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TMI Blog2012 (6) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... ase deed also appears to be contrary to section 531A of the Act. The transaction between the Lessor and Lessee is tainted with element of dishonesty. Company Application is dismissed. - C.A.NO. 237 OF 2011 IN COP NO. 166 OF 2001 - - - Dated:- 14-7-2011 - B. MANOHAR, J. Deepak for the Applicant. K.S. Mahadevan and V. Jayaram for the Respondent. ORDER 1. This company application is filed under Rules 6 and 9 of Companies (Court) Rules 1959 seeking permission of this Court to the applicant to create charge over the Lease Hold rights of the property in favour of M/s. ICICI Bank Limited. 2. The applicant is an educational society registered under the Societies Registration Act, 1960. The main object of the applicant-Society is to impart education to the needy in the Rural parts of the Karnataka State. Besides imparting education, it is also providing consultancy and advisory service to the Government and Semi-Government" undertakings such as P T, KMF, Harihara Municipality and etc. As per the Memorandum of Association of the applicant-Society, all income, earnings movable and immovable property of the society, howsoever derived shall be solely utilis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the registered lease agreement entered into between the Mysore Kirloskar Limited and the applicant-Society, AICTE by its order dated 14-7-2010 granted recognition to the applicant-Society to run Kirloskar Institute of Advanced Management Studies it Yanthrapura Post Harihar Taluk, Davanagere District with the intake of 120 students for the academic year 2010-2011 subject to fulfilment of certain conditions. The applicant further submits that eversince its inception, they have been providing quality education for the Management students and it is fully residential institution providing hostel facility for all the students. Due to the quality education, non-profit nature of the Institution, hostel facility and the secured atmosphere for both male and female students, it has attracted large number of students all over the country. Besides education, the students of the applicant-Society are provided facilities for co-curricular activities like seminar, conference, paper writing and extra curricular activities like sports, recreation etc. Further, institution has a proud placement of record of nearly 100 per cent every year in the various prestigious companies in the country. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, K.S. Mahadevan, advocate appearing for the Official Liquidator inter alia contended that lease executed in favour of the applicant-society is contrary to sections 531 and 531(A) of the Companies Act, 1956. The Mysore Kirloskar Limited has been wound up in Co.P. No. 166/2001 on 1-4-2004. The Official Liquidator has taken charge of the Company. The Management of the company has executed the lease deed in respect of 6 acres 29 guntas of land for a period of 28 years on a monthly rent of Rs. 1,250. As per section 531 of the Companies Act, transfer of any movable or immovable of the Company within six months before the commencement of winding up which, had it been made, taken or done by or against the individual within three months before the presentation of an insolvency petition or which is adjudged as an insolvent, would be deemed in his insolvency a fraudulence preference, shall in the event of company being winding up, be deemed a fraudulent preference, of his creditor or invalid accordingly. Section 531(A) contemplates that transfer of any movable or immovable made within a period of one year before the presentation of a petition for winding up by or subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Official Liquidator further submits that the applicant-society on an earlier occasion approached this Court in C.A. No. 413/2005 and sought for stay of the sale proceedings of the properties of the Mysore Kirloskar Limited on the apprehension that they have auctioned the properties including the leasehold property held by the applicant. They also made alternative prayer to permit the applicant to bid and buy the land. On the submission of the Official Liquidator, the said company application was dismissed reserving liberty to the applicant to bid as and when the properties which are in occupation of the applicant-society are being sold in public auction, Thereafter, the applicant filed one more C.A. No. 188/2008 seeking direction to the Official Liquidator to sell the leasehold property in favour of the applicant and the applicant may be permitted to purchase the said property. This Court by its order dated 30-9-2008 dismissed the said application. Being aggrieved by the order made in CA. No. 188/2008, the applicant filed O.S.A. No.27/2008. The Division Bench of this Court by its order dated 28-1-2009 dismissed the said appeal observing that as and when the land under occupatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial and other general disciplines and also other specialized educational and vocational courses and also imparting education to the candidates in plants, workshops, factories, mills and other organizations. The applicant-Society was established for fulfilment of the said objectives. The Institution is a non-profit making organisation. Income-tax Department has also given exemption under section 12 of the Act. In order to expand the educational activities and also to establish administrative building, college building and hostel to the students, they approached ICICI Bank for financial assistance. The financial institution agreed to give the financial assistance. Since the owner of the land i.e., Mysore Kirloskar Limited has been wound up by the order of this Court, the Bank insisted for permission of the Company Court to mortgage the said Leasehold property. In view of that, they have filed this application. Further, it is also contended that the sections 531 and 531(A) of the Companies Act are not applicable. Section 531 of the Companies Act treats certain transactions as invalid and section 532 treats another category of transfers as void and section 531(A) stands in bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany-in-liquidation and the applicant-society was not in ordinary course of business, the encumbrance is not on good faith. Before initiating winding up proceedings, the statutory notice would have been issued to the Companies, then only winding up proceedings would be initiated. It appears to me that after issuing statutory notice the lease agreement was entered into between the applicant-Society and the Company-in-liquidation. Some clauses in the lease agreement are also prejudicial to the interest of creditors, workers and contributors of the company-in-liquidation, 6 acres 29 guntas of land is being leased to the applicant-society for a period of 28 years and the rent for the entire 28 years is only Rs. 2,84,000. After expiry of lease period, the applicant becomes the absolute owner of the said property. Apart from that, on an earlier occasion, the applicant-society approached this Court in C.A. No. 413/2005 challenging the auctioning of the property of the Company in liquidation on the apprehension that the Leasehold properties, which are in occupation of the applicant, were also auctioned. A prayer was also made to sell 6 acres 29 guntas of land in favour of them. The said c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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