2008 (10) TMI 357 - HC - Companies Law

Winding up - Custody of Company s property - auction sale - Held that - The appellant had knowledge at least since 2000 when he filed objection with regard to sale of land on 1-11-2000. The appellant s objection, though rejected, and upheld by Division Bench vide order dated 26-2-2002, in O. S. A. No. 401 of 2001, wherein the appellant R. Vijayakumar himself was the appellant, but he did not choose to move against the said order before the Superior Court. The order of the court dated 9-4-2003, to auction sell the property by publication of notice in eight national newspapers was never challenged by the appellant though he had knowledge of the case since 1-11-2000. Though the execution of sale deed was made pursuant to the court s order dated 12-11-2003, but the auction sale was not challenged. The question whether the transfer made by the appellant in favour of the company was legal or not was not to be determined in the present company petition. We find the appellant also suppressed material fact that out of the total lands he sold some of the Government lands and for that charge sheet has been served against him. It is also not in dispute that though total land was more than 5 acres, but his claim is only with regard to 1.20 acres and not for the rest of the area, though sold in the same manner. In view of the admitted facts as mentioned above, we find no ground made out to interfere with the order passed by learned Judge.

Issues Involved:
1. Validity of the auction sale of 1.20 acres of land.
2. Non-registration of sale deeds.
3. Appellant's knowledge and participation in the auction process.
4. Legal implications of the agreements and transactions between the appellant and the company in liquidation.
5. Jurisdiction of the court in auctioning the property.

Detailed Analysis:

1. Validity of the auction sale of 1.20 acres of land:
The appellant challenged the auction sale of 1.20 acres of land in Kazhipattur village, Kanchipuram district, arguing that the sale deeds were not registered, and thus, there was no valid sale in favor of the company in liquidation. The court noted that the appellant had received the consideration amount in most cases and had knowledge of the auction process since 2000. Despite this, the appellant did not challenge the court's order for auctioning the property, which was published in eight national newspapers. The court held that the appellant's objections were not valid as he had ample opportunity to contest the auction but failed to do so.

2. Non-registration of sale deeds:
The appellant argued that since the sale deeds were not registered, there was no valid transfer of the property to the company in liquidation. The court acknowledged that the sale deeds were not registered but emphasized that the appellant had received the consideration amount. The court allowed time for the appellant to accept the remaining amount due from the company through the official liquidator, but the appellant refused. The court concluded that the non-registration of the sale deeds did not invalidate the auction sale, especially since the appellant had accepted the consideration amount.

3. Appellant's knowledge and participation in the auction process:
The court found that the appellant had knowledge of the auction process since 2000 when he filed objections regarding the sale of land. Despite this, the appellant did not challenge the court's order for auctioning the property. The court noted that the appellant's objections were rejected and upheld by the Division Bench, and he did not pursue further legal action. The court concluded that the appellant's claim of lack of knowledge was unfounded and that he had ample opportunity to contest the auction sale.

4. Legal implications of the agreements and transactions between the appellant and the company in liquidation:
The court examined the agreements for sale between the appellant and Mr. C. Natesan of the company in liquidation. The agreements were made between 1994 and 1996, and the appellant had executed several sale deeds, some of which were not registered. The court noted that the appellant had received a substantial portion of the sale consideration but did not complete the registration process for all sale deeds. The court held that the agreements and transactions were valid, and the appellant's failure to register the sale deeds did not invalidate the auction sale.

5. Jurisdiction of the court in auctioning the property:
The court asserted its jurisdiction to auction the property, noting that the appellant had knowledge of the court's order and the auction process. The court emphasized that the order to auction the property was published in eight national newspapers, and the appellant had ample opportunity to contest the auction. The court concluded that it had the authority to auction the property, and the appellant's objections were without merit.

Conclusion:
The court dismissed the appeal, finding no merit in the appellant's claims. The court held that the appellant had knowledge of the auction process, received the consideration amount, and failed to challenge the court's order in a timely manner. The non-registration of the sale deeds did not invalidate the auction sale, and the court had the jurisdiction to auction the property. The appeal was dismissed with no order as to costs.

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