1989 (11) TMI 255 - HC - Companies Law

Summary

Issues Involved:
1. Whether the respondents could sell the properties of the company mortgaged with it without the permission of the company court.
2. Whether the sale by respondents to Zoravar Vanaspati Ltd. is void u/s 537 of the Companies Act, 1956.
3. Whether the respondents could take possession of the assets of the company during the pendency of the winding-up petition without the court's permission.
4. Whether the sale by the Corporation was effected in unusual haste and if the company had a right of redemption.

Summary:

Issue 1: Sale of Mortgaged Properties Without Court Permission
The court held that a Financial Corporation can enforce a mortgage u/s 29 of the State Financial Corporations Act, 1951, without approaching a civil court. The remedies available under sections 29 and 31 of the said Act are independent and entirely different. Section 32(10) of the said Act is not applicable to a case where a financial corporation exercises any of its options u/s 29. The Corporation was justified in taking over possession of the assets of the company during the pendency of the winding-up proceedings without the court's permission.

Issue 2: Validity of Sale u/s 537 of the Companies Act, 1956
The court held that section 537 of the Companies Act, 1956, is not applicable to the present case. The Corporation did not take the aid of the court for realizing its dues or enforcing its right. As it was already in possession and control of the assets of the company prior to the passing of the winding-up order, the Corporation was within its legal rights u/s 29 of the said Act to sell the assets of the company to Zoravar Vanaspati Limited without seeking the court's permission.

Issue 3: Taking Possession of Assets Without Court Permission
The court held that the Corporation had the right to take possession of the assets of the company u/s 29 of the said Act. The properties and effects of a company are deemed to be vested in the court on the date when the order of winding up is passed. The principle of relation back cannot apply to the vesting of the property of the company in the court. The Corporation took possession of the assets before the winding-up order was passed, and thus, it was within its rights.

Issue 4: Allegation of Hasty Sale and Right of Redemption
The court found no evidence of corruption, collusion, or fraud by the Corporation. The sale was duly advertised, and the price was considered reasonable. The Corporation and the Industrial Finance Corporation of India acted reasonably regarding the price and the mode of disposal of the assets. The official liquidator failed to show that the mortgaged properties could fetch a higher price than Rs. 90 lakhs. The court dismissed the application filed by the official liquidator, with no order as to costs.

The court also noted that if any amount is found due to any worker of the company, the Corporation shall pay it in accordance with law.