Court-order breach in property transfers cannot be cured by bona fide purchase claims or section 53 protection.

A transfer of immovable property made in breach of a court-sanctioned compromise scheme and subsisting judicial directions cannot be recognised in law. The High Court held that a subsequent purchaser's plea of good faith, consideration, or lack of notice could not validate a transfer that defied an operative court order. Section 53 of the Transfer of Property Act, 1882 was held inapplicable because the case involved violation of a judicial mandate, not merely a fraudulent inter partes transfer. The transactions were treated as collusive and intended to defeat creditors, and the property was to be dealt with by court auction if the required deposits were not made, with proceeds applied for creditors' benefit.

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Issues: Whether the transfer of the company's immovable property in favour of the intermediary company and the subsequent transfer to the purchaser could be recognised when made in breach of the court-sanctioned scheme and directions; whether the plea of bona fide purchase and protection under section 53 of the Transfer of Property Act, 1882 could validate the transfers; and what relief should follow, including consequences for the committee's inaction.

Analysis: The scheme sanctioned under section 391 of the Companies Act, 1956 and the common order dated 12-2-2004 operated as binding judicial directions controlling the manner in which the property had to be dealt with and the sale proceeds applied. A transfer made by a party to those proceedings in defiance of an operative court order could not be treated as a valid transfer in law. The subsequent purchaser's claim of good faith, consideration, and absence of notice could not override the legal effect of a transfer made in violation of a court order. The protection in section 53 of the Transfer of Property Act, 1882 was held inapplicable in such a situation because the case was not merely of a fraudulent transfer inter partes but of a transfer made in breach of a subsisting judicial mandate. The Court also found that the property transactions were collusive and intended to overreach the court's directions and defeat the creditors' interests. The Committee's inaction was criticised, and the matter was viewed as requiring corrective and deterrent consequences.

Conclusion: The transfer in favour of the intermediary company and the later transfer in favour of the purchaser were declared illegal and non-existent in law, and the property was directed to be dealt with by court auction if the ordered deposits were not made, with the proceeds to be applied for the creditors' benefit.

Final Conclusion: The decision restored the primacy of the court's supervisory directions over a sanctioned compromise scheme, rejected validation of transfers made in breach of those directions, and ensured recovery-oriented relief for the creditors while directing consequential action against the erring persons.

Ratio Decidendi: A transfer of immovable property made by a party in violation of a subsisting court order cannot be recognised in law, and neither consideration nor alleged bona fide purchase can cure the defect or invoke section 53 of the Transfer of Property Act, 1882 against the court's mandate.

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