Bank Vs. Bengal Paper Mills Co. Ltd. & Ors  INSC 143 (13 April 1999)
S P Bharucha,
R C Lahoti, Bharucha, J.
relevant facts need to be set out to appreciate what is involved in these
appeals from the judgment and order of a Division Bench of the High Court at Calcutta.
June, 1985 a winding petition was filed against the first respondent company,
now in liquidation (the said company). On 30th September, 1986 a mortgage suit (Title Suit No.143
of 1986) was filed by the Punjab National Bank and the Bank of Baroda against
the said company for recovery of the sum of Rs.1,94,24,886.37 before the
Subordinate Judge, Burdwan. On the same day a hypothecation suit (Suit No.736
of 1986) was filed by the United Bank of India, the Punjab National Bank and American Express against the said company
for recovery of the sums of Rs.20,46,010.31 and 17,87,796.49 in the Calcutta
High Court. On the same day, a hypothecation suit (Suit No.737 of 1986) was
filed by the Allahabad Bank against the said company for recovery of the sums
of Rs.29,18,360.65 and 11,64,370.00 in the Calcutta High Court. Again on the
same day, the Punjab National Bank and American Express filed a hypothecation
suit (Suit No.738 of 1986) against the said company for the recovery of the sums
of Rs.5,30,38,922.28 and Rs.2,14,548.00 in the Calcutta High Court. On 3rd December, 1986 the Calcutta High Court passed an
interim order in Suit No.738 of 1986 appointing joint receivers. From time to
time, further orders were passed in the same suit for inventory and sale of the
On 24th April, 1987, in the winding up petition
aforementioned, the said company was ordered to be wound up and the Official
Liquidator was directed to take possession of the said companys assets and
properties. On 15th
May, 1987 an
application was moved under Section 446 of the Companies Act by the Punjab
National Bank and American Express for leave to carry on with their suits; also
for transfer of the mortgage suit filed in the Burdwan court to the Calcutta
High Court. On 15th
May, 1987 the
application was allowed and the suit transferred from the Burdwan court to the
Calcutta High Court was numbered (T.C. Suit No.5 of 1987). In June, 1987 the Allahabad
Bank made an application under Section 446 of the Companies Act for leave to
carry on with its suit and on 26th June, 1987
such leave was granted.
On 25th November, 1987, the Official Liquidator wrote to
the joint receivers in respect of the possession of the assets and records of
the said company held by them. On 30th November, 1987 the joint receivers replied to the
Official Liquidator; therein they stated that the hypothecated goods could not
be sold due to lack of offers.
11/12th January, 1988 the Punjab National Bank made an application to the
Calcutta High Court in the transferred suit praying that the Official
Liquidator should be appointed receiver in place and stead of the joint
receivers in Suit No.738 of 1986 with directions to take possession, make
inventory and sell the securities both in the transferred suit as well as in
Suit No. 738 of 1986. The application was allowed on 12th January, 1988. On 28th April, 1988 the joint receivers wrote to the Official Liquidator
confirming that they had handed over possession of the securities they held to
On 25th November, 1988 the High Court appointed a valuer
of the said companys assets and properties. On 29th June, 1989 an order was passed in the winding up petition giving to
the Official Liquidator leave to sell the assets and properties of the said
company by public auction by inviting sealed tenders upon advertisements once
in the The Statesman once in Jugantore and once in Biswamitra as per usual
terms and conditions of sale. The sale was to be held on 15th September, 1989 at 2.00 pm in Court. The Official Liquidator was directed to issue the
advertisements at least three weeks prior to the sale and to give notice to the
valuer asking him to be present on the date of the sale.
Official Liquidator, the secured creditors and the valuer were required to act
on a signed copy of the minutes of the order.
On 14th August, 1989 the sale notice was issued. It
stated that the sale was of the entire moveable and immovable assets of the
said company lying in its factory premises at Ballavpur, Ranigunge, District Burdhaman
and moveable assets lying in its registered office at Calcutta.
sale was to be on as is where is and whatever there is basis. The terms and
conditions of sale were stated to be available at the office of the Official
(1) of the terms and conditions of sale stated that the sale would be as per
inventory on as is where is and whatever there is basis and subject to the
confirmation by the Court. Clause (3) stated that the offer made by intending
purchasers should be contained in a sealed cover enclosing a bank draft or pay
order equivalent to 10% of the offer. Clause (5) stated that the successful
purchaser will have to pay the balance purchase price to the Official
Liquidator within a week from the date of sale by the Court either by bank
draft or pay order. It is made clear that this would not prevent the Court from
fixing any other date for such deposit or extending such time even if such time
has expired on such terms and conditions as the court may deem fit. Clause (9)
stated that the sale would be subject to such modifications/alterations of
terms and conditions of sale as the Honble Court deems fit and proper and the decision of the High Court
shall be final.
pursuance of the advertisement for sale the second respondent made an offer on 14th September, 1989. It is this offer which was
accepted and, therefore, its terms are relevant. It stated that the second
respondent was interested in the purchase of the entire moveable and immovable
assets of the said company with a view to reviving it as an on going paper
mill. The second respondent had entered into discussions with existing labour
unions and the State Government and had entered into a memorandum of
understanding with the labour unions for reopening the paper mill to run it,
taking workmen from existing employees. The offer was for the sum of Rs.1,50,00,000/-
and bank drafts for the aggregate amount of Rs.15 lakhs were enclosed. The
offer stated, If our bid is successful we shall complete the payment of the 25%
of the sale value within a fortnight and take the possession. For the balance
we shall pray to the Honble High Court, Calcutta to allow us the instalments facility to pay off (balance) amount for
which we shall however arrange a bank guarantee to cover the entire sum.
would, therefore, request for a clear order of the Honble High Court
transferring the assets of the said company in the usual manner ..........
On 15th September, 1989, the judgment and order of sale
which was challenged before the Division Bench was passed. The learned Single
Judge recorded that the Official Liquidator had received, pursuant to the
advertisements, three offers, one of which was by the second respondent for
Rs.1,50,00,000/-, the other was only with regard to the sale of furniture and
the third was for Rs.1,10,00,000/- for the sale of the assets. The sale of
assets had taken place in the open court though there were no further bidders
at the auction. The offer of Rs.1,50,00,000/- had been subsequently raised to
Rs.2 crores by the second respondent.
Advocate General for the State of West Bengal, appearing for the second respondent, had submitted that
the concerned unit would not be disposed off as scrap but would be used as a
going concern. An agreement had already been reached with the union affiliated
to the CITU containing detailed terms and conditions as to the working of the
mill. The Advocate General had produced a letter from the Bengal Paper Mill Mazdoor
Congress affiliated to INTUC wherein an unequivocal acceptance of the terms had
been recorded. The Advocate General had assured the Court that 1700 people
would be re-employed within a span of two weeks and to those who could not be
taken in necessary compensation would be paid, which might exceed Rs.50 lakhs.
The learned Single Judge recorded that the learned advocate appearing for the
secured creditors has raised no objection excepting however that the prayer for
direction on the Official Liquidator for disbursement of some money to the
secured creditors as a long period of time has already elapsed in the
learned Single Judge then passed the following order:
the above and considering the factum of re-employment of 1700 people of the
Mill which has been under closure for the last 7-8 years, the sale in favour of
M/s. Eastern Minerals & Trading Agency (Paper Division) ought to be
confirmed at Rs.2 crores,. It is ordered thus accordingly. consequently
recorded that a total sum of Rs.20 lakhs has been made over to the Official
Liquidator in court today and the Official Liquidator is, therefore, thus
directed to make over possession of the Mill premises to the purchaser by
purchaser is directed to furnish further bank guarantee for a further sum of
Rs.30 lakhs by 26th Septemer 1989, which will be kept in deposit with the
Official Liquidator. In the event, however, the purchaser fails to furnish such
bank guarantee within the time stipulated above, the Official Liquidator is
directed to bring it to the notice of this Court on 27th September, 1989 for further orders.
purchaser is further directed to pay a sum of Rs.30 lakhs to the Official
Liquidator as against the purchase price within four weeks from date. Balance
75% of the purchase price, that is, Rs.1.50 crores will be paid by the
purchaser by quarterly instalments of Rs.15 lakhs each.
first quarter, however, commencing from 1st January, 1990. In default of payment of a sum of
Rs.30 lakhs or any one of the quarterly instalments as above, the Official Liquidator
is also directed to apply before this Court for necessary directions.
secured creditors protested against the statement in the judgment and order
that referred to them and the learned Single Judge, on 27th September, 1989,
directed that the order dated 15th September 1989 is modified to the extent
that the 9th line of the 6th paragraph of the said order, after the words all
the secured creditors should be read as has made a prayer. As so modified, the
relevant part of the sentence reads: the learned advocate appearing for all the
secured creditors has made a prayer for direction on the Official Liquidator
for disbursement of some monies to the secured creditors ........
were filed by the banks against the orders dated 15th September, 1989 and 27th September, 1989. The appeals were disposed off by the order that is under challenge.
Division Bench noted that the valuation report was not disclosed to any of the
banks, but it stated that it appeared from the valuation report produced before
it that the total value of the assets of the said company was estimated by the valuer
to be Rs.6,22,16,875/- Since the valuation report was not disclosed to the
banks, the banks had had no opportunity to object to the valuation made.
to the advocate appearing on behalf of the banks, the proper valuation of the
assets should have been much higher; the loans granted by the banks were fully
secured and should have been fully recovered if the assets had been sold at a
proper price. Since the valuation report was not shown to the banks, the banks
had had no opportunity to point out the defects in the valuation report. The
said company had 15.2.73 acres of lease-hold land. This was not taken into
consideration by the valuer on the ground that the lease was only upto 14th October, 1992. The valuer had not indicated
whether he had examined the lease-deed or whether there was any renewal clause
in it. Counsel on behalf of the banks had submitted that no proper effort was
made to obtain a fair market price for the property sold.
should have been given all over India, particularly in Bombay, Delhi, Madras and other important commercial centres,
to obtain the best possible price. This had not been done. Because of the
non-disclosure of the valuation report, the secured creditors were unable to
raise any objection and were not in a position to know whether the assets had
been sold at a low price. The assets were the securities of the banks. The
banks had filed several suits and receivers had been appointed. The assets
could not have been sold without the written consent of the banks and the banks
had not agreed to the sale of their securities. The Division Bench found itself
unable to uphold the latter contention advanced on behalf of the bank for the
banks had participated in the sale from the very beginning. No objection had
been raised by the banks to the proposed sale of the assets. The sale was
concluded in the presence of the advocates appearing on behalf of the banks. A
variation of the learned Single Judges order was made at the instance of the
banks. At no point of time did the banks object to the sale of the assets or
the price at which the assets were sold. Learned counsel for the banks
contended that what was actually sold was the equity of redemption in the
secured assets. The Division Bench found that this stand had not been taken by
the banks before or at the time when the sale took place. Counsel had contended
that the mortgages could be given up only in writing and not otherwise and he
had pointed out that the mortgage suits filed by the banks were still pending.
The Division Bench was unable to uphold this contention to set aside the sale
because in a case like this some sort of promptitude was expected from the
allegations of fraud had been made against the purchaser.
purchaser had purchased the properties in a court sale and had promised to give
employment to 1700 workmen of the said company. The purchaser had incurred
expenditure for running the factory and for that purpose had entered into
contracts with various parties. Another important aspect of the case was that
no appeal had been preferred against the order of sale till 3rd February 1990 and no stay of its operation had
been asked for. Counsel for the banks had contended that the appeals were filed
within the period of limitation. The Division Bench countered that that might
be so, but the purchaser had been allowed to take possession after the sale. He
had employed persons and placed orders without objection from the banks. It was
only after these things had happened that the banks woke up. The delay was
found fatal to the case of the banks. But, the Division Bench added :
is, however, considerable force in the argument of Mr. Mitra that the sale was
made with undue haste. The proposal for sale of a large paper mill should only
have been effected after giving wide publicity all over India.
the successful bidders offer should have been examined in depth before
acceptance. Some enquiry should have been made to find out the number of
workers actually employed by the company in liquidation at the time of the
closure of its mills. No attempt was made out to find out how many of those
workers were still unemployed and whether the Trade Union with which the purchaser
had entered into an agreement represented all the unemployed workman of the
company in liquidation. It appears that 1700 of the workmen of the company have
not been re-employed. No attempt was made to find out whether there was any
outstanding liabilities of the company, statutory or otherwise, in respect of
its workers. The company might have other liabilities. The nature and extent of
such liabilities were not found out. The sale of the asse5ts should not have
been made in a way to deprive the right of all the creditors, including the
banks, to proceed against the assets of the company to realise their dues.
Division Bench then stated :
the only parties that have come to this Court for setting aside the sale are
the banks who had participated fully at every stage of the sale. The banks were
represented at the time when the decision was taken to sell the assets of the
company. The banks were also present when the sale was finalised. The banks had
also got the matter mentioned for effecting certain corrections in the sale
order and a prayer was made for disposal of the sale proceeds. It does not
appear that the banks were under any misapprehension that the secured assets
were being sold.
banks had participated in every proceedings which culminated in the sale of the
assets and made a prayer for prompt payment out of the sale of the assets. They
cannot after a lapse of five months turn around and pray for setting aside the
sale on the ground that the banks interests were not properly protected at the
time of the sale. ..........
facts and circumstances of the case and having regard to the conduct of the
bank, this application must be dismissed.
to be noted that no reserve price for the sale was fixed. Why this should have
been so is not understood, particularly having regard to the fact that a valuer
had been appointed of the assets and properties and a report obtained. The
valuation report was not disclosed. The order of the learned Single Judge does
not set out what the valuation of the property that was sold was. It does not
even state that, in view of that valuation, the offer of Rs.2 crores made by
the second respondent was a fair and adequate price. Further, the learned
Single Judge did not notice what the Division Bench did, namely, The Company
had 15.2.73 acres of leasehold land. This was not taken into consideration by
the valuer on the ground that the lease period was only upto 14th October, 1992. The valuer has not indicated
whether he had examined the lease deed or whether there was any renewal clause
in the lease agreement. The valuation was, therefore, itself suspect.
sale was advertised once only in three newspapers, two of which at least were
local newspapers. For a sale of the magnitude of that with which we are
concerned, this was surely inadequate publicity. Inadequate publicity
necessarily suggests the possibility that a better price could have been
learned Single Judge would appear to have been carried away by the prospect
that 1700 people would be re-employed. He did not appreciate that the said companys
ex-employees were only some of its creditors and that they stood on no better
footing than its other unsecured creditors. No order could have been passed
that, while it favoured them, took no account of other unsecured creditors.
employees of the said company had been, as the order of the learned Single
Judge itself shows, out of employment for 7 to 8 years but the learned Single
Judge did not inquire how many of them had secured other employment in the
learned Single Judge did not ascertain and set out what the total amount of the
claims, secured and unsecured, against the said company was and whether the
assets and the property of the said company, other than those sold, were
adequate to pay off these claims, even in part. The learned Single Judge did
not even ascertain and state how many unsecured creditors there were, what the
aggregate amount of their claims was and what part thereof could be ascribed to
the erstwhile employees of the said company. The learned Single Judge did not,
it appears, appreciate that his principal obligation in conducting and
confirming the sale was to the body of creditors of the said company and that
the obligation was to ensure that the best possible price had been procured
from whereout they could recover at least some part of their dues.
learned Single Judge appears not even to have noticed that the offer of the
second respondent was not in accordance with the terms and conditions of sale
inasmuch as it contemplated a payment schedule that was at variance with the
terms and conditions of sale. There is no discussion in the order of the
learned Single Judge about why it was thought fit to entertain such an offer.
was another offer before the learned Single Judge to purchase the assets and
properties of the said company for the sum of Rs.1.10 crores. No details of the
offer are set out in the order of sale. If it was in accordance with the terms
and conditions of sale, it should have been considered and compared to the
second respondents offer. This offerer did not, apparently, raise his offer,
but he might have done so if he have been told that he could have the same
liberal payment terms that the learned Single Judge gave to the second
respondent after it had raised its offer. No reason was given by the learned
Single Judge in the order of sale as to why he thought it necessary or proper
to give to the second respondent these very liberal terms. It is to be noted
that these terms are even more liberal than those asked for in the offer.
only 10% of the price had been received and there was a direction to furnish a
bank guarantee for Rs.30 lakhs 10 days thereafter, and the balance purchase
price was to be received only after a very long period of time the learned
Single Judge directed the Official Liquidator to hand over to the second
respondent the possession of the assets and properties by tomorrow.
observation of the Division Bench in the order under appeal that the sale was
conducted with undue haste is very appropriate. So are the other critical
observations that the Division Bench made, which we have quoted above.
could not but have been obvious to the Division Bench, therefore, that there
was every possibility that the sale had not procured the best possible price.
Even so, the Division Bench did not interfere with the order of sale, because,
in its view, the second respondent had been allowed by the banks to take
possession of the assets and properties and to incur expenditure. In our view,
the Division Bench was in error.
liquidation, the assets and properties of the company in liquidation vest in
the Official Liquidator for the benefit of its creditors. It is only from out
of the sale proceeds of these assets and properties that the creditors of the
company can hope to recoup their dues. To ensure that the best possible price
is realised upon the sale of these assets and properties, the sale thereof by
the liquidator is required to be confirmed by the High Court.
the obligation of the High Court to the creditors of the company in liquidation
to make sure that the best possible price has been realised.
& Sons vs. Sri Ramanya Das & Ors., 1970(3) SCR 1, this Court quoted
Rule 273 of Companies (Court) Rules, 1959, thus : 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 sales shall
be made by public auction or by inviting sealed tenders or in such manner as
the Judge may direct.
then said :
principles which should govern confirmation of sales are well-established.
Where the acceptance of the offer by the Commissioners is subject to
confirmation of the Court the offeror does not by mere acceptance get any
vested right in the property so that he may demand automatic confirmation of
his offer. The condition of confirmation by the Court operates as a safeguard
against the property being sold at inadequate price whether or not it is a
consequence of any irregularity or fraud in the conduct of the sale. In every
case it is the duty of the Court to satisfy itself that having regard to the
market value of the property the price offered is reasonable. Unless the Court
is satisfied about the adequacy of the price the act of confirmation of the
sale would not be proper exercise of judicial discretion. In Gordhan Das Chuni Lal
v. T. Sriman Kanthimathinatha Pillai, A.I.R. 1921 Mad. 286, it was observed
that where the property is authorised to be sold by private contract or
otherwise it is the duty of the Court to satisfy itself that the price fixed is
the best that could be expected to be offered. That is because the Court is the
custodian of the interests of the Company and its creditors and the sanction of
the Court required under the Companies Act has to be exercised with judicial
discretion regard being had to the interests of the Company and its creditors
as well. This principle was followed in Rathnaswami Pillai v. Sadapathi Pillai,
A.I.R. 1925 Mad. 318, and S. Soundarajan
v. M/s Roshan & Co., A.I.R. 1940 Mad. 42. In A. Subbaraya Mudaliar v. K. Sundarajan,
A.I.R. 1951 Mad.
it was pointed out that the condition of confirmation by the Court being a
safeguard against the property being sold at an inadequate price, it will be
not only proper but necessary that the Court in exercising the discretion which
it undoubtedly has of accepting or refusing the highest bid at the auction held
in pursuance of its orders, should see that the price fetched at the auction is
an adequate price even though there is no suggestion of irregularity or
also well to remember that, for the most part, the creditors of a company in
liquidation are small trade creditors whose dues are not so large as would make
it economical for them to resort to proceedings in court. It is these small
creditors that the High Court is expected to protect when confirming a sale by
think that the Division Bench lost sight of what is stated above. It could not
have realistically expected the ordinary unsecured creditors of the said
company to have filed appeals on the ground of inadequacy of the sale price.
could not have turned a blind eye to the many defects that it itself noted in
the order of sale merely because the banks had moved the appeals after five
months; nor was there any justification for taking into consideration the
expenditure that had been incurred by the second respondent subsequent to its
possession of the assets and properties.
first place, the Division Bench should have noted that the learned Single Judge
had with unseemly haste ordered possession thereof to be handed over to the second
respondent on the very next day. In the second place, the appeals had been
filed within the period of limitation.
incurred during this period could not render the appeals, in effect, infructuous.
The same would apply to expenditure incurred subsequent to the filing of the
appeals and until the time that they were heard. The second respondent knew
that the appeals were pending and that they could end in the order of sale
being set aside. Such expenditure as it incurred with this knowledge was at its
risk. In the third place, and most important, the interests of the creditors of
the company, particularly the unsecured creditors, overweighed such equities,
if any, as might have been considered to be in favour of the second respondent.
was, in our view, the obligation of the Division Bench to have struck down the
order of sale, having regard to what it found wrong with it.
contended on behalf of the second respondent, the State of West Bengal and the
employees that, whatever we might think of the order of sale, we should not
the reasons that we have stated, we cannot agree. The interests of the
creditors of the said company are paramount, as is the obligation of the Court
to them. That the second respondent has incurred expenditure and obligations,
which were detailed, subsequent to the passing of the order of sale and upto
date cannot, in the circumstances, deter us from setting aside the order of
sale. The second respondent knew that the appeals were pending. It should have
appreciated that the order of sale was very vulnerable, given what the Division
Bench of the High Court had to say about it. It consciously took the risk of
incurring the expenditure and obligations and it cannot take shelter behind
submitted by learned counsel for the second respondent that we should vary the
terms upon which the offer of the second respondent was accepted to overcome
the prejudice to the said companys creditors. We have no materials upon which
we can do so, apart from the fact that to do so would be wrong in principle. We
do not know and have no means of knowing what the fair value of the said assets
and properties that were sold was; that could only have found after a properly
advertised sale had been held.
not know, and counsel were unable to tell us, what the totality of the claims
against the said company are.
counsel for the banks had contended before the Division Bench of the High Court
that the mortgages could only have given up by the banks in writing and not
otherwise and he had pointed out that the mortgage suits by the banks were
still pending. He had also contended that what was sold to the second
respondent, in any event, was only the equity of redemption in the mortgaged
property. These contentions were repeated before us. On behalf of the second
respondent it was contended, on the other hand, that the banks had given up
their securities and become unsecured creditors.
to be noted that on 11th-12th January, 1988, the Punjab National Bank had made
an application to the High Court in the transferred suit and prayed that the
Official Liquidator should be appointed receiver in place and stead of the
joint receivers in Suit No.738 of 1986 with directions to take possession, make
inventory and sell the securities both in the transferred suit as well as in
Suit No.738 of 1986, which application was allowed on 12th January, 1988. It is
not clear from the submissions whether, as a result, the Official Liquidator
was appointed receiver of the mortgaged properties in the transferred suit. It
is also not clear whether any similar application had been made by the other
banks in their suits. It is pertinent to note that in the subsequent order
dated 29th June, 1989 passed in the winding up petition, giving to the Official
Liquidator leave to sell the assets and properties of the said company,
reference was made to the secured creditors. Similar reference was made to the
secured creditors in the order of sale. There is also some substance in the
contention based on the fact that the mortgage suits were pending when the
order of sale was made and that the mortgage securities could not ordinarily
have been held to have been given up without express writing to this effect. On
the other hand, it needs to be pointed out that it appears that the banks did
not at any time prior to the order of sale require that the sale proceeds,
insofar as they related to properties secured in their favour, should be kept
apart to the credit of their suits. It is, therefore, a moot question as to
whether the banks had given up their securities before the order of sale, but
we cannot resolve the question in the absence of the full record for this was a
question that arose incidentally in the appeals from the order of sale. We
think that this is a question that has now to be left to be answered by the
High Court on appropriate applications by the banks.
same time, it is perfectly clear to us that it was not the equity of redemption
alone in the secured properties that was sold for, had that been so, there
should have been express mention to that effect in the terms and conditions of
additional affidavit filed on behalf of the second respondent before this Court
it is stated that the said company had shown no interest in renewing the lease
of the property which was the subject matter of the sale and that in order to
continue to lawfully remain in possession to run the paper mill, the Bengal
Paper Mills (1989) Co.Ltd., floated by the second respondent and its
associates, had obtained the lease in its favour from the State of West Bengal.
The order of sale in favour of the second respondent being liable to be set
aside, everything consequential thereon must necessarily also be set aside.
lease, patently, was obtained as a consequence of the order of sale. For doing
complete justice, therefore, it is necessary to set aside the lease.
counsel for the second respondent submitted that the second respondent would be
entitled to recover the sale price as also all expenditure that it had incurred
consequent upon the order of sale. We are in no doubt that the Official
Liquidator must refund to the second respondent the sum of Rs.2 crores. As to
any other expenditure, the second respondent must apply to the High Court and
satisfy it, first, that it was incurred and, secondly, that, in law, the second
respondent is entitled to recover it.
appeals are allowed. The judgment and order under appeal is set aside as also
the order of sale dated 15th
September, 1989 in favour
of the second respondent. The Official Liquidator shall forthwith recover
possession, from whoever is in possession, of the assets and properties covered
by the said order of sale. The same shall be resold after a fresh valuation
report thereof has been obtained, a reserve bid fixed and due advertisements
published. The second respondent shall be repaid the purchase price of Rs.2 crores
by the Official Liquidator subsequent to recovery of possession as aforestated.
lease of the property, which was the subject matter of the sale, in favour of
the Bengal Paper Mills (1989) Co. Ltd., is set aside.
second respondent shall pay to the Official Liquidator the costs of the appeals
before the Division Bench of the High Court and of these appeals, quantified in
the sum of Rs.25000/-.