Judgment:
D. Murugesan, J.
1. The Original Side Appeal questions the Judgement and Decree dated 01.03.2007 made in C.A. No. 1327 of 2005 in C.P. No. 61 of 1992, whereby the learned single Judge, while rejecting the said application taken out by one Mr. P.N. Kumar, the Director of M/s. Sears Electronics Limited, seeking for a direction to the Official Liquidator to pay a sum of Rs. 2,05,806/- to the Director of Industries and Commerce, Government of Tamil Nadu, in respect of the allotment order under reference in No. 41179/EL3/87, dated 29.09.1987 and to get the sale deed in favour of M/s. Sears Electronics Limited, a company in liquidation, directed the assignment of the land comprised in Plot No. 2, in Dr. Vikram Sarabhai Instronics Estates, Thiruvanmiyur, Chennai-41 measuring an extent of 0.75 Acres to M/s. Sears Electronics Limited.
2. The dispute revolves on the following facts:
By way of an order of allotment No. 41179/EL3/87, dated 29.09.1987, a shed No. Type II 39, in Dr. Vikram Sarabhai Instronics Estate, Chennai, was allotted to SIPCOT and thereafter, the allotment was transferred to M/s. Sears Electronics Limited at a tentative cost of Rs. 3,21,375/- As the final cost was not fixed, the title continued to vest in the Department of Industries and Commerce. Since the company did not pay a sum of Rs. 2,05,806/- even towards tentative cost, in terms of para - 8 of the terms and conditions of the allotment, a show cause notice was issued to Mr. A.K. Bhattacharya, the Managing Director and Mr. P.N. Kumar, the Director of the company. In spite of such notice, the company defaulted payment and therefore, by exercising the conditions under para - 9 of the terms and conditions of the agreement, action was taken to cancel the hire purchase agreement.
3. In the mean time, the company entered into a joint venture agreement with M/s. Electronics Corporation of Tamil Nadu, Government of Tamil Nadu Undertaking and though it was doing well till 1992, in view of the slash in the business due to competition and introduction of colour televisions in the market, they could not carry on their business thereafter. One of the creditors of the company by name M/s. Elcompca Electronics Industries Private Limited filed a company petition for winding up of the company, since the company was not in a position to settle their claim and winding up order was passed on 26.11.1993 in C.P. No. 61 of 1992. The Official Liquidator also took charge of the property and assets of the company, which are all situate in Madras and Mumbai.
4. In the above circumstances, the Director of the Company by name Mr. P.N. Kumar, approached the Company Court by filing company application in C.A. No. 1327 of 2005 in C.P. No. 61 of 1992 seeking for a direction to the Official Liquidator to pay a sum of Rs. 2,05,806/- to the Director Industries and Commerce in respect of the allotment order No. 41179/EL3/87, dated 29.09.1987 and to get the sale deed in favour of M/s. Sears Electronics Limited, the company in liquidation, represented by the Official Liquidator. The said application was purportedly taken under Order XIV, Rule 8 of the Original Side Rules, r/w Rule 9 of The Companies (Court) Rules, 1959. By the order under appeal, the learned single Judge found that in as much as the company had defaulted and notice dated 09.03.2005 was issued citing Clause 8 of the hire purchase agreement, calling upon the company to show cause, why the allotment should not be cancelled forfeiting the earnest money deposit and though by letter dated 18.03.2005, the 1st respondent herein had communicated to the Official Liquidator for payment of Rs. 2,05,806/- which was due and payable to the department by the company, such amount was not paid, found no ground to accept the prayer in the application to issue any direction to the Official Liquidator to pay the said sum and get the sale deed in favour of the company in respect of the shed. The company has not preferred any appeal questioning the said order and that portin of the order has become final.
5. The controversy in this appeal is that the learned Judge while dismissing the application, had directed the Director of the Industries and Commerce to assign the vacant land measuring an extent 0.75 Acres, which was allotted to the very same Company by a separate allotment order dated 09.10.1985. Aggrieved by the said Order, the present appeal is directed at the instance of the Director of Industries and Commerce.
6. The facts leading to the allotment dated 09.10.1985 are as follows:
A vacant land measuring an extent of 0.75 Acres in Plot No. 2, in Dr. Vikram Sarabai Instronics Estates, Chennai was originally allotted to M/s. Happy House (TV) Manufacturing Division, Madras by fixing a tentative cost of Rs. 60,000/- per acre vide allotment order No. 190532/EE1/84-2, dated 09.10.1985. Thereafter, the name of the company was changed to M/s.Sears Electronics Limited on 02.02.1987. Initially the company had paid the tentative cost amounting to Rs. 22,500/-. There is no dispute that thereafter the company has paid the entire tentative cost of Rs. 60,000/-. However, neither regular allotment order was made nor the sale deed was executed, as the department had not finalised the final cost. In the mean time, the company went into Liquidation and winding up order was passed by the Company Court on 26.11.1993.
7. In the above circumstances, the appellant had approached this Court questioning the Judgement and Decree passed by the learned single Judge in directing the Department of Commerce and Industries to assign the said land to the Company in liquidation.
8. Mr. V. Veeraraghavan, learned Additional Advocate General, appearing for the appellant had extensively taken us to the allotment order dated 09.10.1985, the deed of assignment dated 05.02.1998; and various correspondences. He would submit that while the land in question was allotted to the Company, it was allotted only for the sole purpose for starting Industry of the Company. In Clause 7 of the order of allotment, it was directed that construction of the superstructure of the building should be commenced within 6 months from the date of taking possession of the plot, after getting the technical approval of the building and plan from the Office. It was also directed that in the event, failure to comply with any of the conditions will result in cancellation of the allotment order and resumption of the plot by the Department without further notice and the earnest money deposit and the initial payment will also be forfeited to the Department. Pursuant to the allotment order, a deed of assigned dated 05.02.1988 was also entered into between the company and the department. As per the terms and conditions under Clause 1, set forth in the deed of assignment, the assignee shall not use the plot for any purpose, other than the purpose for which it was assigned. Clause 11 of the deed stipulates that the assignee shall not let out the plot or any portion thereof without the prior permission of the Director. Clause 12 contemplates that the assignee shall not without the previous sanction of the Director transfer the whole or any part of his interest in the said plot or in any superstructure constructed thereon or part thereof with the possession of the said plot or superstructure or any portion thereon, while Clause 14 contemplates that the Government is empowered to cancel the assignment, in case of violation of the terms and condition. As the company is now in liquidation, it cannot run the industry. Therefore, the sale of the plot will be contrary to the terms and conditions of the allotment. He would further submit that the final cost could not be arrived at and the sale deed could not be executed in favour of the Company, in view of the fact that the Government issued G.O.Ms. No. 27, Small Industries (SIE-2) Department, dated 17.04.1995. By that order, the Government, while accepting the conversion of rental basis to hire purchase basis in respect of sheds, it directed the payment of the final cost of the land with a notional increase of 10% p.a. in respective category A and B areas from the actual date of transfer. The Government order was passed keeping the repeated requests of the lessees, who were in occupation of the sheds on rental basis to sell the sheds on hire purchase agreement basis. This order was questioned before this Court in W.P. Nos. 17253 of 1997 and 2856 of 1997 and as such the department was under impression that it should wait for the out come of the writ petitions. Therefore, the department had not finalised the final cost. The above writ petitions came to be allowed on 14.03.2001 holding that fixing of notional price is arbitrary. The above said judgment was taken on appeal in W.A.No.1042 and 1043 of 2001 and the same were dismissed on 18.01.2002. Only under the above said circumstances, the final cost was not arrived and as the company in the mean time, went into liquidation on 26.11.1993, the sale deed could not be executed in favour of the company. He would also submit that in any event, the Company cannot take advantage of the said Government Order as it stands entirely on different facts.
9. Further, the learned Addl. Advocate General would submit that in any case, as the company had been wound up, it cannot utilize the land, the purpose for which the land was assigned. The Company also cannot be allowed to utilize the land for any other purpose. Therefore, the department cannot be compelled to assign the land in favour of the company. He would also submit that in any case, there is a serious dispute, as to whether the company would be entitled to sale deed in respect of the land that was assigned in favour of the company, when no final cost was fixed and the company has paid only the tentative cost. The relief of the direction issued by the learned single Judge is beyond the scope of the petition. According to him, the company had approached the company court, only in respect the shed which was allotted in a separate allotment order, dated 29.09.1987 and the learned single Judge had dealt with the issue in regard to the allotment of the vacant land measuring an extent of 0.75 Acres, made in favour of the Company by a separate order of allotment dated 09.10.1985. The issue as to whether the company is entitled to the sale deed in respect of the said plot was not the subject matter in the company application and therefore, the said direction is liable to be set aside.
10. Mr. Sriram Panchu, learned senior Counsel appearing for the first respondent would on the other hand submit that in as much as the company had paid the entire tentative cost, merely because the final cost was not arrived and the sale deed was not executed, the right of the company to have a sale deed, cannot be defeated. He would further submit that as the delay in executing the sale deed was only on the part of the department, the said delay cannot be put against the company. He would also submit that after the allotment was made an extent of 21000 square feet of building was constructed on the land and in case, the sale deed was executed, the land could be sold and out of the sale proceeds there is a possibility of revival of the company. It is not the case of the department, that the company had breached the conditions of assignment and therefore, it is not entitled for a sale deed. Even when the applicant had approached the Court only in respect of the shed, by virtue of Rule 9 of the Companies (Court) Rules, the Company Court, in exercise of equitable jurisdiction would be justified in ordering the sale of the land which was allotted in a separate allotment order. The Court is empowered to mould the relief to render justice to the parties.
11. The respective submissions are carefully considered. From the rival contentions, it is apparent that there is a serious dispute, as to the entitlement of the company to seek for execution of sale deed, in respect of the vacant land in an extent of 0.75 Acres allotted by way of a separate order dated 09.10.1985. It is true that the company court would certainly entitled to pass orders in the interest of company in a winding up jurisdiction , as it is dealing with equitable jurisdiction. However, the question is, as to whether the Company Court would be justified to deal with an issue and pass orders thereon, by moulding the prayer, when the applicant himself has not approached the Court seeking for any such relief. In this regard, the affidavit of Mr. P.N. Kumar, filed in support of the application in C.A. No. 1327of 2005 is referable. Except stating that the company was also allotted a vacant land and an agreement was entered into on 12.05.1985 in respect of Plot No. 2, nothing is alleged as to the entitlement of the company to have the sale deed in respect of said land. The affidavit further proceeds only in respect of the allotment of shed, whereby though tentative costs for the shed was fixed in the allotment order dated 29.09.1987, for a sum of Rs. 3,21,375/-, the company could not pay Rs. 2,05,806/- and therefore, by the letter of the Director of Industries and Commerce, dated 17.03.2005, the company was called upon to pay the said sum. Therefore, in view of the subsequent order of winding up, an application was filed by the company, seeking for direction to the Official Liquidator to pay the said defaulted amount of Rs. 2,05,806/- to the Director of Industries and Commerce and get the sale deed in favour of the company. The company has not sought for any direction to the Official Liquidator for a direction to get the sale deed in respect of the land situate in Plot No. 2 measuring an extent of 0.75 Acres in Dr. Viram Sarabhai Estates, Chennai. As the entitlement of the company for the said plot, is in serious dispute and without any specific claim on the said plot, the company court would not have jurisdiction to pass such a direction, which are totally outside the scope of the grievance and the pleadings put forth by the Company before the Court. Equitable jurisdiction could be extended while passing orders, but the same should be in respect and in confirmity with the relief sought in the application. For example, in case, the company had approached the Court Seeking for a direction to the Official Liquidator to pay the defaulted amount in respect of the shed and had failed to sought for any relief to get the sale deed executed, certainly the Company Court could mould the relief and issue a further direction to the Official Liquidator to get the sale deed executed in respect of the shed, in favour of the Company, as otherwise the purpose of giving the direction in the application would not be fully served. Though equitable jurisdiction is available for the Company Court to exercise, it can not be extended beyond what is pleaded before the Court by the applicant himself. An argument was advanced by the Company that though the company had not put forth its claim in respect of the other plot, the counter affidavit bears the said particulars and therefore, the company court is justified in going through the counter affidavit and decide the issue.
12. We have carefully perused the counter affidavit filed by the Director of Industries and Commerce. As the issue of allotment of shed has come before this Court, only to put forth all the materials before the Court, without there being any suppression, the Director of Industries and Commerce has proceeded to make averments in the counter affidavit in respect of both the allotments made in favour of the company. Merely because the details as to the allotments are furnished in the counter affidavit that would not certainly give a cause either for the company to seek for the relief or the Company Court to order sale of the plot, which is not the subject matter in the application.
13. In this context, we may also usefully refer the relevant provisions of Rule 6 and 9 of The Companies (Court) Rules, 1959. Rule 6 of the Rules, reads as under:
Rule 6. Practice and Procedure of the court and Provisions of the Code to apply. - Save as provided by the Act or by these rules the practice and procedure of the Court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these rules. The Registrar may decline to accept any document which is presented otherwise than in accordance with these rules or the practice and procedure of the Court.
and Rule 9 of the Companies (Court) Rules, 1959, reads as under:
Rule 9. Inherent Powers of Court. - Nothing in these rules shall be deemed to limit or toherwise affect the inherent powers of the Court to gie such diretions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.
14. In terms of Rule 6 of the Companies (Court), Rules, 1959, the provisions of the Code of Civil Procedure, shall apply to all proceedings under the Companies Act and the rules made thereunder. Rule 9 confers an inherent power on the Company Court to give such direction or pass such order, as may be necessary for the ends of justice or to prevent abuse of the process of the Court. Both the above rules, if read together, would indicate that the inherent powers of the Company Court could be exercised in the manner provided under Section 151 of the Code of Civil Procedure except, in case, where the Companies Act and the Companies (Court) Rules provided otherwise. The provisions of Civil Procedure Code is also applicable for the Company Court to invoke, wherever it is necessary, particularly in dealing with application with specific prayer and the Civil Court will have no jurisdiction to grant relief other than what is asked for.
15. Keeping the above rules in mind, if we approach the issue, it would be apparent that unless a specific application seeking for an order of assignment of a land measuring an extent of 0.75 Acres situate in Plot No. 2, Dr. Vikram Sarabai Electronics Estate, Madras 600041, which was allotted on 09.10.1985 by way of an order of allotment, is filed in terms of the provisions under Rule 9 of the Companies (Court) Rules, 1959, any direction issued for either such assignment or execution of such sale deed cannot be brought under the provisions of Rule 9 of the Companies (Court) Rules, 1959 and the inherent power to give directions and pass orders cannot be extended to such relief.
16. That apart, such direction was issued without appreciation of the rival contentions particularly, without deciding the entitlement of the company as to the right to have a sale deed in respect of such property in the wake of the objections raised by the Department of Industries and Commerce. Therefore, on this ground also the direction in question is unsustainable.
17. For the reasons stated above, the portion of the order under appeal whereby a direction has been issued to the appellant department to assign the land sitaute in Plot No. 2, in Dr. Vikram Sarabhai Instronics Estates, Thiruvanmiyur, Chennai-41 measuring an extent of 0.75 Acres to M/s. Sears Electronics Limited, is set aside. However, it is made clear that this order shall not stand in the way of the Official Liquidator to workout the remedy in respect of the land in question in accordance with law. The Original Side Appeal stands allowed. No costs. Consequently, connected miscellaneous petition is closed.