2003 (1) TMI 549 - HC - Companies Law

Summary

Issues:
1. Impleadment of the applicant as a party in a winding-up petition.
2. Direction to vacate the order of status quo for property transfer.
3. Permission for property conveyance in favor of the applicant.

Issue 1: Impleadment of the Applicant:
The company applications involved seeking impleadment of the applicant in a winding-up petition filed by the first respondent against the second respondent. The applicant, a Singapore-based company, had sold newsprint to the second respondent, leading to a debt exceeding Rs. 25 crores. The applicant sought impleadment due to non-payment and dishonored cheques. However, the court found no legal provision for impleading a third party in the winding-up petition, dismissing the application.

Issue 2: Direction to Vacate Order of Status Quo:
The second issue revolved around seeking directions to vacate the order of status quo for property transfer. An agreement dated 7-9-2000 between the second respondent and the applicant regarding property transfer was contested by the first respondent. The court highlighted Section 531 of the Companies Act, which deems transactions within six months of a winding-up petition as invalid. As the agreement fell within this period, the court refused to entertain the application to vacate the status quo order, emphasizing the invalidity of the transaction.

Issue 3: Permission for Property Conveyance:
The final issue involved seeking permission for property conveyance in favor of the applicant. The court noted that the winding-up petition was filed on 18-12-2000, and the agreement for property transfer was dated 7-9-2000, falling within the six-month period specified by Section 531. Consequently, the court dismissed the applications, emphasizing that the relief sought was based on an invalid transaction. The court clarified that the dismissal did not prevent the applicant from pursuing appropriate actions against the second respondent through the appropriate legal channels.

In summary, the court dismissed the applications due to the invalidity of the transaction under Section 531 of the Companies Act, preventing the applicant from obtaining relief based on the contested agreement. The judgment highlighted the importance of legal compliance and timelines in commercial transactions, emphasizing the need for parties to adhere to legal provisions and procedures in such matters.