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2023 (8) TMI 1326 - HC - Companies LawSeeking stay on auction sale - right over the Disputed Land - Administrator contended that the alleged sales are void against the Company and the Official Liquidator because they were subsequent to the commencement of winding up and not bona fide - HELD THAT - The Company asserts title through the MOU, the GPAs, the sale receipts, the deeds of undertaking, and on the basis of being in possession of parent documents. The MOU was executed by the Company and a local intermediary, namely, Mr.T.V.Pattan. The terms and conditions disclose that Mr.T.V.Pattan was responsible for procuring 200 acres of land and 20% of the total amount was agreed to be paid as advance. The agreed price was Rs.11,250 per acre. It is further provided in the MOU that Mr.T.V.Pattan agreed to hand over all the original documents relating to the respective lands at the time of registration of the GPAs. The contention of learned Administrator that about 58 acres was conveyed to the customers of the Company through the GPA holder, Sankaran, is liable to be accepted. When the survey numbers specified therein are compared with the survey numbers mentioned in the sale deeds executed by the GPA holder in favour of the predecessors-in-interest of the applicants, it is also evident that the GPA holder had fraudulently sold/re- sold 86.86 acres of land, including the 58 acres sold earlier through such GPA holder to the Company's customers under registered sale deeds. What is the effect of the injunction order on the sale deeds executed by the GPA holder subsequent thereto? - HELD THAT - By taking into account the MOU, the GPAs, receipts and letters of undertaking, there is sufficient basis to conclude that the Disputed Land is an asset of the Company. Considering the fact that the MOU, GPAs and receipts were executed in 1995, whereas the sale deeds in favour of the applicants were in 2013, which is much after the commencement of winding up, the said dispositions are void in terms of Section 536(2) of CA 1956. Such sales were detrimental to the interest of the Company and, therefore, cannot be validated. Consequently, the sale deeds are declared void and the pattas issued on that basis are also void. Application dismissed.
Issues Involved:
1. Title to the Disputed Land. 2. Validity of Sale Deeds. 3. Effect of Injunction Orders. 4. Bona Fide Purchases and Due Diligence. 5. Applicability of Section 536(2) of the Companies Act, 1956. Summary: Title to the Disputed Land: The applicants claimed title to 28.11 acres of land through two sale deeds executed by Indian Integrated Energy Limited (IIEL) in 2013. The respondents, represented by the Official Liquidator and Administrator, contended that the Company had acquired 119.105 acres in Nangaimozhi village through 46 registered general powers of attorney (GPA) and two sale deeds in favor of an employee. The Company had taken possession of the entire land, plotted it, and sold 58 acres to 107 customers, entering into maintenance agreements with 359 customers. Validity of Sale Deeds: The respondents argued that the sale deeds in favor of the applicants were void as they were executed after the commencement of winding up and were not bona fide. Detailed correlation charts were provided to show that the Company had already conveyed 58 acres to its customers and the remaining land was brought for auction sale. The applicants, however, claimed that their predecessors-in-title purchased the property under sale deeds executed by the GPA holder, D.Sankaran, in 2005. Effect of Injunction Orders: An interim injunction order was issued on 24.04.2003, restraining the GPA holders from alienating lands purchased by the Company. The GPA holder, D.Sankaran, was one of the respondents in this order, which was extended until further orders. The sale deeds executed by the GPA holder in favor of the applicants' predecessors-in-title were, therefore, in contravention of this order and considered void under Section 23 of the Contract Act, 1872. Bona Fide Purchases and Due Diligence: The applicants failed to exercise reasonable due diligence as the encumbrance certificates from 1995 onwards would have revealed prior conveyances to the Company's customers. The sales in favor of the applicants in 2013 were not bona fide as they did not account for the existing entries in the public records. Applicability of Section 536(2) of the Companies Act, 1956: Section 536(2) of the Companies Act, 1956, renders any disposition of the Company's property after the commencement of winding up void unless validated by the Court. The winding up of the Company was deemed to commence on 24.02.1998. The sale deeds in favor of the applicants, executed in 2013, were much after this date and were, therefore, void. The Court concluded that these dispositions were detrimental to the interest of the Company and could not be validated. Conclusion: Company Application Nos. 359 & 360 of 2021 were dismissed. The Official Liquidator was directed to mutate the title and revenue records to reflect the Company's ownership and conclude the auction sale. The applicants were allowed to make claims against their vendors.
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