Court clarifies remedy for official liquidator's possession dispute under Companies Act

The court addressed an application under section 456 read with section 468 of the Companies Act, 1956, seeking restoration of possession to the official liquidator. The court clarified that section 468 is not the appropriate remedy if the official liquidator's possession is disturbed, directing the official liquidator to approach the District Magistrate under section 456 for resolution.

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Issues: Application under section 456 read with section 468 of the Companies Act, 1956 for restoration of possession to the official liquidator.

In the judgment delivered by G.R. Majithia, J., the court addressed an application under section 456 read with section 468 of the Companies Act, 1956, seeking a direction for the restoration of possession of a property to the official liquidator. The petitioner-company had been ordered to be wound up, and the official liquidator was appointed. The dispute arose when the respondent company, allegedly in possession of some rooms in the building owned by the petitioner company, broke the locks put in by the official liquidator. The respondents contended that the sale of the property to the petitioner company was a sham transaction orchestrated by the managing director of both companies to benefit himself. The court emphasized that the purpose of section 468 is to enable the liquidator to collect company assets efficiently without costly litigation. It clarified that if the official liquidator's possession was disturbed, the appropriate remedy would be through criminal court proceedings, not section 468. The court directed the official liquidator to approach the District Magistrate under section 456, who would determine if the possession was illegally disturbed and take necessary steps for restoration based on evidence presented by both parties. The court concluded by disposing of the petition with the outlined observations.

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