1. ' Through this application the auction-purchaser Popular Group of Industries, have sought direction to the Official Liquidator that the sale certificate to be issued by him should consist of cost of land and building viz. Rs,9.3 million only.
2. ' The auction-purchasers' claim is that their bid for the purpose of purchase of Messrs Firdous Spinning and Weaving Mills Limited was confirmed by order dated 10-10-1994 for a sum of Rs,75,500,000. The break-up of the bid offered by them on 24-9-1994 was in the following manner:- -
(a) Land cost amounting to Rs,1.8 million;
(b) building, machinery and fixture cost amounting to Rs,73.7 million.
3. ' The auction-purchaser is now contemplating for transfer of Messrs Firdous Spinning and Weaving Mills Limited in their favour, for this purpose, Official Assignee is required to issue Sale Certificate in their favour indicating cost at the time of approval of the offer. The applicant had indicated cost at the time of cost of land of Rs,1.8 million, whereas remaining bid money consists of cost of 3 items machinery, fixtures and building. Under the law, stamp duty is leviable on the land and building only. Thus, the amount comes to Rs,9.3 million for which the auction purchaser is ready and willing to pay the stamp duty on this value.
4. ' In order to understand the contention raised, it is expedient, at the outset, to recount the events, which necessitated the filing of the application under disposal, vide public notice advertised in daily Dawn and Jang dated 1-1-1994, whereby Official Assignee/Official Liquidator invited sealed offers on "as it is where it is" basis for leasehold rights, title and interest of Plot No,A-11, SITE, Nooriabad, measuring 12.5 acres with construction, structure, machinery, fittings and fixtures, furniture, being property of Messrs Firdous Spinning & Weaving Mills Limited in liquidation. The terms of offer by the O/L were as follows:--
(a) Sealed tender accompanied with pay order of 10% of the offer amount in favour of 0/A/O/L should reach the undersigned on 17-1-1994 at 12-00 noon, which will be opened on the same day and the time in presence of the person, who wish to be present.
(b) The undersigned may cancel the offer without assigning any reason.
(c) All offers are subject to confirmation of the High Court of Sindh.
(d) Balance of purchase price will be paid by the purchaser within 15 days from the confirmation of the offer by High Court, failing which the deposited amount shall sand forfeited.
(e) Inspection of the property on 11-1-1994 from 11-00 a.m. To 1-00 p.m.
5. ' In response to the above public notice, two offers, namely Messrs Silver Industries and Popular Group of Companies were received by Official Assignee, which were placed in Court, through reference dated 18-9-1994, which was disposed of by order dated 28-9-1994 in the following terms:-- "By consent it is directed that both the parties would appear before Official Assignee on 3-10-1994 at 1-00 a.m. And give their respective bids to him which will be accompanied by ten per cent.
6. Earnest money. On the basis of such offer the Official Assignee will make a reference which will be placed in Court on 4-10-1994."
7. ' Pursuant to the order dated 28-9-1994 Yousuf Jan of Messrs Silver Industries and Suleman Roshan of Messrs Popular Group of Companies (auction-purchaser) appeared before Official Assignee.
8. Yousuf Jan of Silver Industries requested for offer without further payment but was not allowed, being violative of the aforesaid order, whereas Suleman Roshan of Messrs Popular Group of Companies submitted his offer dated 29-9-1994 for Rs,7,55,00,000 with further draft of Rs,15,50,000 making 10% of the bid amount as he had already deposited Rs,60,00,000 with 0/A. The offer of Messrs Popular Group of Companies was with following terms:--
(i) Rs,75,50,000 deposited with offer.
(ii) Rs,1,79,50,000 cash to be deposited on acceptance of offer.
(iii) Balance amount of Rs,5,00,00,000 payable in five equal yearly instalments with 14% mark-up.
9. The first instalment will be paid after one year.
(iv) Offer is free from liabilities.
(v) Additional security will be mortgaged in addition to the purchased property.
10. ' Official Assignee requested for imposition of further condition:--
(i) That the bidder shall furnish security for balance amount subject to satisfaction of Habib Bank.
(ii) That in default of condition of sub-paras. (ii) and
(iii) of para. 2 ante the entire amount so far deposited will be forfeited and the property will be sold by Official Assignee/Official Liquidator.
(iii) That the name of the nominee/nominees be disclosed within 30 days from confirmation of offer.
(iv) That the Court may fix time for payment of the first instalment.
11. ' The officer of the applicant was accepted by order dated 10-10-1994, operating part of the order reads as follows:-- "Accordingly the offer of Rs,7,55,00,000 made by Popular Group of Companies is accepted on the condition set out in the statement of Habib Bank Limited together with the clarification mentioned hereinabove. With regard to Condition No,10 in the said statement Mr. Raja Qureshi states that the name of the nominee is Popular Spinning Mills (Pvt.) Limited. Reference disposed of."
12. ' The applicants have deposited the entire amount of sale price, thus the present application with prayer stated hereinabove.
13. ' The Official Liquidator has vehemently contested the application through reply submitted by him, by pleading the Messrs Firdous Spinning and Weaving Mills at Nooriabad was sold to Popular Group of Companies (applicant) for 7.55 crores, which has been deposited by the applicant/auction-purchaser within the period granted by the Court i,e, five years. It is also pleaded that sealed tender, through various newspapers for the purchase of assets of Firdous Spinning and Weaving Mills were invited, the offers received were placed in Court for approval and the Court, while accepting the offer of the applicant by order dated 10-10-1994 had not accorded permission for bifurcation in terms of land and building and the applicant has to pay stamp duty on full cost of Rs,7.55 crores. I have heard Mr. Siddiq Mirza, Advocate for the applicant. He in support of the application has taken two fold plea, firstly, that the offer made by the auction-purchaser was with break-up of (i) land amounting to Rs,1.8 million, (ii) building, machinery, fitting and fixtures cost Rs,7.37 million, as such, the value of machinery, it being movable, cannot be subject to registration and stamp duty. His second contention was that the auction-purchaser is required to pay stamp duty on conveyance deed for land/building in terms of section 27-A of the Stamp Act in accordance with the Schedule. Mr. Siddiq Mirza urged that since the sale was under the liquidation proceedings by Official Liquidator in terms of clause (1) of section 333 of Companies Ordinance, the same cannot be equated with sale under the orders of Civil Court, therefore, sale has to be conveyed through Conveyance Deed in view of decision of Specialty Traders Mills v. Firdous Textile Mills Limited 1998 CLC 2109. The Official Liquidator has been vested with the power under clause (f) of section 333 of Companies Ordinance to sell the movable and immovable properties and things in auction of the Company by public auction or private contract with the power to transfer whole to any person or Company or to sell the same in partial. Such power of O/L is subject to the sanction of offer by the Court or of the Committee of Inspection (as the case may be). The Company under winding up continues to be a company for all the purposes till it is dissolved. However, from the date of announcement of winding up of the Company, O/L is deemed to have taken over the management of the Company and it is so ordained in section 402 but it does not have its Director, its Chief Executive instead O/L manages the same and the assets of the Company are deemed to be in trust with the Court while physical custody of such assets remains with O/L.
14. It may be clarified that in case of sale by Civil Court in terms of Order 21, Rule 92, sale certificate has to be issued. Said provisions are not applicable to the sale by OIL in terms of clause (f) of section 333 of the Companies Ordinance, but both instruments i,e, sale certificate as well as conveyance deed are subject to stamp duty under Articles 18 and 23 of Stamp Act respectively.
15. ' Mr. Siddiq Mirza with vehemence contended that machinery cannot be subject of registration or stamp duty being "movable property". He referred the definition of immovable property as contained in section 2(6) of Registration Act, which excludes the machinery, though embedded in or attached to the earth, if dealt with apart from the land. Section 2(6) reads as under:-- "(6) 'immovable property' includes land, building, benefits to arise out of land, things attached to the earth, or permanently fastened to anything attached to the earth, hereditary allowances, rights to ways, lights, ferries and fisheries but does not include---
(a) standing timber, growing crops or grass whether immediate service thereof is intended or not;
(b) fruit upon and juice in trees whether in existence or to grow in future; and
(c) machinery embedded in or attached to the earth, when dealt with apart from the land."
16. ' In support of his submission, Mr. Mirza has referred the decision of Habib Credit and Exchange Bank Limited v. Hamaliya Textile Mills (Pvt.) Limited PLD 2000 Lah. 391 wherein learned Single Bench of Lahore High Court, after referring the definition of 'immovable property' given in section 2(6) of the Registration Act, was of the view that the machinery installed in the mill could not be treated as immovable property if it had been dealt with apart from the land inasmuch as the price thereof was separately assessed and offered by the purchaser which was accepted as such, resultantly, the machinery was agreed to be sold to the petitioner independent of the land and building.
17. ' Para. 10 of the report reads as under:- "10. Reverting to the plea that the machinery installed in the mill could not be treated as immovable property for it had been dealt with apart from the land inasmuch as the price there of was separately assessed and offered by the purchaser which was accepted as such, resultantly, the machinery, was agreed to be sold to the petitioner independent of the land and building. The plea afore-noted was sought to be supported by the applicant by the bid-sheet (not found on the record, copy whereof had been obtained from the learned counsel because the Official Liquidator stated before me that such a bid sheet was filed) wherein the price of the machinery had been separately assessed and offered by the applicant which was recommended by the Official Liquidator and accepted by the Court."
18. (Emphasis added).
19. ' The case referred to above is distinguishable with the facts of the instant case. In the present case all assets of factory, including land, building, machinery, was offered for sale through sealed tender and the same was sold without bifurcation in terms of land, building and machinery whereas in Habib Credit and Exchange Bank case, the machinery was sold separately. The question which requires determination in the present case is whether the machinery of factory though movable, once attached, is to be held immovable property or not. Such question was examined by a Division Bench of Madras High Court in case of Muhammad Ibrahim v. Northern Circars Fibre Trading Co.
20. AIR (31) 1944 Madras 492. The question was whether the machinery of the Mill was immovable property so as to render an agreement creating charge over it compulsorily registrable. The view taken was that as there was no reason to think that the owner of the factory intended to keep the machinery of the Mill and the land to which it was affixed apart and his object was to become the owner of both for the purchase of carrying on the business for his own individual benefit the plant and machinery of the Mill, in all the circumstances of the case, was immovable property so annexed to the floor of the factory as to become part of it.
21. ' To arrive at such conclusion, definition of 'immovable property' given in the Registration Act and Transfer of Property Act was discussed with reference to the provisions (section 4) supplemented to the Registration Act, as follows:-- "If we now turn to section 4, Transfer of Property Act, we find it says that section 59 is among a group of sections therein mentioned which should all be read as supplemental to the Registration Act, 1908. So far as the question of registration is concerned, we think that the two Acts are in pari materia and it will therefore, be wrong to construe the definition of 'immovable property' in the one Act as being different from that in the other, in the absence of words clearly pointing to a distinction. Coming back to the definition of 'immovable property' in the Registration Act and leaving out the several species of immovable property enumerated therein which are all different from the property here under-consideration, it will be seen that the governing principle with respect to immovable property in general is stated in the following words 'things attached to the earth or permanently fastened to anything which is attached to the earth'. The first part of the definition implies that what is really movable property may become immovable property by being directly attached to the earth. The second part indicates that though the attachment is not direct, still if the movable property is fastened to something which is directly attached to the earth, it will be immovable property for the purpose of this Act. The Transfer of Property Act, as we have already observed, contains a definition of 'things attached to the earth' but not of 'thing permanently fastened to anything which is attached to the earth'. We are however, loath to accept as correct a dissection and analysis of the definition given by the Registration Act for the purpose of giving it a wider scope than what is expressed in the definition contained in the Transfer of Property Act.
22. Indeed, it seems to us that clause (c) of the latter definition which refers to a mediate and not a direct attachment is substantially what is referred to in the second part of the definition in the Registration Act. The inquiry should accordingly be not whether the attachment is direct or indirect but what is the nature of the attachment and what its object and purpose If the intention is apparent to make the articles part of the land they do become part of the land."
23. What is really 'movable property' becomes 'immovable property' if it is attached to the earth or permanently fastened to anything which is attached to the earth. The nature of attachment, its object and purpose would be dominant factor. An article may be very firmly fixed to the land and yet the circumstances may be such that it was never intended to be part of the land and then it does not become part of the land. The following illustration will demonstrate thus:--
(i) blocks of stone placed one on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones if deposited in a builder's yard and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels.
(ii) An anchor of a large ship must be very firmly fixed to the ground in order to bear the strain of the cable, yet no one could suppose that it became part of the land. Similarly, an anchor fixed in the soil for the purpose of bearing the strain of the chain of a suspension bridge would be part of the land. Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered part of the land, unless the circumstances are such as to show that they were intended to be part of the land, the onus of showing that they were so intended, lying on those who assert they have ceased to be chattel and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to show that it was intended all along to continue a chattel.
24. ' In the instant case, as already observed, the assets of the factory were sold alongwith land and building as such the machinery cannot be treated as movable property. I could have persuaded myself to accept the contention of Mr. Mirza that the 'machinery' as 'movable' provided same would have been dealt with apart from the land in terms of clause (c) subsection (6) of section 2 of the Registration Act but once the land, building and the machinery have been sold in one lot, same cannot be bifurcated so as to treat the machinery independently as movable in terms of clause (c). When the factory is in running condition as contended by Official Assignee, not disputed by applicant, thus the textile machinery imbedded in the earth, in a factory sold with building and land is 'immovable property' for the purpose of registration and Stamp Act. Therefore, the plea raised on behalf of the auction-purchaser/ applicant that he is required to pay stamp duty on the value of land only is not tenable.
25. ' Reverting to the second contention, raised by Mr.Siddiq Mirza that the auction-purchaser is required to pay stamp duty on the basis of valuation of table notified by the Collector in terms of section 27-A. Perhaps, the provision of section 27 of the Stamp Act, has escaped the attention of the learned counsel for the applicant, which reads as under:-- "27. Facts affecting duty to be set forth in instrument. -The consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein."
26. ' The term "consideration" used above is very significant, the same has to be mentioned in the instrument. There is no dispute that consideration in the present proceedings was Rs,7.55 millions, that consideration has to be mentioned in instrument. As such the plea taken by the learned counsel for the auction-purchaser that the auction-purchaser is required to pay stamp duty on the basis of Schedule is not tenable.
27. The purpose of enacting section 27-A was to fix minimum valuation of the property for the purpose of levying of stamp duty and registration fee on instruments subject to registration, due to practice culcated gradually by the parties to such instruments to suppress the actual consideration with motive to avoid payment of required stamp duty and registration fee. Through the said provision, the authority has been authorised to levy the duty on the basis of valuation table. The provisions of section 27-A of the Stamp Act cannot be pressed into service, where the actual/real consideration is determined and approved by Court.
28. In the light of the above discussion, the application has no merit and the same is dismissed. 0/A is allowed to execute the Conveyance Deed on the valuation of the auction price in respect of the assets of Messrs Firdous Textile Mills Limited consisting of land, building and machinery.