2010 (4) TMI 611 - HC - Companies Law

Whether on the facts and circumstances the objection in regard to alienation of the landed property which is sought to be sold on behalf of the appellants is sustainable and its effect on the alleged auction and sale ? Held that - The entire action on the part of the company court through its official liquidator is trying to obliterate the incidents of an assigned land and trying to put to sale, are totally void ab initio. Hence, the appeal is accordingly allowed to the extent of the assigned land i.e., acres 40.65 cents situated in Survey Nos. 445-A1, 445-A5, 445-A6, 525, 527 and 529-A of Kodurupadu village of Nellore Mandal and District. The application filed by the official liquidator under section 457(1)(c) of the Companies Act, 1956, for permission to sell the land in question is dismissed and the alleged auction conducted subsequent thereto is set aside. However, we make it clear that the company can be proceeded against other assets, if any

Issues:
1. Challenge to correctness of orders passed by a single judge in Company Application No. 1231 of 2004 in R. C. C. No. 20 of 2000.
2. Permission sought by the official liquidator to sell properties under section 457(1)(c) of the Companies Act, 1956.
3. Objection raised by Mandal Revenue Officer regarding sale of assigned land.
4. Validity of auction and sale of properties in question.
5. Interpretation of Andhra Pradesh Assigned Lands (Prohibition of Transfer) Act, 1977.
6. Allegations of illegal alienation and violation of assigned land laws.
7. Jurisdiction of the court over the sale of assigned land.
8. Decision on the application filed by the official liquidator for permission to sell the land.

Analysis:

1. The appeal challenged the correctness of orders passed in Company Application No. 1231 of 2004 in R. C. C. No. 20 of 2000. The dispute arose from the permission granted to the official liquidator to sell properties under section 457(1)(c) of the Companies Act, 1956, which was contested by the appellants.

2. The main contention revolved around objections raised by the Mandal Revenue Officer regarding the sale of assigned land, claiming it could not be alienated under the Andhra Pradesh Assigned Lands (Prohibition of Transfer) Act, 1977. The appellants argued that the nature of the land should have excluded it from the alienation process.

3. The judgment analyzed the facts surrounding the sale of the properties, highlighting the history of ownership transfers and mortgage arrangements. The court examined the legality of the auction and sale process, considering the objections raised by the appellants and the actions of the official liquidator.

4. The interpretation of the Andhra Pradesh Assigned Lands Act was crucial in determining the validity of the sale. The court emphasized the social welfare nature of the legislation and its supremacy over other laws. It was established that any alienation of assigned land is illegal and void, irrespective of past transactions or events.

5. The court concluded that the actions taken to sell the assigned land were void ab initio, emphasizing the protection provided by the law for assigned lands. The judgment allowed the appeal to the extent of the assigned land and dismissed the application for permission to sell it. The court clarified that other assets of the company could still be subject to legal proceedings.

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