TaxTMI 
TaxTMI 
TaxTMI 
2012 (11) TMI 363
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....mative, whether this Hon'ble Court would be pleased to permit the Official Liquidator to take possession of the said property situated at H16, MIDC Waluj Industrial Area, Waluj, Aurangabad". The facts in the matter are briefly set out hereunder: 2. On 7th April 1997, Company Petition No. 327 of 1997 seeking winding up of the Company Hindustan Transmission Products Limited ("HTPL") was filed /presented. Smt. Sunita V. Warke ("the occupant") claims to have paid an aggregate sum of Rs. 30 lakhs to the Company between 14th May, 2007 and 26th September 2007 towards the purchase of the Company's leasehold rights in respect of Plot No. H16, MIDC Waluj Industrial Area, Waluj, Aurangabad ("the said property"). It is an admitted position that no document, by way of an agreement for sale or a transfer deed, was executed between the Company and the occupant. In the Income tax returns filed by the occupant for the period upto 31st March 2008 and thereafter, the said amount is shown as an "investment". 3. Sometime in May, 1990, on the application of HTPL, the said property was allotted to HTPL by the Maharashtra Industrial Development Corporation ("MIDC") on the terms and conditions stated in....
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....at therefore their request for transfer of the said plot could not be accepted and the proposal of HTPL to transfer the said property in favour of Sairam Industrial Cooperative Society Ltd. stood closed. 7. Thereafter, the occupant, vide her undated letter addressed to MIDC, recorded that she had purchased the said property and that she proposed to start her business activity on the said property and requested allotment/transfer of the said property in her name. This letter was received by MIDC on 16th April, 2008. Along with the said letter, MIDC received an undated letter from HTPL requesting for transfer of the said property in the name of "Smt. Sunita Vasudeo Warke, Prop. of M/s. Sunita Enterprises". The said letter was signed by Mr. Vasudev Jayram Warke, authorized signatory under a Special Power of Attorney dated 12th October, 2007 issued by HTPL. The said Vasudev Warke is the husband of the occupant. In the recital of the said Power of Attorney, Mr. Rattan Kumar Talia, Director of HTPL has recorded that under a Board Resolution dated 12th September, 2007 Mr. Thalia had been authorized by the Board of HTPL to identify a buyer, negotiate and finalise the sale transaction with....
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....antime the Official Liquidator has moved the above report and has prayed for the aforestated reliefs/directions. 11. Initially in his Report, the Official Liquidator had invoked Sections 531 (1) and 531 A of the Companies Act, 1956 ("the Act"). Subsequently, the Official Liquidator in his rejoinder dated 29th September, 2011 has submitted that since the alleged sale of the property is after the date of presentation of the Company Petition filed for winding up of the Company, the transaction is void as per the provisions of Section 536 (2) and 537 (1) (b) of the Act. 12. The Applicant has filed her affidavitinreply dated 5th September, 2011, a further affidavit dated 22nd December, 2011 and an additional affidavit dated 27th March, 2012. MIDC has filed its affidavit dated 21st January, 2012 and IDBI has also filed its affidavit dated 19th November, 2011. 13. Mr. Malik, the learned Advocate appearing for the occupant has submitted that the transaction entered into by and between the occupant and HTPL is a bona fide transaction which is completed and possession of the said property was also given to the occupant by HTPL. He has relied on a copy of the letter written by HTPL dated 1....
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.... of the Act in favour of the occupant. 14. Mr. J.P. Sen, learned Advocate appearing for the Official Liquidator, has submitted that the contentions raised by the occupant are misconceived and the Official Liquidator ought to be directed to take possession of the said property in view of the following: (a) The question of validating a transaction under Section 536 (2) arises only where the transfer is complete. In the present case, there is no completed transfer in favour of the occupant which is capable of validation. Even the alleged agreement pleaded by the occupant is clearly illegal having been reached after the winding up order was passed; (b) Further, for a transfer to be validated under Section 536 (2), the Applicant must plead and prove not only that the transfer is bona fide but also that the transfer was in the interest of the Company. The occupant has made no attempt to show this. (c) Section 53A of the Transfer of Property Act has no application in the present case in the absence of any agreement in writing from which the terms of the alleged transaction is capable of being ascertained with reasonable certainty. In support of his above contentions, Mr. Sen has reli....
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....of the suit property to the Company between 14th May 2007 and 26th September 2007. If the amounts paid between May and September 2007, by the occupant to the Company is indeed the purchase price of the said property, it would necessarily follow that the alleged sale was finalized on or prior to 14th May 2007. However this fact is belied by the Special Irrevocable Power of Attorney dated 12th October 2007 executed by Mr. Rattan Kumar Thalia, Director of HTPL wherein it is recorded that the Board of HTPL has by a resolution on 12th September 2007 authorized Mr. Thalia to identify a buyer, negotiate and finalize the sale transaction. If the sale of the said property was finalized between the occupant and the Company on or before 14th May 2007 and almost all the installments (except one) was paid by the occupant to the Company by 12th September 2007, the question of the Company authorizing Mr. Thalia to identify a buyer, negotiate and finalize the sale transaction on 12th September 2007 would never arise. Again, the question of Mr. Thalia authorizing his "friend" Mr. Vasudeo Warke (husband of the occupant) on 12th October 2007 to identify a buyer, negotiate and finalize the sale transa....
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....uisite NOC from MIDC for the transfer of the leasehold rights in the said property in favour of the occupant was not obtained prior to the winding up order. It is therefore clearly established that in the present case there is no completed transfer in favour of the occupant which is capable of validation. 19. Even in a case where the transfer is complete, a further question that arises for consideration is whether for a transfer to be validated under Section 536 (2) of the Act, the Applicant must plead and prove not only that the transfer is bona fide but also that the transfer was in the interest of the Company. Section 536 (2) of the Act provides that any disposition of property made after commencement of winding up shall, unless the Court otherwise orders, be void. Some of the situations in which a transfer may be validated under Section 536 (2) of the Act were enumerated in the judgment of a Division Bench of this Court in Tulsidas Jasraj Parekh vs. Industrial Bank of Western India (supra). While sounding a note of caution that" the discretion confided to the Court cannot be crystallized in rules of law in view of the varying circumstances of human action" Court held that it ....
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....ed evidence is produced about such compulsion. The assets of the Company cannot be disposed of at the mere pleasure of the Company. If the business is going to be paralyzed, then the Court in appropriate cases can, for the benefit and interest of the Company, save the transaction. It is for enabling the Company to continue as a going concern and to protect the interest of the shareholders and creditors that such a power is conferred and must be exercised." The suggestion to the contrary on behalf of the occupant that a transaction need merely be honest or bona fide to deserve sanction is unsupported by authority. The judgments cited on behalf of the occupant do not support this position. The judgment of the Nagpur Bench of the Bombay High Court in S.P. Khanna (supra) is a case where the Court was considering a transaction in the ordinary course of business between two branches of a Bank which subsequently entered liquidation. It is a settled position that where a transaction is in the ordinary course of business, the burden that must be discharged to validate such a transaction is far lower. A bona fide transaction of this nature would be protected by a Court under section 536 (2....
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....ontainers (supra). Section 536 treats as void any transfer after commencement of winding up unless the Court otherwise directs. This Court has held in Kanchan Kumar Dhar (supra) that in view of the tenor of the section, the Official Liquidator is not required to file any application seeking a declaration that a transfer is void. As such, the question of any burden resting on the Liquidator cannot possibly arise. Even otherwise, if such a burden were to be cast on the Official Liquidator, he would find it impossible to discharge in many cases, having limited resources and often even more limited access to the relevant records. The two judgments cited on behalf of the occupant on the issue of burden do not support her case. In Monark Enterprises (supra) this Court held Section 536 of the Act to be inapplicable in view of the fact that there was a disposition of the property prior to the commencement of winding up. The observations in the judgment as to burden and as to the ingredients that must be established to set aside a transaction are in the context of Sections 531 and 531 A which are inapplicable in the present case. The judgment of the Hon'ble Supreme Court in Abdul Shukoor ....