C Shanti Anandam v. JVG Finance

1. These appeals lay a challenge to the orders dated 23rd August, 2011; 25th August, 2011; 9th September, 2011; and 22nd November, 2011. By these orders, the learned Company Judge has dismissed the applications filed by the appellants under Section 536 (2) of the Companies Act praying for acceptance of the sale of plots of the respondent’s company to them. Inasmuch as the identical question on law and facts are concerned, we are taking up these appeals together.

2. Notice has been served on the respondent company which is under liquidation. Mr. Rajiv Bahl, learned Standing Counsel for the official liquidator who is present in another case listed today, accepts notice of this case on behalf of the respondent. Copies of the appeals have been received by Mr. Rajiv Bahl, Standing Counsel who has been heard in the matter.

3. The respondent before us was the company registered under the provisions of the Companies Act, 1956 in respect of which liquidation proceedings under C.P.No.265/1998 are pending. In these proceedings order dated 5th of June, 1998 was passed by the learned Company Judge holding that there were sufficient grounds in the case for appointment of provisional liquidator. Therefore, the official liquidator attached to the court was appointed as the provisional liquidator who was directed to take charge of all assets and properties of the court with books of accounts and other records.

4. In these bunch of appeals, the appellants claim to have entered into separate agreements to purchase plot/land which were owned by the respondent company. It is claimed by the appellants that these agreements are dated much prior to even filing of the winding up petition before the passing of the order appointing the official liquidator as the provisional liquidator of the company. Payments of amounts detailed in the appeals are claimed to have been made by the appellants before the filing of the winding up petition against the respondent.

5. We may note that by the order dated 18th of October, 1997, the Reserve Bank of India had restrained the official liquidator from accepting the deposits or alienating any assets except for the purpose of repayment of deposit.

6. It is urged by the appellant that one Colonel M.J. Ganapati claiming himself the Project Manager and the Authorized Representative of the respondent company took further payment even after the winding up orders were passed and the official liquidator had been appointed as the provisional liquidator. He further executed sale deeds in favour of the appellant purporting to act on behalf of the company.

7. The said Colonel Ganapati concealed the factum of the pendency of winding up proceedings and the orders passed therein. The appellant makes a grievance that these properties of the company were located at Hyderabad and the appellants were otherwise also not aware of the proceedings or the orders passed by the learned Company Judge.

8. During the process of liquidation, claims were invited by the official liquidator resulting in several persons making claims in respect of large number of transactions relating to land or otherwise before the official liquidator.

9. A One Man Committee was appointed by the learned Company Judge to examine the merits of these claims. The appellants also submitted their claims before the said committee. The claims of the appellants were rejected even though the validity of the agreements to sell that they were entered before the date of filing of the winding up petition was accepted by the One Man Committee however, the Committee held that the balance payments were taken after the order passed by the Reserve Bank of India dated 18th July, 1997 restraining the company in liquidation from accepting deposits or alienating any assets of the company except for the purpose of repayments of deposits and after appointment of provisional liquidator and that the sale deed in favour of these appellants was bad in law.

10. The appellants thereafter approached the learned Company Judge by filing the application under Section 536(2) of the Companies Act seeking validation of the approval in their favour. The appellants have urged that they were the bonafide purchasers without knowledge of the passing of the order dated 18th of October, 1997 of the Reserved Bank of India or the order dated 5th of June, 1998 of the learned Company Judge appointing the provisional liquidator. They also claimed that they have paid entire consideration of the plot in question in terms of the agreement to sell which was unauthorisedly entered into by the respondent company and hence the present case was a fit case for passing of the order under Section 536(2) of the Companies Act.

11. We are informed that apart from the appellants there were several other persons who were identically situated who had been also directed by Mr. Ganpati to part with the remaining part of the sale consideration for the lands. Their claims were also rejected by the One Man Committee and they had also approached the learned Company Judge by way of filing an application under Section 536(2) of the Companies Act. Some of these applications were rejected by the learned Company Judge by order passed on 23rd August, 2011 and 9th September, 2011 compelling these persons to file the appeals before the Division Bench of this court including the Company Appeal Nos.15/2012; 16/2012; 17/2012; 18/2012; 19/2012; 21/2012; 22/2012; 36/2012; 37/2012; 38/2012; 39/2012; 40/2012; 41/2012; 46/2012; 47/2012; 48/2012; 49/2012; 50/2012; 53/2012; 54/2012; 55/2012; 56/2012; 103-112/2012. These appeals were considered by the Division Bench and by the order dated 6th of September, 2012, the orders of the learned Company Judge rejecting their applications under Section 536(2) of the Companies Act came to be set aside.

12. Mr. Ashutosh Dubey, learned counsel for the appellant has also placed before us a subsequent order dated 17th December, 2012 passed on Co.App.Nos.103, 104, 105, 106, 107, 108, 109, 110, 111, 112 all of 2012 raising an identical challenge wherein also similar appeals of the appellants were also accepted.

13. Mr. Rajiv Bahl, learned counsel has pointed out certain new facts which were placed before the Appellate Bench. It was pointed out by Mr. Rajiv Bahl that the Income Tax Department had passed an order of attachment dated 14th September, 1998, soon after the appointment of the official liquidator but before execution of the sale deed. Mr. Bahl, learned counsel has also pointed out to this court that the learned Company Judge had referred the matter to the Serious Fraud Investigation Office, report whereof was awaited which shall have a serious bearing on the outcome of the application.

14. There can be no dispute with regard to the fact that receipt of the part sale consideration by Colonel Ganapati, was without any authority of law. The sale deed was executed by him after passing of the order of the Reserve Bank of India as well as after appointment of the provisional liquidator. The One Man Committee had however accepted the validity of the agreements to sell as well as receipt of the part payment by the company prior to the filing of the widing up petition. In this background, even if the receipt of the consideration by Colonel Ganapati and the execution of the sale deed was invalid, the learned Company Judge would be required to examine the question as to whether the appellants were the bonafide purchaser of the property in question or not.

15. It is submitted by Mr. Dubey, learned counsel for the appellant, that without prejudice to the rights and contentions that they have validly paid sale consideration, in order to obviate any further delay and for reasons of expediency, the appellants are willing to make payment of the balance consideration afresh to the account of the company with the official liquidator.