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TMI Blog2009 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 531A of the Companies Act, 1956 (hereinafter referred to as "the Act"). 3. Heard Mr. Vakil, learned counsel for Ms. Shefali Doshi - applicant, Mr. Roshan Desai for Official Liquidator in both the applications and Mr. T.S. Nanavati, learned advocate for respondent No. 1 in Company Application No. 172 of 2008. 4. As the facts are interconnected and common questions arise, they are being considered by the present common order. 5. The following facts are not in dispute : (A)It appears that the company in liquidation had filed nine civil suits for recovery of various amounts against the builder and the developer, namely, Devland Developers Private Limited and others for recovery of the huge amount running into crores of rupees. In the said suits ultimately the consent decree came to be passed by the City Civil Court dated 18-8-1999 whereby the right for disposal of Office Premises Nos. 102 to 107 situated at Devpath Complex, C.G. Road, Ahmedabad, inter alia, was entrusted by the defendant in the said suit in favour of the company. As per the said decree, the charge was also created over the said property and the relevant recital in the consent decree is on Clause No. l2(c)( d) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted pursuant to the MoU and since then the applicant remained in possession of the said premises. (H)It appears that the company in liquidation thereafter entered into the Rent Note dated 15-9-1999 in favour of one Decimal Systems Private Limited for giving the premises on rental basis comprising of Office Nos. 102 to 107 admeasuring 1300 sq.ft for the monthly rent of Rs. 1,300 per month. Not only that but thereafter the said tenant Decimal Systems Private Limited preferred HRP Suit No. 1063 of 2000 before the Small Cause Court, Ahmedabad, seeking declaration that they are the tenants of the suit premises bearing Nos. 102 to 107 and the defendant be restrained from interfering with the possession of the plaintiff. In the said suit a statement has been made at para 2 of the plaint that the tenant has paid the rent up to March 2001 and the receipts are produced by separate list. Thereafter ex parte ad interim injunction came to be granted and in the written statement filed by the company in liquidation the factum of giving premises on rental basis as well as the possession was admitted. It appears that thereafter on 22-11-2000, the said tenant plaintiff of the said suit withdrew th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenant Decimal Systems Pvt. Ltd., and Jayantibhai Somabhai Patel to pay mesne profit at the rate of Rs. 5 per sq.ft., for the office premises which remained in occupation of the respective persons. The Decimal Systems Pvt. Ltd. contended that they were in possession of the office premises No. 107 only and they are ready and willing to pay mesne profit at the rate of Rs. 5 per sq.ft. per month from 15-9-1999 till actual handing over the possession of the office premise No. 107. It was directed to pay mesne profit at the rate of Rs. 5 per sq.ft from that date till the possession was surrendered, whereas, so far as Jayantibhai Somabhai Patel is concerned, since it was his case that he was entrusted the possession vide agreement dated 9-3-2006 he had to pay the amount from that date till the actual surrendering the possession to the Official Liquidator. Both the amounts have been deposited with the Official Liquidator. But as this Court observed in the order dated 10-5-2007 that the dispute with regard to the possession of the Office Premises Nos. 102 to 106 for the period from September 1999 to 2006 will be decided by the Court after the Official Liquidator would file a separate repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o debt recoverable by the applicant from the owners of the property or the developer of the property but it was on account of the so-called investment of convertible debenture from the company by way of repayment transferred the rights in favour of the applicant were agreed to be transferred. Therefore, if the contention of the learned counsel for the applicant is accepted that the rights for disposal should not be termed as assets of the company, the same would frustrate the very basis of the MoU which is sought to be validated. Same situation will arise for the charge created pursuant to the decree. It is not a matter of only transferring the rights for disposal of the property but it is coupled with the conjoint stipulation of creation of the charge for recovery of the amount outstanding of the company in liquidation from the defendant who was the owner of the property. 10. The contention that the right as per the consent decree which creates charge over the property cannot be termed as the property of the company in liquidation because it was not registered under the Indian Registration Act by documents or by registration of the decree, even if to be examined, it does appear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly : Provided that, in relation to things made, taken or done before the commencement of this Act, this sub-section shall have effect with the substitution, for the reference to six months, of a reference to three months. (2) For the purpose of sub-section (1), the presentation of a petition for winding up in the case of a winding up by [the Tribunal], and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to the act of insolvency in the case of an individual." 13. It is not in dispute that the date on which the MoU is entered into, is falling during the said period which is covered under section 531 of the Act. Therefore, the aspect which may be required to be considered is as to whether any fraudulent preference is given or not frustrating the rights of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the President of the company in liquidation. 16. The aforesaid totality of the circumstance goes to show that the preference is made for payment in favour of the applicant by way of MoU and the same is by way of an intention to transfer the assets of the company by way of extraneous consideration consequently resulting into frustrating the rights of other creditors. 17. Mr. Vakil, learned counsel appearing for the applicant, relied upon the various decisions to contend that the burden is upon the Official Liquidator to show that there is fraudulent preference and unless it is satisfactorily demonstrated before the Court by way of extraneous consideration or by way of preference by frustrating the rights of the other creditors, the transaction cannot be termed as fraudulent preference and deserves to be validated. 18. Even if such principles are considered, it would not carry the case of the applicant further in view of the peculiar circumstance as referred to hereinabove and the document of MoU itself speaking for the payment by way of set off against the assets of the company though had not become due on the date when the transaction was entered into coupled with the other circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of Decimal Systems Pvt. Ltd. for all the Office Nos. 102 to 107. The said aspect is apparent from the rent note produced and the said rent note is further substantiated by the statement made in the plaint by Decimal Systems Pvt. Ltd. and also the pleadings by way of reply submitted before the Court in the proceedings of the suit preferred by Decimal Systems Pvt. Ltd. being MRP No. 1063 of 2000. It is not the case of the Official Liquidator that such rent note or the written statement by the company in liquidation was concocted. The aforesaid circumstance of rent note and of written statement filed on behalf of company in the proceedings of the suit make it clear that after MoU, the company continued to be in possession of the office premises and, therefore, had given on rental basis to the Decimal Systems Pvt. Ltd. It is true that the advertisement was issued at the time of title clearance certificate by M/s. Jani & Co. Solicitors stating that the office premises Nos. 102 to 106 are in possession of the applicant of Company Application No. 582 of 2008. But the pertinent aspect is that though there is no sale deed whatsoever, the title clearance certificate has been issued as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect but restricted its possession only for office No. 107 and for the said period it has also paid the mesne profit at the rate of Rs. 5 per Sq. Feet. So far as Jayantibhai Patel who was wrongly given possession of the premises by applicant of Company Application No. 582 of 2008 is concerned, he has also deposited the amount of mesne profit at the rate of Rs. 5 per Sq. Feet. Under these circumstances, it appears to the Court that the claim for the amount of mesne profit against the Decimal Systems Pvt. Ltd. exceeding the rental amount and the amount as already ordered by this Court which has been deposited by it, for the office No. 107 as mesne profit does not deserve to be granted. So far as respondent No. 2 is concerned, as observed earlier, as the possession was not entrusted after MoU but was retained by the company in liquidation itself, the claim for mesne profit cannot be sustained. As regards Shri Jayantibhai Patel is concerned no claim is made by Official Liquidator but in any case, he has already deposited the amount of mesne profit as ordered by this Court earlier. 23. It also deserves to be recorded that this Court at the time when directed for mesne profit to Decim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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