w w w . L a w y e r S e r v i c e s . i n



Official Liquidator M/s Rathi Alloys and Steel Ltd. v/s Rajasthan State Industrial Development and Investment Corporation Limited


Company & Directors' Information:- RAJASTHAN STATE INDUSTRIAL DEVELOPMENT AND INVESTMENT CORPORATION LTD [Active] CIN = U13100RJ1969SGC001263

Company & Directors' Information:- RAJASTHAN STATE INDUSTRIAL DEVELOPMENT AND INVESTMENT CORPORATION LTD [Active] CIN = L13100RJ1969SGC001263

Company & Directors' Information:- RAJASTHAN INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65993RJ1946PTC000378

Company & Directors' Information:- RATHI ALLOYS AND STEEL LIMITED [Under Liquidation] CIN = U27101RJ1996PLC011709

Company & Directors' Information:- RATHI INDUSTRIAL CORPORATION PRIVATE LIMITED [Active] CIN = U28112TN2006PTC059314

Company & Directors' Information:- M. S. A. STEEL & ALLOYS PRIVATE LIMITED [Active] CIN = U27310UP2008PTC035833

Company & Directors' Information:- F M STEEL ALLOYS PRIVATE LIMITED [Active] CIN = U27106PB2000PTC023910

Company & Directors' Information:- INDUSTRIAL ALLOYS (I) PVT. LTD. [Active] CIN = U27106WB1988PTC045060

Company & Directors' Information:- P R STEEL & ALLOYS PVT LTD [Active] CIN = U27109WB2006PTC109377

Company & Directors' Information:- INDUSTRIAL DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65990MH1941PTC003300

Company & Directors' Information:- K V DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65922MH1979PTC021155

Company & Directors' Information:- RAJASTHAN ALLOYS AND STEEL PVT LTD [Active] CIN = U27101RJ1972PTC001461

Company & Directors' Information:- V. S. ALLOYS & STEEL PRIVATE LIMITED [Active] CIN = U27100MP2009PTC021808

Company & Directors' Information:- S V STEEL AND ALLOYS PVT LTD [Active] CIN = U99999MH1973PTC016924

Company & Directors' Information:- R N B J INVESTMENT AND DEVELOPMENT PVT LTD [Strike Off] CIN = U65990MH1982PTC028451

Company & Directors' Information:- R B STEEL & ALLOYS (INDIA) PRIVATE LIMITED [Active] CIN = U27100KA2010PTC053048

Company & Directors' Information:- RAJASTHAN INDUSTRIAL CORPORATION PRIVATE LIMITED [Strike Off] CIN = U99999RJ1949PTC000737

Company & Directors' Information:- S P INVESTMENT AND DEVELOPMENT COMPANY PVT LTD [Strike Off] CIN = U67121ML1988PTC003133

Company & Directors' Information:- RAJASTHAN INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1942PTC011099

Company & Directors' Information:- RATHI ALLOYS AND STEEL LIMITED [Active] CIN = U27106DL1970PLC005289

    Company Application No. 54 of 2004

    Decided On, 14 May 2010

    At, High Court of Rajasthan

    By, THE HONOURABLE MR. JUSTICE AJAY RASTOGI

    For the Applicant: BK Sharma, Advocate. For the Respondent: N.R. Choudhary, Advocate.



Judgment Text

Ajay Rastogi, J.

1. Instant company application has been filed U/s 446 (2)(a), (b) and (d) of Companies Act, 1956 ("Co. Act") read with R.9 of Companies (Court) Rules, 1959 ("Co. Court Rules") assailing three orders dt.26/04/1995 (Ann.A/5, A/6, and A/7) whereby respondent-RIICO cancelled the allotments of plots NO.A-463, A-464, A-465 as well as agricultural land admeasuring 62 bighas and 11 biswas situated at Matsya Industrial Area, Alwar, made to M/s. Rathi Alloys and Steel Ltd under lease agreements dt.03/07/91 (Ann.A/1) and dt. 22/04/88 (Ann.A/2) and dt. 07/07/1992 (Ann.A/3) because the lessee-Company failed to comply with conditions of lease deeds executed between the parties.

2. M/s Rathi Alloys and Steel Ltd ("Lessee-Co.") was allotted industrial plots No.A-463, A-464 and A-465 as well as agricultural land admeasuring 62 bighas and 11 biswas situated at Matsya Industrial Area, Alwar ("for short, "industrial plots") for setting up an industry under lease agreements dt.03/07/1991 (A-463), dt.22/04/88 (A-464 and 465) vide letters of allotment dt.18/06/93 and dt.07/07/92 ((Ann.A/3 and A/4).

3. However, vide order dt.24/08/2001 in Company Petition NO.36/2000; the Company Court passed winding up order of M/s Rathi Alloys and Steel Ltd (Co.- lessee to industrial plots in dispute) and the applicant Official Liquidator attached to the Court was appointed as provisional Liquidator to the Company and was further directed to take steps for taking possession of the Company in liquidation - pursuant to which, the applicant took possession of various assets including industrial plots in dispute (supra).

4. While allotting industrial plots (supra), it was specifically stipulated under terms and conditions of lease agreements executed between the parties that the lessee Company is required to start production within one year or extended period expiring on 13/06/92 for plot No.A-463 (condition NO.4 of lease deed executed on 03/07/91); and to start construction over plot Nos.A-464 and A-465 within six months of execution of lease or extended period expiring on 21/10/1988 under Cl.2(d) of lease deed executed on 22/04/88; and as regards plot of land (62 bighas and 11 biswas) allotted vide letter dt. 18/06/93 - possession whereof was handed over on 16/07/93, under condition NO.3 of allotment, the lessee company was required to start construction within 12 months of possession or extended period expiring on 15/07/94.

5. Since the lessee Co. in liquidation failed to comply with terms and conditions (supra) of the lease deed viz. despite possession of industrial plots (supra) having been handed over, the lessee Company failed to start production and construction within the periods stipulated under the lease deeds (supra), as such after notices being served; opportunity being afforded, and having taken note of material on record, respondent-RIICO cancelled allotments of industrial plots (supra) vide orders impugned (Ann.A/5 to A/7) - as a consequence whereof, respondent-RIICO ordered to reverse back possession of industrial plots (supra) and forfeited amount paid so far; and eviction proceedings in respect of industrial plots (supra) in dispute treating the lessee company as trespasser were initiated in the year 1996 before the Estate Officer (Court) RIICO Alwar, so as to take over possession whereof.

6. However, the lessee Company never questioned the cancellation impugned before any court of law. Before proceedings could be culminated, Winding up order was passed by this Court on 24/08/2001 in Company Petition NO.36/2000 - pursuant to which the applicant (OL) took over the possession of industrial plots in dispute. It appears that applicant (OL) sent letters dt. 19/02/2004 and 01/03/2004 to the Estate Officer that no further proceedings could be initiated against the lessee Company (in liquidation) without seeking prior permission of the Company Court as provided U/s 446 of Co. Act. At this stage, Co. Appl.-15/2004 was filed by respondent-RIICO seeking permission of the Court to continue with eviction proceedings despite the winding up order being passed on 24/08/2001 but after hearing the parties, Co-Appl.-15/2004 was disposed of vide order dt.03/11/2006 while observing ad infra:

'LANGUAGE'

In aforesaid background, instant Company application-54/2004 has been filed by applicant (OL of lessee Co., in liquidation) with the prayer to set aside orders of cancellation of industrial plots in dispute (supra) impugned herein.

7. After written statement was filed by respondent-RIICO, this Court framed following issues vide order dt.21/06/2006 -

"1. Whether the respondent could have legally passed the orders dated April 26, 1995 (Annexure A-5), Annexure A-6 and Annexure A-7) regarding plot Nos. A-463, A-464 and A-465 and the land measuring 62 bighas and 11 biswas of land mentioned in para 3 of the application?

Applicant

2. Whether the respondent was justified in cancelling the allotments of plot Nos. A-463, A-464 and A-465 and the allotment of 62 bighas and 11 biswas of land on the grounds mentioned in the cancellation orders dated April 26, 1995 (Annexure A-5, Annexure A-6 and Annexure A-7 respectively) ?

- Respondent

3. Whether the respondent was entitled to exercise any right to re-entry on plot Nos. A-463, A-464 and A-465 by passing orders dated April 26, 1995 (Annexure A-5, Annexure A-6 and Annexure A-7 respectively) in contravention of paras 3 (a) of the lease agreement dated July 3, 1991 (Annexure A/1) and the lease agreement dated April 22, 1988 (Annexure A/2) ?

- Respondent

4. Whether the respondent could not exercise any right re-entry upon the plot Nos.A-463, A-464 and A-465 without serving notice of 90 days upon creditors of the company in liquidation such as, IFCI, IDBI, ICICI and other Scheduled Banks ? - Applicant

5. Relief?

Affidavits were filed by respective parties but none has put cross examination thereto on the premise that documents placed on record alongwith application and written statement, were admitted by parties and in fact, there was no dispute as regards documentary evidence placed on record.

8. Only question for consideration is as to whether the applicant-OL is justified in assailing orders of cancellation impugned herein having been passed by respondent-RIICO on 26/04/95 much before the order 24/08/2001 for winding up the lessee Company was passed; and whether action of respondent-RIICO was arbitrary or in violation of terms and condition of lease agreements while allotments of industrial plots in dispute were being cancelled on 26/04/1995.

9. Counsel for applicant submits that respondent-RIICO cannot re-enter into industrial plots in dispute as the Company in liquidation had its creditors (IFCI, IDBI, ICICI and other Scheduled Banks), to whom no notice as contemplated under Cl.3 of lease agreements had been issued by respondent-RIICO - in absence whereof, the very order of cancellation of industrial plots in dispute is bad in law. Counsel further submits that as per Cl.3(h) of lease agreements (Ann.A/1 and A/2), if there was some dispute having arisen in regard to terms of lease deed, matter was required to be referred to concerned Collector, which respondent RIICO indisputably has failed to do; but has straight away proceeded to initiate eviction proceedings, which is otherwise not maintainable in view of Cl.3(b) of lease agreement as in terms of lease deed, proceedings could be initiated only before the Courts at Jaipur.

10. Counsel further submits that the order dt.26/04/1995 (Ann.A/7) pertaining to the land measuring 62 bighas and 11 biswas is also illegal and the terms and conditions of allotment letter as regards amount to be paid by Co. in liquidation to the RIICO had remained in dispute inasmuch as 30 days time as mentioned in allotment letter dt.18/06/1993 (Ann.A/3), besides onerous conditions whereof had never been treated by RIICO as of essence rather correspondence had continued between RIICO and ex-management of Co. in liquidation, which clearly depicts that justification was offered as regards non-compliance of Cl.2(d) of terms and conditions of lease deeds and in such circumstances the time was never the essence of the contract and the decision having been taken by RIICO to cancel allotments of industrial plots vide orders impugned is not legally sustainable.

11. Written statement to the instant application has been filed by the respondent-RIICO along with justification offered about orders of cancellation impugned herein. Counsel for respondent-RIICO submits that orders of cancellation impugned herein were passed on 26/04/1995 and the lessee-Co. in liquidation had never been aggrieved whereof and since the Company failed to hand over possession of the industrial plots in question, it was trespasser; as such eviction proceedings were initiated before Estate Officer, Alwar and before it could be finally culminated, the Company went in liquidation vide order dt.24/08/201; and obviously, the applicant (OL) being appointed as provisional Liquidator cannot question the orders of cancellation impugned herein at such a belated stage.

12. Counsel for respondent RIICO further submits that after the allotments of industrial plots in dispute being cancelled on 26/04/1995, these plots were not remained the property of the Company in liquidation; in such circumstances, in no way, the cancelled industrial plots in dispute can be treated as property of the applicant Co. in liquidation, and by virtue of winding up order dt. 24/08/01, the applicant claiming the industrial plots in dispute to be in the hands of the Co. in liquidation; and such proceedings U/s 446 of Co. Act. are not maintainable.

13. This Court has considered rival contentions advanced by Counsel for both the parties, and with their assistance, examined the material as well as the documentary evidence led on record.

14. As regards Issue Nos. 1 and 2 which are inter-related, the industrial plot No.A-463 at Matsya Industrial Area, Alwar was transferred to Co. in liquidation vide RIICO's letter dt.14/06/91 - pursuant to which lease deed was executed on 03/07/91 (Ann.A/1) while plots (A-464 and A-465) at Matsya Industrial Area, Alwar were allotted to Co. in liquidation vide RIICO's letter dt.27/06/85 - pursuant to which lease deed was executed on 22/04/1988; at the same time, plot of agricultural land measuring 62 bighas and 1 biswas at Matsya Industrial Area, Alwar was allotted to Co. in liquidation vide RIICO's letter dt.18/06/93 - possession whereof was handed over on 16/07/93. However, there was condition under Cl.2 (d) of lease deed dt. 03/07/91 and Cl.3 of transfer order of Plot NO.A-463, requiring the lessee-Company to start production within one year or extended period expiring on 13/06/92, which the lessee indisputably failed to comply with. Similarly as per condition No.2 (d) of lease deed executed on 22/04/88, lessee Company was required to start construction over plot Nos.A-464 and A-465 within six months of execution of lease deed or extended period expiring on 21/10/88, which too the lessee Co. failed to comply with. Similarly as per condition NO.3 of the allotment, lessee Company was required to start construction over the land admeasuring 62 bighas 11 biswas allotted vide letter dt. 18/03/93 within 12 months of the possession handed over on 16/07/93 or extended period expiring on 15/07/94, which too the lessee Co. failed to comply with. Accordingly, notices were issued from time to time. As regards Plot No.A-463, notices were issued on 17/09/92, 06/04/93, and 11/06/93 while in case of plot NOs.A-464 and A465, Eleven notices were issued in between 18/12/1990 to 09/02/1994 - details whereof is mentioned in order of cancellation dt. 26/04/1995 (Ex.A/6). As regards the land of 62 bighas and 11 biswas, show cause notice was issued on 27/09/94 before the orders of cancellation dt.26/04/95 were passed. However, since the lessee Company failed to comply with terms and conditions of lease deed and order of allotment (supra), after notices being served opportunity of hearing was afforded and taking note of their respective representations which were found to be not convincing, respondent-RIICO took the decision to cancel allotments of industrial plots in dispute vide orders (Ex.A/5, A/6, and A/7 respectively).

15. It is not the case of present applicant that the Company in liquidation had ever complied with terms and conditions of the lease agreements executed between the parties Thrust of its contention is that time was never the essence of contract and if at all, there was a dispute having arisen, matter could be referred to the Arbitrator (concerned Collector) in terms of lease agreements. In the opinion of this Court, submissions made on behalf of applicant are wholly without substance for the reason that as per terms and conditions of lease agreements executed between the parties, time was stipulated of 12 months and it was the essence of lease executed to start production/construction from the date of possession/permission of transfer of the industrial plots and/or the lease was made. Indisputably, industrial plot- A-463 was transferred vide letter dt. 14/06/91 while plots : A-464 and A-465 were transferred on 27/06/85 but as per Cl.2(d) of lease agreement the lessee had to start production/ construction within one year or the period stipulated under lease deed, which the lessee failed to comply with, as discussed (supra). There is no material adduced in evidence on record from which this Court may infer that the company in liquidation did comply with condition NO.3 and Cl.2 (d) of the lease agreements; viz. started construction or production over industrial plots in dispute; which the Company failed to comply, respondent -RIICO rightly took the decision to cancel allotments of industrial plots in dispute vide orders dt.26/04/1995 impugned herein. This Court does not find any illegality being committed by respondent-RIICO while passing the orders impugned herein. Accordingly, both the issue No.1 and 2 are decided against the applicant and in favour of respondent-RIICO.

16. As regards Issue No. 3, once orders of cancellation dt.26/04/1995 (Ex.A/5 to A/7) having been held to be justified while deciding issue Nos.1 and 2, it has been held that respondent-RIICO was justified in taking decision for cancellation of allotments made of industrial plots in dispute, respondent-RIICO was justified to take and initiate eviction proceedings for taking possession of industrial plots in dispute in accordance with law; and that apart, since the winding up order was passed by this Court on 24/08/2001, proceedings initiated in the year 1996 before Estate Officer Alwar for taking possession of the plots in question and re-entry therein, was certainly in their competence. Accordingly, issue NO.3 is decided in favour of respondent-RIICO.

17. As regards Issue No. 4, as per terms and conditions of lease agreements, indisputably there was a clause to call upon secured creditors before orders of cancellation impugned being passed, which clearly depict that a number of notices were issued to the company in liquidation and after affording reasonable opportunity of hearing, the decision was taken by respondent-RIICO while allotments of industrial plots in dispute being cancelled vide orders impugned; and if at all there could have any grievance of not affording opportunity to the secured creditors against the cancellation impugned, it could be raised by secured creditors but at least the applicant (OL) who is a provisional Liquidator in no manner can be said to be aggrieved against the order of cancellation impugned. Accordingly, issue NO.4 is decided against present applicant.

18. As regards relief, while disposing

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of Co.Appl-15/2004 filed by respondent-RIICO, this Court earlier observed that proceedings were initiated by RIICO before Estate Officer, Alwar for re-entry/restoration of possession over industrial plots in dispute - allotment whereof stood cancelled vide orders dt. 26/04/1995 impugned - taking note whereof, Co. Appl.-15/2004 was decided vide order dt. 03/11/2006 with the direction that proceedings shall be subject to final outcome of instant Co.Appl.-54/2004 which has been considered by this Court to be without substance vide present order, as a result whereof, respondent -RIICO can continue with proceedings initiated before Estate Officer in terms of order dt. 03/11/2006 passed in Co.Appl.-15/2004. But, looking to facts of instant case particularly the fact that despite cancellation made on 26/04/1995 vide orders impugned, which indisputably has not been challenged by ex-management of lessee-Co. now in liquidation, the eviction proceedings were initiated before the Estate Officer, much prior to winding up order of lessee company being passed on 24/08/2001, and this court has held that the action of the respondent-RIICO in passing the order of cancellation was justified, there appears to be no justification to continue with the proceedings any further before Estate Officer; and in order to avoid multiplicity of litigation; this Court would like to observe that once Co.-Appl.-54/2004 has been considered to be without substance; it will be appropriate to direct the applicant (OL) to hand over possession of industrial plots in dispute (supra) to the respondent-RIICO after making formalities in accordance with law. Ordered accordingly. With aforesaid directions, company application is hereby dismissed. No costs. Application dismissed.
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