Bombay High Court
M/S. Bhairav Industries And The ... vs Gopani Metal Industrial Pvt. Ltd on 10 March, 2016
Bench: A.S. Oka
pvr 1 appl51-16.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL (LODG) NO.51 OF 2016
IN
COMPANY APPLICATION NO. 132 OF 2013
IN
COMPANY PETITION NO.158 OF 2010
M/s.Bhairav Industries. )
through its proprietor )
Smt.Pushpalata B.Mhaske having its
ig )
Registered Office at Plot No.W-89, MIDC )
Waluj, Aurangabad. )...Appellants
AND
The Official Liquidator )
M/s.Shree Ganshyam Auto Parts P. Ltd. )
High Court, Bombay, 5th Floor, )
Bank of India Building, Fort, Mumbai. )...Respondent
(Org.Respondent)
Versus
In the matter of M/s.Gopani Metal )
Industries Pvt.Ltd., a limited Company )
Incorporated under Companies Act,1956 )
and carrying on business at 37, Baroda )
Street, Carnac Bunder, Mumbai-400009. )...Respondent
(Org.Petitioner)
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Mr.Kunal Bhanage i/b. M/s.Utangale & Co., for the Appellant.
Mr.Naushad Engineer with Ms.Yogini Chauhan, from Depart of Official
Liquidator, for Respondent No.1.
-----
CORAM : A.S.OKA &
G.S.KULKARNI, JJ.
DATED : 10th March,2016.
----
JUDGMENT: (PER G.S.KULKARNI, J.)
1.
This appeal is directed against order dated 21 December
2015 passed by the learned Single Judge in Company Application
No.132 of 2013, whereby the prayer of the Appellant that the Official
Liquidator be restrained from taking possession of a plot of land claimed
to have been purchased by the Appellant, from the Company in
liquidation, stands rejected.
2. Company Petition no.158 of 2010 was filed on 13 April
2010 by one M/s.Gopani Metal Industries Pvt.Ltd. seeking winding up of
'Shree Ghanshyam Auto Parts Pvt. Ltd.' (for short 'the Company'). By
order dated 20 March 2012 passed by the learned Company Judge, the
Company was ordered to be wound up and the Official Liquidator was
appointed. There is no dispute on this position.
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3. The case of the Appellant in the Application before the
learned Single Judge was that the Appellant was a bonafide purchaser in
respect of a plot of land viz. Plot No.W-89 at MIDC Waluj Industrial
Area, Aurangabad, of which the Company was a lessee of the
Maharashtra Industrial Development Corporation (MIDC). The
company had borrowings from the Bank of Baroda and for that purpose
leasehold rights pertaining to the said plot were mortgaged with the
Bank. It is the Appellant's case that the debt of Rs.37,50,000/- of the
Bank of Baroda was duly paid by the Appellants and accordingly on 22
March 2011 a N.O.C. was granted by Bank of Baroda for assigning of
leasehold rights in the said mortgaged plot of land. Thereafter, on 30
April 2011 an "Agreement for Deed of Assignment of lease", was
executed between the Company and the Appellant. On 30 July 2011 a
Board Resolution came to be passed by the Board of Directors of the
Company for transfer of the plot of land. The Appellant had, thereafter,
approached the MIDC seeking its approval for transfer of the lease of the
said plot in favour of the Appellant. An approval came to be granted by
MIDC on 6 November 2012. Thereafter, a Deed of Assignment was
executed on 24 December 2012. According to the Appellant, the plot
stood transferred in favour of the Appellant on 24 December 2012.
4. The Appellants, therefore, on the above facts contended that
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they are the bonafide purchasers of the said plot of land which was
belonging to the Company and, thus, approached the learned Company
Judge seeking a direction that the Official Liquidator be restrained from
taking possession of the said plot of the Company, which is now in
liquidation.
5. Learned Counsel for the Appellant submits that the plot in
question stood transferred in favour of the Appellant and, therefore, was
required to be kept out of the liquidation proceedings. The learned
Counsel submits that the impugned order ought not to have contained
observations casting a doubt as to whether the Appellants had
discharged the liability of the Company towards the Bank of Baroda. It
is submitted that the facts as stated by the Appellant makes it clear that
the Appellant was a bonafide purchaser of the plot and thus was entitled
for transfer of the plot in its favour.
6. We have heard the learned Counsel appearing for the
Appellants and the learned Counsel appearing for the Official Liquidator.
We have also perused the impugned order and the documents as placed
on record of this appeal.
7. We are not persuaded by the submissions as made by the
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learned Counsel appearing on behalf of the Appellant inasmuch as the
submissions overlook the basic facts. On 13 April 2010 the above
Company Petition (No.158 of 2010) was filed seeking winding up of the
Company as it was unable to discharge its debts. The plot in question
is admittedly not of the ownership of the Company, but the Company
was in possession and enjoyment of the same as a 'lessee' of the MIDC.
The Appellant claims that on 30 April 2011 an Agreement for Deed of
Assignment for lease was executed between the Appellants and the
Company which was confirmed by the Board Resolution dated 30 July
2011 which enabled the Appellants to initially make an application
dated 14 September 2011 to the MIDC seeking approval for transfer in
its favour. In our opinion, this document and circumstance cannot be
said to be of any consequence so as to consider that there is a conclusive
transfer of the plot in favour of the Appellants. Admittedly, the approval
from MIDC was yet to be received and a final Deed of Assignment was
yet to be executed between the parties. When the matter stood at this
stage on 20 March 2012, the Company Court ordered winding up of the
Company and the Official Liquidator came to be appointed.
8. Once an order to wind up the company has been passed by
the Company Court and the Official Liquidator was appointed, the
Company ceased to have any legal rights whatsoever and was
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completely disabled from transferring any of its rights or completing the
transaction, which surely was not completed. Any transfer of the
property thereafter would be rendered void by virtue of Section 536 (2)
of the Act.
9. It is an admitted position that in pursuance of the winding
up order the Official Liquidator issued a notice dated 18 May 2012
seeking to take possession of the plot. The bank was also accordingly
intimated on 25 May 2012. Also the Company being aggrieved by the
winding up order, had filed an appeal, which came to be rejected on 28
May 2012.
10. The Liquidator on 29 May 2012 had visited the plot of land
to take possession. The Appellant by its letter dated 4 July 2015
addressed to the Official Liquidator requested not to take possession of
the plot of land. The Appellant thereafter approached the Company
Court by its application dated 5 October 2012 on which the impugned
order is passed. Thereafter on 6 November 2012, the MIDC granted its
permission for transfer of the plot in favour of the Appellant and
accordingly on 24 December 2012 a Deed of Assignment came to be
executed between the Appellant and the Company on the basis of which
also the Appellant claims that the plot in question stands transferred in
favour of the Appellant.
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11. The above facts clearly demonstrate that the Appellants had
approached the MIDC on 7 June 2012 by its application for assigning of
plot in favour of the Appellants. The permission of the MIDC for transfer
was granted on 6 November 2012 and the Deed of Assignment was
executed on 24 December 2012. All these three events indisputedly are
after the order dated 20 March 2012 was passed by the Company Court
directing winding up of the Company and appointing a Liquidator.
Admittedly, on 24 December 2012 when the Deed of Assignment was
executed, the Official Liquidator was already appointed, the company
had no legal authority to execute any Deed of Assignment/ transfer in
favour of the Appellant.
12. We are thus of the clear opinion that the Appellant has
failed to demonstrate that the transfer is bonafide so as to seek any
benefit under Section 536(2) of the Act. We cannot overlook that in fact
the entire exercise to transfer the plot of land commenced after winding
up Petition in question came to be filed on 13 April 2010. Mere
execution of the 'agreement for Deed of Assignment of Lease', executed
between the Company and the Appellants on 30 April 2014 did not
confer any legal rights in respect of the plot of land. The NOC of
the MIDC was certainly not obtained before the execution of this
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Agreement. In any event, this agreement is not conclusive so as to say
that the plot is transferred in favour of the Appellant prior to the
winding up order. The further submission of the learned Counsel on
behalf of the Appellant on the basis of the 'Deed of Assignment' dated 24
December 2012 also completely overlooks the settled position in law
that after the order dated 20 March 2012 of the Company Court
directing winding up of the Company, the Company had ceased to have
any legal right to make any transfer. No rights could be created by the
company in the said plot after the winding up order. The transfer was
admittedly not completed before the order of winding up was passed.
The company, however, disregarding the winding up orders passed by
the Company Court, proceeded to execute the Deed of Assignment on 24
December 2012 which was after nine months from the passing of the
winding up order. There were void acts apart from being bonafide as
seen from the facts and circumstances, and in the teeth of Section
536(2) of the Act.
13. The learned Counsel appearing for the Official Liquidator
has appropriately relied on the decision of the Division Bench of this
Court in Appeal No.737 of 2012 in the case of "Sunita Vasudeo Warke
Vs. Official Liquidator and Ors." dated 11 January 2013 in which the
Division Bench considering several decisions on the issue has held that
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the company would be completely disabled by virtue of its winding up
from making up any disposition of the property of the Company. Once
the order of winding up is passed, the assets of the company stand under
the control of the Official Liquidator who would perform his statutory
duties to realize or to dispose of the assets and utilize the sale proceeds
to pay the creditors. Further the creditors acquire a legal right by virtue
of the said order to seek realisation of the assets and to get the proceeds
distributed in their favour pari-passu. It would be profitable to extract
the following observations of the Division Bench:-
"11. In order that Section 536(2) of the Companies Act, 1956
can be invoked by the Court to "otherwise order", there has to
be a disposition of property of the company; a disposition
which has been made after the commencement of winding-up
proceedings. In the judgment of the House of Lords in The
Governor and Company of The Bank of Scotland Vs.
Macleod and others, [(1914)AC-311], Lord Kinnear
observed that the rights of competing creditors in liquidation
are to be governed by the same rules as regulate the rights of
creditors in a sequestrated estate under the Bankruptcy Acts.
The House of Lords held that "rights in security which have
been effectually completed before the liquidation must still
receive the effect which the law gives to them. But the company
and its liquidators are just as completely disabled by the
winding-up from granting new or completing imperfect rights
in security as the individual bankrupt is by his bankruptcy."4
The Law Lord noted that this indeed was the necessary effect of
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the Companies Act under which the estate has to be distributed
amongst the creditors pari passu and every creditor has an
equal share unless anyone has already a part of the estate in
his hands, by virtue of an effectual legal right.
12. This principle was followed in the judgment of the
Supreme Court in J.K. (Bombay) Private Limited Vs.
M/s.New Kaiser-IHind Spinning and Weaving Co. Ltd. and
others, (AIR 1970 SC 1041). The Supreme Court after
adverting to the judgment in the Bank of Scotland (supra),
held as follows :
"39. It is thus well established that once a winding-up
order is passed the undertaking and the assets of the
company pass under the control of the liquidator
whose statutory duty is to realize them and to pay
from out of the sale proceeds its creditors. Such
creditors acquire on such order being passed the right
to have the assets realized and distributed among
them pari passu. No new rights can thereafter be
created and no uncompleted rights can be completed,
for doing so would be contrary to the creditors' right
to have the proceeds of the assets distributed among
them pari passu. ... ... ..."
. In view of the judgment of the Supreme Court it is
now a settled principle of law that if a transfer is not
completed before an order of winding-up has been passed, an
application would not be maintainable before the Court for a
direction to the Official Liquidator to complete the transfer.
This principle necessarily follows the settled legal position that
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upon the passing of an order of winding up, no new rights can
be completed and no uncompleted rights can be completed."
14. In the light of the above observations, we see no infirmity in
the impugned order passed by the learned Single Judge. The appeal is
dismissed. The pending Notice of Motion does not survive and the same
is disposed of accordingly.
15. On the prayer made by the learned Counsel appearing for
the Appellant, ad-interim relief which is operative till today will continue
to operate for a period of eight weeks from today.
(G.S.KULKARNI, J.) (A.S.OKA, J.)
