TaxTMI 
TaxTMI 
2020 (5) TMI 245
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....r, the objections filed by the appellants to the Thareja Committee Report were dismissed and the Official Liquidator was directed to take possession of the four flats in question forthwith. The official liquidator was held entitled to seek police protection. 2. Since the impugned order encapsulates the facts and extensively deals with the submissions advanced by the learned counsel for the appellants, the relevant portion of the said order is reproduced hereinbelow:- "15. I may now deal with the above contentions. I may first notice the observations of this court as stated in order dated 11.05.2005 while dealing with Co. Appl. No. 892/2000 filed by the ex-management. This court had recorded the following findings on the claim of the claimants:- "17. The next question would be about the genuineness of the purported transactions. From the aforesaid description, it would be clear that the authority in favour of Dr.Sukhvir Singh allegedly flows from some Board Resolution dated 3rd January, 1997. Further, all the Agreements to sell record Board Resolutions purporting to accept the proposals of the intervenors for purchase of respective flats. Therefore, after hearing the argument....
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....oan was the source of funds of the claimant to buy the flat. It is also noted that the statement of accounts does not bear the stamp or certificate of any of the bankers. The report concludes that scrutiny of the documents would reveal that not a single penny of the claimants is at stake. Though a string of borrowing is sought to be created but even at the end of the tunnel there is no proof regarding the payment of consideration that may satisfy the judicial conscience. It is further stated that if such borrowing is made, there is nothing to suggest that an effort was made by the persons lending the money to the extent of Rs. 1.20 crores to take back the money. This conduct itself belies the genuineness of the transaction. (iii) No original resolution of JVG has been placed on record by the claimants. (iv) Regarding the agreement to sell in question, it is stated that the document is manufactured for the purpose of the claim at a later stage. (v) The Committee also notes that Dr. Sukhbir Singh has nothing to do with JVG and that the documents have been filed to commit a fraud before the Committee. (vi) The Thareja Committee also records that the claimants have not appear....
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.... he has aided the claimants and their attorney in the matter of false claims preferred by the said claimants. 3. Another witness examined is Sh. Sukhbir Singh. This witness has tried to help and aid the claimant by supporting the story set up by the claimant. This witness as per documents produced on record by the claimant was never a director in JVG Finance Ltd. And he went to the extent of making the false statement that he was a director in the said company. He has tried to develop the story that the flat had to be transferred to the claimant on account of the urgent necessity of JVG Finance to satisfy the investors. This witness in his deposition has admitted about the enquiry by the RBI and also admitted that alleged money was received without resolution and in cash. He has also not explained where he deposited this huge amount of Rs. 1.20 crores. Instead he deposed that he does not remember the date of deposit nor does he have any record. He further deposed that it was V. K. Sharma who introduced him to Sh.Tarun Rathi. I have gone through his deposition. It is not worth to be relied upon. Since the documentary evidence produced by the claimant in the form it has been pr....
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....said agreement it is claimed that the property has been sold to the claimant. This document was again allegedly executed by Dr. Sukhbir Singh and Ms. Bharti Bhagwan Jadhav (by affixing her thumb impressions) on the document. A letter dated 17.07.1997 was also written by JVG to the claimant handing over possession/keys of the flat. The above photocopies of unregistered documents are the sum and substance of the title papers of the claimant. 19. To prove the source of funds to purchase the flat, Ms.Bharti Bhagwan Jadhav has filed some documents which include a copy of a letter written by one Sh. Sudhir Kumar, Power of Attorney Holder of Mr.Mukesh C. Shah of Milan Enterprises dated 02.06.1997 whereby it is proposed to give a loan of a sum of Rs. 30 lakhs against the security /purchase of the property being Flat No. 104 to the claimant. A photocopy of a statement of account is placed on record to try and show adequate funds in the account of Milan Enterprises. Exhibit P-8 is an acknowledgement of receipt of Rs. 30 lakhs allegedly received from Sh. Mukesh C. Shah by Ms.Bharti Bhagwan Jadhav. Some notices were sent to Ms.Bharti Bhagwan Yadhav for refund of the money. 20. In this co....
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....nt thereafter on 22.08.1997 without paying any amount pursuant to an agreement buys shares of three different companies allegedly worth Rs. 30 lakhs. These shares for which no consideration is paid by the claimant are thereafter sought to be handed over to Sh. Mukesh C. Shah, the proprietor of Milan Enterprises through POA Holder Sh. Sudhir Kumar in lieu of return of the loan amount of Rs. 30 lakhs. There is nothing to show that the seller of the shares, namely, NE Electronic Ltd. was ever paid the consideration for purchase of the shares by the claimant. One cannot but concur with the view taken by the Thareja Committee that the documents are nothing but a camouflage to show as to how the claimant has come in possession of the sum of Rs. 30 lakhs to pay the consideration for the flat in question. In fact the claimant have with no personal contribution of funds have allegedly managed to buy a flat for Rs. 30 lakhs. 22. Apart from the nature of the above documents placed on record as noted above, there are other aspects which persuade me to confirm my conclusion that the claimants have failed to discharge their duty to show their title to the flats in question. I may note thes....
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....out the case he can state on oath but he cannot appear as a witness on behalf of the party in the capacity of that party. If the plaintiff is unable to appear in the court, a commission for recording his evidence may be issued under the relevant provisions of CPC. .... 21. We hold that the view taken by the Rajasthan High Court in the case of Shambhu Dutt Shastri (supra) followed and reiterated in the case of Ram Prasad (supra) is the correct view. The view taken in the case of Floriano Armando Luis [(2002) 2 Bom CR 754] cannot be said to have laid down a correct law and is accordingly overruled." 25. Clearly, a Power of Attorney holder of a party can appear as a witness in his personal capacity. He cannot appear as a witness on behalf of a party. In the present case the claimants themselves have not appeared in the witness box. It is a Power of Attorney Holder who has appeared as a witness on behalf of the alleged title holders of the flat. The Thareja Committee has rightly discarded the evidence of the Power of Attorney Holder as to no effect. 26. The third aspect that I may note which aspect has also been noted by the Thareja Committee is that the claimants have failed....
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....idence or call witnesses. (2) (a) Where the Court makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration. (b) In particular, the Court may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf. (c) The Court may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub- section. (d) For the purpose of this sub- section, the expression" assignee" includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of....
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.... Dr. Sukhbir Singh entering into the settlement terms and not informing the Bombay High Court about the appointment of the OL as Provisional Liquidator is a fraudulent act and an attempt to overreach the orders of this court. 36. In any case, in my opinion, this court vide order dated 04.07.2005 has already held that the said decree of the Hon‟ble Bombay High Court is not binding. This court held as follows:- "16. Furthermore, on the very first date in all these suits and without notice to the Official Liquidator, Dr. Sukhvir Singh appeared through counsel and consent terms were filed on the basis on which suits were decreed. The Bombay High Court was not informed about the liquidation proceedings or the appointment of the provisional liquidator by this court. In fact, it appears, there is no averments made about this order in the suits filed. The company is impleaded as the defendant and after the appointment of the provisional liquidator, it is only he who could represent the company. It is, thus, clear that not only the proceedings in the suits were impermissible as they were initiated without the leave of the court, even they appear to be collusive a well. Such a decr....
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....d., and the appellants are not in possession which statement is refuted by the counsel for the appellants. This is the issue that Thareja Committee will decide. Appeal stands disposed of." 38. Clearly, the Division Bench in its order dated 18.07.2006 did not set aside the findings recorded by the Coordinate Bench of this court on 04.07.2005 as to the effect that the decree passed by the Bombay High Court would be void and would not bind the official liquidator. The said finding remains in operation. 39. Even otherwise, it is manifest that the order passed is contrary to the statutory provisions and not binding. Reference may be had to Sections 446 and 456 of the Companies Act, 1956 which read as follows: 40. Section 446(1) of the Companies Act 1956 reads as follows:- "446. Suits stayed on winding up order. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced. or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose. 41. Section 456(1) of ....
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....f consideration amount having been received and title documents having been executed by Dr. Sukhbir Singh for JVG Finance Ltd. (the company in liquidation), the appellants were protected under Section 53A of the Transfer of Property Act. 5. Learned senior counsel for the appellants further submits that the learned Single Judge fell in error in holding that non-stepping of the appellants in the witness box was fatal. He states that there was no necessity for the appellants to step into the witness box as their power of attorney holder had executed agreements to sell and further the said agreements had been duly exhibited by him. In support of his submission, he relies upon Bhimappa & Ors. Vs. Allisab & Ors. reported in 2007 (6) KarLJ 286, Syed Abdulkhader Vs. Rami Reddy & Ors. reported in 1979 SCC (2) 601 as well as the order dated 05.10.2010 passed by the Hon'ble Supreme Court in C.A.Nos.147-148/2001 titled as Man Kaur (D) by LRs. Vs. Hartar Singh Sangha. 6. Mr. Chadha lastly submits that in view of the Division Bench order dated 18th July, 2006, the earlier order of the learned Single Judge dated 04th July, 2005 holding the consent decrees passed by the Bombay High Court in favo....
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....er appeal under Section 483 of the Companies Act, as well as Letters Patent as laid down by the Apex Court in the case of Kamal Kumar Dutta (supra)." 8. Mr. Kunal Sharma, learned counsel for the Official Liquidator submits that the order dated 4th July, 2005 passed by the Company Court cannot be assailed in the present proceedings as it has attained finality in view of the earlier Division Bench's order dated 18th July 2006. 9. Having heard learned counsel for the parties, we are of the opinion that the present appeal is maintainable as it is not in the nature of a statutory second appeal. In the present case, the initial claims were decided not by the Official Liquidator but by a Committee appointed by a Division Bench. Consequently, the preliminary objection raised by the learned counsel for the Ex-Management is rejected. 10. We are, however, in agreement with the finding of the learned Single Judge that the appellants had failed to prove their ownership to the flats in question as they had not produced any original title documents, but only photocopies. Even during the course of hearing, it was admitted before us that the appellants had not produced their income tax returns ....