TaxTMI 
TaxTMI 
2013 (9) TMI 317
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..../2010 and 127/2011 (in C.P. No.161/1997). 2. Briefly, the facts are that in 1997, a petition for winding up was filed by M/s. Rocksmelt Company (India) [the second respondent] against M/s. Ganga Automobiles Limited (GAL). During the pendency of those proceedings, on 02.02.1998, Mr. G.S. Suri, father of Mr. Ashwin Suri (Managing Director of GAL), appeared before the Company Court and offered to pay the unsettled dues of GAL, in his capacity as DAL, by selling the property situated at 1, Sikandra Road, New Delhi (hereafter "suit property"). The offer was accepted by the Court, which then ordered that the property would be deemed to be attached and sold under Court supervision, if not sold within 3 ½ months. This was expressly recorded by the order of Court, in the company winding up proceeding, as follows: "02/02/1998 ".............It is submitted by the learned counsel for the respondent that M/s Delhi Automobiles Limited have immovable property, namely, 1, Sikandara Road, New Delhi. According to the learned counsel for the respondent the property is extremely valuable. He further states that efforts are being made to sell the property and in case the property is sol....
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....ecution. Subsequently an application, C.A.1242/09, for revival of these applications was also dismissed for non-prosecution on 18.3.2010. 5. DAL claims to have entered into an agreement to sell the suit property on 24.12.2002 to Taneja for a consideration of Rs. 25 crores out of which a sum of Rs. 5 crores was paid to DAL. By lease deed dated 14.01.2003, the 1st floor of the property was let out to Universal Buildcon India Ltd (hereafter "Universal"), the second appellant in Taneja‟s appeal. Universal is an associate company of Taneja, and physical possession of the property was handed over subsequently. Universal apparently paid Rs. 2 crores towards the lease agreement which was adjusted as part consideration towards the sale. 6. In November 2006, Taneja filed a suit for specific performance of the sale agreement and for a permanent injunction. In 2007, Universal also filed a similar suit with respect to the lease deed. Both suits are pending on the file of this Court. On 31.01.2007, a Single Judge in the suit noted that the counsel for the defendant stated that the understanding that the parties had entered into on 08.12.2006 would continue till the next date. On 27.0....
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....e suit property as regards possession and against alienation. It was argued that, likewise, the learned Company Judge overlooked that Universal too had entered into a lease agreement with DAL for renting the entire first floor of the suit property and is in possession of the same. For enforcement of that lease deed, it too filed a suit for specific performance in which the Court has issued an interim order as regards possession. 11. Taneja urges that on a proper and fair reading of the orders dated 02.02.1998, 03.02.1998 and 20.02.1998, the so called deemed attachment of property ordered on 02.02.1998 was stayed by the Court on 20.02.1998 till next date and on the next date i.e. 22.05.1998, the Court directed that "... the order dated February 20, 1998 needs no variation. Therefore, the suit was taken out of the purview of attachment order and the learned Single Judge is in gross error of fact in holding that the said property was under order of deemed attachment." The order dated 02.02.1998 thus stayed the attachment of the property and on the next hearing, the Court directed that the previous order needed no variation. This translated to the concerned suit property being remov....
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....as it was beyond the objects of the company to be a guarantor for the debts of other companies. The appellants are bona fide purchasers/lessees for valuable consideration and were not given any notice of the pending proceedings concerning the property. Their rights should have therefore been protected. Learned counsel relied on the judgment reported as Shubh Shanti Services Ltd v Manjula S. Agarwalla & Ors 2005 (5) SCC 30 and submitted that in the absence of express authorization or power a Director or Managing Director of a company cannot enter into binding obligation on its behalf, especially those which result in encumbrance of its immovable properties or in any manner create clogs on its transfer or alienability. It was also argued that no benefit flowed to DAL as a result of the unilateral statement of Shri Suri. Even otherwise, property was offered to prevent winding up of another company, GAL. Winding up was eventually ordered and consequently, the property cannot be now the subject matter of attachment. 14. It was submitted that the withdrawal of the statement made by Mr. Suri was immediate and suffered from no delay - reliance is placed on the order dated 03.02.1998, in....
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.... taken of the property at Sikandra Road. 19. It was submitted that the observation of the Judge that Mr. G.S. Suri had the power of attorney to deal with the property of DAL is incorrect. The power of attorney was given by the erstwhile owners of the said property in respect of their undivided shares, transferring it in favour of Mr. Suri. The power of attorney did not empower him to offer the property to meet the liabilities of the creditors. The General Power of Attorney executed by the erstwhile owners of the property on Sikandra Road authorized Mr. G.S. Suri to „do all acts and deeds for effecting the transfer of share in favour of Delhi Automobiles'. It further detailed that the GPA authorized the holder to execute a sale deed between the owners and DAL. 20. Mr. Govind argued that in terms of provisions of the Companies Act, the official liquidator is only empowered to take control of the property of the company in liquidation and not another party which is unconcerned with the liquidation. This contention has not been addressed by the company judge. The property is owned exclusively by DAL and no objection has been taken to the same by the respondents. 21. Lear....
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.... with regard to the Liquidator‟s applications as they were in pursuance of the order dated 02.02.1998, which had attained finality. 25. Counsel for the Official Liquidator submitted that on 03.02.1998, when Mr. G.S. Suri sought to withdraw the undertaking made by him the previous day, the counsel for the Appellants sought to delete that part of the order which related to the property at Sikandra Road. However, the Company judge had pointed out that those contentions would only take effect if an application for a review of that order was made. DAL filed an application, C.A. No. 1508/98, for review of the order dated 02.02.1998. Additionally, an application, C.A. No. 1421/05, was filed for amendment of the review petition. On 13.08.2009, both these applications were dismissed for non-prosecution. Subsequently an application, C.A.1242/09, for revival of the said applications was also dismissed for non-prosecution on 18.03.2010. The order directing the attachment of the property at Sikandra Road thus stood and attained finality. Accordingly, the property was thus not taken out of the purview of the attachment order. 26. The Official Liquidator contends that the submission t....
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....hat they had not been informed of the encumbrance on the property when they had entered into the agreement of sale, was withdrawn on 10.02.2011 when they were given the liberty to approach the Court once the matter in 161/97 for sale of the property had been disposed of. However, no subsequent application had been filed by the said Appellant. Here, Counsel argued that Kancherla Lakshminarayana had no applicability. The Court had held there that a person who files a suit on the basis of an agreement of sale could not be held to be an utter outsider having no locus standi to take the objections. It was further held that the question of whether the validity of the agreement of sale and the question of whether it entitled the appellant for specific performance on the basis of the agreement is a question to be decided subsequently in the suit. However, significantly, the contract for sale in that case was made in the context of an agreement of sale entered into prior to attachment. The decision was based on the judgment in Vannarakkal Kallalathil Sreedharan. None of these cases relied on by the Appellants are applicable to the facts of this case as the attachment occurred before, in 199....
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.... Sethi, Senior Advocate, with Mr D.R. Mahajan, Ms. Kamlesh Mahajan and Mr. Girdhar Govind for the respondent. C.P. No. 161/ 97 & C.A. 384/ 97: (with CPs. 320/96, 99/97, 100/97, 101/97, 110/97 120/97, 140/07, 157/97, 163/97, 164/97, 167/97, 293/97, 366/97, 404/97, CCP 21/ 97 & CCP 17/ 97). The statement of Mr. G. Sagar Suri was recorded on February 2, 1998. However, the statement has not been signed by him. It has been mentioned by the learned counsel for the respondent that Mr G. Sagar Suri was as actually not authorized to make any statement on behalf of M/s. Delhi Automobiles Ltd. with regard to 1, Sikandra Road, New Delhi, as he had not gone to the Board for an authorization from them in this behalf. It is unfortunate that on February 2, 1998 this was not the position taken by Mr G. Sagar Suri. He had categorically stated that he was authorized to make a statement on behalf of M/s. Delhi Automobiles Ltd. Learned counsel for the respondent also submits that the order pertaining to taking over of 1 Sikandra Road in the event of it being not sold in three and a half months should be deleted from the order dated February 2, 1998 as the property belongs to M/s. Delhi Automobile....
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.... as the Liquidator of the Company. Learned counsel for the petitioners have no objection to the passing of the order of deemed winding up in the light of the submission of learned counsel for the respondent. Having regard to the statement of learned counsel for the respondent and learned counsel for the petitioners, I am of the view that the submission of Mr. Sethi, learned counsel for the respondent, with regard to the deemed winding-up of the company, should be accepted. Accordingly, it is directed that in case the admitted liability of the creditors who have filed petitions in this Court is not discharged by the respondent before 21st May, 1998, the Company will be deemed to have been wound-up and the Official Liquidator attached to this Court will act as the Liquidator of the Company. Mr. Mahajan, learned counsel for the respondent has presented in Court the statement of account of the Company as on 31st March, 1996. Let the same be taken on record. Mr Mukhinder Singh, director of M/s. Ganga Automobiles will also file the statement of account of the Company upto-date within three weeks. Mr Mukhinder Singh shall also disclose the names of the Directors of M/s. Ganga Automo....
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....M/s. Goyal MG Gases Limited and the respondent stands referred to an arbitrator. Learned counsel also submits that the dispute between M/s. Poysha Oxygen Pvt. Ltd. and the respondent has also been referred for arbitration. Learned counsel for the respondent says that the liability of the respondent towards M/s. Rajeev Goel Architects Pvt. Ltd. will be notified to petitioner. He states that the respondent will calculate the interest payable to each of the petitioners on the admitted rate of interest and will file a schedule of payment. Learned counsel for the respondent submits that Mr. Mukhinder Singh, a director of the respondent company, will give a statement that he will abide by the statements and undertakings given on behalf of the respondent, and in the event of the breach of the payment schedule, he will be personally liable for the consequences arising from such a breach. Mr. Sibal states that Mr. Mukhinder Singh is present and is willing to make a statement to the above effect. Let the statement of Mr. Mukhinder Singh be recorded. Sd/- May 22, 1998 ANIL DEV SINGH, J. Statement of Mr. Mukhinder Singh has been recorded. Learned counsel for the petitioners submit ....
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....review, and noted that it was taken up on 3rd February, 1998 and thereafter the case was adjourned to 20th February, 1998. The Court then, in its order of 18th August, 1998, stated that: ".....................The proceeding of 20th February, 1998 show that the counsel, appearing for the respondent company, Mr. Ravinder Sethi, Senior Advocate made a statement that despite the circumstances against the respondent company an opportunity till 21st May, 1998 for making the payment of all the creditors (who are before this Court) be given and in the event of the payment not being made by the said date, the company be deemed to have been wound up and the Official Liquidator attached to this Court be deemed to have been appointed as the Liquidator of the company. To this statement of counsel for the respondent, petitioners expressed no objection for passing of the order of deemed winding up. Accordingly, having regard to the statement of counsel for the respondent company and of the petitioners, this Court passed the order if the liability or the debts of the Creditors who filed petition before this Court was not discharged by the respondent company before 21st May, 1998, the company wo....
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....ell as of the Director, Mr Mukhinder Singh who had by his undertaking made himself personally liable for the consequences arising from such a breach. Since there is a deemed winding up order operating against the respondent company and the Official Liquidator attached to this Court was appointed as the Liquidator of this Company, the said order was kept in abeyance from time to time to enable the respondent company to pay up its debts. Number of opportunities were given to the respondent company to adhere to the schedule of payment as given by it before this Court on 22nd May, 1998. But the respondent company has faulted and thus committed a breach of the same. Therefore, in these circumstances there is no alternative but to hold that respondent company stood wound up and the Official Liquidator attached to this court who was appointed as Liquidator of the company to take into custody and possession the assets, effects and records of the respondent company as well as the assets moveable and immovable of Mr. Mukhinder Singh, Director of the respondent company, who made himself personally liable for the consequences arising from such a breach. Necessary communication may also be s....
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....up proceedings reveal that the attachment of the suit property was never vacated or modified. (g) The review petition and a subsequent application for amendment, made by DAL were rejected. Its effort to revive those applications were also unsuccessful. It had earlier appealed unsuccessfully against the order of 02.02.1998 to the Division Bench. 35. In the opinion of the Court, the above sequence of events, especially the orders of the Court negate Taneja and DAL‟s submission that the attachment order cannot bind them. These facts show that the attachment order was not subsequent to the agreement to sell and the lease agreements (which were in 2002 and 2003) but rather, before them, having been made in 1998. The reliance on the observations made in Vannarakkal Kallalathil Sreedharan; Rajender Singh and Kancherla Lakshminarayana (supra) are consequently of no avail. In all those decisions, the attachment of the property was subsequent to the contracts by which the owners had agreed to sell the property. Here, the fact situation is to the contrary - the attachment order had been made in 1998 and continued in force. The attachment order, therefore, clearly prevailed. 36.....
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....nance in our hands for another reason also. The parties before the Special Court having consented and invited the Court to pass the order dated 5.7.95 and obtained benefits by giving undertaking of their own and on behalf of the appellant-company, ought not to be allowed to take shelter under technicalities to overreach the Court, which believed the parties and counsel appearing on their behalf and acted in good faith by accepting the terms suggested by the parties themselves. XXXXXXXXXXX XXXXXXXXXXX On a careful consideration of the events which occurred before the Special Court which made the said Court to believe the existence of certain facts on the representations made before it, the orders passed and the affidavits found and noticed to have been filed from time to time before the Special Court, the Special Court could not be either faulted for its conclusions or that the specific findings arrived at that the consent order dated 5.7.95 taken together with the affidavit of undertaking dated 28.7.95 covered within its fold the property of the appellant-company in question for being proceeded against in execution of the decree passed for recovering the amount due as declare....
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....would be necessary to deal with some applications filed during the pendency of the proceedings. On 27.02.2012, in respect of the Company Winding-up Petition (Co. Pet. 161/1997) Rocksmelt Co., the original petitioner, claimed that it had arrived at a settlement with GAL and was withdrawing the petition in view of the development. However, counsel for the Official Liquidator argued that no settlement could be made after the Court had already ordered the company to be wound up. The Company Court agreed with the objections of the Official Liquidator and held the settlement to be impermissible. The proprietors of Rocksmelt were directed to deposit the amount admitted to having been received by them with the court. The Court is not seized of the appeal against that order and it only observes that the said petitioner is permitted to approach the learned Single Judge for a review or modification of the order. 39. C.M. No. 311/2012 is an application filed by the Official Liquidator seeking directions against the respondents who were the legal heirs of Mr. Mukhinder Singh, who had given an undertaking to be personally liable for the non-compliance with the payment schedule to be adhered t....