Company liquidation protection bars binding decrees without leave, while disputed flat transfers may fail absent proof of genuine title.

After appointment of a provisional liquidator, proceedings against the company could not validly continue to binding decrees without leave of the Company Court, and decrees obtained without disclosure to the Official Liquidator were treated as invalid against the liquidation estate. The article also notes that alleged flat transfers based on disputed documents, cash consideration, and unverified approvals did not prima facie appear genuine. The intervenors' failure to produce directed tax records and source-of-funds affidavits justified an adverse inference. Possession was therefore restored to the Official Liquidator, while the intervenors remained free to establish any genuine title through proper proceedings before the Company Court.

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Issues: (i) Whether the consent decrees passed in the Bombay suits after appointment of the provisional liquidator and without leave of the Company Court were valid and binding on the company or the Official Liquidator; (ii) whether the alleged flat transactions were genuine and, if not, whether possession ought to remain with the Official Liquidator pending adjudication of the intervenors' claims.

Issue (i): Whether the consent decrees passed in the Bombay suits after appointment of the provisional liquidator and without leave of the Company Court were valid and binding on the company or the Official Liquidator.

Analysis: Once the provisional liquidator had been appointed, the winding-up regime attracted the statutory bar against commencement or continuation of proceedings against the company without leave of the Company Court. The winding up is deemed to commence from the date of presentation of the petition, and the Company Court retains jurisdiction to deal with claims by or against the company. The suits and consent decrees were obtained after appointment of the provisional liquidator, without disclosure of the liquidation proceedings and without notice to the Official Liquidator. The representation of the company by an unauthorised person in those proceedings rendered the process legally impermissible and collusive.

Conclusion: The consent decrees were invalid and void against the company and the Official Liquidator, and were rightly set aside.

Issue (ii): Whether the alleged flat transactions were genuine and, if not, whether possession ought to remain with the Official Liquidator pending adjudication of the intervenors' claims.

Analysis: The claimed sales were supported only by disputed documents, cash payments of the entire consideration, and alleged board approvals whose authenticity was doubted. The intervenors failed to file the directed income-tax material and source-of-funds affidavits, justifying an adverse inference. On the material then available, the transactions did not prima facie appear genuine, though the intervenors were left free to establish their claims before the Company Court under the appropriate procedure and have them examined by the committee constituted for such claims.

Conclusion: The Official Liquidator was entitled to take immediate possession, subject to the intervenors' right to prove genuine title and seek restoration through proper proceedings.

Final Conclusion: The application succeeded in protecting the company's assets by nullifying the post-liquidation consent decrees and restoring possession to the Official Liquidator, while preserving the intervenors' right to establish any genuine claims in the company court.

Ratio Decidendi: After appointment of the provisional liquidator, proceedings against the company could not validly continue or culminate in binding decrees without leave of the Company Court, and disputed transfers supported by unproved cash consideration may be met with adverse inference and treated as prima facie ineffective against the liquidation estate.

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