2012 (5) TMI 192 - HC - Companies Law

Liquidation of a company - Claim under Section 536(2)- transfer of flat after the order of winding up Held that - Transaction undertaken by company in liquidation can be validated under Section 536(2) as compulsion of circumstances, in order to save or protect the company, provided evidence is produced about such compulsion and it was further held that the assets of the company (in liquidation) cannot be disposed of at the mere pleasure of the company - The Agreement for Sale executed by Smt. Anita Jain in favour of the appellant bears the date of payment of stamp duty of 14.02.2002 whereas the said Agreement is however purported to be ante dated on 13.12.2001 when the Agreement to Sell executed by the company in liquidation in favour of Smt. Anita Jain bears the date of payment of stamp duty of 13.02.2002 - This alone shows collusion and an attempt to show the Agreement to be of a date different than it is borne out to be of - it cannot be said that transfer of subject flat, after the order of winding up and in violation of the order restraining such transfer was under compulsion or for the benefit of the company in liquidation - claim under Section 536(2) rejected.

Summary

Issues Involved:

1. Validity of the transfer of immovable property after the winding-up order.
2. Bona fide nature of the transaction.
3. Preferential treatment to one of the creditors.
4. Compliance with statutory requirements for property transfer.
5. Role of the Official Liquidator and adherence to court orders.

Detailed Analysis:

1. Validity of the transfer of immovable property after the winding-up order:

The core issue in this case was the validity of the transfer of a flat owned by M/s JVG Finance Ltd. (under liquidation) after the winding-up order dated 05.06.1998. The Committee and the Court found that the purported transfer of the flat to Smt. Anita Jain and subsequently to the appellant was void. The transfer was effected after the winding-up order and without the authorization of the Official Liquidator, violating Section 536(2) of the Companies Act, 1956, which declares such transfers void unless otherwise ordered. The Court emphasized that no transfer of assets could be made post the winding-up order, and any such transfer would be considered null and void.

2. Bona fide nature of the transaction:

The appellant claimed that the transaction was bona fide and for valuable consideration. However, the Committee found that the dues from the company to Smt. Anita Jain were not clearly established, and the transaction appeared collusive. The Court noted several irregularities, including the timing of the stamp duty payments and the lack of registration of the transfer documents, which indicated that the transaction was not bona fide. The Court also highlighted that the transaction seemed to be an attempt to save the flat from the Official Liquidator, further questioning its genuineness.

3. Preferential treatment to one of the creditors:

The Committee observed that even if the transaction was bona fide, it amounted to preferential treatment of Smt. Anita Jain, a creditor of the company. The Court reiterated that allowing such a transaction would violate the principle of equality among creditors. The Reserve Bank of India had prohibited the company from alienating any assets without prior written permission, and the Court had restrained the company from disposing of its assets. Any transfer in violation of these orders was aimed at defeating the rights of the creditors and was thus invalid.

4. Compliance with statutory requirements for property transfer:

The Court noted that the Agreement to Sell executed by the company in liquidation in favor of Smt. Anita Jain and the subsequent agreement between Smt. Anita Jain and the appellant were not registered, as required by the Registration Act, 1908. The documents were also found to be ante-dated, indicating collusion. The Court emphasized that the transfer of immovable property required proper registration, and the failure to comply with this statutory requirement further invalidated the transaction.

5. Role of the Official Liquidator and adherence to court orders:

The Official Liquidator, appointed as the Provisional Liquidator, was directed to take charge of the company's assets. The Committee and the Court found that the transfer of the flat was made without the Official Liquidator's authorization and in violation of court orders restraining the disposal of the company's assets. The Court stressed the importance of adhering to these orders to protect the interests of all creditors and ensure the fair distribution of the company's assets.

Conclusion:

The Court dismissed the appeal, affirming the Committee's findings that the transfer of the flat was not bona fide, amounted to preferential treatment, and violated statutory requirements and court orders. The Court emphasized the principles of equality among creditors and the need for proper authorization and registration of property transfers. The appellant's collusion with the company in liquidation and Smt. Anita Jain further undermined the validity of the transaction. The appeal was thus dismissed, though no costs were imposed on the appellant.