TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1075
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....ited, a sub-broker of Latin Manharlal Securities (P) Limited, the stock broker, vide BSE settlement No.A0298. The applicant No.1 has thus acquired ownership of 6600 shares of the company in liquidation the, particulars of which are furnished in Exhibit-A annexed to the application. b) By an order dated 13th February, 2022, the Official Liquidator came to be appointed as the Provisional Liquidator of the company in liquidation. By subsequent order dated 5th September, 2005, the company in liquidation was ordered to be wound up and the Official Liquidator was appointed as the Liquidator. c) The applicants aver that due to oversight and inadvertence the applicant No.1 could not get the 6600 shares transferred in his name. Though the applicant No. 1 is in possession of physical shares along with transfer forms duly signed by the transferrors and the endorsement of the broker, the name of the applicant No. 1 has not been reflected in the share register of the company in liquidation. The sub-broker has confirmed the purchase of 6600 shares by applicant No.1 vide letter dated 7th April, 2014. On 25th August, 2014, the applicant No. 1 filed an affidavit of proof of debts, along with su....
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....port of the application. 5. Ms. Dipsay Sequeira, the learned Counsel for the applicants submitted that the prayer for grant of approval to the transfer of the shares of the company in liquidation is, in a sense, innocuous . The Official Liquidator does not contend that the transfer of the subject shares is against interest of the company, its creditors and shareholders or public in general. It was further urged that there is no prohibition in law to validate the transfer of shares, after the winding up order, as the winding up process is still underway and the company in liquidation has not yet been dissolved. 6. To lend support to these submissions, the learned Counsel for the applicants placed reliance on a judgment of Division Bench of Delhi High Court in case of H.L. Seth Vs. M/s Wear well Cycle Company (India) Ltd & Others DRJ 1992 (22) 354 and an order passed by a learned Single Judge of this Court in the case of Suresh Murlidhar Talreja & Anr Vs. Svadeshi Mills Co. Ltd (in liquidation) in Company Application No.1615 of 2008 in the very Company Petition No.1068 of 1997. 7. In opposition to this, Mr. Pimple, the learned Counsel for the Official Liquidator submitted that the....
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....e till the year 2014. The applicant banks upon a communication dated 7th April, 2014, addressed by Trendsetter Investment Private Limited, a sub-broker of Latin Manharlal Securities (P) Limited, the stock broker at BSE, to bolster up of his case that he had purchased 6600 shares of the company in liquidation. Interestingly, in the said letter dated 7th April, 2014 itself, the sub-broker adverted to the fact that Svadeshi Mills Company Limited has gone into liquidation. Thereupon, on 22nd August, 2014, the applicant No. 1 seems to have lodged an affidavit of proof of debt dated 19th July, 2014, against the company in liquidation. Copies of the share certificates were purportedly annexed to the said affidavit in proof of debts. 12. From perusal of the copies of the share certificates annexed to the application, it appears that the shares stood in the name of Investment Corporation India Limited. The applicant No. 1 had annexed those share certificates and transfer forms allegedly duly executed by the transferor in support of the affidavit of proof of debts. 13. It would be contextually relevant to note that under agreement to sale shares executed on 25th April, 2019, the applicant ....
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....on or benefit of a certain party, or class of parties, is voidable only." 15. For discerning the legislative idea in employing the word "v oid" in the context set out in Section 536(2 ) of the Companies Act the second aspect to be noticed is that the provision itself shows that the word void is not employed peremptorily since court has power to order otherwise. The words "unless the court otherwise order" are capable of diluting the rigor of the word "void" and to choose the alternative meaning attached to that word. (emphasis supplied) 15. The Supreme Court also advertted to the pronouncement of the Division Bench of this Court in the case of Tulsidas Jasraj Parekh V. Industrial Bank of Western India AIR 1931 Bombay 2 and Division Bench of Gujrath High Court in the case of Navjivan Mills Ltd., In re, wherein the considerations which should with the Court in exercising the discretion were enunciated. The relevant observations in paragraph No. 17 and 18 read as under- "17..... ....... Learned Judges stated thus : "Now here as regards S 227(2) the Court has to steer a middle course between two extremes. On the one hand the words of the section are wide enough to inclu....
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....s being paralyzed. If that is the purpose and object of the section, it would hardly be proper and just to stultify the power and restrict its operation since otherwise it is bound to be counter- productive in the sense that the very purpose of keeping the company as a going concern so as to ensure the interest of the shareholders and creditors would be defeated," ......... 20. It is difficult to lay down that all dispositions of property made by a company during the interregnum between the presentation of a petition for winding up and the passing of the order for winding up would be null and void. If such a view is taken the business of the company would be paralysed, for, the company may have to deal with very many day-to-day transactions, make payments of salary to the staff and other employees and meet urgent contingencies. An interpretation which could lead to such a catastrophic situation should be averted. That apart, if any such view is adopted, a fraudulent company can deceive any bona fide person transact-ing business with the company by stage-managing a petition to be presented for winding up in order to defeat such bona fide customers. This conse-quence has been cor....
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....Lords in the case of the Governor and Company of the Bank of Scotland Vs. Macleod and Others (1914) AC 311 and the Supreme Court Judgment in the case of J. K. (Bombay) Private Limited Vs. M/s New Kaiser-I-Hind Spinning and weaving Co. Ltd and Others AIR 1970 SC 1041, the Division Bench of this Court held that it is now well settled principle of law that if a transfer is not completed before order of winding up has been passed an application would not be maintainable before the Court, for a direction to the Official Liquidator to complete the transfer. This principle necessarily follows the settled legal position that upon passing of an order of winding up, no new rights can be created and no incomplete rights can be completed. 19. In the light of the aforesaid enunciation of the legal position, reverting to the facts of the case, it is imperative to note that the applicants essentially seek twin validations. First, the purported acquisition of the shares by applicant No. 1 in the year 1998, post the commencement of the winding up proceedings with the Company Petition No.1068 of 1997. Second, the applicants seek a further validation of the transfer of shares by applicant No. 1 in f....