TMI Blog2007 (7) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... e put up for sale. The Company s office premises at 122, Maker Chambers, VI, Nariman Point, Mumbai were put up for sale through a public advertisement as per the direction of the Company Court in Company Application No. 66 of 1988. The valuation report indicated that the property was worth Rs. 4.10 crores. Thereafter, at the time of physical inspection on 10-2-2006 the property was valued at Rs. 4.55 crores. Bids were invited and the highest offer received by the Official Liquidator was Rs. 5.95 crores. The Official Liquidator accordingly submitted Official Liquidator s Report No. 166 of 2006 seeking direction for confirmation of sale in favour of M/s. Pacific Corporate Services Ltd., for purchase consideration of Rs. 5.95 crores. At the hearing of said OL Report, M/s. Mak Enterprises appeared through their learned advocate Mr. Pavan Godiawala and expressed readiness and willingness to offer more than Rs. 6.20 crores. The Company Court permitted the said firm to deposit earnest money deposit of Rs. 40 lakhs and further sum of Rs. 5 lakhs as late fee charges. The Company Court then permitted the bidders to proceed for inter se bidding. In fact, another party, Dilip H. Udani had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Draft dated 22-1-2007, the appellant made the following averments in paragraphs 5 and 7: "5. Meanwhile the said partnership firm got converted into Part IX Company and hence the present application is preferred before the Hon ble Court for necessary direction to the Official Liquidator to accept the remaining amount of Rs. 5,11,25,000 (Rupees Five Crores Eleven Lakhs Twenty Five Thousand) from the present applicant. A copy of the Memorandum and Articles of Association are marked as Annexure C . 7. I say that, to incorporate the partnership firm into Part IX Company, the other partners were inducted and fresh deed was executed. At least 7 (seven) partners would be required and thereafter the firm was converted and registered into Part IX Company. All the seven partners have to be subscribers to the memorandum of association and hence the said partners are the subscribers to the Memorandum of Association." It was then pointed out that the seven partners expressed their desire vide Resolution dated 23-2-2007 to register the firm as a Limited Company within the meaning of section 565/566 of the Companies Act, 1956. The Memorandum of Association and the Articles of Associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in profit and loss of the original two partners was 45% + 45% = 90% and subsequently inducted five partners were given nominal share of only 2 per cent each. As stated in the partnership deed dated 17-2-2007 (Annexure-B collectively), the names and addresses of two existing partners and the five newly inducted partners and their share in profit and loss were as under: Sr. No Name of the member Share in Profit and loss 1. Mr. Khalid Shoukatali Chowdhary, Crystal Tower, 12th Floor, Flat No. 1202, M. T. Ansari Marg, 14, Arab Lane, Grant Road, Mumbai - 400 008. 45% 2. Mr. Asif Ismail Potia, Ratan Apartment, Flat No. 4, Plot No. 6/3, Samarth Ramdas Marg, 10th Road, JVPD Scheme, Vile Parle (West), Mumbai - 400 049. 45% Sr. No Name of the member Share in Profit and loss 3. Mr. Mohammed Iqbal Khan, 101, Morusadan, S. V. Road, Santacruz (West), Mumbai - 400 054. 2% 4. Mr. Imran Iqbal Khan, 101, Morusadan, S. V. Road, Santacruz (West), Mumbai - 400 054. 2% 5. Mr. Rashid Khalid Chowdhary, Crystal Tower, 12th Floor, Flat No. 1202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4, Plot No. 6/3, Samarth Ramdas Marg, 10th Road, JVPD Scheme, Vile Parle (West), Mumbai - 400 049. Original partner 3. Mr. Mohammed Iqbal Khan, residing at 101, Morusadan, S.V. Road, Santacruz (West), Mumbai - 400 054. Partner No. 3 4. Mr. Imran lqbal Khan, Same address as of partner No. 3 Son of Partner No. 3 5. Mr. Rashid Khalid Chowdhary, same address as of partner No. 1 Son of Partner No. 1 6. Mr. Shahid Khalid Chowdhary, same address as of partner No. 1 Son of Partner No. 1 7. Mr. Salim Ismail Potia, same address as of partner No. 2 Brother of partner No. 2 It is also submitted that the learned Company Judge erred in passing strictures against the learned advocate for the appellant-Company who appeared before the learned Company Judge. 8. On the other hand, Mr. J. S. Yadav, learned counsel appearing for the Official Liquidator has opposed the appeal and submitted that since the order dated 28-12-2006 specifically provided that no nomination shall be permitted and since the highest offer of Rs. 7.35 crores was made by M/s. Mak Enterprises, a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical realities of the business world with which the Company Court has to deal with day in and day out, and that the Company Court has to deal with this aspect in all Court auction sales, we cannot help expressing the view that there need not be absolute embargo on such nomination facility. Nomination facility is being allowed by this High Court exercising jurisdiction under the Companies Act for the last many decades. This Court can take judicial notice of the fact that the ultimate purchasers of the property or the end-users generally do not themselves participate in such auction sales and in any case, never in large numbers. It may be on account of the delays in the Court proceedings or uncertainties in such proceedings or any other reason that the end-users may be shying away from Court auction sales, but the fact remains that a number of persons dealing in plant and machinery or real estate do participate in such auction sales. If the nomination facility were to be prohibited altogether, the number of parties participating in the Court auction sales would considerably go down. This would not be in the interest of ultimate beneficiaries, i.e., secured creditors and workmen wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In any view of the matter, in the facts and circumstances of the case, we are not inclined to impose any such condition for the simple reason that the two original partners of M/s. Mak Enterprises (the auction purchaser) continued to have 90 per cent controlling interest in the newly formed company, converted from partnership firm comprising of seven partners including the same two partners having 90 per cent share and the five others who are not only close relatives of the original partners but also have only nominal share of 2 per cent each (as a partner in the erstwhile firm and shareholder in the Company). 15. In view of the above discussion, we allow the appeal set aside the order dated 9-5-2007. We also expunge the remarks made by the learned Company Judge in the above order against learned advocate Mr. Pavan S. Godiawala, for the appellant-Company. We further allow Company Application No. 166 of 2007 and direct the Official Liquidator that in view of full payment of Rs. 7.35 crores by the M/s. Mak Enterprises/appellant-Company to the Official Liquidator, as per the order dated 28-12-2006 (about which fact there is no dispute), the Official Liquidator shall execute the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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