9911796707
TMI Blog1999 (12) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is invalid and void as against the petitioner-Official Liquidator and also for recovery of possession of the said assets. 2. The company had taken a term loan of Rs. 4,81,000 on interest from the 1st respondent, that is, the A.P. State Financial Corporation (APSFC) through a mortgage deed, dated 20-1-1973 and had taken another term loan of Rs. 2,20,000 through hypothecation of plant and machineries on 3-8-1981. The company had passed a special resolution to sell the land, building, machinery, etc., for a sum not below Rs. 7 lakhs. The 2nd respondent, namely, B.P. Agarwala was authorised to negotiate the sale of the units as also to execute the document in favour of the prospective purchaser. On 1-12-1981, after negotiation with the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated 31-3-1991, the value of the assets has been shown as Rs. 11,57,455.43. The transaction has been done fraudulently by the 2nd respondent in collusion with the 3rd respondent who had fraudulently requested and obtained permission of the 1st respondent to transfer the assets of the company to the 3rd respondent on inter se basis. Fraudulent preference has been given to the 1st respondent causing heavy loss to the company. Therefore, the sale is invalid and void under sections 531, 531A and 537 of the Act and is not binding on the petitioner-liquidator. 4. The 1st respondent through its counter denied the allegations and pleaded that the APSFC is entitled to take action under sections 29 and 46( b ) of the State Financial Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uipment, and vehicles the market price of which was about Rs. 70,000 only. The area in which the factory is located was Naxalite infested and the workers union had also damaged a part of the properties of the company. This respondent has no knowledge about the liquidation proceedings. The company had committed defaults in making payments to the 1st respondent which has taken action for the recovery of dues against the company. The 3rd respondent has also granted loan of Rs. 9,81,000 and another amount of Rs. 50,79,000 was advanced by the 1st respondent on 29-10-1987. The 3rd respondent has since become a private limited company. The properties were sold at the reasonable price of Rs. 7 lakhs. The provisions of sections 531, 531A and 537 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situated in the Naxalite infested area. 12. From the evidence of P.W. 1, only this fact is established that the properties of the company were not valued through a recognised valuer before the transfer of assets of the company by the 2nd respondent in favour of the 3rd respondent. 13. R.W. 1 has testified that he had appointed one A.G. Argade to value the property and after valuation, A.G. Argade has submitted his valuation report, dated 20-10-1981 which is at Exh. R3. The valuer has assessed the value of the property at Rs. 5,99,615. At the relevant time, the unit was not in working condition. It had been closed a year back due to labour problem. Labourers also destructed a part of the property of the com-pany. He had taken loan of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminal proceedings, that will not be termed as a fraudulent preference. It must be shown that the preference was made with a view to give him a favoured treatment. If the transaction is tainted with an element of dishonesty, questions of fraud may arise. The burden lies on the petitioner to establish that the transaction is fraudulent preference to the concerned creditor. It must be established by the petitioner that the company really intended to prefer the concerned creditor to other creditors. Fraudulent preference cannot be inferred from the mere suspicion but should be based on legal evidence. Mere preference is not sufficient for drawing an inference that the preference is fraudulent. It should be established that both the transferor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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