2010 (3) TMI 669 - SC - Companies Law

Approval and validation of the sale deed - Winding up - Held that - Having regard to the market value as disclosed by the enquires by the official liquidator what has been offered may not be adequate. Keeping in view the present value of the amount already spent/incurred by the appellant (that is the consideration plus stamp duty paid with the interest thereon), it would be fair and reasonable if the appellant is required to pay Rs. 2.5 crores to the ICICI Bank in full and final settlement of the amount due to the bank and a sum of Rs. 3.5 crores to the official liquidator representing the first respondent, in all Rs. 6 crores. Having regard to the fact that the issue is being examined with reference to an application under section 531A of the Act, and the facts and circumstances, payments as aforesaid would result in a permanent solution doing complete justice among the parties. Allow this appeal in part and set aside the impugned judgment of the Division Bench of the High Court. The application by appellant for approval and validation of the sale deed dated 13-8-1999, in its favour is allowed subject to that appellant shall pay Rs. 2.5 crores to second respondent (ICICI Bank) on or before 30-3-2010, in full and final settlement of the mortgage loan of first respondent. The appellant shall pay Rs. 3.5 crores to the official liquidator representing the first respondent-company on or before 30-3-2010, to enable the official liquidator to disburse the amount in accordance with the direction of the company court. On payment of six crores as aforesaid, the second respondent shall deliver the title deeds of the property to the appellant and discharge the equitable mortgage. On such payment, the official liquidator shall also deliver possession of the property of the appellant. If the payments as aforesaid are not made, this appeal shall stand dismissed and the judgment of the High Court shall stand confirmed.

Summary

Issues:
1. Validity of the sale of a property during the pendency of a winding-up petition.
2. Determination of market value and adequacy of the sale price.
3. Resolution of the dispute between the appellant, the bank, and the official liquidator.

Detailed Analysis:
1. The judgment dealt with the validity of a property sale during a winding-up petition. The first respondent company had sold a property to the appellant, but the High Court dismissed the sale as void under section 531A of the Companies Act, 1956, due to concerns about the timing of the sale and the utilization of sale proceeds. The appellant contended that the sale was bona fide, made in the company's interest, and at the prevailing market value. The Supreme Court considered these arguments and the circumstances of the sale.

2. The determination of market value and adequacy of the sale price was crucial in this case. The official liquidator assessed the property's market value to be significantly higher than the sale price. The appellant argued that the market value should be based on the date of the sale agreement and highlighted the amounts invested in the property. The Supreme Court considered these valuations and proposed a settlement amount to resolve the dispute, taking into account the interests of all parties involved.

3. The judgment focused on resolving the dispute between the appellant, the bank (ICICI Bank), and the official liquidator. After negotiations and meetings, a settlement was proposed by the Supreme Court. The appellant was directed to pay Rs. 2.5 crores to ICICI Bank and Rs. 3.5 crores to the official liquidator by a specified date. Upon payment of the settlement amount, the title deeds would be transferred to the appellant, and possession of the property would be handed over. Failure to make the payments would result in the dismissal of the appeal and confirmation of the High Court's judgment.

In conclusion, the Supreme Court partially allowed the appeal, setting aside the High Court's judgment and approving the sale subject to the specified payment conditions. The judgment provided a comprehensive resolution to the dispute, ensuring fairness and justice among the parties involved in the property sale transaction.