TMI Blog2005 (7) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... order, sale notice was published on 18-2-2004. On 31-8-2004, two applications were filed by the present appellants. The affidavits in support of the applications were sworn to by Mr. Bhaskaran, who is the power of attorney holder of the applicant in C.A. No. 1170 of 2004 and the applicant himself in C.A. No. 1172 of 2004. The averments in the two applications are as follows One M.N. Rajaraman, the father of the two applicants, had invested Rs. 18,50,000 in Nimmathi deposit in R.P.S. Benefit Fund Ltd., as per several fixed deposits. Such deposits after maturity became due for payment by May, 1999, but, R.P.S. Benefit Fund Ltd. expressed its difficulty in paying the maturity value working out to Rs. 55,50,000. The Company agreed to convey 16.32 acres of land towards investment of Rs. 16,50,000 and accordingly the Company executed an irrevocable power of attorney dated 28-7-1999 in favour of M.N. Rajaraman, authorising him to sell the disputed properties. Accordingly, M.N. Rajaraman, as the power of attorney holder on behalf of the Company, has executed sale deeds between 9-8-1999 and 12-8-1999 in favour of the two applicants and the applicants were in possession after the sale d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negotiation process of selling of the property is yet another device adopted by the former Chairman, Mr. P.G. Saranyan to sell the company s properties for a very low consideration on paper and to receive the secret balance of the market value by collecting the same in cash, thereby cheating the company and committing fraudulent preference to defeat the rights of other depositors and creditors of the company. . . ." 4. On behalf of the appellants/applicants, the main contentions, which were raised before the learned Company Judge, were to the effect that the registered sale deeds were executed in August, 1999 and the purchasers were in possession and the Administrator/Official Liquidator should have ascertained the aforesaid facts by obtaining the encumbrance certificate and without doing so, they obtained order regarding sale of the properties to the detriment of the applicants without impleading such applicants. The applicants were bona fide purchasers for valuable consideration in view of the matured money value in respect of the deposits made by their father, and therefore, the sale effected by the company in liquidation should not be construed as fraudulent preferences. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown to a particular creditor without any rhyme or reason. Learned Company Judge further concluded that the decisions rendered under section 531A of the Companies Act or section 55 and section 28 of the Provincial Insolvency Act laying down the proposition that burden was on the Official Liquidator/Administrator to show that the transaction was not in good faith, were not applicable. Learned Company Judge further concluded that since the transfer had been made even before the part of the deposits had become due and no lawful or compelling reason had been stated justifying such transfer, there was no necessity to recall the order dated 28-6-2004. 7. In the present appeals, the main contentions which were raised before the learned Company Judge have been reiterated. Learned Senior Counsel appearing for the appellants has submitted that even assuming that the entire fixed deposits had not become due, the consideration money indicated in the sale deeds was much less than the amount of about Rs. 27 lakhs, which was admittedly due by June, 1999. Moreover, under the impugned sale deeds, the depositors were giving up their entire right and since the deposits had been made to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. 10. Learned counsel appearing for the appellants has however contended that on 26-7-1999, a letter had been written by the appellants to the Company, which clearly indicates about an earlier oral agreement, and, therefore, it must be taken that the subsequent sale deeds executed in August, 1999 related back to the date of earlier agreement and, therefore, the transactions must be judged in the light of section 531A and not in the light of section 536(2) of the Companies Act. 11. It is of course true that in such letter dated 26-7-1999, reference is made to various discussions M.N. Rajaraman had with the President of the Company. The recital further indicates that the applicants and others had agreed to take over 18.50 acres of land from the company. The letter concludes by indicating "We now request you to confirm the arrangement agreed upon orally between us and do the needful urgently, failing which we will be taking appropriate action against you". There is an endorsement in such letter signed by R. Venkatesan, Vice President indicating "Above Arrangements agreed by us". It is however to be noted that in the Special Power of Attorney, which is executed by one S. Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nothing has been indicated as to why the President of the Company or the Vice President of the Company, who was the son of such President, chose the present applicants or their father to alienate considerable extent of land in their favour. It may be that the value of the deposit made by the applicants father was commensurate with the value of the land sold to them, but then there is nothing to indicate as to why the applicants or their father were preferred for such preferential treatment. In such view of the matter, we do not find anything illegal or erroneous in the order of the learned Company Judge refusing to save the impugned transactions. 14. In course of hearing, the learned Senior Counsel appearing for the appellants has submitted that the question of good faith and other relevant matters could have been decided only after giving adequate opportunity of hearing to the applicants and they should have been afforded opportunity of adducing oral evidence. However, from the records it does not appear that at any time the applicants had insisted any oral evidence to be adduced in the matter. 15. Learned Senior Counsel for the appellants has also submitted that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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