TMI Blog1957 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... The company's main business was to deal in property, to purchase, develop and then to sell the property. The petitioners entered into an agreement with the company, whereby the latter was to develop and resell certain property which the petitioners had purchased. It was on the basis of this agreement that they obtained the awards and the decrees in their favour. After the partition of the country in 1947, the company got into difficulties, for having been deprived of its valuable assets in Pakistan. In 1948, a creditor of the company, Dhanpat Rai, presented a petition to this court for winding up the company. The petition was dismissed because of a scheme sanctioned on 12th August, 1949, under section 153 of the Companies Act. According to this scheme, the creditors of the company were to be paid 25 per cent. of their deposits, as on 15th August, 1947, within six months and 75 per cent. within three years thereafter. The first instalment was actually paid and out of the remaining 75 per cent. the company could pay only 8 per cent. to the creditors. A fresh scheme of arrangement was then put forward by the company and on its being unanimously accepted by the creditors, the scheme w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on fixed for 14th December, 1952, and if, at any subsequent time, the tea gardens were required to be sold notice about it would be given to the petitioners. While the tea gardens were left out, eight other items of property were sold on 14th December, 1952. The total sale price came to Rs. 2,02,700. Since the purchaser in each sale was a creditor of the company the debt due to him was adjusted against the sale price. As already observed, the validity and binding nature of these sales was challenged in the winding up petition dated 10th January, 1953. On that petition coming up for hearing, this court, vide its order dated 25th September, 1953, expressed the view that the scheme sanctioned on 18th July, 1952, was still being carried out and under it six months yet remained for payment to the creditors when the petition was presented, and that "the evidence does not show that the sale of the property held in December, 1952, was carried out in any other way than was prescribed by the terms of the scheme and there is not the slightest evidence of any unfairness." It was consequently directed that the petition would be kept pending till 26th March, 1954, and that during the intervening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was presented on 29th November, 1954. Rule 157 provides thirty days' limitation for a petition to question an act or decision of the official liquidator as provided by section 183 of the Companies Act. Under rule 158 the time may be extended in appropriate cases. If the petitioner succeeds in showing that the transactions are void, it will not be possible to throw out the petition simply because it was presented more than thirty days after the official liquidator refused to accept them to be so. Section 227 of the Companies Act does not provide for an application to be made to obtain an order that any particular disposition of property or transaction is void, nor does it specify the person by whom any such application may be made. The person moving the court need not first approach the official liquidator and his having unsuccessfully done so does not deprive him of his independent right to bring the facts to the notice of the court. Section 183(5) of the Companies Act would have no application to such a case and, therefore, the rules framed under section 246 read with section 183 also would not apply. Under section 227(2), in the case of a winding up by or subject to the super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners as creditors or disentitle them to safeguard their interest by seeking a declaration that the sales are void and the properties liable to be proceeded against in execution of the decrees in their favour. The first two issues are therefore decided in favour of the petitioners. It is common ground between the parties that conveyances with respect to the sales by auction, which took place on 14th December, 1952, excepting in one case, were executed and completed after 10th January, 1953, when the petition for winding up was presented. Sale deed relating to 13 kanals 6 marlas of land in favour of Lt. Col. S. D. Sedhi, respondent, was executed and registered on 9th January, 1953. With respect to the rest of the sales, it is contended that the transactions, completed as they were after the presentation of the winding up petition, were void under section 227(2) of the Companies Act. It is further urged that in any case, the transactions amounted to fraudulent preferences and were therefore liable to be avoided under section 231 of the Act because the vendee in each case was not required to pay anything by way of consideration but was allowed to adjust the purchase price again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf put an end to the contract or render the party incapable of performing its part of the contract. A contract for sale entered into by a company before presentation of the winding up petition continues to be valid and enforceable. The company, before it is ordered to be wound up, and the company's representatives, after it is wound up, would be well within their right to complete the contract. It was in accordance with the scheme that the creditor-purchasers were allowed to set off their claims against the sale price. Every creditor was free to bid at the auction and get benefit of the terms of the scheme, which was duly adopted and sanctioned. There was thus nothing wrong or fraudulent in the adjustment either. I am in agreement with Mr. Aggarwal that no order regarding the validity or otherwise of these sales could be made before the winding up order. This is so because the point was not directly involved when the winding up petition was being considered and was not finally decided. The petition might have been dismissed or withdrawn. Till the petition was allowed, there was only a contingent future possible winding up and the company was not in the course of being wound up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It is further submitted that no fraudulent preference was given to any particular shareholder or creditor, as everyone of the shareholders was given the option to adjust the call money against his dues from the company. On these grounds, it is claimed, the disposition was bona fide and deserves to be saved from the operation of section 227(2). I do not see any force in the contention. The adjustment was neither provided in the scheme, nor was it permitted by the order of this court. The scheme as well as the order simply required the company to realise its assets, including the call money, and to discharge its liabilities to the extent of 80 per cent. within the specified period. Every creditor was entitled to the payment of his dues to that extent, and every item of the company's assets was his security for the purpose. The unpaid call money is an asset of the company, on which every creditor may rely. The assets of the company were to be distributed, so far as possible and subject to certain well-recognised exceptions, pari passu, between the creditors. After the winding up petition was presented, the directors could not give preference to the creditors who were also the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t company, it is contended that the statement did not create a charge, and if it did create a charge, the statement was without authority. Lastly, it is submitted that the charge, if any, was void and unenforceable as against the official liquidator, for the prescribed particulars of it were not duly filed with the Registrar as required by section 109 of the Companies Act. In my view, the first and the last contentions have to be accepted. The statement amounted to nothing more than a personal undertaking. It was to the effect that the property would not be put to sale on the date fixed for auction. Non-observance of the undertaking might have given rise to some other liabilities, but it could not affect the property or be binding on its bona fide purchaser. A number of items were advertised for sale by auction on the particular date. The petitioners, though they had prayed for a general restraint order, were satisfied with the assurance that the tea gardens would not be sold that day. The court did not proceed any further, and did not make any order creating a charge on the property left out by agreement of the parties. In the case of a charge, the prescribed particulars of it a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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