TaxTMI 
TaxTMI 
2009 (5) TMI 537
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.... a bona fide transaction, the action of the company requires to be approved under section 536(2) of the Companies Act. 2. The facts are not in dispute that the company-in-liquidation had mortgaged the leasehold interest of the property, which was located in Bhubneshwar in favour of Allahabad Bank and application had been filed before the Debt Recovery Tribunal-II, Delhi by the Allahabad Bank and obtained an attachment of the property on 19-7-2002. Pending adjudication of the application, the Debt Recovery Tribunal had permitted the sale of the property itself on 12-10-2004 (Annexure A-2) and agreement of sale had been entered into with the third party on 3-3-2005. A One-Time Settlement was arrived at with the creditor-Bank on 23-3-2005 f....
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....void but it only required permission of the Court, which was what he was seeking for, by applying to Court under section 536(2). Admittedly, he did not apply to the Court even before effecting the sale, although the proceedings were pending before that date but seeking for approval post the transaction of the sale itself. 5. In support of the contention that a transaction of sale pending proceedings is not void, the learned counsel refers to a decision of this Court in First National Bank Ltd. v. Om Parkash Sharma AIR 1962 Punjab 433. The Court had held in that case that disposition of property by Directors by disbursement of the amount thus obtained towards salary arrears of staff and Directors' remunerations between the date of present....
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....he sanction of the Court was meant to protect the interest of the company and its creditors in case a future challenge to the correctness or genuineness of the security was taken up. That was a case where an application had been filed even prior to the transaction of the sale and the issue essentially was whether the Court had the power to grant permission for sale after the filing of the petition but before the order of winding up was made. In other words, the essential question, which the Court was answering was whether the permission could be sought during the pendency of winding up proceedings during the interregnum between the date of filing of the petition and the date of the order of winding up. The Court had allowed the case stating....
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....y and sale thereof in execution of the decree of the Civil Court without the leave of the Court would be rendered void by operation of section 537 of the Companies Act, even though the suit will be valid. He would also urge if section 537 was to be given its full amplitude, the power of the Court to grant leave under section 536(2) must be understood only to be restricted to movable properties. 8. Learned counsel for the respondent refers to a decision of the Hon'ble Supreme Court in Pankaj Mishra v. State of Maharashtra [2000] 25 SCL 13, which while considering the power of the Court under section 536(2) dealt with the situation of issuance of cheques by the company during the proceedings for winding up. The Hon'ble Supreme Court said t....
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....here is a disposition of property under the orders of Court, it should be understood that by virtue of section 536(2), the disposition shall be valid. Section 537 is attracted only when such orders have not obtained and the sale takes place without the leave of the Court and in which case such sale shall be void. It is more in the nature of one action following the other for, if the occasion for invoking section 536(2) has already been exercised, there is no scope for applicability of section 537. If this approach is done then by the fact that the company had not approached this Court for sanction of sale before it was undertaken, the sale effected would be seen as void by virtue of section 537. 10. Even if the above approach to be taken....