Case Note & Summary
The appeal arises from a judgment and order of a learned Single Judge in a company application that was moved by the Appellant for recalling an earlier order dated 12 February 2013 of the Company court. M/s. Rajen Textile Private Limited, a company now in liquidation, mortgaged its leasehold rights in respect of land at Barshi, Solapur in favour of Central Bank of India. The company went into liquidation on 27 June 1984. Central Bank of India, a secured creditor, obtained a decree in 1996. On 11 August 2000 and 11 June 2003, the erstwhile owners sold certain blocks of land to Vishwas Barbole, the Third Respondent. On 1 August 2003, the Official Liquidator sought sanction for sale of properties, but the Company Judge rejected the report on 16 December 2004 due to pending recovery proceedings before DRT. Subsequently, on 12 February 2013, the Company Court passed an order directing the Official Liquidator to take possession of the properties and sell them. The appellant, claiming to be an assignee of the leasehold rights from Central Bank of India, filed an application for recall of that order, which was dismissed by the learned Single Judge. The appellant then appealed to the Division Bench. The main legal issues were whether the learned Single Judge erred in dismissing the recall application and whether the appellant had acquired any leasehold rights. The appellant argued that the order of 12 February 2013 was passed without notice to him and in ignorance of the earlier order of 16 December 2004. The respondents contended that the appellant had no right in the property and that the order was correctly passed. The court analyzed that the appellant failed to produce any evidence of assignment of leasehold rights from Central Bank of India. The court also noted that the order of 12 February 2013 was passed without considering the earlier order of 16 December 2004 and without notice to the appellant. However, since the appellant could not establish any right, the appeal was dismissed. The court held that the Company Court has inherent jurisdiction to recall its orders, but on merits, the appellant had no right to the property.
Headnote
A) Company Law - Recall of Order - Jurisdiction of Company Court - The Company Court has inherent jurisdiction to recall its own orders in appropriate cases, especially when the order was obtained without notice to interested parties or based on misrepresentation. The court held that the order dated 12 February 2013 was passed without notice to the appellant and in ignorance of material facts, but the appellant failed to establish any right in the property. (Paras 1-10) B) Company Law - Leasehold Rights - Assignment - The appellant claimed to have acquired leasehold rights through an assignment from the Central Bank of India, but no evidence of such assignment was produced. The court held that mere pendency of proceedings before DRT does not confer any right on the appellant. (Paras 2-8) C) Company Law - Sale of Property in Liquidation - Official Liquidator - The Official Liquidator's report for sale of property was rejected by the Company Court in 2004 due to pending recovery proceedings before DRT. The subsequent order dated 12 February 2013, which directed the Official Liquidator to take possession, was recalled as it was passed without considering the earlier order and without notice to the appellant. (Paras 3-9)
Issue of Consideration
Whether the learned Single Judge erred in dismissing the application for recall of the order dated 12 February 2013, and whether the appellant had acquired any leasehold rights in the property of the company in liquidation.
Final Decision
The appeal is dismissed. The order of the learned Single Judge is upheld.
Law Points
- Recall of order
- Company court jurisdiction
- Leasehold rights
- Assignment of rights
- Official Liquidator
- Secured creditor
- Sale of property in liquidation
