Case Note & Summary
The Official Liquidator filed a report seeking directions regarding the property of Hindustan Transmission Products Ltd. (HTPL), which was in liquidation. The property, a leasehold plot at MIDC Waluj, was allotted to HTPL in 1990. Smt. Sunita V. Warke claimed to have paid Rs. 30 lakhs to HTPL between May and September 2007 for purchase of leasehold rights, but no agreement or transfer deed was executed. The winding up petition (Company Petition No. 327 of 1997) was filed on 7 April 1997, prior to the alleged sale. The court examined whether the sale was void under Section 536(2) of the Companies Act, 1956, which renders any disposition of property after the commencement of winding up void unless the court orders otherwise. The occupant argued that the sale was not a disposition but a transfer of leasehold rights, and that the Official Liquidator had not taken possession. The court held that the transfer of leasehold rights is a disposition of property, and since no court sanction was obtained, the sale was null and void. The court also noted that the occupant's income tax returns showed the amount as 'investment', not as a sale consideration. The court declared the sale void and directed the Official Liquidator to take possession of the property.
Headnote
A) Company Law - Winding Up - Sale of Property After Petition - Section 536(2) Companies Act, 1956 - The sale of leasehold rights by Hindustan Transmission Products Ltd. to Smt. Sunita V. Warke after the filing of Company Petition No. 327 of 1997 was held to be void as no court sanction was obtained. The occupant's claim of payment of Rs. 30 lakhs without any agreement or transfer deed was insufficient to validate the transfer. Held that the sale is null and void and the Official Liquidator is entitled to take possession (Paras 1-10).
Issue of Consideration
Whether the sale of leasehold rights by a company in liquidation to an occupant after the filing of a winding up petition is null and void under Section 536(2) of the Companies Act, 1956, and whether the Official Liquidator is entitled to take possession of the property.
Final Decision
The court declared the sale of the property to Smt. Sunita V. Warke as null and void and permitted the Official Liquidator to take possession of the property.
Law Points
- Sale of company property after winding up petition is void without court sanction
- Section 536(2) Companies Act
- 1956
- Leasehold rights transfer
- Official Liquidator's possession
Case Details
2012 LawText (BOM) (09) 92
Official Liquidator's Report No. 145 of 2011 in Company Petition No. 827 of 2007 in Company Petition No. 327 of 1997 in Company Petition No. 870 of 1999
Mr. J.P. Sen for Official Liquidator, Mr. S. Malik along with Mr. Tanvir Shaikh for Mrs. Sunita V. Warke occupant, Mr. Chavan along with Mr. Suhas Patil for MIDC, Ms. Vinita Hombalkar for IDBI, Mr. Y.I. Ghoghavi for PNB, Dr. T. Pandian Official Liquidator present
M/s. Hindustan Transmission Products Ltd. (In Liquidation)
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Nature of Litigation
Official Liquidator's report seeking directions regarding validity of sale of company property and possession.
Remedy Sought
Official Liquidator sought declaration that sale of property to Smt. Sunita V. Warke is null and void and permission to take possession.
Filing Reason
The occupant claimed to have purchased leasehold rights of the property after the winding up petition was filed, without court sanction.
Issues
Whether the sale of leasehold rights by HTPL to Smt. Sunita V. Warke after the filing of winding up petition is void under Section 536(2) of the Companies Act, 1956.
Whether the Official Liquidator is entitled to take possession of the property.
Submissions/Arguments
Official Liquidator argued that the sale was void as no court sanction was obtained under Section 536(2).
Occupant argued that the transaction was not a disposition but a transfer of leasehold rights, and that the Official Liquidator had not taken possession.
Ratio Decidendi
Any disposition of property made after the commencement of winding up is void unless the court orders otherwise. Transfer of leasehold rights is a disposition of property. Since no court sanction was obtained, the sale is null and void.
Judgment Excerpts
By the above report, the Official Liquidator has sought directions from this Court as follows: ... whether this Hon’ble Court would be pleased to declare the sale of the property ... as null and void.
It is an admitted position that no document, by way of an agreement for sale or a transfer deed, was executed between the Company and the occupant.
Procedural History
Company Petition No. 327 of 1997 filed on 7 April 1997 seeking winding up of HTPL. Official Liquidator's Report No. 145 of 2011 filed seeking directions regarding property. Judgment reserved on June 21, 2012 and pronounced on September 05, 2012.
Acts & Sections
- Companies Act, 1956: Section 536(2)
