Court Orders Sale of Property to Settle Debts; Directors Face Action for Non-Compliance

The court decided that property No. 1, Sikandara Road, New Delhi, should be sold to pay off the debts of M/s. Ganga Automobiles Limited (GAL). Mr. G. Sagar Suri had the authority to bind M/s. Delhi Automobiles Ltd. in the sale of the property. GAL and M/s. Delhi Automobiles Ltd. failed to comply with court orders and undertakings, leading to a deemed winding-up order. Attempts to create a third-party interest in the property were deemed to circumvent court orders. Show-cause notices were issued to Directors for false/misleading statements. The court allowed the sale of the property to pay off debts and took action against the Directors for their actions.

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Issues Involved:
1. Liability of property No. 1, Sikandara Road, New Delhi, to be sold in auction to pay off the debts of M/s. Ganga Automobiles Limited (GAL).
2. Authority of Mr. G. Sagar Suri to bind M/s. Delhi Automobiles Ltd. concerning the sale of the property.
3. Compliance with court orders and undertakings by GAL and M/s. Delhi Automobiles Ltd.
4. Creation of third-party interest in the attached property.
5. Issuance of show-cause notices for false/misleading statements and undertakings.

Detailed Analysis:

1. Liability of Property No. 1, Sikandara Road, New Delhi:
The court had to decide whether property No. 1, Sikandara Road, New Delhi, should be sold to pay off the debts of GAL, which was already wound up. GAL had collected large amounts of money through inter-corporate deposits/loans against non-existent bookings of Maruti cars. When GAL failed to refund the money, creditors approached the court, leading to the winding-up proceedings. The court had previously ordered that if GAL's debts were not paid, the property would be deemed attached and sold under court supervision.

2. Authority of Mr. G. Sagar Suri:
Mr. G. Sagar Suri, Chairman of M/s. Delhi Automobiles Ltd., had made a statement before the court that property No. 1, Sikandara Road, would be sold to liquidate GAL's liabilities. However, M/s. Delhi Automobiles Ltd. contended that Mr. Suri had no authority from its Board of Directors to make such a statement. Despite this, the court found that Mr. Suri was fully competent to make the statement based on the power of attorneys he held from the erstwhile owners, allowing him to execute the sale deed on their behalf.

3. Compliance with Court Orders and Undertakings:
Throughout the proceedings, GAL and M/s. Delhi Automobiles Ltd. had given false assurances and undertakings to the court to defer the winding-up order against GAL. Despite several opportunities and extensions, GAL failed to adhere to the payment schedule, leading to a deemed winding-up order and the appointment of the Official Liquidator. The court noted that the non-compliance and breach of undertakings were evident from the repeated failures to pay the creditors as per the agreed schedule.

4. Creation of Third-Party Interest:
M/s. Delhi Automobiles Ltd. attempted to create a third-party interest in the attached property by entering into an agreement to sell with Taneja Developers and Infrastructure Ltd. for Rs. 25 crores. This was done despite the court's attachment order. The court found that this action was an attempt to avoid the consequences of the attachment order and the undertakings given by Mr. Suri.

5. Issuance of Show-Cause Notices:
The court directed the issuance of show-cause notices to the Directors of GAL and M/s. Delhi Automobiles Ltd. during the years 1998 to 2002. This was due to the prima facie evidence of false/misleading statements and undertakings given in the proceedings and the attempt to create a third-party interest in the attached property. The Official Liquidator was instructed to provide the particulars of the concerned Directors and serve them with the show-cause notices.

Conclusion:
The court concluded that property No. 1, Sikandara Road, New Delhi, was liable to be sold to pay off GAL's debts. The Official Liquidator was permitted to take possession of the property with police aid, get it valued, and proceed with the sale under court supervision. The court also initiated action against the Directors of GAL and M/s. Delhi Automobiles Ltd. for their misleading statements and breach of undertakings.

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