2008 (12) TMI 626 - HC - Companies Law

Winding up - praying for a direction to the Official Liquidator to regularise and execute sale document in favour of the applicant and not to transfer, alienate or deal in any manner with the said property - Held that - It is true that AMCO Bank was the sole secured creditor. However, its dues are already paid off as stated by the applicant and is confirmed by Mr. Chudgar. However, that will not make the applicant entitled to claim the execution of sale deed in his favour on the basis of the agreement to sell which is absolutely illegal and unenforceable agreement. If the applicant has to recover any amount from the Growmore Solvent Ltd., and as per the scheme, if the liability is undertaken by Kengold (India) Ltd., and after the said company goes into liquidation, the only remedy available to the applicant is to lodge his claim before the Official Liquidator with proof of debt and the Official Liquidator, after satisfaction of the dues of the secured creditors and workers, if any surplus remains, in that case, the applicant s claim would be considered by the Official Liquidator along with others. Thus the relief prayed for by the applicant in the present application is not granted. The application is accordingly rejected. However, the applicant is permitted to lodge his claim with the Official Liquidator along with an affidavit as well as necessary proof of debt.

Issues Involved:
1. Validity of the agreement to sell executed on 13-05-2002.
2. Rights and claims of the applicant over the property in question.
3. Legality of the transfer of the property post-amalgamation.
4. Role and rights of the Official Liquidator and AMCO Bank as the secured creditor.
5. Legal remedies available to the applicant.

Detailed Analysis:

1. Validity of the Agreement to Sell Executed on 13-05-2002:
The court noted that the agreement to sell was executed on 13-05-2002, after M/s. Growmore Solvent Ltd. had already been amalgamated with M/s. Kengold (India) Ltd. on 23-12-1999. The certified copy of the amalgamation order was filed with the Registrar of Companies, making the agreement null and void since M/s. Growmore Solvent Ltd. ceased to exist post-amalgamation. The court emphasized that under section 394(3) of the Companies Act, 1956, the effective date of the scheme is crucial, and thus, the agreement executed on 13-05-2002, was not legal, valid, or enforceable.

2. Rights and Claims of the Applicant Over the Property in Question:
The applicant claimed ownership based on the agreement to sell, possession note, and power of attorney executed by M/s. Growmore Solvent Ltd. The court, however, found these claims invalid as the documents were executed after the company had ceased to exist. The applicant's contention that the Registrar of Companies only recorded the amalgamation order in May 2003 was dismissed, as the effective date was 23-12-1999.

3. Legality of the Transfer of the Property Post-Amalgamation:
The court held that any transfer of property by M/s. Growmore Solvent Ltd. after the amalgamation date was illegal. The property in question was mortgaged to AMCO Bank on 04-05-1999, and any subsequent transfer without the mortgagee's consent was deemed illegal. The court concluded that the transfer of possession to the applicant was per se illegal and void ab initio.

4. Role and Rights of the Official Liquidator and AMCO Bank as the Secured Creditor:
The Official Liquidator, appointed by the court, took possession of the property and sought permission to sell it. AMCO Bank, as the secured creditor, had its dues paid off, but this did not entitle the applicant to claim the property based on the invalid agreement. The court supported the Official Liquidator's actions and directed that any claims against the company in liquidation should be lodged with the Official Liquidator, who would handle them per the Companies Act, 1956.

5. Legal Remedies Available to the Applicant:
The court rejected the applicant's request to direct the Official Liquidator to execute the sale deed in his favor. Instead, it permitted the applicant to lodge his claim with the Official Liquidator, along with an affidavit and necessary proof of debt. The court clarified that the applicant's claim would be considered only after satisfying the dues of secured creditors and workers, if any surplus remained.

Conclusion:
The court concluded that the agreement to sell dated 13-05-2002 was null and void as it was executed after the amalgamation of M/s. Growmore Solvent Ltd. with M/s. Kengold (India) Ltd. The applicant's claims were dismissed, and he was directed to lodge his claim with the Official Liquidator for consideration. The application was rejected, but the applicant was allowed to pursue his claim through the appropriate legal channels.

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