Allahabad High Court
VINESH KUMAR SANGHALversusOFFICIALL LIQUIDATOR UTTAR PRADESH ATTACHED TO THE HIGH COURT OF JUDICATURE AT ALLAHABAD
- Decided
Holding
The appellant is entitled to a refund of Rs.7,25,000 (his share of the earnest money) but not the Rs.2,000 cash, and no interest is payable.
Summary
The appellant, Vinesh Kumar Sanghal, sought a refund of Rs.7,25,000 of earnest money he deposited as part of a joint bid with Kapil Kumar for a property auctioned by the Official Liquidator (O.L.) of Arya Hotels Limited. The O.L. returned the joint earnest money by a single cheque in both bidders' names, and refused to issue separate cheques to the appellant. The Single Judge rejected the appellant's refund application, holding there was no evidence of Kapil Kumar's objection to a separate refund. On appeal, the High Court examined the bank certificates showing that seven of the nine demand drafts were issued by the appellant, establishing his ownership of the claimed amount. The Court allowed the appeal, set aside the lower court's order, directed the O.L. to refund Rs.7,25,000 to the appellant within four weeks, denied refund of the Rs.2,000 cash, and rejected the claim for interest due to the long delay.
Issues considered
- Whether the appellant is entitled to a refund of his share of earnest money deposited jointly with an unknown co-bidder.
- Whether the Official Liquidator's policy of issuing a joint cheque precludes a separate refund to an individual bidder.
- Whether interest can be awarded on the delayed refund claim.
- Whether the cash component of the earnest money can be refunded.
Subjects
- official liquidator
- liquidation
- earnest money refund
- joint bid
- indemnity bond
- interest claim
- company law
- insolvency
Judgment
HIGH COURT OF JUDICATURE AT ALLAHABAD
SPECIAL APPEAL No. - 1025 of 2026
Vinesh Kumar Sanghal
.....Appellant(s)
Versus
Official Liquidator, Uttar Pradesh, attached to the
High Court of Judicature at Allahabad .....Respondent(s)
Counsel for Appellant(s) : Roshni Shukla
Counsel for Respondent(s) : Rishabh Agarwal
Chief Justice's Court
HON'BLE ARUN BHANSALI, CHIEF JUSTICE
HON'BLE ARUN KUMAR, J.
1. This appeal is directed against order dated 3 August 2026 passed by
learned Single Judge in Misc. Application No. 6 of 2022, whereby the
application made by the appellant seeking refund of Rs. 7,27,000/- has
been rejected.
2. The application was filed seeking direction from the Company Court to
direct the Official Liquidator ('O.L.') to refund a sum of Rs. 7,27,000/-
along with interest with effect from 20 November 2005 till the actual
payment was made.
3. Submissions were made that the company Arya Hotels Limited in
liquidation was wound up by order dated 03.09.2002. On 03.09.2005, the
O.L. took charge of the assets of the company in liquidation and put the
same to public auction, wherein the appellant along with one Kapil
Kumar submitted a joint bid and being the highest bidder, their bid was
accepted. The amount of Rs. 10,35,000/- was deposited by way of 9
demand drafts and Rs. 2,000/- was deposited in cash as earnest money.
4. Ultimately, the sale of the property was confirmed in favour of one
Manoj Kumar Goel who had offered and raised the bid amount. The
amount deposited as earnest money by the appellant along with Kapil
Kumar was returned by the O.L. through cheque dated 07.08.2008 issued
jointly in their name.
SPLA No. 1025 of 2026
2
5. The appellant approached the O.L. with a request to issue separate
cheques in the name of appellant and the said Kapil Kumar, however, the
same was not accepted on account of the policy being followed by the
O.L.
6. Whereafter, the present application was filed seeking refund of the
earnest money paid in part by the appellant with the submissions that
whereabouts of other co-bidder Kapil Kumar was not known.
7. The application was contested by the O.L. based on the principle being
followed for refund of the amount.
8. The learned Single Judge came to the conclusion that there was nothing
on record to indicate that said Kapil Kumar had no objection in refunding
the money separately to the appellant and therefore, he was not entitled to
the relief and consequently, rejected the application.
9. Counsel for the appellant, with reference to the receipt issued by the
O.L. of the demand drafts in question as well as the certificate issued by
the bank, made submissions that out of the 9 demand drafts, 7 demand
drafts were got issued by the appellant, 3 from his own bank account and
4 from the bank account of his brother Mr. I.C. Sanghal and as separate
demand drafts were deposited, the fact that the amount belonged to the
appellant was clearly evident and therefore, the learned Company Judge
was not justified in refusing the said relief.
10. Further submissions have been made that the appellant is prepared to
produce indemnity bond in case, at any point of time, any claim is made
qua the said amount to be paid to the appellant.
11. Counsel for the respondent made submissions that the policy of the
O.L. Office in this regard is clear, however, in case any order is passed by
the Court, the respondent would abide by the same.
12. We have considered the submissions made and have perused the
material available on record.
13. It is not in dispute that a joint bid was made by the appellant along
with one Kapil Kumar. If the amount had been deposited by one
SPLA No. 1025 of 2026
3
draft/cheque, the position would have been different, however,
admittedly, 9 demand drafts were produced and the certificate, which has
been issued by the bank, clearly indicates that 7 drafts were purchased by
the appellant from the bank and the said fact clearly indicates that out of
the amount of Rs. 10,37,000/-, a sum of Rs. 7,25,000/- was deposited by
the appellant and in those circumstances, there appears to be no reason to
deny the appellant the refund of the said amount.
14. Insofar as the cash of Rs. 2,000/- sought to be refunded to the
appellant is concerned, the said amount cannot be ordered to be refunded.
15. So far as the claim of interest by the appellant is concerned,
admittedly, the cheque was issued by the O.L. in time way back in the
year 2008 and the claim thereafter, after 14 years, has been raised before
the Court and therefore, the claim of interest is not justified.
16. In view of above discussion, the appeal is allowed. The order dated 3
August 2026 passed by learned Single Judge is set aside.
17. The application filed by the appellant being Misc. Application No. 6
of 2022 is allowed, on the appellant filing an indemnity bond for the said
amount indicating that in case any dispute is raised/demand is made from
the O.L. qua the said amount of Rs. 7,25,000/-, the appellant would
refund the same, a sum of Rs. 7,25,000/- be refunded to the appellant by
the O.L. in his individual name within a period of four weeks.
(Arun Kumar, J) (Arun Bhansali, CJ)
September 9, 2026
AHA/Anil
Digitally signed by :-
AFZAL HUSAIN ABBASI
High Court of Judicature at Allahabad
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