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TMI Blog2016 (11) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... e record the transferee had parted with full consideration way back on 04.04.2013. In the totality of these circumstances we do not think it appropriate to exercise our power to invalidate the effect of registration of the document on 02.07.2014. We thus find the Company and its Directors/servants namely alleged Contemnor Nos.1, 4, 5, 6, 7 and 8 guilty of having violated the Order of 08.05.2014. In our view, ends of justice would be met if fine is imposed on the Contemnors. We impose fine of 2,000/- on the Company. Further, fine of 2,000/- each is imposed on Contemnor Nos.4, 5, 6, 7 and 8. Fine shall be deposited with the Registry of this Court within four weeks from today. In case of failure by Contemnor Nos.4, 5, 6, 7 and 8 to deposit the amount of fine within the time stipulated, they shall undergo sentence of simple imprisonment for one month. With these observations, we close Contempt Petition X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.2009, the BIFR had constituted Assets Sale Committee ("ASC" for short) in respect of properties of the Company including Katihar property. The proceedings of ASC dated 08.11.2012 of which Shri R.N. Lahoti, CEO of the Company was also a member show that the sale of Katihar property was engaging the attention of ASC. 4. The proceedings of the BIFR dated 07.02.2013 show that in compliance of the earlier directions, the Operating Agency was in the process of finalizing a Draft Rehabilitation Scheme ("DRS" for short) and in furtherance of the directions of sale of certain assets, notices were already sent to the Company, secured creditors and State of Bihar to nominate their representatives in ASC. The proceedings further show that the Operating Agency by letter dated 29.01.2013 had requested the BIFR to grant permission to proceed further for sale of assets of the Company situated in Bihar. The next proceedings of the BIFR dated 18.02.2013 indicate that the Operating Agency had got the assets valued and had sent notices to all parties to nominate their representatives in the ASC. 5. While the matter stood thus, Auditors' Report dated 15.02.2013 for the period ending 31.12.2012 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... positive, it was no more covered under the Act. The proceedings of the BIFR dated 16.04.2013 disclose that the BIFR had observed that manipulation of accounts had been alleged against the Company and the BIFR would examine the same and enquire whether the Net Worth of the Company had turned positive or not. 8. At this stage, various proceedings including those at Gauhati were instituted, as detailed in the Judgment of this Court dated 13.11.2014. In Title Suit No.166 of 2013, Civil Court at Kamroop, Gauhati by an interim order dated 13.05.2013 restrained the defendants therein including the BIFR from proceeding with Reference No.149 of 1994. This Order and subsequent proceedings taken up in Gauhati High Court led to the filing of Special Leave Petitions giving rise to aforementioned Civil Appeal Nos.10221 of 2014 and 10223 of 2014 and other connected matters in which this Court passed the Order of 08.05.2014. 9. During the pendency of the aforesaid Civil Appeals in this Court, aforementioned Contempt Petition Nos.338 of 2014 and 375 of 2014 were filed alleging alienation of Katihar property vide Conveyance Deed dated 02.07.2014 in violation of the Order of 08.05.2014. Contempt P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle Officer, Katihar who is taking steps to mutate the Katihar capital assets of the Contemnor No.1 Company in favour of Contemnor No.14 which is transferred by the illegal registered Conveyance Deed dated 02.07.2014. The Contemnor No.13 is Mr. Pankaj Kumar, IAS who was occupying the post of Divisional Commissioner, Purnia Division at the relevant point of time and to whom letter was sent on 10.06.2014 (and duly served on 11.06.2014) informing of the orders dated 08.05.2014 passed by this Hon'ble Court and did not take any steps or issue any directions to the Contemnor Nos.9 to 12 to restrain the sale and registration of the Katihar capital assets of the Contemnor No.1 Company. 9. The counsel for the Petitioner by his letter dated 10.06.2014 was sent to Contemnor No.11 with a copy endorsed to Contemnor Nos.9,12,13 and to Registrar of Assurance, Katihar and to the Chief Minister and a letter dated 13.06.2014 was sent by the counsel for the petitioner to Contemnor Nos.9,11,12 and to the Finance Minister, Chief Secretary and Asstt. I.G. of Registration and all of them given full and complete knowledge of the orders dated 08.05.2014 passed by this Hon'ble Court but all of them and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Contemnor No.9 (District Magistrate & Collector, Katihar) being Registration Appeal Case No.235/13-14 the Collector, Katihar, inter-alia, passed the following orders on 21.03.2014 (English translation):- "From the aforesaid facts it is clear that the land under reference is Reyati Land (belonged to Juggi Lal Kamlapati Company, Katihar). Therein the Government has no vested interest. Accordingly, there appears to be no purpose for stay of its registration. Therefore the District Sub-Registrar, Katihar is free for conducting the proceedings under the Registration Act and the Rules framed under it. With this order the present case hereby disposed off." …………………………………………………….. (iii) As stated above, this Hon'ble Court by orders dated 08.05.2014 directed that till further orders, capital assets of the company shall not be disposed of without taking permission of this Hon'ble Court. (iv) On 31.05.2014, the Contemnor No.10, Deputy Collector, District Legal Branch, Katihar made the following endorsement (English translation) on the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 15.37 crores whereas the market value is above ₹ 20 crores. …………………………………………………………… 12. Another instance of fraud and back-dating of the Conveyance Deed is evident from the fact that the Conveyance Deed is signed by one Mr. Sobhanand Jha (Contemnor No.7) as Director of Contemnor No.1 Company but as on the date of the signing and/or execution of the Conveyance Deed, he had on 17.02.2014 resigned as a Director of the Contemnor No.1 Company. The said Mr. Sobhanand Jha long back changed his name to Mr. Ravishankar Prabhakar and got his name changed in the records with the Registrar of Companies but he still signed the Conveyance Deed on behalf of the Contemnor No.1 Company as a Director with his name written as Mr. Sobhanand Jha. …………………………………………………………… 13. That the Contemnor Nos.1 to 17 have thus willfully, consciously and contumaciously and with fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ick company within the meaning of the Act and that BIFR ceased to have jurisdiction over the Company and that all the proceedings in BIFR after filing of the positive balance sheet were without jurisdiction. Consequently the order of injunction passed by the civil court is set aside. Insofar as the said suit pertains to the claim for recovery of money from the Company, the suit could lie and be proceeded with only after express consent of BIFR is received by the plaintiff. We direct that the Company i.e. J.K. Jute Mills Co. Ltd. having its registered office at Kanpur, U.P. continues to be under the jurisdiction of BIFR. We leave it to BIFR to satisfy itself and determine the issues whether the net worth of the Company has turned positive or not. If BIFR is so satisfied, it shall deregister the Company and upon such declaration the Company will be out of the supervisory jurisdiction of BIFR under the Act. Needless to say that if BIFR is not satisfied that the net worth of the Company has turned positive, it shall go ahead and consider the scheme for revival of the Company. We direct BIFR to complete this exercise within two months from the date of receipt of this order. We have refr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged contemnors filed their responses as under:- A. In his reply which was also on behalf of the Company, Shri Shashikant Jha, Director submitted that Katihar property was sold and transferred to alleged Contemnor No.14 on 04.04.2013 for consideration of ₹ 3.55 crores, long before the filing of the matter in this Court and passing of the Order of 08.05.2014. It was submitted that the entire consideration was received by the Company on 04.04.2013 by cheques and constructive possession was also handed over to the purchaser on 16.04.2013. The reply further stated:- "The deed was presented for registration before the Registrar on 16.04.2014. As per the Revenue Department, the stamp duty payable was higher than affixed and accordingly, the matter was pending adjudication. It is only thereafter, that this Hon'ble Court had passed the interim Order dated 08.05.2014 restraining the Company from disposing off capital assets of the Company without taking permission from the Hon'ble Court. By this time, the property in question had for all practical purposes already been transferred. Only, the ministerial act of actual registration by the Authority concerned was remaining which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the higher side, the registration of the deed did not take place. The buyer after certain correspondences with the revenue authorities was able to reduce the value of stamp duty payable on such registration. As a considerable time of more than one year had elapsed, the buyer had contacted the answering respondent to get a fresh deed executed and to get the same registered. As the answering respondent had been given the authority which was not revoked till then the answering respondent on good faith executed the fresh sale deed which was presented for registration and was finally registered on 02.07.2014. As the answering respondent had resigned from the Directorship of the company he was unaware of any orders being passed in the meantime and was also not served by a copy of the said order. In any event the entire exercise of sale was completed in 2013 itself when the deed was executed, payment received and possession handed over." In his supplementary affidavit Shobhanand Jha further submitted:- "1. That on 02.07.2014 at the time of registration of the conveyance deed I had produced the authorization being board resolution of 06.02.2013 given in my favour by the Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.07.2014 was a bonafide purchase for consideration, that the property was already in the possession of the transferee under a long term lease and that the transferee had no knowledge about the Order of 08.05.2014 nor was that order ever served upon the transferee. It was denied that the transferee had any connection with alleged Contemnor Nos.2 and 3. The replies filed by alleged Contemnor Nos.15 and 16 were to the similar effect denying knowledge about the Order of 08.05.2014. 13. The applicants filed their rejoinder affidavits to the replies filed by all the alleged contemnors. As regards the reply of alleged Contemnor No.17 Mrityunjay Kumar Singh, it was submitted that he was authorized respresentative of the Company as well as Director in the transferee company. Reliance was placed on the authority letter dated 17.06.2013 issued by the Company authorizing said alleged Contemnor No.17 to collect certified copies of the orders from the office of the BIFR. It was submitted that he being privy to the proceedings before the BIFR and being aware of the Order of 08.05.2014, ought not to have registered the document on 02.07.2014. In his subsequent affidavit dated 27.01.2016, alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Senior Advocates in support of these contempt petitions. We also heard M/s Ram Jhethmalani, Vikas Singh, V. Giri, Nidesh Gupta, Jayant Bhushan, learned Senior Advocates and Mr. Braj K. Mishra, learned Advocate who appeared on behalf of alleged contemnors. We have gone through the record and considered the rival submissions. 16. The first question that arises is whether any alienation or transfer was effected after the Order of 08.05.2014.The submission of the alleged contemnors is that the conveyance deed was executed on 04.04.2013 on which date the entire consideration stood paid by the transferee and was credited to the account of the Company and as such the title passed in favour of the transferee well before the Order of 08.05.2014 and what was done on 02.07.2014 was a mere ministerial act. According to the alleged contemnors, the documents presented for registration in April 2013 were not accepted for want of adequate stamp and registration fees. This infirmity was removed and the documents were then presented for registration. In such circumstances the order of 08.05.2014 was not in any way violated by them. 17. The Order of 08.05.2014 had directed "….capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration of document which is crucial inasmuch as the transfer is effected and the title passes only upon registration. Viewed thus, it is clear that Katihar property was transferred in the teeth of the Order of 08.05.2014 and ex facie there has been violation of the Order passed by this Court. It is crucial to note that on 08.05.2014, the company had appeared on caveat before this Court and certainly had express knowledge about the Order of 08.05.2014. It was party to the proceedings and was bound by the order passed by this Court in every respect. 19. The submission on part of alleged Contemnor Nos.1,4,5,6,7 and 8 namely the Company and its directors/servants is that the document was executed by alleged Contemnor No.7 Sobhanand Jha in pursuance of the authority given to him by the Company way back on 06.02.2013. As on 06.02.2013, the company was definitely a sick company and the Reference was pending before the BIFR. Around that time the ASC was constituted which was considering sale of assets including Katihar property. It was only after the Auditors' report dated 15.02.2013 that the Company started projecting that its net worth had become positive on which account it ceased to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate Orders including restraint on registration. Similarly, if Sobhanand Jha, alleged Contemnor No.7 had resigned on 17.02.2014, he had no authority to register the document on behalf of the Company. In our view, the entire exercise was a clever device employed by the Company and its Directors, in that, first an authority in favour of a Director was created who then resigned as Director but continued to register the document on the basis of erstwhile authorization and at the same time the person having resigned could claim lack of knowledge of the Order of restraint passed by this Court. Their actions were deliberate and designed to flout the Order of 08.05.2014.The involvement of alleged Contemnor Nos.1,4,5,6,7 and 8 in the transfer the assets of the Company in the teeth of the Order of 08.05.2014 is thus apparent and clear. 21. We now turn to the involvement of those officials concerned with registration, who went ahead and registered the document on 02.07.2014 despite having been put to notice and served with a copy of the Order of 08.05.2014. Our attention has been invited to the opinion rendered by the office of the Advocate General, Bihar to the effect that even if there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the Company nor has it been shown that they have any stake or interest in the Transferee Company. It is undoubtedly true that alleged Contemnor No.17 in his affidavit stated that he used to work under the directions of alleged Contemnor Nos.2 and 3 and that the registration of the document on 02.07.2014 was done under the express directions and alleged Contemnor No.3. However, such a statement coming from a co-contemnor, in our view, is not sufficient to reach a conclusion about the involvement of alleged Contemnor No.3. Further, the documents pertaining to Writ Petition No.5670 (W) of 2016 pending in Calcutta High Court as well as the affidavit filed by Dinesh Sarda are also not conclusive enough. The criticism that such documents and the affidavit of Dinesh Sarda are conveniently brought on record, would also require assessment of facts. Thus, though there is room to suspect the involvement of said Contemnor Nos.2 and 3, the material on record is not conclusive enough to hold them guilty of violation of Order of 08.05.2015. We, therefore, close these proceedings as against them. 24. We now come to the crucial question as to the effect of transfer or alienation of Katihar p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available in such a case, but it is bound to exercise it to undo the wrong in the interest of justice. That was a case where a meeting was held contrary to an order of injunction. The Court refused to recognise that the holding of the meeting is a legal one. It put back the parties in the same position as they stood immediately prior to the service of the interim order. 20. In Sujit Pal(supra) a Division Bench of the Calcutta High Court has taken the same view. There, the defendant forcibly dispossessed the plaintiff in violation of the order of injunction and took possession of the property. The Court directed the restoration of possession to the plaintiff with the aid of police. The Court observed that no technicality can prevent the court from doing justice in exercise of its inherent powers. It held that the object of Rule 2-A of Order 39 will be fulfilled only where such mandatory direction is given for restoration of possession to the aggrieved party. This was necessary, it observed, to prevent the abuse of process of law. 21. There is no doubt that this salutary rule has to be applied and given effect to by this Court, if necessary, by overruling any procedural or other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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