2014 (2) TMI 215 - HC - Companies Law

Court dismisses Achyut Kumar Sharma's claim, imposes Rs. 25,000 costs, deeming him nominal land owner.

Reserve Bank of India Versus MS JVG Finance Ltd.

Reserve Bank of India Versus MS JVG Finance Ltd. - TMI Issues Involved:1. Impleadment of the applicant as a necessary party in the company petition.2. Setting aside the auction of land and subsequent orders.3. Restoration of the auctioned property to the applicant.4. Examination of the applicant's ownership claim over the land.5. Validity of the General Power of Attorney (GPA) and its cancellation.6. Alleged benami transaction and the real ownership of the land.7. Credibility and source of funds for purchasing the land.8. Delay in challenging the liquidator's actions and auction process.9. Report and findings of the Serious Frauds Investigating Office (SFIO).Detailed Analysis:1. Impleadment of the Applicant as a Necessary Party:The applicant, Achyut Kumar Sharma, sought to be impleaded as a necessary party in the company petition. The court dismissed this plea, noting that no substantive relief regarding the property allegedly belonging to the applicant was sought, nor were the particulars of the property provided. The court emphasized that the applicant failed to pursue any legal remedy available to him in time.2. Setting Aside the Auction and Subsequent Orders:The applicant requested the court to set aside the auction conducted on 17.05.2006 and the order dated 31.07.2006, which handed over possession of the land to the auction purchaser, M/s. Metro Nirvana. The court found no merit in the applicant's claims, noting that the auction was conducted under court orders and the applicant failed to challenge the liquidator's actions for six years.3. Restoration of the Auctioned Property:The applicant sought restoration of the auctioned property, claiming lawful title and ownership. The court dismissed this request, emphasizing that the applicant's claim lacked credibility and was not substantiated with sufficient evidence.4. Examination of the Applicant's Ownership Claim:The applicant claimed ownership of the land based on sale deeds from 1995. The court examined the evidence, including the SFIO report, and found that the applicant could not establish the source of funds used for purchasing the land. The court noted discrepancies in the applicant's statements and the lack of credible evidence supporting his ownership claim.5. Validity of the General Power of Attorney (GPA) and Its Cancellation:The applicant executed a GPA in favor of C.M. Chopra, an employee of the company in liquidation. The court found that the cancellation of the GPA through an unregistered document lacked legal validity. The court noted that the GPA was registered and the applicant's subsequent actions raised doubts about the genuineness of his claim.6. Alleged Benami Transaction and Real Ownership:The court considered the affidavit of V.K. Sharma, the ex-managing director of the company in liquidation, which stated that the land was purchased by the company in the benami name of the applicant. The court concluded that the land belonged to the company, and the applicant was merely a nominal owner. The possession of original title deeds by V.K. Sharma further supported this conclusion.7. Credibility and Source of Funds:The court scrutinized the applicant's claim of purchasing the land with personal funds and loans from friends and relatives. The SFIO report revealed inconsistencies and the lack of credible evidence regarding the source of funds. The court found the applicant's explanations unconvincing and concluded that the funds for purchasing the land came from the company in liquidation.8. Delay in Challenging Liquidator's Actions:The court noted that the applicant did not challenge the liquidator's actions or the auction process for six years. The timing of the present application, filed when the sale deed was about to be executed in favor of the auction purchaser, suggested that the applicant was indulging in delaying tactics.9. SFIO Report and Findings:The SFIO report investigated the title to the lands and the funds used for their purchase. The court found that the SFIO's findings supported the conclusion that the land belonged to the company in liquidation. The applicant's failure to establish the source of funds and the possession of title deeds by V.K. Sharma reinforced this conclusion.Conclusion:The court dismissed the application filed by Achyut Kumar Sharma with costs of Rs. 25,000/-, to be deposited in the account of the company in liquidation within two weeks. The court found that the applicant's claims were not credible, lacked sufficient evidence, and appeared to be an attempt to delay the proceedings. The land in question was determined to belong to the company in liquidation, and the applicant was deemed a nominal owner.