TaxTMI 
TaxTMI 
2026 (7) TMI 259
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..../2018, 1176/2018, 1178/2018, 1180/2018 & 1194/2018 For the Applicant: Mr. Rajeev Kumar, Mr. Vishal Advocates. For the RBI: Mr. Ramesh Babu Ms. Manisha Singh & Ms. Tanya Chowdhary Nisha Shanna Advs. For the Applicants: Ms. Lucky Raghuvanshi, Ms. Eesha Gupta, Mr. Ayush Verma, Mr. Siddharth Raghuvanshi, Advs. For the Applicant: Mr. B. Shravanth Shanker, K. Sai Teja, Shivam Kunal, Advs. JUDGMENT PER ANISH DAYAL, J. 1. The applicants in these applications have a common grievance. They are all investors in a residential housing scheme floated by M/s. JVG Finance Ltd. ('Company in liquidation') on 42 acres of land at Kondapur Village, Hyderabad, known as JVG Housing Project. Having invested in this project as far back as 1995, they are yet to obtain release of the plots allotted to them. The process has been interrupted on account of the company having gone into liquidation, first upon the appointment of the Provisional Liquidator by this Court on 05th June 1998, and thereafter pursuant to the winding-up order dated 29th August 2003. Several other group companies, collectively referred to as the JVG Group of Companies, were also directed to be wound up. 2. It has b....
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....G Projects Rs.3,22,650/- 260 (03.06.2011) 4. 1168/2018 S. Susmitha 24.06.1995 27.03.1998 (S. Jai Kumar) F-213 (200 sq. yds.) JVG Finance Ltd. & JVG Projects Rs.1,37,256/- 265 (06.06.2011) 5. 1170/2018 N. Sujatha 22.05.1995 30.12.1997 (S. Jai Kumar) C-329 (300 sq. yds) JVG Finance Ltd. & JVG Projects Rs.2,04,921/- 219 (03.05.2011) 6. 1172/2018 I Ranga Rao (Subsequent purchaser from Mukhuyar Ahmed) 22.05.1995 27.03.1998 (S. Jai Kumar) (20.11.2003) F-206 (200 Sq. yds) JVG Finance Ltd. Rs.83,079/- 264 (06.06.2011) 7. 1174/2018 T. Subba Rao 11.09.1997 20.03.1998 (Col. Ganapathy) E-316 (300 Sq yds) JVG Finance Ltd. & JVG Projects Rs.3,00,000/- 259 (02.06.2011) 8. 1176/2018 B.Dandapani 25.05.1995 27.03.1998 (S. Jai Kumar) F-219 (200 sq yds) JVG Finance Ltd. & JVG Projects Rs.1,19,368/- 269 (21.06.2011) 9. 1178/2018 T. Subba Rao 08.09.1997 20.03.1998 (Col. Ganapathy) E-307 (300 sq yds) JVG Finance Ltd. & JVG Projects Rs.3,35,100/- 258 (02.06.2011) 10. 1180/2018 Gaddipati Sriniwasa Rao (subsequent purchaser from V V ....
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....t. It is contended by the counsel appearing on behalf of the 14 applicants that it was at this stage that the applicants and other allottees became aware of the winding-up proceedings. One-Man Committee 11. By order dated 22nd July 2004, this Court appointed a One-Man Committee ('OMC') to verify the claims of the applicants and other similarly situated persons. Between 03rd May 2011 and 21st June 2011, OMC examined all documents of the applicants along with individual reports, accepted claims, holding that they were entitled to lawful possession. Since the Official Liquidator did not hand over the possession, applicants opposed to the same by these applications for a direction to release their plots. Submissions on behalf of applicants 12. Various counsel appeared for the applicants, mostly led by Mr. Ashutosh Dubey, Advocate and Mr. Krishna Dev Jagarlamudi, Advocate, who filed a common submission on behalf of all the applicants, some of which are culled out for reference. 12.1 It was submitted that the OMC, after examining the entire record, accepted the claims of the applicants. On this basis itself, it was submitted that the present applications ought to be allowe....
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....7th April 2023. 13.2 Reliance was placed upon the Division Bench judgment dated 06th September 2012, wherein it was observed that sale deeds executed after 10th October 1997 were void and that payments made to Col. Ganapathy were inconsequential. 13.3 It was further submitted that, by order dated 05th June 1998, a Provisional Liquidator had been appointed with directions to take charge of the assets of the Company and restrain it from dealing with the same. The Official Liquidator subsequently took possession of the land on 10th October 2003 and again on 02nd February 2004 pursuant to the winding-up order dated 29th August 2003. It was therefore argued that the transactions in question were void under Section 531 of the Companies Act, 1956, which provides that any transfer of property made by or against a company within six months preceding the commencement of winding-up shall be deemed fraudulent and invalid. 13.4 Accordingly, it was submitted that all the same deeds executed after 10th October 1997 would be void in terms of judgment dated 06th September 2012. 13.5 Reliance was also placed upon the SFIO Report dated 07th March 2014, concerning the Hyderabad transaction....
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....thin a period of one year before the presentation of a petition for winding up and has no application to the facts of the present case. Section 536(2) declares transfers of the property of the company after the commencement of winding up as "void" unless otherwise ordered. 11. The question which thus arises is as to in what cases the Court should order the transfer effected (of the property of the company), after the commencement of winding up, as otherwise than void. The learned Company Judge in this regard has already referred to J. Sen Gupta Private Ltd. (In Liquidation) (supra) and The Sidhpur Mills Ltd. (supra). We find that the Supreme Court in Pankaj Mehra v. State of Maharashtra, (2000) 2 SCC 756, laid down the test of "whether the transfer was under compulsion of circumstances or other commercial compulsion to enable the company in liquidation to run its business". We further find that a Division Bench of the Bombay High Court in Shri Laxman Yeswant Prabhudesai v. NRC Ltd., (2010) 2 Comp LJ 380, after noticing a large volume of case law on the subject, deduced that the transaction undertaken by a company in liquidation can be validated under Section 536(2) if it was und....
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....It was submitted that Col. Ganapathy challenged these orders before the High Court of Andhra Pradesh. Considering the fact that the company is in liquidation, the High Court of Andhra Pradesh set aside the order of 2nd March 1999 and 13th March 1999 and directed the issuance of the final layout. The final layout was issued on 21st February 2003 in the name of K. Madhav Reddy. 13.10 Col. Ganapathy's authority was also questionable since the SFIO had already recorded findings against him, and therefore, the transfers executed by him would also stand disputed. Reliance was also placed by Mr. Kalra on yet another decision of the Supreme Court in Rishabh Agro Industries Ltd. v. PNB Capital Services Ltd. (2000) 5 SCC 515, where it was held that, despite appointment of a provisional liquidator, the ex-management continues to hold residuary powers for the benefit of the company, as stated in paragraphs 10 & 11, which are extracted as under: "10. It has been further suggested on behalf of the respondent Bank that the action of the appellant was mala fide inasmuch as it sought time from the Court to make the payment of the amount due and after seeking indulgence mala fidely made ....
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....nt and release of the respective plots. 14.2. It is submitted that all these actions were completed prior to the filing of the winding-up petition, i.e. before 04th June 1998. To qualify as 'fraudulent preference', it must be demonstrated that the dominant motive in the mind of the company was to prefer a particular creditor over other creditors in order to defer other creditors of the Company in liquidation. 14.3. Applicants are not creditors of the company but purchasers of residential plots, having booked the plots since May 1995, paid the entire sale consideration, sale deeds having been executed and been placed in physical possession of the plots. 14.4. There is no question of collusion of the applicants with the ex-management to alienate assets of the company to defer other creditors. The applicants are unconnected with and are at odds with the ex-management of the company. 14.5. The SFIO in report dated 07th March 2014, after thorough investigation, absolved all third-party purchasers, like the applicants, of any wrongdoing and concluded that the purchasers are bona fide and did not have knowledge of the winding up proceedings till 2003. 14.6. Mr. V. K. Sharma....
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....davits with respect to payments made by them, along with relevant documents and have fully complied with the directions issued by this Court. 14.14. Ex-management cannot belatedly seek to invalidate sale deeds by alleging that the money was not received by the company, particularly when the sale deeds were executed prior to the commencement of the winding-up proceedings. 14.15. It was submitted that pre-validation of the draft layout plan in 1997 was followed by the receipt of entire sale consideration and execution of registered sale deeds. Simultaneously, plots were demarcated and handed over to the applicants. So, the argument of cancellation of the draft layout would, therefore, have no meaning since this issue was considered by this Court in its order dated 12th October 2018 and cannot now be re-agitated. 14.16. An additional and critical submission which has been made pertains to the locus standi of Ms. Aneeta Sharma to oppose the applications and maintain the review petition. Ms. Aneeta Sharma, who has filed the review petition, is the wife of Mr. V.K. Sharma, Ex-director of company in liquidation, whose Company Appeal No. 24/2018 was dismissed by the Division Bench....
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....JVG Finance 2017 SCC OnLine Del 11129 (paragraph nos.15-21) V. BOI Finance Ltd. v. Custodian (1997) 10 SCC 488 (paragraph nos.29-34 & 62) VI. Sirmur Chemical & General Industries Ltd. v. Union of India [1962] 32 Comp Cas 826(SC) VII. Dahiben v. Arvindbhai Kalyanji Bhanusali (2020) 7 SCC 366 (paragraph nos.29.6-29.9) 14.22 It is further pointed out that, in Benu Berry (supra), the Division Bench noted that the Company (in liquidation) had engaged Ms. Aneeta Jain to carry on the business of an advertising agency under the name and style of Flying Colours Pvt. Ltd. for promotional work and allegedly owed her a sum of Rs.1,25,00,000/- towards the services rendered. To clear that part of debt owed to Ms. Aneeta Jain, it was claimed that the company agreed to sell the flat in question to Ms. Aneeta Jain, pursuant to which the housing society recognised her as the bona fide owner of the flat. 14.23 Ms. Aneeta Jain then agreed to sell the flat to one Benu Berry, and the flat soon mutated in the name of Benu Berry. The Committee, in its order dated 17th March 2006, dismissed the claim of Benu Berry, noting that the dues of the Company (in liquidation) to Ms.....
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....reviously considered the SFIO report, wherein all such purchasers were found to be bona fide purchasers. vi. Statements of Mr. V.K. Sharma, Ex-director, recorded in May 2004 and June 2004, confirmed that he had sold the plots to such persons who had paid full sale consideration and that Col. Ganapathy had been authorised to execute the sale deeds. vii. Official Liquidator, in OLR No. 36/2025 dated 01st August 2025, has accepted that all the 14 applicants herein should be treated similarly with applicants in orders dated 02nd August 2018 and 12th October 2018 (The 7 buyers' order). 16. All 14 applicants are requesting the Court to pass similar orders as have been passed previously with respect to the 7 other buyers. There is no change of circumstances; the factual matrix is identical, and the appeal against the orders has attained finality after consideration by the Division Bench, and the Official Liquidator has categorically expressed his 'No Objection'. 17. The only impediment as per counsel of applicants, is the review petition filed by Ms. Aneeta Sharma, the wife of Mr. V K Sharma (which is also being considered by this Court in the latter portion of thi....
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.... to examine the original sale deed and verify all supporting documents before possession could be handed over and that no Board Resolution authorising Col. Ganapathy to execute the sale deeds had been produced. Secondly, there was no demarcation of plot in existence. 25. Critically, the Court noted that Ms. Aneeta Sharma, acting as the authorised representative of the ex-directors, made the submission recorded in paragraph 5 of the said order. She stated, on behalf of the ex-directors and the company, that payments had not been received, that the transactions were not bona fide, and that only genuine buyers ought to be allotted plots in a consolidated area so as to facilitate a better price for the remaining land. 26. This submission was objected to on the ground that demarcation had already taken place at the time when the sales were effected and that the same stood confirmed by HUDA. 27. The Court took note of the 262nd Report of the OMC, which recorded that the sale deed had been executed on 15th May 1998. The OMC observed that the transaction relating to the plot had taken place more than six months prior to the commencement of the winding-up proceedings and, therefore....
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....rder. The Court observed as under in paragraphs 4 to 7: "4. Mr. Neeraj Malhotra, learned Senior Counsel, who is appearing on behalf of the Appellant, is unable to show any provision of law, either in the Companies Act or elsewhere permitting a former Director to question, in his individual capacity, the order passed by the Company Court in winding up proceedings dealing with the claims of creditors. In other words, this Court is not shown what the locus standi of the Appellant is in preferring this appeal. 5. Way back on 29th August, 2003, the winding up order was passed with reference to the company in question. The Official Liquidator (OL) had taken over the entire assets of the company in question many years ago. Thereafter, the learned Single Judge has been dealing with the claims of creditors. 6. To entertain, at this stage, any appeal by one of the former Directors on the basis that he was a major shareholder, cannot be legally countenanced. 7. In these circumstances, the Court is not inclined to entertain this appeal." (emphasis added) 33. It is important to emphasise that the Division Bench was clear and categorical in holding....
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....re this Court. There are, however, several other applicants in whose favour sale deeds had been executed prior to June 1998 but whose claims were rejected by the OMC, namely 25 (deposit adjustment), 55 (instalment category), 16 (deposit adjustment category) and 16 (investor category). 40. The 219th Report of the OMC dated 3rd May 2011, concerning Smt. N. Sujatha, wife of Shri N. Pulla Rao, one of the present applicants, has been examined by this Court. The OMC recorded the following: "That from the facts stated above it seems quite clear that though the property in question was transferred on 30.12.1997 within six months before the commencement of its winding up, yet the transaction does not appear to be of fraudulent preference. The claimant booked a plot on 22.05.1995 long before the commencement of winding up proceedings. Thereafter, the claimant continued to pay the sale consideration and got the same deed executed in her favour on 30.12.1997. The process of transfer of property was started in good faith and for valuable consideration long before the stipulated period as mentioned in Section 531. Moreover, there is nothing on record to show that the claimant was a c....
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.... acquired from pattedars by JVG Finance Ltd. through Sh. K. Madhava Reddy. It was noted that the project was launched in May 1995 as a self-financing housing scheme, and that booking of plots started from 1995 onwards. 47. It was further recorded in the report that JVG Finance Limited passed board resolutions on 04th January 1996, authorising inter alia Col. Col. Ganapathy, Mr. Jai Kumar, to sign, execute, correct, verify and do all acts and deeds in connection with the land at Kondapur Village. 48. In paragraph 112 of the Report, the plots sold by the company through Col. Ganapathy, Shri Jai Kumar and Col. A.J. Rao were tabulated, totalling 225 plots. It was observed that plots sold after 5th June 1998 were void, as the company lacked authority to affect such transfers after the winding-up order. The Sub-Registrar, however, continued to register sale deeds even thereafter. HUDA granted final layout approval in 2003. 49. It was noted that, in ignorance of the winding-up orders, plot buyers had invested their hard-earned money in the bona fide belief that they would receive the plots. Significantly, paragraph 115 records that "However, around 14 investors who had booked plo....
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....relating to the sale of a property situated in Mumbai, it observed as under: "16...Having heard the rival submissions advanced by the learned counsel for the parties and upon careful consideration of the material on record, this Court on the issue of financial exigencies, notes that it is clear that outstanding liabilities, including those to statutory bodies, financial creditors, and investor deposits, far exceed the available funds. The auction proceeds are essential to discharge claims and ensure protection of public deposits. The Appellant cannot obstruct the lawful discharge of these obligations under the guise of alleged surplus funds or delay in crystallization of claims. 17...As far as the extraneous matters are concerned, any attempt by the Appellant to traverse into unrelated schemes of revival lies outside the scope of company law proceedings and is impermissible. The liquidation process and asset realization must proceed unimpeded. 19...Moreover, there is no dispute with respect to the subject property located in Mumbai. It is also pertinent to note that the sale of the assets of the CIL has become imperative in order to discharge its outstand....
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....d his second wife Mrs. Anita Sharma, promoter and director of company in liquidation had purchased personal jewellery, farm house and various other valuable immovable properties in their personal names as well as in the names of their close relatives from the funds of JVG Finance Company. After the JVG finance scam was detected by Reserve Bank of India, Mr. Sharma went on to perpetrate the land scam by incorporating and promoting M/s Vian Infrastructure Ltd. besides many other companies. The interconnection between companies floated by Mr. Vijay Kumar Sharma and his second wife is as an admitted position inasmuch as the company in liquidation's defence is that its liability to pay debts was taken over by company's promoter Mr. Vijay Kumar Sharma. 19... Further, in view of the aforesaid facts, the SFIO is directed to investigate the affairs of companies, namely, M/s. Vijay Associates, M/s. Ayushi Buildestates Pvt. Ltd., M/s. Mauve Farms Pvt. Ltd., M/s Yusaf Properties and M/s. Sajjad Pro. Pvt. Ltd. in which either Mr. Vijay Kumar Sharma or his two wives or his associates had been Directors or had been managing its affairs. The inquiry must be completed expeditiously and in ....
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....ication, this Court is of the view that the same constitutes a proxy litigation on behalf of Mr. V.K. Sharma, instituted through his wife, and is an attempt to unsettle and displace concluded orders of this Court. The objections raised pertain to the RBI prohibition order dated 10th October 1997, the alleged absence of demarcation of land, the issue of fraudulent preference under Section 531 of the Companies Act, 1956, and the role of Col. Ganapathy. 55. Most importantly, the applicant's averment in paragraph 'Y' of the grounds of the review is under: "Y...The interest of the applicant by way of the present application is nothing personal but to ensure that this Hon'ble Court is properly assisted and all relevant facts are brought before this Hon'ble Court prior to passing of judicial orders affecting the rights and interests of the creditors and contributories and additionally, necessary actions be taken in time to protect and secure the interest of all concerned. It is made clear that the applicant has no interest and neither does the applicant intend to take over the powers or duties of the Official Liquidator by way of the present application. It is subm....
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....takes her outside the category of persons entitled to seek review of the orders in question. vi. Moreover, all the objections which have been taken in the review petition have already been dealt with by the 7 Buyers' Order and have since attained finality. 58. Further, it is noted that in the order in the case of Benu Berry (supra) wherein the appellant had challenged the report of the Committee in relation to a flat situated in Mumbai, the Division Bench recorded detailed findings regarding the transfer of the said flat in favour of Ms. Aneeta Jain, describing it as nothing short of a 'mother of all smokescreens'. The Court also found it disturbing that though counsel had submitted, upon instructions, that no relationship existed between Ms. Aneeta Jain (now Ms. Aneeta Sharma) and Mr. V.K. Sharma, the submission was later found to be incorrect. The appeal was accordingly dismissed, and it was noted that the appellant was acting in collusion with the company in liquidation and Ms. Aneeta Jain. The Court, therefore, refrained from imposing any cost. 59. Ms. Aneeta Sharma, has, therefore, repeatedly come under the crosshairs of this Court and does not deserve any f....
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....he ready leg and the forward leg. The ready leg of the transaction having been completed, the forward leg, which alone is illegal, has to be ignored. [C] With the ready leg having been performed the illegality of the forward leg contained in the agreements cannot affect that the transfers which had already taken place. (emphasis added) 62. Some of these aspects have been taken into account in Rakesh Jagmohan Pandey v. JVG Finance Ltd, 2017:DHC:6284 dated 25th October 2017, where the Court, noting the objections under Section 531A and the RBI Order, noted that even if a sale was in contravention of prohibitory orders, the consequence could only have been penal action against the company's officials under Section 58B of the RBI Act. The Court also observed that the One Man Committee had taken an unduly narrow view of the matter and held that the transaction was not hit by Section 531A of the Companies Act, 1956. 63. The statement made by Mr. V.K. Sharma before the Official Liquidator, wherein he admitted that the sales had been effected in order to make payments to creditors and depositors of the company was referred to and the Court in Rakesh Jagmohan (su....
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....reference: i. Monark Enterprises v. Kishan Tulpule 1991 SCC OnLine Bom 461: "32. The next question which arises for consideration of the court is whether the impugned transaction is liable to be treated as a "fraudulent preference" within meaning of section 531(1) of the Act. Shri S. D. Puri, learned counsel for the petitioners, admitted that every transaction of transfer of property effected within six months before the commencement of winding up of the company without anything more is liable to be treated as a fraudulent preference within the meaning of section 531(1) and nothing more need be investigated once it is shown that the impugned transaction was effected within six months prior to August 12, 1987, when the winding-up petition herein was filed. Shri Puri submitted that, admittedly, the date of the impugned transaction was February 18, 1987, i.e., within six months prior to filing of the winding-up petition and this fact by itself was sufficient to nullify the transaction. It is not possible to accept this interpretation of section 531(1) of the Act. If the transaction of transfer amounts to a fraudulent preference under the bankruptcy law or the insolve....
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....rence or not. The onus is upon the person who impugned a transaction as being a fraudulent preference to make it out and not for the alienee to disprove that is a fraudulent preference. 7. The principles applicable to insolvency proceedings would be attracted in company proceedings also but, in order to set aside a transaction as a fraudulent preference, fraud must be clearly alleged, proved and established. I do not find anything of the kind in the present case. Issue No.2 is also accordingly decided against the petitioner." (emphasis added) iii. IDBI Bank v. Official Liquidator (2020) 15 SCC 517: "20.2. Be that as it may, in light of the contentions raised by both the parties on whether the agreement to sell in question amounts to a fraudulent preference, we consider it necessary to address the same. We differ with the Division Bench inasmuch as the said agreement cannot be termed as a fraudulent preference under Section 531. Under Indian company law, Section 531 of the 1956 Act (now Section 328 of the Companies Act, 2013) is the cornerstone provision that lays down the requirements for a transaction to amount to a fraudulent preference. Framed....
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....omer'. [B] The ready forward contract is severable into two part, namely, the ready leg and the forward leg. The ready leg of the transaction having been completed, the forward leg, which alone is illegal, has to be ignored. [C] With the ready leg having been performed the illegality of the forward leg contained in the agreements cannot affect that the transfers which had already taken place." (emphasis added) 69. In certain judgments, the Courts have noted that the transfer alleged as void under Section 531A of the Companies Act, 1956 is void only against the Liquidator and the Court will invalidate or ignore the transfer only if the relief is sought by the right person, namely, the Liquidator. In this regard, it is instructive to consider the observation made by Madhya Pradesh High Court in the judgment of Virendra Singh Bhandari v. Nandlal Bhandari and Sons P. Ltd., 2019 SCC OnLine MP 6437, and Kerala High Court Judgment in the matter of K.N. Narayana Iyer v. CIT, (1993) 202 ITR 774, wherein it has been clarified that a transfer falling under Section 531A of the Companies Act, 1956 is not void ab initio but is merely void against the Official Li....
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.... will be equally open to the liquidator to honour the transfers and deal with them as such. All that the section implies is that the transfers will not bind the liquidator, and it will be open to him either to treat them as non est or void, or to affirm them. Since the option is with the liquidator, if he does not choose to disown them, they will continue to be valid and operative. 14. A Full Bench of this Court had an occasion to deal with the purport and meaning of the expressions "void", "voidable" and "void as against..." in the decision, Chacko Mathew v. Ayyappan Kutty, AIR 1962 Ker 164; (1962) 1 KLR 413, while dealing with assignments in violation of the provisions of section 21 of the Travancore Ezhava Act. Madhavan Nair J., with whom Velu Pillai J., concurred dealt with this point in paragraphs 5 to 13 of his judgment. Inter alia, he referred to In re Vansittart, Ex-parte Brown, [1893] 2 Q.B. 377. In re Brail, Ex-parte Norton, [1893] 2 Q.B. 381, both of which dealt with the expression "void against the trustee in bankruptcy", in section 47 of the English Bankruptcy Act, 1883, as also Mariappa Pillai v. Raman Chettiyar, ILR (1919) 42 Mad 322; AIR 1919 Mad 161 and Ru....
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....ion is otherwise a valid transaction and continues to be good until it is avoided by the party aggrieved Johrilal Soni v. Bhanwari Bai, (1977) 4 SCC 59 : AIR 1977 SC 2202. The transfers hit by section 531-A are voidable in the above sense, the avoidance being only at the instance of the liquidator." 15. In view of the above judgment, if the OL does not choose to disown such transactions, they will continue to be valid and operative. Even otherwise they are void as against OL but they are valid inter parties and against the rest of the world. 16. While deciding the objection, this Court is required to see if transfer was in good faith. Bombay High Court in the matter of Monark Enterprises v. Kishan Tulpule, reported in (1992) 74 Comp Cas 89 (Bom.) while considering the meaning and scope of "good faith", has held:- "43. ........................... Before I analyse this submission, I consider it necessary to refer to the leading judgment of the Supreme Court indicating the approach which the Court is enjoined to follow in cases of this kind. In the case of N. Subramania Iyer v. Official Receiver, the Apex Court dealt with an identical question under insolven....
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....to be held to have been done in good faith if it was done honestly, whether it was done negligently or without due care and caution. No definition of "good faith" is to be found in the Companies Act I of 1956" Hence, if an act is done bona fidely with honest intention, it is done in good faith. 20. In light of provision contained under section 531-A, a transaction can be held to be void if it is found to be in violation of conditions mentioned therein. 17. Patna High Court in the matter of Shivshakti Builders and Financial Co. Ltd; In re, (2010) 158 Comp Cas 237 after taking note of section 531-A has held as under:- "It is evident from a perusal of the aforesaid provision that two types of transactions by the application of the said provision would be void against the official liquidator. The first requirement for either of those transactions is that it should be made within one year before the presentation of a petition for winding up. Once that condition is satisfied, the said transaction must be a transfer or delivery which has not been made in the ordinary course of its business. Alternatively, even if the said transfer or delivery has been m....
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....e fraudulent preference under Section 531 of the Companies Act, 1956. Accordingly, the claims of applicants have been duly verified by the OMC, and the OMC has concluded that the claimants are entitled to allotment and possession and has recommended the same to the Official Liquidator, as discussed in paragraphs 39 to 41. III. Sale deeds were executed and registered prior to winding-up of proceedings, and there is no material to establish any fraudulent preference under Section 531 of the Companies Act, 1956. IV. Col. Ganapathy as recorded in the 7 Buyers' order also, was the authorised representative of the Company in liquidation. V. Affidavits and documents placed on record substantiate the applicants' claims and establish the genuineness of the transactions, as discussed in paragraph 42. VI. SFIO Report corroborates the applicants' case by confirming that the project was launched prior to the winding-up order and the authorised representatives were duly empowered to execute sale deeds, as discussed in paragraphs 43 to 49. VII. The Official Liquidator, in OLR No. 36/2025, has categorically stated that she has 'no objection' to ....