TaxTMI 
TaxTMI 
2024 (7) TMI 119
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....out and (ii) Technician Shed No. 5 admeasuring 1755 sq. meters and built up shed admeasuring 1314 sq. meters or thereabout, both situated at Ambernath Industrial Area, within the village limits of Ambernath and sub-District of Ulhasnagar, District and registration District : Thane (the "said Property"), leased the said property in favour of one Ferral Anant Machinery Manufacturers Pvt. Ltd. (the "said company) against which a winding up order has been passed and arrayed as the Respondent No.1. 3. On 25th August 2003, one Mr.Jayantilal A. Shah, Constituted Attorney of Devyani J. Shah, Sole Proprietress of M/s. Jayant Trading Corporation, the Petitioner, filed the petition for winding up against the said company. 4. It is the case of the Applicant that the said company did not inform the Applicant of the filing of the winding up petition nor of any order of admission or of winding up and the Applicant came to know of the same only in the year 2011. 5. On 4th February 2005 an ex-parte order was passed by this Court admitting the winding up petition. 6. In or around 2006-07, the Applicant learnt about the intention of the said company to transfer its leasehold rights and se....
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.... 10. On 26th July 2010, order was passed by this Court winding up the company. It is not in dispute that none appeared for the company and as recorded earlier, the Applicant came to know of the winding up related proceedings only in the year 2011, when on 25th June 2011, a representative from the office of the Official Liquidator visited the said property and informed the Applicant that the Official Liquidator would be taking over possession of the said property in the light of the winding up order. It is submitted that it was after this date that the Applicant conducted necessary searches and came to know of the winding up petition and the orders passed therein. 11. Thereafter, in the year 2011, the Applicant filed Company Application No.325 of 2011 in the winding up petition inter alia for a declaration that the sale agreement dated 5th September 2007 was valid, subsisting and binding. 12. On 6th August 2011, a Memorandum of Understanding (MOU) was entered into between the Applicant and the Petitioner whereby the dues of the Petitioner were settled by the Applicant. 13. On 13th October 2011, keeping all contentions open, an order was passed by this Court permitting the....
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....pass an order of winding up, it is contended that such an order enures for the benefit of all creditors as if it had been made on their joint petition. Therefore, upon an order of winding up being passed, the same relates back to the date of presentation of the winding up petition. Admittedly, the bank of Baroda has informed that the payment has been made some time by the company in liquidation, post the winding up order. In any event, it is made during the pendency of the proceedings. That the application of doctrine of relation back is, therefore, not in dispute. The documents that have been placed on record would indicate that on 4th July 2007, the bank issued a no dues certificate in favour of the company in liquidation. Therefore, at least until that date the claim was not settled. If at all the monies were received, they were received during the course of proceedings. Upon the order of winding up being passed, it was the duty, therefore, of Bank of Baroda to inform the Liquidator and if required by the Liquidator to bring back the monies and deposit them with him. The secured creditors have to be treated equally and particularly in the light of section 529 and 529A of the Com....
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.... agreement dated 5th September 2007 was valid, subsisting and binding. On 20th March 2012, an interim order was passed by the Kalyan Civil Court restraining the Official Liquidator from dispossessing the Applicant from the said property. 15. On 12th September 2012, the Bank of Baroda, who was the only creditor of the Respondent no.1 - company in liquidation, made an application to recall the order dated 13th October 2011 passed by this Hon'ble Court and for other prayers. The said matter had come up for consideration on 12th September 2012. This Hon'ble Court directed that in the event of the Official Liquidator receiving any claims from the workers/creditors of the Company, the Official Liquidator was directed to adjudicate the same and call upon the applicant bank to deposit the necessary amounts by giving 14 days clear notice in writing. Upon receipt of such notice, the applicant was entitled to move an application seeking necessary reliefs. The order was passed without going into the merits of the application since the Official Liquidator had not received any claims from any of the workers/creditors of the Company. 16. On 25th January 2023, the Official Liquidator....
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....is an enabling section which does not render a transaction entered into by a company from the date of filing of the winding up petition till the date of the winding up order void ab-initio. Learned Counsel would submit that the Company Court has the power or rather absolute discretion to declare that a transaction entered into by a company between the date of filing of the winding up petition and the date of the winding up order is not void but is valid, subsisting and binding and in the interest of justice. It is submitted that the transaction of the Applicant has been shown to be bonafide and in the interest of the business of the company, and therefore, in the interest of justice, the same be declared as valid, subsisting and binding. 21. Learned Counsel submits that it is an admitted position that the Official Liquidator has not received any claims from the workers, employees or creditors. That, even the dues of the petitioner have been settled by the Applicant. That, therefore, there are no claims which the company has to meet through the liquidation process, and that, there is no reason therefore for the sale agreement dated 5th September 2007 to be void. 22. Mr.Jain ha....
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....deed, transfer any properties during the pendency of the liquidation proceedings and in support, the learned Counsel draws the attention of this Court to Section 536(2) of the Companies Act, 1956. Learned Counsel, therefore, submits that since the sale agreement dated 5th September 2007 was executed after the commencement of winding up proceedings in the year 2003, the agreement in itself is null and void, non-est, runs contrary to the principles of Indian Contract Act, 1872, as the parties to the transaction lacked competence / locus to enter into the transaction. 28. Mr.Carvalho submits that under Section 456 of the Companies Act, 1956, all the property and effects of the company shall be deemed to be in the custody of the Official Liquidator, as from the date of the winding up of the company. Learned Counsel, therefore, submits that since the sale agreement dated 5th September 2007 is null and void and non-est in the eyes of law, the application be dismissed and the Applicant be directed to handover peaceful possession of the said property to the Official Liquidator. Mr.Carvalho has relied upon a Division Bench decision of this Court in the case of Sunita Vasudeo Warke vs. Of....
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....2/- which was agreed to be deposited with the Official Liquidator. The petitioner had stated that the factory premises of the company in liquidation had already been sold and transferred during the period of liquidation. The Official Liquidator, thereafter, had proceeded to visit the factory premises of the company in liquidation on 25th June 2011 situated on the said property, when it was found that the Applicant was functioning from the said property. In paragraph 8 of the affidavit-in-reply it has been stated that one Mr.Joseph Abraham, Managing Director of the Applicant informed that the Applicant had purchased the said factory premises belonging to the company in liquidation in the year 2007, which is after the date of admission order dated 4th February 2005, for a total consideration of Rs.1,25,00,000/- from the company in liquidation vide registered sale deed dated 5th September 2007. It is not in dispute that the said consideration has been paid to the company in liquidation and that the sale agreement has been registered. 33. Thereafter, the Official Liquidator had filed Official Liquidator's Report No.269 of 2011 seeking the following prayers : (a) Whether....
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....r 2011 and the matter came up for consideration on 12th September 2012, when the Court disposed of the application directing that in the event the Official Liquidator receiving any claims from the workers / creditors of the company in liquidation, the Official Liquidator would adjudicate the same and call upon Bank of Baroda to deposit the necessary amounts by giving fourteen days' clear notice in writing and upon receipt of such notice, Bank of Baroda was entitled to move an application seeking necessary reliefs. It was clearly recorded that the said order was passed without going into the merits of the application since till the date of the order, the Official Liquidator had not received any claims from the workers / creditors of the company. Thereafter, as recorded above, the Applicant filed Civil Suit No.50 of 2011 before the Civil Judge Senior Division at Kalyan inter alia seeking a declaration that the agreement dated 5th September 2007 executed between the Applicant and the company in liquidation was valid and subsisting. The Kalyan Court, by order dated 20th March 2012, granted temporary injunction restraining the Official Liquidator from dispossessing the Applicant or ....
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.... of Rs.1,25,00,000/- has been paid by the Applicant to the company in liquidation. The bank statements annexed to the petition and the correspondence indicate that the payment has been made. 39. It has been submitted by the Applicant that soon after purchase of the said property, the Applicant has invested substantial sum of monies for installation of plants, equipments, raw materials, stock-in- trade for manufacturing, electrical transformers, tanks and other engineering and fabrication works. That, the Applicant employed around 100 workers whose livelihood is depending on the Applicant and that the Applicant has also availed of financial assistance of about Rs.4,24,00,000/- by mortgaging the said property. The said mortgage has been registered/noted with the office of the Registrar of Companies, as can be evidenced from Exhibit H to the application. It has been submitted that the Applicant learnt of the winding up petition only on 25th June 2011 when the representative of the Official Liquidator i.e. the Respondent no.2 visited the said property informing that the possession of the said property would be taken over by the Respondent no.2 and that the Applicant was not aware of....
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....onafide and shown to be fair, just and reasonable, deserve to be protected because of clear equity involved in such matters. Section 536(2) declares the transactions after commencement of the winding up void but leaves discretion to the Court to make appropriate orders in that regard. That, the jurisdiction vested is equitable and is meant to be exercised as such. If even bonafide transaction for a consideration would not be protected, then the company, only by the fact that the process of winding up has started, would benefit itself by unjust enrichment. Such a result is clearly to be avoided while exercising power under the said provision. 41. In the case of Pankaj Mehra and Another vs. State of Maharashtra and Others (supra), the Hon'ble Supreme Court has considered the impact of the legislative direction in Section 536(2) that any disposition of the property of the company made after the commencement of the winding up shall be void. The Hon'ble Supreme Court has observed that there are two important aspects: first is, that the word "void" need not automatically indicate that any disposition should be ab-initio void. That, the legal implication of the word "void" need....
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....to choose the alternative meaning attached to that word. 19. In Gray's Inn Construction Co. Ltd., Re reported in (1980) 1 All ER 814(CA), the Court of Appeal (Civil Division) considered the principle on which discretion of the court to validate the dispositions of property made by a company, during the interregnum between presentation of a winding up petition and the passing of the order for winding up, has been dealt with, Section 227 of the English Companies Act, 1948 is almost the same as Section 536(2) of the Indian Companies Act. Dispositions which could be validated are mentioned in the decision. The said decision was cited before us in order to emphasise the point that courts would be very circumspect in the matter of validating the payments and the interest of the creditors as well as the company would be kept uppermost in consideration. Be that so, the said decision is not sufficient to support the contention that disposition during the interregnum would be irretrievable void. 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 ....