned Counsel for the parties at some length and going through the documents attached by the parties, I deem it appropriate to deal with the arguments raised in two parts, firstly in relation to the revenue record produced and then in respect of the site plans produced.
Revenue Record:
18. All the five sale deeds have been executed on the basis of jamabandi of the year 1983-84. But a copy of the jamabandi for the year 1988-89 has been produced. It shows that Navtej Singh was the owner in the possession of land measuring 52 kanals 9 marlas bearing khewat No. 303 and khatuni No. 346. Out of the said land measuring 52 kanals 9 marlas, Navtej Singh has executed the following sale deeds of land as per details given below:
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Annexure
Date of sale Name of the Area Sold Share in Khasra Nos. in C.A.
deed purchaser Khasra No. No. 127 of
2007
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12/09/1988 Chately 1kanal 14 marlas 34/160 34/13(8-0) A2
Steels P. Ltd.
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28/12/1989 Naresh 1 kanal 14 marlas 34/160 34/13(8-0) A4
Chately
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28/12/1989 Kanav Steels 19 kanals 14 mar- -- 34/11/2 (5-16), A1
P. Ltd. las 12(8-0), 14(5-
18), 15(xx)
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4kanals 14 marlas 92/16 34/13 (8-0)
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11 marlas 11/36 34/19/2(1-16)
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16 marlas 16/116 34/20/1(5-16)
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1 kanal 12 marlas 32/64 34/19/1(5-12)
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28/12/1989 Chately 1 kanal marlas 25/112 34/16(2-16) A3
Steels P. Ltd.
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3 marlas 3/56 34/16 (2-16)
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1 kanal 15 marlas 35/160 34/17(8-0)
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1 kanal 15 marlas 17.1/2/125 34/18(8-0)
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29/12/1989 Nares 1 kanal 7 marlas 27/116 34/201(5-16) A5
Chately
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19. It may be noticed that the translated copies of the sale deeds appended with the applications do not give complete and correct details. The above chart has been prepared with the help of averments made in the application and the revenue records available on the record.
20. The Full Bench of this Court in Bhartu's case [1981] PLJ 204, while considering the sale of a specific portion of the land described by a particular khasra number by a co-owner out of a joint khata, held that it is a sale of a share. It was held to the following effect:.That the sale of specific portion of land out of joint holding by one of the co-owners is nothing but a sale of a share out of the joint holding, would be further elucidated if we take the example of a sale where a co-owner sells the land comprised of a particular khasra number which is not in his possession but is within his share in the joint holding. For example, 'A' who is joint owner of one-fourth share in the joint holding measuring 100 bighas sells the land measuring 10 bighas bearing khasra numbers 'X' and 'Y' which are not in possession. On the basis of this sale, the vendee can neither claim himself to the be a transferee of the said land nor can he claim its possession from the other co-owners in possession thereof. The effect in law of such a transfer would be only that the vendee shall be entitled to 10 bighas of land out of the share of his vendor at the time of partition or prior thereto to a decree for joint possession to the extent of the land purchased by him. Consequently, the effect in law of sale of even of the specified portion of joint land is that it is only a sale of portion of share by one of the co-owners.
21. The said judgment was upheld by the hon'ble Supreme Court in Mange Ram's case [2002] 3 RCR 303.
22. In the present case, the sale of the land is by Navtej Singh out of his total land measuring 52 kanals 9 marlas. Apart from 36 kanals 18 marks sold to the company, Naresh Chately and Chatley Steels Private Limited, Navtej Singh has executed sale deeds in favour of the other persons as well. The first sale of 1 kanal 14 marlas was on September 12, 1988 in favour of Chatley Steels Private Limited. With the aforesaid sale, the sales effected by Navtej Singh to the company and to Naresh Chatley are as a co-sharer alone. The sale is of a share of khasra numbers, except sale to the company of the land measuring 19 kanals 14 marlas. The subsequent sales by Navtej Singh even though of specific khasra numbers are still to be considered as sale of share being part of the same khewat.
23. Therefore, even if specific khasra numbers Rive been mentioned in the sale deed in respect of 19 kanals 14 marlas, still it is a sale of a share of joint land in respect of individual interest of a joint khasra which was once owned by Navtej Singh. The said finding is, in fact, supported by the averments made by the applicants themselves in the application when it is alleged that the purchase of the land was by the sister concern and the steel plant was, erected on the entire land 36 kanals 14 marlas. In fact, the argument of Mr. Vibhu Jhanji is that there was corporate marriage and the sale of the land was intertwined. The said argument leads to an inference that even though specific khasra numbers in respect of land 19 kanals 14 marlas were sold to the company in liquidation still the entire land measuring 36 kanals 14 marlas was used by the company in liquidation, M/s. Chately Steels Private Limited and Naresh Chately. Therefore, the argument raised by Shri Ratta that only those specific khasra numbers sold to the company in liquidation can be put to sale cannot be accepted.
Site plan:
The site plan annexure A2 appended with C.A. No. 631 of 2006 is authenticated by counsel for the applicant. It also shows that khasra numbers 19 and 20 is purported to be in possession of M/s. Kanav Steels and Chately Steels. The said site plan is site plan prepared by the advocate for the applicant probably on the basis of khasra numbers mentioned in the sale deeds. Annexure A2 is another site plan produced along with the affidavit dated September 20, 2006. The said site plan shows certain areas common and portion of khasra number 13 in exclusive possession of Naresh Chately which is bounded on one side by the land of the company in liquidation and the other by Chately Steels Private Limited. The site plan produced by the applicant with the affidavit is attested by the shareholder Tej Sarup Matta. If the said site plan is to be believed, Naresh Chately has no access in respect of the part of khasra number 13. The site plan annexure A2 produced along with the application by the applicants in C.A. No. 631 of 2006 and C.A. No. 127 of 2007 is totally unworkable site plan and, in fact, it shows that certain khasra numbers are jointly in the possession of two companies.
24. The applicants have also referred to a site plan annexure A6 produced by the decree-holder before the executing court in the decree against Naresh Chately whereby a passage is shown to be provided to the company in liquidation from the road and the land auctioned by the civil court is reflected as adjacent to the main road. The applicant has also referred to another site plan annexure A7 signed by the plaintiff in a suit for recovery filed against the company in liquidation. The said site plan also reflects the passage to the land of the company in liquidation situated in the background whereas the property adjacent to the road is reflected as that of Chately Steels. Though the stand of the applicants is that site plan annex-ures P-6 and P-7 are not correctly prepared as the land sold by civil court is reflected to as adjacent to road. The said description is not important and relevant being sale of undivided land. But the fact remains that passage is shown in these site plans and site plan A2 produced with affidavit dated September 20, 2006. Admittedly, Naresh Chately, judgment debtor, has not objected to the site plan produced by the plaintiff before the civil court on the basis of which sale was effected.
25. Therefore, I am of the opinion that the site plan annexure A2 appended by the applicants in C.A. No. 631 of 2006 is not trustworthy and not workable. The site plan annexure A2 with affidavit dated September 20, 2006, itself shows passage to the land of the company from GT road. The said site plan, in fact, contradicts the site plan produced as annexure A2 with the application.
26. In fact, the arguments raised by Shri Ratta and the arguments by Shri Vibhu Jhanji contradicts each other. It is the stand of Shri Ratta that the sale is of a specific khasra number to the company, therefore, only that khasra number can be put to sale, whereas it is the stand of Shri Jhanji that the area measuring 36 kanals 18 marlas bounded with one boundary has three different individual titles and that, within the corporate premises of 36 kanals 18 marlas, there had been a unity of possession of the company, Naresh Chatley and Chatley Steels Private Limited. It is alleged that legally the aforesaid three titles and the khasra numbers thereto, were distinct within the boundary wall. Once three individual titles have put their holding jointly with the objective of common use, the stand taken by the applicant that individual khasra numbers alone could be put to sale is meaningless. The said contention is not tenable on the basis of revenue record or the principle applicable to the sale by a co-sharer and on the basis of site plans produced.
27. The sale confirmed by the civil court in respect of the assets of the company cannot be taken into consideration as no permission of this Court was sought before proceeding for sale of the assets of the company in liquidation. In fact, such aspect is not disputed by any of the parties. Similarly, the sale of the assets of Naresh Chatley by the civil court will not affect the sale conducted by this Court in respect of the assets of the company in liquidation. In respect of argument that actual possession of 4 kanals has been handed over to the purchaser of the land adjacent to the road in pursuance to the civil court decree and that such delivery of possession is invalid, it is suffice to state that even if possession of specific portion has been handed over to the auction purchaser in pursuance of the execution of the decree passed by the civil court, still it is to be treated as sale of a share of a joint land. The question of actual physical possession to the extent of land purchased by the company in liquidation, Naresh Chately and Chately Steels Private Limited has to be settled in partition proceedings.
28. Thus, on the basis of the site plan and the revenue records, it is found that the land was being used by the company in liquidation, Naresh Chately and Chately Steels Private Limited in husband like manner. Though it appears that a separate passage was provided for access to the rear portion of the land but that is the arrangement arrived at by the parties for convenient use of the land. The entire land sold by Navtej Singh to three different entities is to be deemed as a sale of a share of suit land only. The specific portion can be obtained by the parties in pursuance of partition of such joint land.
29. In view of the above, the aforementioned company applications stand disposed of.