Case Note & Summary
The case involved a Company Application before the High Court of Karnataka filed by a purchaser of real estate from a company under liquidation. The applicant, a partnership firm, had purchased an undivided retail space in UB City from United Breweries (Holdings) Limited, which was later ordered to be wound up. The sale deed was executed on 21.05.2012 for a consideration of Rs. 3,00,00,000 after the institution of winding-up proceedings on 26.03.2012 but before any restraint order. The applicant paid the full consideration and took possession but the katha (municipal record) remained in the name of the company in liquidation. The applicant sought a no-objection from the official liquidator for transfer of katha; the official liquidator declined to cooperate without a court direction, asserting the sale was void under Sections 536 and 537 of the Companies Act, 1956 as it was executed after the commencement of winding-up without leave of the court. The official liquidator also argued the sale was not in the ordinary course of business, valuation was not contemporaneous, and additional space was undervalued. The applicant contended the sale was part of the regular real estate business, was for fair market price, and that no mala fide intent existed. The valuation report retrospectively valued the property as on the date of sale. The court heard the matter and reserved judgment. The provided text, however, does not contain the court’s analysis or final decision. The issues raised included the effect of post-petition transfers, the requirement of court leave, and the evidentiary value of a belated valuation report.
Headnote
A) Company Law - Winding Up - Void Transfers Under Section 536(2) - Companies Act, 1956, Section 536(2) - The sale deed was registered on 21.05.2012, after the presentation of the winding-up petition on 26.03.2012. The Official Liquidator contended that any transfer after commencement of winding-up is void, while the applicant argued that the mere filing of a petition does not render the sale void and the sale was part of ordinary business. Held: The court's decision is not included in the provided judgment text. (Paras 13-15, 24-26) B) Company Law - Winding Up - Requirement of Leave Under Section 537 - Companies Act, 1956, Section 537 - The sale deed was executed without leave of the Court, and the Official Liquidator argued it is void. The applicant contended that the sale was for valuable consideration and not intended to defraud creditors, and no injunction was in place. Held: The court's ruling is not available in the extracted portion. (Paras 13-14, 24-27) C) Evidence - Valuation Reports - Retrospective Valuation - Companies Act, 1956, Section 536 - The applicant relied on a valuation report dated 19.08.2022 valuing the property as on 21.05.2012. The Official Liquidator challenged its admissibility as not contemporaneous. The Court's determination on this evidentiary issue is not contained in the provided text. (Paras 6, 17-18, 29)
Issue of Consideration
Whether a sale deed executed by a company after the filing of a winding-up petition but prior to a winding-up order and restraining order is void under Sections 536 and 537 of the Companies Act, 1956; whether the official liquidator is obliged to assist in the transfer of katha consequent to such sale.
Law Points
- Section 536(2) Companies Act 1956 - void transfer post commencement of winding-up
- Section 537 Companies Act 1956 - sale void without leave of court
- bona fide purchaser
- ordinary course of business
- fair market value
- retrospective valuation report
- company court rules
- katha transfer
