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TMI Blog2015 (3) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... present two petitions and ordering the winding up of Shri Ishar Alloy Steels Limited, could not, in my view, have been made. Those petitions, as I have noted, were clearly not maintainable and did not lie. That order ought to have been made, and made only, in the suo-motu BIFR Company Petition No. 154 of 2007. Mr. Chinoy points out that before the BIFR too, it was clear that a sale of these very office premises was very much in contemplation. This is evident inter alia from the minutes or summary record of the proceedings held on 30th March 1999 before the BIFR and also from paragraph 11 of the summary record or proceedings of the hearing held on 22nd May 2000. Indeed, the latter record indicates that it was specifically stated that the promoters of Shri Ishar Alloys would bring in ₹ 18 crores by way of their contribution, of which ₹ 2 crores would be through the sale of the office premises. There was, therefore, Mr. Chinoy submits, and in my view rightly, no injunction per se or any restraining order in respect of the sale of these premises at that time from Shri Ishar Alloys to Neco Tech or its nominees. Consequently, the further sale by Neco Tech to Pavlova could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interesting in purchasing these premises free of any encumbrances and inviting all persons with claims to make these claims known within 15 days. A search report of 8th November 2005 in respect of Neco Tech showed that there were no encumbrances in respect of these Free Press House Premises. On 16th December 2005, Neco Tech and Pavlova executed a Sale Deed for a consideration of 3,43,08,000/-. This Sale Deed is registered. On 16th December 2005, Pavlova mortgaged the Free Press House Premises to Kotak Mahindra Bank Limited. A few days later, Form Nos. 8 and 13, as required by Sections 125, 127 and 135 of the Companies Act were filed in relation to this charge. 4. On 10th March 2006, Pavlova's Advocates issued a title report in respect of the Free Press House Premises. This report recorded that search had been taken in the records of the Sub-Registrar of Assurances, and, on 8th November 2005 with the Registrar of Companies, and that these showed no encumbrances over the premises. There was also no response to the public notices issued on 2nd November 2005. The report noted that by three Deeds of Transfer dated 15th February 2001 and one Deed of Transfer dated 25th February ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed photocopies of all documents of transfer. 8. On 1st December 2011, Pavlova's Advocates wrote to the Official Liquidator setting out the circumstances of its purchase of these premises, and saying that these had been purchased at the market price after exercising of due caution. Pavlova claimed to be bana fide purchaser of these premises. 9. The present company applications were filed on 17th January 2012. The Official Liquidator, Pavlova and the Petitioners in Company Petition No. 649 of 1999 filed affidavits in reply. 10. To fully appreciate the circumstances preceding these applications, I believe it is necessary to set out the sequence of events in somewhat fuller detail than might otherwise have been necessary: (a) Incorporated in the late 1960's as a public limited company, Shri Ishar Alloys began manufacturing alloys, and carbon and stainless steel billets in M.P. Till 1996, it was a profit-making enterprise. Its commercial fortunes declined in the years that followed. By the end of the fiscal year 1997, it carried a loss of 105 lakhs on its books. Even so, its net worth was ₹ 1230 lakhs. By end-March 1998, however, its carry-forward losses had in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued to Shri Ishar Alloys. The petition was made returnable on 12th August 1999. On 22nd September 1999, the second winding-up petition above, Company Petition No. 1214 of 1999 was filed by MSTC against Shri Ishar Alloys. On 14th December 1999, IFGL Refractories Limited's Company Petition No. 649 of 1999 came to be admitted. It was made returnable on 7th February 2000. The petitioner was directed to advertise the petition. (f) It seems that Shri Ishar Alloys thereafter submitted a rehabilitation scheme to BIFR. This scheme specifically states that one of the means of finance would be the sale of Shri Ishar Alloy's premises in Mumbai, i.e., the Free Press House premises. (g) On 14th December 2000, an order was made on IFGL Refractories Limited's Company Application No. 139 of 2000 setting aside the order of admission and adjourning the company petition sine die in view of the pendency of the reference before the BIFR. As we shall see, the order ought to have been one of dismissal of the petition since Section 22 of the SICA does not allow such a petition to lie or be proceeded with once a reference has been registered. In other words, no winding up petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Pavlova, Neco Tech continued in possession and occupation of these premises. The premises were also duly transferred to Neco Tech's name in the records of the FPH Society. (j) On 19th September 2001, the BIFR passed an order inter alia holding that it was of the prima-facie opinion that Shri Ishar Alloys was not likely to make its net worth positive within a reasonable time and that it would not be able to meet its financial obligations. It held that Shri Ishar Alloys was not likely to become viable in future and, it was, therefore, just, equitable and in the public interest that it be wound up under Section 20(1) of the SICA. This opinion was directed to be forwarded to this Court along with copies of earlier orders. Shri Ishar Alloys's appeal was dismissed on 26th February 2002, and, on 9th July 2002, so was its writ petition in the Delhi High Court. (k) For the next two and a half years, there seems to have been a quietus. On 28th December 2004, Shri Ishar Alloys executed four deeds of confirmation between itself and Neco Tech Auto Components Limited as the transferee, and also (i) Jayaswal Holding Private Limited; (ii) Abhijit Iron Processors Private Limited; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court noted that it had received confirmation of BIFR's recommendation for winding of Shri Ishar Alloys; that the BIFR's recommendation had been converted into a winding up Company Petition No. 154 of 2007, which was admitted on 8th February 2007 with a provisional liquidator being appointed and directions being issued for advertisement. In view of that, Vysya Bank's winding up petition was also admitted and further directions were issued, including for advertisement and for deposit of ₹ 10,000/- by the petitioners, Vysya Bank, with the Prothonotary Senior Master toward publication charges. This was a self-operative order that provided that should Vysya Bank fail to make that deposit, the petition would stand dismissed for non-prosecution without further reference to the Court. On 16th January 2008, a further order was passed in Vysya Bank's Company Petition No. 479 of 1998. This Court noted that the petitioners, Vysya Bank, had not deposited the amount of ₹ 10,000/- towards publication charges; and that, therefore, in view of the self-operative order of 13th September 2007, the petition stood dismissed. The petition was, therefore, removed from bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1999 and all orders in that petition including the order dated 16th January 2008 were null and void in view of the then pending reference of the BIFR. I must straightaway note that this amended prayer, included in both Company Applications in relation to the orders of admission and winding up passed in those petitions, is not pressed by Mr. Chinoy, learned senior counsel for the applicants. 13. From these dates it is apparent that there were as many as four separate petitions for the winding up of Shri Ishar Alloys. The first was Company Petition No. 479 of 1998 filed by Vysya Bank. The second and third were the present two petitions, Company Petition No. 649 of 1999 filed by IFGL Refractories Limited and Company Petition No. 1214 of 1999 filed by MSTC. The fourth was the suo-motu Company Petition No. 154 of 2007 on the recommendation made by BIFR for winding up Shri Ishar Alloys. Of these, only the Vysya Bank winding up petition was prior to the reference to BIFR made by Shri Ishar Alloys on 31st October 1998, and registered by the BIFR on 18th November 1998. The present two petitions were filed, respectively, on 1st July 1999 (Company Petition No. 649 of 1999, IFGL Refracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition for the winding up. (Emphasis supplied) 15. From this, it is clear that the date of winding up by a court is the date of presentation of the petition. Given that the present two petitions were not maintainable and that the Vysya Bank petition was subsequently dismissed, the only petition whose presentation date could be reckoned for the purposes of Section 441, was, therefore, the petition on the BIFR recommendation, i.e., Company Petition No. 154 of 2007. The presentation date of that petition was 8th February 2007. By that time, the sales in favour of Pavlova had already been completed. In fact, they had been completed two years earlier. At this stage, it must be noted that the order of admission on the present two petitions filed by IFGL Refractories and MSTC was set aside on 14th December 2000. Those two petitions then lay dormant and they were only again taken up along with the BIFR suo-motu Company Petition No. 154 of 2007. The order dated 16th January 2008 allowing the present two petitions and ordering the winding up of Shri Ishar Alloy Steels Limited, could not, in my view, have been made. Those petitions, as I have noted, were clearly not maintainable and did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of each of those cases and did not invalidate the sales. In Alkaben Rajeshbhai Shah's case (supra) the Court ordered a valuation on condition that if a difference in valuation was found, the purchaser would pay the differential. 19. Mr. Sen, learned senior counsel appearing for the Official Liquidator, however, contests this formulation by Mr. Chinoy. He relies on the decision of a Division Bench of this Court in Keshrimal Jivji Shah v. Bank of Maharashtra 2004 (3) Mh LJ 893 to contend that a transfer of immovable property in violation of an order of injunction or prohibition is no transfer and it confers no right, title or interest in the transferee. In his submission, it makes no difference who issues this injunction. As long as there is a prohibition on the transfer, whether by a Court, a Tribunal, a Board or by operation of statute, no further transfer of title is possible. Any such attempted transfer of title is of no effect. I am unable to accept or even to appreciate this submission. The argument proceeds on the a priori assumption that there was, as a matter of demonstrable fact, such a restraint, or that there was some order that, by operation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4th December 1999 by which IFGL Refractories Company Petition No. 469 of 1999 was admitted and ordered to be advertised. The trouble with this formulation is two-fold. First, that order of admission was set aside on 14th December 2000, exactly one year later. Therefore, from 14th December 2000, even in the present Company Petition No. 649 of 1999 there was no restraint order or any order that would have the effect of functioning as an injunction. Secondly, as I have already noted, both these petitions, Company Petition No. 649 of 1999 and Company Petition No. 1214 of 1999, could never have been filed in view of the reference previously made, prior to the filing of these petitions, before the BIFR and which was duly registered by the BIFR. 21. The Vysya Bank petition was dismissed and therefore falls from reckoning; the IFGL Refractories and MSTC petitions did not lie in view of the pending BIFR reference; and therefore the only validly presented petition whose presentation date was material was the suo-motu Company Petition No.154 of 2007 on the BIFR's recommendation. That presentation date is well after the sale to Pavlova. 22. In my view, Mr. Chinoy is right when he sug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge and the same principles that apply to every kind of judicial discretion must, too, apply here proprio vigore. Steane's (Bournemouth) Ltd., In re (1950) 1 All ER 21; T.W. Construction Ltd, In re (1954) 24 Comp. Cas 180 (Ch. D); Travancore Rayons Ltd. v. Registrar of Companies [1988] 64 Comp. Cas 819 (Ker). 25. In Monark Enterprises v Kishan Tulpule (1992) 74 Comp. Cas. 89 a learned single Judge of this Court enunciated the principle thus: The basic principle is clear. Section 536(2) of the Act cannot be invoked unless the transferor exercises disposing power after the commencement of winding up. In this case, the disposing power had already been exercised by the transferor prior to the commencement of winding up and the only thing which remained to be done was obtaining of sanctions and permissions from various authorities. Thus the transaction cannot be treated as 'disposition of property' effected after the commencement of winding up. 26. I see no reason why the essence of this principle cannot be applied to Pavlova's case. The disposing power was exercised and the sale to Pavlova was completed before the presentation of the suo-motu BIFR-recommende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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