2007 (12) TMI 283 - HC - Companies Law

Winding up - Powers of liquidator - Held that - A perusal of the extract of the affidavit of Shri Chatley shows that the appeal was filed by Shri Vibhu Raj Jhanji and nowhere has the deponent stated in the affidavit that he is supporting the contents of the appeal by way of his own affidavit. That having not been done and the power of attorney having been cancelled, the appeal does not remain alive in the eyes of law. No attempts have been made or steps have been taken by Shri Chatley to rectify the legal infirmity which leaves this court with no alternative but to conclude that the appeal is liable to be dismissed. That apart, we are convinced that Shri Chatley lacks bona fides as the entire exercise seems to be the result of manipulative methods adopted to defeat the orders of the company court which had ordered the process of liquidation and also to defeat the rights of the auction purchaser. Shri Chatley is also fugitive from law as he has been absconding and is stated to be a proclaimed offender. In this view of the matter, when he has blatantly played the game of hide and seek with the court and has made every attempt to hoodwink it, we find no reason to entertain any proceedings in this regard.

Issues Involved:
1. Validity of the sale of assets of the company in liquidation.
2. Legitimacy of the civil court's sale confirmation.
3. Bona fides of the appellant and the power of attorney.
4. Procedural conduct and compliance with court orders.

Detailed Analysis:

1. Validity of the sale of assets of the company in liquidation:
The core issue revolved around the sale of immovable and movable assets of the company in liquidation, Shree Dewan Steels (India) Ltd., conducted by the Official Liquidator. The sale was contested by Naresh Chatley and other parties on the grounds that the land in question was owned by different entities, including Chatley Steels (P.) Ltd. and Naresh Chatley himself. The court found that the land was used in a unified manner by the company in liquidation and associated entities, but specific portions could only be determined through partition proceedings.

2. Legitimacy of the civil court's sale confirmation:
The learned Company Judge negated the sale confirmed by the civil court in respect of the assets of the company in liquidation, stating that no permission was sought from the company court before proceeding with the sale. The court held that the sale conducted by the Official Liquidator would not be affected by the civil court's proceedings. The relevant extract from the order dated 1-3-2007 emphasized that the sale confirmed by the civil court could not be considered due to the lack of necessary permissions.

3. Bona fides of the appellant and the power of attorney:
The appeal was filed by Naresh Chatley through his power of attorney holder, Vibhu Raj Jhanji. The court scrutinized the power of attorney and found it suspicious due to incomplete particulars. Further, it was revealed that Naresh Chatley was a proclaimed offender, which raised doubts about the genuineness of the power of attorney and the appeal itself. The court repeatedly directed Naresh Chatley to appear personally, which he failed to do initially, further eroding his credibility.

4. Procedural conduct and compliance with court orders:
Throughout the proceedings, Naresh Chatley and his attorney displayed evasive behavior, failing to comply with court orders for personal appearance and submission of necessary documents. The court noted multiple changes in legal representation and attempts to delay the proceedings. On 17-10-2007, after much evasion, Naresh Chatley finally appeared in court and tendered an apology. However, the court remained unconvinced about the bona fides of the appeal, particularly since the power of attorney had been canceled and no steps were taken to rectify the legal infirmity.

Conclusion:
The court concluded that the appeal was not maintainable due to the cancellation of the power of attorney and the lack of bona fides on the part of Naresh Chatley. The manipulative tactics employed by the appellant to frustrate the liquidation process and evade legal responsibilities were heavily criticized. Consequently, the appeal was dismissed, and all pending miscellaneous applications were disposed of accordingly.

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