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2000 (3) TMI 1075

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..... consisting of survey plot Nos. 91 to 94 appertaining to Khatian No.2 of mouza Nichitpur (hereinafter referred to as the suit property) and for permanent injunction restraining the respondents from interfering with their possession. The suit property was owned by M/s.Nichitpur Coal Company Private Limited (hereinafter referred to as the Company), which is registered under the Indian Companies Act. By a resolution of the board of directors of the Company dated September 21, 1970, it was resolved to sell the suit property to the appellants for a consideration of ₹ 5,000/-. However, the appellants paid ₹ 7,000/- to one of the directors under receipt dated December 30, 1970 (Ext.10). An agreement to sell the suit property to the appe .....

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..... , collusive, without any consideration and was brought into existence to avoid the effect of vesting of the suit property under the Act of 1973. It was also stated that the appellants are wives of the directors of the Company, who are real brothers. On appreciation of the evidence placed before it, the trial court held that the appellants got no title to the suit property and were, therefore, not entitled to any relief and thus dismissed the suit on September 22, 1977. Aggrieved by the judgment and decree of the trial court, the appellants filed Title Appeal No.147 of 1977 before the learned District Judge, Dhanbad. On reappraisal of the evidence on record, the learned District Judge allowed the appeal and set aside the judgment and decree .....

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..... ogus and was entered into to avoid the vesting of the suit property in Central Government under Section 3(1) of the Act of 1973 and thus allowed the second appeal filed by the BCCL on November 11, 1997. That judgment and decree are under challenge in this appeal. Mr.A.K.Srivastava, learned senior counsel appearing for the appellants, pointed out that contrary to the observation of this Court, the High Court has proceeded to decide point No.2 first and that resulted in prejudice to the appellants. He argued that the High Court found that the appellants had proved three facts, namely, (i) the board of directors of the Company passed a resolution on September 21, 1970 (Ext.12) to sell the suit property in favour of the appellants; (ii) the app .....

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..... been proved by the appellants. But, then the High Court also noted with approval the following circumstances, pointed out by the first Appellate Court: firstly, the resolution dated September 21, 1970 (Ext.12) was an antedated document. Mr.Srivastava submitted that the government authorities were in possession of all the records of the Company and they should have produced the original record to substantiate the allegation that the resolution was antedated and in the absence of such record the High Court was not justified in confirming the finding of the First Appellate Court. The fact remains that the appellants themselves took no steps to summon the record from the custody of the concerned authority. That apart there is no mention of the .....

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..... ves and that they had no independent source of their income, which cannot be ignored altogether as irrelevant. Mr Srivastava submitted that undue emphasis was given to the fact that the directors of the Company were brothers and the appellants are their wives. He argued that the Company is a separate legal entity which is independent of its directors and shareholders and repeatedly referred to the oft-quoted decision in Salomon Vs. Salomon. The principle laid down in Salomons case more than a century ago in 1897 by the House of Lords that the company is at law a different person altogether from the subscribers who have limited liability, is the foundation of joint stock company and a basic incidence of incorporation both under English law a .....

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..... ry for the court to find out whether the respondent has led any evidence to show that the transaction is sham, bogus or fictitious. For the afore-mentioned reasons, we are unable to say that the High Court erred in taking the view that the sale, in favour of the appellants, is neither bona fide nor genuine and confers no right on them. In view of the finding on point No.1, the suit property remained the property of the Company and, therefore, it vested in the Central Government under Section 3(1) of the Act of 1973. This is what the High Court held on point No.2. which is supported by the judgment of this Court in Bharat Coking Coal Ltd. Vs. Madanlal Agrawal [1997 (1) SCC 177]. In the result, we find no merit in the appeal. It is accordingl .....

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