2011 (4) TMI 1204 - HC - Companies Law

Winding up auction to pay off the debts of the respondent Company - secured loans from the public against non-existent bookings of Maruti cars - it has come to the notice of MUL that GAL has taken loans from friends, relatives, business associates and other bodies corporate by offering security of booking of Maruti vehicles to give an appearance of transaction of loan backed by security of allotment of cars and the Managing Director, MUL has even received a copy of the legal notice issued to GAL dated 9-7-1996 from Shri U.K. Choudhary causing undue embarrassment to MUL - transaction of this nature is not legal and/or permissible under the dealership arrangement and in any case the allotment numbers were non-existent, GAL have admitted that due to requirement of funds they resorted to device of raising money - GAL has written to MUL vide their letter dated 25-7-1996 (copy enclosed) admitting that the transaction was not regular and that the allotment numbers were in fact non-existent - creditors of GAL who had approached this Court for winding up of GAL - petitioner states that the price of the land which has been offered as security by the respondent is merely Rs. 200 to Rs. 300 per square metre and not Rs. 4,000 per square metre as mentioned in the proposal of the respondent. Learned counsel for the petitioner suggests that a valuer be appointed to value the plot which is being offered to the petitioner as security Held that - respondent company failed to pay its debt to the petitioners, in spite of the statutory notice having been served on it, therefore, petitioners approached this Court for winding up of the respondent company. After receipt of notice the respondent company was represented by a counsel, on 2nd February, 1998 counsel for the respondent made a statement that M/s. Delhi Automobiles Limited has immovable property, namely, 1, Sikandara Road, New Delhi. According to him this property was extremely valuable. He further stated that efforts were being made to sell this property and in case the property was sold, the money would first be utilized for meeting the amounts due to the creditors who filed petitions in this Court. respondent company failed to adhere to the schedule of payment given to this Court. Thus the breach has been committed by the respondent was well as by its Director in adhering to the schedule of payment. The order of restraining the Official Liquidator from taking possession was kept in abeyance till the next date. Property No. 1, Sikandara Road, New Delhi having stood attached by this Court has now, therefore, become liable to be sold after taking over its physical possession. applications filed on behalf of the petitioner and the Official Liquidator stand allowed accordingly

Summary

Issues Involved:
1. Liability of property No. 1, Sikandara Road, New Delhi, to be sold in auction to pay off the debts of M/s. Ganga Automobiles Limited (GAL).
2. Authority of Mr. G. Sagar Suri to bind M/s. Delhi Automobiles Ltd. concerning the sale of the property.
3. Compliance with court orders and undertakings by GAL and M/s. Delhi Automobiles Ltd.
4. Creation of third-party interest in the attached property.
5. Issuance of show-cause notices for false/misleading statements and undertakings.

Detailed Analysis:

1. Liability of Property No. 1, Sikandara Road, New Delhi:
The court had to decide whether property No. 1, Sikandara Road, New Delhi, should be sold to pay off the debts of GAL, which was already wound up. GAL had collected large amounts of money through inter-corporate deposits/loans against non-existent bookings of Maruti cars. When GAL failed to refund the money, creditors approached the court, leading to the winding-up proceedings. The court had previously ordered that if GAL's debts were not paid, the property would be deemed attached and sold under court supervision.

2. Authority of Mr. G. Sagar Suri:
Mr. G. Sagar Suri, Chairman of M/s. Delhi Automobiles Ltd., had made a statement before the court that property No. 1, Sikandara Road, would be sold to liquidate GAL's liabilities. However, M/s. Delhi Automobiles Ltd. contended that Mr. Suri had no authority from its Board of Directors to make such a statement. Despite this, the court found that Mr. Suri was fully competent to make the statement based on the power of attorneys he held from the erstwhile owners, allowing him to execute the sale deed on their behalf.

3. Compliance with Court Orders and Undertakings:
Throughout the proceedings, GAL and M/s. Delhi Automobiles Ltd. had given false assurances and undertakings to the court to defer the winding-up order against GAL. Despite several opportunities and extensions, GAL failed to adhere to the payment schedule, leading to a deemed winding-up order and the appointment of the Official Liquidator. The court noted that the non-compliance and breach of undertakings were evident from the repeated failures to pay the creditors as per the agreed schedule.

4. Creation of Third-Party Interest:
M/s. Delhi Automobiles Ltd. attempted to create a third-party interest in the attached property by entering into an agreement to sell with Taneja Developers and Infrastructure Ltd. for Rs. 25 crores. This was done despite the court's attachment order. The court found that this action was an attempt to avoid the consequences of the attachment order and the undertakings given by Mr. Suri.

5. Issuance of Show-Cause Notices:
The court directed the issuance of show-cause notices to the Directors of GAL and M/s. Delhi Automobiles Ltd. during the years 1998 to 2002. This was due to the prima facie evidence of false/misleading statements and undertakings given in the proceedings and the attempt to create a third-party interest in the attached property. The Official Liquidator was instructed to provide the particulars of the concerned Directors and serve them with the show-cause notices.

Conclusion:
The court concluded that property No. 1, Sikandara Road, New Delhi, was liable to be sold to pay off GAL's debts. The Official Liquidator was permitted to take possession of the property with police aid, get it valued, and proceed with the sale under court supervision. The court also initiated action against the Directors of GAL and M/s. Delhi Automobiles Ltd. for their misleading statements and breach of undertakings.