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Issues: (i) Whether the alleged sale transactions and power of attorney could be validated or enforced against the company in liquidation despite the pending winding-up proceedings, the Supreme Court undertaking, and the absence of proper corporate authorization. (ii) Whether the applicants could be treated as bona fide purchasers entitled to relief, including lifting of attachment and leave to sue.
Issue (i): Whether the alleged sale transactions and power of attorney could be validated or enforced against the company in liquidation despite the pending winding-up proceedings, the Supreme Court undertaking, and the absence of proper corporate authorization.
Analysis: The property formed part of the undertaking of the company and its sale required compliance with the statutory restrictions on disposal of corporate assets. The winding-up petition had already been presented, so dispositions made thereafter attracted the rule that such transfers are void unless the court orders otherwise. The company was also bound by a prior undertaking given to the Supreme Court not to alienate its immovable assets except with leave. In addition, no resolution of the company in general meeting authorising the sale or the grant of power of attorney was produced, so the alleged authority of the director could not bind the company. The transactions were also inconsistent with the condition in the land clearance and with the charge in favour of secured creditors.
Conclusion: The power of attorney and the sale deeds executed on its strength were not binding on the company in liquidation and could not be enforced against it.
Issue (ii): Whether the applicants could be treated as bona fide purchasers entitled to relief, including lifting of attachment and leave to sue.
Analysis: The purchasers were expected to conduct proper inquiries into the company's records, audit reports, and encumbrances before acquiring land with factory and godown structures from a public company in financial distress. They did not establish such diligence. The facts showed prior Supreme Court restraints, existing security interests, and irregular execution of the conveyances. In these circumstances, the plea of bona fide purchase was not available, and no equitable validation could be granted under the winding-up jurisdiction. Since the underlying documents themselves were not enforceable, no suit could be permitted to proceed on that basis and the attachment could not be lifted.
Conclusion: The applicants were not entitled to be treated as bona fide purchasers, and their prayers for relief, including leave to sue and lifting of attachment, failed.
Final Conclusion: The applications were rejected in their entirety, and the official liquidator's possession and steps in relation to the properties were upheld.
Ratio Decidendi: In winding up, a disposition of company property made without proper corporate authority and in breach of a subsisting court undertaking cannot be validated against the company, and a purchaser who fails to make due inquiry cannot claim bona fide purchaser protection.
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