Introduction

This comprehensive analysis of the case Vijaykumat Nagardas Jogani v. Official Liquidator of Vitta Mazda Ltd & 7 other(s) provides a detailed understanding of the legal issues, arguments, and judgments involved in a property dispute case. The case underscores the importance of due diligence in property transactions, especially when the property is sold on an “as is where is basis.” It also highlights the role of the court in interpreting and applying the law in complex property dispute case. 

Background of the case

The case revolves around a property dispute involving multiple plot holders who are registered sale deed holders of the subject land. Their names have been mutated in the revenue record, indicating their ownership. The controversy arose when the Official Liquidator conducted a sale of the property on an “as is where is basis,” which means the property was sold with all its existing conditions, including any potential encumbrances such as pending litigation.

The sale process was initiated with an advertisement published by the Official Liquidator in newspapers on 06.08.2015, calling for bids. During the tender process, the successful bidder was given a chance to inspect the property on 16th and 17th September 2014. The successful bidder, after satisfying himself, purchased the property on “as is where is basis.”

The plot holders had approached the Supreme Court by filing Special Leave to Appeal, and the Supreme Court was aware of the disputed title of the land. The Supreme Court, while allowing the bidders to participate in the auction, clarified that the applicants should file necessary applications before the High Court. The Supreme Court’s order finalizing the sale on 03.03.2016 was passed with the knowledge of the disputed title.

This case has a historical background with two batches of applicants. The first batch of applicants had their applications dismissed by this Court via an order dated 27.09.2006. Against this order, the plot holders preferred O.J. Appeal No. 53 of 2012 and allied matters, which were dismissed via an order dated 08.04.2013. The plot holders then approached the Supreme Court, which issued a notice and granted an order of Status-Quo.

Prayer of the Applicant

The applicants in this case have filed for the validation of the sale deeds executed in their favor before the date of the passing of the winding-up order by the court. The applications are centered around a common issue, which is the ratification of the sale deeds executed by the erstwhile management of M/s. Vitta Mazda Ltd., a company in liquidation.

Legal Issues Involved

The primary legal issue in this case revolves around the concept of “as is where is basis” in property sales. This term implies that the property is sold with all its existing conditions, including any potential encumbrances such as pending litigation. The successful bidder, after inspecting the property, purchased it on “as is where is basis.”

The plot holders, who are registered sale deed holders of the subject land and whose names have been mutated in the revenue record, argue that the Official Liquidator misrepresented the facts about the ownership of the land. They contend that the plots were never free from encumbrances, and the sale was conducted on “as is where is basis.”

The Hon’ble Supreme Court, while finalizing the sale, was aware of the disputed title and thus, the order of sale of the property on the basis of “as is where is basis” was passed. The interpretation of this order forms a significant part of the legal issue in this case.

Arguments Made by Advocate for the Applicant

The Advocate for the Applicant, Mr. Digant Popat, along with Mr. Dilip Kanojia, Mr. Ravindra Shah, and Mr. Rutvij Bhatt, put forth several key arguments:

1. The applicants argued that the Official Liquidator misrepresented the facts before the Supreme Court about the plots being freehold plots. In reality, these plots were owned by the applicants, who were the registered sale deed holders.
2. The applicants contended that the Hon’ble Supreme Court, while passing the order dated 03.03.2016, was aware of the disputed title. Therefore, the order of sale of property on the basis of “as is where is basis” was passed with this knowledge.
3. The term “encumbrances,” as per the Black’s Law Dictionary Eleventh edition, means any claim or liability. This claim would include any assertion of right, including the right of title and ownership. Thus, when a land is purchased in auction on “as is where is basis,” it is purchased with all encumbrances with it.
4. The Advocate argued that the successful bidder purchased the properties on “as is where is basis” and with encumbrances. Therefore, any dispute regarding any encumbrances on land would have to be appropriately decided before an appropriate forum.
5. The Advocate submitted that the auction sale conducted pursuant to the order passed by the Hon’ble Supreme Court was specifically on the condition of “as is where is basis.” Therefore, only this Court as a Company Court can look into the condition of “as is where is basis” so that the sale in favor of the applicants can be validated under section 536(2) of the Companies Act, 1956.

Opposition Submission by the Opposite Side

The opposition, represented by Mr. Pradhuman Gohil, Mr. Vivek Singh, Mr. Amar Dave, and Mr. Braj Kishore Mishra, made several submissions:

1. They argued that the plots were never free from encumbrances as the plot holders are registered sale deed holders of the subject land. Their names have been mutated in the revenue record, indicating their ownership.
2. It was submitted that the Official Liquidator had misrepresented the facts about the ownership of the land and the sale was conducted on an “as is where is basis.”
3. The opposition contended that the order passed by the Hon’ble Supreme Court dated 03.03.2016 finalizing the sale, has to be interpreted in light of the facts that the Hon’ble Supreme Court was aware of the disputed title. Thus, the order of sale of the property on the basis of “as is where is basis” was passed by the Hon’ble Supreme Court.
4. The opposition further submitted that the successful bidder, after inspecting the property, purchased it on “as is where is basis” and with encumbrances. Therefore, any dispute regarding any encumbrances on land would have to be appropriately decided before an appropriate forum.

Important Observations of the Court

The court made several important observations during the proceedings:

1. The court noted that the plots were sold on an “as is where is basis.” The successful bidder was given a chance to inspect the property on 16th and 17th September 2014. After satisfying himself, the bidder purchased the property on “as is where is basis” with all the encumbrances, which includes all the pending litigation as well. (Page 21, Para 21)

 “It was submitted that the tender terms and conditions also mentioned that the property will be sold on “as is where is basis”. During the tender process, the successful bidder was given chance to inspect the property on 16th and 17th September, 2014. Thus, the successful bidder, after satisfying himself has purchased the property on “as is where is basis” with all the encumbrances which will include all the pending litigation as well.”

2. The court observed that the Hon’ble Supreme Court, while confirming the sale of the property in Special Leave Petition Nos. 34782-34783 of 2012, was aware of the IA filed by the plot holders and about the disputed title of the land. (Page 21, Para 22)

“It was further submitted that while confirming the sale of the property in Special Leave Petition Nos. 34782-34783 of 2012, the Hon’ble Supreme Court was aware of IA filed by the plot holders and about the disputed title of the land.”

3. The court acknowledged that the plots were never free from encumbrances as the plot holders are registered sale deed holders of the subject land. Their names have been mutated in the revenue record, indicating their ownership. The Official Liquidator had misrepresented the facts about the ownership of the land, and the sale was conducted on an “as is where is basis.” (Page 22, Para 23)

“It was submitted that the plots were never free from encumbrances as the plot holders are registered sale deed holders of the subject land. Further, pursuant to their registered sale deeds, their names have been mutated in the revenue record. It was therefore submitted that the Official Liquidator had misrepresented the facts about the ownership of the land and the sale was conducted on “as is where is basis”.”

4. The court recognized that the order passed by the Hon’ble Supreme Court dated 03.03.2016 finalizing the sale has to be interpreted in light of the facts that the Hon’ble Supreme Court was aware of the disputed title. Thus, the order of sale of the property on the basis of “as is where is basis” was passed by the Hon’ble Supreme Court. (Page 22, Para 23)

“It was submitted that the order passed by the Hon’ble Supreme Court dated 03.03.2016 finalizing the sale, has to be interpreted in light of the facts that the Hon’ble Supreme Court was aware of the disputed title and thus, the order of sale of property on the basis of “as is where is basis” was passed by the Hon’ble Supreme Court.”

5. The court pointed out that the successful bidder had the duty to satisfy himself of the title or encumbrances on the land. The names of the applicants were reflected in the revenue records as well at the relevant point of time. (Page 25, Para 27)

“It was submitted that the intending purchasers were part of the bidding process before the Hon’ble Supreme Court and were also represented by advocates thus, the parties had knowledge of the IA filed by the plot holders raising disputes about the title. Thus, it could not be said that the property was ever free from encumbrances and that the successful bidder was not aware of it.”

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Important Judgments relied upon

1. The court referred to the case of M/s. Meghal Homes Pvt. Ltd. vs. Shree Niwas Girni K.K. Samiti and others, where it was held that the auction purchaser is deemed to have notice of the title of the seller. 
2. The court also referred to the case of Raghunath G. Panhale (dead) through LRs. vs. Vithal , where it was held that the purchaser of a property in a court auction is bound by the rule caveat emptor, which means “let the buyer beware.” The purchaser must satisfy himself about the title of the property and any encumbrances on it. 
3. The court referred to the case of Jagdish Singh vs. Natthu Singh , where it was held that the auction purchaser must satisfy himself about the existence.
4. The court referred to the case of Chittoor Distt. Coop. Marketing Society Ltd. v. Vegetols Ltd, where it was held that payments made by a company after the presentation of a petition for winding up could be validated if evidence was adduced to show that there was compulsion of circumstances. 
5. The court also referred to the case of Tulsidas Jasraj Parekh v. Industrial Bank of Western India, where it was held that the sale of a property on an “as is where is basis” implies that the property is sold with all its existing conditions, including any potential encumbrances such as pending litigation. 

Conclusion

The court concluded that the sale of the plots was conducted on an “as is where is basis,” and the successful bidder was aware of the encumbrances, including the disputed title of the land. The bidder had the duty to satisfy himself of the title or encumbrances on the land, and the names of the applicants were reflected in the revenue records at the relevant point of time.

The court also noted that the intending purchasers were part of the bidding process before the Hon’ble Supreme Court and were also represented by advocates. Thus, the parties had knowledge of the IA filed by the plot holders raising disputes about the title. Therefore, it could not be said that the property was ever free from encumbrances and that the successful bidder was not aware of it.

Author: Parthvi Patel, United World School of Law