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TMI Blog2013 (6) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... eanwhile, on 19th December 1994 the Appellate Authority for Industrial and Financial Reconstruction dismissed the appeals filed by KIPL and its sister concern Dior International Pvt. Ltd. ('DIPL'). On 28th April 1995, the OA was asked to name an officer who could be appointed as Liquidator of KIPL. Thereafter on 1st May 1995, the OA informed the Court that Mr. L. Narayanan, Chief Manager (Assets & Recovery Management Branch) of the Canara Bank shall act as the Liquidator. Consequently, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ober 1996, was directed to continue. On 31st March 1997 a reply was filed on behalf of Adarsh Kumar Agarwal and Niraj Kumar Agarwal. It was submitted by them that the order passed by the Civil Judge had already attained finality and a sale deed has already been executed in favour of the Plaintiffs on 25th May 1995. It was denied that Mr. Kathuria was not competent to enter into an agreement on behalf of KIPL. In the rejoinder filed the Liquidator pointed out that the Court had wound 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 Septe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered. The balance consideration also did not appear to have been paid. Section 17 of the Registration Act as amended for the State of UP required such agreement to sell to be compulsorily registered before the Registrar in the absence of which there could not have been any decree for specific performance. It is submitted that said sale of the half portion to Mr. Shyam Agarwal was fraudulent and prejudicial to the investors of KIPL which was before the BIFR. It could not have been 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, Mr. Niraj Kumar Agarwal as well as Mr. Ashok Agarwal, Mr. Rajender Sharma learned counsel submitted that Mr. Kathuria was the PoA holder of KIPL. According to him, the PoA dated 17th May 1988 was registered in Ghaziabad and the details have been mentioned in agreement to sell dated 30th May 1988 which was registered. At the time of said agreement, there were no proceedings pending against KIPL before the BIFR. He submitted that a suit for specific performance was filed on 18th 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 Mahat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be the date on which the BIFR formed its prima facie opinion that KIPL should be wound up. The law in this regard has been explained by the Supreme Court in NGEF Ltd. v. Chandra Developers (P) Ltd. (2005) 8 SCC 219. Disagreeing with the decision of the Division Bench of Karnataka High Court in BPL Ltd. v. Intermodal Transport Technology Systems (Karnataka) Ltd._____, the Supreme Court in NGEF Ltd. held that "it may be true that no formal application is required to be filed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act which read as under: "536 (2) In the case of a winding up by the Tribunal, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall unless the Tribunal otherwise orders, be void. 537 (1) Where any company is being wound up by Tribunal- (a) any attachment, distress or execution put in force, without leave 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 Gandh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances noticed earlier, no execution could have been taken place without permission of the Company Court. The plea of limitation under Section 458A of the Act is, therefore, rejected as being misconceived. The decision in Pankaj Mehra is also of no assistance to the Respondent/non-Applicants. The Court, in the said decision, clarified that all transactions that took place after winding up of the company would automatically become null and void since the Court had 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 with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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