2024 (7) TMI 1363 - HC - Companies Law

De-sealing and handing over of the physical, vacant and peaceful possession of the property - Rules 6 9 of the Companies (Court) Rules, 1959 - removal of the security guards deputed by the Official Liquidator from the property - HELD THAT - The manner in which the sale agreement dated 16.04.2013 was executed, towards the transfer of shareholding of SJSPL, as also the pattern of payments pursuant to the same, which events took place prior to the winding up petition being entertained by this Court, raise an inference that such disposition had been done in the ordinary course of business. The transfer of shareholding was a purely commercial decision taken in the ordinary course of business and was obviously based on certain conditions prevailing in the real estate market. The management of SJSPL pursued its remedies against the respondent company in good faith, in the process laying claim over the subject property subsequent to the adverse action taken by the Noida Authority. Since it is evident that the right to the shareholding of the applicant company/SJSPL did not fructify in favour of the respondent/ company (in liquidation), it is difficult to discern that there has been any lack of bonafides or diligence on the part of the applicant/SJSPL and for that matter, on the part of the Ex-directors of the company (in liquidation). It is also difficult to discern any element of collusiveness or conspiracy between the two parties, soon before or after commencement of the winding up petition vide order dated 23.02.2016. In such a scenario, there could be no two opinions but to hold that the subject property cannot be made available to the Official Liquidator for the purposes of the winding up proceedings. The benefit of vesting the subject property in favour of the company (in liquidation) so as to enhance its assets cannot be sustained. Lastly, merely because some schemes for revival of the company (in liquidation) have been proposed by the stakeholders and are pending for consideration before this Court, the same would not warrant vesting the subject property in favour of the company (in liquidation), particularly when, apart for bhumipujan at the site, no construction work ever commenced at the subject property. The instant application moved by the applicant-SJSPL is hereby allowed and the Official Liquidator is directed to de-seal the subject property viz. Plot No.1, Sector 154, Noida- 201301 and hand over its peaceful and vacant possession to the applicant-company. Application allowed.

Issues Involved:
1. Application for de-sealing and handing over possession of property.
2. Validity of the transfer of property under the Companies Act, 1956.
3. Alleged collusion and financial mismanagement.
4. Legal implications of the Agreement dated 16.04.2013.
5. Validity of actions taken by the Official Liquidator.
6. Impact of winding-up proceedings on property transactions.
7. Financial burden on SJSPL due to Noida Authority's demands.
8. Legal remedies pursued by SJSPL and the respondent company.
9. Consideration of revival schemes for the company in liquidation.
10. One-Time Settlement (OTS) negotiations.

Issue-wise Detailed Analysis:

1. Application for De-sealing and Handing Over Possession of Property:
The application dated 23.11.2020 was filed by M/s. Surya Jyoti Software Pvt. Ltd. (SJSPL) under Rules 6 & 9 of the Companies (Court) Rules, 1959, seeking de-sealing and handing over of the property at Plot No.01, Sector-154, Noida. The property was sealed by the Official Liquidator as part of the winding-up proceedings against M/s. Cosmic Structure Ltd. The applicant sought the removal of security guards and the return of the property.

2. Validity of the Transfer of Property under the Companies Act, 1956:
The court examined Sections 433, 434, 531-A, 536, and 537 of the Companies Act, 1956. Section 531-A voids transfers made within one year before the winding-up petition if not in the ordinary course of business. Section 536(2) voids any disposition of property after the commencement of winding-up unless validated by the court. The court emphasized that any transfer of assets after the winding-up petition must be bona fide and for the benefit of the company.

3. Alleged Collusion and Financial Mismanagement:
The Official Liquidator and the Investors Association alleged collusion between SJSPL and the ex-directors of the respondent company. However, the court found no evidence of collusion or financial mismanagement. The Serious Fraud Investigation Office (SFIO) report did not indict SJSPL, and there was no proof of funds being siphoned off.

4. Legal Implications of the Agreement Dated 16.04.2013:
The Agreement dated 16.04.2013 between SJSPL and the respondent company involved the transfer of shareholding for a total consideration of Rs. 42,00,50,400/-. The respondent company failed to make the full payment, leading SJSPL to issue a legal notice on 25.02.2016 and subsequently cancel the agreement. The court noted that the agreement was a genuine transaction and not collusive.

5. Validity of Actions Taken by the Official Liquidator:
The Official Liquidator seized the property on 10.02.2017, justifying it as part of the real estate project "Cosmic Masterpiece." The court found that the seizure was not justified as the property was not part of the company's assets at the time of liquidation. The court directed the Official Liquidator to de-seal the property and hand it over to SJSPL.

6. Impact of Winding-Up Proceedings on Property Transactions:
The court highlighted that any disposition of property after the commencement of winding-up proceedings is void unless validated by the court. The court validated the transaction between SJSPL and the respondent company, stating that it was in the ordinary course of business and not collusive.

7. Financial Burden on SJSPL Due to Noida Authority's Demands:
SJSPL faced significant financial demands from the Noida Authority, which increased from Rs. 8.26 crores to Rs. 20.88 crores. The court acknowledged that SJSPL had deposited Rs. 2.50 crores with the Noida Authority and was under financial strain due to the respondent company's failure to honor the agreement.

8. Legal Remedies Pursued by SJSPL and the Respondent Company:
SJSPL pursued legal remedies diligently, including issuing a legal notice and filing a public notice. The respondent company filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, which was dismissed by the court on 19.12.2016. The court found that SJSPL acted in good faith and pursued its legal rights appropriately.

9. Consideration of Revival Schemes for the Company in Liquidation:
The court noted that certain revival schemes for the company in liquidation were proposed by stakeholders. However, the court held that these schemes did not warrant vesting the subject property in favor of the company in liquidation, especially when no construction work had commenced on the property.

10. One-Time Settlement (OTS) Negotiations:
The court acknowledged that SJSPL attempted to negotiate a One-Time Settlement (OTS) with the Official Liquidator, which did not fructify. The court directed that SJSPL should bear the charges for the security services rendered at the site.

Conclusion:
The court allowed the application by SJSPL, directing the Official Liquidator to de-seal the property and hand over its peaceful and vacant possession to SJSPL. The court emphasized that SJSPL should bear the charges for the security services and make the necessary payments to the Official Liquidator. The court found no evidence of collusion or financial mismanagement and validated the transaction as being in the ordinary course of business.

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