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TMI Blog1996 (8) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... d the creditors. Notice was issued by this court on March 15, 1991. The official liquidator was directed by the order dated April 12, 1991, to identify the property of the company which has not been transferred. On May 17, 1991, it was found that all the assets of the company had been sold under registered sale deeds before moving the application for winding up of the company. Notices were issued to 75 persons to whom the property was alleged to have been transferred. The report of the official liquidator was received and it was pointed out by learned counsel for the petitioner on February 28, 1992, that the movable and immovable property has been transferred to defendants Nos. 4 to 76. The machinery of the company is likely to be transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directed to appear, Bailable warrants for producing documents were not executed. Notices which were issued by this court from time to time were not complied with and, therefore, separate action for presence of the directors is being taken. 5. The controversy is with regard to transfer of movable/immovable properties of the company. The relevant provisions of Section 531/531A of the Companies Act read as under : 531. Fraudulent preference.--(1) Any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a company within six months before the commencement of its winding up which, had it been made, taken or done by or against an 'individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts Nos. 4 to 35 purchased the movable property on December 3, 1990, and respondents Nos. 36 to 39 purchased the immovable property of the company on December 5, 1990. Respondents Nos. 40 to 44 purchased the property under the sale deed dated December 5, 1990. Respondents Nos. 45 to 54 purchased the property under the sale deed dated December 15, 1990. Respondents Nos. 55 to 59 purchased the immovable property under the sale deed dated December 5, 1990. Under the sale deed dated December 3, 1990, the businessmen of Kherli Vyapar Mandal who are alleged to have the dealings with the company failed to pay their outstanding dues. In the aforesaid sale deed the total value of the machinery has been shown as ₹ 15,40,000. Ashok Kumar Dalmia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for winding up was filed by Bhagwan Das Gopal Prasad on March 13, 1991. 8. On behalf of the respondents it has been contended that the transfer cannot be said to be fraudulent. Reliance has been placed on the decision in Monark Enterprises v. Kishan Tulpule [1992] 74 Comp Cas 89 wherein resolution not being passed by board of directors, but the company accepting the consideration and implementing the transaction, failure to pass resolution was held not to vitiate the transaction. The question with regard to Section 531 was considered and it was observed that unless a transaction of transfer of a company's property amounts to a fraudulent preference under the bankruptcy law or insolvency law and it is entered into within a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The decision in Official Liquidator Kerala High Court v. Victory Hire Purchasing Co. (P.) Ltd. [1982] 52 Comp Cas 88 has also been relied upon wherein it was held that if fraudulent preference was given to creditors and execution of mortgage on the eve of winding up was done in favour of two out of several creditors, the same was void. 13. I have considered over the matter. The provision of Section 531 give protection if the transaction is carried out in the ordinary course of business or if it is in good faith for valuable consideration. The provisions of Section 531 equally apply to a company whose transaction is made within six months before the commencement of winding up proceedings and a deeming fiction has been created. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r selling the property of the company, namely passing of the resolution and authorising the directors, has not been followed in this case. An agreement dated December 11, 1990, has also been entered into nullifying the sale that if the dues are paid then they will again execute the sale deed in favour of the company. This shows that preference was given to these creditors excluding other creditors similarly situated. 14. In these circumstances, the application is allowed and the sale of movable/immovable property to respondents Nos. 4 to 76 on December 3, 1990, and December 5, 1990, is annulled. The official liquidator is directed to take possession of the movable/immovable property and deal with the same in accordance with law. The supe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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