1994 (5) TMI 198

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....n brief is that they have purchased the aforesaid land, vide registered sale deed executed on 25-10-1980, and registered on 30-10-1980, for a total consideration of Rs. 22,000 from the said company and Shri Roop Singh, the managing director of the said company had executed and got registered the sale deed in favour of the petitioners on receiving the consideration before the Sub-Registrar. 3. The official liquidator has filed a reply contesting this petition. It has been pleaded that no valid sale deed has been executed on behalf of the company in favour of the petitioners and thus the petitioners have not become the owners of the property in question. 4. It appears that in the English translation of the sale deed which was in Hindi l....

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.... of the company was legally entitled to sell the land of the company on behalf of the company then the sale made in favour of the petitioners has to be given effect to. It is true that in the sale deed there is no reference to any power given to the managing director on the basis of any resolution passed by the board of directors of the company. The minutes book of the company is not available with the official liquidator and there is no evidence brought on the record by the petitioners to prove that in fact any such resolution had been passed confering any powers on the managing director to sell or dispose of the immovable property, ie., the land, in question belonging to the company. 7. The learned counsel for the official liquidator h....

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.... perusal of this article makes it evident that the managing director had been authorised to carry on the management of and the affairs of the company on behalf of the board. Unless and until the board of directors had restrained the managing, director from performing any particular act or function in the management of the business of the company, the vast powers given to the managing director to manage the affairs of the company would include disposing of and selling properties of the company. One of the businesses of the company being colonisation, the managing director, in my opinion, had the power to sell the land belonging to the company to any one for consideration. So it was not necessary that any specific resolution ought to have bee....

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....saction in the normal course of the business of the company had taken place after the filing of the winding up petition, such a transaction could be held to be valid. In Burton & Deakin Ltd., In re [1977] 1 All ER 631 (Ch. D), it was held that if a particular disposition falling within the powers was necessary or expedient in the interests of the company, and if the court considered that the reasons given were such as an intelligent and honest man could reasonably hold, the court would normally sanction the disposition. The court would not, except in the case of proven bad faith or other exceptional circumstances, interfere with the discretion conferred on the directors by a company's articles of association even if a winding up petition ha....