2003 (9) TMI 568 - HC - Companies Law

Summary

Issues Involved:
1. Sealing of residential premises by the Official Liquidator.
2. Legality of the sale transaction of Flat No. 18.
3. Jurisdiction of the Company Court.
4. Entitlement of the applicant to legal title of the property.
5. Appointment of an independent valuer for the property.

Detailed Analysis:

Issue 1: Sealing of Residential Premises by the Official Liquidator
The applicant sought a direction from the Court to prevent the Official Liquidator from sealing his residential premises (Flat No. 18, Haridwar Apartment) as per the order dated 20-7-2001 in Company Petition No. 147 of 2000. The Official Liquidator had taken possession of other flats (Nos. 8, 16, and 17) but not Flat No. 18, which was in possession of the applicant.

Issue 2: Legality of the Sale Transaction of Flat No. 18
The applicant claimed ownership of Flat No. 18, asserting that he purchased it for Rs. 14 lakhs from Rajiv Vastupal Mehta. The sale deed was executed on 7th June 1999, and the applicant received a title clearance report on 28th June 1999. The Court had previously held that the transaction between the company and Rajiv Vastupal Mehta was fraudulent and illegal, thus affecting the subsequent transaction with the applicant.

The applicant argued that he was a bona fide purchaser who had paid full consideration and had no knowledge of the fraudulent nature of the previous transaction. The Court acknowledged that the applicant had paid Rs. 14 lakhs and ordered Rajiv Vastupal Mehta to refund this amount to the Official Liquidator if the transaction was deemed illegal.

Issue 3: Jurisdiction of the Company Court
The Court examined its jurisdiction under section 446 of the Companies Act and inherent powers under section 151 of the CPC. It referred to various judgments, including Sudarsan Chits (I) Ltd. v. O. Sukumaran Pillai, which emphasized the Court's jurisdiction to entertain claims for and against the company in liquidation.

The Court concluded that it had jurisdiction to decide the legality and validity of the transaction between the company and Rajiv Vastupal Mehta, and consequently, the transaction between Rajiv Vastupal Mehta and the applicant.

Issue 4: Entitlement of the Applicant to Legal Title of the Property
The Court considered the applicant's bona fides and the fact that he had paid Rs. 14 lakhs for the property. It ordered the appointment of an independent valuer to determine the value of the property as of June 1999. If the valuation exceeded Rs. 14 lakhs, the applicant would be required to pay the difference to the Official Liquidator. Upon payment, the Official Liquidator would confer a legal and valid title to the applicant.

Issue 5: Appointment of an Independent Valuer for the Property
The Court ordered the appointment of an independent valuer to determine the value of Flat No. 18 as of June 1999. The applicant, through his advocate, agreed to bear the cost of the valuation. The valuation would ensure that the company in liquidation received adequate consideration for the property.

Conclusion:
The Court modified the order dated 20th July 2001, directing the Official Liquidator not to seal Flat No. 18. It ordered Rajiv Vastupal Mehta to refund Rs. 14 lakhs to the Official Liquidator and appointed an independent valuer to assess the property's value. If the valuation exceeded Rs. 14 lakhs, the applicant would pay the difference, and the Official Liquidator would then confer a legal title to the applicant. The Court exercised its jurisdiction under section 446 of the Companies Act and inherent powers to ensure justice and protect the interests of the company in liquidation and the bona fide purchaser.