TaxTMI 
TaxTMI 
2010 (1) TMI 567
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....4-10-2000 which read thus :- "Resolved that subject to floor price for sale of the assets of the 'E' company, i.e., Land and factory building at Khopoli is fixed at Rs. 3.60 crores. Creditors are voting for the following Scheme. The amount will be paid to the creditors through the Hon'ble Court within three months from the date of receipt of the entire consideration in proportionate after incorporating the additional names of creditors, if any, not later than three months from today after proper verification from the Books of Account of the Applicant company and rest of the claim is given up by the creditors : Provided that the sale is completed within six months from the date of the order of the Hon'ble Bombay High Court sanctioning the Scheme." The said "E" company presented the scheme of compromise and/or arrangement before this Hon'ble Court for sanction in exercise of powers under section 391 of the Companies Act, 1956. The same read thus :- "Exhibit "A" SCHEME OF COMPROMISE AND/OR ARRANGEMENT BETWEEN EUROPLAST INDIA LIMITED AND ITS CREDITORS 1. In this Scheme, unless in consistent with the subject of context the following expressions shall have the follow....
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....38,000. (c)the Company to pay the said dues has decided to dispose of, out of its other assets, the land along with the factory building at Khopoli, Maharashtra. (d)The Company has estimated the net value of the said land and factory building at Rs. 3.80 crores. (e)The Company out of the said amount of Rs. 3.80 crores desires to pay off to the said creditors in monthly instalments as mentioned below :- To Creditors up to Rs. 25,000 In monthly 12 equal instalments. To Creditors up to Rs. 25,000 to Rs. 50,000 In monthly 18 equal instalments. To Creditors up to Rs. 50,000 to Rs. 1,00,000 In monthly 24 equal instalments. To Creditors up to Rs. 1,00,000 and above In monthly 36 equal instalments. 4. The creditors will not be paid any interest after 31st March, 2000. 5. All payments received by the creditors from and on behalf of the Company after 31st March, 2000 shall be adjusted and/or deemed to be adjusted against their dues as on 31st March, 2000 as appearing in the books of the account of the Company. 6. The Creditors covered by the Scheme shall not be entitled to claim any payment save and except in a....
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....me was approved and sanctioned by the unsecured creditors including the applicant Shri Brain Thomas D'Souza. From the minutes of the meeting it appears that the unsecured creditors in value of Rs. 1.60 lakhs were represented by Shri Rego, the learned counsel appearing for the said Shri D'Souza. The scheme has been signed by the unsecured creditors who were present in the meeting and a resolution to that effect was passed which appears on page 48 of the paper book. The resolution appears signatures including the signature of the learned counsel Shri Rego. 2. The Regional Director of the Department of Company Affairs has not filed any objection to the scheme, though served, long back on 25-5-2001. It appears that the Regional Director has written a letter dated 17th July, 2001 requiring the petitioner to furnish balance sheet of the company as on 31-3-2000 and four other documents viz.: (a)copy of memorandum of association of the petitioner company. (b)list of creditors. (c)Company application and (d)Newspaper cutting in respect of publication of holding of meeting of creditors. I must record here that the petition was adjourned from time to time for the say of the ....
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.... 3. As held in the case of UMA Investments (P.) Ltd. Company Cases 1977 Vol. 47 page 242, by the learned Single Judge of this Court the criminal proceedings can be commenced or continued notwithstanding the fact that the scheme was compromised or arrangement has been initiated under section 391. I am in respectful agreement with the said ratio in the said judgment. If the criminal proceedings are commenced, they should be allowed to complete as expeditiously as possible and to let the criminal law take its own course and criminal proceedings should not be held up because civil proceedings are initiated and are pending. In the present case, the scheme of compromise was approved by the unsecured creditors and has been sanctioned by this court today. Under the scheme the unsecured creditors would stand benefited. There is no reason why the criminal proceedings should not be allowed to be completed in accordance with law. At the same time, I agree with Shri Pandit that the Director/employees of the petitioner company need not undergo once again harassment and rearrest by the police which would be unwarranted as the entire record is in the custody of the Special Court. If the presence....
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....oved before this Court since the suit property in question could not be disposed of in spite of the order dated 18-7-2001. In this Application, it was prayed that the scheme of compromise dated 18-7-2001 be modified to a limited extent of granting further period of 12 months for the disposal of the Companies land and factory building at Khopoli or in the alternative the said property be ordered to be disposed of by the Special Committee of unsecured creditors of the applicant company under the supervision of this Hon'ble Court or in the alternative, the Court may appoint any fit and proper person to dispose of the assets of the company. All these three applications came to be disposed of by a common order on 12-2-2004. Relevant portion of the said order reads thus:- "2. Having considered the rival submissions, the foremost question that arises for my consideration is whether the said Ashoka Buildcon Pvt. Ltd., can be allowed to proceed with the auction of the immovable assets of the Company? To my mind, that question will have to be answered in the negative for more than one reason. In the first place, the proceedings are already pending before this Court for granting further ti....
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....ted in this Court so that the same can be disbursed amongst all the Unsecured Creditors on pari passu basis. 8. Accordingly, applications filed by the Company and some of the Unsecured Creditors are allowed on the above terms." In terms of the above order, the Committee appointed by the Court under the Chairmanship of the then Company Registrar of this Court and other five members was expected to take steps to dispose of the specified property of "E" Company in consonance with the observations made therein. That was to generate funds so as to repay the dues of the unsecured creditors which at the relevant time was stated to be around Rs. 6 (six) crores. There were 698 creditors for fixed deposits valued at Rs. 1,22,83,248; 480 creditors for liquinotes valuing Rs. 2,46,38,000. Whereas, net value of the land and factory of the company was assessed at only Rs. 3.80 crores. 5. It is, however, noticed that the Committee did not take any step in the matter as was expected under the order of the Court. Instead, the then Board of Directors of the "E" company passed resolution on 28-8-2006 which read thus :- "Certified true copy of the minutes of the meeting of the board of dire....
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....avin Bhatt. Significantly, the said Pravin Bhatt is a person none other than the ex-director of Gorakhnath Electrical Private Ltd. (hereinafter referred to as "G" company). Soon thereafter, the suit property was conveyed in favour of the "G" company on 29-11-2006. Besides the above resolution, the Board of Directors of "E" Company allegedly passed another resolution on 18-11-2006, which reads thus :- "Certified true copy of the resolution passed by the Board of Directors of M/s. Euro Plast India Limited at its registered office on Saturday, 18th November, 2006. "RESOLVED THAT the company do hereby authorise Mr. Naresh Kaushik as Authorised Representative to deal on behalf of the company in the property of the company situated at Khopoli Pen Road, Village Vanvate, Taluka Khalapur, Distt. Raigad, Maharashtra and to transfer the title of the said property and sign the necessary documents on behalf of the company. "FURTHER RESOLVED THAT Mr. Naresh Kaushik, Authorised Represen-tative of the company be and is hereby further authorised to sign and execute all the agreement, deed and documents as and when required to handover the possession of the property to the buyer for and on ....
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....a Committee was to be constituted of Unsecured Creditors to facilitate sale of the immovable assets of the Company so as to recover proper sale proceeds corresponding to the fair market price of the said assets. The Court has also ordered that the Committee shall consist of five persons and I, as Company Registrar, was appointed as Chairman of this committee. One representative of the Company M/s. Europlast India Ltd., one representative of Ashoka Buildcon Pvt. Ltd. and two representative of remaining Unsecured Creditors to be notified to the Company Registrar within two weeks from the date of the Order. By the said Order, the Committee was authorised to take steps to issue advertisement for inviting offers from Public for auction of immovable assets of the Company on usual terms and conditions. The Court has also directed to call for valuation report regarding the available assets to be auctioned from empanelled Valuers of this Court. The Court has also given other directions. Copy of the said Order dated 12th February, 2004 passed by Shri Justice A.M. Khanwilkar is annexed hereto and marked as Exhibit "A". Advocate for M/s. Ashoka Buildcon Pvt. Ltd. by his letter forwarded cop....
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....taken away all the papers and my NOC in the matter. I am no more therefore, concerned in the matter. You are, therefore, requested to inform the client directly". In the said meeting, Mr. Bhagat on behalf of Ashoka Buildcon Pvt. Ltd. furnished the names and addresses of the Directors of the company which are as under :- 1. Harsha Mani Pant, Khopoli Pen Road, Village Vanvate, [Taluka Khalapur, Distt. Raigad, Maharashtra. 2. Corporate Office, Delhi Blue Apartment, Factory Road, Safdarjung, Ring Road, New Delhi-110 026. The said meeting was adjourned to 21st February, 2007 and the notices were sent to the Europlast India Ltd., at the abovementioned addresses. On 21st February, 2007, Mr. A.A. Garge, Advocate for Ashoka Buildcon Pvt. Ltd. and Ms. Deepa Kamath, Advocate i/b. Ms. Annie Fernandes for Europlast India Ltd. appeared and at the request of Ms. Kamath, meeting was adjourned to 1st March, 2007. In the meeting held on 1st March, 2007, Shri A.A. Garge, Advocate Ashoka Buildcon Pvt. Ltd. and Ms. Annie Fernandes, Advocate for Europlast India Ltd. and Shri N.J.D. Monte, Advocate for some of the Unsecured Creditors appears and the Advocate informed me that they ....
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.... of the Company. Hereto annexed and marked as Exhibit "B" is a copy of the said letter dated 22nd March, 2007. On 30th March, 2007, Shri A.A. Garge, Advocate for Ashoka Buildcon Pvt. Ltd. and Shri N.J.D. Monte Advocate, on behalf of some of the unsecured creditors attended the meeting. However, no one was present on behalf of Europlast India Ltd. Shri Garge submitted that Europlast India Ltd. is not co-operating and they are not interested in implementing the Court's Order. They are also not attending the meeting and not suggesting the name of the person who could be a Committee Member. Similarly, they are not giving any clear instructions to their Advocates. It is high time that the report should be submitted to the Hon'ble Court pointing out the conduct of the Company-Europlast India Ltd. From the record, it appears that the Company is not co-operating the Committee either by attending the meetings through some representatives and suggesting the names of the persons who would be the committee member. Similarly, Company has not lodged documents in respect of the property and not put in funds to appoint valuer and incur initial expenses. Due to non-co-operation of Company-....
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....ompany Petition No. 327 of 2001. (3) Since the proposed sale could not materialise in time, the Company took out Company Application Lodging No. 139 of 2002 praying following reliefs :- '(a)that the scheme of compromise finalized on 18th July, 2001 be modified to a limited extent of granting a further period of 12 months for the disposal of the Company's land and factory building at Khopoli, or in the alternative the said properties be ordered to be disposed of by a sub-committee of the unsecured creditors of the applicant company under the supervision of this Hon'ble High Court, or in the alternative this Hon'ble Court may appoint any fit and proper person or persons or some agency to dispose of the said assets of the applicant Company. (b)That ad interim reliefs in terms of prayer (a) be granted. (c)That such further and other reliefs as this Hon'ble Court may deem fit and proper be granted. (d)That cost of this application be provided for.' (4) The Company also took out another application No. 673 of 2003 for staying auction to be held on 5th August, 2003. (5) Some of the Unsecured Creditors also took out Company Application for relief as mentioned therein. ....
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....by their letter dated 4th July, 2008 addressed to me, stated that when their representative had gone on the factory site to verify, he found that there was a board installed on the site on which the following was written :- 'Kelkar Group Factory : LBS Marg, Mulund, Mumbai, Office : Devkaran Mension, 36 Mangaldas Road, Mumbai.' (12) In the said letter it has been also mentioned that on further enquiring in the vicinity their representative came to know that the said site was recently purchased by the Kelkar Group and from the above it appears that the management of Europlast India Ltd. have sold the property to the above party and thereby done a breach of the Hon'ble Bombay High Court's Order. In the said letter they have also mentioned that Europlast India Ltd. and Kelkar Group have done contempt of Court's Order and requested me to approach the Hon'ble High Court at Mumbai to protect the interest of the Unsecured Creditors. They have also prayed for :- (a)Issuing a contempt of Notice against the Directors of Europlast India Ltd. and Kelkar Group. (b)Restraining Europlast India Ltd. and Kelkar Group, their agents, servant, or anybody working on their behalf from a....
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....its and Liquinotes and to appraise them of the latest development and to propose a scheme for repayment of their dues. The Petitioner decided to dispose of, out of its other assets, the land along with the factory building at Khopoli, Maharashtra. The Company proposes to pay off the creditors in monthly instalments, out of the amount of sale proceeds received as per the scheme of Compromise under section 391 of the Companies Act, 1956. (b)The said fact is also evident from the resolution passed at the meeting of Unsecured Creditors held on 14th October, 2000 modifying the Scheme which is at Exhibit "B". (c)The Company has also mentioned these facts in the Scheme at paras 3.1 (c), (d ) & (e), which are reproduced hereinbelow :- '3.1( c) The Company to pay the said dues has decided to dispose of, out of its other assets, the land along with the factory building at Khopoli, Maharashtra. 3.1( d) The Company has estimated the net value of the said land and factory building at Rs. 3.80 crores. 3.1( e) The Company out of the said amount of Rs. 3.80 crores desires to pay off to the said creditors in monthly instalments as mentioned below :- To Creditors up to Rs....
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....dia Ltd. be directed to deposit entire consideration received by them in this Hon'ble Court. (g)and or in the alternative, the Official Liquidator,High Court, Bombay be appointed as Liquidator of the Company. (h)For any such further and other reliefs as the nature and circumstances of the case may require. Dated, this 14th day of July, 2008. (A.P. Kothari) Deputy Official Assignee & Appointed Chairman of Committee." On the basis of the said report, this Court issued notice to the respective companies. Having regard to the nature of controversy brought before this Court, by order dated 17-10-2008, the Court directed the parties, in particular "K" company to maintain status quo of the suit property as on that date till the disposal of the proceedings. 8. Pursuant to the notice, affidavit was filed on behalf of the "K" company to explain their stand point. The parties were represented by the Counsel who appeared during the hearing. This Court, however, upon deeper consideration, thought it appropriate to call upon the Chairman of the Committee to submit his report on certain issues. The order passed on 19-11-2008 is self-eloquent. The same reads thus :- "1. Argume....
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....property in question. 5. Besides the affidavit of the Advocates who appeared for the Respondent Company, I think it necessary to call upon the Chairman of the Committee appointed in terms of order dated 12th February, 2004 to submit his explanation on following matters :- (1) As to why no steps were taken by him for sale of the assets in question or otherwise between 12th January, 2005 to 6th February, 2007 for almost two years? (2) What prevented him to move the Court for seeking extension of time beyond twelve weeks from 12th February, 2004 in the context of specific direction issued in Para 7 of the said order that the sale should be concluded and amount disbursed within twelve weeks from the date of order? (3) Why no report was submitted soon after 30th March, 2007 when Advocate for Ashoka Buildcon Pvt. Ltd. informed about the developments, whereas the report was submitted only on 31st March, 2008? (4) Why no initiative was taken after 30th March, 2007 to ascertain the factual position brought to the notice of the Chairman by Ashoka Buildcon Pvt. Ltd.? (5) To take search of the Register maintained by the concerned Registrar of Companies and obtain details abou....
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....y was purportedly transferred. (2) As far as Point No. 1 viz. 'As to why no steps were taken by him for sale of the assets in question or otherwise between 12th January, 2005 to 6th February, 2007 for almost two years?' is concerned, I most respectfully submit that in the meeting held on 12th February, 2005 nobody attended the meeting and Advocate A.A. Garge was also operated and hospitalised, hence no date was fixed. At that time and thereafter also as I was working as Company Registrar there was tremendous pressure of work and in the circumstances matter remained to be attended and only in the year 2007 when Advocate contacted me, I again fixed meetings and intimations were given to all the Advocates concerned. (3) As far as Point No. 2 viz. 'What prevented him to move the Court for seeking extension of time beyond twelve weeks from 12th February, 2004 in the context of specific direction issued in Para 7 of the said Order that the sale should be concluded and amount disbursed within twelve weeks from the date of order?' is concerned, I most respectfully submit that the first meeting itself was held in October, 2004, i.e., after 6 months and after January, 2005 ....
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....seeking directions :- (a)The Company Europlast India Ltd. be directed through its Director or authorised representative to co-operate to implement the Court's Order and also to submit documents in respect of assets of the Company and to put in funds to incur initial expenses and/or in the alternative; to (a) (b)Official Liquidator be appointed as Liquidator of the Company. (6) I further submit that the said report appeared before Hon'ble Justice Shri S.C. Dharmadhikari who passed on Order on 19th June, 2008, upon Advocate for Ashoka Buildcon agreeing that Ashoka Buildcon will bear financial expenses of appointment of valuer, issuance of Advertisement in newspapers and incidental expenses to enable me to dispose of the properties. By the said Order dated 19th June, 2008 on my report dated 31st March, 2008, the Hon'ble Court has also directed the Committee to proceed after due notice to the Company and even if none remained present despite such notice, committee can take appropriate steps to implement the Order of the Court and accordingly, said Report was disposed of. (7) A report dated 31st March, 2008 annexed as Exhibit "D" to the report dated 14th July, 2008 and copy ....
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....006 and Gorakhnath Electricals Pvt. Ltd. sold property to S.H. Kelkar Co. Pvt. Ltd. on 26th April, 2007 which are more particularly set out in the affidavit filed by Shri Ramesh Vaze. (12) Thereafter, Hon'ble Shri Justice S.A. Bobde by Order dated 18th July, 2008 directed to issue Notice to all the Respondents. Again on 1st August, 2008, the Hon'ble Court directed to issue Notice to Europlast India Ltd. and Gorakhnath Electricals Pvt. Ltd. The said Notice was made returnable on 21st August, 2008 and nobody attended, on behalf of Gorakhnath Electricals Pvt. Ltd. on 5th September, 2008 Advocate Shri Shah for Europlast India Ltd. stated that he will furnish the correct address of Gorakhnath Electricals Pvt. Ltd. within one week and notice was made returnable on 26th September, 2008. Office sent notices to Gorakhnath Electricals Pvt. Ltd. twice at the address mentioned in the conveyance annexed to the Affidavit of Shri Ramesh Vaze. The registered Office of Gorakhnath Electricals Pvt. Ltd. is at Haryana as mentioned in the conveyance. Two notices sent to Gorakhnath Electricals Pvt. Ltd. by Registry, packet returned back unserved. Since the notice could not be served upon Gorakhnath E....
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....Khanwilkar, Judge taking the company matters My Lord, Pursuant to the order dated 5th December, 2008, passed by Your Lordship and in continuation of my earlier report dated 8th December, 2008, I further submit that :- I have taken physical inspection of records made available to me in respect of EUROPLAST INDIA LIMITED at the office of the Registrar of Companies at CBD Belapur in respect of former and present Director of the company EUROPLAST INDIA LIMITED. The details about the name and addresses of the former Directors of EUROPLAST INDIA LIMITED, is as under :- Sr. No. Name of Director Address Date of Appointment Date of Retirement 1. Mr. Hetram Agarwal S/o. D.I. Agarwal (1) 21/17, Shakti Nagar, New Delhi-110 007, also at (2) 114, Mittal Tower, Nariman Point, Bombay-400 021 (28-2-1985) Since Incorporation 24-12-1993 Sr. No. Name of Director Address Date of Appointment Date of Retirement 2. Mr. Arun Kumar Jain S/o Nemichand Jain 28, Snivtolla Street, Calcutta-700 007 (28-2-1985) Since Incorporation 24-12-1993 3. Mr. Ashok Kumar Surekha As-....
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....ngh S-161A, School Block, Shakarpur, New Delhi 30-9-2004 13-6-2005 From the records available in the office of Registrar of Companies at CBD Belapur, details about the resignation of the following persons are not available, hence, the following persons appear to be present Directors of company Europlast India Limited. The details of their name and addresses and their date of appointment are as under : Sr. No. Name of Director Address Date of Appointment 1. Mr. Uday Kumar Agarwal S/o Hetram Agarwal 21/17, Shakti Nagar, New Delhi-110 007 (28-2-1985) Since Incorporation 2. Mr. Deepak Arora S/o. M.L. Arora H130 Mohan Garden, Uttam Nagar, New Delhi-110 059 30-9-2004 3. Mr. Harshmani Pant S/o P.N. Pant (1) B/95 Chhatrapur, Pahari, Ambedkar Colony, New Delhi - 110 030, also at (2) 3/6/70, Dakshin Puri, Delhi-110 026 30-9-2004 4. Mr. Ajay Kumar Naithani, S/o B.P. Nathan (1) 162 (Top Floor) Savitri Nagar, New Delhi-110 017, also at (2) E-4 Gali No. 1 West, Vinod Nagar, New Delhi 13-6-2005 As far as the Directors of Gorakhnath Electricals Pvt.Ltd., as on 29-11-2006 and....
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....nsel for M/s. Europlast India Ltd. may, in the meantime, inform the concerned official of M/s. Europlast India Ltd. about the contents of this order without waiting for the copy of the order so as to impress upon Mr.Deepak Arora to furnish latest last known addresses of the abovesaid persons at the earliest and not wait till the 10th day provided for in this order." It transpires that notices could not be served on some of the noticees. As a result, the Advocate for the "E" Company was called upon to provide necessary information. It may be relevant to produce the order dated 27-1-2009 which reads thus :- "1. Counsel for the Europlast India Ltd. submits that he has made best efforts to get the latest addresses of the concerned unserved noticees, who incidentally are/were either associated with the Europlast India Ltd. or directors of the said Company. However, same addresses, on which notices were sent to the said noticees on the earlier occasion have been made available by advocate Mr. R.N. Parikh. The only course open to this Court is to call upon the Secretary of Europlast India Ltd. to appear in person before the Court on the next occasion and furnish the latest and corre....
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....atory note was circulated to the members in the context of the Resolution dated 28th August, 2006. Perhaps, the said explanatory note may throw some light on the names of persons who were associated with the process of negotiation and sale of the land in question for and on behalf of the Europlast India Ltd. The affidavits filed as of now do not reveal or clarify the above doubt. In the circumstances, it has become necessary to direct the Commissioner to forthwith visit the Registered Office of Europlast India Ltd. and take inspection of all the records of the Company in relation to the proceedings instituted before this Court and the Order passed on 12th February, 2004 and any other related document, which would throw light on the circumstances, in which the Company proceeded to complete the transaction in respect of the land in question. The Company is obliged to give inspection of all the documents, as may be demanded by the Commissioner during the inspection pursuant to the present order. 2. Needless to observe that failure to co-operate with the inspection of record by the Commissioner, the Court may consider of initiating appropriate action against the authorised officer a....
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.... cause of Europlast India Ltd. to remain present in court on 6th May, 2009. Ordered accordingly." To complete the record, it may be useful to advert to the order passed on 6-5-2009 which records the fact that Deepak Arora, Director of "E" Company produced Minute Book. The same was taken on record. The minute book is for the period from 4-10-2004 till 31-3-2009. On close examination of the said register, it is noticed that the same has been prepared with dexterity. It is noticed that the minutes are kept in loose leaves of sheets compiled in a file. Obviously such pages can be added, subtracted and replaced at any time. Moreover, it is noticed that common printing error runs through all the pages at the foot of the page, which is possible only if the said documents were printed on the same day and with the same printer. Therefore, it is obvious that the printing of all the minutes, though spread over from 4-10-2004 till 31-3-2009, for almost five years, have been printed on one day with the same printer. However, to give an impression that the said minute book is genuine, each minute is signed by the Chairman after some gap of the concerned meeting. Merely putting the dates below....
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....en required to handover the possession of the property to the buyer for and on behalf of the company and to do, perform, execute and exercise all or any of the acts, deeds, powers, authorities, matters and things and generally to do all such things as may be necessary in regard to the above to protect all the legal interests of the company." 3. Review of Performance of the Company.-The Chairman placed before the Board reports on the working of the company. The Board reviewed the progress report of the company and satisfaction was expressed over the same. 4. Vote of Thanks.-There being no other business to transact, the meeting terminated with vote of thanks to the chair. Sd/- Chairman 5-12-2006." Suffice it to observe that the genuineness of the document (minute book) now produced is questionable. 12. Be that as it may, out of the 8 directors of "E" Company as on 12-2-2004, only noticee Nos. 2,5 and 6 have appeared before the Court and filed their affidavits. Noticee Nos. 1, 3, 4, 7 and 8 have not only failed to appear but have also not bothered to file any response or affidavits. The affidavits of the persons associated with "E" Company, namely, Harshmani Pant....
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....no details thereof have been furnished in any of the affidavits. 13A. Be that as it may, the affidavit further states that the new directors who joined Board of Directors of the "E" Company were not informed about the order dated 12-2-2004 by the outgoing management. He has stated that the "E" Company by its letter dated 22-3-2007 had addressed to the Official Assignee requesting him to ascertain/verify the claims of the depositors and other unsecured creditors including M/s. Ashoka Buildcon - one of the unsecured creditors. It was recorded in that letter that based on the claims verified and ascertained, the "E" Company may arrange for funds from the strategic investor to settle the outstanding liabilities of the company to the best of its ability. He has stated that no response was received to the said letter. Whereas, a letter was received from the Company Registrar of this Court dated 21-8-2008 to appear before the Court. At the end, it is stated that the "E" Company is ready and willing to convene a fresh meeting of its unsecured creditors for a fresh settlement and has no intention to deprive them of their legitimate dues subject however, to ascertaining the genuineness an....
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....er that sale was effected. He has reiterated that the sale was neither intentional nor deliberate but due to lack of knowledge and information. He has requested to take a sympathetic view of the matter and pardon them for any act committed by them without knowledge and also to drop the proceedings. The third affidavit filed by him is dated 8-2-2009, which once again reiterates the position stated in the earlier affidavits. He has further stated that the Company has no business activities since long and from year 2002 "E" Company has been delisted even from the Stock Exchange. He has stated that the Company does not have any Secretary/Company Secretary. He has stated that noticee No. 13 Ms. Niti was associated with the Company for a very short period as Consultant Company Secretary and was not on regular pay roll or employment. He has stated that noticee No. 15 Mr. Parida was never associated with the new management and must have been employed with previous management, whose whereabouts were not known or are available. Insofar as Noticee No. 18 Mr. Naresh Kaushik, he has stated that he was introduced by one of the ex-director Mr. Ajay Naithani for the property transaction. He did no....
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.... Green Park Extn. New Delhi-110 016. Whereafter "E" Company also shifted record to the said premises where the same are available till date. He has stated that along with him two other directors namely Mr. Harshmani Pant and late Mr. Ajay Naithani were engaged in the business of investment and assets management. The said Mr. Ajay Naithani negotiated and finalized the takeover of all companies of Mr. Rajiv Khandelwal. He has stated that M/s. Euro Cotspin Ltd. was one of the other group of company of Rajeev Khandelwal, besides the "E" Company. He has stated that after examining the balance sheet in regard to the assets and liabilities, the new management decided to take over "E" Company on 30-9-2004, when it was non-functioning company. He has stated that since it was a non-functioning company, new management did not find any problem in arrangement of taking over. He has stated that except few files and balance-sheet, the new management has not received the old minute book etc. from the outgoing management. He has stated that on 13-6-2005, when Mr. Anand Bisht, ex-director of the "E" Company resigned from the Board of Directors, Mr. Ajay Naithani, who was the key person behind the co....
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....his letter dated 24-3-2002, he informed the Registrar of Companies about his resignation as director, which was duly received in the office of the Registrar of Companies on 27-3-2002. He has stated that after his resignation as director, he continued to be an employee of the company somewhere till March, 2002 and thereafter left the Company as there were no activities in the Company. He has stated that he later on started legal practice. 18. Another ex-director of "E" Company Mr. Anand Bisht has filed his affidavit stating that he joined the board of the Applicant Company on 30-9-2004 and resigned on 13-6-2005. He has stated that he was not aware of any proceedings pending against the Company in respect of the suit property. The authorised representative of the "E" company who executed registered conveyance in favour of the "G" Company Mr. Naresh Kaushik has sent un-affirmed copy of his affidavit dated 29-4-2009, in which he states that he was involved in part-time job of property dealing activities. In relation to his routine work, he has stated that around September- October, 2006 his friend Mr. Ajay Naithani from Delhi contacted him. He was informed by said Ajay Naithani that....
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....t told him without disclosing his identity that he was in search of a lawyer to visit Bombay High Court. He consented to take up the assignment. Whereafter, Mr. Harshmani Pant met him and told about the pending matter at Bombay against the "E" Company. He has stated that since he was not interested to work for "E" Company, he was told that entire management has changed and he would like to engage him as lawyer. He had made it clear that he would only help in finding out appropriate lawyer as he would not be able to frequently visit Mumbai. Thereafter, he contacted Mr. Girin Pandit, Advocate, who in turn, informed that he had already returned the brief in 2004 and has given no objection to the Company, who engaged another lawyer. Thereafter, he contacted Mr. Pankaj Shah and discussed the matter with him, who in turn consented to accept the brief. He has denied the fact stated by Mr. G. Pandit that papers of the proceedings were handed over by Shri G. Pandit. In short, he has denied his role and involvement in connection with the proceedings on hand. 20. Mr. Girin N. Pandit, Advocate has filed his affidavit dated 4-12-2008. He has stated that he was engaged in the matter by one Mr....
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....or her to appear before the Official Assignee on 21-2-2007. Therefore, she requested her colleague Ms.Deepa Kamat to do the needful, who in turn appeared at her instance at 4.30 p.m. before Official Assignee and sought adjournment. She has stated that Ms. Niti Kakkar was in contact with her to know about the developments of the matter and when she was informed that in absence of Vakalatnama, she would not be able to continue in the matter. It is stated that Ms. Niti Kakkar expressed inability to send Vakalatnama, but still requested the affiant to appear even on 1-3-2007 with assurance that Vakalatnama would be made available before the next date without fail. It is stated that on instruction of Ms. Niti Kakkar, she appeared before the Chairman of the Committee and took adjournment on 1-3-2007. Again on 1-3-2007, said Ms.Niti Kakkar assured to send Vakalatnama before the next date of which was 15-3-2007. She has stated that on 15-3-2007 at about 3 p.m. Ms. Niti Kakkar once again called her and instructed to appear before the Chairman of the Committee and instructed not to appear before the Official Assignee on that date. She has further stated that on 22-3-2007 at about 3 p.m. Ms. ....
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....irst affidavit, he has asserted that "K" Company became aware of the scheme sanctioned only on being served with a copy thereof along with report of the Chairman dated 14-7-2008, served on them on 16-7-2008. It is stated that "K" Company has purchased the suit property consisting of land admeasuring in all 7 acres 9 gunthas and 4 prati together with structures standing thereon by registered conveyance deed dated 26-4-2007 from "G" Company for consideration of Rs. 4.30 crores. It is stated that before entering into the said conveyance, "K" Company had issued a public notice in two local newspapers on 4-4-2007 before executing conveyance on 26-4-2007. However, no objection of any kind was received by their Advocate, who had issued the public notice on behalf of the Company. They had also obtained conveyance deed dated 29-11-2006 whereunder "G" Company had purchased the property from "E" Company. Besides, prior to purchase, "K" Company caused a search to be taken in the records of the Sub-Registrar of Assurances, Karjat in respect of the suit property which did not contain any revelation about the scheme. In this backdrop, it is submitted that "K" Company had exercised proper and due ....
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.... this anomaly. From the affidavit of the Directors of "E" Company, it is noticed that Rajeev Khandelwal was the King-pin of group of Companies of which "E" Company was one of the Companies. 27. In this affidavit, Mr. Ramesh Vaze has further asserted that due diligence was taken before execution of the conveyance deed in respect of the suit property. In that, "K" Company had appointed Epicon Consultants for structural assessment of factory sheds in March, 2007 and independent valuer M.M. Vaidya & Co. for inspection/valuation of land/building/ compound wall etc. The valuation report indicates the price as Rs. 4.42 crores. It is stated that final negotiations took place between Rajeev Khandelwal of "G" Company and "K" Company and the price of the suit property was concluded at Rs. 4.30 crores. Since the said price was acceptable to the Company, decision to acquire the suit property was taken by the "K" Company and advance of Rs. 5 lakhs was paid on 26-3-2007. Thereafter, advertisements were issued in local newspapers on 4-4-2007 and as no objections were received, the balance amount of Rs. 4.25 crores was paid at the time of execution of the conveyance deed on 26-4-2007. The convey....
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....arly, "G" Company changed its registered address. It is then stated that "K" Company after purchase of suit property had applied for grant of Central Excise License at Panvel, when they were informed that "E" company owed a sum of Rs. 32 lakhs to the Collector and until that amount was paid, no licence would be granted to "K" Company. "K" Company thereafter, immediately approached Khalapur Police Station to file complaint against "G" Company, which however, was not entertained by the named Inspector. In this affidavit, it is reiterated that "K" Company purchased the suit property in good faith and without any notice of any prior or antecedent title adverse to the interest of "G" Company or "E" Company or any fraudulent intent on the part of either of them. It is stated that the negotiation in favour of "K" Company is protected by section 53 of the Transfer of Property Act, 1882 and binding on all concerned. The same cannot be set aside. 28. The two named persons who were associated with the deal, Mr. Vilas Wakade, employee of "K" Company and the Broker Mr. Raju Shinde have filed their respective Affidavit dated 3-2-2009 and 4-2-2009. Mr. Wakade in his affidavit has stated that h....
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....m for discussion and later on site visit was made along with Mr. Wakade and Mr. Kedar Vaze before finalising the sale. Upon finalisation of the site, he contacted Mr. Naresh Kaushik and called upon him to furnish documents pertaining to the suit property. He has stated that he never took part in the meetings of negotiations. He had no communication with "G" Company and had taken part in sale transaction to the extent of showing the site and informing Mr. Kaushik to hand over documents in respect of the suit property. He has stated that after completion of transaction, he has not taken remuneration although he was not working as broker in land dealing. He had submitted bills for technical consulting charges of his firm, i.e., Om Chemicals. 30. Besides, three secured creditors have filed separate affidavits dated 24-10-2008, 13-10-2008 and 12-1-2009 more or less contending that the transaction effected by "E" Company in spite of the order of the Court was to defeat the claim of unsecured creditors who are similarly placed like them. In substance they have supported the report of the Chairman of the Committee and have asserted that the transaction was intended to defeat and delay t....
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....d. There is strong link between the Directors of the two companies. In that, Mr.Pravin Bhatt who is the Ex-Director of "G" Company was appointed as scrutinizer for postal ballot and also gave his consent to do so. It is also noticed that letters received on the registered address of "E" Company were sent to Mr. Ashwin Dewan and Company. The said Mr. Ashwin Dewan is the Ex-Director of "G" Company. Moreover, the address of Ashwin Dewan is the same as that of Deepak Arora, Director of "E" Company. Similarly, "G" Company permitted Arun Gupta to negotiate and complete the sale, as is recorded in the resolution produced on record. However, the affidavit filed for and on behalf of "K" Company discloses that the negotiations were held with one Rajeev Khandelwal of "G" Company. The said Rajeev Khandelwal was the King-pin of group of companies amongst which "E" Company was one of the company. The affidavit of Ramesh Vaze discloses that he interacted with Rajeev Khandelwal Gupta, who was the authorised representative. In such a case, it is too late in the day for the "K" Company to contend that due diligence was observed before executing conveyance deed in its favour. It is submitted that the....
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....na fide for consideration without notice of the pendency of the proceedings or the order of the Court. 33. The argument of the "K" Company is that "K" Company is victim of fraud played by the Directors of "E" Company and "G" Company in collusion. It is argued that even though the conveyance in favour of the "G" Company may be in violation of the order of the Court, even so, the rights which have crystallised in favour of "K" Company consequent to execution of the registered conveyance deed in its favour in respect of the suit property would not be affected in any manner. That protection flows from section 53 of the Transfer of Property Act. According to the Counsel for the "K" Company, purchase of suit property by "K" Company from "G" Company was in good faith and for consideration without notice of pendency of any proceedings or of any order of the Court. The suit property has been purchased for substantial price of Rs. 4.30 crores in spite of the valuation thereof done by the Committee and by the Court as Rs. 3.60 crores. That shows that "K" Company has paid more than reasonable price for the suit property and is bona fide purchaser in good faith for consideration. It was argu....
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....to has undertaken to do or not to do something. He submits that at best, it may be a case of contempt action. But the rights which have enured in favour of the "K" Company by virtue of conveyance deed being purchaser in good faith with consideration, cannot be impaired as provided by section 53 of the Transfer of Property Act. According to him, even if the transaction between "E" Company and "G" Company is held to be fraudulent, the protection under section 53 would enure to "K" Company being transferee. 34. It may be placed on record that although an application has been filed by the Advocate for discharge for the reasons mentioned therein, the same has become redundant as the Advocate continued to appear before the Court and participated in the hearing of the case, who in turn was assisted by Noticee Nos. 5 and 6. Accordingly, no orders were solicited on that application which, therefore, would stand disposed of by this order having become infructuous. 35. Considering the rival submissions and going through the material on record, the moot question that needs to be addressed is: what is the effect of order dated 12-2-2004 passed by this Court. The same has been reproduced i....
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....tory force and is binding not only on the company but even the dissenting creditors or members as the case may be. While referring to the decision in the case of J.K. (Bombay) (P.) Ltd. v. New Kaiser-I-Hind Spg. & Wvg. Co. Ltd. AIR 1970 SC 1041, the Court has observed that the effect of the sanctioned scheme is to supply by recourse to the procedure thereby prescribed the absence of that individual agreement by every member of the class to be bound by the scheme which would otherwise be necessary to give it validity. It is also observed that scheme represents a contract sanctified by Court's approval between the company and the creditors and/or members of the company. It is equally well established that the rights which are enshrined in the scheme of the class of creditors cannot be impaired or superseded unless it is by a new scheme approved in the same way as the earlier one. Further, sanction of the Court operates as a judgment in rem. In the case of Smt. Premila Devi v. Peoples Bank of Northern India Ltd. AIR 1938 PC 284, the Court held that the scheme when sanctioned acquires statutory force and has greater sanctity than a mere agreement between the parties affected. It cannot....
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.... While dealing with the situation, the Apex Court observed thus : ". . .In defiance of the restraint order, the alienation/assignment was made. If we were to let it go as such, it would defeat the ends of justice and the prevalent public policy. When the Court intends a particular state of affairs to exist while it is in seisin of a lis, that state of affairs is not only required to be maintained, but it is presumed to exist till the Court orders otherwise. The Court, in these circumstances has the duty, as also the right, to treat the alienation/assignment as having not taken place at all for its purposes. . . ." (p. 136) In the case of Keshrimal Jivji Shah (supra) the situation was not different. In that, an ad interim order of injunction was passed on 6-3-1998. In spite of that injunction, the Respondent No. 2 transferred and assigned its lease hold rights in the property in favour of Petitioner No. 2. The said property was further put up for auction by the Recovery Officer. The Petitioner challenged that action before the DRT as well as in appeal before the High Court. The Court held that sub-lease in favour of the Petitioner was in contravention of the order of the injun....
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....e great detriment of society." 39. Following the said observation, the Court proceeded to hold that faith of the people is the source and succor to invigorate justice intertwined with the efficacy of law. The faith of the people in the efficacy of judicial process would be disillusioned, if the parties are permitted to abuse its process and allowed to go scotfree. It further observed that it is but the primary duty and the highest responsibility of the Court to correct such mischief at the earliest and restore the confidence of the litigant public, in the purity of fountain of justice; remove stains on the efficacy of judicial adjudication and respect for rule of law, lest people would lose faith in the Courts and take recourse to extra-constitutional remedies which is a death-knell to the rule of law. In Satya Brata Biswal's case (supra), the Controversy was that the order of status quo was violated. The Court found the act of having effect of violating preservation of status of the property and opined that the principle contained in the maxim : Actus Curiae Neminem Gravabit has no application at all when in violation of status quo order a sub-tenancy has been created. The Cour....
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....ill become casualty in the process-a consequence to be jealously guarded by all and at any rate by the highest Courts in the State. This legal position is restated in the decision in Salkiya Businessmen's v. Howrah Municipal Corpn. AIR 2001 SC 2790. Referring to this dictum, the Division Bench observed that the argument of the transferee that they had no knowledge of injunction was of no avail. The Court instead opined that the Petitioners cannot be allowed to go scotfree as bona fide purchasers for value without notice, once it is held that transfer has no legal effect. At the end, the Court answered the question by holding that the transfer was illegal and cannot be recognised and the transferee gets no valid title nor does he acquire any right or interest in the immovable property. 42. Applying the abovestated exposition, there is hardly any scope to entertain the defence now taken before this Court that the conveyance was executed without knowledge of the pending court proceedings or the order of the Court. As that argument will be advanced in every singular case of this kind. The fact asserted that the transfer was in good faith and for consideration cannot extricate the tr....
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.... illegal and non-existing and cannot be recognised in law. Indeed, the Commissioner has submitted his report for and on behalf of the Committee appointed by the Court to espouse the cause of unsecured creditors of the "E" Company. 43. In view of the answer to the above issue, the next question is: should the Court pass order of status quo ante, so as to restore the position in respect of suit property as on 12-2-2004. Further, if such direction is to be issued, will subsequent transferee ("K" Company) have any remedy to redress its grievance for the loss and damages caused to it. As is observed earlier, it is well established position that the transfers which are made in violation of the order of the Court will have to be treated as illegal and non-existing in the eye of law. It is enough for the Court to restate the legal position and pronounce that notwithstanding the execution of the registered conveyance deed in respect of the suit property by "E" Company in favour of "G" Company and the subsequent transfer by "G" Company to "K" Company, both these conveyance deeds are illegal and cannot be recognised in law. More so, neither the "G" Company nor "K" Company would get valid t....
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....the transferee would not get any valid title nor would acquire any right or interest in the immovable property. This is the established legal position. In that case, no argument of want of knowledge or that the transfer was in good faith could be countenanced as this would result in a situation that the parties can breach and violate Court's order openly with impunity. That position not only operates against the party to the order who is restrained but also to the beneficiaries or persons claiming directly or indirectly through such party. The only legal argument that needs to be examined is one of the protection flowing from section 53 of the Transfer of Property Act. Section 53 of the Transfer of Property Act reads thus: "53. Fraudulent transfer.-(1) Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. Nothing in this sub-section shall impair the rights of a transferee in good faith and for consideration. Nothing in this sub-section shall affect any law for the time being in force relating to insolvency. A suit instituted by a creditor (which ter....
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....ule of law. Thus understood, section 53 will be of no avail to the case on hand. 45. and 46. Further, the argument that the "K" Company was purchaser in good faith and for consideration and the rights acquired by the "K" Company under the registered conveyance deed cannot be impaired clearly overlooks the statement of law that the transfer which is in violation of the order of the Court is illegal and cannot be recognised in law. The transferee under such transfer gets no valid title and does not acquire any right and interest in the immovable property. The fact that there exists a registered conveyance deed in favour of the "K" Company does not take the matter any further for the simple reason that "G" Company who has purported to transfer the property in favour of the "K" Company itself had no valid title and had not acquired any right or interest in the immovable property in law. As a result, the protection claimed by the "K" Company on account of section 53 of the Act is ill-advised. 47. Counsel for the "K" Company has relied on the decision of the Lahore High Court in the case of Firm Man Singh Moti Ram Maliwara (supra). The exposition in that case will be of no avail. I....
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....of this Court, who was acting as Company Registrar at the relevant time, did not think it necessary to move for extension of time and for further consequential directions. Suffice it to observe that the inaction and failure of the Commissioner which is palpable from the record, has resulted in the present situation where the party to the order was emboldened to act in defiance and in violation of the order of the Court. In my opinion, for the course that I intend to adopt, it may not be necessary to elaborate on this aspect any further. The question as to whether failure and inaction of the Commissioner was deliberate, intentional or otherwise; or he was party to the smaller conspiracy of the larger conspiracy or otherwise is a matter which needs to be enquired into. That will have to be considered in appropriate proceedings, if and when occasion arises. 49. The last but most important question, that needs to be addressed is whether this is a fit case for initiating criminal action against all the erring persons including the members of the Committee appointed by the Court, for their act of commission and omission or of conspiring to defeat the directions issued by this Court, w....
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....forefront was not Mr. Arun Gupta but Mr. Rajeev Khandelwal, Ex-Director of "E" Company. That militates against the argument of "K" Company of having completed the transfer in good faith. It is also noticed that "E" Company appointed Mr. Pravin Bhatt, Director of "G" Company as scrutinizer. From the various circumstances emerging from the record as made available, it would appear that the transfers by "E" Company in favour of the "G" Company and soon thereafter, by "G" Company in favour of "K" Company were in collusion and part of larger conspiracy to over-reach the orders of the Court of law and also to defeat and delay the claim of the creditors. Notably, the conveyance by "E" Company in favour of "G" Company was executed on 29-11-2006, which is stated to be on the basis of resolution passed by the Board of Directors on 28-8-2006 and 18-11-2006 respectively. Significantly, the value of the property is shown only as Rs. 75 lakhs as against the assessed value thereof by the Company itself before this Court as Rs. 3.80 crores two years prior thereto. Not only that, within a short span of "only five months", "G" Company further transferred the same property in favour of "K" Company on....
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....K" Company, but also create deterrence that such conduct cannot be viewed lightly. As a result, I think it appropriate to direct "E" Company as well as "G" Company and its Directors to bring back the amount, which was received by them respectively towards transfer of the suit property. "E" Company will have to bring back Rs. 75 lakhs. "G" Company will have to bring back Rs. 4.30 crores received from "K" Company under the conveyance deed, after deducting Rs. 75 lakhs paid to "E" Company under the former conveyance, i.e., Rs. 3.55 crores. Both "E" Company as well as "G" Company will have to bring back the amount with interest. "E" Company will have to bring back the amount of Rs. 75 lakhs with interest with effect from 29-11-2006, the date on which conveyance was executed in favour of "G" company and the amount received thereunder. Insofar as "G" Company is concerned, it will have to bring back the amount of Rs. 3.55 crores with interest with effect from 26-4-2007, the date on which the conveyance deed was executed between "G" Company and "K" Company. The interest shall be payable until the date of realisation of the full amount. 51. The next question is: what should be the quantu....
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....hat will be without prejudice to the rights of the unsecured creditors of the "E" Company to proceed against the Directors of "E" Company and/or "G" Company or against either of the two companies for appropriate relief, as may be advised. The said proceedings will be decided on its own merits. (iii)However, if 'E' Company and/or 'G' Company fail to deposit the amount, as per clause (i) above, in that case, it is ordered that the suit property shall be disposed of by conducting Court Auction disregarding the two registered conveyances in favour of the 'G' Company and 'K' company respectively, which are illegal and non-existent in the eye of law. It will be open to 'K' Company to participate in the said Court Auction of the suit property, if so advised. Out of the sale proceeds, the amount equivalent to principal amount of Rs. 4.30 crores will have to be set apart and/or adjusted against the bid amount offered by 'K' Company, if it were to be the highest bidder, with liberty to the "K" company to proceed against the Directors of "E" Company and "G" Company and/or against the said two companies for claim of further damages and loss, if so advised. The said proceedings will have to ....