Karnataka Industrial Areas Development Board vs A. Khadar Bash and Others

Vineet Saran, J.—There was a winding up order dated 29.6.2006 passed in Company Petition 301/2000 and the Official Liquidator attached to this Court was appointed as the provisional Liquidator. The Company (M/s. Padmavathy Panel Board Ltd.) had leasehold rights of the land allotted to it by the Karnataka Industrial Area Development Board (for short Board), for which a lease cum sale deed was executed by the Board in favour of the Company on 11.12.1987. The said lease cum sale deed provided for execution of sale deed in favour of the Company on expiry of eleven years, provided the Company fulfilled the conditions of the lease cum sale deed. The eleven years period under the said Deed expired in the year 1998. Admittedly, no sale deed was executed in favour of the company in terms of the said Deed.

On the winding up order having been passed, the Official Liquidator proceeded to auction the land in question allotted by the Board in favour of the Company and in terms of the orders passed by this Court, sale notification was published on 19.2.2013. The bids of the parties were accepted and though the highest bidder was one T. Venkatesh, whose bid was for a sum of Rs. 1.10 cores, after inter se bidding before the Company Court, respondent 1 in this appeal - A. Khadar Basha offered a sum of Rs. 2.2 crores. The said bid was accepted by the Company Court on 15.4.2013. However, since the Official Liquidator thereafter required respondent 1 to deposit a further sum of Rs. 69,22,136/-, as had been demanded by the Board and communicated to Official Liquidator at some stage, respondent 1 approached Company Court for a direction to the Official Liquidator and the Board for execution of sale deed in his favour, in terms of the order dated 15.4.2013 passed by learned Company Judge.

It is on such application filed by respondent 1 that the impugned order dated 7.11.2013 has been passed whereby a direction has been issued to appellant and the Official Liquidator to execute registered sale deed in respect of the property in question, on the respondent 1 depositing a sum of Rs. 1,34,922/-, as had been provided by order dated 15.4.2013, while accepting the bid of respondent 1.

We have heard Sri Vijay Shankar, learned senior counsel appearing along with Sri Ashok N. Nayak, for the appellant; as well as Sri P.S. Manjunath, learned counsel appearing along with Sri T.P. Vivekananda, for respondent 1; and Sri K.S. Mahadevan, learned counsel appearing for the Official Liquidator and have perused the record.

It is noteworthy that up to the stage of acceptance of the bid by order dated 15.4.2013, the Board was not a party to the proceedings before the learned Company Judge, even though, as rightly claimed by learned counsel appearing for the Board, no order accepting the bid with regard to the land which was given on lease to the Company, could have been accepted by the learned Company Judge without the Board being a party to the proceedings. Challenging the said order, this appeal has been filed by the Board.

The submission of Sri Vijay Shankar that nothing more than what was granted by the Board in favour of the Company could have been transferred by way of auction, has force. It is submitted that it was only the leasehold rights which had been granted by the Board to the Company, which had also expired in the year 1998 and since no sale deed was executed in favour of the Company (which was to be done only on fulfillment of certain conditions which had not been complied with by the Company), no better rights than holding over rights of the company which could have been transferred by the auction. It has thus been contended that in the absence of appellant Board having been heard after being impleaded as party, no land belonging to the Board could have been directed to be transferred in favour of respondent 1.

After learned counsel for appellant had concluded his arguments in this appeal, time was sought by the parties to arrive at an amicable settlement, and in response thereto, a memo dated 4.9.2015 has been filed by respondent 1 which has been signed by the said respondent, as well as by his counsel. In the said memo, it has been offered by respondent 1 that ''either appellant may agree to grant the title deed subject to this respondent paying Rs. 69,22,136/- demanded by the appellant in substantial compliance of the order of the learned Company Judge or if the said proposal was not accepted, then the Official Liquidator be directed to refund the amount of Rs. 2.20 crores deposited by the respondent with the Official Liquidator, along with interest as contemplated under Order 21 Rule 93 of the CPC''.

On having received instructions, learned counsel for appellant has stated that the question of transfer of title deed in favour of respondent 1, would not arise as the land in question is to be allotted to persons of certain categories, who are to establish industries in the designated area for which the Board has been constituted and in the absence of respondent having made any proposal for setting up an industry, no right or title could be transferred in favour of respondent 1. As such, appellant Board does not accept the proposal of the respondent.

Sri K.S. Mahadevan, learned counsel appearing for the Official Liquidator stated that in the facts of the case, the Official Liquidator would be agreeable to refund the amount of Rs. 2.20 crores deposited by the appellant along with such interest which the Official Liquidator has earned on having deposited the said amount in the bank.

Learned counsel for respondents, however, have not contested this appeal on merits.

In view of the memo dated 4.9.2015 filed by respondent 1 and the alternate proposal having been accepted by the appellant as well as by respondent 2 - Official Liquidator, we allow this appeal and set aside the order dated 7.11.2013 passed by learned Company Judge and direct respondent 2 - Official Liquidator to refund the deposit of Rs. 2.20 crores made by respondent 1, along with interest which the Official Liquidator has earned on such amount which was kept in the bank in Fixed Deposit, as expeditiously as possible, preferably within six weeks from today.

Appeal stands allowed to the extent as indicated above. No order as to costs.