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TMI Blog2024 (7) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted on behalf of the applicant - M/s. Surya Jyoti Software Pvt. Ltd. (hereinafter referred to as 'SJSPL'), under Rules 6 & 9 of the Companies (Court) Rules, 1959, for de-sealing and handing over of the physical, vacant and peaceful possession of the property situated at Plot No.01, Sector- 154, Noida, Uttar Pradesh-201301 and removal of the security guards deputed by the Official Liquidator from the property in question. 2. It is pertinent to mention at the outset that the aforesaid application has been moved in the instant company petition filed under Sections 433 and 434 of the Companies Act, 1956 seeking winding up of M/s. Cosmic Structure Ltd. (hereinafter referred to as the 'company (in liquidation)'), which was entertained by this Court for the first time on 23.02.2016 and inter alia an interim order was passed against the respondent/company (in liquidation) restraining it from alienating, selling, transferring and/or creating third party interest in its immovable properties, save and except in the usual and normal course of business. The Provisional Liquidator was appointed by this Court in terms of order dated 11.01.2017. 3. Reverting to the instant application, sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is paid in entirety. It appears that the buyer company i.e., M/s. Cosmic Structure Ltd. failed to make the payment of consideration in accordance with the Agreement dated 16.04.2013 and the applicant/company sought to invoke forfeiture of the amount paid towards part-consideration and cancellation of the Agreement in terms of clause (6), which is reproduced as under: "That it is agreed between the Parties that the First Party will transfer its equity paid up shares in favour of the Second Party on its Nominee in after receiving the entire consideration amount from the Second Party as per the payment plan schedule mentioned above in clause 4 and the First Party shall simultaneously deliver to the Second Party or its Nominee liable to pay liquidated damages of Rs. 10,000/- per month to the First Party (OR this Agreement be terminated and 20% of total consideration shall be forfeited by the First Party)." 6. It is stated that accordingly, a legal notice was sent on 25.02.2016 by the applicant/SJSPL and eventually, since no further payment was made, the applicant/SJSPL was constrained to issue a public notice in daily newspapers regarding the cancellation of the Agreement namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evealed that at some time in the past, Bhumi Pujan was performed at the site and initial construction/digging work had commenced. Further, a valuation report was filed with regard to the parcel of land in question in terms of this Court's order dated 26.04.2019, valuing the property at Rs. 32 crores. It was pointed out that the Ex-directors/Promoters of the company (in liquidation) had included the parcel of land/property in question in the proposed township scheme, which was meant for commercial purposes and the Official Liquidator justified its decision to wrest control of the land/property in order to safeguard the interests of the stakeholders. 10. It is pertinent to mention that during the pendency of this proceeding, certain schemes have been propounded by four different groups for revival of the company (in liquidation) and a reply has also been filed by the Investors Association i.e. Cosmic Victim Association, who have opposed the grant of prayers sought by the applicant/company. LEGAL SUBMISSIONS ADVANCED AT THE BAR: 11. Mr. Manish Bishnoi, learned counsel for the applicant/SJSPL, alluding to the terms and conditions/covenants of the Lease Deed dated 27.06.2008 executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taking over as many as six different entities, having nexus with the management/Ex-directors of the company (in liquidation). However, there was no mention of the applicant/SJSPL being associated with the respondent/company (in liquidation) in any manner, except for the transaction in question. The SFIO report on the record, which is lying in a sealed cover, has not indicted the applicant company in any manner. 14. Learned counsel for the applicant company, in order to buttress his submissions, has relied upon the decisions in the case of Stressed Assets Stabilization Fund v. West Bengal Small Industries Development Corp. Limited (2019) 10 SCC 148, Phatu Rochiram Mulchandani v. Karnataka Industrial Areas Development Board (2015) 5 SCC 244, R.G. Soft Drinks P. Ltd. v. Official liquidator 2007 SCC Online Del 1307, and Citicorp International Limited v. Shiv Vani Oil & Gas Exploration Services Ltd. 2023 SCC Online Del 4312. 15. Ms. Ruchi Sindhwani, learned Senior Standing Counsel for the Official Liquidator has submitted that evidently, about Rs. 16 crores had been paid to the applicant company by the respondent/company (in liquidation), but it was pointed out that surprisingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent/company (in liquidation). Further, that the collusion between the management of the applicant and the respondent/company (in liquidation) is apparent from the fact that although OMP(I) No.11/2016 was filed, however, the same was not pursued nor it could have been pursued for the reason that winding up proceedings were initiated vide order dated 23.02.2016. 19. Ms. Vrinda Bhandari, learned counsel appearing for the Ex- director/Mr. Nishant Muttreja of the respondent/company (in liquidation) has urged that there was never any collusion between the management/Ex-directors of the respondent/company (in liquidation) and the management of the applicant company. However, she submitted that the actual, vacant and physical possession of the site had been handed over to the respondent/company (in liquidation) in terms of Agreement dated 16.04.2013, which possession was never given back to the applicant company and the parcel of land in question was integral to the six township projects that were being propounded by the respondent/company (in liquidation). It was vehemently urged that if the land in question is allowed to go back to the applicant company, the entire project w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent) Act, 2002 (w.e.f. a date yet to be notified). Section 537. Avoidance of certain attachments, executions, etc., in winding up by tribunal (1) Where any company is being wound up by the Tribunal - (a) any attachment, distress or execution put in force, without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up ; or (b) any sale held, without leave of the Tribunal of any of the properties or effects of the company after such commencement ; shall be void. (2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government.] 23. A bare perusal of Section 536 of the Act would show that any transfer of the assets of the company after commencement of winding up proceedings may be held to be void. This Court in the case of Reserve Bank of India v. J.V.G. M/s. Finance Limited (20110 SCC OnLine Del 5135 dealt with a report filed by a one-man Committee appointed by the Court whereby the claim of the applicant with regard to an Agreement to Sell executed by the company (in liquidation) after commencement of the winding up proceedings was rejected. This Court r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Bold portions emphasized) 25. In view of the aforesaid proposition of law this Court held that: "it has the discretion to validate any disposition of the property made after passing of the winding up order, but the said discretion is not an untrammelled one, as it has to be exercised on sound judicial principles. In the opinion of this Court, while validating any disposition of the property after the appointment of the Provisional Liquidator, the Company Court, has to keep in view all surrounding circumstances and if it finds that the transaction is a bona fide one for the benefit of the company, then alone the same would be validated". (Bold portions emphasized) 26. Further, it was held that Knowledge of the presentation or of the pendency of the winding up proceedings, on the part of the contracting parties at the time of sale or disposition of the property, is immaterial. We may also invite reference to the decision of this Court in the case of Smt. Benu Berry v. JVG Finance Ltd 2012 SCC OnLine Del 6378, wherein the respondent company was ordered to be wound up vide order dated 05.06.1998 and after commencement of the winding up proceedings, a property belonging to the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding up as "void" unless otherwise ordered. 11. The question which thus arises is as to in what cases the court should order the transfer effected (of the property of the company), after the commencement of winding up as otherwise then void. The learned company judge in this regard has already referred to J. Sen Gupta (Private) Ltd., In re, [1962] 32 Comp Cas 876; AIR 1962 Cal 405 and Siddhpur Mills Co. Ltd., In re, [1987] 61 Comp Cas 756 (Guj); [1987] 1 Comp. LJ 71. We find that the Supreme Court in Pankaj Mehra v. State of Maharashtra, [2000] 100 Comp Cas 417; (2000) 2 SCC 756, to have laid down the "test of whether the transfer was under compulsion of circumstance or other commercial compulsion to enable the company in liquidation to run its business". We further find a Division Bench of the Bombay High Court in Laxman Yeswant Prabhudesai v. NRC Ltd., [2010] 155 Comp Cas 88; [2010] 2 Comp. LJ 380, to have, after noticing a large volume of case law on the subject deduced that the transaction undertaken by company in liquidation can be validated if under section 536(2) under compulsion of circumstances, in order to save or protect the company, provided evidence is produced abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 installments within a period of 12 months starting from the date of payment of first instalment. It is also apposite to note that vide clause (12) of the Agreement dated 16.04.2013, it was affirmed and declared that the vacant and peaceful possession of the plot, including appurtenants, if any thereto, had been handed over to the second party i.e., company (in liquidation) on 07.04.2013. 29. Evidently, the parties entered into the contract for transfer of the shareholding of the company in the ordinary course of its business. Admittedly, there was a default on the part of the respondent/company in making the payment of the sale consideration and the applicant SJSPL served a legal notice dated 25.02.2016 upon the respondent company (not yet in liquidation) i.e., two days after the interim order was passed in the present winding up petition on 23.02.2016 with regard to the assets of the company (in liquidation). Although a Provisional Liquidator was appointed by this Court vide order dated 11.01.2017, it is borne out that in the interregnum the company (in liquidation) filed a petition being O.M.P.(I) 11/2016 under Section 9 of Arbitration and Conciliation Act, 1996, invoking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f `21,000/- per square meter. 6. Since the petitioner is unable to deposit the consideration as agreed, the relief as prayed for by the petitioner cannot be granted at this stage. 7. The petition is, accordingly, disposed of. 8. However, it is clarified that this would not preclude the petitioner from filing an appropriate application under Section 17 of the Act as and when the arbitral tribunal constituted.‖ 30. It is pertinent to mention that the applicant company (in liquidation) in O.M.P. (I) 11/2016 vide paragraph (8) of the petition, acknowledged that the entire shareholding of M/s. SJSPL had been agreed to be transferred for a total consideration of Rs. 42,00,50,400/- (sic which should be read as Rs. 44 crores) and vide paragraph (10) of the petition, it was brought out that Rs. 3,45,25,000/- had been paid to the Noida Authority and Rs. 12.95 crores had been paid to the applicant SJSPL, thereby the total amount being paid amounting to Rs. 16,40,25,000/- and that there were outstanding dues to the extent of Rs. 25,60,25,400/-. It was acknowledged that the petitioner company in O.M.P. (I) 11/2016 was unable to pay the full consideration for purchase of the sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponsibility of the lessee. It shall be treated as breach of terms and conditions of building bye laws and lease deed. 14. (a) That the lessee shall not be permitted to transfer the demised plot before making the unit functional and building constructed thereupon. However at the discretion of CEO the transfer may be permitted after making the unit functional and building constructed thereupon and laying transfer charges as prevalling at that time of transfer such transfer charges shall be paid to the lessor. The decision of Chairman / Chief Executive Officer for all purpose will be final and binding on the lessee. (b) That the lessee may be permitted to sub-lease the part built up space for the same project in case of IT/ITES allotment of 20000 sq.mtr. or above after making the unit functional and completion of minimum of 75% of total permissible FAR subject to payment of prevailing pro-rata transfer charges and prior approval of lessor. 15. Notwithstanding anything contained in the Clause 18, the lessee may, with the previous permission of CEO mortgage the demised plot to any Government Organisation or any Government recognised institution for raising loans for purposes of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently filed and taken up for hearing for the first time on 23.02.2016. At this juncture, as pointed out by the learned counsel for the applicant/SJSPL, it would be apposite to highlight that the payments commenced from 09.09.2013 and lasted till 10.12.2015, as per the tabular details provided in the Affidavit of the applicant, reproduced as under: Date Amount (in Rs.) 09-09-2013 50,00,000 09-09-2013 25,00,000 23-09-2013 50,00,000 07-10-2013 1,00,00,000 14-10-2013 50,00,000 18-10-2013 1,00,00,000 18-10-2013 50,00,000 21-10-2013 50,00,000 23-10-2013 50,00,000 12-11-2013 50,00,000 16-11-2013 10,00,000 06-02-2014 60,00,000 18-2-2014 50,00,000 04-03-2014 50,00,000 11-03-2014 50,00,000 12-03-2014 50,00,000 28-07-2014 50,00,000 25-08-2014 25,00,000 27-08-2014 25,00,000 09-09-2014 25,00,000 30-10-2014 25,00,000 30-10-2014 25,00,000 07-11-2014 35,00,000 07-11-2014 25,00,000 06-08-2015 25,75,000 17-09-2015 23,00,000 30-09-2015 9,50,000 10-12-2015 2,00,000 Total 11,40,25,000 Total Receipt 16,40,25,000/- Only. 33. Thus, the aforesaid pattern of payments resorted to by the respondent company (till then n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought on the record suggesting that there was any connection or nexus between the management of the applicant - M/s Surya Jyoti Software Pvt. Ltd. and the Ex- directors/management of the company (in liquidation). There is also no sufficient allegation that any money was siphoned off, diverted or misappropriated for some extraneous consideration. There is nothing in the report of the SFIO so as to hold that the directors/management of the applicant/SJSPL were the beneficiaries of any financial mismanagement done on the behest of the Ex-directors/management of the company (in liquidation). There is no merit in the plea taken by the learned Senior Standing Counsel that the subject property/land in question was sold for an inflated value. The submission belies common sense and it is not inconsistent with prevailing market practices. It was rightly urged by the learned counsel for the applicant that sale considerations are factored on various market permutations and combinations and are determined after taking calculated risks with regards to the real estate market. Needless to state, in all probability, the company (in liquidation) had much to gain commercially from legitimate exploi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommencement of the winding up petition vide order dated 23.02.2016. In such a scenario, there could be no two opinions but to hold that the subject property cannot be made available to the Official Liquidator for the purposes of the winding up proceedings. The Ex- management, investors or the home buyers cannot enrich themselves at the cost of the applicant/SJSPL, especially in the absence of any evidence which would prove siphoning off funds by the Ex-directors of the company (in liquidation) in favour of the applicant company. Rather, SJSPL is also a victim at the hands of the Ex-management. The benefit of vesting the subject property in favour of the company (in liquidation) so as to enhance its assets cannot be sustained. Lastly, merely because some schemes for revival of the company (in liquidation) have been proposed by the stakeholders and are pending for consideration before this Court, the same would not warrant vesting the subject property in favour of the company (in liquidation), particularly when, apart for bhumipujan at the site, no construction work ever commenced at the subject property. 38. Before parting with this application, it may be pointed out that in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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