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TMI Blog2009 (5) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... s other creditors. About the value of the property itself, learned counsel for the applicant suggested that he would have no objection if the property was to be assessed to be valued afresh to satisfy the conscience of the Court that at the relevant point of time, the property had been properly valued. Thus do not propose examine the adequacy of the sale consideration since have already held that there was no bona fides in selling the property that resulted in the only immovable asset belonging to the company being lost. Appeal dismissed. - C.A. NO. 803 OF 2007 C.P. NO. 374 OF 2002 - - - Dated:- 7-5-2009 - K. KANNAN, J. Sudhir Mittal for the Applicant. Puneet Kansal for the Official Liquidator. Ram Chander for the Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition before DRT and when an attachment had been ordered. The proceedings initiated before this Court on 12-11-2002 yielded to an order of winding up on 22-3-2007. Evidently, company had been served with notice in the petition for winding up and OTS and the sale had been made during the pendency of the petition for winding up before this Court. 4. The contention of learned counsel for the petitioner is that the disposition of law by the Hon ble Supreme Court in Allahabad Bank v. Canara Bank [2000] 4 SCC 406 allowed a financial institution to stay outside the process of winding up and enforce the security or take action before the Debt Recovery Tribunal unfettered by any order of the Court under the proceedings for winding up. He wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge. It was also found that the sale was not required to be set aside due to the fact that the purchase was in good faith and without notice to the conspiracy of the Directors and their illegality in providing for salary for themselves. In that case, the Court ultimately dealt with the situation where the Directors had refunded the amount taken by them from out of the sale proceeds and the claims of salaries of some workers were also satisfied. The proposition of law laid down by the said judgment must be understood in the context of three vital factors: ( i ) the amounts, which they had paid to themselves from out of the sale proceeds had been refunded; ( ii ) the salaries of the staff had been paid, which was not against the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms. 7. This was the starting point of arguments for the learned counsel appearing on behalf of the Official Liquidator and who is contesting the application. He would refer to section 537 of the Companies Act as fully governing the issue and makes a reference to 537(1)( b ) that "any sale held, without leave of the Court of any properties or effects of the company after such commencement; shall be void." According to him, section 537(1)( b ) applies comprehensively to interdict any sale after the commencement of the proceedings for winding up and the said provision cannot be controlled by any permission that could be granted under section 536(2). He also refers to a decision of this Court in Haryana Financial Corpn. v. Dev Papers (P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be void ab initio qualifies it as obtaining to such a situation, if the Court otherwise orders the same. The Hon ble Supreme Court was not actually considering the interplay of sections 536(2) and 537 but was dealing with question of the issuance of cheques that did not involve attachment of sale of property, which is covered in the succeeding section 537. This question, which was not raised before the Hon ble Supreme Court could not be simply shoved under the carpet by a simplistic approach that section 536(2) does not relate to disposition of immovable property. On the other hand, the reference to disposition of property (including actionable claims) of the company must be understood as referring to any property, which could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld ever urge the plea of bona fides. If any portion of property had been salvaged for the benefit of the company or any portion was available in surplus for satisfaction of other unsecured creditors, it may be possible to infer bona fides. If the property which is secured is allowed to be transferred for the exact amount, which was paid to a creditor, then it means the debtor was actually facilitating one secured creditor for, the earlier realization of his own debt. Even if the company had not consented for the sale, it would have come to a similar result of the property being sold at the instance of the creditor whose debt was fully satisfied. By the OTS, scaling down the debt had no meaning, for no benefit obtained to the company. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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