2024 (8) TMI 1157 - AT - Companies Law

Validity of the sale of immovable property by the National Company Law Tribunal - transmission of shares under SARFAESI Act - Inability to sell its flats due to lack of permission from its lessor MHADA - crux of appellant is the shareholder of the appellant company does not have any title or ownership in the property of the appellant - HELD THAT - Admittedly Respondent No.1 had acquired shares under share certificate No.23 and a flat viz. bearing No.101 situated at Satsang Building for valuable consideration pursuant to an enforcement proceedings initiated by the Bank under the SARFAESI Act. The said acquisition tantamounts to transmission of shares in favour of Respondent No.1 by operation of law and hence Respondent No.1 had acquired, shares and flat through valid SARFAESI proceedings. In Dinesh Nagindas Shah Ors Vs. Pankaj Aluminium Industries Pvt Ltd 2010 (7) TMI 288 - HIGH COURT OF BOMBAY it was held an award passed by an Arbitrator would fall in the ambit of transmission by operation of law and such transfer would not be based upon volition of the parties but by operation of law. Instead of effecting transmission of shares, the appellant No.1 vide letter dated 19th September, 2018 sought inspection of documents despite having complete details and all documents in its possession and with a view to frustrate the rights of Respondent No.1 had filed the petition before the NCLT Mumbai. There is no delay in filing the present company petition by Respondent No.1. The Ld. NCLT has held the protracted correspondence at the instance of the appellant constitutes sufficient reason to condone the delay in filing of this present company petition. In Akal Spring Limited Ors V Amrex Marketing Pvt Ltd, 2019 (11) TMI 1131 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI , it was held the Ld. NCLT has powers to condone the delay under Section 58 of the Companies Act, 2013. Further in Sesh Nath Singh Anr V Baidyabati Sheoraphuli coop Bank Ltd and anr Civil Appeal No.9198 of 2019, it was held a delay can be condoned by Tribunal without a formal application as Section 5 of the Limitation Act does not envisage the requirement of formal application for condoning of delay. There is no reason to interfere with the reasoned order of Ld. NCLT. There being no force in the appeal - Appeal dismissed.

Summary

Issues:
1. Validity of the sale of immovable property by the National Company Law Tribunal.
2. Ownership rights of shareholders in the property of a company.
3. Transmission of shares under SARFAESI Act.
4. Application of Articles of Association in cases of transmission of shares.
5. Knowledge and intervention of the appellant in SARFAESI proceedings.
6. Estoppel and rights recognition in property disputes.
7. Condonation of delay in filing Company Petition by the National Company Law Tribunal.

Analysis:

1. The judgment by the National Company Law Appellate Tribunal, New Delhi, involved an appeal against an order passed by the National Company Law Tribunal, Mumbai, regarding the sale of immovable property situated in Mumbai to Respondent No.1. The appellant company had purchased lease rights in a plot and constructed a residential building, allowing its shareholders to occupy flats until a decision was made to dispose of the property.

2. The crux of the argument presented was the lack of ownership rights of shareholders in the property, specifically regarding the mortgage of a flat by one of the shareholders. The Tribunal considered the acquisition of shares and a flat by Respondent No.1 through SARFAESI proceedings as a valid transmission of shares by operation of law.

3. The judgment discussed the distinction between transmission and transfer of shares, emphasizing the overriding effect of SARFAESI Act over the Articles of Association of a company. It was highlighted that the appellant had knowledge of the SARFAESI proceedings but did not challenge them, indicating awareness and non-intervention in the security enforcement measures.

4. Regarding the rights recognition and estoppel, the Tribunal noted the actions of the shareholders, including the failure to challenge the SARFAESI proceedings and the subsequent legal actions taken by the shareholders. The judgment emphasized that the shareholders had been involved in the sale and purchase of flats, indicating their understanding and involvement in the property transactions.

5. The Tribunal also addressed the issue of condonation of delay in filing the Company Petition, citing previous cases to support the power of the Tribunal to condone delays under the Companies Act. The judgment concluded that there was no basis to interfere with the decision of the National Company Law Tribunal, ultimately dismissing the appeal and closing any pending applications.