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TMI Blog2012 (11) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... sition that such a letter would not constitute an agreement in writing for the purpose of Section 53A. The Official Liquidator is correct in his submission that Section 53A of the Transfer of Property Act has no application in the present case in the absence of any agreement in writing from which the terms of the alleged transaction is capable of being ascertained with reasonable certainty. The occupant has not made out any case for validating the alleged transfer of the said property in her favour by the Company in liquidation. The Official Liquidator is therefore directed to take physical possession of the said property for the benefit of the creditors and workers of the Company in liquidation - pending the Official Liquidator taking possession of the said property for two weeks on the request of occupant who shall not part with possession of the said property or induct any third party therein. - OFFICIAL LIQUIDATOR'S REPORT NO. 145 OF 2011 & COMPANY PETITION NO. 827 OF 2007, 327 OF 1997, 870 OF 1999 - - - Dated:- 5-9-2012 - S.J. KATHAWALLA, J. Mr. J.P. Sen for Official Liquidator. Mr. S. Malik along with Mr. Tanvir Shaikh for Mrs. Sunita V. Warkeoccupant. Mr. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted a factory building on the said plot of land for which MIDC had issued a completion certificate to HTPL. 4. MIDC on 26th March, 2008 received a letter from the occupant in her capacity as the Chief Promoter of Sairam Industrial Cooperative Society Limited (Proposed) informing MIDC that she is interested in setting up a Cooperative Industrial Society by acquiring the said property and has therefore submitted her application along with the necessary documents seeking the consent of MIDC for transfer of the said property in her favour. Along with the said letter, the occupant also forwarded to MIDC a letter dated 31st December, 2007 addressed by HTPL to MIDC inter alia stating that due to some problems HTPL is now not in a position to continue its activity on the said property and requested MIDC to grant their consent for transfer of the said property in favour of Sau Sunita Vasudeo Warke, Chief Promoter of Sairam Industrial Cooperative Society Ltd. (Proposed) . Along with the said application, the occupant also annexed the minutes of a meeting held on 20th July 2007 of the members of the Sairam Industrial Cooperative Society Ltd. (Proposed) which showed that the said societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Thereafter, IDBI Bank vide their letter dated 2nd July, 2008 furnished to the MIDC a warrant of attachment issued by the Debt Recovery Tribunal ( DRT ) in respect of the said property. IDBI Bank vide its further letter dated 14th November, 2008 informed MIDC that in the proceedings before the DRT in respect of attachment of the said property, the occupant has filed an intervention application contending that she has purchased the said plot of land from HTPL, and requested MIDC to furnish the documents pertaining to the said property. MIDC vide their letter dated 21st July, 2008 addressed to the occupant, whilst referring to letter dated 9th July, 2008 of the IDBI Bank, informed the occupant that it was not possible for the MIDC to process further her application without the decision of the DRT in Recovery Proceedings No. 212 of 2003 filed by the IDBI Bank. The Recovery Officer passed an order dated 2nd December, 2009 in favour of the occupant and IDBI Bank filed an Appeal therefrom being Appeal No. 4 of 2010. The Official Liquidator was directed by the DRT to file the status report of the said property and statement in the matter. Accordingly, the Official Liquidator filed his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction pertaining to the sale of the said property between the occupant and HTPL is honest and bona fide and the occupant has paid an amount of Rs. 30 lakhs towards sale consideration to HTPL. He has submitted that though valuation report was not obtained by the occupant, the sale price of the said plot at the relevant time was about Rs. 65 lacs. Rs. 30 lacs was paid to HTPL and an amount of approximately Rs. 27 lacs plus Rs. 7 lacs were to be paid towards transfer fee and service charge respectively. He has submitted that a transaction need merely be honest or bona fide to deserve sanction. It is submitted that the Official Liquidator has neither alleged fraud nor has he alleged that the sale is at an undervalued price. It is submitted that the Official Liquidator must plead and prove that the transaction was fraudulent before it could be treated as void under Section 536 (2) of the Act. It is submitted that since the occupant s rights have been effectually pleaded and the permission from MIDC could not be obtained due to the wrongful attachment levied by IDBI, the sale must now receive full effect. He has submitted that the occupant is entitled to the protection of Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia AIR 1931 Bom. 2 at pages 1821; J. Sen Gupta (Pvt.) Ltd., In re [1956) 32 Com. Cas. 876 at pages 879886; Kanchan Kumar Dhar, Official Liquidator vs. Dr. L.M. Visrani and others [1986] 60 Com. Cas. 746 at 748749, 752; Sarigam Containers Pvt. Ltd. Vs. Magatul Industries Ltd. 2008 (5) Bom. CR 112, 119120; and Laxman Yeshwant Prabhudesai and Ors. vs. NRC Ltd. and others 10 2011 (Supp.) Bom. CR 243248 at 251 (Paras 1923) 15. The learned Advocate appearing for the MIDC has submitted that though MIDC by its letter dated 19th January, 2010 addressed to HTPL requested HTPL to produce the original copy of the Resolution of the Members of the Board to transfer the said property, no objection from Labour Commissioner and the certificate of no dues of water and service tax, MIDC has not received any of the said documents. MIDC has therefore not allowed the said property to be transferred to the occupant and the said property till date stands in the name of HTPL. In the circumstances it is submitted on behalf of the MIDC that this Court may pass appropriate orders in the above Official Liquidator s report. The learned Advocate appearing for IDBI has submitted that no sale has taken plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to HTPL towards sale consideration of the said property, the next question the Court is required to consider before validating the sale under Section 536 (2) of the Act is whether the transfer has been completed in favour of the occupant, prior to the winding up order. It is settled law that if a transfer has not been completed prior to the winding up order, no application would lie to the Court for a direction to the Official Liquidator to complete the transfer. As pointed out on behalf of the Official Liquidator, the classic statement of the law in this regard is to be found in the Judgment of the House of Lords in the Governor and Co. of the Bank of Scotland vs. Macleod and others (supra), where Lord Kinnear observed that while rights in security which have been effectually completed before the liquidation must still receive the effect which the law gives to them , the Company and its Liquidators are just as completely disabled by the winding up from granting new or completing imperfect rights in security as the individual brankrupt is by his bankruptcy . These observations were cited with approval by the Hon ble Supreme Court in M/s. JK (Bombay) Pvt. Ltd. Vs. New KaiserIHin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led only by the general principles which apply to every kind of judicial discretion. 3. The Court must have regard to all the surrounding circumstances, and if from all the surrounding circumstances it comes to the conclusion that the transaction should not be void, it is within the power of the Court under Section 536 (2) to say that the transaction is not void. 4. If it is found that the transaction was for the benefit of, and in the interests of, the company or for keeping the company going or keeping things going generally, it ought to be confirmed. The principle that a transfer must be in the best interests of the Company to be validated under Section 536 (2) was also reaffirmed in the judgment of this Court in Kanchan Kumar Dhar, Official Liquidator vs. Dr. L.M. Visrani and others (supra), where Parekh, J. observed: The question is not whether Respondent No.1 acted bona fide or he was a victim of a deception or a fraud practiced on him by the Company. The question is whether the transaction in question is in the interest of the business of the Company or in the interest of the Company (now in liquidation) or its creditors. 20. The Judgment in J. Sen Gupta Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), cited on behalf of the occupant are equally unhelpful. They deal with the question as to whether an application under Section 536 (2) will lie before a winding up order is passed. While answering the question in the affirmative, both judgments held that such an application ought to be allowed where the proposed transfer is in the interest of the Company. I am in agreement with the submission advanced by the learned Advocate appearing for the Official Liquidator that the occupant has made out no ground in the present case for the Court to direct otherwise. Except for a bare statement in her further Affidavit that the Company has made a business deal keeping in mind their business need at that time , the occupant has neither pleaded nor proved that the said alleged transfer is in the best interest of the Company. She has admittedly not filed an application seeking sanction of the Court to the alleged transfer in her favour of the said property. She has only filed a reply to the report of the Official Liquidator seeking directions from this Court in respect of the said property. She has merely relied on the fact that she has paid a sum of Rs. 30 lakhs to the Company, which sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the said Section enables a transferee to resist an attempt made by the owner to recover possession of the property under certain limited circumstances which are not to be found in the present case. As held by the Hon ble Supreme Court in its decisions in Shankar Gopinath Apte vs. Gangabai Patwardhan (supra), and Rambhau Namdeo Gajre vs. Narayan Bapuji Dhotra (supra), the Section applies only where any person contracts to transfer for consideration any immovable property in writing, signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty and such person has been placed in possession of the property in pursuance of such a contract. In the present case, it is an admitted position that no written contract was entered into between the Company and the occupant. There is even otherwise no means of ascertaining the terms of the transaction (including the consideration) alleged to have been agreed to. Though the occupant has been found to be in possession of the said property, the circumstances in which she was so placed are unclear. The occupant has relied on the alleged letter dated 14th November, 2007 where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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