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TMI Blog2010 (2) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... eration of ₹ 3,34,000 and ₹ 4,82,000 with respect to the same 1.57 acres of land are also void against the official liquidator. - COMPANY PETITION NO. 7 OF 1998 - - - Dated:- 19-2-2010 - RAMESH KUMAR DATTA, J. U.P. Singh, R.A. Singh, Shrinandhan Pd. Singh, Ashok Kumar and Subhash Chandra Mishra for the other Parties. Arvind Shula , for the Official Liquidator. JUDGMENT Ramesh Kumar Datta J. Heard the official liquidator and learned counsels for the Ranjan brothers, Daya Builders, Sunita Singh and Shashank Shekhar. 2. By the aforesaid report dated December 2, 2008, the official liquidator pointed out that certain sale deeds had been executed in favour of the land holders of Khata No. 870, Plot No. 119 ad measuring 1.57 acres situated at village Baiju Bigha, Tola, Bhagwanpur Utalke, Mouza, Bodh Gaya, Thana No. 359, District Gaya in favour of Daya Builders and Properties P. Ltd., through the director, Sri Sanjay Sahay, ( ii ) Shashank Shekhar, and ( iii ) Sunita Singh, which ought to be declared as null and void being in violation of the provisions of sections 531A and 536 of the Companies Act, 1956 and prayed for the same to be declared a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Pursuant to the notices issued earlier, Smt. Sunita Singh and Shri Shashank Shekhar (minor) through Shri Rabindra Kumar Singh, his father and natural guardian, also appeared and filed I.A. No. 3436 of 2009. In the said interlocutory application the factum of purchase of the aforesaid land by the company and its subsequent sale to Ranjan brothers was stated and further that they also sold 18.36 decimals to petitioner No. 1 Smt. Sunita Singh and 25.51 decimals of land to petitioner No. 2, Shri Shashank Shekhar on September 16, 2002 for Rs. 3,47,000 and Rs. 4,82,000 respectively out of 1.57 acres of land under two registered sale deeds and received payments through bank drafts. Similar stand was taken as that of M/s. Daya Builders and Properties P. Ltd., by these two applicants also. 7. The three Ranjan brothers also appeared and filed their I.A. No. 7147 of 2009 stating the fact regarding purchases made by the company, the purchase of land by them from the company and subsequent sale to M/s. Daya Builders and Properties P. Ltd., Sunita Singh and Shri Shashank Shekhar, for the same amounts as mentioned in the earlier interlocutory applications of the subsequent purchasers. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idator. It is alleged that there is a very heavy burden upon the official liquidator to prove that the transaction was for the purpose of defrauding the creditors, otherwise the presumption is regarding genuineness of the documents. It is contended that in the present matter the official liquidator has not discharged the said onus that the transfer was not made in the ordinary course of business of company and that the same was not voidable or lacked in bona fide s or was fraudulent in the sense that it was meant to defraud the creditors. 11. Learned counsel relies upon the provisions of sections 91 and 92 of the Indian Evidence Act, 1872, for the proposition that in the case of a written document relating to disposition of property, the document alone is the proof of the disposition and no oral evidence regarding its contents or for the purpose of contradicting, varying, adding to or subtracting from its terms is permissible. It is thus submitted that the sale deeds, copies of which have been placed on the record, are evidence of the bona fide s of the transactions between the company in liquidation and the purchasers and subsequent purchasers and it is not at all possible t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 36 Comp Cas 888, and upon a decision of the Chancery Division in the case of Burton and Deakin Ltd., In re [1977] 1 All ER 631, at page 637 of which it has been held as follows : "Taking all these considerations into account and in the absence of any authority demonstrating the contrary, I thus reach these conclusions on the question of principle raised by the present application : If on an application under section 227 relating to a solvent company, ( a ) evidence is placed before the court showing that the directors consider that a particular disposition falling within their powers under the company's constitution is necessary or expedient in the interests of the company, and ( b ) the reasons given for this opinion are reasons which the court considers that an intelligent and honest man could reasonably hold, it will in the exercise of its discretion normally sanction the disposition notwithstanding the opposition of a contributory, unless the contributory adduces compelling evidence proving that the disposition is in fact likely to injure the company. A fortiori in my judgment the court will be inclined to exercise its discretion in this manner in a case such as the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly fall to the ground. 17. It is alleged by the official liquidator that a sale of land not being within the objects which the company could carry out in the normal course of its business, the sale would be hit by the doctrine of ultra vires under which it is ultra vires for the company to act beyond the scope of its memorandum of association and any attempted departure will be invalid and cannot be validated even if assented to by all the members of the company. It is alleged by him that any act or transaction of a company which is not within the objects of the memorandum of association is ultra vires as the same is beyond the company's powers even though a transaction may not be illegal. The memorandum of association is the area beyond which the company cannot travel. The said proposition was laid down by the House of Lords in Ashbury Railway Carriages and Iron Co. v. Riche [1875] LR 7 HL 653, which has been approved by the Supreme Court in the case of Dr. A. Lakshmanaswami Mudaliar v. Life Insurance Corporation of India [1963] 33 Comp Cas 420 ; AIR 1963 SC 1185, wherein it was held that an act of the company outside the object mentioned in the memorandum of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. Further, the main objects of the company as enumerated in its memorandum of association are mentioned in the following terms : "1.To carry on the business of finance for houses, building, factories, construction including the purchase of land. 2.To develop and introduce amongst the human the habit of thrift by issue of small saving scheme which shall not amount to business of banking as per the Banking Regulation Act nor company shall carry on business of price or chit or money circulation scheme unless otherwise permitted under the law of land. 3.To build, take on lease, purchase or acquire in any manner whatsoever any apartments, houses, flats, rooms, huts or other accommodation for men or animals and to let or dispose of the same on instalment basis, rent, purchase basis or by outright sale whether by private treaty or by auction, or in any other mode of disposition all or any integral part thereof. To purchase or otherwise acquire, issue, reissue, sell, place, underwrite and deal in shares, stocks, bonds, debentures and security of all kinds. To lend money or discount bills or indemnify or guarantee payment of money or amalgamate with other companies with similar or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the purchasers, that sale of plots would also include sale of the underlying land, has to be noticed to be rejected as the same is not borne out from the provisions of the Transfer of Property Act, 1882, under which the owner of the land may not necessarily be the owner of its superstructure. It is only for the first time after the enactment of the Bihar Apartments Ownership Act, 2004, subsequently repealed by and reenacted in the Act of 2006 that the right to ownership of underlying land of the building has been created by the said statute. In any case the said enactment was nowhere in existence in the year 1998 when the company sold the land and in any view of the matter the sale of an apartment with the proportionate share in the land is not the same thing as the sale and purchase of land. 26. So far as the submission of learned counsel for the purchasers and subsequent purchasers, that they are bona fide purchasers of the land, is concerned the same cannot be of much assistance to them in view of the specific provision of section 531A of the Companies Act, 1956, which is in the following terms : "531A. Avoidance of voluntary transfer. Any transfer of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by section 531A of the Act. The rule of ultra vires as laid down by the House of Lords in Ashbury Railway Carriages and Iron Co. case [1875] LR 7 HL 653, has been quoted with approval by the apex court in Dr. A. Lakshmanaswami Mudaliar's case [1963] 33 Comp Cas 420 ; AIR 1963 SC 1185, in paragraph 12 in the following terms (page 430) : "A company is competent to carry out its objects specified in the memorandum of association and cannot travel beyond the objects. The objects of the company are set out in clause III. By the first sub-clause the company is authorised to carry on life insurance business in all its branches and all kinds of indemnity and guarantee business and for that purpose to enter into and carry into effect all contracts and arrangements. By sub-clause ( ii ) the company is authorised 'to invest and deal with funds and assets of the company upon such securities or investments and in such manner as may from time to time be fixed by the articles of association of the company'. Sub-clauses ( iii ) and ( iv ) are not material for the purposes of this appeal. By sub-clause ( v ) the company is authorised to do 'all such other things as are incidental or cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution and 2 months before the filing of the winding up petition, the transaction of sale has been made in favour of Ranjan brothers for an amount of Rs. 4 lakhs only. The same piece of land has been sold by Ranjan brothers four and half years later for nearly seven and half times the price at which had been able to get the land from the company. The submission of learned counsels for the purchasers and subsequent purchasers that the increase in the value was mainly due to the declaration of Bodh Gaya as a World Heritage site by the UNESCO cannot be so lightly accepted. Bodh Gaya has been a place of national tourist interest for a very long period of time and the development activities therein have been going on on a continuous basis. Thus the submission cannot be accepted that the declaration of World Heritage in 2002, will lead to escalation of land prices by seven times. 31. Moreover, it is evident from a consideration of the winding up petition that it has been filed under the circumstances that the company which had a share capital of Rs. 2,32,000 incurred loss to the extent of Rs, 2,34,33,810.95 and further loss of Rs. 43,42,674.80 till March 31, 1998. The unsec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any benefit of the order dated May 3, 2007, passed by this court in the case of Smt. Shakun Kedia as the aforesaid aspects of the matter had not been placed before this court regarding the inherent lack of power of the company to enter into such transaction nor is there any discussion in the said order regarding the price on which the land was sold to Smt. Shakun Kedia being much below the prevailing price as per any subsequent sale of the land. The said order appears to have been passed on account of the failure of the official liquidator to point out the relevant facts to this court, particularly the absence of any such power of purchase and sale of land in the memorandum of association. 36. Thus, in the light of the aforesaid discussions, this court is of the view that the sale deeds dated January 29, 1998, with respect to 1.57 acres of land sold by the company to S/Shri Rajani Ranjan, Priya Ranjan and Prabhat Ranjan for a sum of Rs. 4 lakhs bearing Plot No. 119, Khata No. 870 situated at Tola Bhagwanpur, Mauza, Bodh Gaya, Thana No. 359, District, Gaya being contrary to the provisions of section 531A of the Act, is fit to be declared void and is accordingly declared as v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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