Court dismisses Company Application Nos. 359 & 360, ruling against applicants. Sale deeds void post-winding up.

The Court dismissed Company Application Nos. 359 & 360 of 2021, ruling in favor of the respondents represented by the Official Liquidator and Administrator. The Court held that the sale deeds claimed by the applicants were void as they were executed after the commencement of winding up, and the applicants failed to exercise due diligence in their purchases. The Court directed the mutation of title and revenue records to reflect the Company's ownership and allowed the applicants to make claims against their vendors.

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Issues Involved:
1. Title to the Disputed Land.
2. Validity of Sale Deeds.
3. Effect of Injunction Orders.
4. Bona Fide Purchases and Due Diligence.
5. Applicability of Section 536(2) of the Companies Act, 1956.

Summary:

Title to the Disputed Land:
The applicants claimed title to 28.11 acres of land through two sale deeds executed by Indian Integrated Energy Limited (IIEL) in 2013. The respondents, represented by the Official Liquidator and Administrator, contended that the Company had acquired 119.105 acres in Nangaimozhi village through 46 registered general powers of attorney (GPA) and two sale deeds in favor of an employee. The Company had taken possession of the entire land, plotted it, and sold 58 acres to 107 customers, entering into maintenance agreements with 359 customers.

Validity of Sale Deeds:
The respondents argued that the sale deeds in favor of the applicants were void as they were executed after the commencement of winding up and were not bona fide. Detailed correlation charts were provided to show that the Company had already conveyed 58 acres to its customers and the remaining land was brought for auction sale. The applicants, however, claimed that their predecessors-in-title purchased the property under sale deeds executed by the GPA holder, D.Sankaran, in 2005.

Effect of Injunction Orders:
An interim injunction order was issued on 24.04.2003, restraining the GPA holders from alienating lands purchased by the Company. The GPA holder, D.Sankaran, was one of the respondents in this order, which was extended until further orders. The sale deeds executed by the GPA holder in favor of the applicants' predecessors-in-title were, therefore, in contravention of this order and considered void under Section 23 of the Contract Act, 1872.

Bona Fide Purchases and Due Diligence:
The applicants failed to exercise reasonable due diligence as the encumbrance certificates from 1995 onwards would have revealed prior conveyances to the Company's customers. The sales in favor of the applicants in 2013 were not bona fide as they did not account for the existing entries in the public records.

Applicability of Section 536(2) of the Companies Act, 1956:
Section 536(2) of the Companies Act, 1956, renders any disposition of the Company's property after the commencement of winding up void unless validated by the Court. The winding up of the Company was deemed to commence on 24.02.1998. The sale deeds in favor of the applicants, executed in 2013, were much after this date and were, therefore, void. The Court concluded that these dispositions were detrimental to the interest of the Company and could not be validated.

Conclusion:
Company Application Nos. 359 & 360 of 2021 were dismissed. The Official Liquidator was directed to mutate the title and revenue records to reflect the Company's ownership and conclude the auction sale. The applicants were allowed to make claims against their vendors.

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