9911796707
TMI Blog2008 (6) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... filled, the petitioner proceeded to file Company Petition No. 14 of 1997 praying for winding up of the Company, on or about 25-10-1996/28-11-1996. 3. The said Company Petition was accepted by the Company Judge on 16-1-1997, whereafter the Company entered appearance in the said proceedings. During the pendency of the said Company Petition, however, the Company executed rent note on 20 rupees stamp paper on 13-6-1997. 4. The said document gives the description of the premises as all part and parcel of office room No. 33 on the 3rd floor admeasuring 431 square feet and the address, as indicated above. It is mentioned therein that the Company is owner of 806 equity shares of Rs. 10 each bearing Nos. 15639 to 16444 and 4838 Loan Bond Certificates of Rs. 5 each bearing Nos. 77785 to 82632 of Deepak Talib Estate Private Limited. Consequent to the Company holding of said equity shares and loan bond certificates, had been allotted the said office premises and had every right to lease out the same. It is then stated that the Company has let out and leased the said premises to the applicant with effect from the date of Rent Note (i.e., 13-6-1997) on terms and conditions mentioned therein. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered inside and told the security-man the purpose of their visit, the security-man took them to one Shri Dhawal Desai, Executive Director of the Company in Liquidation. When Shri Dhawal Desai was apprised about the winding-up order and the purpose of visit, he informed that the premises being room Nos. 51 and 52 in one block along with furnitures and fixtures were given on rent to M/s. Videocon Appliances Limited since 13-6-1997. The representatives of the Official Liquidator prepared rough inventory of furnitures and fixtures lying inside, which is annexed to the Minutes dated 19-3-1999. It was noticed that besides the furnitures and fixtures, computers, key-boards, printers were lying inside the premises which, on the basis of slips pasted on the computers were presumably belonging to the said occupant under the lease deed. The representative of the Official Liquidator then visited the said premises on the third floor being office premises No. 33 belonging to the Company in liquidation. However, it was noticed that even the said premises were given to the applicant along with furnitures and fixtures as per Annexure-I. In the said premises, one Shri P. Haridasan of the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant, in the first place, has referred to the agreement and/or Rent Note dated 13th June, 1997 to assert that the applicant was in lawful possession of the said premises along with furnitures, fixtures, fittings, telephone connection installed therein on monthly rent of Rs. 2,500 and was put in possession thereof by the Company. The applicant has then referred to the supplementary agreement dated 14-1-1998 extending the lease period on same terms and conditions. The applicant has then referred to letter received from Official Liquidator dated 13-3-1999 calling upon the applicant to hand over possession of the said premises immediately on expiry of the lease period on 12-4-1999. The applicant thereafter refers to letter received from Official Liquidator dated 1-4-1999 and has also stated that similar letter was received by applicant's associate Company Videocon Appliances Limited who were in possession as tenant of premises on the 5th floor. It is stated that the applicant as well as the said associate Company (Videocon Appliances Limited) gave reply to the Official Liquidator expressing inability to hand over possession of the respective premises and claimed that they were pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as its associate company (Videocon Appliances Limited) are obliged to return possession of the concerned premises to the Official Liquidator. In the circumstances, the Official Liquidator had called upon the applicant and its associate Company to vacate the premises. Since that request was not complied with by the applicant as well as the associate Company, the Official Liquidator had no option but to proceed to take possession of the premises and as the premises were found closed at the relevant time, came to be sealed. The Official Liquidator has also sought direction from this Court that, the associate company (Videocon Appliances Limited) should hand over possession of the premises on the 5th floor to the Official Liquidator as the Company in Liquidation is owner thereof and the premises would be required in the process of liquidation. Along with the reply affidavit the Official Liquidator has placed on record minutes dated 19-3-1999 and its accompaniment reproducing the event that unfolded at the time of visit to the site for taking over possession of the premises. Besides the Rent Note and supplementary Agreement relied by the petitioner, the Official Liquidator has also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidator filed further affidavit dated 6-9-2007 and has supported the stand taken by the petitioners that since the transaction in favour of the applicant in respect of the said premises was after the commencement of the winding up action, the same was void and could not be validated by the Court, as it was not in good faith. The Official Liquidator has denied the case of the applicant that the applicant is a lawful tenant of the Company in Liquidation. The Official Liquidator has also placed on record that the applicant was put back in possession on 15-10-1999 as agent in respect of the premises No. 33 on the 3rd floor on monthly royalty of Rs. 6,000 pursuant to the order dated 30-9-1999. The Official Liquidator has also asserted that the two documents relied by the applicant are inadmissible also because the same are insufficiently stamped and not registered. The Official Liquidator has once again reiterated its stand that the premises are required by him for beneficial winding up of the Company to satisfy the dues of the stakeholders in the Company. 17. Significantly, the applicant filed further affidavit on 3-12-2007 sworn by Shri Bharat More, Manager (Legal) of the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Company in Liquidation in favour of Videocon Leasing and Industrial Finance Limited; agreement dated 13-6-1997 between said Videocon Leasing and Industrial Finance Limited and the Company in Liquidation whereunder the Company in Liquidation accepted its liability to repay and refund sum of Rs. 1.33 crores. The applicant also relies on agreement dated 13-6-1997 whereunder Company in liquidation accepted its liability to pay the amount specified therein. Similar agreement has been executed between Videocon Appliances Limited and the company in liquidation to acknowledge and confirm the liability and assuring that the amount will be repaid within one year. The applicant then relies on the correspondence and the loan bond certificates as well as equity share certificates. 18. The petitioner has also filed reply affidavit to the further affidavit filed by the applicant sworn by Deepak Hemendrakumar Sheth, Director of the petitioner Company dated 7-12-2007. The petitioners have challenged the locus of Shri Bharat More to file further affidavit. In that, he has no personal knowledge of the facts which were unfolded in 1994. The petitioners have denied the claim of applicant of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inanciers (P.) Ltd. v. Official Liquidator [1970] 40 Comp. Cas. 116 (Delhi), in the case of Dinesh v. Hemchandra 1999 (1) Mh. LJ 749 (Bom.) and in the case of Anthony C. Leo v. Nandlal Bal Krishnan AIR 1997 SC 173. He has additionally relied on Ram Sewak Jaiswal v. Abdul Majeed AIR 1980 All. 262. On the other hand, counsel for the Official Liquidator has relied on the decision in the case of Kanchan Kumar Dhar, Official Liquidator v. Dr. L.M. Visarai [1986] 60 Comp. Cas. 746 (Bom.). 21. The first question that needs to be addressed is whether the transaction relied upon by the applicant is affected by section 536, in particular, sub-section (2) of the Act. Section 536(2) of the Companies Act reads thus :- "536. Avoidance of transfers, etc., after commencement of winding up.- (1)****** (2) In the case of a winding up by the Tribunal any disposition of the property including actionable claims of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall unless the Tribunal otherwise orders, be void." The expression 'commencement of the winding up' is no more res integra. In the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t both the Company in Liquidation as well as the applicant had complete knowledge about the winding up proceedings. As a matter of fact, the Company in Liquidation was admittedly served with the Company petition as back as on 18-1-1997. Appearance on behalf of the Company in Liquidation was also entered in the proceedings after service of the notice and yet the rent note in question came to be executed on 13-6-1997, which is obviously with the knowledge of the winding up proceedings. If transaction is entered with such knowledge, the question is, whether such a transaction can be treated as bona fide. For the sake of repetition, it is apposite to re-state the legal position that, if the transaction is for the benefit of and in the interest of the Company or for keeping the company going or keeping the things going generally, it ought to be confirmed being bona fide. However, this is a factual aspect to be pleaded and proved. Significantly, this aspect is no where pleaded in the application under consideration. Moreso, if we were to look at the agreement in question, even the said agreement no where (even remotely) suggests that the same was executed by the parties without the knowl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding winding up action. We shall refer to the afterthought stand now taken for the first time in the latest affidavit filed by the applicant a little later. Reverting to the stand founded on the rent note, upon scrutiny of the said document clause by clause set out therein, the arrangement seems to be most unnatural. For, no landlord would create right in favour of lessee, to whom premises are given only for a period of eleven months permitting the lessee to sub-lease or assign premises to any other person for which lessor would have no objection. Significantly, the applicant has been inducted in the premises which have been let out along with furnitures, fixtures and fittings belonging to the company in liquidation. Going by the terms of this agreement, as aforesaid, the same seems to be palpably unnatural. Moreso, there is nothing in the agreement to even remotely suggest as to what were the compelling circumstances necessitating the Company in liquidation to enter into such transaction during the pendency of winding up action and in spite of its knowledge. So much so that such a transaction can neither be said to be in the interest of Company nor for keeping the Company going or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-lease or assign the same to third party and the Company in liquidation would take no objection for the same. If the lease is for a limited period of eleven months, the question of providing such a right to the lessee, itself, makes the document/transaction suspicious and not in good faith, especially because there is nothing to indicate as to what was the compelling need to enter into such transaction by the Company in liquidation. By no stretch of imagination, the transaction can be said to be for the benefit of the Company and in the interest of the Company or for keeping the Company going concern or keeping the things going generally. It cannot be overlooked that this transaction has been entered with full knowledge of institution of winding up petition. Besides, the subject rent note nowhere reflects even remotely that in addition to the meagre compensation of Rs. 2,500 per month, the Company in liquidation was to receive any other consideration irrespective of the fact that the premises are located in a prime locality in Fort area in Mumbai and admeasuring about 431 sq. ft. Taking over all view of the matter, there can be no doubt that the transaction was not in good faith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating compulsory registration of the said agreement. Thus understood, the documents pressed into service by the applicant to establish its right to remain in possession as lawful tenant have been executed not in good faith or for that matter, in the interest of the Company in liquidation. 28. Having realised this difficulty after opening of the arguments of the applicant, the applicant has now thought it fit to file further affidavit dated 3-12-2007 so as to assert completely new case for the first time before this Court. Now, the applicant, in substance asserts that, the applicant was put in possession of the suit premises; and Videocon Appliances Limited in respect of premises on 5th floor being room Nos. 51 and 52, by way of arrangement under the agreement separately executed on the same after date viz., 13-6-1997. The agreements now relied for the first time before this Court are between Videocon Leasing and Industrial Finance Limited and the Company in liquidation dated 13-6-1997 executed on 20 rupees stamp paper bearing serial number 3421, dated 11-6-1997 issued in the name of Videocon Leasing and Industrial Finance Limited. I am at a loss to understand as to how stamp paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct property of the Company in liquidation or create third party interest therein to said Videocon Leasing and Industrial Finance Limited under the garb of adjusting the consideration amount so as to appropriate the outstanding dues payable by the Company under the sponsorship agreement. 31. Be that, as it may, it may be relevant to note that the sponsorship agreement makes no reference, not even a remote reference, that in case of non-compliance of the terms of the sponsorship agreement, the Company in liquidation would offer the premises to disburse its liability. On the contrary, the sponsorship agreement makes express provision for the consequence in case of default. None of the consequence provided under the agreement would entitle M/s. Videocon Leasing and Industrial Finance Limited to take over the assets or the property of the company. Whereas, the said party (Videocon Company and Industrial Finance Limited) was free to pursue claim for specific performance of the said agreement and specified interest on the outstanding dues. Clause IX of the sponsorship agreement also provides that disputes or differences between the parties are to be resolved by way of arbitration. Admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Company, I have no hesitation in concluding that the subject transaction cannot be validated as it is not in good faith. It is not as if that transaction has been entered without knowledge of the pending winding up action. Similarly, it is not the applicant's case that the transaction was for the benefit and in the interest of the Company or for keeping the Company going or keeping things going generally. The attempt of the applicant and the associate companies was obviously to take over possession and corner the assets of the Company in liquidation under the guise of such agreement. The applicant as also its associate companies would at best be treated as unsecured creditors so as to receive the outstanding dues payable to them, if any. 34. If the new case of the applicant is to be accepted, that stand would be diametrically opposite to the stand taken in the application that the applicant and Videocon Appliances Limited were inducted as lessees in the respective premises. If the agreements now produced were to be kept in mind, the Company in liquidation has agreed to transfer the respective premises in favour of the applicant and Videocon Appliances Limited. Obviously, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at under agreement of repayment and appropriation of the outstanding amount to be adjusted against the conside-ration in respect of the disputed premises does not take the matter any further. The claim of the applicant and Videocon Appliances Limited would then be only of a creditor. The said agreements nowhere expressly mention that possession of the premises has been made over to the applicant or Videocon Appliances Limited under the said arrangement. In other words, the possession of the premises with the applicant and Videocon Appliances Limited is only on account of the rent note dated 13-6-1997 and the subsequent supplementary agreement. No more and no less. So far as that transaction is concerned, I have already held that the same is not bona fide or in the interest of or for the benefit of the Company in liquidation nor the said transaction is for keeping the Company going concern or keeping the things going generally. As a result, the said arrangement cannot be validated by the Courts. 37. Before proceeding further, I shall now refer to the reported decisions pressed into service at the time of arguments. Reliance was placed on the observations in the case of Globe Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator to dispel the argument of the applicant that the applicant was paying rent to the Company in Liquidation. In the case of Kanchan Kumar Dhar, Official Liquidator (supra), our High Court has held that acceptance of rent by liquidator cannot validate a void lease. The validation has to be by the Court. In the present case, I have already found that the lease in respect of property of the Company in Liquidation executed by the Company during the pendency of winding up action was void and the same cannot be validated (as it is not executed in good faith). It is a different matter that the applicant or Videocon Appliances Limited have paid monthly compensation to the Company in liquidation or the Official Liquidator. That will not make any difference for deciding the issue on hand as is the view taken in the case of Kanchan Kumar Dhar, Official Liquidator (supra). It will have to be kept in mind that insofar as premises on 3rd floor possessed by the applicant were sealed by the Official Liquidator on 13-4-1999. The applicant has been put in possession on 15-10-1999, only pursuant to the Court's order dated 13-9-1999, which is obviously without prejudice to the rights and contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the one hand and the applicant as well as said M/s. Videocon Appliances Limited on the other hand being void, the Official Liquidator will have to take steps to recover market rent from the applicant as well as said Videocon Appliances Limited with effect from 13-6-1997 from which date respective parties claim to be in possession of the concerned premises. Indeed, the Official Liquidator shall provide adjustment of amount paid by the applicant or Videocon Appliances Limited, as the case may be, towards monthly rent/compensation under the agreement or the order of this Court as also for the period during which the premises on the 3rd floor room No. 33 remained sealed between 13-4-1999 till 15-10-1999. 45. In view of the finding recorded in respect of the documents in question which are relied by the applicant, it will also be appropriate to direct the applicant to deposit all the abovereferred original documents (Agree-ments) in this Court within four weeks from today. On depositing the said documents (Agreements), the same shall stand impounded and for- warded to the Deputy Inspector General of Registration and Deputy Controller of Stamps, Old Custom House, Mantralaya, Mumbai-32 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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