9911796707
TMI Blog2003 (9) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... d as party opponent No. 3 in Company Application No. 220 of 2001 and further prayed that this Court may be pleased to summon Shri Rajiv Vastupal Mehta for his appearance before this Court on the day fixed and may examine said Shri Rajiv Vastupal Mehta in respect of the suit property and also in respect of the amount of Rs. 14.00 lakhs (Rupees Fourteen Lakhs) being the consider- ation received by him for sale of above stated Flat No. 18 to the applicant. The applicant has further prayed that this Court may be pleased to direct Shri Rajiv Vastupal Mehta to deliver property being amount of Rs. 14.00 lakhs received by him towards consideration from the applicant for sale of Flat No. 18 belonging to the company to the Official Liquidator and further prayed that this Court may be pleased to direct that on Official Liquidator receiving above stated amount of Rs. 14.00 lakhs from Shri Rajiv Vastupal Mehta, the Official Liquidator shall confer legal title of Flat No. 18 to the applicant. 3. In support of both the aforesaid Judge s Summons, the applicant has filed necessary affidavits. 4. For appreciating the aforesaid contention, I will have to set out few facts giving rise to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts in this behalf. 6. It may be noted that so far as Flat Nos. 8, 16 and 17 are concerned, this Court has dealt with the said matter separately in the case of Official Liquidator Report No. 81/01 in Company Petition No. 147 of 2000. This Court gave judgment on 21st March, 2003 in Official Liquidator of Piramal Financial Services (P.) Ltd. v. RBI 2003 CLC 1146 1 . In the said matter this Court in paras 9.26, 9.27 and 10 observed as under : "Para 9.26 : In view of the same, order of winding up was passed in Company Petition No. 147 of 2000, winding up commenced from 9-5-2000. After that when the order was passed in Company Petition No. 296 of 1999, it commenced from 18-10-1999. The impugned transfers have been effected on 7-5-1999 which date is within six months previous to 18-10-1999 and as such, the same are covered by section 531 of the Act. Para 9.27 : I have considered sections 441 and 531 of the Companies Act. I have also considered judgment in the case of J.K. (Bombay) Pvt. Ltd. v. New Kaiser-I-Hind Spg. Wvg. Co. Ltd. reported in (1970) 40 Comp. Cas. 689 : (AIR 1970 SC 1041) particularly on pages 713-714 and also Division Bench judgment of this Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Liquidator did not take possession of Flat No. 18 at that time. So in my earlier judgment and order dated 21st March, 2003, I did not deal with the question of Flat No. 18. Now in this matter, I am considering the matter only pertaining to flat No. 18 (suit premises). 7.1 The applicant has stated that the applicant is an owner of the residential premises suit premises. He submitted that before purchasing the suit property in question, he had given an advertisement in Gujarat Samachar dated 24th May, 1999. The copy of the said advertisement has been produced by the applicant. He has further stated that before purchasing the above flat, the applicant requested his Advocate Mr. Amar G. Shah for title clearance report and thereafter his advocate Mr. Amar Shah started making search in the office of Sub-Registrar to find out whether the property in question was free from encumbrances or not. However, before the report was received, Shri Rajiv Vastupal Mehta had executed a sale deed in his favour. The said sale deed was executed on 7th June, 1999, and he had received the title clearance report on 28th June, 1999. The advocate has opined that the property in question is clear and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the charge of above stated four flats. 7.5 The applicant has further stated that on 1-4-1999 a resolution was passed by the Board of Directors of the Company by which the Chairman and Managing Director Shri Ashish P. Patel was authorised to purchase, sell, acquire, release, develop etc. the property movable as well as immovable of the company. Pursuant to the said resolution, the above stated four flats were sold to Shri Rajiv Vastupal Mehta and out of four flats, the applicant had purchased Flat No. 18 from Shri Rajiv Vastupal Mehta. 7.6 Mr. C.L. Soni, learned advocate for the applicant has argued to show his bona fide that if this Court appoints any independent valuer of the flat in question to determine the value as on June, 1999 and if valuer comes to the conclusion that the property was more valuable than Rs. 14.00 lakhs, then if Mr. Rajiv Vastupal Mehta pays Rs. 14.00 lakhs to Official Liquidator then whatever is shortfall amount of the said flat he is prepared to pay the same to Official Liquidator provided Official Liquidator gives a legal and valid title of the flat in this behalf. 8. It may be noted that by the judgment of this Court, which has been referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ventilating his grievance against him. He submitted that when this Court came to the conclusion that the transaction between the company and Rajiv Vastupal is a fraudulent transfer, jurisdiction of the company Court ends. He submitted that against the main judgment of this Court ( i.e. OL Report 8/2001 decided on 28-3-2003), Mr. Rajiv Vastupal Mehta has filed appeal before Division Bench of this Court. However, the same is pending for admission and no order has been passed by the Division Bench in this behalf. In view of the same, this Court will have no jurisdiction to hear the matter at this stage. He has submitted that in no clauses of section 446(2) the present case falls and, therefore, the Court may not entertain this application and this Court may reject the application filed by the applicant. 13. It was further submitted that section 477 deals with the power to summon persons suspected of having property of company. He further submitted that the property sold to the applicant was purchased by Rajiv Vastupal Mehta for a valuable consideration and the property sold was not in his custody and possession at the relevant time and, therefore, section 477 does not apply in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 446(1) manifests the legislative intention that the procedure thereunder prescribed could be availed of when the winding up order has been made or where the Official Liquidator is appointed as the provisional liquidator. Section 446(1) envisages two situations in which the Court will have jurisdiction to make the order thereunder contemplated. These two situations are where a winding up order has been made or where the Official Liquidator has been appointed as Provisional Liquidator. The first of the two situations envisages an order for winding-up of the company having been made and which is subsisting.... ...Sub-section (2) of section 446 confers jurisdiction on the Court which is winding up the company to entertain and, dispose of proceedings set out in clauses ( a ) to ( d ). The expression Court which is winding-up the company will comprehend the Court before which a winding-up petition is pending or which has made an order for winding-up of the company and further winding-up proceedings are continued under its directions. Undoubtedly, a look at the language of section 446(1) and (2) and its setting in Part VII, which deals with winding-up proceedings, would clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at elaborate proceedings by way of suit involving time and expense to the detriment of the ultimate interests of the company in liquidation were not contemplated." (p. 144) 15.1 In view of the aforesaid decision, he has submitted that this Court has jurisdiction. He submitted that once the Court already held that transaction between company and Rajiv Mehta is illegal, naturally the transaction entered into between Rajiv Mehta with the applicant can be considered by this Court. 15.2 The learned advocate further submitted that in this case the applicant has paid Rs. 14.00 lakhs to Rajiv Vastupal Mehta which has been paid by cheques. The transaction between company in liquidation and Rajiv Vastupal Mehta was held to be fraudulent preference by this Court and, therefore, naturally the transaction between Rajiv Vastupal Mehta and the applicant may also be held to be bad in law. But in this case the applicant is unnecessarily suffering a loss because he was not aware about the earlier transaction and he has bona fidely and genuinely paid Rs. 14.00 lakhs in this behalf. With a view to give complete justice to applicant he stated that over and above section 446 this Court must ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These are clear authorities for the position that even at the stage of admitting the winding up petition, or entertaining the winding up petition, the Court has also an inherent power to do that which is necessary to prevent the abuse of the process of the Court or to advance the cause of justice or make such orders which are necessary to meet the ends of justice. That inherent power of the Court is not taken away or in any way restricted by section 443(1) of the Companies Act." (p. 233) 15.5 He submitted that in this case Mr. Nigam Maniar has purchased the property, and before purchasing the same he had given advertisement in the Newspaper and, thereafter he had purchased the property by paying Rs. 14.00 lakhs. He submitted that Rajiv Mehta has duped Mr. Maniar in this behalf. In view of the same this Court will have a jurisdiction to examine the transaction between Rajiv Mehta with applicant as to whether the same is legal and valid or not. Conclusion : 16. I have already considered the submission of learned advocates Mr. C.L. Soni, Mr. Soparkar and Mr. A.L. Shah in this behalf. In my view, I will have to consider what is scope of inherent powers in relation to CPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t) Rules is liable to be interpreted in the light of the enabling provisions of the Act contained in section 643 of the Companies Act. Rule 9 can, therefore, be invoked by the Company Court while considering applications made to it under one or other of the substantive provisions of the Companies Act, 1956, and not otherwise." (p. 71) 16.4 I have also considered what is scope of inherent powers under section 151 of the CPC in the leading text book namely "Mulla on CPC" and also book of CPC by Prof. C.K. Thakker, (CJ). Volume II. "The Court has, therefore, in many cases, where the circumstances require it, acted upon the assumption of the possession of an inherent power to act as debito justitios and to do that real and substantial justice for the administration for which alone it exists. This section does not confer any powers but only indicates that there is a power to make such orders as may be necessary for the ends of justice and to prevent an abuse of the process of the Court. The inherent power, "observed the Supreme Court in Manoharlal v. Seth Hiralal reported in AIR 1962 SC 527 has not been conferred on the Court; it is a power inherent in the Court by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intention of the Legislature." (page 902) Object of section 151 of CPC : "The Code of Civil Procedure is an adjective law. The provisions of the Code, therefore, have to be liberally construed to facilitate justice. It is also not capable of contemplating all possible eventualities which may arise in future and to provide procedure. The provisions of the Code, therefore, have to be construed liberally and following the principles of justice, equity and good conscience. Courts have been vested with inherent powers keeping in mind these considerations and they come to the rescue in such unforeseen circumstances. They are to be exercised ex debito justitiae. They have not been conferred upon the Court. They are inherent in every Court by virtue of its duty to do justice between the parties before it." (Re. Code of Civil Procedure, 1908 by C.K. Thakkar Vol. II 2002 Edition page 903) : "The Court must be satisfied that such exercises necessary: ( i ) for the ends of jutice; or ( ii ) to prevent abuse of the process of the Court. (page 904) Though the phrase "ends of justice" has not been defined anywhere, it may be said that the connotation may mean full and complete ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Ramakrishna Industries (P.) Ltd. ( supra ) and also scope of section 151 of the CPC principle of which I have extracted from the judgment of Hon ble Supreme Court in the case of Manoharlal Chopra s case ( supra ) and Naresh Shridhar Mirajkar case ( supra ) and also leading text book of Mulla on CPC as well as book of C.K. Thakker. I am of the view that in this case not only section 446 but, read with section 643 inherent powers of the Company Court will have to be exercised in this behalf. I have also considered the submissions made by Mr. Roshan Desai, Mr. Ashwin L. Shah, Mr. Soparkar and Mr. C.L. Soni, learned advocates appearing for the respective parties. I have also considered the judgment of the Hon ble Supreme Court and also submissions of Mr. Roshan Desai and Mr. Ashwin L. Shah in this behalf. In this case the Company Court has a jurisdiction to decide the legality and validity of the transaction in this behalf and once the Court has come to the conclusion by its earlier judgment decided in OLR No. 81 of 2001 dated 21st March, 2003 - Official Liquidator of Piramal Financial Services (P.) Ltd. s case ( supra ), that the transaction between company and Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot pass any order at this stage regarding examination of Rajiv Vastupal Mehta in respect of the property bearing Flat No. 18, situated at Haridwar Apartment, 23 Patel Society, Gulbai Tekra, Ellisbridge, Ahmedabad, at this stage. 20. Before I part with this order, I may quote the following maxim: "EX DOLO MALO ORITURE ACTIO. (Per Lord Mansfield in Holman v. Johnson, Cowp. 341, at p. 343) A right of action cannot arise out of fraud." 21. After pronouncement of judgment, Mr. Roshan Desai, learned advocate for the Official Liquidator states that in view of the order passed by this Court, the Official Liquidator has to receive Rs. 14 lakhs from Mr. Rajiv Vastupal Mehta and after valuation report of said property whatever price is determined by the valuer, the difference will have to be paid by Mr. Maniar. The learned counsel for the Official Liquidator states that if Mr. Rajiv Vastupal Mehta files an appeal or any other proceedings and obtains stay regarding Rs. 14 lakhs to that extent the interest of Liquidator is not properly preserved or protected. In that eventuality, this Court should protect the same in this behalf because Mr. Nigam Maniar is staying in the property with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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