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2018 (9) TMI 99 - HC - Companies LawPetition for winding up - proceedings deemed to have commenced - Held that:- The weight of authority is clearly in favour of the view that winding up proceedings would be deemed to have commenced on the date of recommendation by the BIFR that a Company be wound up and respectfully agree with the said view. In any event, whether one were to take as the relevant date to commence the winding up proceedings, the date of recommendation, i.e., 22nd January 2007, the date of receipt by this Court of the recommendation, i.e., 5th July 2007, or the date of admission of the winding up proceedings, i.e, 27th August 2009, the Consent Decree dated 9th July 2009 falls within the period stipulated in Section 531 of the Companies Act, 1956 for an enquiry as to whether a transaction constitutes a fraudulent preference. Apart from the fact that the Consent Decree itself is liable to be set aside, applicant also acquired no title or interest in the Satara Property merely by virtue of the attachment. Applicant is no more than an unsecured creditor who has no prior right in law over any other lender for payment out of the sale proceeds of the Satara property. The interest of all stakeholders would therefore be far better served if leave as sought for by applicant is refused and the property is sold by the Official Liquidator. The cause of action in favour of Official Liquidator can be held to be complete only on his becoming aware, from the suit proceedings, of the nature of the fraud perpetrated by applicant in collusion with the Company. As such the directions sought by Official Liquidator are clearly within time. Refund of amounts withdrawn - It is applicant’s case that Official Liquidator is, in any event, not entitled to apply for refund by applicant of the amounts withdrawn by it - The formulation of this argument is problematic. The distribution was effected not under orders passed by DRT - The order dated 21st April 2016 of this Court permitting such distribution was careful to qualify the order by the observation that it would be an interim arrangement subject to final outcome of the issue on status of the creditors of the Company (in liquidation) and that the order was being passed at the instance of Kotak Mahindra Bank and applicant and “without prejudice to the rights and contentions of the Official Liquidator”. As such, this order merely permitted an adhoc distribution of the sale proceeds and did not conclude any rights between the parties. Indeed, this issue regarding the illegality of the Consent Decree sought to be enforced by applicant was neither considered nor determined by either the DRT or this Court. (a) the leave sought by applicant under Section 446 of the Companies Act 1956 to enforce the Consent Decree dated 9th July 2009 is refused; (b) the Consent Decree dated 9th July 2009 is declared illegal and void as a fraudulent preference; and (c) applicant is directed to refund with interest at 12% p.a. the amount of ₹ 10,17,03,493/withdrawn by it from the sale proceeds of the Ambattur property.
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