2019 (2) TMI 30 - HC - Companies Law

Official Liquidator action for auctioning/selling the property/plot - Held that - A company can only act through the authorisation received from the Board of Directors while effecting sale of an immovable property. In the present case the applicant has not been able to show that the signatories to the sale deed are officers of the respondent company or have any authorisation from the Board of Directors of the respondent company to effect a sale in favour of the applicant and to execute registered conveyance deed. There is no proof that the respondent company received the consideration for sale of the land. Other factors noted above also throw suspicion on the bona fide and genuineness of the sale transaction. The sale deed relied upon by the applicant cannot be relied upon. It is manifest that the above sale deed relied upon by the applicants have been allegedly executed to hoodwink the respondent company and to fraudulently part with the assets of the company. In my opinion, the applicant lacks bonafide. The alleged sale deed is an illegal and a sham document created for the purpose of grabbing the property of the company. Accordingly, in my opinion, the sale transaction relied upon by the applicant cannot be relied upon. The present application is accordingly dismissed.

Summary

Issues:
1. Validity of the sale deed for property auctioning
2. Authority of signatories to execute the sale deed
3. Proof of consideration for the sale transaction
4. Compliance with Companies Act provisions

Analysis:
1. The petitioner filed an application seeking to prevent the auctioning of a property he claims to own. The Official Liquidator (OL) argued that the company was ordered to be wound up due to fraudulent activities, and the property in question was part of the company's assets. The OL had taken possession of the land, and a valuation report confirmed the property was registered in the company's name.

2. The OL contested the validity of the sale deed, alleging it was fraudulent. The deed lacked clarity on the authorized signatory, and the individuals mentioned were not known to the company. There was no resolution authorizing the sale, and discrepancies in payment receipts raised doubts about the transaction's authenticity.

3. The court noted inconsistencies in the payment details provided by the petitioner and highlighted the lack of evidence supporting the claimed consideration amount. The receipts submitted did not align with the sale deed's timeline, casting further doubt on the transaction's legitimacy.

4. Referring to relevant sections of the Companies Act, the court emphasized the necessity for proper authorization from the company's Board of Directors for property transactions. The absence of proof regarding signatories' authority and consideration receipt indicated a lack of compliance with legal requirements.

The court concluded that the sale deed was likely fabricated to deceive the company and unlawfully acquire its assets. Due to the petitioner's lack of bona fide intentions and the questionable nature of the transaction, the application to prevent auctioning was dismissed. The judgment underscored the importance of adhering to legal provisions and conducting property transactions with transparency and authorization as mandated by the Companies Act.