Case Note & Summary
The appeal arose from a judgment of the learned Company Judge allowing the Official Liquidator's report seeking a declaration that the sale of immovable properties of Hindustan Transmission Products Limited (in liquidation) was null and void and directing the Liquidator to take possession. The appellant, Sunita Vasudeo Warke, claimed to have paid Rs.30 lakhs to the company between 14 May 2007 and 26 September 2007 for acquisition of leasehold rights of a plot of land at Waluj Industrial Area, Aurangabad, leased from MIDC. No agreement for sale or transfer deed was executed. The winding-up petition was presented on 7 April 1997, and the winding-up order was passed on 27 March 2008. MIDC rejected the request for transfer consent. The appellant sought validation under Section 536(2) of the Companies Act, 1956. The court held that the burden of proof was on the appellant to show that the disposition was made in good faith and for value. The appellant failed to produce any documentary evidence of transfer, and the transaction lacked MIDC consent. The court found no bona fides and dismissed the appeal, upholding the Company Judge's order.
Headnote
A) Company Law - Winding Up - Disposition of Property - Section 536(2) Companies Act, 1956 - Validation of Transfer - The appellant claimed transfer of leasehold rights from a company in liquidation after the winding-up petition was presented but before the winding-up order. The court held that the burden is on the transferee to prove that the disposition was made in good faith and for value. The appellant failed to produce any agreement for sale or transfer deed, and the transaction lacked MIDC consent. The court found no bona fides and declined to validate the transfer. (Paras 1-21)
B) Company Law - Winding Up - Official Liquidator's Report - Declaration of Sale as Null and Void - The Official Liquidator sought a declaration that the sale of immovable properties of the company in liquidation was null and void. The court allowed the report, holding that the transfer was not valid under Section 536(2) as the appellant did not make out a case for validation. The court directed the Liquidator to take possession of the property. (Paras 1-21)
Issue of Consideration
Whether the transfer of leasehold rights by a company in liquidation to the appellant can be validated under Section 536(2) of the Companies Act, 1956, and whether the sale is null and void.
Final Decision
Appeal dismissed. The order of the learned Company Judge allowing the Official Liquidator's report is upheld. The transfer of leasehold rights is declared null and void, and the Official Liquidator is directed to take possession of the property.
Law Points
- Section 536(2) of Companies Act
- 1956
- disposition of property after winding up petition
- validation of transfer
- burden of proof on transferee
- bona fide purchaser for value without notice
- MIDC consent requirement
Case Details
2013 LawText (BOM) (01) 50
APPEAL NO.737 OF 2012 IN OFFICIAL LIQUIDATOR'S REPORT NO.145/11 IN COMPANY PETITION NO.827 OF 2007 IN COMPANY PETITION NO.327 OF 1997 WITH COMPANY PETITION NO.870 OF 1999
DR.D.Y.CHANDRACHUD, A.A.SAYED
Mr.Hiralal Thacker, Sr.Advocate with Mr.S.Malik and Mr.Tanvir Shaikh for Appellant; Mr.J.P.Sen for Official Liquidator; Mr.Prashant Chavan with Mr.Suhas Patil i/by Navdeep Vora and Associates for Respondent no.5
Official Liquidator and others
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Nature of Litigation
Appeal against Company Judge's order allowing Official Liquidator's report seeking declaration that sale of immovable properties of company in liquidation is null and void and direction to take possession.
Remedy Sought
Appellant sought validation of transfer of leasehold rights under Section 536(2) of Companies Act, 1956.
Filing Reason
Appellant claimed to have paid Rs.30 lakhs for leasehold rights of a plot of land from the company in liquidation after winding-up petition was presented but before winding-up order.
Previous Decisions
Company Judge allowed Official Liquidator's report, held that appellant did not make out a case under Section 536(2) for validating the transfer.
Issues
Whether the transfer of leasehold rights by the company in liquidation to the appellant can be validated under Section 536(2) of the Companies Act, 1956?
Whether the sale of the immovable properties of the company in liquidation is null and void?
Submissions/Arguments
Appellant argued that she paid Rs.30 lakhs for the leasehold rights and sought validation under Section 536(2).
Official Liquidator contended that the transfer was without court sanction and MIDC consent, and no document of transfer existed.
Ratio Decidendi
Under Section 536(2) of the Companies Act, 1956, any disposition of property made after the presentation of a winding-up petition is void unless the court orders otherwise. The burden is on the transferee to prove that the disposition was made in good faith and for value. In this case, the appellant failed to produce any agreement for sale or transfer deed, and the transaction lacked MIDC consent, indicating lack of bona fides. Therefore, the transfer cannot be validated.
Judgment Excerpts
The judgment of the learned Company Judge impugned in the appeal arose from a report of the Official Liquidator seeking : (i) A declaration that the sale of the immovable properties of the company in liquidation is null and void; (ii) A direction permitting the Liquidator to take possession of the property.
While allowing the request of the Official Liquidator, the learned Company Judge has held that the Appellant had not made out a case under section 536(2) of the Companies Act, 1956 for validating the alleged transfer of property in question in favour of the Appellant by the company in liquidation.
Procedural History
Company petition for winding-up presented on 7 April 1997. Winding-up order passed on 27 March 2008. Official Liquidator filed Report No.145/11 seeking declaration that sale of property is null and void. Company Judge allowed the report. Appellant filed Appeal No.737 of 2012 against that order.
Acts & Sections
- Companies Act, 1956: 536(2)
