Leave granted.
The Company in liquidation approached respondent No. 1 – M/s V.G.P. Finance
Ltd. on 10th November, 1995 for a loan of Rs.1,00,00,000/- (Rupees one crore) for business
purposes. Pursuant to the correspondence a loan agreement came to be executed on 1st
December, 1995 between the Company in liquidation and respondent No. 1 herein.
Following the loan agreement the parties entered into further agreements under which
amounts were advanced from time to time. According to respondent No. 1 herein, in terms
of the loan agreement, the Company in liquidation had mortgaged the property in question
in favour of respondent No. 1 herein.
According to respondent No. 1, as the Company in liquidation did not repay the
amounts in terms of the mortgage deed, vide two sale deeds dated 11.2.1999 and 16.2.1999,
the subject lands stood sold in its favour with possession.
In the meantime, it appears that petition for winding up was moved on 14th
October, 1996 and the Company was ordered to be wound up on 10th March, 1999.
Following the order of winding up, the Official Liquidator issued a notice on 1st June, 1999
for handing over the assets and effects of the Company in liquidation.
Under the above circumstances, on 13th September, 2004, respondent No. 1
herein moved the Company Court for validation of the disposition of property in question
(see page 79). At this stage it may be noted that there was earlier an application made by
respondent No. 1 herein for possession. That was on 14th September, 1999. It was not for
validation whereas the application for validation was moved only on 13th September, 2004.
The first Application dated 14th September, 1999 was numbered as Company
Application No. 1275 of 1999. By judgment and order dated 9th August, 2005 the learned
Single Judge disposed of Company Application No. 1275 of 1999 in favour of respondent
No. 1 herein which was not for validation. The High Court directed the Official Liquidator
to deliver possession of the property in question to respondent No. 1 herein. This order
stood confirmed by the impugned judgment of the Division Bench. Hence, the Indian Bank
which claims to be a secured creditor has come by way of SLP to this Court.
On going through the entire record we find that both, the Company Court as
well as the Division Bench, have not taken into account some of the vital aspects which a
Company Court is statutorily required to take into account. Firstly, in the impugned
judgments there is no reference to the interest of other secured and unsecured creditors of
the Company. Generally, while granting validation the Company Court is required to take
into account the list of assets held by the Company in liquidation. It appears that in this
case apart from the subject lands there are no other assets except goodwill. This aspect is
very important. If a Company does not possess any other assets then the interest of the
creditors, both secured and unsecured, would be jeopardized if the transfer is validated. In
this case it appears that Indian Bank was not heard. It was not even made a party. The
Court has not examined the list of creditors both secured and unsecured whose
security/claims would stand defeated on validation of the sale deed. Moreover, it is
important to note that there was no prayer for validation in Company Application No.
1275 of 1999 and even without said prayer the Court has allowed validation which was
erroneous. The High Court has also not considered the question regarding commencement
of the winding up proceedings and whether the conveyances stood executed after such
commencement?
However, to put an end to the controversy, we are restoring to the file of the
Company Judge the application dated 13th September, 2004 moved by respondent No. 1
herein for validation. We direct the Company Registrar to give a proper registration to the
Company Application for validation dated 13th September, 2004. On giving the
registration number we give liberty to respondent No. 1 herein, if so advised, to move an
application for amendment giving better particulars in support of his claim. We also direct
the Company Registrar to inform the Indian Bank regarding the application being
numbered as directed hereinabove. On completion of all these preliminaries we direct the
Company Court to dispose of the Application for validation dated 13th September, 2004
after considering the claims of secured and unsecured creditors as well as after taking into
consideration assets held by the Company in liquidation as on the date of order of winding
dated 10th March, 1999, and thereafter. We also give permission to Indian Bank to make
an application for impleadment in such application.
Basically the point raised by the Indian Bank before us in this case is that the
Company Court ought not to have granted validation of the sale deeds without taking into
account the interest of the creditors without considering the list of assets and according to
Indian Bank the entire transaction allegedly has taken place after the commencement of
the winding up process.
We direct the High Court to de novo decide this matter uninfluenced by any of
its earlier observations made in the impugned judgment. We express no opinion on the
merits of the case. We grant liberty to both sides to make submissions in support of their
case.
Before concluding, we may state that the possession of the lands is with
respondent No. 1 herein. Status quo as regard to possession is to be maintained till the
Company Court decides the Application for validation dated 13th September, 2004.
However, respondent No. 1 will not encumber the property. Respondent No. 1 will neither
alienate the property nor create any third party rights in respect of the said property.
The appeal is disposed of accordingly with no order as to costs.
April 24, 2009 [ AFTAB ALAM ]
Petition(s) for Special Leave to Appeal (Civil) No(s).28177/2008
(From the judgment and order dated 09/09/2008 in OSA No.201/2005 of the HIGH COURT OF MADRAS)
INDIAN BANK Petitioner(s)
M/S.V.G.P.FINANCE LTD.& ANR. Respondent(s)
(With prayer for interim relief and office report)(For orders)
Date: 24/04/2009 This Petition was called on for hearing today.
CORAM :
For Petitioner(s) Mr. R. Venkataramani, Sr.Adv.
Mr. Alto K. Joseph, Adv.
Mr. Shiv Ram Sharma,Adv.
For Respondent(s) Mr. Harish N. Salve, Sr.Adv.
Mr. K.K. Mani,Adv.
Mr. Mayur R. Shah, Adv.
Mr. S. Srinivasan, Adv.
Ms. Madhusmita Bora, Adv.
UPON hearing counsel the Court made the following
Leave granted.
Appeal is disposed of with no order as to costs.
(S. Thapar) (Madhu Saxena)
PS to Registrar Court Master
The signed order is placed on the file.