Mr.C.Sekar v. The Offficial Liquidator

Order reserved on

02.08.2023 Order pronounced on

20.09.2023 CORAM The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY in Comp.A.No.161 of 2022 in C. P. No.57 of 1998

¶1C.Sekar

¶2S.ChinnaKaruppan

¶3C.Lakshmi

¶4S.Pichammal ... Applicants (in both applications) v.

¶1The Official Liquidator, High Court, Madras As Provisional Liquidator of Maxworth Orchards (India) Limited (In Provisional Liquidation), High Court, Corporate Bhavan, 2nd Floor, No.29, Rajaji Salai, Chennai – 600 001.

¶2Ms.D.Nagasaila Suresh Administrator of Maxworth Orchards(India) Limited, (In Provisional Liquidation) Old no.3811/new no.1411, Akbarabad Second Street, Kodambakkam, Chennai – 600 024. Page No.1 of 27

¶3Indian Bank, rep. by General Manager, Corporate Office, No.254-260, Avvai Shanmugam Salai, Royapettah, Chennai – 600 014.

¶4The Manager, Indian Bank, Karaikudi Branch, Sivagangai District. ... Respondents (Respondent Nos.3 & 4 impleaded by order (in both applications) dated 21.06.2023 in C.A.No.261/2023) PRAYER IN C.A.Nos.237 & 238 of 2022: These Applications are filed under Order XIV Rule 8 of O.S. Rules r/w Rules 9, 11(B) of the Companies (Court) Rules, 1959 praying to (a) set aside the order dated

14.06.2022 passed by this Hon'ble Court in C.A.No.161 of 2022 in C.P.No.57 of 1998, pertaining to the lands to an extent of 46.64 acres situated at Iluppakottai Velampallam Village, Panangudi group, Sivagangai district in survey nos.131/7, 132/1B, 132/2, 132/3, 132/4, 133/1, 133/2, 133/3, 133/4, 133/5, 134/1A, 134/1B, 134/1C, 134/3, 135/1, 135/3, 136/1, 136/2, 136/3, 136/4B, 136/5, 137/1, 137/2, 137/3, 137/4, 137/6, 138/2, 138/4, 139/4, 139/5A/53, 140/1, 140/3, 140/4, 141/2, 141/3, 142/1A, 142/1B, 143/5, 144/1, 144/2, 144/3, 144/5, 144/6, 147/1, 148/6, 149/1A, 149/2A, 149/2B, 149/2C, 149/2D1, 281/11; and

(b) grant stay of all further proceedings pending final disposal of the case; and pass such suitable order and thus render justice. Applicants : M/s.C.Umashankar & B.P.Vinoth Respondents : Official Liquidator for R1

Mr.H.Karthik Seshadri for Mrs.Nagasaila Suresh, Page No.2 of 27

Administrator (R2) Ms.Hemalatha Suresh for R3&R4 C O M M O N O R D E R These applications are presented by persons claiming title to lands ad-measuring an extent of 46.64 acres in Survey Nos.131/7, 132/1B, 132/2, 132/3, 132/4, 133/1, 133/2, 133/3, 133/4, 133/5, 134/1A, 134/1B, 134/1C, 134/3, 135/1, 135/3, 136/1, 136/2, 136/3, 136/4B, 136/5, 137/1, 137/2, 137/3, 137/4, 137/6, 138/2, 138/4, 139/4, 139/5A/53, 140/1, 140/3, 140/4, 141/2, 141/3, 142/1A, 142/1B, 143/5, 144/1, 144/2, 144/3, 144/5, 144/6, 147/1, 148/6, 149/1A, 149/2A, 149/2B, 149/2C, 149/2D1, 281/11 situated at Elumpaikottai Velamballam village, Sivagangai taluk, Sivagangai District. In Company Application No.237 of 2022, the applicants seek an order of stay of all further proceedings pursuant to the order dated 14.06.2022 of this Court in C.A.No.161 of 2022 and in Company Application No.238 of 2022, the applicants seek to set aside the sale notice.

¶2Learned counsel for the applicant, Mr.C.Umashankar, submitted that the applicants trace their title from four registered sale deeds each dated 08.01.2014, which were registered as Document Page No.3 of 27 Nos.31, 32, 33 and 34 of 2014 at the Joint Sub-Registrar Office-I, Sivaganga. He further submitted that the aforesaid purchase was from Columbia Bio Fuels Pvt. Ltd.(Columbia Bio Fuels), which has its registered office at Kolkata. Learned counsel also relied upon the pattas, kist receipts and village accounts in respect of the lands to assert title.

¶3Learned counsel further submitted that the schedule mentioned property was mortgaged by the applicants in favour of the Indian Bank, Karaikudi Branch, by deposit of title deeds on 26.04.2016. He also submitted that a supplementary deed of mortgage was executed on 04.10.2019, which was registered as Document No.1718 of 2019 at the Joint Sub-Registrar Office-I, Sivaganga. These mortgages were not redeemed and, therefore, by order dated 28.06.2023 in C.A.No.261 of 2023, the Indian Bank was impleaded as Respondent Nos. 3 & 4 in both applications.

¶4Learned counsel submitted that no prior notice of the auction was provided to the applicants. On the ground that the applicants have clear title over these lands, it was submitted that the company in liquidation (the Company) does not have any right over the lands. Page No.4 of 27

¶5In response to these submissions, a common counter was filed by the learned Administrator on behalf of the Official Liquidator (the OL). In the said counter, it was asserted that the Company acquired about

155.65 acres in Velamballam (Illupukottai) and Kattu Suravanthi villages under the Max-Nandavanam project through 57 registered general powers of attorney (GPAs) in favour of Mr.A.Venkatesan, an employee of the Company. Pursuant thereto, the Company took possession of the entire extent of land, conducted a survey and plotted the lands.

¶6Mr.Karthik Seshadri, learned counsel for the Administrator, submitted that item no.14 of the sale notice dated 29.04.2022 pertained to sale of lands of the extent of 74.65 acres in the Max-Nandavanam project. Out of 74.65 acres, he pointed out that the applicants claim title to only

46.64 acres based on the alleged purchase by the applicants from Columbia Bio Fuels in the year 2014. Therefore, for purposes of these applications, he contended that it is sufficient to decide the rival claims as regards the said 46.64 acres (the Disputed Lands). Page No.5 of 27

¶7In order to establish the Company's title over the Disputed Lands, learned counsel for the Administrator relied upon the memorandum of understanding (MoU) dated 10.07.1995 for acquiring about 150 acres of land and the subsequent agreement for sale dated

13.07.1995. He further stated that the original landowners, after receiving the full sale consideration, executed GPAs in favour of an employee of the Company.

¶8With regard to the sale deeds executed by Columbia Bio Fuels in favour of the applicants, learned counsel contended that the sale was after the commencement of winding up and, therefore, void against the OL and the Company. Furthermore, he referred to the encumbrance certificates placed in the typed set of the Administrator (pages 419 to 573) and contended that the name of Mr. A.Venkatesan, the agent, is specified therein and that this constitutes evidence that both Columbia Bio Fuels and the applicants had knowledge of his interest in the Disputed Lands before purchasing the same. It was also submitted that the OL took possession of the lands on 27.04.2011 by affixing a notice on the compound pillars. Thereafter, the auction sale took place on 14.06.2022 Page No.6 of 27 and S.Abinaya was declared as the highest and, therefore, successful bidder for 74.65 acres at Rs.1,50,00,000/.

¶9Learned counsel for the Bank (respondent Nos.3 & 4) submitted that the applicants had mortgaged the Disputed Lands by deposit of title deeds on 26.04.2016, and that the memorandum of deposit was registered as Doc.No.689/2016. She further submitted that the mortgage was renewed by re-deposit of the said title deeds on

04.10.2019, and that the memorandum of deposit in relation thereto was registered as Doc.No.1789/2019, with the SRO, Sivagangai. Learned counsel concluded her submissions by contending that the proposed sale by respondent no.1 pursuant to order dated 14.06.2022 in C.A.No.161/2022 is liable to be set aside in view of the subsisting mortgage on the properties.

¶10Upon considering the contentions of the contesting parties, the primary question that warrants examination is whether the disposition in favour of the applicants is a disposition of the property of the Company. If the answer is in the affirmative, the conveyance in favour of the applicants would be void unless validated by the Court because such Page No.7 of 27 conveyance is after commencement of winding up. If the answer is that no clear conclusion can be drawn in summary proceedings, parties should be called upon to go through a trial process. If the answer is in the negative, the applicant succeeds. In order to determine which category this case falls under, it is necessary to scrutinize the documents on record.

¶11On perusal of the MoU dated 10.07.1995 between the Company and Mr.A.Karupaiah, it is evident that Mr.A. Karuppaiah was entrusted with the responsibility of obtaining GPAs in favour of the Company for the extent of 150 acres. Further, in clause 4 thereof, it was specified that 20% of the total sale consideration would be paid to Mr.A.Karupaiah as advance after getting the preliminary clearance from the land acquisition executives of the Company. The said document also specifies that the agreed price is Rs.7500/- per acre without commission. The agreement for sale dated 13.07.1995 executed by Mr.A.Karupaiah in favour of the Company covers an extent of 150 acres for the sale consideration of Rs.11,25,000/-. However, the schedule to the said document does not disclose any survey numbers. Page No.8 of 27

¶12In addition to the MoU, 34 GPAs are on record along with sale consideration receipts and deeds of undertaking executed by the land owners in 1995 for handing over possession. Each GPA deals with specific extents of land in one or more survey numbers. Several receipts are also on record and the learned Administrator has correlated the GPA with the corresponding receipt. Since the GPA contains details of both survey number(s) and extents therein and, likewise, the receipt also contains the same information, such correlation is possible. Moreover, it is stated in each receipt that a GPA would be executed and that the entire sale consideration was received in cash. By way of illustration, one of the receipts is extracted below: @fpiuaurPJ 1995Mk; tUc&k; mf;nlhgh; khjk; 16e; njjpf;F a[t tUc&k; g[ul;lhrp khjk; 29e; njjp. brd;id khefuk;. brd;id?83. mnrhf;efh; nlhh;ek;gh; 39. 47tJ bjUtpy; trpf;Fk; jpU/ mUs;jUk;bgUkhs; mth;fs; Fkhuh; 27 taJs;s jpU/V/bt';fnlrd; mth;fSf;F. gRk;bghd;Kj;Juhkyp';fj;njth; khtl;lk;. rptf';if tl;lk;. ,Yg;gf;nfhl;il ntshk;gs;sk; fpuhkj;jpy; trpf;Fk; ntY kfd; tptrhak; ehF vGjpf; bfhLj;j fpiua urPJ/ vdf;Fg; ghj;jpag;gl;Ls;s moapw;fz;l brhj;ij ehd; j';fSf;F ehsJ njjpapy; hp$p!;jh; b$duy;gth; gj;jpuj;jpd;K:yk; gth; Page No.9 of 27 gj;jpuj;jpy; fz;Ls;sbrhj;Jf;fis hp$p!;jh; bra;J bfhLj;J,Uf;fpnwd;/ i& gth; gj;jpuj;jpy; fz;Ls;sbrhj;Jf;F fPnH Fwpg;gpl;l gzg;gw;Wg;go fpiuaj;Jif U:gha; KGtija[k; buhf;fk; bgw;Wf;bfhz;nld/; i& brhj;ij jh';fs; rh;tRje;jpug; ghj;jpakhf mDgtpj;Jf; bfhs;sntz;oaJ/ i& brhj;Jf;fis vf;fhuzj;ijf;bfhz;Lk; khw;wk; bra;anth. uj;Jr;bra;anth vdf;F ahbjhU chpika[k; fpilahJ vd;W ,jd;K:yk; cWjpaha;r;brhy;Yfpnwd;/ gzg;gw;W U:.32.925-? (U:gha; Kg;gj;jp ,uz;lhapuj;jp bjhs;shapuj;jp ,Ug;gj;ije;J kl;Lk;)/ brhj;J tptuk; rptf';if tl;lk;. gd';fho FU:g;. gd';fho cs;fil. ,Yg;gf;nfhl;il ntshk;gs;sk; fpuhkj;jpy;/ 1/rh;nt vz;/134y; 1V g[d;ir 0/60/0 Vh;Rf;F Vf;fh; 1 brd;L 48 xU Vf;fh; ehw;gj;jpvl;L brz;L kl;Lk/; 2/ rh;nt vz;/136y; 50/71/0 Vh;Rf;F Vf;fh; 1 brz;L 76 xU Vf;fh; Vggj;jpMW brd;L kl;Lk/; 3/rh;nt vz;/142y;1V g[d;ir 0/46/5 Vh;Rf;F Vf;fh; 1brd;L 15 xU Vf;fh; gjpide;J brd;W kl;Lk;/ rhl;rpfs; 1/

2.uhkfjpnurd; S/o. uhkd; ,Yg;gf;nfhl;il GPAoNo:o312/95" PageoNo.10oofo27

¶13If the GPAs are verified to identify whether any GPA deals with the lands described in the above-extracted receipt, it becomes clear that GPA No.312 of 1995 relates to 1.48 acres in Survey No.134/1A; 1.76 acres in Survey No.136/5; and 1.15 acres in Survey No.142/2A. The same survey numbers and extents are dealt with in the receipt, extracted above, which is at page 22 of the typed set filed by the learned Administrator. Therefore, it is possible to draw the conclusion that the said receipt is in respect of consideration paid and received for the extent of lands covered in GPA No.312 of 1995. By undertaking this exercise of identifying corresponding GPAs and receipts, an inference may be drawn that full sale consideration was paid in respect of specific parcels of land before the relevant GPA was executed. The relevant particulars are captured in the following table: Page No.11 of 27 S.No. GPAoNo. Extento(inoacres) SurveyoNos.oCovered Consideration

¶1312/95 1.48o+o1.76o+o1.15 134/1A,o136/5,o142/1A Rs.32,952/-

¶2219/95 1.40 137/2 Rs.10,500/-

¶3407/95 3.01 138/2 Rs.22,575/-

¶4175/95 2.65o+o1.42 141/1,o143/2 Rs.30,525/-

¶5179/95 1.10o+oti.91o+o1.68 143/1,o143/4,o144/1 Rs.27,675/-

¶6160/95 0.88o+o1.70 141/3,o145/6

¶7162/95 1.64 140/3 Rs.12,300/-

¶8180/95 10.94 147/1 Rs.82,050/-

¶9171/95 0.84 143/5 Rs.6,300/-

¶10172/95 1.98o+oti.64 132/2,o136/2 Rs.19,650/-

¶11290/95 2.70o+o1.63o+o5.74 133/4,o133/5,o134/2 Rs.75,525/-

¶12409/95 2.74 140/4 Rs.20,550/-

¶13218/95 1.44 139/4 Rs.10,800/-

¶14408/95 2.11 133/1 Rs.15,825/-

¶15344/95 0.99 132/1B Rs.7,425/-

¶16277/95 2.91 281/12 Rs.21,825/-

¶17313/95 0.74o+oti.69 134/1Co+o139/5A Rs.10,725/-

¶18319/95 1.52 132/4 Rs.11,400/-

¶19167/95 1.68 133/3 Rs.12,600/-

¶20278/95 0.74o+oti.67 134/1B,o139/5B Rs.10,575/-

¶21176/95 1.00o+oti.48o+oti.70 131/7,o136/3,o144/2o Rs.16,350/-

¶22159/95 0.50o+o1.91 137/4,o139/1 Rs.18,075/-

¶23166/95 1.82 137/6 Rs.13,650/-

¶24161/95 1.16o+o1.07 134/3,o140/1

¶25212/95 0.84 136/1 Rs.6,300/-

¶26220/95 3.32 137/1 Rs.24,900/-

¶27289/95 1.83o+o2.56o+o1.80 135/1,o135/3,o137/3 Rs.46,425/-

¶28213/95 0.84o+oti.57 136/4B,o142/1B Rs.10,575/-

¶29203/95 1.80 148/6 Rs.13,500/-

¶30182/95 2.42 132/3 Rs.18,150/-

¶31217/95 4.50o+o2.99o+o1.51 141/2,o144/3,o132/4 Rs.67,500/-

¶32174/95 0.70o+o1.95 144/5,o144/6

¶33168/95 1.54 133/2

¶34324/95 4.54 132/4 SALEoDEEDS

¶145/96 0.72o+oti.29o+o3.05o+o 149/1A,o149/2A,o149/2D1,o

0.29o+o2.20o+oti.12o+o 149/2B,o149/2C,o149/1B,o Rs.58,032/-

0.25o+oti.98o+oti.16o+o 149/2D2,o149/2E1,o

0.95o+oti.35 149/2Ey2,o150/4,o150/6,oo

¶246/1996 0.40 150/8 - https://www.mhc.tn.gov.in/judisTOTALoEXTENT 113.59oacres TOTALo Rs.7,35,234/- CONSIDERATION_____________ PageoNo.12oofo27

¶14These GPAs evidence that the land owners executed them in favour of Mr.A.Venkatesan. The employment application form and joining report of the agent, Mr.A.Venkatesan, is on record, and these documents clearly indicate that A.Venkatesan was an employee of Maxworth. Therefore, there is basis to draw the inference that the PoAs were executed in his favour in course of his employment with Maxworth. By orders of injunction dated 24.04.2003 and 18.11.2003, in C.A.No.740 of 2003, this Court restrained the agent from alienating lands purchased by the Company.

¶15Another piece of evidence in this case is the deed of undertaking by land owners for handing over possession of lands forming the subject of each of the GPAs. All the deeds of undertaking are in identical language and a representative relevant extract is set out below: 1995 tUc&k; mf;nlhgh; khjk; 16e;njjpf;F a[t tU&k; g[ul;lhrp khjk; 29e;njjp. brd;id khefuk;.

brd;id

83.

mnrhf;efh; nlhh;ek;gh; 39. 47tJ bjUtpy; trpf;Fk; jpU/mUs;jUk;bgUkhs; mth;fs; Fkhuh; 27 taJs;s jpU/V/bt';fnlrd; mth;fSf;F. gRk;bghd; Kj;Juhkyp';fj; njth; khtl;lk;. rptf';if tl;lk;. ,Yg;gf;nfhl;il ntshk;gs;sk; fpuhkj;jpy; trpf;Fk;ntY kfd; Page No.13 of 27 tptrhak;

ehF

vGjpf;

bfhLj;j cWjpbkhHpg; gj;jpuk;/ vdf;Fj; jdpj;j brhe;j ghj;jpa mDgtj;jpYk;

RthjPdj;jpYk;

,Ue;J tUfpw moapw;fz;l brhj;ijg; bghWj;J j';fSf;F ehd; ehsJ njjpapy; xU gth; gj;jpuk;

vGjpf;

bfhLj;jpUf;fpnwd;/ moapw;fz;l brhj;ijg; bghWj;J VjhtJ tpy;y';fk;. tptfhuk; ,Ue;J btspahdhy; mij vd;Dila brhe;jg; bghWg;gpypUe;Jk;. vd;Dila brhe;j brytpypUe;Jk; ,ju kw;wr; brhj;Jf;fspypUe;Jk; j';fSf;Fehd; epth;j;jp bra;Jf; bfhLg;ngdhft[k; vd;W j';fSf;F ,e;j cWjpbkhHpg;gj;jpuk; vGjpf; bfhLj;jpUf;fpnwd;/ moapw;fz;l brhj;ij ,d;W njjpapy; j';fs; trk; xg;gilj;J tpl;nld;/ Additionally, the minutes of proceeding dated 27.04.2011 records that the representative of the OL and Administrator visited the lands in Max-Nandavanam and affixed notices on the compound pillar communicating the taking over of possession by the OL and a team of 4 security guards for day shift and 6 security guards for night shift from M/s.Global Security Services were appointed to safeguard the immovable assets of the Company. Page No.14 of 27

¶16In Suraj Lamp & Industries (P) Ltd. v. State of Haryana, (Suraj Lamps)(2012) 1 SCC 656, which was decided on 11.10.2011, the Supreme Court concluded that a sale should ordinarily be by way of a registered conveyance, but carved out an exception for bona fide transactions involving the execution of a GPA in favour of a developer. In relevant part, it was held as under in paragraphs 26 and 27: "26....The said "SA/GPA/will transactions" may also be used to obtain specific performance or to defend possession under Section 53-A of the TP Act. If they are entered into before this day, they may be relied upon to apply for regularisation

of

allotments/leases

by development authorities. We make it clear that if the documents relating to "SA/GPA/will transactions" have been accepted/acted upon by DDA or other developmental authorities or by the municipal or Revenue Authorities to effect mutation, they not be disturbed merely on account of this decision.

¶27We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, Page No.15 of 27 daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding "SA/GPA/will transactions" are not intended to apply to such bona fide/genuine transactions." Upon examining the MoU, the Sale Agreement, the GPA, the receipts and the deeds of undertaking, I conclude that this transaction falls within the exceptions carved out in Suraj Lamps. In this connection, it is also pertinent to refer to the judgment of the Division Bench of this Court in Maxworth Orchards India Ltd. v. B. Ravi Babu and others (Maxworth DB), 2023-4-L.W.205, where, in paragraph 27, the Division Bench Page No.16 of 27 extracted paragraph 27 of Suraj Lamps, held in paragraph 28 that Suraj Lamps is prospective and further held, in paragraph 29 as under: "29. In the case before us, the powers of attorney were executed in the last decade of the previous millennium and therefore, the argument based on Suraj Lamps necessarily, has to fail." The wide powers of the Companies Court under Sections 446(2) and 456 of CA 1956 were also recognised and endorsed in Maxworth DB at paragraphs 30 and 31 of the judgment.

¶17The documents relied on by the rival claimants remain to be considered. The applicants produced the following four sale deeds dated

08.01.2014 executed by Columbia Bio Fuels: (i) sale deed in favour of the 1st applicant under Document no.31 of 2014 for an extent of 36.30 acres of land comprised in Survey Nos.131/7, 136/3, 132/1B, 134/1A, 136/5, 142/1A, 132/2, 132/3, 133/1, 133/2, 134/1C, 139/5A, 134/3, 140/1, 136/2, 136/4B, 142/1B, 137/2, 137/4, 137/6, 138/1, 138/2, 139/1, 139/4, 140/3, 143/5, 133/3; (ii) sale deed in favour of the 2nd applicant under Document no.32 of 2014 for an extent of 36.30 acres of land comprised in Survey Nos. 134/1B, 135/1, 135/3, 136/1, 137/1, 137/3, 138/4, 139/5B, 139/6, 140/4, 141/1, 141/2, 141/3, 143/1, 143/2, 143/4, 143/6, Page No.17 of 27 143/7, 151/9; (iii) sale deed in favour of the 3rd applicant under Document no.34 of 2014 for an extent of 36.28 acres of land comprised in Survey Nos. 144/1, 144/3, 147/1, 148/1, 148/2, 148/4, 148/5, 149/3A, 149/3B, 150/1, 150/2, 151/17, 163/6, 163/8, 167/2, 167/5, 145/6; and (iv) sale deed in favour of the 4th applicant under Document no.33 of 2014 for an extent of 36.35 acres of land comprised in Survey Nos.144/2, 144/5, 144/6, 148/6, 149/1A, 149/2A, 149/2B, 149/2C, 149/2D1, 150/8, 151/10, 151/13, 151/2, 151/3, 151/8, 163/3, 164/2B, 164/3B, 164/4, 166/4B, 167/1, 168/3, 145/1A, 145/5, 132/4, 133/4, 133/5.

¶18The recitals of each of the sale deeds reveal that Columbia Bio Fuels is a private limited company registered under the Companies Act, 1956 (the Act), with its registered office at Kolkata. They further reveal that Columbia Bio Fuels had acquired the Disputed Lands from several original land owners in 2006. However, the parent documents of such transactions are not on record.

¶19The pattas on record specify the names of the applicants as the owners of the property. Patta Nos.1689 & 1720 reflect the name of the 1st applicant, patta no.1690 reflects the name of the 2nd applicant, Page No.18 of 27 patta no.1691 reflects the name of the 4th applicant, and patta no.1692 reflects the name of the 3rd applicant. Additionally, there are some land D.8 receipts and adangal receipts of the year 2015 to show the alleged ownership of the applicants.

¶20In order to determine the category in which this case may be placed (paragraph 10 supra), Section 536(2) of the Companies Act, 1956 (CA 1956) needs to be examined. Section 536(2) deals with the disposition of the property, including actionable claims, of a company after the commencement of winding up. The said provision is set out below: "536(2) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the Company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall, unless the Court otherwise orders, be void." C.P.No.57 of 1998 was presented by a creditor of the Company on or about 24.02.1998. An Administrator was appointed on 12.02.2001 and was vested with all powers of the Official Liquidator by order dated Page No.19 of 27

06.02.2006. By order dated 17.09.2010, the Official Liquidator was appointed as Provisional Liquidator. Consequently, by virtue of the legal fiction incorporated in Section 441(2) of CA 1956, the winding up was deemed to commence on or about 24.02.1998. As a corollary, Section 536(2) of CA 1956 became applicable and all dispositions of property, including actionable claims, of the Company and transfers of shares or alteration in the status of members in the Company, if effected after

24.02.1998, would be void unless validated by the Court.

¶21In this case, as discussed above, there is basis to conclude that the Disputed Lands are assets of the Company. Considering the fact that the MoU, Sale Agreement and GPAs in favour of the Company were executed in 1995, whereas the sale deeds in favour of the applicants were executed in 2014, the pertinent question is: whether the sale deeds in favour of the applicants are void in terms of Section 536(2) of CA 1956? The relevant documents are revisited to answer this question.

¶22As regards Sale Deed bearing Document No.31 of 2014, the survey numbers specified in the schedule thereto tally with the survey numbers in GPA Nos.312/95, 219/95, 407/95, 162/95, 171/95, 172/95, Page No.20 of 27 218/95, 408/95, 344/95, 313/95, 167/95, 176/95, 159/95, 166/95, 161/95, 213/95, 182/95 and 168/95, and the receipts corresponding thereto. The aggregate extent covered by these survey numbers is about

34.86 acres. Survey No.138/1 for an extent of 1.45 acres is the subject of the above sale deed but not of any GPA. As regards Sale Deed bearing Document No.32 of 2014, the survey numbers specified in the schedule thereto match those in GPA Nos.278/95, 289/95, 212/95, 220/95, 278/95, 409/95, 175/95, 217/95, 160/95 and 179/95 and the receipts corresponding thereto, except for Survey Nos.143/7, 138/4, 139/6, 143/6 and 151/9. It is pertinent to note here that Survey Nos. 143/7, 139/6, 143/6 and 151/9 do not form part of the Judge's Summons. Excluding those survey numbers and the extents therein, the extent covered in the GPAs in relation to this sale deed is 25.96 acres. As regards Sale Deed bearing Document No.33 of 2014, Survey Numbers 144/5, 144/6, 148/6, 132/4, 133/4, 133/5 correspond to GPA Nos.174/95, 203/95, 217/95, 290/95 to an extent of 20.97 acres and the receipts corresponding thereto and Survey Numbers 149/1A, 149/2A, 149/2D1, 149/2B, 149/2C correspond to the Sale Deed bearing Document No.45/96, which was executed in favour of the agent for an extent of 6.51 acres. As regards Sale Deed bearing Document No.34 of 2014, Survey Numbers 144/1, Page No.21 of 27 144/3, 147/1 match those in GPA Nos.179/95, 180/95 and 144/3, respectively, of an extent of 15.57 acres and the receipts corresponding thereto. A table correlating the sale deeds of the applicant and the GPAs is set out below: Doc. No.31 of 2014 Survey Nos. Extent (in acres) Covered in GPA Doc. No. Extent (in acres)

1.00

1.00

0.48

0.48 132/1B

0.98

0.99 134/1A

1.48

1.48

1.75

1.76 142/1A

1.13

1.15

1.97

1.98

2.42

2.42

2.11

2.11

1.54

1.54 134/1C

0.74

0.74 139/5A

0.69

0.69

1.16

1.16

1.07

1.07

0.64

0.64 136/4B

0.83

0.84 142/1B

0.56

0.57

1.39

1.40

0.49

0.50

1.81

1.82

1.45 --

3.01

3.01

1.91

1.91

1.44

1.44

1.64

1.64 Page No.22 of 27

0.83

0.84

1.67

1.68 Total Extent

36.30 Total Extent

34.86 Document No.32 of 2014 Survey Nos. Extent (in acres) Covered in GPA Doc. No. Extent (in acres) 134/1B

0.74

0.74

1.83

1.83

2.55

2.56

0.83

0.84

3.32

3.32

1.80

1.80

3.02 - - 139/5B

0.66

0.67

3.43 --

2.74

2.74

2.65

2.65

4.49

4.50

0.88

0.88

1.09

1.10

1.42

1.42

0.91

0.91

2.08 --

0.90 --

0.93 - - Total Extent

36.30 Total Extent

25.96 Document No.33 of 213 Survey Nos. Extent (in acres) Covered in GPA Doc. No. Extent (in acres)

0.70

0.70

0.70

0.70

1.95

1.95

1.80

1.80 149/1A

0.71 149/2A

0.28 149/2B

0.28 149/2C

2.19 Sale deed

0.72

0.29

3.05

0.29 Page No.23 of 27 Survey Nos. Extent (in acres) Covered in GPA Doc. No. Extent (in acres) 149/2D1

3.0

3.05

0.39 46/1996 Sale deed

0.40

0.13 --

0.17 --

0.16 --

0.16 --

0.23 --

1.34 - - 164/2B

1.50 - - 164/3B

0.43 --

1.18 - - 166/4B

0.64 --

4.60 --

2.40 - - 145/1A

0.67 --

1.67 --

4.54

4.54

2.70

2.70

1.63

1.63 Total Extent 36.35 Total Extent 21.82 Document No.34 of 2014 Survey Nos. Extent (in acres) Covered in GPA Doc. No. Extent (in acres)

1.67

1.68

2.98

2.99

10.92

10.94

2.43 --

2.12 --

0.70 --

0.80 - - 149/3A

1.80 - - 149/3B

0.52 --

2.21 --

3.01 --

2.08 - - Page No.24 of 27

0.23 --

0.61 --

1.23 --

1.19 --

0.85

1.70 Total Extent

36.28 Total Extent

17.31

¶23Therefore, the sales in favour of the applicants in 2014 were undoubtedly not bona fide. Such sales were detrimental to the interest of the Company and, therefore, cannot be validated. Consequently, the sale deeds dated 08.01.2014 are declared void and the pattas issued on that basis are also void. As is evident from the table in the preceding paragraph, lands conveyed in certain survey numbers, as specified therein, under the four sale deeds are not lands of the Company. As regards such lands, it is open to the applicants to call upon the respective vendors to execute an appropriate instrument. In view of the above, the purported mortgages, all of which are founded on the above sale deeds, are also declared void by applying the principle of nemo dat quod non habet. Even as regards lands covered under the GPAs/sale deeds, it is open to the applicants to make claims against their vendors as a consequence of this order. It is needless to say that it is open to the Bank to initiate appropriate proceedings against the applicants/borrowers to Page No.25 of 27 recover its dues, including by enforcing any other security (other than the mortgages that were declared void herein).

¶24For reasons set out above, Company Application No.237 and 238 of 2022 are dismissed without any order as to costs. As a corollary, the Official Liquidator shall take necessary action to mutate the title and revenue records to reflect the Company's ownership of the relevant immovable property and to conclude the auction sale.

20.09.2023

Index : Yes Internet : Yes : Yes kal Page No.26 of 27 ooooooooooooooSENTHILKUMARoRAMAMOORTHY,o J. oooooooooooooookal ooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo ooooooooooooooooo oPre-DeliveryoCommonoOrderomadeoino oo oinoo ooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooComp.A.Nos.237o&o238oofo 2o 022oiono Comp.A.No.161oofo2022 in C.oP.oNo.57oofo1998 PageoNo.27oofo27 20 .09.2023 Page No.28 of 27

IN THE HIGH COURT OF JUDICATURE AT MADRAS