judgement:
Appeal Nos.
636 37 of 1993 From the Judgment and Order dated 20.2.
1992 of the Calcutta High Court in Appeal No. 493 of 1.990.
Harish Salve and Indranil Ghosh for the Appellants.
P. Chidambarani.
Lahoty Ms. section Khazanchi, K.( '.
J. Heard the counsel for the parties.
Leave granted in both the S.L.Ps.
We shall first deal with the appeal arising from S.L.P.(c) No, 5377/92 1068 The appeal is directed against the order dated 4.3.1992 passed by a Division Bench of the Calcutta High Court modifying its earlier order of November 13, 1990.
The controversy in this appeal pertains to the terms of sale of the assets of a Company in liquidation.
A few facts are necessary to be stated to appreciate the controversy.
Neptune Paper Mills (N.P.M.) was directed to be wound up by the Company Court on August 4,1987.
The Official Liquidator took possession of the assets of the company under the orders of the Court.
N.P.M. had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India, I.C.I.C.I., W.B.I.D.C. and I.D.B.I. on security of its assets.
In view of the default committed by it in repayment, the financial institutions (F.Is.) recalled their loans in April, 1988 with the result all the loans in their entirety became due at once.
On August 8, 1988 the F.Is. were granted leave to file a suit under Section 446 of the .
A suit was filed by them in September, 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too.
In January 1990, the company court directed the sale of the assets of the company in liquidation.
Before making the said order the court had obtained a valuation of the said assets.
The valuation was at Rs. 4 crores.
Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores.
For one or the other reason, no offer was accepted and sale notice published again.
It would be appropriate at this stage to notice the terms of the sale notice, which led to the sale in favour of the respondent, Buxa Holdings Limited since re named as Kanoi Agrotech Limited (hereinafter referred to as "Buxa").
The Sale notice published in the newspaper "The Hindu ' dated 10th April, 1990 reads as follows: "PUBLIC NOTICES Sale Notice Sale Notice Sale Notice In the matter of Neptune Paper Mills Ltd (in Liquidation) That in terms of the order of the Hon 'ble High Court, Calcutta dated 3.4.90, take notice the sale of the above 1069 named company as going concern and "as is where is and whatever there is basis" will be held at 2.00 pm on 17.4.90 in the open Court of the Hon 'ble Company Judge, High Court, Calcutta.
The bids of such sale will be started from 6.90 crores.
The successful bidders must deposit 10% of his/their bids in the Court at the time of sale.
The balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble Court, Calcutta i.e., deferred payments of instalments will be considered.
The Purchaser shall have to enter into an agreement and or memorandum of understanding with the employees ' union in the same line with which has already been entered into with one of the bidders in court.
The bidder may have inspection of the assets of the company on applications to Official Liquidator before the sale of date.
Terms and condition along with the list of assets will be available at the office of the undersigned during the office hours.
Official Laiquidator High Court Calcutta Dated the 10th April, 1990.
" The significant thing to notice is that the sale notice did not specify the number of instalments nor did it specify the period within which the entire consideration was to be remitted.
All that it stated was that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 6.90 crores, (3) the successful bidder must deposit 10% of his bid at the time of the sale, (4) the balance amount of the sale price may be paid by instruments as would fixed by the Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered and (5) the purchaser shall have to enter into an agreement and understanding with the employees ' union on the same lines as has been entered into previously by one of the bidders.
In pursuance of the said sale notice, certain offers were received including the one by Buxa.
Its offer was in a sum of Rs.6 crores subject to certain terms and conditions stipulated therein.
In short, it proposed to pay the said amount in instalment @ Rs.45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale.
When the matter 1070 was taken up by the learned Company Judge on 17th September, 1990, only two parties remained in the field.
They were asked to raise their bids.
Buxa raised its offer to Rs. 8 crores, the higher of the two.
The learned Judge accepted its offer subject to the condition that the balance consideration (after deduction 10% earnest money which was to be deposited immediately) shall be paid in instalments prescribed by him.
The learned Judge directed that for the first two years following the sale, Rs. 60 lakhs shall be paid each year.
Thereafter, half yearly instalments of Rs.30 lakhs shall be paid until the entire eat nest money is paid off.
No interest was stipulated.
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited.
Certain other conditions were also stipulated but it is not necessary to notice them for the purpose of this appeal.
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and prejudicial to the interest of the F.Is., an appeal was preferred by them before the Division Bench.
On a consideration of relevant circumstances, the Division Bench came to the opinion that it would not be appropriate for it to set aside the sale, and that no useful purpose will be served by postponing the sale of the assets any further.
At the same time, it was of the opinion that some more safeguards should be provided to protect the interest of the F.1s: Accordingly, it effected the following modifications in the terms of sale: (i) The balance consideration namely Rs.7 crores 20 lakhs (the earnest money of Rs. 80 lakhs was already deposited) shall be paid in the following manner: for the first two years, the instalments payable each year shall be Rs. 60 lakhs; thereafter half yearly instalments in a sum of Rs. 40 lakhs each shall be paid till the entire consideration is paid off.
The first instalment shall be paid by 10th June, 1993 and the last instalment by 30th June, 2000 A.D. (ii) In case of default in payment of any one instalment, the official liquidator 'shall be entitled to take possession of the assets sold.
In such an eventuality the entire earnest money and other instalments paid till then shall stand forfeited.
(iii) Buxa shall provide a revolving bank guarantee in favour of the official liquidator for a sum of Rs. 60 lakhs till all the instalments are paid.
The bank guarantee shall be furnished within three weeks from the date of the order and shall be kept alive till the entire consideration is paid off.
It Is not necessary to notice the other terms and conditions.
This order was made on November 13, 1990.
1071 Aggrieved by the order of the Division Bench, F.Is.
approached this Court by way of a Special Leave Petition (S.L.P. 14929/90), which was disposed of on 19.11.1990 under the following order : "Taken on Board on being mentioned.
We have heard Mr. Gopal Subramanium for the petitioner and counsel for the respondents.
We are of the view that some of the allegations which Mr. Subramanium makes can be appropriately dealt with by the High Court in the case the High Court is moved again but at present we do not think it would be advisable to interfere with the order of the High Court.
We gather today is fixed as the date of which the possession of property would be transfered from the official liquidator to the purchaser.
To secure the interest of the Financial institutions the petitioner we are of the view that until the High Court makes its order the purchaser shall be taken to be the receiver and shall be accountable to be a receiver." Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order.
In this application, the F.Is. prayed that the order dated 13th November, 1990 be recalled, the sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs. 7.2 crores at once.
It was submitted by the F.Is.
that the company in liquidation has been directed to be sold by the company court free from all encumbrances that the financial institutions have a charge for Rs. 8 crores on the assets of the company in liquidation and the granting a period of 10 years for paying the balance consideration in instalments is highly prejudicial to the interest of the F. Is.
Not taking adequate security from the Buxa for proper payment of balance consideration, it was submitted, was also prejudicial to their interest.
At the time of arguments, however, their counsel did not press the request for setting aside the sale.
His main submission was that Buxa be directed to pay the entire balance consideration immediately and that till the payment is made, it should be directed to furnish a bank guarantee besides interest @ 15% per annum.
Alternately, it was submitted that the number of instalments granted be reduced sharply with a provision for interest thereon.
The Division Bench disposed of the said application by its order dated 20.2.1992.
It held that (1) the F.Is.
(secured creditors) by their acts and conduct have come within the winding, up and.
therefore the 1072 assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage.
(2) The purchaser Buxa has taken possession of the assets sold, has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factory.
(3) In the above circumstances, the F.Is.
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation.
(4) The only question that survives for consideration is whether the time for making the payment should be curtailed and whether some interest should be directed to be paid by the purchaser.
The application was disposed of with the following directions: (a) The purchaser (Buxa) shall pay in the year 1992 a sum of Rs. 80 lakhs in six bimonthly instalments payable on the last day of February, April, June, August, October and December.
(b) In the year 1993, the sum payable shall be Rs. 85 lakhs.
In 1994, it shall be Rs. 90 lakhs and in 1995, Rs. 95 lakhs.
In the year 1996 and thereafter, the annual amount payable shall be Rs. one crore till the entire consideration is paid off.
(c) The revolving bank guarantee shall be equal to the amount payable in each of the said years.
(d) Along with the last instalment, the purchaser shall pay a lumpsum of Rs. 25 lakhs as and by way of interest.
(e) The purchaser shall not encumber, alienate or transfer assets purchased by him so long as the entire consideration is not paid.
This does not, however, prevent it from raising monies by hypothecation, mortage or by creating charge on the said assets.
(f) In default of payment in any two of the bimonthly instalments, the Official Liquidator shall take possession of the assets sold and all the amounts paid till then shall stand forfeited.
A few other directions were made which, not being relevant herein, need not be noticed.
In this appeal it is contended by Sri Salve, learned counsel for the appellants that the procedure followed by the High Court for selling the 1073 assets of the company in liquidation is not fair and proper and that its has caused grave prejudice to the interest of financial institutions.
He submitted that by granting such liberal instalments, the "present price" of the assets sold is no more than Rs. 4 crores, whereas the total amount due to the financial institutions is more than Rs. 12 crores.
He submitted that either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration.
On the other hand, Sri P. Chidambaram, learned counsel for the purchaser submitted that it is not open to this court at this stage to effect any modification in the terms of the sale.
The purchaser in any event is not agreeable to any further modification.
If this court proposes to effect any modification in the terms of sale, the purchaser should be left free to withdraw his offer and to walk out.
The learned counsel submitted that Buxa 's offer of Rs. 6 crores, which was ultimately raised to Rs. 8 crores, was subject to the conditions contained in its offer.
True it is that Buxa accepted the terms and conditions stipulated by the Company Judge which were different from those stipulated by it.
But this was by its consent.
As a matter of fact, with a view to save its investment which it had already made by the date of the judgment of the Division Bench, it even agreed to certain further modifications being made by the Division Bench on both the occasions.
The purchaser is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration.
He submitted that the purchaser has invested huge sums of money and has reemployed almost all the workers and that it is not in a position to bear any further financial burden.
(11) Before we deal with the contentions urged by the learned counsel, we feel constrained to make certain observations with respect to the terms of the sale notice issued by the court.
While we agree that there is no standard or uniform pattern to be followed in such matters, it would be appropriate for the court to adopt such procedure as would avoid a situation where the courts is put to the task of negotiating the terms of sale with the parties.
That would not be consistent with the dignity of the court.
It would also give room for avoidable criticism and comment.
It would have been better if the sale notice itself had prescribed the number of instalments which would be granted to the purchaser, besides other terms and conditions and then invited offers on that basis.
Alternately, the court could have invited the offers subject to such conditions as the offerers may 1074 prescribe and then have them evaluated by a qualified person and select the most appropriate one.
If none of them are found acceptable and if the court thought it appropriate, it could also allow the bidders to submit revised offers and then have them evaluated.
We are not saying that these are the only two methods.
There may be others.
Our object is only to emphasise that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties.
The sale notice in this case merely stated that the balance consideration may be paid in instalments as would be fixed by the court.
The number and duration of instalments and other allied terms like bank guarantee, nature and terms of default clause, payment of interest on instalments were all left to be determined by the court.
It is true that in this case the bid of Rs. 6 crores was got enhanced to Rs. 8 crores, with lesser number of instalments that offered by the purchaser all as a result of persuasive efforts by the Company Judge.
Even so, it has given room for the argument that had it been known beforehand that so many instalments would be granted without stipulation of interest, several higher offers could have been received.
We are not prepared to agree with Mr. Chaidambaram, learned counsel for Buxa that this court has no power at this stage to modify the number of instalments.
Nor do we see any basis for Buxa to take up the stand that either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment.
This it cannot do for more than one reason.
Firstly, the sale notice itself stated that "the balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble court, Calcutta i.e., deferred payment of instalments will be considered".
What the High Court of Calcutta could do, can equally be done by this court sitting in appeal.
Secondly, the purchaser had repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may be imposed by the Court.
We may refer to the stand taken by the counsel for the purchaser before the Division Bench as recorded in its order dated 13th November, 1990.
It reads thus: "Mr. Mukherjee, learned Advocate appearing on behalf of the purchaser has submitted that the sale in this case was sale of assets of the Mill as a going concern and not merely sale as scrap.
The Court had power to grant such instalments whether it was specifically provided in the terms and conditions as advertised or not.
In this connection he has drawn our attention to clause (10) of the Terms.
He has 1075 submitted in the present case the court had granted such instalments for such period and on such terms after considering all the facts. (para 7).
He has submitted that in any event if this court is not inclined to approve the confirmation of the sale on the terms and conditions as prescribed by the Trial Court, it may allow such confirmation in favour of his clients to remain but provide for some modification and/or addition to such term and conditions if this court think it fit and proper.
In this context, he has submitted that so far as the instalments are concerned, the quantum may be increased so that all the instalments are paid by the year 2000 A.D instead of 2002 A.D. as directed by the impugned order.
So far as the guarantee is concerned, he has submitted that the court can provide for similar guarantee as provided for in other cases for sale by court in cast of default.
He also submitted that it may be provided that the charge of the secured creditors be shifted to the sale proceeds and that the sale, which was free from encumbrances, should be subject to this that his clients should approach the financial institutions for further financial held (para 8) . " Even before the second Division Bench which passed the impugned order, the purchaser did not take up the stand that the court has no power to modify the terms and conditions of sale.
All that its counsel submitted was that having regard to the facts and circumstances of the case, the instalments should not be reduced.
The impugned order records the contention of the purchaser 's counsel in the following words: "It is submitted by Mr. Mukherjee, learned counsel for the purchaser that having regard to the commitments of the company and the fact that former employees have been re employed and the company has to consistently run on a profitable basis, it would not be possible to reduce the instalments any further.
" Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions, the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company, we are of the opinion that certain modifications should be made in the number of instalments in which the balance consideration shall be paid.
But before we do so, we must refer to a particular fact which discloses the unfair conduct of the purchaser (Buxa).
According to the impugned order the purchaser had to pay a sum of Rs. 80 lakhs in the year 1992 in bimonthly instalments.
It paid only a total sum of Rs. 28 lakhs.
The excuse now put forward for nonpayment of the 1076 balance of 52 lakhs is the order of 'status quo ' passed by this court Having entertained the S.L.P. filed by the financial institutions, this court (K. Jayachandra Reddy and late R.C. Patnaik, JJ.) passed the following order on 14.5.1992: "Heard both the parties.
Status quo to be maintained.
The second respondent in SLP(C) 5377/92 shall not encumber, alienate or transfer the assets of the company in liquidation purchased by him.
Respondent No.2, shall, however, maintain accounts and, as and when required, produce the same before the Court.
Post the matter before an appropriate Bench on 21.7.1992.
Meanwhile, if the parties alone chose to file affidavits, they may file.
As the matter before us is at an interlocutory stage, it need not be treated as part heard.
" It is evident from a reading of the order that the order to maintain status quo did not and could never have meant stay of instalments payable by the purchaser in accordance with the impugned order.
To say so would amount to placing a totally unreasonable and unwarranted interpretation upon the said order.
It would be unfair above all.
The purchaser has been put in possession of the assets purchased by him and no fetter whatsoever was ever placed by the said order upon his possession or enjoyment of the property purchased by him.
The idea behind the order was that the purchaser should not transfer, alienate or encumber assets purchased and that he should maintain the accounts and produce them before the court.
The order directing that status quo to be maintained has to be understood in the said context.
We must say that after some debate, Mr. Chidambaram agreed fairly that his client 's interpretation of the said order was wrong, that he retreats his default and that he is prepared to pay the said amount of Rs. 52 lakhs along with such interest as may be prescribed by this Court.
It is directed that the purchaser shall pay the said amount of Rs. 52 lakhs due for the year 1992 in terms of the impugned order along with an amount 107 of Rs. 6 lakhs representing the interest on the said amount, consolidated i.e., a total of Rs. 58 lakhs on or before 5th March, 1993.
This payment shall be in addition to such other amounts as may be payable in accordance with the impugned order as modified by us herein.
Now coming to the modification of the terms imposed in the order under appeal, the only modification we wish to make is in the number of instalments.
After the payment of the aforesaid Rs. 52 lakhs due in the year 1992, the total balance consideration will be Rs. 5.80 crores.
This amount shall be paid in full by the end of the year 1996 in equal bi monthly instalments.
The instalments shall be payable by the last day of February April, June, August, October and December in each year.
This means that each instalment, excepting the last instalment, shall be in a sum of Rs.24,16,000.
The last instalment shall be in such sum as to make up the total shortfall payable on that date i.e., Rs. 20,16,000.
There shall be no other modification in the terms and conditions prescribed in the order under appeal including those relating to default and interest.
Having regard to the facts and circumstances of the case, there shall be no order as to costs.
For the reasons given above, the appeal arising from S.L.P. (C) No. 6736/92 filed by the purchaser is dismissed.
No costs.
G.N.R. Appeal dismissed.

summary:
Neptune Paper Mills (N.P.M.) was directed to be wound up by the Company Court on August 4, 1987.
The Official Liquidator took possession of the assets of the company under the orders of the Court N.P.M. had borrowed huge amounts from several financial institutions including Industrial Finance Corporation of India, I.C.I.C.I., W.B.I.D.C. and I.D.B.I. on security of its assets.
In view of the default committed by it in repayment, the financial institutions (F.Is.) recalled their loans in April, 1988 with the result all the loans in their loans in April, 1988 with the result all the loans in their entirety became due at once.
On August 8, 1988 the F.Is. were granted leave to rile a suit under Section 446 of the A suit was filed by them in September 1990 in the Calcutta High Court wherein a direction was given to the official liquidator to function as a receiver too.
In January 1990, the company court directed the sale of the assets of the company in liquidation.
Before making the said order the court had obtained a valuation of the said assets.
The valuation was at Rs. 4 crores.
Sale notices were published from time to time in response to which certain offers were received, the highest of them being Rs. 6.90 crores.
For one or the other reason, no offer was accepted and sale notice was published again.
The sale notice would state that (1) the said company in liquidation will be sold as a going concern on "as is where is and whatever there is basis", (2) the bids will start from 690 crores, (3) the successful bidder must deposit 10% of his bid at the time of the sale, (4) the balance amount of the sale price may be paid by instalments as would be fixed by tile 1064 Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered and (5) and purchaser shall have to enter into an agreement and understanding with the employees union on the same lines as has been entered into previously by one of the bidders.
In pursuance of the said sale notice, certain offers were received including the one by Buxa.
Its offer was in a sum of Rs. 6 crores subject to certain terms and conditions stipulated therein.
In short, it proposed to pay the said amount in instalments @ Rs. 45 lakhs per annum with a moratorium of one year immediately following the confirmation of sale.
On the date of sale before the learned company Judge only two parties remained in the field.
They were asked to raise their bids.
Buxa raised its offer to Rs. 8 crores, the higher of the two.
The learned Judge accepted its offer subject to the condition that the balance consideration (after deducting 10% earnest money which was to be deposited immediately) shall be paid in instalments prescribed by him.
It was directed that for the first two years following the sale, Rs. 60 lakhs shall be paid each year.
Thereafter, half yearly instalments of Rs. 30 lakhs shall be paid until the entire earnest money is paid off.
No interest was stipulated.
It was provided that on default of payment in any one instalment yearly or half yearly the official liquidator shall forthwith take possession of the assets and the earnest money paid shall stand forfeited.
Complaining that the terms settled by the learned Company Judge were too liberal to the purchaser and pre judicial to the interest of the F.Is., an appeal was preferred by them before the Division Bench.
The Division Bench finding that it would be inappropriate to set aside the sale, effected modifications in the terms of sale thereby providing some more safeguards to protect the interest of the F.Is.
Aggrieved by the order of the Division Bench, F.Is.
approached this court by way of a Special Leave Petition (S.L.P. 14929/90).
This Court, taking the view that the allegations made on behalf of F.Is. can be dealt with by the High Court if it is moved again declined to interfere with the order of the High Court.
But with a view to secure the interest of the Financial institutions it passed an order on 19.11.90 that until the High Court makes its order the Purchaser shall be taken to be the receiver and shall be accountable as a receiver.
Accordingly the financial institutions filed an application before the Division Bench requesting it to reconsider its order with a prayer that the 1065 sale in favour of Buxa be set aside or in the alternative Buxa be directed to deposit the entire balance consideration of Rs. 7.2 crores at once.
They further submitted that they have a charge for Rs. 8 crores on the assets of the company in liquidation and that granting a period of 10 years for paying the balance consideration in instalments and not taking adequte security from Buxa for proper payment of balance consideration, was prejudicial of their interest.
The Division Bench disposed of the said application by its order dated 20 2 1992, holding that (1) the F.Is.
(Secured creditors) by their acts and conduct have come within the winding up and. therefore, the assertion of their right as secured creditors outside winding up proceedings cannot be accepted or sustained at that stage.
(2) the purchaser Buxa has taken possession of the assets sold, has re employed the workmen after entering into an understanding with them and has also invested substantial amounts in recommencing the production in the factor%?.
(3) In the above circumstances, the F.Is.
cannot insist upon repayment of the entire money due to them under the deeds of hypothecation executed by the company in liquidation.
However, it passed directions curtailing the time for payment and providing for payment of interest by the purchaser.
In these appeals by special leave it was contended for the Appellants that (a) the procedure followed by the High Court for selling the assets of the company in liquidation is not fair and proper and that it has caused grave prejudice to the interest of financial institutions, (b) By granting liberal instalments, the "present price" of the assets sold is no more than Rs. 4 crores, whereas the total amount.
due to the financial institutions is more than Rs. 12 crores, (c) either the sale should be set aside and a fresh sale be held or the instalments prescribed should be drastically reduced coupled with a provision for reasonable interest on the balance consideration.
On the other hand the purchaser/Respondent submitted that it is not open to this court at this stage to effect any modification in the terms of the sale; that though with a view to save its investment which it had already made by the date of the judgment of the Division Bench, it agreed to certain further modifications being made by the Division Bench; it is not now agreeable to any further modification since in such a case it would not be possible for it to run the industry or to pay the consideration and 1066 that as the purchaser has invested huge sums of money and has reemployed almost all the workers; it is not in a position to bear any further financial burden.
Modifying the order and dismissing the appeal, the Court, HELD: 1.
Though there is no standard or uniform pattern to be followed with respect to the terms of the sale notice issued by the Court, it would be appropriate for the court to adopt such procedure as would avoid a situation where the court is put to the task of negotiating the terms of sale with the parties.
That would also give room for avoidable criticism and comment.
It would have been better if the sale notice itself had prescribed the number of instalments which would he granted to the purchaser, besides other terms and conditions and then invited offers on that basis.
Alternately, the court could have invited the offers subject to such conditions as the offerers may prescribe and then have them evaluated by a qualified person and select the most appropriate one.
If none of them are found acceptable and if the court thought it appropriate, it could also allow the bidders to submit revised offers and then have them evaluated.
These are not the only two methods.
But it has to be emphasised that any method devised should be such as to obviate the necessity or occasion for the court to negotiate the terms and conditions of sale with the party or parties.
The sale notice in this case.
merely stated that the balance consideration may be paid in instalments as would be fixed by the court The number and duration of instalments and other allied terms like bank guarantee, nature and terms of default clause, payment of interest on instalments were all left to be determined by the Court.
In this case the bid of Rs. 6 crores was got enhanced to Rs. 8 crores, with lesser number of instalments than offered by the purchaser all as a result of persuasive efforts by the Company Judge.
But it has given room for the argument that had it been known before hand that so many instalments would be granted without stipulation of interest, several higher offers could have been received.
[1073G H, 1074A D] 2.
The contention that the Supreme Court has no power at this stage to modify the number of instalments is untenable.
Nor there is any basis for Buxa to take up the stand that, either the existing terms should be affirmed by this court or it should be allowed to walk out of the deal altogether along with its investment.
This it cannot do for the following 1067 reasons; Firstly, the sale notice itself stated that "the balance amount of the sale price may be paid by instalments as would be fixed by the Hon 'ble Court, Calcutta i.e., deferred payment of instalments will be considered".
what the High Court of Calcutta could do, can equally be done by this Court sitting in appeal.
Secondly, the purchaser has repeatedly submitted before the Calcutta High Court that it is prepared to abide by such conditions as may` be imposed by the Court.
[1074E F] 3.
Having considered and taken into account all the relevant facts and circumstances of the case including the interest of the financial institutions, the interest of the workers who have since been re employed by the purchaser and the fact that the purchaser has already invested substantial amount to revive the company, the following modification was made in the number of instalments in which the balance consideration has to be paid: [1075F G] The total balance consideration of Rs. 5.80 crores, remaining due after payment of Rs. 52 lakhs due in the year 1992 shall be paid in full by the end of the year 1996 in equal bimonthly instalments.
The instalments shall be payable by the last day of February, April, June, August, October and December in each year.
Each instalment excepting the last instalment shall be in a sum of Rs. 24, 16,000.
The last instalment shall be in such sum as to make up the total short fall payable on that date i.e. Rs. 20,16,000.
[1077C]


judgement:
minal Appeal No. 398 of 1984.
From the Judgment and Order dated 16.11.83 of the Himachal Pradesh High Court in Crl.
A. No. 32 of 1983.
Ms. Kusum Choudhury and Ms. Bina Gupta for the Appellant.
Dr. N.M. Ghatate and S.V. Deshpande for the Respondent.
20 The following Order of the Court was delivered: On special leave being granted, the State of Himachal Pradesh has preferred this appeal against the judgment and order dated 16.11.1983, acquitting the respondent of an offence under Section 376, IPC earlier recorded by the learned Sessions Judge.
Briefly stated the prosecution case is that on 2.8.1982, the prosecutrix, Raksha Devi PW4 alongwith her father Nikkoo Ram PW5 and an elder sister by name Samti were in their fields.
It started to rain all of a sudden and the prosecutrix, her father and her sister, ran towards their house.
The prosecutrix got separated from her father and elder sister and was following them when the respondent Raghubir Singh, then aged about 16 years, came to her and caught hold of her hand and took her under a mango tree.
The prosecutrix, who was 7/8 years old at that time was wearing a frock and having a shawl with her.
The respondent spread the shawl on the ground and making the prosecutrix lie on that shawl committed rape on her.
Since, the prosecutrix had not reached her home, Nikkoo Ram her father after waiting for about half an hour returned towards the field and saw the respondent lying on top of the prosecutrix, Raksha Devi, under the mango tree.
He raised alarm and the respondent ran away carrying with him his underwear.
The prosecutrix was crying and was bleeding per vagina.
The occurrence took place at about 2.30 p.m. and the First Information Report exhibit PE was lodged at the Police Station at 5.50 p.m.
The prosecutrix was got examined by the doctor, who found her hymen ruptured and slight bleeding coming out of the vaginal edges.
Blood clott was also present and the external genitals of the prosecutrix were found to be tender and red.
The vagina admitted one finger with difficulty, which got smeared with blood.
The doctor who had examined the prosecutrix, namely, Dr. Urmil Gupta, Medical Officer, Rural Hospital Nalagarh at about 7 p.m. on the same day, appearing as PWI at the trial had also testified that when the prosecutrix was brought to her by her father, he had also brought with him a shawl, which was found to be having some mud and bloodstains.
According to the opinion of Dr. Urmil Gupta PWI, the prosecutrix had been subjected to sexual intercourse and the probable duration of the injuries on her private parts.
, including the vagina, was about 6 to 12 hours.
During the cross examination, a suggestion was put to the doctor that the injuries found on the prosecutrix could have been caused by a fall on some bushes or on the stem of a 'beree ' tree but the doctor had categorically denied the suggestion.
It was also suggested to her that the venginal in jury could also be caused by inserting 21 a finger in the vagina.
The X Ray, the skiagrams and the examination of her teeth by Dr. Subhash Chandra Aggarwal PW2 established the age of the prosecutrix to be between 6 to 8 years.
The respondent was also examined by doctor C.L. Sharma PW3, medical officer at the Rural Hospital, Nalagarh.
He had found the respondent to be potent and capable of sexual intercourse.
He denied the suggestion that injuries would necessarily be caused to the penis in case of sexual intercoures by a grown up male with a virgin when during the act her hymen gets torn.
The father of the prosecutrix Nikkoo Ram PW5, the prosecutrix Raksha Devi PW4 and Taru PW7, who had rushed to the scene of occurrence on hearing the alarm and had also seen the respondent running away therefrom carrying with him his underwear supported the prosecution case in its totality.
The learned Sessions Judge after a careful appraisal of the evidence on record found that the respondent had committed the offence of rape and sentenced him to suffer R.I. for a period of five years for the offence under Section 376 IPC.
While awarding the sentence, the learned Sessions Judge took into account the age of the prosecutrix, the age of the accused and the other attending circumstances and directed that it would be appropriate if the accused was kept in the open air jail in Bilasput during the term of five years R.I.
The respondent appealed to the High Court of Himachal Pradesh and on 16.11.1983.
The High Court acquitted him.
We have heard learned counsel for the parties at length and have gone through the evidence on the record.
The statement of the prosecutrix, Raksha Devi PW4 is clear, cogent and specific.
The learned Sessions Judge before recording her statement was conscious of her age and had, therefore, taken all the precautions required by law to ascertain whether she was capable of giving evidence or not and on being satisfied that she was so capable, recorded her, statement.
She narrated the occurrence in a simple and straight forward manner.
The prosecution case as noticed in the earlier part of the judgment was fully supported by her during her statement and nothing has been brought out in the cross examination from which any doubt could be caused about her veracity.
Her statement receives ample corroboration from the testimony of Nikkoo Ram PW5, her father who even otherwise would be the last person to come forward with a false accusation of the type of rape on his young unmarried daughter.
22 His testimony has impressed us and we find him to be a truthful and reliable witness.
The medical evidence of Dr. Urmil Gupta has supported the prosecutrix in all material particulars.
She has also testified to the presence of mud and blood stain, , on the shawl.
The evidence of Taru PW7 who had also seen the accused running away from the scene of crime carrying his underwear, further lends credence to the prosecution version.
The learned Sessions Judge, in our opinion, was therefore justified in relying upon the prosecution evidence and recording an order of conviction against the respondent for an offence under Section 376 IPC.
His findings were based on proper appreciation of evidence and were not unreasonable much less perverse.
The learned single Judge of the High Court in our opinion, without appreciating or properly discussing the evidence set aside the findings recorded by the Sessions Judge.
The High Court appears to have embarked upon a course to find some minor contradictions in the oral evidence with a view to disbelieve the prosecution version.
In the opinion of the High Court, conviction on the basis of uncorroborated testimony of the prosecutrix was not safe.
We cannot agree.
There is no legal compulsion to look for corroboration of the evidence of the prosecutrix before recording an order of conviction.
Evidence has to be weighed and not counted.
Conviction can be recorded on the sole testimony of the prosecutrix, if her evidence inspires confidence and there is absence of circumstances which militate against her veracity.
In the present case the evidence of the prosecutrix is found to be reliable and trustworthy.
No corroboration was required to be looked for, though enough was available on the record.
The medical evidence provided sufficient corroboration.
The High Court, however, while dealing with the medical evidence observed as follows: "Lady doctor Urmil Gupta PW1, who had examined the prosecutrix, had admitted in so many words towards the end of her cross examination that the injury found on the private part of the prosecutrix and which is the only injury found in the instant case, could be caused by insertion of a finger by a grown up person like the parents of the prosecutrix It is true that normally no parents would not do so but in the peculiar circumstances of this case, this possibility may not be ruled out altogether.
In any case the mere fact that the hymen of the prosecutrix had been found ruptured, would not prove the prosecution version 23 and connect the appellant with the offence charged against him.
" The above approach to say the least was highly improper.
What were the 'peculiar circumstances ' of the case from which the learned single Judge of the High Court thought that the possibility could not be ruled out that the parents of the prosecuted would have themselves caused injury to the prosecutrix by inserting finger in her vagina rupturing her hymen is not at all understandable.
There is no suggestion that on account of any enmity, the parents of the girl would go to that length to falsely implicate the respondent.
Dr. Ghatate, the learned senior counsel was also unable to point out any such 'circumstances ' from the record which could show that there was any possibility of the hymen of the prosecutrix having been ruptured in the manner suggested by the High Court or any reason to falsely implicate the respondent.
In fairness to Dr. Ghatate it must be recorded that he did not support the observations of the High Court noticed above.
The learned single Judge of the High Court also drew an inference against the prosecution from the fact that only two blood stains had been found on the shawl by the Chemical Examiner and doubted the prosecution version on that account.
According to the learned single Judge: "In natural course if this shawl had been used under the prosecutrix at the time of the alleged offence, the same should have been drenched with blood in the meddle.
Moreover, this shawl should have been full of mud as it remained lying on the ground under the prosecutrix for such a long time and when it had rained throughout.
" In making the above observations, obviously the High Court ignored the testimony of Doctor Urmil Gupta who had found the presence of blood stains and the mud on the shawl and who had opined that the bleeding from the edges of the vagina was slight and that some amount of clotted blood was also present.
The prosecutrix was a girl of tender age and on account of the rape committed on her, there was bleeding from her vagina but to expect that the shawl should have got "drenched with blood" as if the large blood arteries had been cut, is letting the imagination run wild and ignoring the circumstances of the case.
The absence of spermatoza on the vaginal slide, which was also pressed into aid by the High 24 Court to acquit the respondent, was not based on proper scrutiny of the evidence.
The prosecution case itself was that on being surprised while the respondent was in the act of committing sexual intercourse on the prosecutrix, he ran away carrying his underwear.
The absence of spermatoza under the circumstances could not be said to be a circumstance in favour of the respondent at all.
The judgment of the High Court, in our opinion, is based more on surmises and conjectures than on proper appreciation of evidence.
It exposes the insensitivity of the learned Judge to the serious crime committed against human dignity.
We are not impressed by the manner in which the High Court dealt with the case.
Courts must be wary, circumspect and slow to interfere with reasonable and proper findings based on appreciation of evidence as recorded by the lower courts, before upsetting the same and acquitting an accused involved in the commission of heinous offence of rape of hapless girl child.
Dr. Ghatate, learned senior counsel for the respondent submitted, by reference to Rahim Beg & Anr.
vs State of U.P., , that the absence of injuries on the penis of the respondent should be treated as sufficient to the negative prosecution case.
We are afraid we cannot agree.
Inferences have to be drawn in every case from the given set of facts and circumstances.
There is no inflexible axiom of law which lays down that the absence of injuries on the male organ of the accused would always be fatal to the prosecution case and would discredit the evidence of the prosecutrix, otherwise found to be reliable.
The presence of injuries on the male organ may lend support to the prosecution case, but their absence is not always fatal.
Rahim Beg 's case (supra) was based on its peculiar facts and the observations mate therein were in a totally different context and cannot advance the case of the respondent.
The observations in Rahim Beg 's case (supra) cannot be mechanically pressed into aid in every case regardless of the specific circumstances of the crime and absence of the fact situation as existing in that case.
Every case has to be approached with realistic diversity based on peculiar facts and circumstances of that case.
Doctor Sharma who had examined the respondent had found him to be capable of sexual intercourse and according to his opinion the absence of injury on his male organ was not suggestive of the fact that he had not indulged in sexual intercourse with the prosecutes then of tender years of age.
His evidence was not at all challenged on this aspect by the defence.
Thus, considered on the whole.
we are of the opinion that the 25 judgment of the High Court is based on conjectural findings and cannot be sustained.
The same deserves to be set aside and is hereby set aside.
The reasoning given by the learned Sessions Judge and the findings recorded by him on appreciation of evidence have appealed to us and we find no reason to take a view different than the one taken by the learned Sessions Judge.
We, accordingly, set aside the acquittal of the respondent and hold him guilty of the offence under Section 376 IPC for having committed rape on the prosecutrix, Raksha Devi, on the date and in the manner alleged by the prosecution.
Having recorded the conviction of the respondent for the offence under Section 376 IPC, the next question is about the awarding of proper sentence.
The occurrence took place on 2.8.1982, more than a decade ago.
The learned Sessions Judge after recording the conviction under Section 376 IPC had sentenced the respondent to suffer RI for five years.
The State did not move the High Court for any enhancement of the sentence.
We, therefore, feel that the ends of justice would be met if the sentence to be imposed on the respondent is confined to five years RI as was awarded by the learned Sessions Judge for cogent reasons recorded by him.
We may emphasise that though for such an offence a more severe sentence would have been desirable but we have restricted ourselves to the maintenance of the sentence as imposed by the learned Sessions Judge for the reason that the State did not seek any enhancement of the sentence by filing an appropriate petition in the High Court or in this Court and for over a period of seven years, while the case has remained pending here, no notice had been issued to the acquitted respondent to show cause as to why in the event of his acquittal being set aside, a more deterrent sentence, than the one imposed by the Sessions Judge, be not imposed upon him and without putting him on such a notice, the Court cannot enhance the sentence.
If the notice were to issue now, it would further delay the disposal of the case and we do not consider that to be a proper course to be adopted.
The more stringent minimum sentence prescribed for an offence under Section 376 IPC was also incorporated in the Code by an amendment only with effect from December, 1982, after the offence in the present case had been committed.
The appeal is consequently allowed and the judgment of the High 26 Court is set aside.
The respondent is held guilty of an offence under Section 376 IPC and sentenced to suffer rigorous imprisonment for a period of five years.
The respondent shall be taken into custody to suffer the term of imprisonment.
R.P. Appeal allowed.

dataset_name: IN-Abs

summary:
The respondent accused was prosecuted for committing rape on a child of 8/9 years of age.
The prosecution case was that: while the prosecutrix (P.W.4), her father (P.W.5) and elder sister (P.W.7) were in their fields, it suddenly started raining and all the three ran towards their house; P.W.4 got separated from the two kins and was following them when the accused, then aged about 16 years, took her under a mango tree and committed rape on her; P.W.5, who in the meantime returned to the fields in search of P.W.4, saw the accused lying on her, he raised an alarm whereupon P.W.7, rushed to the spot and the accused ran away leaving P.W.4 crying and bleeding per vagina.
The victim was got medically examined the same day and the doctor (P.W.1), besides mentioning the injuries on the private part of the prosecutrix, reported that she had been subjected to sexual intercourse.
At the trial P.W.5, P.W.7 and the doctor (P.W.1) who had medically examined the prosecutrix, supported the prosecution case in its totality.
The trial court held that the accused had committed an offence of rape under s.376, I.P.C. on the prosecutrix, and sentenced him to suffer R.I. for a period of five years.
18 The accused riled an appeal before the High Court which acquitted him.
The State filed the appeal by special leave to this Court.
Allowing the appeal, this Court, HELD: 1.I. Courts must be wary, circumspect and slow to interfere with reasonable and proper findings based on appreciation of evidence as recorded by the lower courts, before upsetting the same and acquiring an accused involved in the commission of heinous offence of rape of hapless girl child.
[p.24B C] 1.2.
The High Court without appreciating or properly discussing the evidence committed an error in setting aside the findings recorded by the trial court which were based on proper appreciation of evidence and were not unreasonable much less perverse.
The judgment of the High Court is based on conjectural findings and cannot be sustained.[pp.22B C; 25A] 3.
The statement of prosecutrix (PW4) is clear, cogent and specific.
The Sessions Judge recorded her statement on being satisfied that she was capable of giving evidence.
She narrated the occurrence in a simple and straight forward manner.
The prosecution case was fully supported by her during her statement and nothing has been brought out in the cross examination from which any doubt could be caused about her veracity.
Her statement receives ample corroboration from the testimony of her father (PW5) who is found to be a truthful and reliable witness.
The medical evidence of PWl has supported the prosecutrix in all material particulars.
The evidence of PW7 who had also seen the accused running away from the scene of crime further lands credence to the prosecution version.
[pp.21E H; 22A] 2.1.
There is no legal compulsion to look for corroboration of the evidence of the prosecutrix before recording an order of conviction.
Evidence has to be weighed and not counted.
Conviction can be recorded on the sole testimony of the prosecutrix, if her evidence inspires confidence and there is absence of circumstances which militate against her veracity.
[p.22D] 2.2.
In the instant case the evidence of the prosecutrix is found to be reliable and trustworthy.
No corroboration was required to be looked for, though enough was available on the record.
The medical evidence provided sufficient corroboration.
[p.22E] 19 3.1.
There is no inflexible axiom of law which lays down that the absence of injuries on the male organ of the accused would always be fatal to the prosecution case and would discredit the evidence of the prosecutrix, otherwise found to be reliable.
Every case has to be approached with realistic diversity based on peculiar facts and circumstances of that case and inferences have to be drawn from the given set of facts and circumstances.
[p.24D F] Rahim Beg & Anr.
vs State of UP.
, , distinguished.
The doctor (PW3), who had examined the respondent, found him to be capable of sexual intercourse and according to him the absence of injury on the male organ of the accused was not suggestive of the fact that he had not indulged in sexual intercourse with the prosecutrix, then of tender years of age.
His evidence was not at all challenged on this aspect by the defence.
[p.24F G] 4.1.
The judgment of the High Court acquitting the accused is set aside.
The accused is convicted under S.376 IPC for having committed rape on the prosecutrix and sentenced to suffer regorous imprisonment for a period of five years.
[pp. 25H; 26A] 4.2.
Though for such an offence a more severe sentence would have been desirable but neither the State sought enhancement of the sentence by filing an appropriate petition nor any notice in this regard had been issued to the accused, and without putting him on such a notice, the Court 'cannot enhance the sentence. 'Me provision prescribing more stringent minimum sentence under Section 376 was also incorporated in the Code by an amendment only with effect from December, 1982, after the offence in the instant case had been committed.
[p.25D G]


judgement:
Appeal No. 690 of 1993.
From the Judgment and Order dated 21.5.1992 of the Patna High 13 Court in Civil Writ Jurisdiction Case No. 1317 of 1990.
A.K. Sen and M.P. Jha for the Appellant.
Uday Singh, A.K. Sinha and A. Sharan for the Respondents.
The following Order of the Court was delivered: Leave granted.
The admitted facts in the present case are that by an order dated 16th August, 1969 the appellant was appointed by the respondent 2.
Bihar School Examination Board ( 'Board ') as a Special Officer (Stores) for a period not exceeding six months, in the pay scale of Rs. 300 20 400 EB 20 500 with usual allowances.
His services, however, were continued till 10th March, 1971, when he was intimated that the said post of Special Officer would be abolished w.e.f 1st April, 1971 and consequently his services would stand terminated.
The appellant filed a suit and obtained an injunction against the abolition of the post and the termination of his services.
In the suit, a compromise was arrived at between the Board and the appellant whereby he was to be appointed as Section Officer in the General Cadre and his pay as a Special Officer was to be protected.
Pursuant to this compromise, the Board passed an Office Order on 20th March, 1972 which stated as follows: "Shri Tej Narain Tiwary who is at present working as Special Officer (Stores) on purely temporary basis, is appointed on the vacant post of Sectional Head (Section Officer) in the initial pay of the pay scale of Rs. 230 15350 EB 20 450 besides dearness allowance.
Besides pay he is sanctioned reducible personal pay at the rate of Rs. 70 per month".
By the same order, another Special Officer (Vigilance) was also appointed to one more vacant post of Sectional Head (Section Officer) in the same pay with an additional reducible personal pay of Rs. 20 per month.
The order further stated as follows: "As per the decision dated 18.12.1971 of the Board, the posts of Special Officer (Stores) and Assistant Vigilance Officer are abolished from the date of issue of this order: 14 We are not concerned with the post of Special Officer (Vigilance).
What is obvious from the above order is that the appellant was working as Special Officer till that time and was appointed in one of the vacant posts of Section Officers with the protection of his pay.
We do not know how the amount of Rs. 70 per month was arrived at.
Read with the note put up by the Secretary of the Board, it is apparent that appellant 's then pay as Special Officer was to be protected entirely.
We presume that it was wholly protected.
The point to note is that his pay could be protected, whether partially or fully, only if he was transferred from one post to another whether on account of the abolition of the former post or as a matter of compulsory transfer.
Read with the Office Order dated 20th March, 1972, it appears that the Board had adopted the device of first transferring the appellant from the post of Special Officer to the post of Section Officer and then abolishing the post of the Special Officer.
It is necessary to note this fact, since the Board has interpreted this device as amalgamation of the posts of Special Officer with that of the Section Officer and not as a compulsory transfer from the post of Special Officer to that of Section Officer.
Further, whether it is construed as amalgamation or as compulsory transfer, the legal consequences are the same, viz., that the appellant would have to be absorbed in the post of Section Officer from the date of his appointment in the post of Special Officer.
Since further the Board itself regularised the appointment from the date of appointment as Special Officer, viz., 16th August, 1969, as is evident from its Order of 11th November, 1986, no objection can be raised in that behalf However, respondents who was promoted to one of the posts of Section Officers on 27th August, 1970 has contended that the seniority given to the appellant in the post of Section Officer w.e.f 16th August, 1969 i.e., from the day on which he was appointed as Special Officer, was illegal.
We may now deal with the said contention.
Respondent 5 was an Assistant in the Office of the Board and as stated above, was for the first time, promoted as Section Officer on 27th August, 1970.
It appears that for the first time in 1983, a seniority list of Section Officers was prepared but not circulated.
In that list respondents was shown at No. 23 whereas, the appellant was shown at No. 33.
This was so because two representations made by the appellant to give him seniority from 16th August, 1969 stood rejected on 20th April, 1977 and 13th March, 1978 respectively.
It appears that it was for the first time that by the order 15 dated 11th November, 1986, the appellant 's representation was accepted and he was given seniority from 16th August, 1969.
Against the said order, respondents filed a writ petition which was withdrawn by him on 22nd December, 1986 since the learned Advocate General appearing for the Board stated before the Court that by the order dated 11th November, 1986 the Board had merely given seniority to the appellant from 16th August, 1969 and that grant of this seniority to the appellant had nothing to do with the inter se seniority in the cadre of Section Officers which would be determined later.
It appears that, thereafter, & seniority list of Section Officers was prepared by the Board in which the appellant was shown above respondent 5 and was granted promotion to the post of Assistant Secretary on 20th March, 1982 and to that of Deputy Secretary on 29th November, 1989.
Against the said list of seniority, the respondents filed the present writ petition in the High Court primarily challenging the order of llth November, 1986 in terms of which the inter se seniority list was prepared.
The High Court held that the post of Special Officer occupied by the appellant was a temporary post and was not a cadre post; since the said post was abolished and thereafter the appellant was appointed as a Section Officer on 20th March, 1972 he would have to rank below respondent 5 who was appointed as Section Officer on 27th August, 1970.
The High Court also relied on the fact that the Board 's case before it was that as a consequence of the abolition of the post, the appellant was appointed as a Section Officer.
We are of the view that the approach of the High Court is not correct.
As stated above, the facts reveal that the appellant was appointed in a higher post with a higher salary scale.
He was in fact compulsorily transferred from that post to the post of Section Officer, and after the transfer, by the same order of the 20th March, 1972, the post of Special Officer was abolished.
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of Special Officer with the cadre posts of Section Officers.
As stated earlier, the consequence of both the interpretations of the said order is the same, viz., that the appellant would get seniority from the date of his appointment as the Special Officer.
That it is a case of a compulsory transfer or of the amalgamation of post is evident from the fact that the appellant 's salary as Special Officer was 16 protected on the said transfer.
It is true that there is nothing on record except the order of 20th March, 1972 to show that the temporary post of Special Officer which was created for the first time on 16th August, 1969 with the appointment of the appellant to it, was ever regularised and the appellant was appointed regularly to the same.
However, on this aspect, we must go by the intention revealed in the resolutions and the orders of the Board itself.
It cannot be suggested that the Board could not regularise the post and the appointment retrospectively by passing resolutions which in the absence of rules and regulations are equally valid.
The Board 's intentions in that behalf are clear.
It treated the post as regular.
The appellant was appointed to it in a substantive vacancy and in accordance with the conditions governing it.
There is, therefore, nothing in the decisions relied upon by the learned Counsel for respondent 5, viz., The Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra and Ors.
, ; and State of Bihar & Ors. etc.
vs Akhouri Sachindra Nath & Ors., [1991] Suppl.
1 SCC 334 which militates against the seniority given to the appellant.
We accordingly allow the appeal.
There will be no order is to costs.
S.L.S. Appeal allowed.

summary:
By an order dated 16th August 1969, the appellant was appointed by respondent 2 the Bihar School Examination Board as a Special Officer (Stores) for a period not exceeding six months in the pay scale of Rs. 300 20400 EB 20 500, with usual allowances.
The services were, however, continued till 10th March, 1971, when it was intimated that the said post of Special Officer would be abolished with effect from 1st April 1971, and consequently his services were terminated.
The appellant riled a suit and obtained an injunction against the abolition of the post and the termination of his services.
In the suit, a compromise was arrived at between the Board and the appellant, whereby he was appointed as Section Officer in the General Cadre and his pay as Special Officer was to be protected.
Pursuant to this compromise, the Board by order dated 20th March, 1972 appointed him on the vacant post of Section Officer, with a personal pay of Rs. 70 per month.
Later, by an order dated 11.11.86, respondent No. 2 regularised the appointment from the date of his appointment as Special Officer viz. 16.8.69.
However, respondent No. 5 promoted to one of the posts of Section officers on 27 8 70, contended that the seniority given to the appellant in the post of Section Officer w.e.f. 16 8 69, ie.
from the date of his appointment as Special Officer was illegal.
In the Seniority list of Section Officers prepared by respondent No. 2, the appellant was shown above respondent No. 5 and he was granted promotion to the post of Asstt.
Secretary on 20th March, 1982, and to that of Deputy Secretary on 29.11.87.
12 Against the said list of seniority, respondent No. 5 filed a writ petition in the High Court, formally challenging the order of dt 11th Nov., 1986 in terms of which the inter se seniority list was prepared.
The High Court held that the post of Special Officer occupied by the appellant was a temporary post, which was abolished, and therefore, he would have to rank below respondent No. section The appellant came to this Court.
Allowing the Appeal, HELD: The approach of the High Court was not correct.
The appellant was appointed in a higher post with a higher salary scale.
He was in fact compulsorily transferred from that post to the post of Section Officer and after that transfer by the same order of 20th March, 1972, the post of Special Officer was abolished.
The order is also capable of being interpreted as an order of amalgamation of the ex cadre post of a Special Officer with the cadre post of Section Officer.
[15H G] The consequence of both the interpretations of the said order is the same, viz. that the appellant would get seniority from the date of his appointment as Special Officer.
[15G] It is true that there is nothing on record except the order of 20th March, 1972, to show that in the temporary post of Special Officer which was created for the first time on 16th August, 1969, that the appointment of appellant was ever regularised and the appellant was appointed regularly to the same.
However, on this aspect, we must go by the intention revealed in the resolutions and orders of the Board itself.
The Board 's intention is clear.
It treated the post as regular.
The appellant was appointed to it in a substantive vacancy and in accordance with the condition governing it.
There is accordingly nothing, which militates against the seniority given to the appellant.
[16A D] The Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra & Ors.
, ; and State of Bihar& Ors. etc.
vs Akhouri Sachindra Nath & Ors., [1991] Suppl. 1 SCC 334, referred to.


judgement:
y Application No. 1 of 1992.
IN Writ Petition No. 1165 of 1986.
(Under Article 32 of the Constitution of India).
M.C. Bhandare, P.P. Rao, N.N. Goswamy, C.K Sucharita, Ms. Shashi Kiran, Ms. Manjula Gupta, R. Shashi Prabhu, V.K. Verma and Raj Kumar Gupta for P.C. Kapur for the appearing parties.
The Judgment of the Court was delivered by SAWANT, J.
The petitioner applicants are some of the Medical Officers who were recruited by the Railways on ,id hoc basis as Assistant Divisional Medical Officers between 1968 and 1st October, 1984.
They were appointed as such ad hoc employees by way of a stop gap arrangement pending the regular recruitment to the said posts through the Union Public Service Commission [UPSC ' for short], according to the rules.
It appears that although from time to time the UPSC recruited candidates on regular basis, there remained some vacancies unfilled, either because the doctors recruited were less in number than the number of vacancies since suitable candidates were not available or some of those who were selected did not join the service or between the date of advertisement by the UPSC and that of the empanelling, some more vacancies occurred.
Whatever the reasons, the fact was that even after the UPSC undertook the exercise of recruiting the doctors from time to time, some vacancies always remained unfilled.
The result was that every time the petitioner applicants and others like them were continued on ad hoc basis as a stop gap arrangement till the next recruitment by the UPSC.
It may be mentioned in this connection that the ad hoc appointees were always at liberty to appear before the UPSC for their regular recruitment.
Some of them in fact did so appear and were selected; others like the petitioner applicants either failed to be selected or did not care to appear.
The fact, however, remains that the petitioner applicants and others like them continued to serve on ad hoc 4 basis since 1968.
Hence they filed writ petitions in this Court for their regularisation in service.
By an order dated 24th September, 1987 passed in the case of Dr. A.K Jain & Ors.
vs Union of India & Ors.
, [1987] Supp.
SCC 497 at 500 this court directed as follows: "(1) The services of all doctors appointed either as Assistant Medical Officers or as Assistant Divisional Medical Officers on ad hoc basis up to October 1, 1984 shall be regularised in consultation with the Union Public Service Commission on the evaluation of their work and conduct on the basis of their confidential reports in respect of a period subsequent to October 1, 1982.
Such evaluation shall be done by the Union Public Service Commission.
The doctors so regularised shall be appointed as Assistant Divisional Medical Officers with effect from the date from which they have been continuously working as Assistant Medical Officer/Assistant Divisional Medical Officer.
The Railway shall be at liberty to terminat e the services of those who are not so regularised.
If the services of any of the petitioners appointed prior to October 1, 1984 have been terminated except on resignation or on disciplinary grounds, he shall be also considered for regularisation and if found fit his services shall be regularised as if there was not break in the continuity of service but without any back wages.
(2) The petitions of the Assistant Medical Officers/Assistant Divisional Medical Officers appointed subsequent to October 1, 1984 are dismissed.
But we however direct that the Assistant Divisional Medical Officers who may have been now selected by the Union Public Service Commission shall first be posted to the vacant posts available wherever they may be.
If all those selected by the UPSC cannot be accommodated against the available vacant posts they may be posted to the posts now held by the doctors appointed on ad hoc basis subsequent to October 1, 1984 and on such posting the doctor holding the post on ad hoc basis shall vacate the same.
While making such postings the principle of 'last come, first go ' shall be 5 observed by the Railways on zonal basis.
If any doctor who is displaced pursuant to the above direction is willing to serve in any other.
zone where there is a vacancy he may be accommodated on ad hoc basis in such vacancy.
(3) All Assistant Medical Officers/Assistant Divisional Medical Officers working on ad hoc basis shall be paid the same Wary and allowances as Assistant Divisional Medical Officers on the revised scale with effect from January 1, 1986.
The arrears shall be paid within four months.
(4) No ad hoc Assistant Medical Officer/Assistant Divisional Medical Officer who may be working in the Railways shall be replaced by any newly appointed AMO/ADMO on ad hoc basis.
Whenever there is need for the appointment of any AMO/ADMOs on ad hoc basis in any zone the existing ad hoc AMO/ADMOs who are likely to be replaced by regularly appointed candidates shall be given preference.
(5) If the ad hoc doctors appointed after October 1, 1984 apply for selection by the Union Public Service Commission the Union of India and the Railways Department shall grant relaxation in age, to the extent of the period of service rendered by them as ad hoc doctors in the Railways.
All the Writ Petitions are disposed of in the above terms.
" It appears that since they experienced difficulty in adjusting the seniority of the petitioner applicants the Union of India moved an application before this Court and this court on 1st November, 1988 made the following order in that application: "We have heard learned counsel for the Union of India (the applicant in this Civil Miscellaneous Petition) and the learned counsel for the petitioners in the Writ Petition.
In the circumstances of the case we feel that the Union 6 Government should be directed to implement the order passed by us in the writ petition Nos. 522, 875, 180 & 200 of 1987 and connected cases on 24th September, 1987 in full except to the extent of fixing the inter se seniority between the petitioners in the Writ Petition and the direct recruits.
We accordingly make an order in this case.
The question of seniority, however, is left to be decided by the Government in the light of the decision to be rendered by this Court in the cases which are pending before the Constitution Bench involving similar questions.
If any person is aggrieved by the decision of the Government on the question of seniority he is at liberty to question it in an appropriate forum.
The order passed by us in the Writ Petition subject to the above modification shall be complied with by the Union Government within two months without failure.
The Civil Miscellaneous Petition is disposed of accordingly.
" The present application has been moved in Writ Petition No. 1165 of 1986 which has been disposed of on 24th September, 1987 along with other writ petitions in which also the aforesaid order of 1st November, 1988 was made by this Court.
Thus we are concerned in this application with those Assistant.
Divisional Medical Officers who were appointed between 1968 and 1st October, 1984 and who have been regularised by the aforesaid two orders but whose seniority remains to be fixed.
After the order of 1st November, 1988, the Constitution Bench of this Court delivered its judgment in Direct Recruit Class II Engineering Officers ' Association & Ors.
vs State of Maharashtra & Ors.
, ; pending ' which decision the fixation of seniority of the petitioner applicants was kept pending.
In that case the Constitution Bench has laid down certain guidelines for fixing the seniority.
Two of them, viz., (A) & (B), which are relevant for our purpose are as follows: "(A) Once an incumbent is appointed to a post according to rule, his seniority has to be counted from the date of 7 his appointment and not according to the date of his confirmation.
The corollary of the above rule is that where the initial appointment is only ad hoc and not according to rules and made as a stop gap arrangement, the officiation in such post cannot be taken into account for considering the seniority.
(B)If the initial appointment is not made by following the procedure laid down by the rules but the appointee continues in the post uninterruptedly till the regularisation of his service in accordance with the rules, the period of officiating service will be counted.
" Before we discuss as to which of the above two guidelines would be applicable in this case, it is necessary to state the relevant facts relating to the applicants ' appointment.
Firstly, it is an admitted fact that the UPSC introduced the Combined Medical Services Examination for the first time in the year 1977.
Prior to 1977, the method of recruitment was otherwise than by examination.
As stated earlier, some of the petitioner applicants were recruited between 1968 and 1977.
Secondly, the petitioner applicants were given three chances for their selection through the UPSC but they did not avail of them.
Some of those who were appointed with them, however, had availed of the chances and have been appointed as regular direct recruits and they have been given their seniority from the date they were regularly appointed through the UPSC.
Thirdly, it appears that although in 1977 the written examination was introduced, on account of exigencies, the UPSC held two special selections in the years 1982 and 1985 based on interviews only and by relaxing the age limit.
In these two special selections respectively 100 and 67 ad hoc doctors like the petitioner applicants were selected and absorbed in the regular cadre.
They have also been given their seniority from the date they were so absorbed regularly.
The petitioner applicants either failed to appear in these examinations also or after appearing in the same, had failed Thus, while fixing the seniority of the petitioner applicants we have to keep in mind that there are three classes of Assistant Divisional Medical Officers (i) the outsiders who have been directly recruited through the UPSC either on the basis of the written examination or the interview; (ii) 8 those who were ad hoc appointees like the applicants but who came to be regularly recruited through the UPSC by appearing in the written examination or in the interview; and (iii) the present petitioner applicants who either did not appear in any written examination/interview or had failed to get through them but who have been regularised in service because of the orders of this Court dated 24th September, 1987 and 1st November, 1988.
Since the petitioner applicants are admittedly not regularly appointed through the UPSC according to the rules but have been directed to be regularised by following the procedure laid down by this Court it is obvious that they are not appointed to their posts according to the rules.
Under no circumstances, therefore, they fall within the scope of guideline (A) laid down in Direct Recruit Class II Engineering Officers Association 's case (supra).
In fact, they do not fall under guideline (B) given therein either, since their regularisation is not in accordance with the rules but as a consequence of special procedure laid down by this Court.
The expression "in accordance with the rules ' or "according to rules" used in the said guidelines (A) and (B) means the rules of recruitment and not the special procedure laid down by this Court.
The petitioner applicants thus fall in an altogether different category not covered under any of the guidelines given in Direct Recruit Class II Engineering Officers ' Association 's case (supra).
We have, therefore, to evolve a procedure for fixing their seniority.
That procedure cannot be in violation of the guidelines laid down in Direct Recruit Class II Engineering Officers Association 's case (supra).
Secondly, the seniority given to the petitioner applicants will have to be below the seniority of the outsiders directly recruited through the UPSC as well as below that of the directly recruited erstwhile ad hoc Medical Officers This is not and cannot be disputed on behalf of the petitioner applicants.
This matter was heard earlier on 14th September, 1992 and was reserved for judgment.
At that time, neither the in service direct recruits nor the outsider direct recruits were made parties to the application.
They made separate applications, being I.A. Nos. 2 and 3 respectively for im pleadment/intervention and requested that they be heard in the matter before judgment is pronounced.
Hence, this matter was set down for a fresh hearing and all the parties were heard on 11th and 18th January, 1993.
The anxiety of the interveners, was obvious.
In no case their seniority should be disturbed and they be penalised for passing the examinations/interview tests and for coming into the cadre according to the rules through 9 the UPSC, and no premium should be given to the applicants for their refusal to appear for the tests or for their failure to pass the same.
This contention of their is unexceptionable and whether they had appeared in the case or not, the Court was bound to protect their interests particularly when the matter was heard in their absence.
The petitioner applicants, however, relied upon a decision of this Court in Dr. P.P.C Rawani & Ors. etc vs Union of India & Ors., (JT 1991 (6) 534).
Shri Bhandare, appearing for the petitioner applicants, made a very fervent plea that in the circumstances, the course adopted by this Court in Dr. Rawani 's case (supra) should be followed which will do no injustice to both the categories of direct recruits.
We have gone through the said decision and have anxiously considered whether the course adopted there should be adopted in the present case.
We are conscious of the fact that the petitioner applicants have been serving the Railways from the year 1968.
It is also possible, as contended on their behalf that many of the outside direct recruits have joined the service long after 1968 and some of them might have even taken initial instructions from the petitioner applicants.
We are also conscious of the fact that candidates in service have a disadvantage as against the fresh candidates in the tests particularly when they face the tests after a long lapse of time.
As against this, however, we cannot lose sight of the fact that the recruitment rules made under Article 309 of the Constitution have to be followed strictly and not in breach.
If a disregard of the rules and the by passing of the Public Service Commissions are permitted, it will open a back door for illegal recruitment without limit.
In fact this Court has, of late, been witnessing a constant violation of the recruitment rules and a scant respect for the Constitutional provisions requiring recruitment to the services through the Public Service Commission.
It appears that since this Court has in some cases permitted regularisation of the irregularly recruited employees, some Governments and authorities have been increasingly resorting to irregular recruitments.
The result has been that the recruitment rules and the Public Service Commissions have been kept in cold storage and candidates dictated by various considerations are being recruited as a matter of course.
What is further, in the present case, some of those like the petitioner applicants who were initially recruited on ad hoc basis, have exerted themselves and taken pains to appear for the tests before the UPSC and have enrolled themselves through regular channel unlike in Dr. Rawani 's case (supra).
We have thus on hand three classes of 10 employees as pointed out earlier, viz., the outside direct recruits, the in service direct recruits and the ad hoc employees like the petitioner applicants who were regularised through the Court 's order.
Further, Dr. Rawani 's case (supra), as has been pointed out on behalf of the respondents, pertains to the Central Government Health Services which has a larger component both at the initial and promotional stages.
The course adopted by this Court to direct creation of supernumerary promotional posts at every higher promotional stage there, may not be feasible in the medical service in the Railways.
The creation of supernumerary posts has its own limitations, both physical and financial.
The burden of additional posts even when they are not necessary and cannot be accommodated, is not easy to carry.
We are, therefore, of the view that the direction given in Dr. Rawani 's case (supra) has to be confined to the special facts of that case and cannot be extended to other cases.
In any case, this court should not give any such direction to the Railways.
If, however, the Railways decide to follow that course, they can do so and nothing prevents them from doing it.
We would rather refrain from creating a precedent by giving such directions.
In the result, we direct that the seniority of the direct recruits both outsiders and insiders should be determined according to the dates of their regular appointment through the UPSC and the petitioner applicants should be placed in the seniority list after those direct recruits who are recruited till this date.
Among themselves, their seniority will be governed by the dates of their initial appointment.
The interlocutory application is disposed of in the above terms.
G.N. Application disposed of.

summary:
The petitioner applicants were recruited by the Railways on ad hoc basis as Assistant Divisional Medical Officers between 1968 and 1984.
Though UPSC recruited candidates on regular basis from time to time, either due to non availability of number of candidates or non joining of selected candidates, vacancies remained and persons like the petitioners continued in such vacancies on ad hoc basis.
The petitioners riled Writ Petitions before this Court for regularisation of their services.
By orders of this Court, the services of the petitioners have already been regularised.
The present application is for fixing the seniority of the Writ Petitioners whose services were regularised.
Disposing of the application, this Court, HELD: 1.
Since the petitioner applicants are admittedly not regularly appointed through the UPSC according to the rules but have been directed to be regularised by following the procedure laid down by this Court, it is obvious that they are not appointed to their posts according to the rules.
Under no circumstances, therefore, they fall within the scope of guidelines in Direct Recruit Class II Engineering Officers 'Association 's case.
The expression "in accordance with the rules ' or 'according to rules" used in the said guidelines means the rules of recruitment and not the special procedure laid down by this Court The petitioner applicants thus fall in an altogether different category.
Therefore, a procedure for fixing their seniority has to be evolved.
That procedure cannot be in violation of the guidelines laid down in Direct Recruit Class II Engineering Officers ' 2 Association 's case.
Further, the seniority given to the petitioner applicants will have to be below the seniority of the outsiders directly recruited through the UPSC as well as below that of the directly recruited erstwhile ad hoc Medical Officers.
[8C F] Direct Recruit Class II Engineering Officers Association & Ors.
vs State of Maharashtra & Ors.
, ; , referred to.
Of late this Court has been witnessing a constant violation of the recruitment rules and a scant respect for the Constitutional provisions requiring recruitment to the services through the Public Service Commission.
Since this Court has in some cases permitted regularisation of the irregularly recruited employees, some Governments and authorities been increasingly resorting to irregular recruitments.
The result has been that the recruitment rules and the Public Service Commissions have been kept In cold storage and candidates dictated by various considerations an being recruited as a matter of course.
[9E G] 2.2.
What is further, in the present case, some of those like the petitioner applicants who were initially recruited on ad hoc basis, have themselves and taken pains to appear for the tests before the UPSC and have enrolled themselves through regular channel.
There are three classes of employees viz., the outside direct recruits, the in service direct recruits and the ad hoc employees like the petitioner applicants who were regularised through the Court 's order.
The direction given In Dr. Rawani 's case for creation of supernumerary posts has to be confined to the special facts of that case and cannot be extended to other cases.
In any case, this Court should not give any such direction to the Railways.
If, however, the Railways decide to follow that course, they can do so and nothing prevents them from doing it.
This Court would rather refrain from creating a precedent by giving such directions.
[9G H; 10A D] Dr A.K Jain & Ors.
vs Union of India & Ors.
[1987] Sapp.
SCC 497 and Dr. P.P. C. Rawani & Ors etc.
vs Union of India & Ors.
, JT 1991 (6) 534, referred to.
The seniority of the direct recruits both outsiders and insiders ,should be determined according to the dates of their regular appointment through the UPSC and the petitioner applicants should be placed in the seniority list after those direct recruits who are recruited till date.
Among 3 themselves, their seniority will be governed by the dates of their initial appointment [10E]