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RE-IN THE MATTER OF COTINENTAL TEXTILES MILLS LTD. vs …

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on : 30th January 2024
Judgment pronounced on: 01st February 2024
+ CO.PET. 188/1999
RE-IN THE MATTER OF COTINENTAL TEXTILES MILLS
LTD. ….. Petitioner
Through:
versus
… ….. Respondent
Through: Ms. Ruchi Sindhwani, Sr.
Standing Counsel with Ms.
Megha Bharara, Advocate for
Official Liquidator.
Mr. Ajay Digpaul, CGSC with
Mr. Kamal Digpaul & Ms.
Ishita Pathak, Advocates.
Mr. Jai Sahai Endlaw, Mr. Shiv
Mangal Sharma, Mr. Shashank
Khurana, Ms. Sonali Gaur &
Mr. Santosh Kumar, Advs. for
applicant.
CORAM:
HON’BLE MR. JUSTICE DHARMESH SHARMA
J U D G M E N T
CO.APPL. 850/2023

1. This application dated 06.11.2023 is moved on behalf of the
applicant/M/s. Jupiter Laminators Pvt. Ltd. seeking certain directions
from this Court with regard to the property purchased in an e-auction
which belonged to the respondent company (in liquidation).
2. Notice of the application has not been served upon the Official
Liquidator. However, a copy of the same is directed to be supplied to
the learned Senior Standing Counsel appearing for Official Liquidator.
Reply to the same is not required.

3. Having heard the learned counsel for the applicant along with
the learned Senior Standing Counsel for the Official Liquidator and on
upon perusal of the record, I find that the present application is bereft
of any merits.
4. Suffice to state that the applicant is the successful bidder,
having purchased the property of the respondent company (in
liquidation) located at Ahmadabad, in the e-auction held by the
Official Liquidator on 23.06.2023 and EMD1 of 10% of the sale price
was deposited by 26.06.2023. This Court, vide order dated 17.08.2023
inter alia dismissed the objections filed by the ex-director of the
respondent company (in liquidation), pertaining to the revised market
value attached to the property; and the sale in favour of the applicant
company was confirmed.
5. It is also an admitted fact that 90% of the balance amount of the
sale consideration has since been deposited by the applicant company
with the Official Liquidator. In the said backdrop, the applicant
approached this Court raising a grievance that certain portions of the
property have come to be unauthorisedly occupied by some ex-
employees/workmen of the company (in liquidation) as also lamenting
the fact that certain parts of the property have since been encroached
upon by trespassers. Thus, a relief is sought from this Court in the
nature of directions to the police at Ahmadabad to take appropriate
action against the unauthorised occupants/trespassers in accordance
with law.

1 Earnest Money Deposit

6. Learned counsel for the applicant alluded to order dated
26.07.2023 passed by this Court, whereby the submissions advanced
in connection with the aforesaid aspects of unauthorized occupation
and encroachment were considered and inter alia certain directions
were passed whereby a Local Commissioner was appointed and was
directed to visit the property and submit a detailed report entailing the
following aspects:-

“6. … i) The details of the persons who are in possession of the
various portions of this land.
ii) The manner in which such persons may have come into
possession of any portion of the lands falling within the subject
property.
iii) If there is any security agency that is deployed in the said land
and also who has engaged the said security agency.
iv) If there is any portion of the land that is in occupation of any of
the ex-directors.”

7. This application is vehemently opposed by the learned Senior
Standing Counsel for the Official Liquidator and attention of this
Court is drawn to a report filed by the Official Liquidator bearing
OLR No. 55/2023 dated 26.05.2023, which inter alia brings to the
fore the status of unauthorized occupation and encroachment by third
parties on the property in question. It is fervently urged that the order
dated 26.05.2023 appointing Local Commissioner, was only passed so
as to verify the aspect of unauthorized occupation and trespassing on
the property of the respondent company (in liquidation) and nothing
further.
8. Without further ado, I find merit in the submissions advanced
by learned Senior Standing Counsel for the Official Liquidator that
there was no concealment about the status of the property in question

on the part of the official liquidator. The property was auctioned on an
„as is where is and whatever there is basis’ and before the e-auction
the applicant company had sufficient time and opportunity to ascertain
the status of unauthorized occupants and/or trespassers and it is for
that reason that the reserved price of the property in question was
lowered and possession of the same was delivered to the applicant on
30.10.2023.
9. It is evident from the record that learned counsel for the
applicant was very much present on each date of hearing, particularly
on 26.07.2023 as well as 17.08.2023, and now the applicant cannot
turn around and seek directions from this Court so as to direct the
Official Liquidator or for that matter the Police to take action for
removal of unauthorized occupants and/or encroachers, in terms of the
provisions of Section 452 of the Companies Act, 20132.
10. Learned Senior Standing Counsel for the Official Liquidator in
this regard has referred to the decision of this Court vide order dated
08.05.2012 in CO.PET.539/1998 tilted „M/s. Tata Iron and Steel Co.
Ltd. v. M/s. Jhalani Tools India Ltd.”, wherein in a somewhat similar
set of circumstances as prevailing in the instant matter, it was held that
where the land has been auctioned and purchased on an „as is where is
and whatever there is basis”, it was not the duty of the Official
Liquidator to initiate action against the alleged unauthorised
occupants/trespassers in the property in question.
11. To sum up, when the auction purchaser had purchased the
property in question with “open eyes” and with a full disclosure of all

2 Section 630 of Companies Act, 1956

relevant facts on the part of the Official Liquidator, this Court is not
inclined to pass any directions in the present winding up proceedings
for removal of the alleged unauthorized occupants/trespassers.
12. The present application is dismissed, thereby providing that the
applicant company shall be at liberty to pursue remedies as per the
process of law and the delay, if any, may be considered for
condonation as per law by the appropriate forum.

DHARMESH SHARMA, J.
FEBRUARY 01, 2024
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