9911796707
TMI Blog2010 (1) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... (i), the property in question of "E" Company shall be disposed of by conducting Court Auction disregarding the two registered conveyances in favour of "G" Company and "K" Company respectively, which are illegal and non-existent in law. "K" Company will be entitled to participate in the Court Auction of the suit property, if so advised. The sale proceeds would be primarily used for settling the claims of all the creditors of the "E" Company. That will be without prejudice to the rights of the unsecured creditors of the "E" Company to proceed against the Directors of "E" Company and/or "G" Company or against either of the two companies for appropriate relief, as may be advised. The said proceedings will be decided on its own merits. However, if ‘E’ Company and/or ‘G’ Company fail to deposit the amount, as per clause (i) above, in that case, it is ordered that the suit property shall be disposed of by conducting Court Auction disregarding the two registered conveyances in favour of the ‘G’ Company and ‘K’ company respectively, which are illegal and non-existent in the eye of law. It will be open to ‘K’ Company to participate in the said Court Auction of the suit property, if so adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to initiate appropriate action against the then Company Registrar of this Court, who was appointed as the Chairman of the Committee in terms of order dated 12-2-2004, in view of observations made in this Judgment, in particular, Paragraph 48. - SHOW CAUSE NOTICE NOS. 1 OF 2008 AND 1 OF 2009 IN CHAIRMAN’S REPORT DATED 14-7-2008 AND 31-3-2008 IN COMPANY APPLICATION (LODGING) NOS. 75 OF 2002 AND 673 OF 2003 WITH COMPANY APPLICATION NOS. 139 OF 2002 AND 1530 OF 2008 IN COMPANY PETITION NO. 327 - - - Dated:- 7-1-2010 - A.M. KHANWILKAR, J. Pankaj S. Shah, Ram Apte, A.A. Garge, Satish Shah, A.C. Tamhane, Vishal Kanade, Shahzad Qazi, Negandhi Shah, Himayatullah, Anant Narayan, Ms. Deepali Deshmukh, R.N. Pareek, N.J.D. Monte, B.G. Tangsali, Mrs. P.U. Badadare, Ms. Annie Fernandes and A.P. Kothari for the Appearing Parties. JUDGMENT 1. This common order will dispose of all the pending applications, show-cause notices and Chairman s reports. 2. The background in which the present proceedings have emanated can be briefly mentioned as follows : The unsecured creditors of M/s. Europlast India Ltd. (hereinafter referred to as E for the sake of brevity) passed res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such decrees, orders or otherwise and also does not include any other persons having claims against the company whether secured or not. 1.6 "Claims" means dues of the creditors of the Company other than trade creditors for goods and services inclusive of interest being provided as for the arrangement pertaining thereto. 1.7 Scheme means the scheme of compromise in its present form with any modifications as may be appointed by the creditors and approved or imposed or directed by the High Court at Mumbai. 2. The Scheme although effective from the appointed date shall become operative from the effective date. 3. The claim of all persons, concerns and/or bodies or Bodies Corporate who do not come within the definition of Creditors referred to above, will stand outside the purview of the scheme. 3.1 Upon coming into effect of this scheme and immediately on expiry of the three months from the effective date, the creditors of the Company shall be paid their dues in the following manner : ( a )there are in all about 698 creditors for Fixed Deposits amounting totally Rs. 1,22,83,284 (maturity value) ( b )There are in all 480 creditors for liquinotes amounting totally Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and creditors including creditors, whose claims are disputed as aforesaid. 9. Subject to the provisions of Clause 7, above the commencement and/or continuation of all suits and proceedings including of those now pending against the Company by the Creditors shall remain stayed. 10. The Board of the Directors of the Company may consent on behalf of the Company any modification of this scheme or accept any condition which the Hon ble High Court of Bombay may think fit to impose or approve or may do all acts, deeds and things necessary for carrying this scheme into effect." The scheme was duly considered by the company Judge of this Court on 18-7-2001 and the Company Petition No. 327 of 2001 filed under section 391 of the Act was disposed of in terms of the said order which reads thus: "P.C. : The petitioner company has filed this petition seeking sanction of the scheme of compromise/arrangement at Exh. B as modified and annexed at Exh. C. It appears that the scheme is for the benefit of unsecured creditors of the petitioner company. Pursuant to an order dated 4-8-2000 passed by this court the petitioners had convened a meeting of the unsecured creditors on 14-10-2000. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of Depositors (Finance Establishment) Act, 1999 was granted by this Court (Bobde, J.) on 9-6-2000. Shri Rego submits that the criminal proceedings which are pending before the Special Court under the aforesaid Special Act should be continued to proceed further in accordance with law. He further submits that the criminal proceedings are all together different from the civil proceedings before this Court under section 391( b ) of the Companies Act, 1956. Shri Pandit, however, submits that on the complaint by the unsecured creditors the police have investigated in the complaint in the said act and that the Directors were arrested and were kept in custody and were subsequently released on bail. Shri Pandit further submits that the investigation at the end of the police are completed and the entire record was submitted by the company during the course of the investigation and that the record is in the custody of the Special Court. Shri Pandit submits that he has no objection if the criminal proceedings continue and his clients would extend all co-operation in the proceedings before the Special Court. His prayer however is that no arrest of any of the Directors/employees should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad resorted to arbitration proceedings against the "E" Company. The said arbitration proceedings were decided against the "E" Company whereunder the said M/s. Ashoka Buildcon Pvt. Ltd. became entitled to recover substantial amount. Accordingly, the said creditor filed execution proceedings against the "E" company. The Executing Court was pleased to attach the property of the "E" company and also directed sale of the property consequent to the said attachment for sum of Rs. 50 lakhs only by issuing sale notification/proclamation on 4-8-2003. 4. The "E" Company immediately rushed to this Court and filed Company Application No. 673 of 2003 for staying the auction to be held on 28-8-2003. One of the unsecured creditor also filed company application (Lodg.) No. 75 of 2002 for staying of auction sale to be held on 28-8-2003 at Panvel of the suit property belonging to the "E" Company being land and factory building situated at Khopoli, Village Vanvatti, Taluka Khalapur, District-Raigad. It was further prayed that pending decision of the said application further proceedings pending before the Executing Court be stayed. At the same time, one more Application being Company Application (L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court, if this Court was to modify the scheme already approved earlier. 3. Accordingly, in my opinion, it would be appropriate to appoint Committee of Unsecured Creditors to facilitate sale of the immovable assets of the Company so as to recover proper sale proceeds corresponding to the fair market price of the said assets. 4. The Committee shall consist of five persons. The Company Registrar of this Court is appointed as Chairman of this Committee, being an independent person. One representative of the company M/s. Europlast India Limited, one representative of Ashoka Buildcon Pvt.Ltd., and two representatives of the remaining Unsecured Creditors to be notified to the Company Registrar of this Court within two weeks from today. 5. The said Committee is authorised to take steps to issue the advertisement for inviting offers from public for auction of immovable assets of the Company on usual terms and conditions. 6. Before issuing the advertisement, the Committee shall call for valuation report regarding the immovable assets to be auctioned, from the empanelled valuers of this Court. 7. The proposed auction to be concluded within twelve weeks from today and the sale proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conduct the postal ballot of the company on a remuneration and out of pocket expenses as may be fixed by the Board. FURTHER RESOLVED THAT Mr. Deepak Arora and Mr. Ajay Naithani, Directors of the company be and are hereby authorized to monitor the entire process of Postal Ballot and that they are authorized to do all acts, deeds and things as may be necessary and/or expedite in its discretion for the completion of the above transactions in the best interest of the company and to settle all questions or difficulties that may arise in the course of the implementation of the said resolution. For Euro Plast India Ltd. Sd/- Ajay Naithani, Director" It is common ground that no prior intimation of this intended sale of the property by means other than the one provided under the order of this Court dated 12-2-2004 was brought to the notice either of the Committee appointed by the Court for sale of the property or of this Court. At this stage, it is relevant to make note of the fact that by this resolution, the then Board of directors of the "E" Company assigned the job of intended sale of the suit property to one Mr. Ajay Naithani, director; Mr. Deepak Arora, director and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the committee appointed by this Court for sale of the suit property. Moreover, the Board of Directors of "E" Company who were bound by the orders passed by this Court under section 391 of the Act, as much as the unsecured creditors of the "E" company for whom the scheme was propounded, did not bother to move this Court for appropriate directions. Moreover, no record has been produced that postal ballot to seek approval of the members of the company was duly conducted. Even the explana- tory statement issued by Mr. Ajay Naithani, Director of the "E" Company to its members is not forthcoming. 7. Obviously, for want of knowledge and in ignorance of the above position, the Commissioner appointed by the Court moved this Court, for the first time, by his report dated 31-3-2008, praying that the Directors and authorised representatives of the "E" Company be directed to co-operate to implement the Court s Order and submit documents in respect of the suit property and consequential directions. The said report reads thus : " Submitted to the Hon ble Judge taking company matters. Pursuant to the Order passed by the Hon ble Shri Justice A.M. Khanwilkar on 12th February, 2004 in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unsecured creditors. On 18th October, 2004, Shri Tiwari stated that he has no instructions in the matter and Advocate will be applying for withdrawal of the appearance. At his request, meeting was adjourned to 1st November, 2004 at 5.00 P.M. and thereafter meetings were adjourned from time to time and lastly on 12th January, 2005. On 12th January, 2005, Shri Garge, Advocate for Ashoka Buildcon Pvt. Ltd. has written a letter stating that he is unable to attend meeting on 12th January, 2005 as he has been advised by a medical practitioner to take bed rest due to surgery and requested to adjourn the meeting in the first week of February, 2005. However, since nobody attended meeting on 12th January, 2005 no further steps were taken. Thereafter, again in the year 2007, meeting was held on 6th February, 2007 and intimations were sent to the Advocates for the parties. In the meeting held on 6th February, 2007, Advocate for Ashoka Buildcon Pvt. Ltd. appeared with Mr. D.H. Bhagat, Manager (Legal) of Ashoka Buildcon Pvt. Ltd. In the notice which was sent to Shri Pandit, Advocate for Europlast India Ltd., he put a remark "As already informed earlier, I have to inform you once again that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the settlement of the claim of M/s. Ashoka Buildcon Pvt. Ltd. and Unsecured Creditors. She also stated that she will inform me about the name and address of the person who will be the committee member on behalf of M/s. Europlast India Ltd. on or before the next date of the meeting. It was made clear to Ms. Fernandes that if she does not communicate any name and address of the person who will be the committee member on behalf of M/s. Europlast India Ltd. on or before the next date of the meeting, matter will be proceeded with. At the request of Ms. Fernandes, meeting was adjourned to 30th March, 2007, at 4.30 P.M. In the meantime, Europlast India Ltd. by their letter dated 22nd March, 2007 received by me on 23rd March, 2007 informed that they are under the impression that the claim of the Fixed Deposit holders and Ashoka Buildcon has not been ascertained yet and they would like to request that before proceedings further the committee may first ascertain/verify the claims of the depositors and other unsecured lenders including Ashoka Buildcon and Company may under present circumstances arrange for the funds from the strategic investor to settle the outstanding liabiliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . propounded a Scheme of Compromise with its Unsecured Creditors under section 391 of the Companies Act, 1956 and took out Summons for directions being Company s Application No. 263 of 2000 for convening the meeting of its Equity Shareholders and Unsecured Creditors for the purpose of considering the Scheme. A copy of the Scheme is annexed hereto and marked as Exhibit "A" . (1) As directed by the Hon ble Court, a meeting of the Equity shareholders and Unsecured Creditors of the Company were held on 14th October, 2000. In the meeting held on 14th October, 2000, the Scheme of Compromise was approved by the Equity Shareholders. However, the Unsecured Creditors approved the Scheme with some modification. The said modifications suggested by the Unsecured Creditors in the meeting and approved by the Company is annexed hereto and marked as Exhibit "B" . (2) Thereafter, the Company filed a Petition being Company Petition No. 327 of 2001 for sanctioning of the Scheme. By an Order dated 18th July, 2001 passed by this Hon ble Court, Scheme filed by the Company - Europlast India Ltd. was sanctioned. Hereto annexed and marked Exhibit "C" is a copy of Order dated 18th July, 2001 passed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meeting and they have also not nominated the representative who would be the committee member. In view of non-co-operation on the part of Europlast India Ltd., a report dated 31st March, 2008 was submitted to the Hon ble Court. Hereto annexed and marked as Exhibit "D" is the copy of the said Report dated 31st March, 2008. (9) Notices of the report were given to Europlast India Ltd., Advocate for Europlast India Ltd., Shri A.A. Garge. Advocate for Ashoka Buildcon Pvt. Ltd. and Shri N.J. Monte, Advocate for some of the Unsecured Creditors. (10) Ashoka Buildcon Ltd. has agreed to bear the financial expenses of appointment of Valuer and issuance of advertisement in the newspapers and incidental expenses for sale of the properties. In view of the above the Hon ble High Court by an Order dated 19th June, 2008 disposed of the said Report and has directed the Committee to proceed after due notice to the Company and even if none remains present despite such notice, committee can take appropriate steps to implement the Orders of the Court. Hereto annexed and marked as Exhibit "E" is the copy of the Order dated 19th June, 2008. (11) Thereafter, Ashoka Buildcon Ltd. one of the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted them to ascertain the exact name and address of the Purchaser of the property, when it was purchased and whether the documents have been registered or not; to enable me to submit a report to the Hon ble Court at the earliest. A copy of the said letter is annexed hereto and marked as Exhibit "G". I am informed by Advocate for Ashoka Buildcon Ltd. that the property was purchased by S.H. Kelkar and Co. Pvt. Ltd. (14) Upon perusal of the papers and from the facts mentioned hereinbelow it is clear that the Company Europlast India Ltd. was well aware that said property is required to be sold as per Court s directions as per the Scheme propounded by the Company and payment is to be made to the Unsecured Creditors : ( a )Para - 9 of the Company Petition No. 327 of 2001 reads as under : "It is submitted that the aforesaid facts and circumstances are not known to the small depositors and the numbers of the Public who have invested in such schemes. The said creditors have filed 31 cases in various Courts. About 398 creditors have issued notices to file litigations against the Company. The Petitioner Company therefore decided to hold a meeting of the said creditors for the Fixe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed between Europlast India Ltd. and Kelkar Group or S.H. Kelkar Co. Pvt. Ltd. and/or with any person/firm, Company may be treated as null and void and the same should be treated as cancelled. ( b )Europlast India Ltd. and Kelkar Group or S.H. Kelkar Co. Pvt. Ltd. may be directed to handover the documents in connection with the said plot of land and hand over the possession of the said plot of land to the committee to enable them to implement Court s Order. ( c )Kelkar Group or S.H. Kelkar Co. Pvt. Ltd. may be restrained by the Order of this Hon ble Court from making any further payment to Europlast India Ltd. towards the consideration of the said plot of land. ( d )Europlast India Ltd. and Kelkar Group or S.H. Kelkar Co. Pvt. Ltd. be restrained by an Order and injunction of this Hon ble Court from transferring the said plot of land to anybody else or creating any third party right and mortgage the said plot of land. ( e )Restraining the Talathi/Tahsildar or any other Revenue office of Village Vanvate and Khalapur, from mutating or entering the names of any person/firm/Company etc. in the record of Rights without the written consent of the Hon ble High Court, at Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avel the relevant facts so as to effectively answer the matters in issue. I am disposed to do so having regard to the seriousness of the issues involved. 3. It is noticed that Mr. G.N. Pandit was Advocate on record and had appeared at the hearing of the Company Application (Lodging) No. 673 of 2003 which was disposed of by order dated 12th February, 2004. Before the Chairman of the Committee appointed by the Court in terms of the said order, appearance was made by Mr. Rupesh Tiwari i/b Mr. G.N. Pandit on couple of dates. Thereafter, appearance was made by Ms. Deepa Kamath i/b Ms. Annie Fernandes. At one stage, statement was made that some settlement talks were in progress. That may be a relevant fact to be considered for deciding the points in issue. 4. In the circumstances, I call upon Mr. G.N. Pandit and Ms. Annie Fernandes to state on affidavit all the relevant facts so as to disclose information such as the names of concerned persons who were giving instructions in the matter and the dates on which meetings were held including the nature of interaction over telephone or such other details within their personal knowledge in the context of the plea taken by the Directors of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en directed to submit my explanation on the following viz. : (1) As to why no steps were taken by him for sale of the assets in question or otherwise between 12th January, 2005 to 6th February, 2007 for almost two years? (2) What prevented him to move the Court for seeking extension of time beyond twelve weeks from 12th February, 2004 in the context of specific direction issued in Para 7 of the said Order that the sale should be concluded and amount disbursed within twelve weeks from the date of order? (3) Why no report was submitted soon after 30th March, 2007 when Advocate for Ashoka Buildcon Pvt. Ltd. informed about the developments, whereas the report was submitted only on 31st March, 2008? (4) Why no initiative was taken after 30th March, 2007 to ascertain the factual position brought to the notice of the Chairman by Ashoka Buildcon Pvt. Ltd.? (5) To take search of the Register maintained by the concerned Registrar of Companies and obtain details about the names and addresses of ( a ) former directors of the Respondent Company ( b ) present directors of the Respondent Company and ( c ) directors of Gorakhnath Electricals Pvt. Ltd. at the relevant time on 29th Novem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmit that Office of the Official Assignee was shifted twice, i.e., first in August, 2007 and again in March, 2008 in G.T. Hospital Complex. There was no infrastructure provided and therefore, Office could not work about a month or so. Hence, there was delay in submitting report to the Hon ble Court. (5) As far as Point No. 4 viz. "Why no initiative was taken after 30th March, 2007 to ascertain the factual position brought to the notice of the Chairman by Ashoka Buildcon Pvt. Ltd.?" is concerned, on 30th March, 2007 no facts were brought to my notice, I most respectfully submit that Advocate for Ashoka Buildcon only submitted that Europlast India Ltd. is not co-operating by not attending the meetings and it appears that they are not interested in implementing the Court s Order, no representative of Europlast India Ltd. attended the meeting or suggested the name of the person who could be the committee member and they are also not giving instructions to their Advocate. This is delaying tactics adopted by Europlast India Ltd. and a report should be submitted to the Hon ble Court pointing out the conduct of the Company - Europlast India Ltd., and pursuant to that a report was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of ( a ) former directors of the Respondent Company ( b ) present directors of the Respondent Company and ( c ) directors of Gorakhnath Electricals Pvt. Ltd. at the relevant time on 29th November, 2006 and also on 26th April, 2007 when the property was purportedly transferred." is concerned, I submit that since Europlast India Ltd. was represented by an Advocate, I did not obtain details about the names and address of ( a ) former directors of the Respondent Company ( b ) present directors of the Respondent Company. For the first time I came to know about change in management of Europlast India Ltd. on 26th September, 2008 when affidavit of Harshmani Pant dated 18th September, 2008 was served upon me. Till that time I was not aware about change in management of Europlast India Ltd. (11) As far as Directors of Gorakhnath Electricals Pvt. Ltd. at the relevant time on 29th November, 2006 and also on 26th April, 2007 when the properties were transferred is concerned, I submit that for the first time I came to know on 31st July, 2008 when Tamhane Co., Advocate for S.H. Kelkar Co. Pvt. Ltd. filed an affidavit of Ramesh Vaze disclosing that Europlast India Ltd. has sold pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension of time and delay in submitting a report to this Hon ble Court for the reasons mentioned hereinabove. I respectfully submit that the above acts and omission was purely unintentional due to the reasons mentioned hereinabove. I, therefore, deeply regret for the said lapses and I may be pardoned for the same for which act of kindness I shall ever remain grateful to Your Lordship. I also assure to Your Lordship that I will take utmost care in future while dealing with such matters. Dated, this 3rd day of December, 2008." When the matter appeared on 5-12-2008, Chairman of the Committee took time to submit further clarification as the report presented by him did not disclose the names and details of the erstwhile directors at the relevant time as well as present directors of the "E" and "G" company. The Chairman, accordingly, submitted his further report dated 8-12-2008. On 10-12-2008, when the Chairman of the Committee appeared, he sought further time to file report in the context of physical inspection taken by him in respect of the record of the Registrar of the Companies. Accordingly, further report was submitted by the Chairman dated 16-12-2008. The same reads thus : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rna Jai Prakash Nagar, Goregaon (E), Mumbai - 400 063 8-11-1994 4-9-1997 10. Mr. Manoj Trivedi S/o Prafulchandra Trivedi 48, Joothica, 22, N.B. Marg, Mumbai - 400 007 31-8-1994 30-7-1996 (Expired) 11. Mr. Robert Wagner S/o Sofie Siebengebirgsb lick-5 53844, Troisdori, Germany 18-1-1995 6-11-1996 12. Mr. Artur Roschker S/o Eduard Pauline Kriesel Stresemanmstrase-21, 53844, troisdori, Germany 18-1-1995 6-11-1996 13. Mr. Staurt Jules Paskin S/o Cyril Paskin 16, Green Lanes, Oxhey Nr. Watfod Herts, w.o.l. 4 Q J, England 20-9-1995 6-11-1996 14. Mr. Anant Narayan S/o V.R. Venkate Swaran 14, Madhumati Orchid, Majiwade, Thane (East), Maharashtra-400 604 4-9-1997 4-10-2004 15. Mr. N.K. Khandelwal S/o G.S. Khandelwal 7-8, Kailash Nagar, Model Town, Ambala City, Ambala, Haryana 6-4-1998 4-10-2004 Sr. No. Name of Director Address Date of Appointment Date of Retirement 16. Mr. Sanjiv Kha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of letter dated 15-12-2008, of RSM Co. is annexed hereto and marked as Exhibit A . Dated this 16th day of December, 2008." 10. On the basis of information made available in this report notices were issued to the named persons. I would think it to apposite to re-produce part of the order dated 17-1-2009 which records the stand taken by "K" Company. Paragraphs-7, 8 and 9 of this order are reproduced thus : "7. The Counsel for M/s. S.H. Kelkar Co. Pvt. Ltd. has handed in affidavit of Ramesh Vaze dated 17th January, 2009 which is taken on record. One of the intriguing aspect highlighted in this affidavit is that the address of the Directors of M/s. Gorakhnath Electricals Pvt. Ltd., namely, of Mr. Ashwani Dewan, Mrs. Sunita Dewan, Mr. Arun Gupta, who were directors from April, 2001 to 2007, is the same as of Mr. Deepak Arora, Director of M/s. Europlast India Ltd., i.e., 103, Delhi Blue Apartment, First Floor, Safdarjung Ring Road, New Delhi - 100 029. That would indicate that the named Directors of M/s. Gorakhnath Electricals Pvt. Ltd. were intimately associated with Mr. Deepak Arora, Director of M/s. Europlast India Ltd. If it is so, Mr. Deepak Arora, who has been du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate this order to the Secretary, Europlast India Ltd." Hearing of these proceedings was deferred from time to time for completing service. As it was noticed that service could not be effected on all the noticees in spite of all efforts, eventually the Court directed "E" Company to issue public notice in the concerned local newspapers. After resorting to substituted service on the unserved respondents, the matter proceeded further. 11. In response to the notices sent by the Court and/or public notice issued in local newspapers, some of the noticees appeared in court through Counsel and personally. Some of them have chosen to file reply affidavit to explain their position. Even the advocates who were interacting with the representative of the concerned companies and on whose instructions they made statements or submissions before the Court or in the proceedings before the Chairman have also filed their affidavits. Hearing of the matter proceeded on 4-5-2009 when following order was passed : "1. During the course of hearing, one of the question posed to the Counsel appearing for the Europlast India Ltd. was whether the Company is in a position to state the names of all the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concerned minutes and relevant record of the Company, as he may think it appropriate, shall be produced in court for perusal of the Court at the time of hearing on Wednesday, 6th May, 2009 along with his report. 7. Counsel for the Europlast India Ltd. assures to inform the contents of this order to the concerned officer of Europlast India Ltd., irrespective of availability of copy of this order today or otherwise, who in turn shall provide inspection to the Commissioner and co-ordinate with the Commissioner for production of original records of the company in terms of this order." After the above order was dictated in court, the matter was moved just before lunch time of the Court when liberty was given to the Company Registrar to produce the matter at 3 p.m. After the lunch break, following order was passed : "1. After the order was dictated and before the Court rose for lunch break at 2 p.m., the Advocate for Europlast India Ltd. mentioned the matter pointing out that he attempted to inform the order passed in the earlier part of the day to the authorised officer of the Company, but could not get in touch with the said Officer. He submitted that he may be discharged fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Mr. Harshmani Pant Director 1. Confirmation of Previous Minutes. The minutes of the previous meeting were considered and confirmed. 2. To sale the Property of the Company. The chairman apprised the board that as it has been decided to pass the ordinary resolution through postal ballot for sale of property situated at Khopoli Pen Road, Village Vanvate, Taluka Khalapur, Distt. Raigad, Maharashtra, the same has been approved by the overwhelming majority. The results for the same had been declared by the scrutinizer vide his report dated 3rd October, 2006. The chairman further apprised the board that to pay the deposit holders, the Company is in need of money and hence it has been decided to sell the property of the Company situated at Khopoli Pen Road, Village Vanvate, Taluka Khalapur, Distt. Raigad, Maharashtra. Further the Chairman informed the board that the management has received the very good proposal for sale of the property situated at Khopoli Pen Road, Village Vanvate, Taluka Khalapur, Distt. Raigad, Maharashtra. After detailed discussion the following resolution was passed : "RESOLVED THAT the company do hereby authorise Mr. Naresh Kaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raju B. Shinde. For and on behalf of M/s. Ashoka Buildicon Pvt. Ltd., Satish D. Parakh has filed his affidavit. Besides, Advocate Adrian Periera, Sunil D Souza, advocate for the creditor; Mr. Anibal Antohio De. Monte have also filed their affidavits. 13. In substance, the stand of the directors of "E" company at the relevant time (when the property of "E" Company was conveyed to "G" Company on 29-11-2006), is that, there was change in the management. They took over the management much after the order was passed by the Company Judge dated 12-2-2004. Insofar as Harshmani Pant, director of the "E" Company one of the noticee, he has filed in all three affidavits before this Court. The first affidavit is dated 18-9-2008. The second is dated 8-1-2008 and the third is dated 8-2-2009. In the affidavit dated 18-9-2008, he has stated that "E" Company, in bona fide and good faith, sold and transferred the suit property in favour of the "G" Company on 29-11-2006 against consideration of Rs. 75 lakhs. He has stated that when committee was appointed by this court on 12-2-2004, "E" Company was under previous management. He has stated that after the acquisition of "E" Company by the new man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. Instead, he has stated that Mr. Anand Bisht joined the Board on 30-9-2004, who later on resigned on 13-6-2005, when Mr. Ajay Naithani joined the Board. Further, for the first time in February, 2007, he received communication from the Chairman of the Committee to attend meeting on 21-2-2007. He has further stated that he had requested the Company Secretary to arrange for a lawyer who instructed Ms. Annie Fernandis to inform the committee regarding the developments and to attend to the matter. He has stated that after receipt of notice of the Company Registrar dated 21-8-2008, they came to know through lawyer at Delhi that one advocate of Delhi Mr. R.N. Pareek was associated with the Company. In the circumstances, he approached Mr. Pareek and requested him to attend to the matter, who initially refused. But, when he was informed that there was change in the management, he agreed to appear for the Company. He agreed to help the Company to engage appropriate lawyer. It is stated that the intention behind disposal of the property was only to settle the creditors and with good motive. Further, no profit has been made by the Company as the liability of the company was far more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book of the Company, but assured to provide later on - which was never done. He has stated that new management started maintaining new minute book with effect from 30-9-2004, i.e., the date of joining of the new management and since then the minute book is in his possession. Although Deepak Arora has produced Minute Book, the genuineness thereof is questionable for more than one reason as indicated earlier. 15. Significantly no minutes have been recorded after the sale of the suit property in favour of "G" Company on 29-11-2006. There is no mention that funds have become available, which needs to be disbursed to the unsecured creditors. Thus, minutes are conspicuously silent on these matters. Interestingly, the Board of Directors resolved to shift the registered office to some other place on the ground that it would be more convenient to do business from such place without referring to the fact that the suit property in which the registered office was situated has been sold, necessitating shifting of registered office. It is so done for reasons best known to the Board of Directors of "E" Company at the relevant time. 16. In this Affidavit, he has stated that the register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty, or that the suit property is attached by any order. He has stated that since the creditors and depositors were approaching the new management for settlement of dues, the new management started to search a buyer for the suit property and, accordingly, with good intention sold the same to "G" Company for consideration of Rs. 75 lakhs by executing registered conveyance deed on 29-11-2006. It is stated that the suit property was sold almost after 26 months of joining of the new management and, therefore, cannot be said to have been sold in haste or with mala fide intention. He has stated that Mr. Naresh Kaushik was authorised on behalf "E" Company and Mr. Pawan Nagpal on behalf of the "G" Company. He has then stated that the sale proceeds were utilized by the company to settle the claims of the creditors/depositors. He has stated that "G" Company sold the suit property to "K" Company for consideration of Rs. 4.30 crores after due publication of public notice in local newspapers and necessary enquiry. He has prayed for taking sympathetic view and accept unconditional apology. 17. Mr. Anant Narayan, ex-director of "E" company has filed his affidavit dated 9-1-2009. He has sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose. They disclosed that they would like to resell the property as and when opportunity comes. He has stated that he informed "G" company since he came across prospective buyer. "G" Company, accordingly, instructed him to complete the transaction. As a result, he got the deal completed and signed the documents as witness. He asserts that his act was bona fide without knowledge of any court proceedings in respect of suit property. 19. As aforesaid, Mr. R.N. Pareek, Advocate, who was associated with the "E" Company, has also filed his personal affidavit. He has stated that he was retained as advocate at Delhi on 8-12-1999 by Mr.Rajeev Khandelwal to attend legal matters of M/s. Euro Cotspin Ltd. which is situated at Punjab. In May, 2000, he was requested to help in appointing advocate for the "E" Company at Bombay in relation to some arbitration matter. In that connection, he visited Mumbai when he was introduced to Mr. Girin Pandit, Advocate. He has stated that he was constantly in touch with Mr. Pandit to co-ordinate with some senior counsel and to attend arbitration proceedings at Chembur and regarding bank recovery proceedings and pending cases of 138 N.I. Act at Bombay. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that one Mr.Parida in the Bombay Office of the "E" Company used to give him instructions on behalf of "E" Company. He has stated that he was not aware about the whereabouts of Mr.Khandelwal and even Mr. Parida, who was the only person attending office at Amarchand Mansion. He was unaware about his whereabouts. On that count, he thought it appropriate to withdraw from the matter and return the papers. He has stated that as per his recollection, he had handed over papers of the proceedings of the company to Mr. R.N. Pareek who had visited his office along with Mr. Parida sometime in November-December of 2004. He has also stated that the said person had also brought a Vakalatnama on which he had put endorsement as "no objection" for engaging any other lawyer in his place and since then he is not representing the Company. He has stated that he had twice deputed his junior to attend the proceedings before the Chairman of the Committee and to inform that his office has no instruction from the Company and would want to withdraw from the matter. 21. Another advocate Ms. Annie Fernandes, who represented "E" Company before the Chairman of the Committee has filed her affidavit dated 5-12- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred by the "E" Company notwithstanding the scheme sanctioned by this Court. 23. Besides the above affidavits, Mr. Pravin Bhatt, ex-director of "G" Company has filed his affidavit dated 10-4-2009. He has stated that he came to know about present proceedings through Mr. Arun Gupta on the basis of notice published in local newspaper. He has stated that he was Director of "G" Company between 20-11-2006 and 6-8-2007 when he resigned. He has stated that "G" Company purchased the suit property as bona fide purchaser by registered sale deed from "E" Company for consideration of Rs. 75 lakhs only after due confirmation from relevant revenue record that there were no charge, endorsement, lien, seizure and injunction from any competent authority. He has stated that he had no personal knowledge of pendency of any court proceedings in respect of the suit property. According to him, buying of the suit property by "G" Company is absolutely bona fide and normal business transaction. There was no intention to disobey and violate orders of the Court. 24. Mr. Arun Gupta, another ex-director of "G" Company has filed his affidavit dated 10-4-2009. He has more or less reiterated the stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany had installed a board on the suit property indicating that the possession thereof was that of "K" Company. It is stated that "K" Company has no concern with the dealing between "E" Company and "G" Company. Moreover, it proceeded to purchase the suit property only after making proper enquiries. It is stated that the direction sought by the Chairman that the conveyance between the "K" Company and "G" Company be declared as null and void was untenable in the facts of the present case. In the second affidavit dated 5-1-2009 disclosure is made about persons with whom Company interacted before culmination of registered conveyance deed. It is stated that as "K" Company was looking forward to a suitable property to shift its manufacturing facility of Aromatic Chemicals from Mulund to the suitable location near to its new fragrance manufacturing facility at Vashivali, had deputed its Manager Mr. Vilas Keshav Wakade from 16-8-2006 with specific responsibility to locate land with building. The said Mr.Wakade amongst other located the suit property. In the month of December, 2006, he introduced one Mr. Raju Shinde of Om Chemicals who in turn recommended the suit property. Thereafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the "E" Company passed board resolution on 28-8-2006, wherein an approval of board was accorded to conduct a postal ballot to seek approval of the members of the Company to sell, transfer, dispose of the suit property. The said resolution was minuted and certified by Mr. Ajay Naithani, who was then a Director of "E" Company. The said Mr.Naithani later on expired on 4-3-2007. The contents of the resolution are spelt out in this affidavit. It is stated that the said resolution was passed by the Company after a period of 12 weeks provided under the Court s Order dated 12-2-2004 had expired. Further, the Committee did not comply with the directions nor the Chairman sought extension of time from the Court. Moreover, the Board of "E" Company was although aware of the order dated 12-2-2004, made no mention thereof in the resolution nor does it seem to have informed the Committee of this decision. Reference is then made to the certified true copy of another Board resolution filed by Mr. Deepak Arora of "E" Company dated 18-11-2006, which authorised Mr. Naresh Kaushik to deal with the suit property. It is stated that Mr. Deepak Arora still continues to be a Director of the "E" Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Road near to its Fragrance Manufacturing Unit at Khalapur to shift the unit of Mulund. He has corroborated facts stated in the affidavit of Ramesh Vaze as to how the site of the suit property was identified and finalised. He has stated that he has visited the site along with Mr. Raju Shinde and Mr.Naik, Project In-charge of Vashivali Plant, Patalganga. He has stated that the legal advisor of "K" Company M/s. S.S. Tamhane Co. gave opinion, on the basis of which decision was taken to go ahead with the purchase of the suit property. He has stated that he was present at the time of execution of the conveyance deed. 29. The said Mr. Raju Shinde associated as Broker during the transaction between "G" Company and "K" Company in his affidavit has stated that he was having business relations with "K" Company and was doing part-time business in property. He has stated that he knew Mr. Wakade , Mr. Kokje, Mr. Kedar Vaze and Mr. Giresh Vaze of "K" Company. He has stated that in October, 2006, Mr. Wakade had discussed with him about requirement of suitable land along with structure thereon. Further, he was frequently visiting Patalganga, Khalapur, Pen-Khopoli Road for purchasing of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To buttress this submission, reliance is placed on the decision of the Division Bench of our High Court in the case of Keshrimal Jivji Shah v. Bank of Maharashtra 2004 (3) Mh.L.J. 893 and Surjit Singh v. Harbans Singh AIR 1996 SC 135. It was argued that the order passed by the Company Judge on 12-2-2004 is in fact a judicial pronouncement and in the nature of direction to deal with the property in the manner provided for in the said order and in no other manner. It is further submitted that the scope of powers under sections 391 and 392 of the Act are wide enough and it is the duty of the Court to continuously supervise the implementation of the scheme till it is finally executed. In support of the above submission, reliance is placed on the decision in the case of Krishna Nath Sen v. Dinajpur Loan Office Ltd. AIR 1938 Cal. 337 and of the Supreme Court in the case of S.K. Gupta v. K.P. Jain [1979] 3 SCC 54. It was argued that "E" Company could not have passed resolution to evoke consent of the members of the Company to sell or transfer the suit property by postal ballot as the Company was not listed on stock-exchange at the relevant time. Moreover, no resolution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certified copy of the order in terms of section 391(4). There is no statement that this compliance was not done by the Management at the relevant time. It is unfathomable that no such record was noticed by the new set of Directors. As a matter of fact, the totality of circumstances would suggest that the suit property was transferred clandestinely so that the claim of the unsecured creditors would be defeated and delayed. It is submitted that if totality of circumstances are taken into account, it would appear that the transaction entered into by "K" Company was not a case of due diligence. Moreover, it has been done contrary to and in violation of the order of the Court, both dated 12-2-2004 as well as the attachment order passed by the Executing Court. As a matter of fact, the Executing Court had ordered public auction of the suit property after its attachment and that the directions stood merged in the order passed by the Company Judge on 12-2-2004 considering the reliefs claimed in the applications, which were disposed of by that order. 32. Counsel for the "E" Company reiterated the stand taken in the affidavit filed by the Directors that there was change of management and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court directed to sell the suit property within 12 weeks from the date of the order. No steps were taken by the Committee to effectuate the said directions even after expiry of 12 weeks and much less even issuance of public notice as was directed nor applied for extension of time for sale. Moreover, "K" Company before finally executing conveyance deed in respect of suit property had taken all precaution such as issuance of public notice, inspection of revenue record to reassure that no claim whatsoever was pending in respect of the suit property. It is only after reassuring that no such claim was pending, conveyance was executed. The order only authorises the Committee to act in a particular manner. The Committee having failed to take those steps, the innocent purchaser of the suit property in good faith for consideration without notice to "K" Company cannot be blamed. It is submitted that as a matter of fact, the argument canvassed on behalf of the unsecured creditors that the transaction was in violation of the injunction/prohibitory order, cannot be countenanced. In that, the orders referred to by the unsecured creditors are neither in the nature of order of injunction or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f not only attaching the suit property but also ordering public auction thereof on the specified date. Considering the grievance which was raised at the relevant time by the "E" Company as well as its unsecured creditors, the said order came to be passed. It is noticed that the order of attachment passed by the Executing Court in respect of the property in question also merged in the order passed by this Court. As aforesaid, the said order issued peremptory directions about the manner in which the suit property should be disposed of and the sale proceeds thereof to be appropriated. It is obviously a judicial pronouncement on matters referred to in the said order. 36. The question as to what is the scope of power of the Company Court while exercising jurisdiction under sections 391 and 392 of the Act is no more res integra. The Apex Court in S.K. Gupta s case ( supra ) had occasion to observe, while interpreting the said provisions which are in pari materia with the provisions occurring in the U.K. Act. The Apex Court went on to observe that the Parliament has, in its wisdom, conferred a power of wide amplitude on the High Court in India to provide for its continuous super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty. Such order issuing peremptory directions to the parties cannot be wished away on the specious argument that it is neither an order of injunction nor prohibitory order, as such. The order clearly requires the "E" Company to deal with the suit property only in the manner provided therein and to apportion the sale proceeds as per the said order. It was not less than an order of injunction or a prohibitory order, which expects the party not to do a thing specified in the order. The order requiring the parties to do a thing in a particular manner, treating the same as order of injunction and the parties are bound to obey the same unless modified, varied or set aside by the Court of law. 38. The next question is in the face of the said order dated 12-2-2004 whether the suit property can be said to have been validly disposed of by "E" Company in favour of the "G" Company. In view of the finding already recorded, the answer to this question has become obvious keeping in mind the dictum of the Apex Court in the case of Surjit Singh ( supra ) and that of the Division Bench of our High Court in the case of Keshrimal Jivji Shah ( supra ). The Apex Court in the case of Surjit S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int order does not make the right, title and interest in the immovable property but only restrains allocation and disposal thereof. That would not prevent the party against whom restraint order was passed to transfer his rights in favour of third party and more so, when the party was holding only a leasehold right and the property belonged to the Authority CIDCO, who had given prior concurrence to the transfer. It was also the case of the Petitioners that no lis pendence was registered and that the Petitioners therein had taken all precautions before purchasing the rights and it was not a case where petitioners colluded with the Respondent No. 2. It was contended that considering the fact that injunction is in personem and not in rem , the same cannot affect the rights acquired by the Petitioners in good faith for consideration. Moreover, when the title is already passed on, in such a case, the Tax Recovery Officer cannot precipitate the matter until title issue is finally concluded in a civil suit. This and similar arguments have been rejected by the Division Bench of our High Court relying on the exposition in the case of Surjit Singh ( supra ) and decisions in Ramch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s quo was clearly illegal and all actions including the grant of sub-lease and all actions founded on such sub-lease. 40. On analysing these decisions, the Division Bench of our High Court has opined that act done in defiance of injunction order will have to be denuded on the pedestal of public policy. Considering thus, the very faith of litigants in Rule of Law and administration of justice, the argument canvassed to defend right passed on in favour of the third party cannot be countenanced. If such arguments were to be accepted, it would result in nullifying the efficacy of the injunction order or prohibitory order. It would also mean that the parties can breach and violate Court orders openly and with impunity and neither they nor the beneficiaries would suffer any consequences therefor. The Court then went on to observe that it is time that the Court affirms the principle that transfer of immovable property in violation of an order of injunction or prohibition issued by the Court of law, would confer no right, title or interest in the transferee, as it is no transfer at all. The transferee cannot be allowed to reap advantage or benefit from such transfer merely because he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuting Court which issued order of attachment and order of sale of the suit property. In fact, at the instance of "E" Company, this Court issued peremptory direction of selling the suit property in the manner specified and, thereafter, to disburse the sale proceeds as provided in the order. Both the orders of attachment issued by the Civil Court in execution as well as by the Company Court while modifying the scheme under section 391 pertain to the suit property and was passed against "E" Company, who was party to the respective proceedings and both these orders were in force. In the wake of those orders, it was not open to "E" Company to transfer the suit property to third party in the manner other than the one stipulated by the Court and that too without seeking prior permission of the Court in that behalf. Thus understood, the transfer of suit property by "E" Company in favour of "G" Company was illegal and cannot be recognised in law. As a concomitant of this finding, it follows that "G" Company had no valid title nor it had acquired any right, title and interest in the suit property, what so ever in law. If so, "G" Company could not have validly transferred the suit property t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether "K" Company can proceed against the "G" Company or for that matter "E" Company for reliefs, as may be available to them in law. That is a matter, which will have to be adjudicated in appropriate proceedings, if resorted to by "K" Company. 44. The stand taken on behalf of the two companies ( i.e., "G" Company and "K" Company) that they had no knowledge about the pendency of any proceedings in relation to the suit property or for that matter, of order of Court of law will be of no avail to answer the controversy in issue. To get over this position, the Counsel for "K" Company had vehemently argued that from the record it is more than evident that "K" Company is itself a victim of fraud committed by the Directors of "E" Company and "G" Company. Besides, "K" Company is purchaser in good faith for consideration. It has taken all precautions that were necessary before executing conveyance deed in its favour. They have gone to the extent of contending that as a matter of fact, the order passed by this Court on 12-2-2004 had worked out on expiry of 12 weeks and, thereafter, nothing prevented the "E" Company to deal with the property in appropriate manner. According to the Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made." This section is part of Chapter-II of the Act. Chapter-II, inter alia, deals with transfer of different types. Indeed, one such transfer is a fraudulent transfer envisaged in section 53 of Chapter-II. Significantly, the third clause of sub-section (1) provides that nothing in the said sub-section shall affect any law for the time being in force relating to insolvency. In broad sense, transfer in violation of a judicial pronouncement can be termed as a fraudulent transfer. However, considering the settled legal position, the defence of section 53 will be of no avail in cases where the transfer is effected in breach of a judicial pronouncement. In the latter cases, the doctrine expounded by the Apex Court and, consistently, followed is that if the transfer is in violation of the order of the Court, the same is no transfer in the eye of law. It is enough to show that the transferor was party to the order of the Court and that the said order was in operation when the transfer was effect by him. No other enquiry would be necessary. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds. The Court noticed that in the mortgage suit an order by consent was passed for sale of the mortgaged properties by the liquidators reserving the contention of all the parties. The Plaintiff, however, claimed that by virtue of the document of charge to pay the amount of Rs. 20,000 secured thereby in priority to the claim of the second mortgages, contending further that as the latter failed to appeal against the decision of the District Judge, they were estopped from disputing the same. The Court was not called upon to consider the question as in this case, as to whether the transfer of suit property was illegal being in violation of the order of the Court and further about the consequence of such order on the efficacy of the transfer though effected by registered conveyance deed. 48. The next question is: whether the explanation offered by the Commissioner of Committee appointed by the Court regarding his inaction is plausible and can be accepted as just explanation. There is no doubt that the present situation has resulted on account of the inaction of the Commissioner. If he had acted with despatch after the order dated 12-2-2004, the present situation was obvio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant Narayan, Ajay Kumar Naithani, Deepak Arora, Harshmani Pant and Anand Bhist. Insofar as Anant Narayan and Anand Bhist are concerned, they have appeared in the present proceedings and have filed their respective affidavits. Rajeev Khandelwal has neither appeared nor bothered to file any response. From the affidavit filed by Mr. Ramesh Vaze, it transpires that Mr.Rajeev Khandelwal was the central figure, who was involved in the negotiations with "K" Company, presumably projecting himself to be the director of "G" Company. At the same time, the new directors of "E" Company have asserted that when the Management was transferred, no disclosure was made about the pending proceedings or the order of the Court in relation to the suit property. It is possible that Mr. Rajeev Khandelwal had not disclosed that position. It is also possible that new management must have entered the deal fully aware of the prevailing position. They may have indulged in speculation. For, it has been stated on affidavit that the Company was not functioning at all since 2000. The purpose of taking over the management by the new directors was obviously to encash the immovable properties of the Company. Moreover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspiracy so as to act in breach of the order of this Court to encash the property of the "E" Company and also to defeat the claim and rights of the creditors of that Company. In the peculiar facts of the present case, it is appropriate to direct initiation of criminal action against all the erring persons who were directly or indirectly concerned with the transaction in question, which was intended to overreach the orders of the Court of Law and to defeat the claim of the Creditors. In my considered opinion, in not resorting to criminal action against the erring persons in spite of such a finding would be abdicating the powers and duty of the Court to take the matter to its logical end. 50. The last and most important aspect to be answered is the nature of order that ought to be passed. It is noticed that the Directors, former or present of "E" Company, are primarily responsible for the present situation. It is also noticed that although "E" Company transferred the suit property in favour of the "G" Company, an independent entity, it was a collusive act with purpose. In other words, although they are two different entities, the persons acting behind the scene namely, the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch with the rate of escalation of property price. Moreover, since transactions between the "E" Company and "G" Company and, thereafter, between "G" Company and "K" Company is the product of fraud, the said two Companies being beneficiaries thereof would be obliged to bring back the amount with interest, which should deter them and other litigants from indulging in such illegalities which shakes the confidence of the litigating public and impinges upon the rule of law. In my considered opinion, following order will meet the ends of justice. ORDER ( i )Both "E" Company and "G" Company will have to bring back the stated amount of Rs. 75 lakhs and Rs. 3.55 crores respectively (aggregate amount of Rs. 4.30 crores) along with interest at the rate of 18 per cent per annum to be computed from the dates referred to in Paragraph 50 above. The principal amount as well as interest amount shall be deposited within four weeks from today. If the said amount is deposited in time, the same will be made over to "K" Company. Thereafter, "K" Company would be free to avail of the amount so deposited without prejudice to its rights and contentions and remedy for recovery of loss and damages again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said proceedings will be decided on its own merits. ( iv )In addition, if the direction contained in clause ( i ) is not complied by "E" Company and/or "G" Company in whole or in part, all the assets of the concerned Company would stand attached under this order, so that the same can be realised and distributed amongst the unsecured creditors of E Company as per the scheme, to the extent of aggregate amount of Rs. 4.30 crores along with interest accrued thereon referred to in clause ( i ) above after deducting the residuary amount of the sale proceeds recovered from the sale of the property in question of the "E" Company left after setting apart Rs. 4.30 crores for "K" Company as per clause ( iii ) above. This will be without prejudice to the rights of the unsecured creditors to proceed against the Directors of "E" Company and/or "G" Company or against either of the two companies for appropriate reliefs, as may be advised. Those proceedings will be decided on its own merits. In the event any further amount is still available for distribution out of the sale proceeds of the property of the "E" Company and/or "G" Company, the Company Registrar shall submit his report for appr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
