2007 (3) TMI 368 - HC - Companies Law

Summary

Issues Involved:

1. Objection to the sale of assets of the company in liquidation.
2. Dispute over specific khasra numbers and joint ownership.
3. Validity of the sale conducted by the official liquidator.
4. Allegation of inflated claims by secured creditors.
5. Possession and trespassing issues related to auctioned land.
6. Corporate relationship and unity of possession among entities.

Detailed Analysis:

1. Objection to the Sale of Assets of the Company in Liquidation:

The shareholders filed C.A. No. 631 of 2006 and C.A. No. 641 of 2006, objecting to the sale of the company's assets. They argued that the sale conducted by the official liquidator was illegal due to the specific khasra numbers involved. The court determined that the sale of the land was by Navtej Singh out of his total land measuring 52 kanals 9 marlas and that specific khasra numbers mentioned in the sale deed in respect of 19 kanals 14 marlas were still considered a sale of a share of joint land.

2. Dispute Over Specific Khasra Numbers and Joint Ownership:

The applicants contended that the sale should be limited to specific khasra numbers purchased by the company. However, the court cited the Full Bench judgment in Bhartu v. Ram Sarup and the Supreme Court judgment in Mange Ram v. Ram Chander, concluding that the sale of specific portions of land out of joint holdings by a co-owner is a sale of a share out of the joint holding. The court found that the land was used collectively by the company in liquidation, Naresh Chately, and Chately Steels Private Limited, indicating a joint ownership scenario.

3. Validity of the Sale Conducted by the Official Liquidator:

The official liquidator was permitted to conduct the sale of all movable and immovable assets of the company in liquidation. The highest bidder, Avtar Singh, bid Rs. 5.2 crores for the composite lot. The applicants argued that the sale was conducted improperly, but the court found that the sale was valid and conducted correctly. The court also noted that the sale confirmed by the civil court in respect of the assets of the company was not valid as no permission of the court was sought before proceeding with the sale.

4. Allegation of Inflated Claims by Secured Creditors:

The applicants claimed that the secured creditors, particularly IFCI, raised undue and illegal claims, and the official liquidator inflated claims on account of security/sundry charges. The court did not find sufficient evidence to support these allegations and focused on the legality of the sale and the joint ownership issues.

5. Possession and Trespassing Issues Related to Auctioned Land:

The applicants alleged that Rishi Steel Traders trespassed into the premises of the company in liquidation based on an auction conducted by the civil court. The court noted that the possession of specific portions handed over to the auction purchaser should be treated as a sale of a share of joint land. The actual physical possession of the land purchased by the company in liquidation, Naresh Chately, and Chately Steels Private Limited had to be settled in partition proceedings.

6. Corporate Relationship and Unity of Possession Among Entities:

The court examined the corporate relationship and unity of possession among the company in liquidation, Naresh Chately, and Chately Steels Private Limited. The court found that the land was used in a unified manner, with a boundary wall encompassing the entire area. The court rejected the argument that only specific khasra numbers could be put to sale, as the land was jointly used by the three entities.

Conclusion:

The court concluded that the land sold by Navtej Singh to three different entities was to be deemed a sale of a share of joint land. The specific portion could be obtained by the parties through partition proceedings. The objections raised by the applicants were dismissed, and the sale conducted by the official liquidator was upheld. The company applications were disposed of accordingly.