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TMI Blog2020 (5) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants had not stepped into the witness box. The argument of the appellants that there was no necessity in the present case for the appellants to step into the witness box is contrary to facts and untenable in law. It is settled law that to succeed in a suit for specific performance (which is the nature of the claim filed by the appellants), the appellants had to prove that a valid agreement of sale was entered into by the company in liquidation in their favour and also the terms thereof; that the company in liquidation committed breach of the said agreements; and the appellants were always ready and willing to perform their part of the obligations in terms of the agreement - If the appellants had to prove that they were always ready and willing to perform their part of the agreement, that is, to perform their obligations in terms of the contract, necessarily they should have stepped into the witness box and given evidence that they had all along been ready and willing to perform their part of the contract and subjected themselves to cross-examination on that issue. Therefore, a third party who has no personal knowledge and is not an immediate relative cannot give evidence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Dr.Sukhvir Singh allegedly flows from some Board Resolution dated 3rd January, 1997. Further, all the Agreements to sell record Board Resolutions purporting to accept the proposals of the intervenors for purchase of respective flats. Therefore, after hearing the arguments, the Official Liquidator was directed to file minutes of the Board meetings of the company for period June to August, 1997. 18. On the other hand, payment of entire consideration of ₹ 30 lacs in cash by all the four alleged purchasers/intervenors also puts question mark on the authenticity of the transactions. Further, if the property was purchased in the years 1997-1998 and it is not an ante-dated transaction manufactured later but an honest deal, the intervenors must have shown purchase of these flats in the income tax returns. Because of this reason the intervenors were also directed to file income tax returns for the counting year 1997-98 (assessment year 1998-99) indicating whether the purchase of flats in question was shown in their returns or not. They were also directed to file an affidavit stating source of ₹ 30 lacs purportedly paid in cash for the purchase of flats in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated that the document is manufactured for the purpose of the claim at a later stage. (v) The Committee also notes that Dr. Sukhbir Singh has nothing to do with JVG and that the documents have been filed to commit a fraud before the Committee. (vi) The Thareja Committee also records that the claimants have not appeared in person to support their claim. However, the report concludes that the documents produced by the OL indicate that it is Sh.Tarun Rathi who had been allegedly occupying the flats after breaking the seal of the Official Receiver of the Bombay High Court. Further it concludes that bogus claims have been made by the said Sh.Tarun Rathi. Had the claims been genuine, the claimants would have appeared in the witness box to submit their claims of the flats. (vii) On the deposition of witnesses, the Committee states as follows:- 1. I have scrutinized the deposition of Sh. Rathi, POA holder for all four files. His deposition clearly indicates that he has no personal knowledge about the transaction. The documents which he referred in his deposition have already been considered. His deposition is not of any worth particularly because no cogent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of ₹ 1.20 crores. Instead he deposed that he does not remember the date of deposit nor does he have any record. He further deposed that it was V. K. Sharma who introduced him to Sh.Tarun Rathi. I have gone through his deposition. It is not worth to be relied upon. Since the documentary evidence produced by the claimant in the form it has been produced has already been rejected. I need not further dilate upon his testimony. 4. The last witness examined is Sh. M. N. Wadhwa, Chairperson of the Panchtantra Society. The said society was constituted on 26.06.2001. He supported the version of the Official Liquidator that the flats belong to JVG Finance Ltd. In flat No. 104 Sh. V.K. Sharma stayed in the year 2002-2003. After 20003 none stayed until new occupants forcibly broke open the seal and occupied the said flat. He deposed that in flat no. 504 and 505 Swati Verma and Sunita Aggarwal were staying. They were there before the societies were formed but new persons were staying in the said flats at the time the deposition was made and they had left the flats. Neither Swati Verma nor Sunita Aggarwal are the members of the society. He produced the documents exhibit OW1/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty being Flat No. 104 to the claimant. A photocopy of a statement of account is placed on record to try and show adequate funds in the account of Milan Enterprises. Exhibit P-8 is an acknowledgement of receipt of ₹ 30 lakhs allegedly received from Sh. Mukesh C. Shah by Ms.Bharti Bhagwan Jadhav. Some notices were sent to Ms.Bharti Bhagwan Yadhav for refund of the money. 20. In this context there are two interesting letters which are placed on record to show as to how the sum of ₹ 30 lakhs was generated by Ms.Bharti Bhagwan Jadhav. One NE Electronic Ltd. on 22.08.1997 offered to sell to Ms.Bharti Bhagwan Jadhav shares worth ₹ 30-35 lakhs (approximately). The said NE Electronic Ltd. forwarded the shares to Ms.Bharti Bhagwan Jadhav on 22.08.1997 without receipt of sale consideration. These shares have been subsequently forwarded to Sh.Mukesh C.Shah through the Power of Attorney Holder Sh.Sudhir Kumar as return of the loan of ₹ 30 lakhs that was received from the said Sh. Mukesh C. Shah/the concern Milan Enterprises. No consideration has been paid by Ms.Bharti Bhagwan Jadhav to NE Electronic Ltd. for the shares bought from the said company. Some reminders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs to pay the consideration for the flat in question. In fact the claimant have with no personal contribution of funds have allegedly managed to buy a flat for ₹ 30 lakhs. 22. Apart from the nature of the above documents placed on record as noted above, there are other aspects which persuade me to confirm my conclusion that the claimants have failed to discharge their duty to show their title to the flats in question. I may note these aspects also. 23. Firstly, I may note that this court on 11.5.2005 heard arguments on CA 892/2000 and reserved judgment. The Court had directed the claimants to file their Income Tax Return for the Accounting Year 1997-98 Assessment Year 1989-99 indicating whether the purchase of the flats in question was shown in their Income Tax Returns or not. They were also directed to file an affidavit stating the source of ₹ 30 lacs which they claim to have paid in cash as consideration for purchase of the flats. This Court while disposing of CA 892/2000 by judgment dated 4.7.2005 noted that despite the above order of this court the claimants have failed to file the Income Tax Returns for the relevant period or to file the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity. He cannot appear as a witness on behalf of a party. In the present case the claimants themselves have not appeared in the witness box. It is a Power of Attorney Holder who has appeared as a witness on behalf of the alleged title holders of the flat. The Thareja Committee has rightly discarded the evidence of the Power of Attorney Holder as to no effect. 26. The third aspect that I may note which aspect has also been noted by the Thareja Committee is that the claimants have failed to file the original title documents on the basis of which JVG Finance Limited became the owner of the flats in question. It is claimed that these original documents are in the custody of the OL but no credible evidence to that effect has been placed on record. A purchaser of immovable property will normally be in possession of title papers by which the seller of the property claims title. 27. I may also note that the SFIO in its report dated 11.02.2010 has also commented upon the alleged sale of the said flats. The SFIO concludes as follows:- 4.6.11 From the above it is clear that these four ladies were used as front persons to camouflage the dubious sale of these flats by S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub- section. (d) For the purpose of this sub- section, the expression assignee includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the declaration is made. (3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in sub- section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to five thousand rupees, or with both. (4) This section shall apply, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made. xxx xxx xxx xxx 33. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were decreed. The Bombay High Court was not informed about the liquidation proceedings or the appointment of the provisional liquidator by this court. In fact, it appears, there is no averments made about this order in the suits filed. The company is impleaded as the defendant and after the appointment of the provisional liquidator, it is only he who could represent the company. It is, thus, clear that not only the proceedings in the suits were impermissible as they were initiated without the leave of the court, even they appear to be collusive a well. Such a decree will neither be binding on the official Liquidator or the company and would be void. It is not necessary to take steps for recall of those decrees by filing appropriate proceedings in those sutis. The Company Court seized with liquidated proceedings has ample power to pass necessary directions in this behalf. This aspect is succinctly explained and elaborated by the supreme Court in the case of Sudarsan Chits (I) Ltd. vs. G. Sukumaran Pillai and Others reported as AIR 1984 SC 1579. 37. The Division Bench of this court on 18.07.2006 in appeal did not set aside the above conclusion. The said order dated 04.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory provisions and not binding. Reference may be had to Sections 446 and 456 of the Companies Act, 1956 which read as follows: 40. Section 446(1) of the Companies Act 1956 reads as follows:- 446. Suits stayed on winding up order. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding 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 and subject to such terms as the Court may impose. 41. Section 456(1) of the Companies Act 1956 reads as follows:- 456. Custody of company' s property. (1) Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator 2 or the provisional liquidator, as the case may be,] shall take into his custody or under his control, all the property, effects and actionable claims to which the company is or appears to be entitled. 42. Hence, on passing of an order of appointment of a Liquidator, the Liquidator/Provisional Liquidator takes into custody all the properties, effects, etc. of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments to sell and further the said agreements had been duly exhibited by him. In support of his submission, he relies upon Bhimappa Ors. Vs. Allisab Ors. reported in 2007 (6) KarLJ 286 , Syed Abdulkhader Vs. Rami Reddy Ors. reported in 1979 SCC (2) 601 as well as the order dated 05.10.2010 passed by the Hon ble Supreme Court in C.A.Nos.147-148/2001 titled as Man Kaur (D) by LRs. Vs. Hartar Singh Sangha . 6. Mr. Chadha lastly submits that in view of the Division Bench order dated 18th July, 2006, the earlier order of the learned Single Judge dated 04th July, 2005 holding the consent decrees passed by the Bombay High Court in favour of the appellants to be null and void stood set aside. He emphasizes that the applications on which the Company Court had initially set aside the consent decrees passed by the Bombay High Court in favour of the appellants were not maintainable as they had not been filed by the Official Liquidator but by the Ex-Management i.e. V.K. Sharma, Ex-Managing Director. 7. Per contra, Mr. Dheeraj Gupta, learned counsel for Mr.V.K. Sharma, the Ex-Management submits that the present appeal is not maintainable as it is in the nature of a second a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appeal is maintainable as it is not in the nature of a statutory second appeal. In the present case, the initial claims were decided not by the Official Liquidator but by a Committee appointed by a Division Bench. Consequently, the preliminary objection raised by the learned counsel for the Ex-Management is rejected. 10. We are, however, in agreement with the finding of the learned Single Judge that the appellants had failed to prove their ownership to the flats in question as they had not produced any original title documents, but only photocopies. Even during the course of hearing, it was admitted before us that the appellants had not produced their income tax returns to prove the payment of consideration to M/s J.V.G. Finance Ltd. despite being repeatedly asked by the learned Single Judge. 11. Moreover, the purchasers under the alleged title documents i.e. the appellants had not stepped into the witness box. The argument of the appellants that there was no necessity in the present case for the appellants to step into the witness box is contrary to facts and untenable in law. It is settled law that to succeed in a suit for specific performance (which is the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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