Court dismisses claim for mesne profit & MoU validation due to retained possession & fraudulent preference.

The Court dismissed both applications in the case. The claim for recovery of mesne profit was rejected as possession was retained by the company, and insufficient evidence supported the claim. The application seeking validation of the transaction under the Memorandum of Understanding (MoU) was also dismissed as the transaction was deemed a fraudulent preference under Section 531 of the Companies Act, 1956.

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Issues Involved:
1. Recovery of mesne profit.
2. Validity of the transaction under the Memorandum of Understanding (MoU) in the context of Sections 531 and 531A of the Companies Act, 1956.
3. Determination of whether the right for disposal of premises acquired by the company is an asset of the company.
4. Determination of whether the transaction is a fraudulent preference under Section 531 of the Companies Act, 1956.

Issue-Wise Detailed Analysis:

1. Recovery of Mesne Profit:
The Official Liquidator sought recovery of mesne profit at the rate of Rs. 30 per sq.ft for the office premises and Rs. 10 per sq.ft for parking space per month from 1-9-1999 till 29-5-2007 from the respondents. The Court found that the possession of the premises was not with the applicant as per the MoU but was retained by the company in liquidation. The company had entered into a rent agreement with Decimal Systems Pvt. Ltd., which was substantiated by the pleadings in the suit proceedings. Hence, the claim for mesne profit against the applicant could not be granted. The Court also noted that no other evidence was produced to support the claim of Rs. 30 per sq.ft for the office and Rs. 10 per sq.ft for parking. Consequently, the application for mesne profit was dismissed.

2. Validity of the Transaction Under the MoU:
The applicant sought a declaration that the transaction under the MoU dated 1-9-1999 was valid and not void against the Liquidator under Sections 531 and 531A of the Companies Act, 1956. The Court observed that the MoU was entered into during the period covered under Section 531 of the Act, and the transaction appeared to give a preference to the applicant over other creditors. The MoU included debentures that had not become due, and the transaction was influenced by the involvement of Shri D.D. Mehta, who was closely associated with the company. Therefore, the Court concluded that the transaction was hit by the provisions of Section 531 of the Act and did not validate the transaction.

3. Determination of Whether the Right for Disposal of Premises Acquired by the Company is an Asset of the Company:
The Court examined whether the right for disposal of the premises acquired by the company could be considered an asset of the company. The Court found that the right for disposal and the charge created as per the consent decree were enforceable and created an interest in favor of the company. The company had acquired rights for disposal of the property, which were considered assets of the company. The Court rejected the contention that these rights should not be termed as assets of the company.

4. Determination of Whether the Transaction is a Fraudulent Preference Under Section 531 of the Companies Act, 1956:
The Court analyzed whether the transaction under the MoU constituted a fraudulent preference. The Court noted that the MoU was entered into during the period covered by Section 531 of the Act and appeared to give an intended preference to the applicant, thereby frustrating the rights of other creditors. The transaction included debentures that had not become due and was influenced by extraneous considerations. The Court concluded that the transaction was a fraudulent preference under Section 531 of the Act and did not validate the transaction.

Conclusion:
The Court dismissed both applications. The application for recovery of mesne profit was dismissed as the possession was not with the applicant, and no sufficient evidence supported the claim. The application for validation of the transaction under the MoU was also dismissed as the transaction was found to be a fraudulent preference under Section 531 of the Companies Act, 1956.

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