TMI Blog2013 (6) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... ned only by Mr. Kathuria. The original of the PoA dated 17th May 2008 stated to have been issued in favour of Mr. Kathuria has not been produced. In any event there appears to be no resolution by KIPL in that behalf. Also there was no decision taken by KIPL either to sell the half portion of property at B-72, Mohalla Mahatma Gandhi Nagar, Moradabad in favour of Adarsh Kumar Agarwal and Niraj Kumar Agarwal or to sell the remaining half to Mr. Shayam Agarwal or Mr. Ashok Agarwal. The ex parte decree passed on 18th August 1993 also overlooked the mandatory requirement in the agreement to sell that exemption from the income tax authorities had to be obtained. Therefore the decree dated 18th August 1993 cannot be sustained in law. The execution proceedings for enforcement of the decree are also judicial proceedings. It is an admitted position that the sale deed dated 25th May 1995 was executed in favour of Adarsh Kumar Agarwal and Niraj Kumar Agarwal only pursuant to the order passed by the executing court and subsequent to the winding up of KIPL. The above proceedings continued without any permission being sought from the Company Court. The actual conveyance of the property i.e. one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court appointed Mr. L Narayanan as the Liquidator, directed KIPL to be wound up under Section 20 (2) of the SICA and directed Liquidator to take appropriate steps for sale of assets of KIPL and invite claims from creditors. 2. CA No. 522 of 1996 was filed by the Liquidator under Sections 446(2) and (3) of the Companies Act, 1956 ( Act ) stating that Suit No. 212 of 1991 against KIPL was pending in the District Court, Moradabad in respect of one of the properties of KIPL situated at B-72, Mohalla Mahatma Gandhi Nagar, Moradabad. The said suit was filed by Mr. Adarsh Kumar Agarwal and Mr. Niraj Kumar Agarwal. Notice of the said application was issued to them but despite service they did not appear. In the circumstances, on 19th August 1996 the Court directed transfer of Suit No. 212 of 1991 (titled Adarsh Kumar Agarwal Niraj Kumar Agarwal v. Kapri International (P) Limited) pending in the Civil Court, Moradabad to this Court. On 16th September 1996, the Court received the aforementioned file and directed the Registry to give the suit a fresh number. Accordingly, the suit was numbered as Suit No. 2293 of 1996. Notices were directed to be issued to the parties to the suit, ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d up the company and appointed him as such on 1st May 1995 whereas the sale deed purportedly was executed on 25th May 1995. In terms of Section 446(1) of the Act no suit or other legal proceedings shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court. On 2nd December 1997, the Court restrained the original Plaintiffs transferring, alienating or creating any charge in respect of the property in question and also directed the status quo to be maintained. 6. On 24th April 1998, the Court asked Canara Bank to appoint a Valuer to determine the market value of the property in question, as on 31 March 1998. On 21st September 1998, the Court noted that the valuer had fixed the price for the land @ Rs.4,000 per sq. yd. The Court raised some queries in its order dated 21st September 1998. On 3rd March 1999, Mr. M.B. Singh, learned counsel for the Plaintiff/non-Applicant in CA No. 27 of 2007 stated before the Court that it may perhaps be not possible for his client to contest the illegality of the sale deed in respect of the property allegedly executed on 25th May 1995 as contended by the Liquidato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold without the prior permission of the BIFR or of this Court. It is stated that inasmuch as the said agreement to sell did not find any mention in the records of KIPL, it appeared to be a false and fabricated document besides not being properly stamped and registered. Accordingly, it was prayed that the agreement to sell be declared null and void; Mr. Ashok Agarwal may be asked to hand over vacant and peaceful possession of the other half of the property to the Liquidator forthwith and pay damages in the sum of Rs.15,000 per month for the entire period of unauthorised use of occupation and to restrain him from alienating, transferring or creating any charge in respect of the said other half portion of the property at B-72, Mohalla Mahatma Gandhi Nagar, Moradabad. Notice was directed to issue in the application on 6th November 2012. 8. Meanwhile on 23rd May 2012, the Liquidator also filed IA No. 12367 of 2012 in Suit No. 2293 of 1996 under Sections 536 and 537 of the Act for a declaration that the sale deed dated 25th May 1995 executed in favour of Mr. Adarsh Kumar Agarwal and Niraj Kumar Agarwal in respect of the half portion of B-72, Mohalla Mahatma Gandhi Nagar, Moradabad be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8th February 1991. An application under Order VII Rule 11 CPC was filed by KIPL on 18th December 1991 seeking rejection of the plaint on the ground that permission from the Income Tax Department ( ITD ) had not been received. The said application was rejected by the Civil Court on 28th February 1998. It is pointed out that KIPL was thrice set ex parte, on 17th January 1992, 19th November 1992 and finally on 30th March 1993. During the pendency of the proceedings in the Civil Court in Moradabad, KIPL failed to disclose that proceedings were pending before the BIFR. Since in terms of the ex parte decree dated 18th August 1993, KIPL failed to execute the sale deed in respect of half portion of B-72, Mohalla Mahatma Gandhi Nagar, Moradabad in favour of Adarsh Kumar Agarwal and Niraj Kumar Agarwal, they filed an execution petition and pursuant to the order passed by the executing court, the sale deed was executed on 25th May 1995. It was submitted that no convincing explanation has been given by KIPL for the delay in fling the application under Order IX Rule 13 CPC for setting aside the ex parte decree. As far as IA No. 12367 of 2012 is concerned, it was hopelessly time barred. As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled for initiating a proceeding under section 433 of the Companies Act as the recommendation therefor are made by BIFR or AAIFR, as the case may be, and thus the date on which such recommendations are made, the Company Judge applies its mind to initiate a proceeding relying on or on the basis thereof, the proceeding for winding up would be deemed to have been started . Therefore, the date of commencement of winding up would be the date on which BIFR made the recommendation for KIPL s winding up, i.e. 27th October 1993. Even before the ex parte decree was passed on 18th August 1993 proceedings had commenced before the BIFR i.e. 1991. If KIPL did not appear thereafter it Co. Pet. No. 59 of 1994 CS(OS) No. 2293 of 1996 Page 11 of 16 can possibly be explained by the fact that there was no information of the pendency of the suit filed by Adarsh Kumar Agarwal and Niraj Kumar Agarwal. 13. As rightly pointed out by learned counsel for the Liquidator, the agreement to sell has been signed only by Mr. Kathuria. The original of the PoA dated 17th May 2008 stated to have been issued in favour of Mr. Kathuria has not been produced. In any event there appears to be no resolution by KIPL in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal against the estate or effects of the company, after the commencement of the winding up; or (b) any sale held, without leave of the Tribunal of any of the properties or effects of the company after such commencement shall be void. (2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government. 16. This Court, therefore, has no hesitation in holding that neither the ex parte decree passed by the civil court on 18th August 1993 nor the subsequent sale deed executed on 25th May 1995 can be sustained in law. They are hereby declared to be illegal and void and quashed as such. 17. As regards the other half of B-72, Mohalla Mahatma Gandhi Nagar, Moradabad, there was only an agreement to sell which again was not expressly authorised by KIPL by a resolution. In fact, Mr. Ashok Agarwal and Mr. Shyam Agarwal never sought to enforce the said agreement by filing a suit for specific performance. Once the company was ordered to be wound up, there was no question of any transaction involving the said property without the permission of the Company Court. The benefit of Section 53A of the TP Act is not avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power to decide otherwise. However, the Court must be satisfied that the transaction was bona fide. In the present case for the reasons explained hereinbefore, the Court is not satisfied about the bona fide of the transactions particularly since no permission of the Court was taken for executing the sale deed. The decision in Banshidhar Sankarlal was under the Companies Act, 1913. It did not deal with Sections 446 or 536 of the Act of 1956. In Minnie Pan (India) Pvt. Ltd, the Court explained that the burden of proof that transaction was not in good faith or for full consideration is on the Official Liquidator. In the present case, properties of more than Rs. 50 lakhs were transferred just for Rs.10,000 and that too without appropriate documentation or authorisation. 20. For the aforementioned reasons, this Court is satisfied that the prayers of the Liquidator in CA No. 27 of 1997 and IA No. 12367 of 2012 in CS (OS) No. 2293 of 1996 as well as CA No. 2068 of 2012 in Co. Pet. No. 59 of 1994 should be allowed. Accordingly, it is ordered as under: (i) the ex parte decree passed by the civil court on 18th August 1993 in CS (OS) No. 2293 of 1996 is set aside. (ii) the sale deed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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