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TMI Blog2012 (6) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... in the aforesaid perspective other arguments of the appellants stand automatically answered. We may also place on record that one of the appellants, viz., Akhilesh Gupta, even conceded that he had not revoked the MoU by virtue of which shares had been transferred to the propounders. It is more so when the appellants have been given liberty to challenge the factum of share transfer agreement prior to second motion. - Decided against the appellant with cost. - Co. App. Nos. 6 to 11 of 2012 - - - Dated:- 1-5-2012 - A.K. Sikri, Rajiv Sahai Endlaw, JJ. T.K. Ganju, A.K. Thakur and Aditya Ganju for the Appellant. Abhinav Vashist, Ms. Prema Priyadarshini and Rajiv Bahl for the Respondent. JUDGMENT A.K. Sikri, Actg. CJ. The respondent Bharat Carpets Ltd. (hereinafter referred to as 'the company') is a company under liquidation. Provisional winding up order was passed on 23.8.1984 in CP No.50 of 1984 and final winding up order was passed on 18.5.1987. Official Liquidator was appointed who has seized all the assets and records of the company. Liquidation proceedings are still pending. There have been certain attempts to revive/rehabilitate the company and scheme unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly, the transfer took place after commencement of the winding up, sub-Section (2) of Section 536 states that such a transfer of share is void. In case, the transfer is made after the winding up orders passed by the Court, then it can only be validated by the Court. It means that the transfer is treated as void but the Court which has passed the winding up order has given the power to validate the transfer. 2. The erstwhile shareholders (appellants herein) were put to notice of the filing of that application. Official Liquidator also entered appearance in the proceedings. As far as OL is concerned, he filed his reply affidavit inter alia stating that every document annexed with the application with regard to the purchase of the equity shares of the propounder of the scheme appeared to be legal and proper fulfilling the mandatory requirement of transfer and purchase of equity shares. He also stated that the Court had the power to valid the transfer of shares in favour of the propounders. The appellants, however, objected to the relief claimed by the propounders. The learned Single Judge examined the ambit and scope of Section 536(2) of the Act. The company Court referred to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted after passing of the winding up order, but the said discretion is not an untrammeled one, as it has to be exercised on sound judicial principles. The Court has to keep in view all surrounding circumstances and if it finds that same is a bona fide transaction for the benefit of the company, then the same should be validated. While doing so, the Company Court also must be satisfied that there was clear intent on the part of the purchasers to transfer the shares in question. It was not necessary to obtain prior sanction of the Company Court before execution of an agreement to sale and post facto sanction could be granted. The Company Judge has also referred to Chapter VII of the SEBI (Delisting of Equity Shares) Regulations, 2009 (for short 'SEBI Regulations, 2009') which states that in case of small and delisted companies where winding up proceedings are pending, its shares shall be dealt with in accordance with law applicable to those proceedings. Regulations 27(1) and 28(1) of the SEBI Regulations, 2009 are reproduced herein below:- "Special Provisions in case of small companies 27. (1) Where a company has paid up capital upto one crores rupees and its equity shares were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations were supported by affidavits as well. Even MoU dated 10.3.2006 categorically stated that these appellants had consented to sell their share on consideration of percentage of face value in favour of the propounders and receipt was also executed having received the amount. Subsequent to the execution of these MoUs, the propounders after acquiring the share settled the dispute with all the secured creditors, viz., HFC and UCO bank by entering into one time settlement with them. A sum of Rs. 183 lacs was paid to UCO Bank by the propounders. Thereafter, the propounders even invited claims from unsecured creditors and agreed to repay the amounts to the said unsecured creditors with 10% simple interest till the date of winding up order and thereafter at the rate of 5% simple interest till the date of repayment. It is only after the debts of secured creditors had been settled that the members of Gupta family had second thoughts and they withdrew the applications filed by them with liberty to refile those applications in case they were so advised in future. Based on these facts and events, the learned Single Judge held that the appellants are stopped from contending that they had eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause of action arose within the territorial jurisdiction of the Chandigarh Court." 6. Vide impugned order, the learned Company Judge has allowed the transfer of share treating the transaction bona fide for the benefit of the company in liquidation entering the respondent Nos. 2 and 3 in the Register of Members. The permission is, however, given to the appellant to raise a dispute prior to filing a second motion petition in case they wish to challenge the factum of transfer of share agreement. On the scheme propounded by the propounders, notices were issued to the share holders and the creditors which was scheduled for 11.2.2012 which was earlier scheduled for 17.12.2011. 7. Challenging that order, the present appeals are filed which were listed for admission on 08.2.2012. However, as the counsel for the respondents appeared on caveat as well as counsel for the Official Liquidator was also present, with the consent of the counsel for the parties, arguments were finally heard on that date itself. There was no stay of the proposed meeting of shareholders and creditors and we presume that this meeting must have taken place. 8. Mr. T.K. Ganju, learned Senior counsel and Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a legislative device to make a statutory provision imperative. ** ** ** 19. Where a contact, express or implied, is expressly or by implication forbidden by statute, no court will lend its assistance to give it effect. ( See Mellis v. Shirley. L.B. A contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition. The penalty may be imposed with intent merely to deter persons from entering into the contract or for the purposes of revenue or that the contract shall not be entered into so as to be valid at law. A distinction is sometimes made between, contracts entered into with the object of committing an illegal act and contracts expressly or impliedly prohibited by statute. The distinction is that in the former class one has only to look and see that acts the statute prohibits; it does not matter whether or not it prohibits a contract; if a contract is made to do a prohibited Act, that contract will be unenforceable. In (the latter class, one has to consider what act the statute prohibits, but what contracts it prohibits. One is not conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 420. 14. Mr. Abhinav Vashist, learned Senior Counsel appeared for the respondent/propounders and Mr. Rajiv Bahl, learned counsel appeared for Official Liquidator to refute the aforesaid submissions of the appellants. We will take note of the submissions while dealing with the arguments of the appellants. 15. Insofar as arguments based on provisions of Section 108 of the Act is concerned, we do not find much force therein. No doubt, provisions of Section 108 of the Act are mandatory in nature and principle of law laid down in Mannalal Khetan ( supra ) and Sakal Papers (P.) Ltd. (supra) by the Supreme Court cannot be questioned. At the same time, we find that those cases relate to the companies which were solvent and functioning and not the companies in respect of which winding up order has been passed. When we deal with the case of a company in liquidation, the applicability of Section 108 of the Act would be meaningless. This very issue came up before this Court in the case of H.L. Seth v. Wearwell Cycle Co. (India) Ltd. [1988] 64 Comp. Cas. 497. It was held that Mannalal Khetan ( supra ) would have no application to a company which is in liquidation. We may repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons for holding that the compliance of Section 108 after the winding-up order had been made is not prerequisite for directing the registration of the transfer of shares under the orders of the court and rightly so because the Company is now under the complete supervision of the Company Court and the Official Liquidator is to manage the company under the orders of the Court. If the court in its wisdom comes to the conclusion that transfer of shares has been made between the parties validly and the said transfer shares is not going to adversely affect the public interest or the interest of the Company, there is no earthly reason why the Company Court should not declare such a transaction as valid and direct the registration of shares in the names of the transfers or their nominees in the register of the company." 16. This judgment is a complete answer to the submission of the appellant on this aspect. In the present case, what we find is that all these appellants had entered separate purchase agreement/MoU/Deed of Arrangements, etc. As per the terms of deeds/agreement, they had transferred their shareholdings in favour of the propounders. They had even accepted the payment in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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