Haradhan Mukherjee vs Monojit Sen

Bhagabati Prasad Banerjee, J.—This is an appeal against the order of the learned trial Judge dated July 25, 1990, passed in C.P. No. 179 of 1983, C.A. No. 201 of 1984. By the said order the learned trial Judge recorded that the learned Advocate appearing on behalf of the Applicant, Haradhan Mukherjee, submitted that he was in a position to proceed in the matter. In that view of the matter the application taken out by judgment dated March. 20, 1990, was dismissed and an interim order was vacated. Prior to that order the learned trial Judge has also passed two other orders which are, inter alia, as follows:

In that view of the matter, the purchaser is directed to pay the balance purchase price by 2 p.m. on 23rd March, 1990. Such payment be made in terms of the earlier order dated 4th August 1989. In the event there is any default of payment of the money, the Official Liquidator is directed to forfeit the money so far paid and shall forthwith made an inventory of the assets and issue publication for sale of the assets in local newspapers, viz., once in Statesman, once in Telegraph, once in Bartaman and once in Sanmarg. Such publication if required to be published by reason of the failure to pay the purchase price within the time stipulated above, be published within a period of three weeks from the date hereof.

It is, however, recorded that no further extension of time shall be given to the purchaser on any count whatsoever and the Official Liquidator shall forthwith take steps in the event of there being any default.

The Official Liquidator would be at liberty to the cost of this application assessed at 60 G. Ms, to come out of the funds lying in his hands.

The order dated March 23, 1990, passed by the learned Judge is as follows:

As regards the existing charge in favour of two other secured creditors, Mr. Dhandhania, appearing for the said two secured creditors, has left the matter to the discretion of the Court. Considering the facts and circumstances of the matter in issue, it is ordered that the charge of the other two secured -creditors shall shift on to the sale proceeds and the sale is confirmed in favour of the purchaser free from all encumbrances.

It is recorded that the payment in terms of the earlier order passed by this Court yesterday has been made in Court to the Official Liquidator and Mr. Shome, appearing for the Bank, has made over a pay order of the Bank for Rs. 20 lakhs in favour of the Official Liquidator.

Mr. Kar, appearing for the Official Liquidator, states on instruction that considering the order passed yesterday, apart from the payment of Rs. 20 lakhs a further sum of Rs. 3,10,000 is due and payable by the purchaser. The purchaser is directed to pay the said sum of Rs. 3,10,000 to the Official Liquidator within a period of 8 weeks from the date thereof.

By reason of the arrangement between the purchaser and the United Bank of India the Official Liquidator is directed to make over the title deeds to the Bank upon intimation to the purchaser. Upon payment of the balance sum of Rs. 3,10,000 the Official Liquidator shall convey the property to the purchaser or its nominee or nominees in terms of this order. Possession of the property may; however, be delivered to the purchaser by 26-03-90. The security guards of the Official Liquidator shall stand discharged upon making over possession excepting that one security guard will be there who shall be discharged upon payment of the balance of Rs. 3,10,000.

Mr. Shome appearing for the United Bank of India, however, submitted that the Bank has advanced a sum of Rs. 20 lakhs to the purchaser on the basis of the sanction letter dated 28th December, 1989.

All parties including the Official Liquidator to act on signed copy of the minutes of the order upon usual undertaking.

The fact of this case in short is that the liquidated company in question was a family concern of two brothers, viz. Smarajit Sen and Monojit Sen. Because of the in-fighting between the two brothers, the company became commercially insolvent, and on the petition of the concerned creditor u/s 434 of the Companies Act, 1956, the company was directed to be wound up and went into liquidation by the order dated November 4, 1981, passed by the Hon''ble T. K. Basu J. (as His lordship then was). Between November 1981 to November 1985 Smarajit Sen, elder brother of the Respondent Monojit, tried his best to purchase the liquidated company as a going concern. On December 20, 1985, the said Smarajit Sen recorded in open Court his failure in purchasing the said company when the learned trial Judge fixed an open Court auction sale of the said company to be held on January 1986. The said open Court bid and auction was held on January 10, 1986, and in the said auction the Appellant Haradhan was declared highest bidder and, as such, the auction purchaser. The said auction sale held on January 10, 1986, made in favour of the Appellant herein, Haradhan, was confirmed with the knowledge of the Respondents, Monojit and his wife Dipali Sen. It is stated that an application was filed by Oriental Sales Agency before the learned trial Judge on November 24, 1986, which was allegedly put up by Smarajit and Monojit for cancellation of the said auction sale on the ground that the said Oriental Sales Agency had better and higher offer to purchase the said company in liquidation. The said application filed by Oriental Sales Agency was heard in presence of Monojit Sen and Dipali Sen, the Respondents herein on November 24, 1986, when the learned Counsel appeared on their behalf submitted that the said auction sale was confirmed in favour of the present Appellant, Haradhan, should be cancelled and fresh advertisement inviting fresh offer for re-sale should be ordered for cancellation of the present auction sale which was already made and was duly confirmed by the learned trial Judge. The said stand was supported by the Oriental Sales'' Agency. After a long, contested hearing the said application filed by Oriental Sales Agency was dismissed by order dated November 24, 1986, and the prayer made by and on behalf of the Respondents Monojit and Dipali for re-advertisement for re-sale upon cancellation of the said auction sale was rejected. Against the said order dated November 24, 1986, Oriental Sales Agency preferred an appeal, but the Respondents Monojit and Dipali Sen did not prefer any appeal against the said order dated November 24, 1986, nor did they apply to be added as parties to the appeal preferred by the Oriental Sales Agency. On May 13,1986, the said appeal preferred by Oriental Sales Agency was dismissed for non-prosecution and the said Oriental Sales Agency had it recorded in the said Court of Appeal that they were no longer interested in purchasing the said company. It is stated that in view of all the proceedings in the liquidation sale being blocked in the Court of Appeal from November 27, 1986, to May 13, 1987, leave was granted by the Division Bench before whom the appeal was pending to the Appellant herein to apply before the learned trial Judge for all appropriate orders including extension of time for payment of the purchase price in terms of the said auction sale. It is stated that the Division Bench before whom the said appeal was pending could not make any order to that effect in view of the dismissal of the said appeal. On May 20, 1987, the matter was mentioned for appropriate order in terms of leave granted by the Division Bench with notice to Oriental Sales Agency whereupon Mrs. Monjula Bose J. (as Her lordship then was) passed the following orders:

Time to make final payment of the balance amount, as directed by the 6rder dated July 4, 1986, is extended, namely, a sum of Rs. 12,50,000 will be paid by the purchaser by 28-5-87. Mr. Dutt''s client, the purchaser, will also pay the rupees incurred for the security guards, viz., Rs. 77,350 as also the sum of Rs. 29,000 by way of interest by 28-5-87. Thereafter the balance purchase price of Rs. 17,50,000 in respect of the sale to be paid by 19-9-87. Of the payments are made, as aforesaid, no interest will be charged. In default of payment as aforesaid, the balance amount will carry interest at the rate of 18 % per annum and if the balance amount with interest at the rate of 18 % is not paid within 30-11-87 the sale will be set aside. Rest of the order dated 4th July, 1986 will stand.

If the purchaser makes the payment of the costs incurred on the Official Liquidator for the security guards by 28-5-87, the Official Liquidator will, keep only two guards at the cost of the Official Liquidator until the balance amount is paid. The purchaser will also have liberty to engage their security guards till the balance amount is paid.

It is made clear that the Official Liquidator will be in possession of the articles till the balance amount is paid by the purchaser.

It is submitted that notice was served upon M/s. Sandersons & Morgans by Mr. Sujit Basu, Advocate on Record for the purchaser, and in spite thereof they have not come forward to make any submission.

Liberty to mention after the balance purchase price is paid.

On August 21, 1987, Monojit and Dipali Sen, Ex-Director and Ex-shareholder of the said company took out another application for cancellation of the said auction sale which was confirmed and for re-sale of the liquidated company by fresh advertisement. The said application ultimately came up for hearing before Mrs. Monjula Bose J. (as Her lordship then was) and by order dated April 11, 1988, dismissed the said application of the Respondents, Monojit Sen and Dipali Sen, holding that the Ex-Director and Ex-shareholder have no locus standi to participate in a liquidation sale and they have no right in law to challenge a confirmed auction sale and also held that the Court have sufficient power u/s 148 of the Act to extend time to prevent manifest in justice. It was further observed that the said application" was filed by Monojit Sen and Dipali Sen after about a year although they had knowledge of the sale as far back as on July 10, 1986, which disentitled them to any relief. Being aggrieved by and dissatisfied with the said order dated April 11, 1988, the appeal was preferred by the Respondents Monojit Sen and Dipali Sen, but the same was dismissed by order dated April 6, 1989. It is stated that after various proceedings, auction-purchaser settling with United Bank of India, a leave was sought from the learned trial Judge. whereupon the learned trial Judge granted leave on March 22, 1990, to the Appellant to pay the balance price to the Official Liquidator provided such payment be made by 2 p.m. on the next day, i.e., March 23, 1990. The payment in terms of the order made on March 22, 1990, was fully made by 2 p.m. on March 23, 1990 whereupon the learned trial Judge passed an order on March 23, 1990, that

By reason of the arrangement between the purchaser and the United Bank of India, the Official Liquidator is directed to make, over the title deeds to the Bank upon intimation to the purchaser. Upon payment of the balance sum of Rs. 3,10,000 the Official Liquidator shall convey the property to the purchaser or its nominee or nominees in terms of this order. Possession of the property may, however, be delivered to the purchaser by 26-03-90. The security guards of the Official Liquidator shall stand discharged upon making over possession excepting that one security guard will be: there who shall be discharged upon payment of the balance sum of Rs. 3,10,000.

Mr. Shome appearing for the United Bank of India, however, submitted that the Bank advanced a sum of Rs. 20 lakhs to the purchaser on the basis of the sanction letter dated 28th December, 1989.

On April 18, 1990, the Respondents, Monpjit and Dipali Sen took out another application for recall of the order dated March 23, 1990, on the ground that the said order was taken by the Appellant without notice to Monojit and Dipali whereupon the learned trial Judge stated that the earlier order dated March 23, 1990, directed that the money already paid to the Official Liquidator be kept in a suspense account until further order and the Appellant was asked to return the keys to the Official Liquidator by order dated April 18, 1990. On April 11, 1990, pending hearing of the said application filed on April 18, 1990, the learned trial Judge recalled the earlier order dated March 23, 1990, affirming the auction sale and gave direction for completing affidavits fixing July 23, 1990 as the date of hearing. On July 23, 1990, the order under appeal was passed by the learned trial Judge recalling the order made on March 23, 1990, by dismissing the application filed by the Appellant on March 20, 1990. The further case of the Appellant is that from the foregoing chronology of events and anecdotes of the present case as set forth hereof it would be evident that Smarajit Sen, the elder brother of Monojit Sen (who along with his wife Dipali Sen is now back-fighting against the present Appellant), himself tried his utmost to purchase the liquidated company''s assets and properties as a going concern till the last, i.e. December 20, 1985, which lie failed when, ultimately, on January 10, 1986, the auction was held in open Court before His lordship the Hon''ble R. N. Pyne J. (as His lordship then was), when the said Haradhan Mukherjee, the present Appellant, was declared in open Court the highest bidder and ultimately the confirmed auction-purchaser by this Hon''ble Court by force of the combined effect of the orders dated January 10, 1986, and the continuation order dated July 4, 1986, within the knowledge of Monojit, which Monojit Sen himself had referred to in para. 8 of the application dated August 21, 1987, i.e., second attempt jointly filed with his wife, which was since dismissed by the Hon''ble Mrs. Monjula Bose J (as Her lordship then was) by the judgment and the order dated April 11, 1988. None of the founding two orders aforesaid declaring the Appellant the confirmed auction-purchaser, namely those dated January 10, 1986, and July 4, 1986, had been challenged in appeal or higher up, and the appeal preferred by Monojit Sen and Dipali Sen against the dismissal of their application dated August 21, 1987, by the said order dated April 11, 1988, was also dismissed on April 6, 1989, by the former Chief Justice''s Bench of the Hon''ble P. D. Desai J (as His lordship then was) as referred to in para. 16 of the present Appellant''s application for stay. Reference was made to the order passed by the learned trial Judge on April 11, 1988, and it was stated that on a mere perusal of the said judgment, it would be significantly evident that, after the frustration of Smarajit Sen, Monojit Sen and Dipali Sen, were always watching the proceeding at tandem from the beginning and admittedly from August 10, 1986, for all these years. After their prayer for re-sale was rejected on November 24, 1986, and without challenging the same in appeal, after the present Appellant had already sunk by payment to the Official Liquidator and otherwise by bearing the expenses for the safety of the liquidated factory by more than Rs. 18 lakhs in deference to the order dated May 20, 1987, passed by the Hon''ble Mrs. Bose J., Monojit and Dipali re-appeared again on the scene on August 21, 1987, when they once again applied for cancellation of the confirmed auction sale and for fresh advertisement for re-sale, since dismissed on April 14, 1988. It is on record that by the order dated March 23, 1990, the learned Judge of the First Court, the Hon''ble Umesh Chandra Banerjee J., directed the Appellant to pay the balance purchase price to and in favour of the Official Liquidator under the said confirmed auction within 24 hours, specifically by 2 p.m. of March 23, 1990, which the Appellant did pay fully and wholly in deference to and in complete carriage of the said order dated March 22, 1990, as manifested in the order dated March 23, 1990, passed by His lordship. Consequent upon the full carriage of the said order dated March 22, 1990, simultaneously upon the passing of the order dated March 23, 1990, and upon full payment, there was an ipso facto instantaneous vesting of the title of the said liquidated factory to and in favour of the present Appellant without any further delay. After the Appellant had dived into the deep sea after payment of over Rs. 40 lakhs, lastly on March 23, 1990, Monojit Sen and Dipali Sen again repeated the same'' tactics, as they did twice in the past on November 24, 1986, and on August 21, 1987, as observed by Hon''ble Mrs. Monjula Bose J. in her judgment dated April 11, 1988, afore-referred on April 18, 1990, when the said Monojit Sen and Dipali Sen took out a strikingly similar and identical application as on August 21, 1987, for recall of the said order dated March 23, 1990, on the only ground that the said order dated March 23, 1990, was passed without notice to them which question was already gone into by the Hon''ble Mrs. Monjula Bose J. and was found by Her lordship against Monojit Sen and Dipali Sen as reflected in the said judgment of April 11, 1988, thereby constituting the bar of res judicata to the filing of the application dated April 18, 1990, which led to the order under appeal.

Unfortunately, for the Appellant, on the filing of the said application dated April 18, 1990, the learned Judge stayed the operation of his earlier final order dated March 23, 1990, until further order, directed the Appellant to return the keys to the Official Liquidator and directed the amount paid by the Appellant to the Official Liquidator (over Rs. 40 lakhs in all) to be kept in suspense account until further order, followed by re-call of order of March 23, 1990, by the order dated July 11, 1990. After affidavits, the said application dated April 18, 1990, came up for final disposal on July 23, 1990, when the order under the present appeal was passed, whereby the application dated March 20, 1990, whereon the afore-mentioned final order dated March 23, 1990 was passed declaring the title of the Appellant to the liquidated company, was dismissed and all interim orders were vacated.

Curious enough, the learned Judge did not pass any order with regard to the money paid to the Official Liquidator, nor did the learned Judge give any directions otherwise reversing the status of the Appellant as the auction-purchaser nor for re-sale of the liquidated company by any fresh advertisement.

The propriety and legality of the said order dated July 23, 1990, and the jurisdiction of the learned Judge in making the said order dated July 23, 1990, by entertaining the said application dated April 18, 1990, is the subject-matter of challenge in the present appeal.

Mr. Piyus Kanti Dutt, learned Counsel appearing on behalf of the Appellant submitted before us that as once attempt was made by the opposite parties, Monojit and Dipali, the Ex-Director and Ex-shareholder respectively of the company under liquidation for cancellation of the auction-sale which was confirmed and for re-sale of the assets of the liquidated company by fresh advertisement arid that the said application was dismissed by Mrs. Monjula Bose J. (as Her lordship then was) by order dated April 11, 1988t in which the said learned Judge has held in no uncertain term that the case of Monojit and Dipali Sen, the Ex-Director and Ex-shareholder have no locus standi to participate in liquidation sale and have no right to challenge in the auction-sale and, as such, the said parties have no locus standi to make any grievance in the liquidation sale or proceeding e en on the ground of ''under-value'' as the matter in liquidation sale is exclusively between the Court, the Official Liquidator and the auction-purchaser. It was further submitted that the three parties have no locus standi to make application in such proceeding. Further, the said" order dated April 11, 1988, was challenged in an appeal which was also dismissed. So, on the question of locus standi Mr. Monojit Sen and Dipali Sen had reached its finality and, as such, the second application dated April 18, 1990, was clearly hit by principle of res judicata and that it was further submitted that the learned trial Judge was wrong in passing the said order dated July 23, 1990, far from entertaining the application dated April 18, 1990. Mr. Dutt further submitted that the question of res judicata goes to the root to the jurisdiction of the Court. It was further submitted by Mr. Dutt that after the auction-sale was confirmed the same could not be re-opened after confirmation by the Court on the ground that the fresh auction would fetch higher price. It was further submitted that in liquidation sale in Court, the matter is exclusively between the Court, the Official Liquidator, and the auction-purchaser. It was submitted that so long as the company continues to exist, that is to say, before its dissolution, no share-h alder can be said to have any interest in the properties and assets of the company either legal or equitable, and in this connection, reference was made to a decision of this Cour: in the case of Bank of India Vs. Andhra Steel Corporation Ltd. and Others, Further reliance was placed to a passage from Pennington''s Company Law, 5th Ed., p. 913.

The assets of. the company, which will be available in the Liquidator''s hands to satisfy its debts and liabilities and to repay share capital to its members, are the assets which the company owns at the commencement of the winding up except assets which the Directors have disposed of with the Court''s sanction before the date of winding up order in a compulsory winding up. If the company acquires further assets during the; liquidation, these too are available to satisfy the creditor''s and members'' claim. Conversely, if the Liquidator disposes of assets in exercise of his power, or if secured creditors sell assets in order to realise their securities, or if assets are sold by order of the Court, such assets cease to be available for the benefit of members and creditors.

Accordingly, it was submitted that the opposite parties Monojit Sen and Dipali Sen never had nor do they have any locus standi or standing to challenge the order passed by the learned trial Judge on March 23, 1990, and that the'' learned trial Judge was wrong in entertaining the said application dated April 18, 1990, filed by the said Sri Monojit Sen and Dipali Sen. It was further submitted that the said application could not be entertained on the ground, of res judicata as also the same was barred by limitation. It was next submitted by Mr. Dutt that the rules as to liquidation sale are pari materia with the provisions of Order 21 Rules 90 and 92 of the CPC and, as such, the principle of Order 21, Rule 92 of the Code of Civil Procedure, once the auction-sale is confirmed by Court, the same cannot be challenged on the ground of a subsequent higher offer and in this connection reference was made to a decision of Supreme Court in Sadhuram v. Pulin Behari AIR 1984 S.C. 147/ (1482) Para. 42 where it is said that

the case reported in Navalkha and Sons Vs. Ramanuja Das and Others, is an authority in support of the proposition that once a Court comes to a conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation.

It was submitted by Mr. Dutt that the present auction-sale was confirmed as far back as on July 4, 1986, thereafter the applications dated August 21, 1987, and April 18, 1990, were barred by limitation in view of Article 127 of the Limitation Act, 1963. Mr. Dutt referred to Rules 272 and 273 of the Companies (Court) Rules, 1959, which is pari materia with Order 21 Rule 92 of the Code of Civil Procedure. The said rules are as follows:

Rule 272: Sale to be subject to sanction and to confirmation by Court. Unless the Court otherwise orders, no property belonging to a company, which is being wound up by the Court, shall be sold by the Official Liquidator without the previous sanction of the Court, and every sale shall be subject to confirmation by the Court.

Rule 273: Procedure at Sale every sale shall be held by the Official Liquidator, or, if the Judge shall so direct by an agent or an auctioneer approved by the Court, and subject to such terms and*conditions, if any, as may be approved by the Court. All sale shall be made by public auction or by inviting sealed tenders or in such manner as the Judge may direct.

On the basis of the aforesaid provisions, it was submitted by Mr. Dutt that in view of the confirmation of the auction-sale in favour of the Appellant by the learned trial Judge by the order dated July 4, 1986, followed by re-confirmatory order of April 11, 1988, and March 23, 1990, respectively the learned trial Judge was wrong in recalling the order dated March 23, 1990, by the order under appeal dated April 11, 1990. It was lastly submitted by Mr. Dutt that the learned trial Judge was not justified in keeping the Appellant''s money in suspense without cancelling and reversing the vested title of the Appellant in the property in question which had passed unto him and which was not under challenge in the said application filed on April 18, 1990. In this connection it was submitted that in law with the confirmation of the auction-sale in favour of the Appellant which cannot be recalled or cancelled any more, it was the duty and obligation on the part of the Court to restitute the Appellants who were the auction-purchasers of the possession of the factory of the liquidated company. In equity there in no justification is keeping the Appellant''s money blocked in a suspense account by one hand and keeping the Appellant out of possession on the other hand. It was further submitted that under terms and conditions of the auction-scale as settled by the trial Court there was no forfeiture clause. Therefore, neither the said confirmed auction-sale already confirmed, withdrawn or cancelled nor the said sum of Rs. 40 lakhs paid to the Official Liquidator could be forfeited. Mr. Dutt submitted that the order dated March 23, 1990, could not be recalled and a sale which was concluded with confirmation could not be set at naught on the basis of the application made by Mr. Monojit and Dipali Sen when in terms of the earlier orders passed in the proceeding it was found that they had no locus standi in the matter, and in that event they have no locus standi to file an application as the order was passed without notice to them. And as such the order could not have been stayed and recalled as done by the learned trial Judge.

Mr. Dutt has relied upon a Division Bench decision of this Court in the case of Shyamlal Purohit and Another Vs. Jagannath Ray and Another, wherein it was held that so long as the company continues to exist, that is to say, before its dissolution no share-holder can be said to have any interest in the properties and assets of the company either legally or equitably. Share-holders in the company are certainly interested in the properties or assets of the company in the sense that wastage or frittery of the assets might affect their rights to enjoy the properties and eventually the distribution of surplus assets in a winding up. Reliance was also placed to another decision of this Court in the case of Bank of India v. Andhra Steel Corporation Ltd.(Supra) wherein it was held that the share-holder of a company has no locus standi to present application and intervene in the suit or application for putting up in the terms of settlement under Order 23 Rule 3 made in the suit by the Plaintiff Bank and other parties representing the company who signed the terms of settlement. On behalf of the Respondents it was submitted that the auction-sale had not been concluded and that in that event the Court retained its power to re-open the auction-sale in the interest of the company and if it appears that any order was passed without giving any notice to the ex-Directors. It was further observed that the property was sold at a sum below than that of the market value and that was the reason for which the Appellant should not be allowed to take over the property as a purchaser. This appeal is against the order dated July 23, 1990, passed by the learned trial Judge dismissing the Appellant''s application filed under Judge''s summons dated March 20, 1990, in which it was stated that a prayer was made for recalling the order dated December 19, 1989, and that the said application of the Appellant-purchaser was disposed of by the learned trial Judge by orders dated March 22, 1990 and March 23, 1990, that the same was contested by the Respondent Monojit by filing the affidavit wherein it was alleged by them that the application for recalling the order dated December 19, 1989, was made without notice to Monojit and also other Applicants who were allegedly interested in opposing the said application of the Appellant purchaser for extension of time as they wanted re-sale of the. said properties and, according to them, the sale in favour of the purchaser stood set aside and cancelled and, as such, there was no question of any further opportunity being given to them for completing the said purchase. On these grounds the orders which were passed by the learned trial Judge on March 22, 1990 and March 23, 1990 were stayed after the payment in terms of the said orders were fully made and on making payment thereof the keys of the factory in question were handed over to them. In view of the full compliance of the order dated March 22, 1990, by which the Appellants have paid the balance purchase money and that thereafter the keys of the said factory were handed over to the purchaser, the same became a concluded sale and that such concluded sale could not be re-opened and set at naught at the instance of ex-Directors of the company. It is the case of the Appellant that on the face of the judgment and order dated April 11, 1988, passed in the proceeding by dismissing the* application dated August 21, 1987, taken out by Monojit and another with a finding that the said Respondents had no locus standi and or legal right to intervene in the present auction-sale arising out of liquidation proceeding in the capacity of the ex-Directors and ex-shareholders of the said company, the learned trial Judge was wrong in passing the order which practically set aside the auction-sale. In terms of the order the auction-purchaser had paid the money and after setting aside the sale on the ground that the extension of time was taken without notice to the ex-Directors the auction-purchaser was dispossessed from the factory in question who were directed to make over the keys of the factory back to the Official Liquidator. Surprisingly, the money paid by the auction- purchaser were not re-paid to the auction-purchaser but kept in suspense account. When money was being paid which was duly accepted by the Court, the sale became concluded. It appears that the learned trial Judge has simply dismissed the application on the ground that the Advocate appearing for the Appellant was not in a position to proceed with the matter, in a matter like this when on the basis of an application taken out by a party some orders were passed and on compliance of these orders right of the third party was created. The Appellants have paid huge money for the purpose of the sale. The keys were handed over and thereafter at the instance of the ex-Directors and ex-shareholders the whole thing was set at naught without considering the legal effect of the orders dated March 22 and 23, 1990. The learned trial Judge has not considered the effect of the order dated April 11, 1988 passed by Monjula Bose J. (as Her lordship then was) with regard to ''locus standi and/or legal right of intervention by the Respondents Nos. 1 and 2 who were the ex-Director and ex-shareholder of the said company. The law is well-settled as soon as the property is sold in auction it creates equity in favour of the auction-purchaser and that the sale is made and concluded, the said sale could only be set aside on the basis of an application to set aside the sale on deposit of the money paid by the auction-purchaser. The auction-purchaser is only interested in the properties of the company under liquidation and the auction-purchaser had no manner of rights, duties and obligation towards anybody. This sale was made by the Court and that after the bid was accepted and money was paid, possession was handed over, the same cannot be taken so lightly. An application is necessary before the Court for setting aside a sale made by the Court and that merely on the grounds that the sale was made not at proper -price, it was not a good and sufficient ground for setting aside such a sale. Secondly, when the matter appears in the list of this Court and when a party appears to counsel in a pending proceeding, a party cannot be allowed to contend that he had no notice of proceeding inasmuch as it was also a duty of any party who is interested in the affairs of the company to watch the proceeding and to take objection if he is otherwise entitled. In the instant case, in view of the determination made by Monjula Bose J. (as Her lordship then was) in the order dated April 11, 1988, the ex-Director and the ex-shareholder had no locus standi to interfere with such proceeding and, as such, the question is whether on the basis of an allegation of non-service of notice of the application filed by the auction-purchaser was proper on the part of the learned trial Judge to recall all orders passed and taking back the possession of the property from the auction-purchaser keeping money in the custody of the Official Receiver, after all money has been paid as a consideration for such sale and that the Court had no jurisdiction to keep the money of a third party in the form of temporary confiscation of money in a winding up proceeding after all money belongs to a third party and that for procuring this money the third party purchaser had to incur loan by paying interest and that money cannot be allowed to be kept in the custody of the Official Receiver. This Court of auction has resulted a substantial failure of justice to the auction-purchaser-Appellant. In our view, before recalling all the orders dated March 22 and 23 1990, the Court below ought to have considered all the aspects of the matter including the effect of the orders passed by Monjula Bose J. (as Her lordship then was) on April 11, 1988. Further, the question that was required to be gone into by the learned trial Judge was whether at the instance of the ex-Directors and ex-shareholders, the order dated March 22 and 23, 1990, could be set aside and the benefits of those orders could be withdrawn with Appellant who had discharged the obligations under those orders.

In our view, before the recalling of the order dated March 23, 1990, the Court below ought to have considered whether such an objection could be entertained at the instance of the Respondents who are the ex-Directors and/or share-holders in the light of the determination made earlier by Monjula Bose J. (as Her lordship, then was) on April 11, 1988, inasmuch as the principles of res judicata applies even at the interlocutory stages and that any issue which was decided finally between the parties is binding between the parties. Particularly when against the order dated April 11, 1988, an appeal was preferred and that appeal ultimately was dismissed and, as such, the said determination made on April 11, 1988, has reached its finality. Consequently the orders dated April 18, 1990 and July 11, 1990, cannot also stand. Accordingly, considering the facts and circumstances of the case we set aside the order dated July 23, 1990, and the Court below is directed to proceed in the matter according to the light of the observation made above in this judgment.

Appeal is allowed.

There will be no order as to costs.

All parties to act on a xeroxed copy of this judgment countersigned by an Officer of this Court upon the undertaking given by the parties to apply for and obtain the certified copy of the same.

Baboo Lall Jain, J.: I agree.