M.G.Paripoornam Vs. the Official Liquidator and anr. - Court Judgment

C.A.No.347 of 2012 C.P.No.289 of 2009 IN THE HIGH COURT AT CALCUTTA Original Jurisdiction IN THE MATTER OF: CARRITT MORAN & CO.P.LTD.(IN LIQN.) AND IN THE MATTER OF : M.G.PARIPOORNAM VS THE OFFICIAL LIQUIDATOR & ANR.

BEFORE: The Hon'ble JUSTICE PATHERYA Date : 11th February, 2014.

Appearance: Mr.Jayanta Mitra, Senior Advocate, Mr.Jaydip Kar, Advocate, Mr.T.Chakraborty, Advocate..for the applicant.

Mr.S.N.Mookherjee, Senior Advocate with.

Mr.Shaunak Mitra, Advocate..for the creditORS.Mr.Sabyasachi Choudhury, Advocate, Mr.Rishad Medora, Advocate with Mr.Sayantan Bose, Advocate..for respondent no.2.

Ms.Ruma Sikdar, Advocate..for Official Liquidator.

The Court :-This application has been filed by one Smt.

M.G.Paripoornam, who alleges to be a bona fide purchaser from one Sailesh Mohan Sharma of 4.45 acres of agricultural land in survey No.4813/1C in Ooty since August, 2009.

According to the applicant her property has been mentioned in the sale notice dated 23rd February, 2012 issued by the Official Liquidator.

The reason for doing so is that the Ooty property was mortgaged by Mr.Sharma to the company (in liquidation) by letter dated 21st January, 1996.

Prior to purchase, a requisition on title was undertaken on 10th August, 2009 and Mr.Sharma has categorically stated therein that his title was perfect.

There was no disclosure made of any mortgage created.

In fact, a no encumbrance certificate was also issued in 2007 wherefrom it will appear that since 1987 to 2007 there has been no encumbrance created.

The said status continued till the time of taking possession, that is, 31st December, 2010.

A caretaker of the applicant was found at the said premises.

The letter dated 21st January, 1996 can not be a creation of charge or deposit of title deeds as, although there was mention of the document of collateral security in the said letter but there is no enclosure with the said letter.

Mr.P.K.Sen one of the directors of the company (in liquidation) was subjected to examination and cross-examination in CP No.289 of 2009, CA No.510 of 2011 and CA No.29 of 2012.

He has admitted that clear title deed is not available with the company (in liquidation) in respect of the Ooty property as the original title deed was misplaced but a certified copy of the title deed had been given to the company [in liquidation].But such certified copy of the title deed will not suffice.

Therefore, there is no deposit of title deed as per the requirement of law.

The charge has also not been registered.

There is no covering letter and no title deed deposited has been disclosed by the Official Liquidator in its affidavit.

Public notice was issued in 2007 as also in 1997.

The one issued in 1997 was to inform the public that the original document in respect of the said property had been lost.

This was issued by Mr.Sharma himself while the 2007 public notice was issued on behalf of the company [in liquidation].through its Advocate.

Section 58[f].of the Transfer of Property Act contemplates creation of mortgage by deposit of title deeds.

The title deeds are deposited with the intent to create security as has been held in AIR1965SC430 Even assuming that the letter dated 21st January, 1996 which has been relied on tantamounts to creation of mortgage.

The said document has not been registered under section 17 of the Registration Act and therefore will create no mortgage.

No interest rate has been prescribed nor maturity date mentioned.

The original title deed is not on record.

Therefore, the creation of mortgage by the letter dated 21st January, 1996 is questionable and without the same being registered under section 17 of the Registration Act cannot be looked into.

No mortgage stands created by virtue of the said document.

Sharma had no authority to mortgage in January 1996 as the patta was issued in his name on 24th December, 1996.

Reliance is placed on AIR1965SC1591and AIR1976Cal 224.

The Official Liquidator in the absence of a document of mortgage is seeking to enforce mortgage when company [in liquidation].took no step to do so.

Even assuming that a certified copy of the registered document of sale will create a mortgage such certified copy must be accompanied by a memorandum which needs to be registered as held in AIR [2003].Karnataka 210.

Reliance is placed on AIR2010Kerala 90, (2007) 11 SCC75and (2008) 5 SCC124 Order 34 of the Code of Civil Procedure contemplates filing of proceedings in cases of mortgage.

Therefore, orders be passed as sought and the Ooty property be removed from the sale notice.

In opposing the said application creditor Atal has submitted that the document dated 21st January, 1996 will require no registration under section 17 of the Registration Act as there was an existing loan and security was also created for future loan.

This is essential to signify the intent of the parties, as per the requirement of sections 58[a].and [f].of the Transfer of Property Act.

In view of AIR1987Madras 108 the said document requires no registration.

In fact, the said document dated 21st January, 1996 is not a repository as held in AIR2010Madras 84.

Deposit of certified copy will create an equitable mortgage.

Reliance is placed on (2001) 2 KLJ363 In view of AIR1984SC1579and section 446(2) of the 1956 Act the company court is empowered to take evidence and resolve the dispute as regards the document dated 21st January, 1996.

Time to redeem has not arisen in view of Article 61 of the Limitation Act.

A demand was made in 2006 and the right to sue accrues from the date of demand.

Therefore to contend otherwise is contrary to law.

Reliance is placed on 57 Indian Appeals 194.

Atal is a creditor of the company [in liquidation].and interest of that class of creditors must be protected as it is from the sale proceeds that monies will be disbursed to such creditORS.As the Ooty property has been mortgaged to the company [in liquidation].and to ascertain the creation of that mortgage the provisions of Section 446(2) of the Companies Act be invoked.

Counsel for the official liquidator submits that the Ooty property was mortgaged to the company [in liquidation]., according to the deposition of Mr.P.K.Sen.

The deed of mortgage was lost and admittedly has not been registered.

In fact the sale by Sharma to the applicant herein is at an under value.

A public notice was issued and by letter dated 18th January, 2011 the official liquidator has called upon Ram Bahadur Thakur and Sharma to repay the amount.

The suit, if any, be filed in Calcutta to save unnecessary cost.

Counsel for Sharma submits that it is only on 31st December, 2010 when the Official Liquidator’s representative visited Ooty to take possession of the asset in question that he came to know of the claim of the company [in liquidation].As the said property has never been the property of the company [in liquidation].the Official Liquidator could not have taken possession thereof.

Therefore, Section 446(2) of the 1956 Act will not apply to the said asset in question and cannot be an issue in liquidation process.

The Official Liquidator has treated the said property as an asset of the company [in liquidation].on the basis of information received from one G.S.Fertilizers on whose application being C.A.100 of 2009 an order was passed directing the Official Liquidator to take possession and control of the assets and properties of the company.

No independent enquiry has been made by the Official Liquidator.

A doubt arose in the mind of the Court on 30th March, 2012 when the owner of the Ooty property viz.

the appellant herein and Atal appeared before it whether the said asset was of the company [in liquidation].By the said order it was left open to all persons claiming adveRs.to the company to assert and establish its interest.

The Official Liquidator by its letter dated 17th April, 2012 has also tried to ascertain whether the said property is the asset of the company [in liquidation].This is after issuance of the sale notice in February, 2012.

Several orders have been passed by the Court.

The winding up order was passed on 14th May, 2010 while the order to take possession of the asset of the company [in liquidation].was passed prior thereto.

The public notice was enclosed by G.S.Fertilizers and forwarded to the Official Liquidator in its letter dated 24th December, 2010.

At the meeting held on 31st December, 2010 G.S.Fertilizer was present on whose application the order dated 26th February, 2010 was passed but the petitioning creditor on whose order the winding up was passed was not there.

Therefore, it is G.S.Fertilizers who activated the Official Liquidator to treat the Ooty properties as the asset of the company [in liquidation].and take possession thereof.

Although by order dated 10th February, 2012 sale of the Ooty property was directed in the order dated 30th March, 2012, the inclusion of the said property in the sale notice has been questioned.

In view of the no encumbrance certificate issued on 18.4.2007 the property could not have been included in the sale notice.

In reply Counsel for the applicant relies on AIR1959Bombay 41, 37 Company Cases 306 and 25 Company Cases 49.

As the property is outside so also the applicant and the borrower, proceedings be filed in the appropriate forum and this Court do not adjudicate the issues.

Having considered the submissions of the parties the applicant herein alleges to be a bona fide purchaser for price and on 31st December, 2010 when the Official Liquidator’s representative went to take possession of the assets was found to be in possession.

It is on 31st December, 2010 that the applicant for the fiRs.time came to know of the order of winding up dated 14th May, 2010.

On 30th March, 2012 the applicant had appeared to inform the Court of its ownership and accordingly an order of injunction was passed.

The reliefs sought in this application are two fold : The petitioner not only seeks a declaration that the Ooty property is not a mortgaged property but also seeks exclusion of the said Ooty property from the sale notice.

The presence of Ram Bahadur Thakur would be necessary in adjudicating the issue of mortgage created by the document dated 21st January, 1996.

By the said document one Sailesh Sharma was creating a collateral security for loans taken by Ram Bahadur Thakur of which he is a director.

By this document not only was the past dues secured but future loans would also be covered.

Therefore to ascertain whether any sum was outstanding in the books of Ram Bahadur Thakur, its presence would be necessary.

The document of 21st January, 1996 would also have to be proved by the executant namely, Sailesh Sharma and by the directors of the company [in liquidation].But this cannot be done in the absence of the principal debtor.

Accordingly this issue cannot be decided in this proceeding and for determining the said issue, proper proceeding will have to be initiated by the Official Liquidator in the event the said property is an asset of the company [in liquidation].From the pleadings disclosed in this proceedings it appears that the Official Liquidator has not made any independent enquiry as regards the said Ooty property being the asset of the company [in liquidation].He has relied on and believed what was told to him by letter or otherwise by one G.S.Fertilisers PVT.LTD.who was the petitioning creditor and on whose application an order was passed on 26th February, 2010.

The ultimate winding up order was passed on the application of one Krishna Kumar Kalyani but the matter has been vehemently pursued by G.S.Fertilisers LTD.and not by Krishna Kumar Kalyani.

In fact it was in the presence of representatives of G.S.Fertilisers PVT.LTD.that possession was taken of the Ooty property on 31st December, 2010 and it was on the basis of the letters for direction sought from the Company Court that the order dated 10th February, 2012 was passed.

The basis of taking possession of the Ooty property was not brought to the notice of the Court and therefore the order dated 10th February, 2012 was passed.

Be that as it may on 30th March, 2012 the applicant herein and Atal the creditor appeared before the Company Court and after hearing their respective submissions an order of injunction was passed restraining the parties from dealing with the said property and leaving it open to persons claiming adveRs.title to the company to assert and establish its interest.

Prior to execution of the Deed of Conveyance between Sharma and the applicant herein in August 2009, a no encumbrance certificate was issued on 18th April, 2007 by the concerned authorities.

Therefore in the absence of an independent enquiry made by the official Liquidator to ascertain the right of the company [in liquidation].over the said asset in question, the said asset could not have been included in the sale notice dated 23rd February, 2012 and for such purpose let no sale be effected in respect of the said asset by the Official Liquidator.

This however will not prevent the Official Liquidator from making necessary enquiry in respect of the said Ooty property and ascertaining whether the same is an asset of the company [in liquidation].The said enquiry be completed within six months from the date of receipt of this order.

In the event it is found that the said asset is a property of company [in liquidation]., steps be taken in accordance with law.

The applicant however will be restrained from dealing with, disposing of, encumbering, creating any third party interest and/or transferring the said property at Ooty in any manner whatsoever for 10 months.

It is made clear that the issue of mortgage has not been addressed by this Court as in the event it is found by the Official Liquidator that the said property does form an asset of the company [in liquidation]., then in proceedings that may be filed, this question will arise for consideration.

The Official Liquidator will hand over possession of the said Ooty property to the applicant herein but will regularly visit the said premises to ascertain its status.

The application is accordingly disposed of.

All parties concerned are to act on a photostat signed copy of this order on the usual undertakings.

nm/TR A.R.(C.R.) ( PATHERYA, J.)