TaxTMI 
TaxTMI 
2026 (3) TMI 475
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....t is stated the appellant is a part of the group forming minority shareholding in the Respondent No.1 company and allegedly it was mismanaged by its directors and its majority shareholders. It is alleged while the Company Petition No.64/2022 was pending, the Respondent company under the control of majority, sold one of the two properties of the company being land bearing Final Plot No.887A/21, (TPS-1, Bhamburda, Pune, varied final) ad-measuring 446.16 sq.mts, carved out of S.No.198 A/6 and S.No.192/2 together with an old two-story residential building constructed thereon admeasuring 366.02 sq. mts built up inclusive of garage, situated at Village Bhamburda (Shivaji Nagar) of City of Pune namely Saakar Bungalow Property. 3. It is alleged the said property forms over 20% of the undertaking of the company; was sold in gross violation of Section 180 of the Companies Act, 2013 and at a grossly undervalued rate to a related party. It was argued the sale was carried out during the pendency of Company Appeal (AT) No.196/2023 wherein the appellant had challenged the order vacating the interim stay in Company Petition No.64/2022, despite hearing being complete. It is argued this Tribunal ....
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.... held the assets of the company does not fall within the ambit of the word "undertaking" as given in Explanation to Section 180(1)(a) of the Companies Act. Further reference was made to sub-section (3) of Section 180 of the Companies Act, 2013 as under: - "180. Restrictions on powers of Board. (1) xxx (2) xxx (3) Nothing contained in clause (a) of sub-section (1) shall affect- (a) the title of a buyer or other person who buys or takes on lease any property, investment or undertaking as is referred to in that clause, in good faith; or (b) the sale or lease of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing. 7. It was argued the purchaser was never a bona fide purchaser and has rather acted malafidely as he knew the litigation was pending qua the said property before the Ld. NCLT. In support of his arguments he submitted though the Ld. NCLT had granted the status quo upon the assets and shareholding as on 28.03.2022 but the status quo on the assets was vacated on 18.08.2023 and despite the filing of Company Appeal (AT) No.196/2023 by the appellants herein....
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....the equipment; it is in actual effect an activity of man which in commercial or business parlance means an activity engaged in with a view to earn profit. Property, moveable or immoveable, used in the course of or for the purpose of such business can more accurately be described as the tools of business or undertaking, i.e. things or articles which are necessarily to be used to keep the undertaking going or to assist the carrying on of the activities leading to the earning of profits." 38. He further relied on P.S. Offshore Inter Land Services Pvt. Ltd. and Anr. Vs. Bombay Offshore Suppliers Ltd. and Ors: 1991 SCC OnLine Bom 555, the Hon'ble Bombay High Court had interpreted the expression 'undertaking', the relevant paragraph of which is extracted below: "18. In my judgment, the expression "undertaking" used in this section is liable to be interpreted to mean "the unit", the business as a going concern, the activity of the company duly integrated with all its components in the form of assets and not merely some asset of the undertaking. Having regard to the object of the provision, it can, at the most, embrace within it all the assets of the business as a unit or....
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....essions in the Companies Act together with the judicial pronouncements that there has a legislative intent to give different meanings to both the terms. 43. While 'asset' would generally mean a property of the Company whether moveable or immoveable and may or may not be used to generate revenue, an 'undertaking' of a company could be referred to as something that would constitute an integral part of a company and would be used as a tool for business purpose thereby contributing to the Company's generation of revenue and/or earning of profits. 44. In the present case, Ld. Counsel for MPTA submitted that the Saakar Bungalow Property was acquired in the year 2017 and it constitutes only an individual asset. It is further submitted that the said Property from the date of its purchase until the sale date i.e. 09.11.2023, did not generate any revenue for MPTA and in fact, it is a continuing liability due to accruing tax liabilities. 45. During the course of the argument, Ld. Counsel for the Petitioners admitted that the Saakar Bungalow Property is not being used for business purpose and is not generating any revenue. 46. Hence, we are of the view that ....
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....eme under the Companies Act, 2013 reinforces this distinction. Section 2(16) of the Act defines 'charge' as an interest created on the assets or undertakings of a company- using the disjunctive 'or.' The legislative intent is that 'assets' and 'undertakings' are not synonymous. 15. Now, Saakar Bungalow, acquired in 2017, was allegedly a passive, non-revenue-generating mortgaged property, not part of the operational business. Its sale was disposal of an asset, not an undertaking. Therefore, the requirement of a special resolution under Section 180 was not necessitated. The Appellants' interpretation of provisions of Companies Act, is wholly misplaced in law. Admittedly it was not a sole asset of the company. 16. Qua good faith per sub-section (3) of Section 180 (supra), we note it was not a sale simplicitor by the company but a distress sale under the SARFAESI Act, 2002 by Axis Bank through the company. Admittedly Axis Bank had granted loan to Respondent No.1 company and admittedly the company had defaulted in re-payment of such loan(s) and the loan account was declared NPA and the personal guarantors/directors, including the appellants herein, were all proceeded again....
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....le of the property but alleged the property may fetch higher amount if it is disposed of in open market. The Ld. NCLT also noted the appellants were turning down every suggestion given by the Bench as well as by Respondent No.1 company and were taking advantage of the interim order to settle their scores with the Respondents. 21. Now admittedly the sale deed noted about the pendency of the litigation; vacation of the interim order as well as the fact that the outstanding amount of loan was approximately Rs. 12.68 crores and only after seeking valuation of the property, i.e. at about Rs. 8 crores it was sold for a sum of Rs. 9.50 crores. Now admittedly the purchaser is not a related party. 22. CA 129/2024 was then moved by the appellants herein for cancellation of the sale deed on the grounds viz violation of Section 180(1)(a); malafide act of the purchaser; and under valuation. However, a bare perusal of the application would show no allegation was made against the purchaser and the allegations of fraud were made only against the management of Respondent no. 1 company. Further as is noted above CA 213/2023 for impleading Axis Bank and seeking a status quo against the Axi....