2005 (9) TMI 325 - HC - Companies Law

Summary

Issues Involved:
1. Onus of establishing the right to the property.
2. Ownership and possession of the property by PFSL.
3. Validity of agreements and transactions involving the property.
4. Admission of additional evidence.
5. Applicability of Section 59 of the Transfer of Property Act.

Detailed Analysis:

1. Onus of Establishing the Right to the Property:
The appellants argued that the official liquidator had not discharged the onus of establishing his right to the property, referring to Sections 101 and 102 of the Indian Evidence Act, 1872. However, the court found that the genuineness of the allotment letter dated April 10, 1997, which recorded that the allotment was made in lieu of full and final payment by PFSL, was never challenged. The onus was on the appellants to show that this statement was incorrect, which they failed to do.

2. Ownership and Possession of the Property by PFSL:
The court established that PFSL was the de facto owner of the undivided share in the unit, superstructure, and other allied services. The learned single judge found that:
- The procedure for admission as a member of the society and allotment of premises was followed for PFSL.
- PFSL possessed a letter of allotment indicating full and final payment.
- PFSL was issued a possession certificate, which was not shown to be fraudulent.
- Once the title had passed to PFSL, the transferor (appellant No. 1) ceased to have any right over the property.
- Any subsequent dealings with the property by appellant No. 1 or third parties were invalid.

3. Validity of Agreements and Transactions Involving the Property:
The appellants contended that the property was given to PFSL as collateral security and not as an owner, citing agreements dated July 9, 1997, and September 8, 1999. However, the court found no link between appellant No. 1 and Radhe Estate Developers, which purportedly placed the property as collateral. The agreements were not executed as required by law, lacking necessary resolutions and proper execution. Consequently, these agreements could not dislodge PFSL's ownership.

4. Admission of Additional Evidence:
The appellants sought to introduce a consent decree as additional evidence under Order 41, Rule 27(1)(b) of the Code of Civil Procedure, 1908. The court rejected this request, noting that the appellants had knowledge of the document during the original proceedings and failed to raise this issue timely. The court emphasized that additional evidence is only permissible to fill inherent lacunae or defects apparent on the record, which was not the case here.

5. Applicability of Section 59 of the Transfer of Property Act:
The appellants argued that the law did not require registration of a mortgage based on the deposit of title deeds. However, the court found this argument irrelevant, as the documents post-April 10, 1997, could not affect PFSL's established ownership. The learned single judge correctly noted that once PFSL became the owner, no subsequent unregistered agreements could alter this status.

Conclusion:
The court dismissed the appeal, finding no error in the company court's order. The appellants failed to establish any right over the property post-allotment to PFSL, and their arguments based on subsequent agreements and additional evidence were unconvincing. The civil application was also rejected as infructuous, and the request for a stay of the order was denied.