TMI Blog2001 (1) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs having a face value of Rs. 10 lakhs each. Such purchase occurred in between one Sri Sankarlal Saraff and petitioner No. 1-company at a consideration of price of Rs. 3,69,00,000 (rupees three crores and sixty-nine lakhs only) on July 1, 1998. Petitioner No. 1 paid the consideration amount by cheque bearing No. 136229, dated July 1, 1998 of Vaisya Bank Ltd., Netaji Subhas Road Branch, Calcutta. The petitioners took delivery of the bonds from such person and deposited in the office of respondent No. 1 for grant of transfer/registration of the bonds in favour of the petitioners. The petitioners requested respondent No. 1 by letter dated July 2, 1998, to issue the interest cheques for the period of June 31, 1997, to June 30, 1998, in his favour. The aforesaid bonds were received by respondent No. 1 on July 2, 1998 ; formal receipt was issued on July 9, 1998. The petitioners, along with the bonds, duly submitted specimen signature of petitioner No. 2 who was the operator to deal with the subject bonds. Respondent No. 1 is also under obligation to pay interest to petitioner No. 1 who is presently the holder of the bonds. The bonds themselves specify the rate of interest, particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with such securities and also not to part with the dividend or principal without the permission of the official liquidator appointed by the Delhi High Court. On June 13, 1997, a further order was passed by the Delhi High Court directing freezing of accounts of M/s. CRB Capital Markets Ltd. and its 40 sister concerns and companies, their directors, lying with all the banks nationalised as well as scheduled, Indian and foreign, and all other financial institutions. On October, 1997, a department of supervision of the Reserve Bank of India intimated the SIDBI making certain allegations in respect of bonds held by M/s. CRB Capital Markets Ltd. in IDBI and SIDBI. In view of such information, transfer of bonds held by Sri Sankarlal Saraf to any person ; payment of interest, etc. were stopped by the bank. Moreover, a portion of the bonds were lodged by Sri Saraf on December 19, 1997, for collection of interest due on December 20, 1997, but he did not lodge the remaining bonds for collection of interest, etc. In any event, the SIDBI (Small Industries Development Bank of India) being respondent No. 1 wrote a letter to the official liquidator on April 3, 1998, seeking advice with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act and ultimately to a decision in K.N. Narayana Iyer v. CIT [1993] 78 Comp Cas 156 (Ker). According to them, sections 531, 531A and 532 of the Companies Act are playing in the field, if any. Section 531 is made for fraudulent preference. In respect of 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 the company within six months before the commencement of its winding up which, had it been made, taken or done by or against an individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of a company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly. As per sub-section (2) mere presentation of the petition or supervision by the court, etc. will be deemed to correspond to the act of insolvency in the case of any individual. Section 531A of the said Act speaks about avoidance of voluntary transfers, meaning thereby any transfer, etc. as aforesaid made by a company, not being transfer or delivery made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of A. The fact that a transfer falling within section 531A is void as against the liquidator implies that it is not a nullity in the absolute sense. Since it is void only as against the liquidator it means that the court will invalidate or ignore the transfer only if the relief is either by a right person namely the liquidator and in appropriate circumstances. For instance, it may be avoided only if it is necessary to satisfy the creditors of the company, or to the extent necessary for that purpose. Therefore, when the liquidator himself does not choose or find it necessary to avoid a particular transfer or to recover the property concerned it is not open to a stranger to ignore it and treat the transferred asset as remaining with the liquidator relying on section 531A of the Act. By citing this judgment both learned counsel interpreted that the liquidator has no business to interfere with the transfer between Sri Sankarlal Saraf and the petitioner No. 1-bank. It cannot ignore and treat the transfer of asset in between themselves as remaining with liquidator relying on section 531A. They have also made certain submissions in respect of section 36 and section 118( e ) and ( g ) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BI, i.e. , respondent No. 1 acted on the basis of the direction of the Reserve Bank of India who is not a party herein. The transactions are definitely of commercial nature which normally be not entertained in the writ jurisdiction. It also appears that the intervention of the transfer of bonds from the company under the winding up and Sri Sankarlal Saraf as well as the present company have occurred within a very short span of time which requires certain fact-finding and definitely not by the writ court. Moreover, whether petitioners are entitled for benefit of section 531A on the basis of the judgment of K.N. Narayana Iyer v. Commissioner of Income-tax [1993] 78 Comp Cas 156 (Ker) or not is definitely dependable under certain circumstances and such circumstances are to be adjudicated by a court having jurisdiction in respect of the company affairs. I have carefully considered all the aspects of the matter. Under article 300A of the Constitution of India, no person shall be deprived of his property save by authority of law. Therefore, if the freedom is restricted under any authority of law, invocation of writ jurisdiction is also restricted under article 226 of the Const ..... 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