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2013 (6) TMI 271 - HC - Companies LawWinding up petition - date on which the proceedings are deemed to be started - Held that - The date the winding up became effective would be the date on which the BIFR formed its prima facie opinion that KIPL should be wound up. The law in this regard has been explained by in NGEF Ltd. v. Chandra Developers (P) Ltd. (2005 (9) TMI 306 - SUPREME COURT OF INDIA) wherein held that it may be true that no formal application is required to be filed for initiating a proceeding under section 433 of the Companies Act as the recommendation therefor are made by BIFR or AAIFR, as the case may be, and thus the date on which such recommendations are made, the Company Judge applies its mind to initiate a proceeding relying on or on the basis thereof, the proceeding for winding up would be deemed to have been started . Therefore, the date of commencement of winding up would be the date on which BIFR made the recommendation for KIPL s winding up, i.e. 27th October 1993. As rightly pointed out by Liquidator, the agreement to sell has been signed only by Mr. Kathuria. The original of the PoA dated 17th May 2008 stated to have been issued in favour of Mr. Kathuria has not been produced. In any event there appears to be no resolution by KIPL in that behalf. Also there was no decision taken by KIPL either to sell the half portion of property at B-72, Mohalla Mahatma Gandhi Nagar, Moradabad in favour of Adarsh Kumar Agarwal and Niraj Kumar Agarwal or to sell the remaining half to Mr. Shayam Agarwal or Mr. Ashok Agarwal. The ex parte decree passed on 18th August 1993 also overlooked the mandatory requirement in the agreement to sell that exemption from the income tax authorities had to be obtained. Therefore the decree dated 18th August 1993 cannot be sustained in law. The execution proceedings for enforcement of the decree are also judicial proceedings. It is an admitted position that the sale deed dated 25th May 1995 was executed in favour of Adarsh Kumar Agarwal and Niraj Kumar Agarwal only pursuant to the order passed by the executing court and subsequent to the winding up of KIPL. The above proceedings continued without any permission being sought from the Company Court. The actual conveyance of the property i.e. one half of B-72, Mohalla Mahatma Gandhi Nagar, Moradabad in favour of Adarsh Kumar Agarwal and Niraj Kumar Agarwal was clearly hit by Sections 536(2) and 537 of the Act, therefore, no hesitation in holding that neither the ex parte decree passed by the civil court on 18th August 1993 nor the subsequent sale deed executed on 25th May 1995 can be sustained in law. They are hereby declared to be illegal and void and quashed as such. As regards the other half of B-72, Mohalla Mahatma Gandhi Nagar, Moradabad, there was only an agreement to sell which again was not expressly authorised by KIPL by a resolution. There cannot be a valid sale deed executed in favour of Mr. Ashok Agarwal after the order of winding up. There is no legal basis for permitting Mr. Ashok Agarwal to be in continued possession and occupation of the property being the other half of B-72, Mohalla Mahatma Gandhi Nagar, Moradabad.
Issues Involved:
1. Validity of the winding-up order of Kapri International Pvt. Ltd. (KIPL) under SICA. 2. Legality of the ex parte decree dated 18th August 1993. 3. Validity of the sale deed executed on 25th May 1995. 4. Validity of the agreement to sell dated 30th May 1988. 5. Applicability of Sections 536 and 537 of the Companies Act, 1956. 6. Limitation under Section 458-A of the Companies Act, 1956. Detailed Analysis: 1. Validity of the Winding-Up Order of KIPL under SICA: The Board for Financial and Industrial Reconstruction (BIFR) referred the case for winding up of KIPL to the Delhi High Court under Section 20 of SICA. The court ordered the winding up of KIPL on 11th April 1994 and appointed Mr. L. Narayanan as the Liquidator. The winding-up was effective from the date BIFR formed its prima facie opinion, which was 27th October 1993. This was corroborated by the Supreme Court's decision in NGEF Ltd. v. Chandra Developers (P) Ltd., which clarified that the date of commencement of winding up is the date BIFR made the recommendation. 2. Legality of the Ex Parte Decree Dated 18th August 1993: The ex parte decree directed KIPL to execute a sale deed for a plot in Moradabad. The Liquidator argued that the decree was based on an invalid agreement to sell, signed by Mr. Kathuria without proper authorization from KIPL. Moreover, the decree overlooked the requirement of obtaining exemption from income tax authorities. The court found that the decree could not be sustained in law as it was issued without the requisite permissions from BIFR, making it illegal and void. 3. Validity of the Sale Deed Executed on 25th May 1995: The sale deed was executed pursuant to the ex parte decree and during the pendency of winding-up proceedings. Sections 536(2) and 537 of the Companies Act, 1956, render any disposition of property or sale held without the Tribunal's leave, void. The court held that the sale deed executed on 25th May 1995 was illegal and void since it was executed after the winding-up order and without the company's court's permission. 4. Validity of the Agreement to Sell Dated 30th May 1988: The agreement to sell was signed by Mr. Kathuria on behalf of KIPL without proper authorization. The court noted that there was no resolution passed by KIPL authorizing the sale, and the agreement was not registered as required under Section 17 of the Registration Act. The agreement was thus declared null and void. 5. Applicability of Sections 536 and 537 of the Companies Act, 1956: Sections 536(2) and 537(1) of the Companies Act, 1956, state that any disposition of property or sale held without the Tribunal's leave after the commencement of winding-up is void. The court found that the sale deed and the ex parte decree were both executed without the requisite permissions and were thus void under these sections. 6. Limitation under Section 458-A of the Companies Act, 1956: The respondents argued that the application to set aside the ex parte decree was time-barred under Section 458-A. The court rejected this plea, noting that the Liquidator acted promptly after learning about the decree and the sale deed. The court emphasized that no execution could have taken place without the company's court's permission, rendering the plea of limitation misconceived. Judgment: The court allowed the applications filed by the Liquidator and ordered: (i) The ex parte decree dated 18th August 1993 was set aside. (ii) The sale deed dated 25th May 1995 was declared null and void. (iii) The agreement to sell dated 30th May 1988 was set aside. The respondents were directed to pay costs of Rs. 5,000 to the Liquidator within two weeks.
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