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2023 (8) TMI 1104
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.... Administrator/Official Liquidator; (2).Whether in view of the provisions of the Benami Transactions (Prohibition) Act, 1988, the Company can be said to be the owner of the property, though the property is shown to be under ownership of the true owners throughout; (3).Whether in absence of a petition under Sections 542 and 543 of the Companies Act, the transaction in favour of third party can be questioned by way of simple company application or company is required to file a civil suit to challenge the sale in competent Court having jurisdiction with permission of Company Court; (4). What is the effect of Civil Court decree which has attained finality; (5).Whether in absence of positive evidence of false misrepresentation, a finding can be recorded of fraud and misrepresentation, without trial only on basis of Administrator/Provisional Liquidator. (6).Whether the Company Court has the jurisdiction to determine question of title of land falling outside jurisdiction of this Court in view of Clause 12 of Madras High Court Letters Patent." 2. There existed a company by name Maxworth Orchards (India) Limited. The business model of the comp....
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....ts with respect to the property situated at Siddavaram Village of Porumammilla Mandal Kadappa District, the Learned Administrator filed a report and sought for similar orders. At that stage, the attention of the learned judge was invited to the order passed in C.A.Nos.1937 to 1939 of 2003 batch and he was requested to apply the same. The learned judge differed from the opinion taken by Justice Jyothimani and referred the aforesaid questions to be answered by a Division Bench. 8. Heard Mr.Karthik Seshadri for The Administrator and Mr.P.R.Raman for the Respondents. 9. For the sake of understanding, we shall deal with one question after another in seriatim:- Question No.1.Whether application for setting aside the sale can be entertained, which is not supported by any affidavit, but based on a report of the Administrator/Official Liquidator? Answer:It has been an established practice of this Court that the Official Liquidator does not file an affidavit accompanied by a judge's summons. He only files a "report" which is of course signed and sealed by him at the end of every page. This is a practice which has been followed by this Court for decades. The Learne....
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....Sadr Courts came to be abolished creating the Madras High Court. It was argued before the Special Bench that the practice of the Sadr court should not be adopted but the High Court should adopt a new procedure. Rejecting the argument, the Special Bench held in Muttu Chidambara Vs. Karuppa (1884) ILR 7 Madras 382 as follows:- "It was held by the Sadr Court that raiyatwari holdings were not estates paying revenue to Government, and this construction has always been acted upon in this Presidency. It would unsettle a large number of titles to adopt a different construction now, and whatever we might have thought if the matter had come before us as res-integra, we are not prepared to disturb a practice so long established. " 13. The view taken by the Calcutta High Court came for consideration before the Supreme Court in Rao Shiva Bahadur Singh and Another Vs. The State Of Vindhya Pradesh AIR (1955) SC 446. Writing for the majority, SR Dass J. (as His Lordship then was) was pleased to hold that the view taken by the Calcutta High Court is correct and made the principle of practice of the Court as the law of the Court, a part of the post constitutional Indian Legal Jurispruden....
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....n 4 of the Benami Transactions (Prohibition) Act, 1988 reads as under: 4. Prohibition of the right to recover property held benami: (1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property. (2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person shall be allowed in any suit, claim or, action by or on behalf of a person claiming be the real owner of such property. (3) Nothing in this section shall apply, ... (b) where the person in whose name the property is held is a trustee or other standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity. 24. The reading of the admitted facts would show that respondent no.1 could not be said to be trustee or a person standing in the fiduciary capacity on behalf of the company, as a....
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....aspect we have to carefully analyze is the application of the Indian Trust Act of 1882. The Benami Act repealed, Sections 81 and 82 of the Indian Trust Act, 1988 with effect from 18.05.1988. However, it did not touch the provisions relating to Sections 88, 91 and 92 of the Indian Trust Act. The principles which flows out of these 3 Sections are that where a person contracts to buy a property, to be held on trust for certain beneficiaries and buys that property, accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract. 21. In a different context, the Supreme Court was called upon to interpret whether there exists a fiduciary relationship between the Power of Attorney & his principal. Dr Justice D.Y. Chandrachud was pleased to hold as follows in Central Public Information Officer, Supreme Court of India Vs. Subhash Chandra Agarwal (2020) 5 SCC 481. "244.A fiduciary must be entrusted with a degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. [ Tamar Frankel, Fiduciary Law, Oxford University Press, 2011] The greater the independent authority to be exercised b....
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.... Oxford University Press, 2011 246. From the discussion above, it can be seen that a fiduciary is someone who acts for and on behalf of another in a particular matter giving rise to a relationship of trust and confidence. A fiduciary relationship implies a condition of superiority of one of the parties over the other, where special confidence has been reposed in an individual to act in the best interests of another." 22. This concludes that the relationship between the Power of Attorney and his principal is fiduciary. As seen from above, the relationship between the owner & the purchaser is also one such. Fiduciary capacity existing in both the transactions, even if the Benami Act were to apply, it falls within the exemptions contemplated under the Act. 23. Apart from that, a combined reading of Sections 88, 91 and 92 of the Indian Trust Act, put both the employees as well as the landowners in a fiduciary capacity with the company. When the parties hold the property in a fiduciary capacity, Section 4 (3) (b) applies. The said provision reads as follows:- "4. Prohibition of the right to recover property held benami.- ............ (3) Nothing....
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....g the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a power of attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding 'SA/GPA/will transactions' are not intended to apply to such bona fide/genuine transactions." 28. Further, The Supreme Court held in Maya Devi Vs. Lalta Prasad (2015) 5 SCC 588 that the judgment of the Suraj Lamp would only be prospective in operation and therefore, inapplicable to transactions which had been taken place before that. It held that the operation of Suraj Lamp (1) judgment was pointedly and poignantly prospective. 29. In the case before us, the powers of attorney were executed in the last decade of the previous millennium and therefore, the argument based on Suraj Lamps necessarily has to fail. 30. This makes it clear that neither the A....