2008 (12) TMI 400 - HC - Companies Law

Court rules in favor of respondents, rejecting State Bank of India's claim over property ownership.

The Court rejected the applications filed by the State Bank of India, holding that Respondent Nos. 4 to 13 were lawful owners and in legal possession of ... Winding up - Custody of company’s property - whether Respondent Nos. 4 to 13 are in unauthorised and illegal occupation of land situate, lying and being at Mouje Dariapur Kazipur, City Taluka, bearing Final Plot No. 31 (Original Survey No. 416) of Town Planning Scheme No. 5 Ahmedabad admeasuring 12818 sq. yds. equivalent to 11501 sq. mts. together with construction standing thereon. Held that:- The respondent No. 4 was put into possession of the property in question way back in 1994 and the present application is filed by the applicant in 2004, i.e., after the expiry of the period of 10 years. The respondent No. 4 and, thereafter respondent Nos. 5 to 13 are totally the strangers to the proceedings between the applicant Bank and the Com-pany-in-liquidation. They are the bona fide purchasers and purchased the properties after payment of consideration. Now the possession is sought to be taken away from the respondent Nos. 4 to 13 after the expiry of the period of more than 10 years and that too by alleging the contention that the applicants were not aware about these transactions and that a fraud was committed not only on the applicant Bank but also on the Court. From the facts and on the basis of documents produced on record in support of all these transactions, it clearly appears to the Court that the respondent Nos. 4 to 13 came to be in possession of the properties in question. Thus there is no matter of doubt or suspicion that the respondent Nos. 4 to 13 are the lawful owners and are in legal possession of the properties in question and they cannot be deprived of such lawful rights and legal possession vested in them years back, by entertaining these applications after a considerable length of time and by permitting the applicants to raise the plea of fraud. The Court, therefore, rejects both these applications Issues Involved:1. Possession of the land by the Liquidator.2. Declaration of unauthorized and illegal occupation by Respondent Nos. 4 to 13.3. Declaration of Respondent Nos. 4 to 13 as encroachers and trespassers.4. Declaration of no right, title, or interest of Respondent Nos. 4 to 13 over the land.5. Requirement for Respondent Nos. 4 to 13 to establish their title and interest.Issue-wise Detailed Analysis:1. Possession of the land by the Liquidator:The applicant, State Bank of India, requested the Liquidator of New Gujarat Synthetics Ltd. (NGSL) to take possession of a specified parcel of land. The Court noted that NGSL had mortgaged its leasehold rights to the applicant Bank in 1981 and 1983. However, NGSL transferred its leasehold rights to Aboo Investors and Dealers Ltd. (AIDL) in 1984, with the Bank's knowledge. The Court found that the Liquidator was unaware of this property because the leasehold rights had already been transferred. The Court concluded that the respondent Nos. 4 to 13, who had purchased the property from AIDL, were bona fide purchasers and had lawful possession.2. Declaration of unauthorized and illegal occupation by Respondent Nos. 4 to 13:The Court examined the claim that Respondent Nos. 4 to 13 were in unauthorized and illegal occupation. It was established that Respondent No. 4 had legally acquired the ownership rights from the original owner (a public charitable trust) after obtaining necessary permissions from the Charity Commissioner and following due process. The leasehold rights expired in 1993, and Respondent No. 4 obtained possession through legal proceedings. The Court found no basis to declare their occupation unauthorized or illegal.3. Declaration of Respondent Nos. 4 to 13 as encroachers and trespassers:The Court considered whether Respondent Nos. 4 to 13 were encroachers or trespassers. The evidence showed that Respondent No. 4 had legally acquired ownership and possession through proper channels, including court orders. The subsequent sale of the property to Respondent Nos. 5 to 13 was also lawful. The Court held that Respondent Nos. 4 to 13 were not encroachers or trespassers.4. Declaration of no right, title, or interest of Respondent Nos. 4 to 13 over the land:The Court reviewed the title and interest claims of Respondent Nos. 4 to 13. It was found that they had acquired the property through valid conveyance deeds and proper legal processes. The applicant Bank's mortgage was for the leasehold period, which expired in 1993. The Court concluded that Respondent Nos. 4 to 13 had established their right, title, and interest in the property.5. Requirement for Respondent Nos. 4 to 13 to establish their title and interest:The Court noted that Respondent Nos. 4 to 13 had produced relevant documents and followed legal procedures to establish their title and interest. The applicant Bank's claims of fraud and unauthorized transactions were not substantiated. The Court found that Respondent Nos. 4 to 13 had lawfully acquired the property and were in legal possession.Conclusion:The Court rejected the applications filed by the State Bank of India, holding that Respondent Nos. 4 to 13 were lawful owners and in legal possession of the property. The Court found no merit in the applicant Bank's claims and emphasized that the respondents had followed due process and legal formalities in acquiring the property. The applications were dismissed without any order as to costs.