TaxTMI 
TaxTMI 
2020 (5) TMI 245
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....rve Bank of India v. M/s J.V.G. Finance Ltd. By virtue of the impugned order, 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 pr....
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....statement of accounts filed by Milan Enterprises on the basis of which it was alleged that the said concern advanced money to the claimant. This alleged loan 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 ....
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....aims to have participated in the alleged transaction of loan but there is nothing on record to suggest the consideration for which he participated in the said transaction. Material on record indicates, as already noted, that 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.....
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....ame date Dr. Sukhbir Singh (presumably) issued a cash receipt of Rs. 30 lakhs on behalf of JVG stating that the proposal has been accepted by the Board of Directors and the agreement to sell was purportedly entered on 17.07.1997 copy of which is Exhibit P-4. By the 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 sh....
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....picious documents are placed on record. One Sh.Mukesh C. Shah (Milan Enterprises) through his Power of Attorney Holder Sh. Sudhir Kumar executes a communication dated 02.06.1997 giving a loan to the claimant of Rs. 30 lakhs, that too in cash. Admittedly, the claimant is unable to refund the loan. The claimant 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 ....
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....t was quoted with approval in the case of Ram Prasad v. Hari Narain [AIR 1998 Raj 185 : It was held that the word "acts" used in Rule 2 of Order 3 CPC does not include the act of power-of-attorney holder to appear as a witness on behalf of a party. Power-of-attorney holder of a party can appear only as a witness in his personal capacity and whatever knowledge he has about 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....
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....any, may, if it thinks it proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct. On the hearing of an application under this sub- section, the Official Liquidator or the liquidator, as the case may be, may himself give evidence 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....
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.... Dr. Sukhbir Singh and Ms.Bharti Bhagwan Jadhav by affixing her thumb impressions on the consent terms dated 21.01.2000. It is an admitted fact that on that date, the OL had already been appointed as the Provisional Liquidator vide order dated 05.06.1998. Under section 450 of the Companies Act the OL was in possession of the entire assets of the company on that date. Under section 446 of the said Act, no proceedings could have been continued against the respondent Company without prior permission of this court. The act of 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....
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....pellant. We direct the appellant to file necessary documents before Shri G.P. Thareja within one week. Shri. G.P. Tharja will hear and decide after giving notice to the parties about the genuineness of the purchase of the flats in question on the basis of the documents within a period of eight weeks. The appellants will continue in possession of the flats till the decision is made by Shri G.P. Thareja. Mr. Jayant Bhusan says that the statement of the counsel for the appellant is not correct as they are in possession of the flats through Raj Nandini Entertainment Pvt. Ltd., 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 provis....
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....erious Fraud Investigation Office (hereinafter referred to as 'SFIO') dated 11th February, 2010 wherein it has been held as under: ''4.6.11 From the above it is clear that these four ladies were used as front persons to camouflage the dubious sale of these flats by Shri Sukhbir Singh to these ladies. These flats were the properties of M/s JVG Finance Ltd. and were sold unauthorisedly and the proceeds of sale were misappropriated by Shri Vijay Kumar Sharma and Shri Sukhbir Singh. The funds of the company were thus siphoned off by Shri Vijay Kumar Sharma in connivance with Shri Sukhbir Singh." 4. He submits that on account of 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 exe....
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....ditor.- If a creditor is dissatisfied with the decision of the Liquidator in respect of his proof, the creditor may, not later than 21 days from the date of service of the notice upon him of the decision of the Liquidator, appeal to the Court against the decision. The appeal shall be made by a Judge's summons, supported by an affidavit which shall set out the grounds of such appeal, and notice of the appeal shall be given to the Liquidator. On such appeal, the Court shall have all the powers of an appellate Court under the Code." 23. The application moved for correction in the order passed in the appellate exercise of jurisdiction by the learned Single Judge clearly bars further 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 opin....
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....te relative cannot give evidence about such readiness and willingness, even if he/she is an attorney holder of the person concerned. [See: Man Kaur (D) by LRs. vs. Hartar Singh Sangha (supra)]. 12. This Court is also of the opinion that the consent decrees dated 04th January, 2000, 06th January, 2000 and 21st January, 2000 passed by the Bombay High Court cannot be said to be legal, valid and subsisting by virtue of the order dated 04th July, 2005 passed by the Company Court, which has attained finality. Further, the argument of learned senior counsel for the appellants that the Division Bench order dated 18th July, 2006 had set aside the order dated 04th July, 2005 of the Company Court is untenable in law, as in that eventuality, there was no question of the said Division Bench directing the appellants to prove their title before a Committee under the chairmanship of Mr. G.P. Thareja. The necessity to prove the title before the Committee arose only because the consent decrees passed by the Bombay High Court were invalid. 13. Also, the maintainability of the application which led to the passing of the order dated 4th July, 2005 in our opinion cannot be challenged today as m....