2009 (2) TMI 459 - HC - Companies Law

Winding up - Custody of company s properties - whether the appellants in O.S.A. Nos. 130 to 132 of 2008 could seek for return of the title deeds from M/s. R.B.F. Nidhi Limited solely on the ground that Jamsheed M. Panday had deposited the title deeds contrary to the power of attorney given to him by way of the resolutions? Held that - On the given facts of the case, we are of the considered opinion that M/s. R.B.F. Nidhi Limited is entitled to invoke the provisions of section 171 relating to general lien and the claim of the appellants-companies seeking for redemption in terms of section 91 of the Transfer of Property Act must yield to such right and consequently the right to claim redemption cannot be accepted. Thus the order of the learned Single Judge directing the return of the title deeds to the appellants is set aside and consequently, the said appeals are dismissed.

Issues Involved:
1. Return of title deeds pledged as collateral security.
2. Validity of resolutions authorizing the pledge of title deeds.
3. Application of section 91 of the Transfer of Property Act.
4. Application of section 171 of the Contract Act regarding general lien.
5. Role and responsibilities of the Provisional Liquidator and the Company Court.

Detailed Analysis:

1. Return of Title Deeds Pledged as Collateral Security:
The appellants sought the return of title deeds pertaining to properties pledged by Mr. Jamsheed M. Panday as collateral security with R.B.F. Nidhi Limited. The court noted that Panday, authorized by board resolutions, deposited the title deeds for loans availed by Zen Global Finance Limited. The appellants argued that Panday mortgaged the deeds for his personal borrowings, contrary to the authorization. However, the court found that the loans were availed in Panday's capacity as Chairman of Zen Global Finance Limited, thus benefiting the company and not for personal use.

2. Validity of Resolutions Authorizing the Pledge of Title Deeds:
The resolutions authorized Panday to pledge the title deeds as collateral security for Zen Global Finance Limited's benefit. The appellants contended that the authorization was for future loans, not existing ones. The court disagreed, stating that the resolutions did not restrict the pledge to a specific loan. The court inferred that the deposit of title deeds was intended to cover all loans availed by Panday, given the significant outstanding amount and multiple loans already taken.

3. Application of Section 91 of the Transfer of Property Act:
The appellants invoked section 91, claiming the right to redeem the mortgaged property. The court acknowledged this right but emphasized that redemption could not be entertained due to the broader context of multiple loans and the general lien held by R.B.F. Nidhi Limited. The court highlighted that the dispute over authorization between the appellants and Panday did not affect R.B.F. Nidhi Limited's rights.

4. Application of Section 171 of the Contract Act Regarding General Lien:
R.B.F. Nidhi Limited claimed a general lien over the properties under section 171. The court supported this claim, citing legal precedents that recognize a banker's general lien over securities deposited by a customer. The court concluded that R.B.F. Nidhi Limited was entitled to retain the title deeds as security for all loans availed by Panday, not just a single loan.

5. Role and Responsibilities of the Provisional Liquidator and the Company Court:
The court criticized the Official Liquidator's stance, which limited the lien to one loan, as contrary to the records and the company's interest. The court emphasized the duties of the Company Court to protect the assets of the company in liquidation and ensure fair distribution among creditors and investors. The court stressed the importance of the Provisional Liquidator's role in maximizing the company's assets for equitable distribution.

Conclusion:
The court set aside the order directing the return of title deeds to the appellants and dismissed their appeals. It allowed the appeals filed by the Federation of Investors Association and closed the appeals by the erstwhile Committee of R.B.F. Nidhi Limited. The court upheld R.B.F. Nidhi Limited's right to a general lien over the properties and denied the appellants' claim for redemption under section 91 of the Transfer of Property Act.

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