2001 (7) TMI 1303 - HC - Companies Law

Summary

Issues:
Sale of property by Delhi Financial Corporation challenged for inadequate consideration and violation of court orders.

Analysis:

1. Sale of Property: The appellant company challenged the sale of property no. A-83, Okhla Industrial Area, Phase-II, New Delhi, by the Delhi Financial Corporation (DFC) due to inadequate consideration and violation of court orders. The DFC recalled a loan from M/s. Disco, leading to the sale of the property. The appellant company responded to the sale notice and eventually acquired the property through a bid process.

2. Legal Proceedings: Legal proceedings ensued as creditors filed a winding-up petition against M/s. Disco. The DFC, while not a party to the petition, continued with the sale process. The Official Liquidator opposed the sale, citing a restraint order against M/s. Disco. However, the DFC argued that its actions were in line with its powers under the State Financial Corporation Act, specifically Section 29.

3. Interpretation of Laws: The appellant's counsel argued that the DFC's actions were valid under Sections 29 and 32E of the Act. Section 29 empowered the DFC to take over and transfer assets of defaulting concerns. Section 32E restricted winding-up proceedings without the consent of the Financial Corporation. The counsel contended that possession and management were synonymous in this case, given the circumstances of the closed unit.

4. Judicial Interpretation: The court analyzed the provisions of the Act and previous judgments to determine the legality of the sale. It emphasized the DFC's rights to recover dues and protect its interests. The court noted that the DFC had followed due process, becoming the owner of the assets before the sale to the appellant company.

5. Decision: Considering the sequence of events, the court concluded that the DFC's actions predated the winding-up petition and the restraint order. It ruled in favor of the appellant company, setting aside the previous order and confirming the sale. The court highlighted that the appellant had repaid the loans and was running the property efficiently.

6. Conclusion: The judgment overturned the lower court's decision, emphasizing the DFC's legal authority to handle the property sale. It underscored the importance of upholding the DFC's rights under the law and recognized the appellant's compliance with loan repayment. The parties were directed to bear their respective costs, bringing closure to the legal dispute.