M/s. JVG Finance Limited v. Respondents

10. 1180/2018 Gaddipati Sriniwasa Rao (subsequent purchaser from V V Ratnakar Reddy) 20.05.1995 27.03.1998 (S. Jai Kumar) (29.08.2003) F-214 (200 Sq yds) JVG Finance Ltd. & JVG Projects Rs.1,13,870/- 279 (21.06.2011)

11. 1194/2018 Karri Padmaja 20.05.1995 16.02.1998 (S. Jai Kumar) C-371 (200 Sq yds) JVG Finance Ltd. & JVG Projects Rs.2,04,920/- 220 (03.05.2011)

12. 82/2012 Ayodhya Joshi 18.05.1995 31.03.1998 (S. Jai Kumar) F-210 (200 sq yds) JVG Finance Ltd. & JVG Projects Rs.1,08,478/- 272

13. 253/2021 Deepak Joshi 18.05.1995 21.02.1998 (S. Jai Kumar) F-207 (200 sq yds) JVG Finance Ltd. & JVG Projects Rs.1,54,378/- 270

14. 255/2021 Santosh Joshi 18.05.1995 31.03.1998 (S. Jai Kumar) F-212 (200 Sq yds) JVG Finance Ltd. & JVG Projects Rs.1,34,947/- 274

7. As regards the 14 applicants herein, registered sale deeds were executed prior to 05th June 1998, and possession of the plots was also handed over to them. Prohibition Order

8. On 10th October 1997, the Reserve Bank of India (‘RBI’) issued a prohibition order restraining the Company from accepting any fresh deposits CO.APPL. 233/2012 & few other connected CAs Page 6/61 from the public. The company, attempting to damage control, stated to the allottees that the prohibition order was only in respect of acceptance and renewal of fixed deposits and did not affect the housing project since it was a self-financing project, and that the layout approval had been received and development was in full swing.

9. On 23rd October 1997, Hyderabad Urban Development Authority (‘HUDA’) revalidated the draft layout plan, and letters were issued to the allottees to make the balance payment and have the sale deed registered. As and when the allotees paid the entire sale consideration, the JVG Group of Companies, through their authorized representatives executed registered sale deeds. Between December 1997 and 2001, registered sale deeds in respect of 225 plots have been executed.

10. RBI filed CO.PET No.265/1998 before this Court on 04th June 1998 under Section 45MC of the Reserve Bank of India Act, 1934. By order of 05th June 1998, a Provisional Liquidator was appointed. Subsequently, by order dated 29th August 2003, the Company was directed to be wound up. On 10th October 2003, the Official Liquidator took symbolic possession of the 225 plots forming part of the project. It is contended by the counsel appearing on behalf of the 14 applicants that it was at this stage that the applicants and other allottees became aware of the winding-up proceedings. One-Man Committee

11. By order dated 22nd July 2004, this Court appointed a One-Man Committee (‘OMC’) to verify the claims of the applicants and other similarly situated persons. Between 03rd May 2011 and 21st June 2011, OMC CO.APPL. 233/2012 & few other connected CAs Page 7/61 examined all documents of the applicants along with individual reports, accepted claims, holding that they were entitled to lawful possession. Since the Official Liquidator did not hand over the possession, applicants opposed to the same by these applications for a direction to release their plots. Submissions on behalf of applicants

12. Various counsel appeared for the applicants, mostly led by Mr. Ashutosh Dubey, Advocate and Mr. Krishna Dev Jagarlamudi, Advocate, who filed a common submission on behalf of all the applicants, some of which are culled out for reference. 12.[1] It was submitted that the OMC, after examining the entire record, accepted the claims of the applicants. On this basis itself, it was submitted that the present applications ought to be allowed, particularly as neither the OMC reports nor the registered sale deeds have been challenged to date. 12.[2] By order dated 02nd August 2018 and 12th October 2018, the Court directed release of seven plots in favour of similarly situated applicants. Objections raised by ex-management and of the Official Liquidator were considered and rejected. The Court also considered SFIO report, whereby purchasers were held to be bona fide, having no knowledge of the order dated 05th June 1988. 12.[3] Statements of Mr. V. K. Sharma, ex director, dated 17th May 2004 and 03rd June 2004, also confirmed that the plots were sold to those persons who paid full sale consideration, and he had authorised Col. Ganapathy to execute the sale deeds. CO.APPL. 233/2012 & few other connected CAs Page 8/61 12.[4] Aggrieved by order dated 12th October 2018, Mr. V. K. Sharma filed a company appeal, being CA No. 24.2018, which was dismissed by the Division Bench of this Court by order dated 16th November 2018 on the ground that he had no locus to file the appeal. The order dated 02nd August 2018 was never assailed by the aggrieved party. 12.[5] Despite the dismissal of the aforesaid appeal, Ms. Aneeta Sharma, wife of Mr. V.K. Sharma, claiming to be a creditor of the Company, filed CA No. 1374/2018 on 22nd November 2018, seeking review of the order dated 12th October 2018, which is pending adjudication. Upon objections being raised regarding its maintainability, CA No. 928/2024 was filed seeking amendment of the review petition, which application is also pending consideration. 12.[6] OLR No. 36/2025 dated 01st August 2025 has been filed by the Official Liquidator, recording that the present applicants stand on the same footing as the applicants covered by the order dated 02nd August 2018 and giving no objection to a similar order being passed in their favour. Submissions on behalf of Ms. Aneeta Sharma and the Ex-management

13. Revision Petition and the application for amendment filed by Ms. Aneeta Sharma were pressed by Mr. Peeyosh Kalra, Advocate, and the following submissions were made. 13.[1] RBI’s prohibition order dated 10th October 1997 restrained the Company from dealing with its assets or creating third-party rights. Reliance was placed on the order dated 31st January 2012, wherein this Court held that CO.APPL. 233/2012 & few other connected CAs Page 9/61 any sale effected after 10th October 1997 was void. The said judgment was affirmed by the Division Bench by judgment dated 17th April 2023. 13.[2] Reliance was placed upon the Division Bench judgment dated 06th September 2012, wherein it was observed that sale deeds executed after 10th October 1997 were void and that payments made to Col. Ganapathy were inconsequential. 13.[3] It was further submitted that, by order dated 05th June 1998, a Provisional Liquidator had been appointed with directions to take charge of the assets of the Company and restrain it from dealing with the same. The Official Liquidator subsequently took possession of the land on 10th October 2003 and again on 02nd February 2004 pursuant to the winding-up order dated 29th August 2003. It was therefore argued that the transactions in question were void under Section 531 of the Companies Act, 1956, which provides that any transfer of property made by or against a company within six months preceding the commencement of winding-up shall be deemed fraudulent and invalid. 13.[4] Accordingly, it was submitted that all the same deeds executed after 10th October 1997 would be void in terms of judgment dated 06th September

2012. 13.[5] Reliance was also placed upon the SFIO Report dated 07th March 2014, concerning the Hyderabad transactions, wherein it was observed that Col. Ganapathy committed fraud against the company. Reference was made to the order dated 01st August 2018, whereby this Court directed the Official CO.APPL. 233/2012 & few other connected CAs Page 10/61 Liquidator to initiate criminal proceedings against Col. Ganapathy for offences including cheating and criminal breach of trust. 13.[6] Mr. Kalra further relied upon the decision in Smt. Benu Berry vs JVG Finance Ltd. (Under Lqdn.) 2012:DHC:2367-DB to contend that transactions undertaken during the pendency of winding-up proceedings require validation by the Company Court and that the purchaser’s knowledge or lack of knowledge of such proceedings is irrelevant. Relevant paragraphs of Benu Berry (supra) with respect to this aspect are extracted as under:

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 than void. The learned Company Judge in this regard has already referred to J. Sen Gupta Private Ltd. (In Liquidation) (supra) and The Sidhpur Mills Ltd. (supra). We find that the Supreme Court in Pankaj Mehra v. State of Maharashtra, (2000) 2 SCC 756, laid down the test of “whether the transfer was under compulsion of circumstances or other commercial compulsion to enable the company in liquidation to run its business”. We further find that a Division Bench of the Bombay High Court in Shri Laxman Yeswant Prabhudesai v. NRC Ltd., (2010) 2 Comp LJ 380, after noticing a large volume of case law on the subject, deduced CO.APPL. 233/2012 & few other connected CAs Page 12/61 that the transaction undertaken by a company in liquidation can be validated under Section 536(2) if it was under compulsion of circumstances, in order to save or protect the company, provided evidence is produced about such compulsion. It was further held that the assets of the company (in liquidation) cannot be disposed of at the mere pleasure of the company and only such disposal shall be validated which is found to be for the benefit and interest of the company. It is for enabling the company to continue as a going concern and to protect the interests of the shareholders and creditors that the power of validation under Section 536(2) should be exercised. We also find that a Division Bench of this Court in H.L. Seth v. Wearwell Cycle Company (India) Ltd., 46 (1992) DLT 599, observed that the test to be applied for validating a transaction in exercise of powers under Section 536(2) is of “good faith in the ordinary course of trade, for the benefit of the company”. Similarly, in Reserve Bank of India v. Crystal Credit Corporation Ltd., 121 (2005) DLT 375, the following principles for exercise of powers under Section 536(2) were laid down:

(i) Transactions bona fide entered into and completed in the ordinary course of trade must be protected.

(ii) If the disposition is made for the purpose of preserving the business as a going concern, then also the discretion of the Court must be exercised.

(iii) A disposition must not be validated merely because the party bona fide entered into the transaction. CO.APPL. 233/2012 & few other connected CAs Page 13/61

(iv) Knowledge of the presentation of the winding-up petition is immaterial.

A reference with benefit in this regard may also be made to M.L. Gupta & Anr. v. M/s Ceat Financial Services Ltd., 136 (2007) DLT 308, and Kamani Metallic Oxides Ltd. v. Kamani Tubes Ltd., (1984)

56 Comp Cas 19 (Bom) (DB).” (emphasis added) 13.[7] It was further contended that, though receipts had been filed by the applicants, the Court, on 05th August 2025, directed the applicants to place on record proof of payments showing actual movement of funds from their accounts. According to Mr Kalra, the applicants have not produced any bank statements reflecting the movement of funds but have merely produced receipts. 13.[8] It was further contended that the draft layout plan revalidated on 23 October 1997 was subsequently cancelled by HUDA by orders dated 02nd March 1999 and 03rd March 1999, on the basis of which the sale deeds had been executed. 13.[9] It was submitted that Col. Ganapathy challenged these orders before the High Court of Andhra Pradesh. Considering the fact that the company is in liquidation, the High Court of Andhra Pradesh set aside the order of 2nd March 1999 and 13th March 1999 and directed the issuance of the final layout. The final layout was issued on 21st February 2003 in the name of K. Madhav Reddy. CO.APPL. 233/2012 & few other connected CAs Page 14/61

13.10 Col. Ganapathy’s authority was also questionable since the SFIO had already recorded findings against him, and therefore, the transfers executed by him would also stand disputed. Reliance was also placed by Mr. Kalra on yet another decision of the Supreme Court in Rishabh Agro Industries Ltd. v. PNB Capital Services Ltd. (2000) 5 SCC 515, where it was held that, despite appointment of a provisional liquidator, the ex-management continues to hold residuary powers for the benefit of the company, as stated in paragraphs 10 & 11, which are extracted as under:

14. Submissions in rejoinder were placed by counsel for the applicants on behalf of the claimants and are culled out hereinafter.

14.1. On the issue of sale deeds being invalidated under Section 531(1) of the Companies Act, 1956, it is submitted that OMC has examined the documents of the applicants and accepted their claims vide individual reports dated between 03rd May 2011 and 21st June 2011, holding them entitled to allotment and release of the respective plots.

14.2. It is submitted that all these actions were completed prior to the filing of the winding-up petition, i.e. before 04th June 1998. To qualify as CO.APPL. 233/2012 & few other connected CAs Page 16/61 ‘fraudulent preference’, it must be demonstrated that the dominant motive in the mind of the company was to prefer a particular creditor over other creditors in order to defer other creditors of the Company in liquidation.

14.3. Applicants are not creditors of the company but purchasers of residential plots, having booked the plots since May 1995, paid the entire sale consideration, sale deeds having been executed and been placed in physical possession of the plots.

14.4. There is no question of collusion of the applicants with the ex-management to alienate assets of the company to defer other creditors. The applicants are unconnected with and are at odds with the ex-management of the company.

14.5. The SFIO in report dated 07th March 2014, after thorough investigation, absolved all third-party purchasers, like the applicants, of any wrongdoing and concluded that the purchasers are bona fide and did not have knowledge of the winding up proceedings till 2003.

14.6. Mr. V. K. Sharma, Ex-Chairman, himself made a statement before the SFIO on 17th May 2004, accepting that plots were sold by the company in favour of purchasers, who paid full consideration.

14.7. There is no challenge to the OMC reports in favour of the applicants and the Official Liquidator, as per OLR 36/2025, has no objection.

14.8. Even Section 531A of the Companies Act, 1956 cannot be used to interdict the release of plots of land to the applicants, considering that the CO.APPL. 233/2012 & few other connected CAs Page 17/61 purchase of these lands was made in the ordinary course of business pursuant to a brochure issued by the company and the transfers were made in good faith and for valuable consideration. In fact, the applicants acted in good faith, without knowledge of impending winding-up of proceedings, and paid adequate and fair sale considerations.

14.9. Benu Berry (supra) judgment cannot be used to invalidate the sale deeds executed in favour of the applicants and is distinguishable on facts. In Benu Berry (supra), the issue arose in respect of a flat in Mumbai for an agreement to sale dated 13th December 2001 executed by Ms. Aneeta Sharma in her favour. The agreement was entered post the date of commencement of winding up proceedings, i.e. 05th June 1998, while the sale deeds executed in favour of the applicants were prior.

14.10. Section 536 (2) of the Companies Act, 1956 applies only to transfers effected after the commencement of winding-up proceedings and, therefore, has no application to the sale deeds in question.

14.11. The reference to judgment dated 31st January 2012, taking note of the order dated 10th October 1997 passed by the RBI and rejecting the claims of the wife and daughter of Col. Ganapathy cannot be equated to that of the applicants. None of the applicants is related to Col. Ganapathy nor is there any evidence to prove that they were in collusion with him. The SFIO had found that all the applicants were kept in the dark about the winding-up proceedings by Col. Ganapathy. CO.APPL. 233/2012 & few other connected CAs Page 18/61

14.12. SFIO has found that 62 out of 225 plots were sold by the company in favour of Col. Ganapathy and his family and friends. None of the applicants forms part of the 62 plots. Sale deeds executed in favour of 9 applicants out of 14 were executed by the company through Mr. S. Jai Kumar, and not by Col. Ganapathy.

14.13. Pursuant to order of this Court dated 04th August 2025, the applicants have filed affidavits with respect to payments made by them, along with relevant documents and have fully complied with the directions issued by this Court.

14.14. Ex-management cannot belatedly seek to invalidate sale deeds by alleging that the money was not received by the company, particularly when the sale deeds were executed prior to the commencement of the winding-up proceedings.

14.15. It was submitted that pre-validation of the draft layout plan in 1997 was followed by the receipt of entire sale consideration and execution of registered sale deeds. Simultaneously, plots were demarcated and handed over to the applicants. So, the argument of cancellation of the draft layout would, therefore, have no meaning since this issue was considered by this Court in its order dated 12th October 2018 and cannot now be re-agitated.

14.16. An additional and critical submission which has been made pertains to the locus standi of Ms. Aneeta Sharma to oppose the applications and maintain the review petition. Ms. Aneeta Sharma, who has filed the review petition, is the wife of Mr. V.K. Sharma, Ex-director of company in CO.APPL. 233/2012 & few other connected CAs Page 19/61 liquidation, whose Company Appeal No. 24/2018 was dismissed by the Division Bench vide order dated 16th November 2018. The Order dated 12th October 2018 had directed release of 7 plots in favour of similarly situated applicants.

14.17. It was further submitted that Ms. Aneeta Sharma, who claimed to be a creditor of the company, was also shown as one of Directors of Flying Colours Pvt. Ltd. As per the report dated 11th December 2020 submitted by the Committee appointed by this Court, the Official Liquidator has placed the claims received till date, which include the claims of Flying Colours Pvt. Ltd. of which Ms. Aneeta Sharma happens to be the Director. In any event, considering that a corporate entity Flying Colours Pvt. Ltd. is a creditor, it would be highly suspected that Ms. Aneeta Sharma, in a private capacity, can call herself a creditor as well.

14.18. It was also contended that the issue of locus standi stands substantially addressed by the Division Bench of this Court in V. K. Sharma v. JVG Finance Limited (In Liquidation) 2026:DHC:355-DB, while dealing with disputes concerning the Mumbai properties. Division Bench held that “…The appellant cannot obstruct the lawful discharge of these obligations under the guise of alleged surplus funds or delay in crystallization of claims”. It further stated that “As far as the extraneous matters are concerned, any attempt by the Appellant to traverse into unrelated schemes of revival lies outside the scope of company law proceedings and is impermissible. The liquidation process and asset realization must proceed unimpeded”. CO.APPL. 233/2012 & few other connected CAs Page 20/61

14.19. This judgment has been upheld by the Supreme Court by order dated 16th March 2026 in SLP(C) no. 6139/2026, whereby the SLP was dismissed.

14.20. Further, it was pointed out that Mr. V.K. Sharma has been repeatedly castigated by this Court. Reference was made to the order dated 04th November 2011 passed in CCP (CO) no. 5/2006, where the Court has listed various situations showing the persistent non-cooperative attitude of Mr. V.K. Sharma.

14.21. Reliance has been also placed in rejoinder on the following judgments:

I. Monark Enterprises v. Kishan Tulpule 1991 SCC OnLine

II. Official Liquidator, Victor Chit Fund v. Kanhaiya Lal

III. IDBI Bank v. Official Liquidator (2020) 15 SCC 517

IV. Rakesh Jaganmohan Pandey v. JVG Finance 2017 SCC

V. BOI Finance Ltd. v. Custodian (1997) 10 SCC 488

VI. Sirmur Chemical & General Industries Ltd. v. Union of

VII. Dahiben v. Arvindbhai Kalyanji Bhanusali (2020) 7 SCC

14.22 It is further pointed out that, in Benu Berry (supra), the Division CO.APPL. 233/2012 & few other connected CAs Page 21/61 Bench noted that the Company (in liquidation) had engaged Ms. Aneeta Jain to carry on the business of an advertising agency under the name and style of Flying Colours Pvt. Ltd. for promotional work and allegedly owed her a sum of Rs.1,25,00,000/- towards the services rendered. To clear that part of debt owed to Ms. Aneeta Jain, it was claimed that the company agreed to sell the flat in question to Ms. Aneeta Jain, pursuant to which the housing society recognised her as the bona fide owner of the flat.

14.23 Ms. Aneeta Jain then agreed to sell the flat to one Benu Berry, and the flat soon mutated in the name of Benu Berry. The Committee, in its order dated 17th March 2006, dismissed the claim of Benu Berry, noting that the dues of the Company (in liquidation) to Ms. Aneeta Jain were not clearly established and the transaction in favour of Ms. Aneeta Jain could not be said to be a bona fide.

14.24 It was further pointed out that, in paragraph 8 of the said order, it was recorded that counsel, upon making enquiries and obtaining instructions, had stated that there was no relationship between Ms. Aneeta Jain (now Ms. Aneeta Sharma) and Mr. V.K. Sharma. However, it subsequently came to light that Mr. V.K. Sharma had indeed married Ms. Aneeta Jain in the year 2005. The Court expressed its surprise at the categorical statement made on instructions that no such relationship existed and that counsel was unaware of the same, and observed that the situation was disturbing.

14.25 The appeal filed by Benu Berry was dismissed by the Court, noting CO.APPL. 233/2012 & few other connected CAs Page 22/61 that “Though we have found the appellant to be in collusion with the company in liquidation and Smt. Anita Jain but we refrain from imposing any cost on the appellant”. Analysis

15. These applications relate to 14 investors (whose applications were filed between 2012 and 2021) in the JVG Hills Residential Self-Financing Scheme, who seek release of their respective plots, which are in symbolic possession of the Official Liquidator. Sale deeds in their favour were executed prior to 05th June 1998, i.e. before the appointment of the Official Liquidator. Since the company subsequently went into liquidation and the Official Liquidator took symbolic possession of the land in 2003, the applicants seek release of their respective plots on grounds which may be summarised as follows: i. Pursuant to Court’s order of 22nd July 2004, the OMC has verified their claims and passed individual reports between May 2011 and June 2011. ii. This Court, by order dated 02nd August 2018, adjudicated applications of similarly placed applicants and, by order dated 12th October 2018, directed release of seven plots in their favour. iii. While considering the claims of the said seven purchasers, the Court examined and rejected all objections raised by the ex-management and the Official Liquidator. iv. Company Appeal No. 24/2018 filed by Mr. V.K. Sharma against CO.APPL. 233/2012 & few other connected CAs Page 23/61 the order directing release of plots in favour of the seven similarly situated purchasers was dismissed by the Division Bench on 16th November 2018, thereby making the said order final. v. This Court has previously considered the SFIO report, wherein all such purchasers were found to be bona fide purchasers. vi. Statements of Mr. V.K. Sharma, Ex-director, recorded in May 2004 and June 2004, confirmed that he had sold the plots to such persons who had paid full sale consideration and that Col. Ganapathy had been authorised to execute the sale deeds. vii. Official Liquidator, in OLR No. 36/2025 dated 01st August 2025, has accepted that all the 14 applicants herein should be treated similarly with applicants in orders dated 02nd October 2018 (The 7 buyers’ order).

16. All 14 applicants are requesting the Court to pass similar orders as have been passed previously with respect to the 7 other buyers. There is no change of circumstances; the factual matrix is identical, and the appeal against the orders has attained finality after consideration by the Division Bench, and the Official Liquidator has categorically expressed his ‘No Objection’.

17. The only impediment as per counsel of applicants, is the review petition filed by Ms. Aneeta Sharma, the wife of Mr. V K Sharma (which is also being considered by this Court in the latter portion of this judgment). CO.APPL. 233/2012 & few other connected CAs Page 24/61

18. Aside from the analysis in respect to the review petition, which will be dealt with subsequently in this judgment, this Court is constrained to observe that ex facie attempt by Ms. Aneeta Sharma to intervene in these proceedings through a review petition, despite not being a party to the appeal, being the wife of Mr. V.K. Sharma, lacking any independent locus standi, and not being a creditor in her individual capacity, appears to be a desperate effort to delay satisfaction of the claims of investors who had entrusted their hard-earned savings to a company effectively controlled and managed by Mr. V.K. Sharma and which ran aground due to various issues raised by the RBI.

19. The company being in liquidation, this Court does not see any reason for the ex-directors, or even Ms. Aneeta Sharma, who appears to be acting as a proxy for them, to be heard opposing the transfer and objecting to the devolution of the assets of the company in favour of persons whose claims and identities have already been duly verified.

20. Even during the course of hearings, repeated attempts have been made to obstruct these claims despite the fact that the Official Liquidator has categorically expressed no objection and has recorded the same on affidavit as well.

21. As per the Official Liquidator, a large number of investors had invested their money either through the purchase of property or otherwise in JVG, and they have been left high and dry for more than two decades. The plight of these claimants has compelled this Court to make the above observations. However, the issues argued before the Court CO.APPL. 233/2012 & few other connected CAs Page 25/61 shall be dealt with in accordance with law. The 7 Buyers’ Order

22. On 02nd August 2018, a decision was delivered by the predecessor Company Bench in Co.Appl. no. 2080/2014 filed by Mrs. G. Bharathi seeking directions to the Official Liquidator to hand over possession of plot No. E313, located in the JVG Hills Complex basis that she was a bona fide purchaser and the registered owner of the property vide sale deed executed in May 1998 through Col. Ganapathy, as authorized signatory of JVG.

23. The Court took note of the appointment of the OMC in July 2004 and recorded that the OMC had upheld the title of Mrs. G. Bharathi.

24. The Official Liquidator opposed the application primarily on two grounds. First, it was contended that the OMC was required to examine the original sale deed and verify all supporting documents before possession could be handed over and that no Board Resolution authorising Col. Ganapathy to execute the sale deeds had been produced. Secondly, there was no demarcation of plot in existence.

25. Critically, the Court noted that Ms. Aneeta Sharma, acting as the authorised representative of the ex-directors, made the submission recorded in paragraph 5 of the said order. She stated, on behalf of the ex-directors and the company, that payments had not been received, that the transactions were not bona fide, and that only genuine buyers ought to be allotted plots in a consolidated area so as to facilitate a better price CO.APPL. 233/2012 & few other connected CAs Page 26/61 for the remaining land.

26. This submission was objected to on the ground that demarcation had already taken place at the time when the sales were effected and that the same stood confirmed by HUDA.

27. The Court took note of the 262nd Report of the OMC, which recorded that the sale deed had been executed on 15th May 1998. The OMC observed that the transaction relating to the plot had taken place more than six months prior to the commencement of the winding-up proceedings and, therefore, would not fall within the ambit of Section 531 of the Companies Act, 1956. Moreover, there was nothing on record to show that the vendor had been accorded preferential treatment over other similarly placed persons, and the plot had been transferred in the ordinary course of business for valuable consideration.

28. The Court also considered the SFIO Report, which confirmed that, as on the date of winding up, Col. Ganapathy had sold 72 plots, which were no longer part of the assets of the company on the winding-up date, and that title thereto stood registered in favour of the plot holders.

29. The issue regarding the existence of a Board Resolution in favour of Col. Ganapathy was considered irrelevant by this Court, considering that the documents and receipts of consideration and sale deed registration were before the Sub-Registrar. Moreover, the SFIO did not come to a conclusion that Col. Ganapathy was not authorized representative of the Company (in liquidation). Statement of Mr. V K CO.APPL. 233/2012 & few other connected CAs Page 27/61 Sharma, recorded earlier, wherein he had stated that the plots had been sold and consideration received, was also taken into account by the Court. Accordingly, directions for release were passed.

30. In a subsequent order dated 12th October 2018, the Court once again noted the submissions of the counsel for the ex-directors, whose appearance was recorded along with Ms. Aneeta Sharma, authorised representative of the ex-management.

31. The submission raised was that the plots had not been demarcated at the time the sale deeds were executed and, therefore, could be allotted in a consolidated manner so that the remaining property could be utilised more effectively. The Court noted that the sale deed in favour of Mrs. G. Bharathi had been executed in May 1998 and clearly described the plot along with a site plan. The Court, therefore, observed that the issue of demarcation could make no difference to the legality or validity of the transaction. The Court further held that “there are no reasons to annul the sale deeds merely to enhance the value of assets of the respondent company. The settled legal position is that once the title of the property is vested in the transferee by sale of the property, it can be divested back to the transferor on the ground of fraud etc. only. No such allegation exists.”

32. Ex-Director Mr. V K Sharma went up in appeal against the said order. The Court observed as under in paragraphs 4 to 7: “4. Mr. Neeraj Malhotra, learned Senior Counsel, who is appearing on behalf of the Appellant, is CO.APPL. 233/2012 & few other connected CAs Page 28/61 unable to show any provision of law, either in the Companies Act or elsewhere permitting a former Director to question, in his individual capacity, the order passed by the Company Court in winding up proceedings dealing with the claims of creditors. In other words, this Court is not shown what the locus standi of the Appellant is in preferring this appeal.

5. Way back on 29th August, 2003, the winding up order was passed with reference to the company in question. The Official Liquidator (OL) had taken over the entire assets of the company in question many years ago. Thereafter, the learned Single Judge has been dealing with the claims of creditors.

6. To entertain, at this stage, any appeal by one of the former Directors on the basis that he was a major shareholder, cannot be legally countenanced.

7. In these circumstances, the Court is not inclined to entertain this appeal.”

33. It is important to emphasise that the Division Bench was clear and categorical in holding that objections raised by the ex-director in his individual capacity could not be entertained, as he had no locus standi. The Official Liquidator had taken over assets of the company many years earlier, and the Company Court was dealing with the claims of investors.

34. Merely on the basis of the 7 Buyers' Order attaining finality (subject to the fate of the review petition filed by Ms. Aneeta Sharma), the Court finds that the case of the present 14 applicants stands on an CO.APPL. 233/2012 & few other connected CAs Page 29/61 identical footing and arises from the same factual matrix. Furthermore, in the present case, the Official Liquidator, in OLR No. 36/2025, has categorically stated that he has ‘no objection’ if similar orders are passed. The OLR specifically records that this Court, by order dated 10th January 2019, had directed the Official Liquidator to take expeditious steps to hand over the plots to all buyers, which direction was duly complied with.

35. Mr. Rishi Manchanda, counsel for the Official Liquidator, on instructions, has categorically stated that the Official Liquidator has no objection to these applications being allowed and the plots being duly handed over/released in favour of the 14 applicants. The status and particulars of each applicant, including the dates of booking, execution of sale deeds, and payments made by them, have already been tabulated in paragraph 6 above.

36. It is easily discernible from the tabulation that the sale deeds of the 14 applicants range from as early as 30th December 1997 to 31st March

1998. It is also noted that the sale deeds were executed through Col. Ganapathy, acting as the authorised representative, or through Mr. S. Jai Kumar.

37. The first booking amount was paid as far back as 1995-1996, with subsequent payments being made thereafter. Further, all 14 applicants have been cleared by the OMC through individual reports, particulars whereof have been reflected in the tabulation extracted above. CO.APPL. 233/2012 & few other connected CAs Page 30/61

38. It is also noted that, in two cases, the plots were subsequently purchased in the year 2003 from the original allottees. OMC Reports

39. A brief word be said regarding the assessment by the OMC regarding the buyers under the JVG Hills Project. The OMC accepted and verified the claims of 21 applicants, seven of whom were granted release by orders dated 2nd October 2018, while the remaining 14 are the applicants before this Court. There are, however, several other applicants in whose favour sale deeds had been executed prior to June 1998 but whose claims were rejected by the OMC, namely 25 (deposit adjustment), 55 (instalment category), 16 (deposit adjustment category) and 16 (investor category).

40. The 219th Report of the OMC dated 3rd May 2011, concerning Smt.

41. The OMC, therefore, concluded that the claimant was entitled to allotment and possession and that the Official Liquidator was required to verify the original sale deed before handing over possession. The other OMC Reports examined by this Court are substantially on the same lines. Affidavits on behalf of applicants

42. The affidavits filed by the applicants pursuant to the order dated 4th August 2025 have also been examined. Taking the example of Smt. N. Sujatha, the affidavit sets out the details of booking of the subject plot, payments made through cheque and subsequent instalments through demand drafts. Receipts issued by JVG Projects have been annexed. The Plot Buyer Agreement and the registered sale deed have also been perused by the Court. Significantly, the schedule of property contains a specific demarcation, complete with dimensions and a site plan. The affidavits filed by the remaining applicants are on similar lines, and the Court has had occasion to examine the same. SFIO Report

43. Counsel has drawn attention to the Investigation Report of JVG CO.APPL. 233/2012 & few other connected CAs Page 32/61 Finance Limited filed by the SFIO dated 07th March 2014. It is noted that the Ministry of Corporate Affairs had ordered the SFIO to conduct an investigation under Section 235 of the Companies Act, 1956. The investigation was completed and the report was submitted on 11th February 2010.

44. The report, which was presented on 16th April 2012 and 23rd April 2012 before the Court, did not include the real estate project of Hyderabad, since the books are not being signed.

45. On 18th May 2012, in CCP (C) 17/2007, the Court directed that this aspect be considered in the asset-filing exercise. The SFIO Report records that statements were obtained from Mr. V.K. Sharma, Ex-Managing Director, Col. M.J. Ganapathy, Project Manager of JVG Finance Limited at Hyderabad, and others. The SFIO team also interacted with various stakeholders of the plot.

46. The SFIO noted that the lands in the JVG Hills layout were acquired from pattedars by JVG Finance Ltd. through Sh. K. Madhava Reddy. It was noted that the project was launched in May 1995 as a self-financing housing scheme, and that booking of plots started from 1995 onwards.

47. It was further recorded in the report that JVG Finance Limited passed board resolutions on 04th January 1996, authorising inter alia Col. Col. Ganapathy, Mr. Jai Kumar, to sign, execute, correct, verify and do all acts and deeds in connection with the land at Kondapur Village. CO.APPL. 233/2012 & few other connected CAs Page 33/61

48. In paragraph 112 of the Report, the plots sold by the company through Col. Ganapathy, Shri Jai Kumar and Col. A.J. Rao were tabulated, totalling 225 plots. It was observed that plots sold after 5th June 1998 were void, as the company lacked authority to affect such transfers after the winding-up order. The Sub-Registrar, however, continued to register sale deeds even thereafter. HUDA granted final layout approval in 2003.

49. It was noted that, in ignorance of the winding-up orders, plot buyers had invested their hard-earned money in the bona fide belief that they would receive the plots. Significantly, paragraph 115 records that “However, around 14 investors who had booked plots much before 5.6.98 and have been given plot buyers agreement have unregistered plots. Their names are not included in the above list of 225 plots…”. Submission of Ex-management

50. Submissions of the ex-management, presented through the written submissions which have been filed, essentially revolve around the contention that the transactions are void in terms of Section 531 of the Companies Act, 1956, the alleged fraudulent actions of Col. M.J. Ganapathy; the fact that the sale deeds were executed after 10th October 1997, when the prohibition order had been passed by the RBI; the applicants having placed only payment receipts and no other proof of payment despite the order dated 04th August 2025 passed by this Court; HUDA's cancellation of the draft layout dated 23rd October 1997 in the year 1999. Reliance was placed on Rishabh Agro Industries Limited CO.APPL. 233/2012 & few other connected CAs Page 34/61 (supra), claiming residual powers of the ex-management for the benefit of the company.

51. As regards the objections raised by the ex-management, the same have already been dealt with in relation to the 7 buyers whose applications were disposed of by orders dated 02nd October 2018. The appeal preferred by the ex-management was also dismissed by the Division Bench of this Court and, subsequently, by an order dated 04th September 2025, directions were issued for release of the plots to the said seven buyers. The issue, therefore, stands concluded insofar as the ex-management is concerned.

52. Apart from the above, what is more important is that the Division Bench specifically noted that the ex-management has no locus standi in the matter, the company already being in liquidation, as extracted above in paragraph 14.18.

53. A similar situation applies to the ex-management even today, and, in light of the Division Bench judgment, this Court is not inclined to reconsider the said objections. As noted above, the ex-management has consistently sought to obstruct the release of the plots, which is also exemplified by the filing of the review petition through Ms. Aneeta Sharma, wife of Ex-Director Mr. V.K. Sharma, which is being dealt with hereinafter.

53.1. The Court notes the recent decision of the Division Bench of this Court in V.K. Sharma v. JVG Finance Limited (In Liquidation) CO.APPL. 233/2012 & few other connected CAs Page 35/61 2026:DHC:355, wherein, while dealing with a challenge to orders passed by the Company Judge relating to the sale of a property situated in Mumbai, it observed as under: “16…Having heard the rival submissions advanced by the learned counsel for the parties and upon careful consideration of the material on record, this Court on the issue of financial exigencies, notes that it is clear that outstanding liabilities, including those to statutory bodies, financial creditors, and investor deposits, far exceed the available funds. The auction proceeds are essential to discharge claims and ensure protection of public deposits. The Appellant cannot obstruct the lawful discharge of these obligations under the guise of alleged surplus funds or delay in crystallization of claims. 17…As far as the extraneous matters are concerned, any attempt by the Appellant to traverse into unrelated schemes of revival lies outside the scope of company law proceedings and is impermissible. The liquidation process and asset realization must proceed unimpeded. 19…Moreover, there is no dispute with respect to the subject property located in Mumbai. It is also pertinent to note that the sale of the assets of the CIL has become imperative in order to discharge its outstanding liabilities. In these circumstances, the various properties of the CIL are required to be sold in accordance with law, and the Appellant cannot be permitted to dictate or determine which of the several properties is to be sold first or given priority in point of time. CO.APPL. 233/2012 & few other connected CAs Page 36/61 20… As far the as the argument raised by the Appellant, with respect to the failure of the LCJ to refer to a chart produced during the course of arguments, it is noted that mere failure to advert to the chart cannot, by itself, constitute sufficient ground to set aside the IO of 2023, particularly, when the perusal of record sufficiently establishes that the financial requirement for meeting the liabilities of the CIL was taken into consideration and duly examined.”

53.2. Aforesaid order of the Division Bench was appealed again by Mr. V.K. Sharma, before the Supreme Court, and the Supreme Court has also considered the matter. In light of the observations of the Division Bench, the various objections raised by the ex-management on different grounds, with a view to obstructing rights that have already crystallised in favour of the applicants, would equally apply to the present proceedings.

53.3. Division Bench has categorically noted that “the liquidation process and asset realisation must proceed unimpeded”. The Division Bench judgment having been given imprimatur of the Supreme Court, there can be no other discussion in this regard.

53.4. Yet another noting has been made by a Single Judge of this Court in CO. Pet. 123/2010, where the Court noted that a Status Report submitted had a severe indictment of the manner in which Mr. V. K. Sharma and his family members had been managing the companies. The Court noted as under: “18…From the aforesaid status report, it is apparent that Mr. Vijay Kumar Sharma and his CO.APPL. 233/2012 & few other connected CAs Page 37/61 second wife, Mrs. Anita Sharma have no regard for law. Mr. Sharma is perpetrating one scam after another. While in the 1990’s, Mr. Vijay Kumar Sharma and his family members had floated ‘ponzi investment schemes’ wherein they duped a large number of small and middle class investors by promising high returns, in the decade of 2000, they once again duped a large number of small and middle class flat buyers by promising them residential accommodation. As pointed out in the SFIO report, in JVG Group of Companies, Mr.Vijay Kumar Sharma and his second wife Mrs. Anita Sharma, promoter and director of company in liquidation had purchased personal jewellery, farm house and various other valuable immovable properties in their personal names as well as in the names of their close relatives from the funds of JVG Finance Company. After the JVG finance scam was detected by Reserve Bank of India, Mr. Sharma went on to perpetrate the land scam by incorporating and promoting M/s Vian Infrastructure Ltd. besides many other companies. The interconnection between companies floated by Mr. Vijay Kumar Sharma and his second wife is as an admitted position inasmuch as the company in liquidation’s defence is that its liability to pay debts was taken over by company’s promoter Mr. Vijay Kumar Sharma. 19… Further, in view of the aforesaid facts, the SFIO is directed to investigate the affairs of companies, namely, M/s. Vijay Associates, M/s. Ayushi Buildestates Pvt. Ltd., M/s. Mauve Farms Pvt. Ltd., M/s Yusaf Properties and M/s. Sajjad Pro. Pvt. Ltd. in which either Mr. Vijay Kumar Sharma or his two wives or his associates had been Directors or had been managing its affairs. The inquiry must be completed expeditiously and in a time bound CO.APPL. 233/2012 & few other connected CAs Page 38/61 manner because, given the past conduct of Mr. Vijay Kumar Sharma, by the time the scam is unearthed, the valuable assets and funds of companies in question, already stand siphoned off. After completion of inquiry, the report must be submitted to this court, preferably within a period of eight weeks. 20.. This Court is of the opinion that Mr. Vijay Kumar Sharma and his family members are targeting small and middle class investors as they know that they are unorganized and do not have resources to defend themselves. Even the statutory authorities like the Official Liquidator’s office who are entrusted with the duty to bring the culprits to book are not able to keep pace with the scams perpetrated by Mr. Vijay Kumar Sharma and his family members. In fact, the Official Liquidator’s office is ill-equipped, under-staffed, untrained and manned by non-professionals. Had it not been for the SFIO police inquiry, Official Liquidator would never even have come to know about the real diversion of funds even in JVG Finance Company, despite lapse of more than ten years. 21… Consequently, this Court is of the opinion that in order to effectively prevent Mr. Vijay Kumar Sharma from committing any future financial scam, Mr. Vijay Kumar Sharma and his two wives cannot be permitted to incorporate or manage any company till the proceedings in JVG Group Companies and M/s. Vian Infrastructure Limited are brought to a logical conclusion. Accordingly, the Central Government is directed to ensure that Director’s identification number issued to Mr. Vijay Kumar Sharma and his two wives namely, Mrs.Veena Sharma and Mrs. Anita Sharma are immediately revoked and the statutory authorities CO.APPL. 233/2012 & few other connected CAs Page 39/61 are directed to ensure that they are not issued any such number without taking prior permission of this Court.”

53.5. Not only are these observations by the Single Judge scathing indictments, but also prophetic, considering that even till date, more than a decade and a half since these observations were made, Mr. V. K. Sharma and his wife, Ms Aneeta Sharma, continue to obstruct and delay the adjudication of the applications. Review Petition (CA No. 1374/2018)

54. Ms. Aneeta Sharma, wife of ex-director Mr. V.K. Sharma, seeks review of the order dated 12th October 2018. It is important to note that, in the context of the present review application, this Court is of the view that the same constitutes a proxy litigation on behalf of Mr. V.K. Sharma, instituted through his wife, and is an attempt to unsettle and displace concluded orders of this Court. The objections raised pertain to the RBI prohibition order dated 10th October 1997, the alleged absence of demarcation of land, the issue of fraudulent preference under Section 531 of the Companies Act, 1956, and the role of Col. Ganapathy.

55. Most importantly, the applicant's averment in paragraph ‘Y’ of the grounds of the review is under: CO.APPL. 233/2012 & few other connected CAs Page 40/61 “Y…The interest of the applicant by way of the present application is nothing personal but to ensure that this Hon'ble Court is properly assisted and all relevant facts are brought before this Hon'ble Court prior to passing of judicial orders affecting the rights and interests of the creditors and contributories and additionally, necessary actions be taken in time to protect and secure the interest of all concerned. It is made clear that the applicant has no interest and neither does the applicant intend to take over the powers or duties of the Official Liquidator by way of the present application. It is submitted that even though the applicant is a creditor of the company to an extent of Rs. 1.50 Cr. and the claim of the applicant has already been filed, however, other than that the applicant has no personal interest in the process of winding up of the company.”

56. It is evident that the applicant states that the Court was not properly assisted, that too by the ex-director previously and “right and interest of creditors and contributors” have not been secured. Further, the applicant makes it clear that “applicant has no interest and neither does the applicant intend to take over the powers and duties of the OL”. She claims to be a creditor to an extent of Rs. 1.[5] crores, having filed the claim.

57. The following aspects have been pointed out by the counsel for the applicants, which are necessary to highlight: i. The affidavit filed by Ms. Aneeta Sharma is substantially similar to the affidavit earlier filed by Mr. V.K. Sharma. In fact, the affidavit CO.APPL. 233/2012 & few other connected CAs Page 41/61 accompanying the review petition refers to ‘the present appeal’ instead of the review petition. ii. In paragraph 'Y' (as extracted above), she herself states that she has no personal interest in the matter and claims only to be a creditor to the extent of Rs. 1.50 crores. iii. The Official Liquidator has filed a OLR No. 105/2023 in which it has been stated that the claims have been received from the creditors, in which Flying Colours Pvt. Ltd. (Ms. Aneeta Sharma) is stated to be a creditor, even if she is not a creditor in her own right but through a company which has a different corporate personality. iv. Ms. Aneeta Sharma had represented the management as the authorized representative in both the orders dated 02nd August 2018 and 12th October 2018, which have been noted above, thereby disclosing her role as far as the company was concerned. v. The attempt by Ms. Aneeta Sharma to file the review petition, on the slim ground that she was a creditor and a contributor, has no bearing whatsoever and is completely untenable. She was neither an applicant in the original petition nor an appellant along with Mr. V. K. Sharma, whose appeal has already been dismissed. Her proximity to Mr. V.K. Sharma as his spouse, coupled with her role as the authorised representative of the ex-management and the absence of any independent personal claim, takes her outside the category of persons entitled to seek review of the orders in question. CO.APPL. 233/2012 & few other connected CAs Page 42/61 vi. Moreover, all the objections which have been taken in the review petition have already been dealt with by the 7 Buyers' Order and have since attained finality.

58. Further, it is noted that in the order in the case of Benu Berry (supra) wherein the appellant had challenged the report of the Committee in relation to a flat situated in Mumbai, the Division Bench recorded detailed findings regarding the transfer of the said flat in favour of Ms. Aneeta Jain, describing it as nothing short of a ‘mother of all smokescreens’. The Court also found it disturbing that though counsel had submitted, upon instructions, that no relationship existed between Ms. Aneeta Jain (now Ms. Aneeta Sharma) and Mr. V.K. Sharma, the submission was later found to be incorrect. The appeal was accordingly dismissed, and it was noted that the appellant was acting in collusion with the company in liquidation and Ms. Aneeta Jain. The Court, therefore, refrained from imposing any cost.

59. Ms. Aneeta Sharma, has, therefore, repeatedly come under the crosshairs of this Court and does not deserve any further benevolence of this Court in any manner.

60. It is clear that Ms. Aneeta Sharma is essentially an alter ego of Mr. V. K. Sharma, the grounds of the appeal and the review being identical. The adjudication, which has already crystallised, cannot now be entertained in an indirect challenge. The review petition actually seeks to reopen the release and possession of the 7 plots directed to be handed over under the 7 Buyers' Order passed more than 8 years ago. CO.APPL. 233/2012 & few other connected CAs Page 43/61

61. As regards the RBI prohibition order dated 10th October 1997, the same merely restrained the company from alienating its assets without prior permission of the RBI, except for the purpose of repayment of deposits. The order, issued under Section 45MB of the RBI Act, remained operative for a period of six months and was never extended. Bona fide purchasers of property cannot be brought within its scope, nor can the order be construed so as to invalidate duly executed sale deeds. In BOI Finance Ltd. v. Custodian (1997) 10 SCC 488, the Supreme Court held as under:

64. As regards the contention that Col. Ganapathy was not authorised, this Court has perused the brochure of the JVG Hills Project, wherein Col. Ganapathy was described as an Additional Director of the company. The Board Resolutions dated 04th January 1996 and 01st September 1997, the statement made by Mr. V.K. Sharma before the Official Liquidator on 17th May 2004, and the affidavit dated 21st February 2002, all of which confirm that Col. Ganapathy had been authorised and that the plots had been transferred.

65. The SFIO also in its report has stated that “all purchasers are bona fide, and knowledge of winding up”. However, the ex-management cannot raise an issue relating to their indoor management to object to a release of the land to bona fide purchasers for value. CO.APPL. 233/2012 & few other connected CAs Page 46/61

66. The Court has noted the statement recorded by Mr. V. K. Sharma on behalf of the company, where he had stated that the land was bought through cheques/bank draft/cash and that Col. Ganpathy, was the Project Director of the companies and “person who applied and paid full consideration amount, the land was registered/transfer in their names and those persons in their names”. The applicants have rightly objected to any objections being taken at this stage, which cannot be permitted.

67. On the issue of fraudulent pre-reference, certain decisions have been cited by the applicants which have been noted as under for reference: i. Monark Enterprises v. Kishan Tulpule 1991 SCC OnLine Bom 461:

531. Under Indian company law, Section 531 of the 1956 Act (now Section 328 of the Companies Act, 2013) is the cornerstone provision that lays down the requirements for a transaction to amount to a fraudulent preference. Framed along the lines of Section 320 of the English Companies Act of 1948, it provides that any act relating to the property of a company may qualify as a fraudulent preference if two conditions are met. First, the dominant motive in the mind of the company (as represented by its directors or general body of shareholders) should be to prefer a particular creditor [see Jayanthi Bai v. Popular Bank Ltd., AIR 1966 Ker 296; Official Liquidator, Victor Chit Fund (P.) Ltd. v. Kanhiya Lal & Ors., (1972)

42 ComCas 196 (Del)]. Second, the said act must be undertaken during the period of six months preceding the filing of the winding up petition of the company. While the first requirement ensures that the dominant intention to defraud creditors is detected, the second ensures that there is a level of commercial certainty and finality of transactions for those interacting with the company.”

68. Some decisions have also been quoted in context of the RBI’s prohibitory order and the invalidation of pleadings, which are as under for reference: CO.APPL. 233/2012 & few other connected CAs Page 50/61 i. BOI Finance Ltd. v. Custodian (1997) 10 SCC 488: “30. It is not in dispute that the said circulars which have been issued were not made public. The said circulars were confidential documents and required the banking companies to transact their businesses in a particular manner namely they should not enter into any buy-back contracts which were not according to the terms of the circulars. The Act itself does not provide that, where the directions issued by the confidential circulars are violated by the bank, the contracts entered into with the third parties would in any way be invalidated. The said circulars also, did not say that the consequence of the directions contained therein not being followed by the Banking Companies will result in such transaction being regarded as void. Indeed, no such stipulation could be made which would adversely affect third parties to whom no direction have been or could be issued and who were not aware of such directions issued to the banks.

64. The following conclusions from the aforesaid discussion: [A] Infringements of the instructions issued by the Reserve Bank of India under Banking Regulations Act prohibiting the banks from entering into by-back arrangements do not invalidate such contracts entered into between the banks and it’s customer'. [B] The ready forward contract is severable into two part, namely, the ready leg and the forward leg. The ready leg of the transaction having been completed, the forward leg, which alone is illegal, has to be ignored. CO.APPL. 233/2012 & few other connected CAs Page 51/61 [C] With the ready leg having been performed the illegality of the forward leg contained in the agreements cannot affect that the transfers which had already taken place.”

69. In certain judgments, the Courts have noted that the transfer alleged as void under Section 531A of the Companies Act, 1956 is void only against the Liquidator and the Court will invalidate or ignore the transfer only if the relief is sought by the right person, namely, the Liquidator. In this regard, it is instructive to consider the observation made by Madhya Pradesh High Court in the judgment of Virendra Singh Bhandari v. Nandlal Bhandari and Sons P. Ltd., 2019 SCC OnLine MP 6437, and Kerala High Court Judgment in the matter of K.N. Narayana Iyer v. CIT, (1993) 202 ITR 774, wherein it has been clarified that a transfer falling under Section 531A of the Companies Act, 1956 is not void ab initio but is merely void against the Official Liquidator and therefore voidable at his option. Unless the Official Liquidator chooses to challenge or disregard such a transaction, it remains valid and operative between the parties. Relevant paragraphs of Virendra Singh Bhandari (supra) are extracted as under:

15. Reference may also be made to the observation of Subba Rao J., in Ramaswami Chettiar v. Official Receiver, AIR 1960 SC 70, where, after referring to section 54 of the Provincial Insolvency Act, 1920, which uses the expression “void as against the receiver”, the learned judge observed that the transfer in question was not absolutely void and that in the context the expression “void” only meant “voidable”.

16. The fact that a transfer falling within section 531-A is void as against the liquidator implies that it is not a nullity in the absolute CO.APPL. 233/2012 & few other connected CAs Page 55/61 sense. Since it is void only as against the liquidator, it means the Court will invalidate or ignore the transfer only if the relief is sought by the right person, namely, the liquidator and in appropriate circumstances. For instance, it may be avoided only if it is necessary to satisfy the creditors of the company, or to the extent necessary for that purpose as held by the Madras High Court in Official Receiver v. Palaniswami Chetti alias Ponnuswami Chettiar, AIR 1925 Mad 1051, a case under the Provincial Insolvency Act, 1920. A void transfer is no transfer at all and is completely destitute of any legal effect. A voidable transaction is otherwise a valid transaction and continues to be good until it is avoided by the party aggrieved Johrilal Soni v. Bhanwari Bai, (1977) 4 SCC 59: AIR 1977 SC 2202. The transfers hit by section 531-A are voidable in the above sense, the avoidance being only at the instance of the liquidator.”

15. In view of the above judgment, if the OL does not choose to disown such transactions, they will continue to be valid and operative. Even otherwise they are void as against OL but they are valid inter parties and against the rest of the world.

16. While deciding the objection, this Court is required to see if transfer was in good faith. Bombay High Court in the matter of Monark Enterprises v. Kishan Tulpule, reported in (1992)

74 Comp Cas 89 (Bom.) while considering the meaning and scope of “good faith”, has held:— “43. ……………………… Before I analyse this submission, I consider it necessary to CO.APPL. 233/2012 & few other connected CAs Page 56/61 refer to the leading judgment of the Supreme Court indicating the approach which the Court is enjoined to follow in cases of this kind. In the case of N. Subramania Iyer v. Official Receiver, the Apex Court dealt with an identical question under insolvency legislation. It was held by the Apex Court that the burden of proof was entirely on the official liquidator who impugned the transaction of transfer. In paragraph 10 of his judgment, Sinha J; speaking for the Bench of the Hon'ble Supreme Court, observed that it was not necessary for upholding the transaction that the transferor who had been subsequently adjudged as an insolvent should have been honest and straightforward in the matter of the transaction impeached. It was observed in paragraph 11 of the said judgment the both the transferor and the transferee must have shared a common intention to defraud the creditors. It was held that unless the conduct of the transferee was blameworthy, the transaction could not be annulled. In that case, the High Court had accepted the submission of the official liquidator who represented the estate of the insolvent that the burden of proof was on the transferee to prove that the transaction was bona fide. Relying on several judgments of the Privy Council, the Apex Court negatived this proposition of law propounded in the judgment of the High Court under appeal. The definition of “good faith” in the General Clauses Act (X of 1987) is in these terms: “A thing shall be deemed to be done in good faith where it is in fact done honestly, whether it is done negligently or not.” CO.APPL. 233/2012 & few other connected CAs Page 57/61

44. The same definition of “good faith” is not adopted under the Indian Limitation Act,

1963. The definition of “good faith” as set out in the Limitation Act, 1963, states that a thing shall not be deemed to be done in good faith if not done without due care or caution. The definition of good faith as enacted in the Limitation Act was erroneously adopted in the High Court's judgment in support of its finding that the impugned transaction of transfer or usufructuary mortgage was not a transaction in good faith. The High Court held that the mortgagee had not acted with due care and caution and, therefore, the transaction could not be considered to have been effected in good faith. Overruling this approach of the High Court and its ultimate decision, our Supreme Court held that the definition of “good faith” given in the General Clauses Act (X of 1987) shall have to be read in all Central statutes unless some other definition was provided in the specific statute. It was, therefore, held that the act of the transferee shall have to be held to have been done in good faith if it was done honestly, whether it was done negligently or without due care and caution. No definition of “good faith” is to be found in the Companies Act I of 1956” Hence, if an act is done bona fidely with honest intention, it is done in good faith.

20. In light of provision contained under section 531-A, a transaction can be held to be void if it is found to be in violation of conditions mentioned therein. CO.APPL. 233/2012 & few other connected CAs Page 58/61

17. Patna High Court in the matter of Shivshakti Builders and Financial Co. Ltd; In re, (2010) 158 Comp Cas 237 after taking note of section 531-A has held as under:— “It is evident from a perusal of the aforesaid provision that two types of transactions by the application of the said provision would be void against the official liquidator. The first requirement for either of those transactions is that it should be made within one year before the presentation of a petition for winding up. Once that condition is satisfied, the said transaction must be a transfer or delivery which has not been made in the ordinary course of its business. Alternatively, even if the said transfer or delivery has been made in the ordinary course of business, the same has not been made in favour of a purchaser or encumbrancer in good faith and for valuable consideration. Thus, the two parts of the said section are clearly distinct. The second part as to the person being a purchaser in good faith and for valuable consideration only comes into picture if the transfer itself has been made in the ordinary course of business. If the allegation is that the transfer or delivery has not been made in the ordinary course of business, i.e.; it is not a transaction or transfer which the company could have entered into in the ordinary course of business, then there is no requirement for further proving that the purchaser was a bona fide purchaser and for valuable consideration.”

70. Reliance was placed on M/s Rishabh Agro (supra) by the CO.APPL. 233/2012 & few other connected CAs Page 59/61 ex-management. It was dealing with a situation where, after the order of winding up, the Board of Directors had moved the BIFR by passing a resolution. Since, this was objected to, the Court, in that context, noted that proceedings were deemed to be commenced under Section 441 of the Companies Act, which culminated in dissolution of company under Section 481 of the Companies Act and, therefore, the appointment of the OL did not take away power of the Board of Directors who continue to hold residuary powers for the benefit of the company, which includes the power to take steps for its rehabilitation.

71. The scathing observations which the Courts have made repeatedly against Mr. V.K. Sharma and their repeated obstructive tactics are noted. The ex-management’s obstruction, either directly or through the proxy of Ms. Aneeta Sharma, militates against the crystalized rights of the buyers. Mr. Kalra’s reliance on this judgment does not give them any legal crutch. Conclusions

72. In view of the aforementioned analysis, this Court arrives at the following conclusions:

I. The 7 Buyers’ orders dated 02nd August 2018 and the order dated 12th October 2018 have attained finality, the appeal preferred by the ex-management having been dismissed by the Division Bench. Accordingly, the 14 applicants herein stand on the same footing as discussed in paragraphs 22 to 38. CO.APPL. 233/2012 & few other connected CAs Page 60/61

II. OMC, in its reports, has concluded that the transactions in favour of applicants were bona fide, for valuable consideration, and did not constitute fraudulent preference under Section 531 of the Companies Act, 1956. Accordingly, the claims of applicants have been duly verified by the OMC, and the OMC has concluded that the claimants are entitled to allotment and possession and has recommended the same to the Official Liquidator, as discussed in paragraphs 39 to 41.

III. Sale deeds were executed and registered prior to winding-up of proceedings, and there is no material to establish any fraudulent preference under Section 531 of the Companies Act,

1956. IV. Col. Ganapathy as recorded in the 7 Buyers’ order also, was the authorised representative of the Company in liquidation.

V. Affidavits and documents placed on record substantiate the applicants' claims and establish the genuineness of the transactions, as discussed in paragraph 42.

VI. SFIO Report corroborates the applicants' case by confirming that the project was launched prior to the winding-up order and the authorised representatives were duly empowered to execute sale deeds, as discussed in paragraphs 43 to 49.

VII. The Official Liquidator, in OLR No. 36/2025, has categorically stated that she has ‘no objection’ to the release of the plots in favour of the present applicants, as discussed in paragraphs 34 and 35. CO.APPL. 233/2012 & few other connected CAs Page 61/61

VIII. Objections raised by the ex-management are unmerited and have been also addressed by earlier decisions of this Court and the Division Bench. The same has been extensively discussed hereinabove in paragraphs 50 to 53.5.

IX. Ms. Aneeta Sharma does not have any independent locus standi to maintain the present review petition. She was neither a party to the original proceedings nor an appellant in the appeal proceedings. Besides, her attempt to reopen issues which have already attained finality is just to prolong the proceedings and is severely detrimental to the interests of bona fide investors. The same has been dealt in detail by this Court in paragraphs 54-71 hereinabove. The review petition, i.e. CO. APPL.1374/2018, is devoid of any merit and is accordingly dismissed and CO. APPL.928/2024 is rendered infructuous.

73. In view of the above, applications filed by the 14 applicants, as mentioned above, and OLR 36/2025 are allowed and disposed of accordingly.

74. Official Liquidator will take steps to hand over the plots belonging to the applicants within 3 weeks from today. CO.APPL.1369/2018

1. List on 10th July 2026.

2. Judgment be uploaded on the website of this Court.

ANISH DAYAL (JUDGE) JULY 1, 2026/sm/ak/rk/bp