TMI Blog2010 (3) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... vali, District Thane, Navi Mumbai and return the possession thereof to the applicants. 3. The other prayer is that the Official Liquidator should be restrained from issuing any notice of auction or tender notice and selling the aforementioned plot of land. 4. The company application was supported by the affidavit of the appellant No. 1. He stated in the affidavit that he is carrying on business as a partner of a partnership firm M/s.. Refair Industries. The business of the firm is of manufacturing electrical parts and assemblies. The firm has been producing electrical assemblies and parts to be supplied to various companies including M/s.. Siemens Limited. The demand for their product has been increasing and in fact, the business with M/s. Siemens Limited necessitated acquisition of more space for production activities. Therefore, the firm was in search of an additional plot of land. One real estate agent known to the first appellant assisted him earlier and, therefore, he informed the said agent that the agent should find out any additional plot for the business of the firm. Accordingly, the agent alongwith another person approached the appellant No. 1 in December, 2006 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 and the firm in resisting the attachment. As a result, the subject plot was attached. The officials of the Official Liquidator took possession and deployed their security. However, the applicants repeatedly followed up the matter with Shri Anwar Merchant but there was no response. They made enquiries and it was revealed during the same that an order was passed on 21st April, 2007 by this Court attaching the said premises. It is in such circumstances that the aforementioned company application was filed claiming the reliefs referred to hereinabove. 7. It was the case of the applicants that the plot was transferred to M/s. Arsh International Chemical Pvt. Ltd. It was stated that the records pertaining to the subject plot did not reveal that there was any litigation pertaining to the same. There was no fault found with the title of M/s. Arsh International Chemical Pvt. Ltd. 8. It was stated that when M/s. Aminx Alkalies Limited (the company in liquidation) was ordered to be wound up by this Court order dated 26th April, 1999, enquiries revealed that there were two plots viz. R 34 i.e. the subject plot and R 35. These are adjoining plots. R 35 was an asset of the company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh International Chemical Pvt. Ltd.). A Deed of Assignment was executed on 15th December, 1998 transferring the subject plot to M/s. Aminex Holdings and Investments and thereafter, the said Aminex Holdings had transferred the subject plot to M/s. Arsh International Chemical Pvt. Ltd. and these Deeds of Assignments were registered on 20th April, 1999. It is stated that the respondents including respondent No. 5 were not aware of the winding up order passed by this Court. The deponent states that even MIDC permission for assignment was obtained. In such circumstances, it is stated that the respondents were not concerned with the winding up petition and any order made therein. On the other hand, since they had handed over possession of the subject plot to the Merchants, they did not make enquiries with regard to the appointment of Official Liquidator. He came to know of such appointment only after the Merchants filed a criminal case against the respondents. Thus, it is stated that the order passed by this Court on 21st April, 2007 was set aside and the Official Liquidator was directed to do the needful after Deed of Assignment was quashed by this Court. The respondents confirmed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional affidavit on 4th March, 2009 and dealt with some of the statements made in the affidavits of the contesting respondents and the Liquidator. 14. With this material, the company application was placed before the learned Single Judge and after hearing the counsel appearing for the parties, by the impugned order, he has dismissed the same. 15. It is this order which is under challenge before us. 16. Shri Rajadhyaksha, learned Senior Counsel appearing on behalf of the applicants did not seriously dispute that the subject property was assigned by the Director of the Company in liquidation in favour of its sister concern M/s. Aminex Holdings and Investments. He did not dispute that this is a partnership firm of the Ex Director of the company in liquidation. He does not dispute that on 18th December, 1998 M/s. Aminex Holdings and Investments have assigned the subject plot to Anwar Ismail Merchant and Ismail Hashan Merchant. On 15th February, 1999, the Merchants (respondent Nos. 8 to 10) incorporated the company by the name of Arsh International Chemical Pvt. Ltd. The subject plot was brought in by the Merchants as an asset of Arsh International Chemical Pvt. Ltd. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Liquidator should be permitted to go ahead and dispose of the subject plot so that the creditors of the company in liquidation are paid their dues. She, therefore, submits that there is no substance in the appeal and it be dismissed. 18. Although there are several parties impleaded to the appeal as respondents other than the Official Liquidator, none other than the Official Liquidator addressed us. 19. With the assistance of the learned Counsel appearing for parties, we have perused the impugned order, some of the relevant documents and the statutory provisions in question. The principles on which Company Court exercises its power under Section 536(2) are well settled. In a decision ( Pankaj Mehra and Anr. v. State of Maharashtra and Ors .) reported in AIR 2000 SC 1953, the Supreme Court noticed relevant sections of the Company Act and in paras 14 to 18 this is what is observed by the Hon'ble Supreme Court: 14. In the above backdrop alone we can consider the impact of the legislative direction in Section 536(2) that any disposition of the property of the company made after the commencement of the winding up (i.e. after the presentation of a petition for winding up) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was any commercial compulsion to enable it to run its business . The decision only indicates that such payments could have been made valid if evidence was adduced to show that there was compulsion of circumstances. In fact, this decision lends support to the interpretation that the payments which were made after the commencement of winding up proceedings, would not become ab initio void. 17. An early decision of a Division Bench of the Bombay High Court in Tulsidas Jasraj Parekh v. Industrial Bank of Western India AIR 1931 Bombay 2 was sought to be relied on by most the learned Counsel who argued for different appellant. The question which the Court considered therein pertained to Section 227(2) of the old Companies Act, 1913 which was identical to Section 536(2) of the present Act. Certain payments made by a Company after commencement of the winding up proceedings were questioned and the Division Bench considered the scope of the sub section and noticed that the principle had been borrowed from the English Companies Act. Hence some of the English authorities were also referred to by Marten, C.J., who spoke for the Division Bench. Learned Judges stated thus: Now h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a company which is made the subject of a winding up petition may nevertheless obtain the money necessary for carrying out its business and so as to avoid its business being paralysed. If that is the purpose and object of the section, it would hardly be proper and just to stultify the power and restrict its operation since otherwise it is bound to be counter productive in the sense that the very purpose of keeping the company as a going concern so as to ensure the interest of the shareholders and creditors would be defeated. 20. Thus, the principles that can be deduced are that the transactions which have been undertaken under compulsion of circumstances in order to save or protect the property of the company could be saved provided evidence is produced about such compulsion. The assets of the company cannot be disposed of at the mere pleasure of the company. If the business is going to be paralyzed, then, the court in appropriate cases can, for the benefit and interest of the company, save the transaction. It is for enabling the company to continue as a going concern and to protect the interest of shareholders and creditors that such a power is conferred and must be exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that this is not a fit case wherein the powers conferred by Section 536(2) of the Companies Act, 1956 can be exercised. The acts of taking away the property and assets of the company in winding up are by the ex Directors of the Company in liquidation. The transaction with the sister concern of the company in liquidation is after the winding up petition was presented to this Court. In fact, it was within three days thereafter. Further, the assignment in favour of the firm of Ex Directors is also after the date of presentation of the petition. The Ex Directors had knowledge of the proceedings. Each one of them is aware and in fact stated that the company in liquidation was carrying on its business and manufacturing activities on the subject plot. That it was adjacent to plot No. R 35 and possession of that plot was taken by the Liquidator. In such circumstances, by their acts, they prevented the Official Liquidator from attaching and taking possession of the subject plot, thereby they prevented the court from attaching a valuable asset of the company in liquidation. The court protects assets and properties so as to effectively and properly wind up the affairs of the company in l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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