Calcutta High Court
Om Prakash Bhartia vs The Official Liquidator on 18 July, 2025
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
In The High Court at Calcutta
Original Jurisdiction
Original Side
The Hon'ble Justice Sabyasachi Bhattacharyya
C.A. No.10 of 2024
In
C.P. No.55 of 1985
Fibre Processors Private Limited (in Liquidation)
And
Om Prakash Bhartia
VS
The Official Liquidator
For the applicant : Mr. Ranjan Bachawat, Sr. Adv.,
in CA/10/2024 Mr. Anuj Singh,
Mr. Sourojit Dasgupta,
Mr. Sagnik Bose
Mr. Giridhar Dhelia,
Mr. Vidhu Upadhyay
Mr. Yogesh Kr. Sharma .... Advocates
For the O/L : Mr. Deepak Kumar Singh
Ms. Harshita Singh
Mr. Anubhav Singh... Advocates.
For the applicant : Mr. Jishnu Saha, Sr. Adv.,
in CA/9/2024 Mr. U. S. Menon,
Mr. Zeeshan Haque
Mr. Abhirup Chakraborty ... Advocates
Heard and reserved on : 11.07.2025
Judgment on : 18.07.2025
Sabyasachi Bhattacharyya, J:-
1.
The present application has been filed for recall of an Order dated
September 5, 2024, allowing C.A. No.03 of 2002 (Old C.A. No.507 of
2002) in connection with C.P. No.55 of 1985, thereby releasing the
property-in-question, situated in Gurgaon, Haryana, in favour of the
Disclaimer Applicant (hereinafter referred to as “the DA”) therein.
2. Learned senior counsel appearing for the recall applicant contends
that the said order was passed in the absence of the present
applicant. Although admitting that a notice was recorded in the order
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under recall to have been served on the learned advocate for the
applicant, it is submitted that the said advocate had shifted his law
practice to Rajasthan High Court, Jaipur Bench since the month of
May, 2023. Hence, in effect, the present applicant did not have notice
of the said proceedings.
3. Secondly, it is argued that the order under recall ought to be set aside
on the ground of suppression of material facts by the DA. By an order
dated August 14, 2987 passed in the winding up proceeding, the
Company Court had, inter alia, directed the DA, namely M/s. East
India Cotton Manufacturing Company Limited, to complete sale of the
subject-property in favour of the Company (in Liquidation) pursuant
to an agreement for sale dated September 29, 1980 entered into
between DA and the Company (in Liquidation).
4. The Official Liquidator (O/L) filed an application in the year, 1989 for
implementation of the said order, alternatively for leave to sue for
specific performance of such agreement, which was, and still is,
pending. Furthermore, full consideration for the proposed sale was
paid in terms of the agreement by the Company (in Liquidation). Such
amount was not directed to be returned by the order under recall.
5. Thirdly, by dint of the existence of the said agreement and possession
having been handed over to the Company, the provisions of Section
53A of the Transfer of Property Act are attracted, thereby precluding
any legal action from being taken by the DA against the Company (in
Liquidation).
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6. Such facts were completely suppressed, it is alleged, while obtaining
the order under recall.
7. The present applicant, being a contributory, has vital interest in the
valuable assets of the Company (in Liquidation) and, as such, the
present application, it is submitted, is very much maintainable at its
instance.
8. Learned senior counsel for the DA, in reply, contends that Mr. Saket
Sharma, the learned advocate appearing for the present applicant,
had not only received a copy of the disclaimer application but had also
received other notices and appeared on behalf of the DA in several
proceedings much after May, 2023, when he is alleged to have shifted
practice to Rajasthan. Learned senior counsel relies on several orders
where the name of Mr. Saket Sharma was recorded to be appearing on
behalf of the applicant post May, 2023.
9. Secondly, it is argued that the facts which were not disclosed or
considered by the Court while passing the order under recall were not
material for the adjudication of the disclaimer application.
10. In the affidavit of the O/L, the O/L sought leave to sue for specific
performance, which application was never moved, nor any such suit
filed.
11. Moreover, the subject-property is an onerous liability of the Company
(in Liquidation), since huge amounts of rent/licence fees would have
to be paid by the company in the event it had retained possession, as
the title of the DA in the property was never displaced.
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12. It is next contended that the applicant’s application for
implementation of the 1987 order was dismissed for default in the
year 2018. Having taken no steps to restore the same, it does not lie
in the mouth of the appellant now to reiterate its claim by the present
recall application.
13. Learned senior counsel for the DA also seeks to draw the attention of
the court to the internal squabbles between the applicant and the DA
and a third company, which are apparently family companies.
14. It is reiterated that title in the property all along rested with the DA.
15. Learned senior counsel points out that the order dated August 14,
1987 was passed in chambers and was in the nature of a mere
direction for legal action to be taken for taking possession of the
property and could not be equated with a decree of specific
performance of the purported agreement. Furthermore, by the said
order, the purported agreement for sale was directed to be registered
prior to a sale deed being executed pursuant thereto. Such
registration never took place and, as such, the occasion to execute a
conveyance did not arise even in terms of the said order.
16. Furthermore, it is argued by the DA that the original of the agreement-
in-question has never come forth before the court.
17. It is next argued by learned senior counsel appearing for the DA that
since all the secured creditors of the Company (in Liquidation) have
already been paid up, no further liability remains of the contributory.
Thus, the applicant has no present interest in the assets of the
company.
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18. Upon hearing learned senior counsel for the parties, the court arrives
at the following findings:
(i) Powers of the Company Court in winding up proceedings.
19. The cardinal question which arises for consideration is as to the legal
effect of the direction passed by the Company Court vide order dated
August 14, 1987. By the said order, leave was given to the O/L to
incur the expenses out of the loan taken from the Government fund
for the purpose of registration for the agreement of sale in September
29, 1980 in favour of the Company (in Liquidation) with an additional
direction upon the DA to complete the sale forthwith. Thus, the
direction to complete sale was preceded by the leave to have the
agreement registered, which was never done, thereby taking away the
very premise of the direction. In view of the pre-condition of
registration of the sale agreement, it cannot be construed that the
order dated August 14, 1987 was in the nature of a decree for specific
performance of the contract.
20. The Company court, even if its powers are to be given the widest
amplitude, is bound by law and can at best subsume the jurisdiction
of a Civil Court with regard to assets of the company. Thus, the
Company Court could not do something which the Civil Court
otherwise could not, in law.
21. Even if possession of the property was to be taken by the Company (in
Liquidation) and sale was to be effected, a suit for specific
performance had to be instituted by the O/L on behalf of the company
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and the same had to reach a logical culmination for the sale to be
effected in accordance with law. In view of the O/L having kept the
application for leave pending for so long, the statutory limitation
period of three years from the date of first refusal has long expired
and, thus, the agreement for sale is no longer enforceable in law.
Hence, the direction of the Company Court cannot, from any
perspective, be equated to a specific performance decree.
22. Looking into the powers of the Company Court, Section 273(1)(e) of
the Companies Act, 2013 (for short, “the 2013 Act”), in its residuary
portion, confers power on the Company Court to pass “any other
order”. However, the principle of ejusdem generis applies and such
“any other order” cannot be on a higher footing than the previous
powers given to the said court, which relate to the interests of the
company in a restricted mode.
23. Section 180(a) of the 2013 Act empowers the Company Court, in a
winding up proceeding, to entertain any suit/proceeding by or against
a company which indicates that to assert the right of the company
available in civil law, the company had to file a proper suit which can
at best have been entertained by the Company Court. The Company
Court would step into the shoes of a Civil Court in such event and
could not have greater powers than the Civil Court de hors the law.
24. As discussed above, even the Civil Court could not pass a decree for
specific performance without a judgment on trial. Several factors
such as whether the company was ready and willing to perform its
part of the contract and other aspects of the matter such as whether
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the possession of the property was ever handed over “in terms of the
agreement” were to be looked into on evidence by the Company Court
even if such a suit was entertained.
25. In any event, since no suit for specific performance of the agreement
for sale has been filed and the statutory limitation period has already
expired in that regard, the agreement, even existent, would be
toothless at the juncture when the order under recall was passed and
could not be specifically enforced in law.
26. We cannot also overlook the fact that the order of August 14, 1987
was passed in chambers. It is the established practice in the Original
Side of this Court that chamber applications pertain to innocuous and
ancillary matters relating primarily to procedural aspects of a
suit/proceeding and cannot contemplate substantive orders
adjudicating conclusively the right, title and interest of parties, either
under contract or law.
27. Thus, the powers of the Company Court, if read in the light of the
Companies Act, 2013 as well as the Transfer of Property Act, 1882
and Section 9 of the Code of Civil Procedure, are restricted. As such,
the legal effect of the order dated August 14, 1987 could not operate
virtually as a decree of specific performance mandating the DA to
execute a conveyance, that too, without the pre-condition of
registration of the agreement, incorporated in the self-same order,
being complied with.
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(ii) The effect of Section 53A of the Transfer of Property Act.
28. As per the above discussion, in view of the expiry of the limitation
period, there is no subsisting enforceable contract in favour of the
Company (in Liquidation). Thus, the rigours of Section 53A of the
Transfer of Property Act, the pre-condition of which is the subsistence
of a valid agreement between the parties, cannot be applied.
29. Secondly, it is an admitted position that the Company (in Liquidation)
was a lessee in respect of a part of the property-in-question and a
licensee in respect of the other part. Thus, it was already in
possession of the property prior to the execution of the purported
agreement for sale. That being so, it was required to be proved by
evidence and adjudicated, as in a regular civil suit for specific
performance of contract, as to whether the possession could be
construed to have been handed over or continued in terms of the
agreement or continued by virtue of the prior jural relationship of the
lessor-lessee/licensor-licensee between the company and the DA.
30. Such an exercise was never undertaken by any court, simply because
no suit for specific performance of the contract was instituted at any
point of time, be it before the Company Court or a regular civil court.
31. Hence, it cannot be said that the bar under Section 53A of the
Transfer of Property Act is ex facie applicable. Thus, the reliance of
the recall applicant is misconceived.
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(iii) Effect of dismissal of the applicant’s application for
enforcement of the 1987 order.
32. It is an admitted position that as long back as in the year 2018, the
applicant’s own application for enforcement of the order dated August
14, 1987 by execution of a conveyance in favour of the company was
dismissed for default. Thus, the principle embodied in Order IX Rule
9 of the Code of Civil Procedure is attracted and the applicant is, even
otherwise, debarred from urging the same claim by way of the present
recall application. It is well-settled that what a person cannot directly
do in law, cannot be done indirectly as well.
(iv) Whether the order under recall was otherwise valid in law.
33. Section 333 of the Companies Act, 2013 provides for disclaimer
regarding properties of the company burdened with onerous
covenants. In absence of a valid and enforceable agreement in law, at
present juncture or at the juncture when the disclaimer order was
passed, the subject-property was an onerous burden on the Company
(in liquidation), since it had to clear off the huge amounts of arrears of
occupation charges in lieu of rent as well as licence fees for the
subject-property. Such burden could easily be construed to have
offset the consideration amount which was allegedly paid by the
Company (in Liquidation) to the DA. In any event, the fact of such
payment of full consideration amount had to be established by
evidence, in absence of which, it cannot be said that the Company (in
Liquidation) performed its part of the agreement.
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34. Even otherwise, in absence of enforcement of the purported agreement
for sale, the title remained all along with the DA. Thus, the DA had a
right in law for release of the property in its favour, since the property
was never the asset of the company.
(v) Locus standi of the applicant.
35. Section 2(26) of the 2013 Act defines a “contributory” as a person
liable to contribute towards assets of a company in the event the
company is wound up. Since the official stand of the O/L is that the
secured creditors have already been paid off substantially and there is
no further liability of the Company (in liquidation) in that regard, the
applicant does not have any further interest in the company by virtue
of being a contributory thereto. A contributory stands on the same
footing as a shareholder otherwise and does not, per se, have any right
or interest in the assets of a company. Thus, the applicant does not
have any locus standi to file the recall application on the grounds
stated therein.
(vi) Whether there has been any suppression of material fact.
36. In view of the above observations, none of the facts now pointed out,
mostly centred around the existence of a purported agreement of 1980
for sale of the property in favour of the Company (in Liquidation), were
relevant issued for the purpose of the disclaimer application. Hence,
there was no suppression of any “material” fact to justify the recall of
the order-in-question.
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(vii) Where any ground for recall has been established.
37. It is well-settled that no order passed in a concluded proceeding (here,
the disclaimer application of the DA) can be recalled unless there a
gross error on the part of the court itself tantamounting to application
of the principle of Actus Curiae Neminem Gravabit. Here, we do not
find any such case being made out.
38. Insofar as the recall application is concerned, no ground for review
under Order XLVII of the Code of Civil Procedure has also been made
out.
39. The primary ground for recall appears to be that the applicant did not
have notice of the disclaimer application at the relevant point of time.
40. The said ground is based on the specious plea that Mr. Saket Sharma,
the then Advocate for the applicant, had shifted practice to Rajasthan
High Court in the month of May, 2023, that is, prior to the disclaimer
order.
41. However, such contention has been patently belied by several orders
passed after May, 2023 in the Company Petition. Mr. Saket Sharma
appeared on certain occasions on behalf of the applicant, including on
June 24, 2024, and had accepted service on behalf of the applicant on
April 4, 2024, as well as of the notice regarding the pendency of the
disclaimer application. Hence, the ground of shifting practice is a
mere camouflage, in an attempt to reopen the disclaimer order on
merits, and cannot be accepted.
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42. Even otherwise, the shifting of practice of an advocate, who still holds
power to represent a party, cannot be a good ground for recall at all.
Order III Rule 3(1) of the Code clearly provides that the process served
on a recognized agent of a party shall be as effectual as if it was served
on the party itself in person, unless the court otherwise holds.
Admittedly, no change was taken from the said Mr. Saket Sharma,
Advocate, by the present recall applicant, at least till the date of
disposal of the disclaimer application by passing the order under
recall.
43. Thus, Mr. Saket Sharma was the recognized agent and advocate of the
applicant at the relevant point of time and had accepted notice of the
disclaimer application on behalf of the recall applicant. Hence, the
very premise of the recall application is flimsy and not tenable in the
eye of law.
CONCLUSION
44. In view of the above discussions, no ground for recall of the order
dated September 5, 2024 passed in C.A. No.03 of 2002 (Old C.A.
No.507 of 2002) in connection with C.P. No.55 of 1985 has been made
out.
45. Accordingly, C.A. No.10 of 2025 is dismissed on contest, thereby
sustaining the order sought to be recalled.
46. There will be no order as to costs.
47. Urgent certified server copies, if applied for, be issued to the parties
upon compliance of due formalities.
( Sabyasachi Bhattacharyya, J. )
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Later:-
After the above order is passed, learned counsel for the applicant
seeks an order of stay. However, since the recall application has been
dismissed, there is no scope of any stay order. Accordingly, such prayer is
refused.
(SABYASACHI BHATTACHARYYA, J.)
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