Respondent(s)
WITH Civil Appeal No _______of 2022 (Arising out of SLP (C)
No 4053 of 2018) Civil Appeal
No _______of 2022 (Arising out of SLP (C) No 3537 of 2018) Civil Appeal No _______of 2022 (Arising out of SLP (C) No 12724 of 2018)
J U D G M E N T Hrishikesh Roy, J. The above arrangements were preceded by the advertisement dated 29.6.2009 in the newspaper proposing slump sale of the loss making sugar mills of UPSSCL. The appellant submitted bid for Rs.13.94 crores for the Amroha Unit and as per Clause 12 of the Slump Sale Agreement dated 17.7.2010, all liabilities referred to in the said clause, accruing before the date of signing agreement were to be borne by the Seller and those of subsequent period, were to be borne by the Purchaser. The appellants representation was disposed of on 7.6.2016 by declaring that the purchaser is liable for the outstanding liabilities in respect of the sugar unit at Amroha upto 30.11.2011. Excluded Liabilities: “Excluded Liabilities shall mean Liabilities claimed till Signing Date which are being retained/settled by the Seller.
Clause 2.1 reads as under:- “2.1 In consideration of the Purchase Price to be paid by the Purchaser to the Seller in the manner set out herein and subject to the provisions of this Agreement, on the Closing Date, the Seller shall Transfer and deliver to the Purchaser and the Purchaser shall purchase, acquire and accept from the Seller, all right, title and interest of the Seller in and to the Unit, together with all Assets and Liabilities except Excluded Liabilities, as a going concern on an as is where is basis” collectively (“The Unit”)” 9.
Clause 2.6 reads as under:- “2.6 It is hereby further agreed between the parties that all contingent liabilities and legal cases pending in respect of the Unit, shall be transferred by the Seller to the Purchaser and the Purchaser is solely liable in respect of such contingent liabilities from the Signing Date and the Seller shall have no liabilities whatsoever in such respect. The following sub- clauses of Clause 12 being relevant are extracted :- “12.1 The purchaser shall save as herein expressly provided, bear, pay and discharge all assessments, rents, taxes, outgoing and impositions of whatsoever nature relating or pertaining to the operations and activities of the Unit pertaining to the period after the Signing Date. Clause 8(d) of the sale deed reads as under:- “8(d) All taxes, levies, cesses or any charges in respect to the Unit/Land, whether levied by a government authority, such as municipal or property tax that are due up to the date of Agreement (“Signing Date”) have been paid in full by seller. While rejecting the challenge of the appellant to the speaking order dated 7.6.2016, the High Court relied on clause 2.1 of the agreement and adverted to the expression “except excluded liabilities in the said clause” and held that it means liabilities claimed till signing date which are retained or settled by the Seller and since tax liabilities are not shown to be part of the “excluded liabilities” and since clause 2.4 provides for transfer of all contingent liabilities and legal cases in respect of the unit, to the purchaser, the recovery of such contingent liabilities after the signing date would only be from the purchaser and not from the seller.
The questions to be answered here are (1) whether the dues arising out of the operations and activities of the sugar unit prior to the date of acquisition is to be borne by the seller and whether subsisting dues arising out of transactions occurring on dates prior to the sale, can be characterized as contingent or conditional liability or is it an accrued liability which may be computed or discharged at a subsequent date; (2) Whether a purchaser of a sugar mill could be treated as a dealer or service provider as an entity liable for discharging dues even if they had not been acting as a dealer or service provider or otherwise as an entity on whom, liability could be fastened; (3) Whether the speaking order is vitiated, due to conflict of interest, a point which the impugned order does not indicate was argued before the high court. There is no dispute that the liability towards the duty in question for the Amroha unit are in respect of business transactions for the period anterior to the signing date of the Slump Sale Agreement. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” In the case in hand, the business liability for the Amroha unit had definitely arisen out of the operation of the unit during the period before the same was sold to the appellant, although the liability is to be quantified and discharged at a future date. The liability of the purchaser for the dues relating to activities and operations of the unit for the period anterior to 17.7.2010, could not therefore have been fastened on the appellant in view of the clear provisions made in clause 9 of the Sale Deed read with Clause 12.1 and 12.2 of the Slump Sale Agreement as both are specific in nature. UPSSCL and the buyer is made responsible only for dues in respect of post-sale transactions, we are unable to agree with the impugned order dated 1.11.2017 which erroneously in our view, held that the liabilities for the transactions made prior to the sale agreement, are to be borne by the purchaser. In such circumstances, the rejection of the representation of the appellant appears to be arbitrary and the speaking order could not therefore have been sustained by the High Court in the impugned judgment. JOSEPH]……………………………………….. J.
Case Title: WAVE INDUSTRIES PVT. LTD. Vs. STATE OF U.P. (2022 INSC 1281)
Case Number: C.A. No.-009272-009272 / 2022
