Delivery to Official Liquidator allowed where property acquired with misapplied company funds, without deciding final title.

Where property was acquired using misapplied company funds, the court may order delivery of that property to the official liquidator on the basis that the company is prima facie entitled to it; this authorises interim possession but does not decide final title, which must be determined separately. The trust principle permits recovery of assets purchased with diverted funds, and the liquidator may take possession pending resolution of title under the procedures reserved for a final determination.

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Issues: (i) Whether the official liquidator is entitled under Section 185 of the Indian Companies Act to take possession of property (Amber Nath Mills) purchased with bank funds allegedly misapplied by the chairman.

Analysis: The evidence shows funds of the bank were remitted to the disposal of its chairman and used to purchase the Mills, with subsequent backdated documentation and no board authorisation for a loan. Section 63 of the Indian Trusts Act was invoked as the trust principle for recovering property acquired with trust funds. Section 185 of the Indian Companies Act empowers the Court, after a winding-up order, to require trustees, bankers or officers to deliver to the official liquidator any money or property to which the company is prima facie entitled; it does not authorize a final determination of title, which may be made under Sections 186 or 235. Applying these provisions to the proved facts, the company, through the liquidator, has a prima facie claim to the Mills as proceeds of misapplied bank funds.

Conclusion: In favour of Appellant. The official liquidator is entitled under Section 185 of the Indian Companies Act to take possession of the Amber Nath Mills on the basis that the company is prima facie entitled to the property.

Ratio Decidendi: Section 185 of the Indian Companies Act permits the Court to order delivery to the official liquidator of property to which the company is prima facie entitled, without deciding final title, where evidence shows acquisition with misapplied company funds.

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