Rajasthan High Court - Jaipur
The Official Liquidator Of M/S Sequel ... vs Srinivas Kaja Son Of Purn Chand Kaja on 14 November, 2024
Author: Sameer Jain
Bench: Sameer Jain
[2024:RJ-JP:46928]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Company Application No. 19/2018
Official Liquidator of M/s Sequel Infocom Private Limited (In
Liquidation) having its registered office at Corporate Bhawan, G-
6-7, Residency Area, Civil Lines, Jaipur.
---Applicant/Petitioner
Versus
1. Srinivas Kaja son of Purn Chand Kaja aged about 53 years
resident of F-425, Ushas Apartment, 16 th
main 4 th
Block
Jayanagar, Bangalore-11.
2. Vandana Kaja Wife Of Srinivas Kaja, Aged About 52 Years,
Resident Of F-425, Ushas Apartment, 16th main 4th Block
Jayanagar, Bangalore-11.
....Respondents/Directors
3. Rakesh Kumar Gupta Son Of Mahesh Chandra Gupta, Resident Of Plot No. 92, Hari Marg, Civil Lines, Jaipur. (Rajasthan)
4. Shalini Gupta Wife of Rakesh Kumar Gupta Resident of Plot No.92, Hari Marg, Civil Lines, Jaipur. (Rajasthan) ....Respondents/Purchasers
5. ICICI Home Finance Co. Ltd. Regd. Office ICICI Bank Towers, Bandra Kurla Complex Mumbai- 400051, India and Regional Office at 1st floor, Shop No.- 46 To 49 Lakshmi Complex, M.I. Road, Subhash Marg, C Scheme, Jaipur, Rajasthan 302001.
----Respondents Connected With S.B. Company Application No. 11/2019 Official Liquidator Of M/s Sequel Infocom Private Limited, (In Liquidation), having its registered office at Corporate Bhawan, G-6-7, Residency Area, Civil Lines, Jaipur.
----Complainant/Applicant Versus
1. Srinivas Kaja son of Purn Chand Kaja, Aged About 53 Years, Resident Of F-425, Ushas Apartment, 16 th main 4th Block, Jayanagar, Bangalore-11
2. Vandana Kaja wife of Srinivas Kaja, Aged About 52 Years, Resident Of F-425, Ushas Apartment, 16 th main 4th Block, Jayanagar, Bangalore-560011 (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (2 of 16) [COAP-19/2018]
3. ICICI Home Finance Co. Ltd., Regd. Office ICICI Bank Towers, Bandra Kurla Complex Mumbai-400051, India And Regional Office At 1st Floor, Shop No.- 46 To 49 Lakshmi Complex, M.I. Road, Subhash Marg, C Scheme, Jaipur, Rajasthan 302001.
----Respondents IN S.B. Company Petition No. 23/2010 M/s Dell India Private Limited, Having its office at Divyasree Greens, Ground Floor, #12/1, 12/2A, 13/1A, Challaghatta Village, Varthur Hobli, Bangalore South, Bangalore-560071, through its Power of Attorney Holder Mr. Santosh Pandey, Residing at Q1/141, First floor, South City 2, Sector-47, Sohna Road, Gurgaon-122018, Haryana.
----Petitioner Versus M/s Sequel Infocom Private Limited. Having its registered office at 401-404, Geetanjali Towers, Ajmer Road, Jaipur, Rajasthan-
302006 through its Managing Director
----Respondent
For Petitioner(s) : Mr. Vijay Choudhary
For Respondent(s) : Mr. Shashank Singh assisted by Mr.
Prince Pal Singh, through VC
Mr. Amol Vyas
Mr. Vineet Sharma, ICICI
Mr. Sumail Sharma
HON'BLE MR. JUSTICE SAMEER JAIN
Judgment
Reserved on : 12/07/2024
Pronounced on : 14/11/2024
1. S.B. Company Application No. 19/2018 is filed under Sections 531, 531A, 533, 536(2), 537, 456 & 468 of the Companies Act, 1956 read with Rule 6 & 9 of the Company (Court) Rules, 1959, seeking directions for declaration of the sale deed (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (3 of 16) [COAP-19/2018] dated 25.05.2011 executed inter-se respondents-directors & respondents-purchasers null & void and handing over peaceful possession qua the disputed property to the petitioner.
2. For the sake of convenience, the provisions relied upon by the learned counsel are enumerated below:
Provisions of law Head note Statute
Section 456 Custody of The Companies
Company's Property Act, 1956
Section 468 Delivery of property The Companies
to liquidator Act, 1956
Section 531 Fraudulent The Companies
preference Act, 1956
Section 531A Avoidance of The Companies
voluntary transfer Act, 1956
Section 533 Liabilities and rights The Companies
of certain Act, 1956
fraudulently
preferred persons
Section 536(2) Avoidance of The Companies
transfers, etc., after Act, 1956
commencement of
winding up
Section 537 Avoidance of certain The Companies
attachments, Act, 1956
executions, etc., in
winding up by or
subject to
supervision of court
Rule 6 Practice and The Companies
Procedure of the (Court) Rules,
Court and provisions 1959
of the Code to apply
Rule 9 Inherent powers of The Companies
Court (Court) Rules,
1959
(Downloaded on 19/11/2024 at 10:07:26 PM)
[2024:RJ-JP:46928] (4 of 16) [COAP-19/2018]
SUBMISSIONS ON BEHALF OF THE PETITIONER:
3. Learned counsel on behalf of Official liquidator had averred that the germane facts for consideration before this Court are that M/s Sequel Infocom Private Limited Company (hereinafter, referred as 'the said company') was primarily engaged in the business of primarily providing I.T. services, wherein they used to provide services qua electronic data processing centers and software consultancy. The said company has its registered office at 401-404, Geetanjali Towers, Ajmer Road, Jaipur (hereinafter, referred as 'the said disputed property').
4. It was further submitted that a winding up petition (S.B. Company Petition No. 23/2010) was filed by M/s Dell India Private Limited against the said company on 14.12.2010 before this Court, wherein vide order dated 03.08.2017, an Official liquidator was appointed for conducting the winding up proceedings of the said company.
5. Furthermore, it was submitted that during the course of taking over the aforementioned charges by the Official liquidator qua winding up proceedings, it came to his knowledge that on 17.03.2011, a Board resolution (Annexure-3) was passed by Mr. Srinivas Kaja & Mrs. Vandana Kaja (respondents-directors) in favor of Mr. Rakesh Kumar Gupta & Mrs. Shalini Gupta (respondents-purchasers) to sell the said disputed property, thereafter a registered sale deed dated 25.05.2011 (Annexure-4), was executed inter-se respondents-directors and respondents- purchasers for sale consideration of amount Rupees fifty five Lacs (Rs. 55,00,000/-).
(Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (5 of 16) [COAP-19/2018]
6. It was further contended that such sale transaction is violative of the provisions enumerated under Sections 531A, 536 and 537 of the Companies Act, 1956. Moreover, the sale transaction was done through misrepresentation and fraudulent means with an intention of evading the winding up proceedings.
7. It was further alleged that the respondents-directors have siphoned Rs. fifty-five lacs (Rs. 55,00,000/-) inclusive of the leftover money post payment of their sanctioned loans, amounting to Rs. 18 lacs approximately qua which they have failed to provide any details about the whereabouts of the residuary consideration amount.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
8. Per Contra, learned Counsel on behalf of the respondents- directors had vehemently denied the allegations qua siphoning of consideration money, amounting to Rs. fifty five Lacs (Rs. 55,00,000/-) and submitted that on 17.03.2011 they have passed a Board resolution in favour of respondents- purchasers to sell the said disputed property for a consideration amount of Rs. fifty-five lacs. Moreover, the said consideration amount was partly paid in cash and partly through a cheque.
9. It was further submitted that out of the total sale consideration amount of Rs. fifty-five Lacs (Rs. 55,00,000/-), Rs. 37 lacs approximately was paid to the respondent-bank in lieu of the loans dated 18.12.2004 and 23.06.2007, whereby all dues are cleared.
10. Furthermore, it was submitted that the remaining amount of Rs. 18 lacs approximately was utilized in payment of salary to (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (6 of 16) [COAP-19/2018] employees and approximately Rs. 1.25 Lacs were given to the property dealer in cash.
11. Learned counsel on behalf of the respondents-purchasers had submitted that on the date of executing the sale deed they were unaware of the pending winding up application of the said company before the concerned Court and the purchase of the said disputed property was done with bonafide intention.
12. It was further submitted that after entering into an agreement to sale with the respondents-directors, they had made a payment of consideration amount of Rs. 36,24,851/- to the respondent-bank qua pre-payment of mortgage loan taken by the said Company through the respondents-directors.
13. Furthermore, it was contended that for the purchase of the said disputed property, they have availed a loan amount of approximately Rs. thirty-seven Lacs (Rs. 37,00,000/-), which is presently being repaid by them. It was further averred that the sale of the disputed property was done for a consideration amount of Rs. fifty-five Lacs (Rs. 55,00,000/-) inclusive of the amount being made as a pre-payment of mortgage loan as aforestated.
14. Additionally, it was submitted that the said disputed property was bought and registered at a price higher than the DLC rate which was prevailing at that time, therefore, no case of fraudulent preference is made out against them as they are bonafide purchasers of the said disputed property for a valuable consideration.
15. In support of the contentions made insofar, learned counsel had placed reliance upon the ratio encapsulated in 172 CC 528 (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (7 of 16) [COAP-19/2018] (Guj) titled as Hawa Controls versus O.L. of Tirupati Foundry Private Limited & Ors, 2024 SCC Online Bom 1646 titled as Helbon Engineers Pvt. Ltd. versus Ferral Anant Machinery Manufacturers Pvt. Ltd. & Another and 2024 SCC Online Del 2378 titled as Sharun Wires Pvt Ltd versus M & A Orient Accessories Pvt Ltd, wherein the application of Official liquidator was dismissed on the akin factual matrix of the instant matter therein.
16. Learned counsel on behalf of the respondent-bank had outsely denied having any knowledge qua the pending winding up application of the said company before the competent authority. It was further submitted that neither there was any intimation nor any awareness of the pending winding application of the said company.
17. Furthermore, it was submitted that back in the year 2004, respondents-directors had applied for a loan sanction on 18.12.2004 amounting to Rs. twenty Lacs (Rs. 20,00,000/-), additionally, a top-up facility qua afore-stated sanctioned loan was provided to them on 23.06.2007, amounting to Rs. fourteen Lacs (Rs. 14,00,000/-) whereby both the sanctioned loans were given by mortgaging the said disputed property.
18. It was further averred that in the year 2011, the respondents-directors sold the said disputed property to the respondents-purchasers for sale consideration of Rs. fifty-five Lacs (Rs. 55,00,000/-), whereby the latter obtained a credit facility through Internal Balance Transfer for a loan amounting to a sum of Rs. Thirty-seven Lacs (Rs. 37,00,000/-) and the remaining (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (8 of 16) [COAP-19/2018] amount of the sale consideration was paid directly to the respondents-directors wherein the respondent-bank had no pivotal role to play.
19. Consequently, the sanctioned loan in favour of the respondents-directors were closed having an outstanding balance payment of Rs. 35,23,124/- and remaining amount Rs. 1,76,876/- was paid to respondents-directors.
20. Furthermore, it was submitted that prior to sanctioning of loans qua respondents-purchasers, they conducted their due diligence and obtained necessary documents such as Title Search Report, Legal Search Report, ROC Report and Board resolution issued by respondents-directors (Annexures A/2 Colly).
21. It was further averred that neither there was any lapse of due-diligence in re-financing the said disputed property, nor there was any verbal/written acknowledgment of winding up proceedings of the said company to them.
OBSERVATIONS:
22. Upon a conscientious scanning of the record, considering the aforementioned facts and circumstances of the case, considering the judgments cited at the Bar and taking note of the arguments averred by the learned counsel for the parties, this Court at this juncture, deems it appropriate to jot down indubitable facts:-
22.1 That the present application is preferred seeking directions for cancellation of sale deed dated 25.05.2011 executed inter-se respondents-directors & respondents-purchasers and handing over peaceful possession of the disputed property to the (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (9 of 16) [COAP-19/2018] petitioner-applicant in pursuance to relevant provisions under the Companies Act, 1956.
22.2 Furthermore, that the instant issue for adjudication before this Court is whether sale of the said disputed property to the respondents-purchasers during the pendency of winding up application is void as per the provisions under Sections 531, 531A, 533, 536(2), 537 of Companies Act 1956.
23. Considering the aforementioned discussions and findings;
juxtaposing the averments raised by the learned counsel for both the sides and taking note of the provisions enumerated under the Companies Act, 2013, this Court deems it apposite to allow the instant application for the reasons noted herein below: 23.1 That the present application is preferred relying on the interim order dated 07.10.2016 in S.B. Company Petition No. 23/2010, titled as M/s Dell India Private Limited versus M/s Sequel Infocom Private Limited vide which the winding up application was admitted against the said company in accordance with the provisions enshrined under Sections 433, 434 and 439 of Companies Act, 1956 and an Official liquidator was appointed to carry out the winding up proceedings vide interim order dated 03.08.2017.
23.2 That the said company (M/s Sequel Infocom Pvt Ltd) is in liquidation because of an outstanding credit of approximately Rs. 1 Crores, wherein a statutory notice as per Section 433 and 434 was served upon the respondents-directors on 04.05.2010 by M/s Dell India Private Limited, whereby a reply to the aforestated notice was filed on 27.05.2010 by the said company. (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (10 of 16) [COAP-19/2018] 23.3 Thereafter, a winding up petition was preferred before this Court under Section 433, 434 and 439 of Companies Act, 1956 against the said company on 14.12.2010 in S.B. Company Petition No. 23/2010, wherein notices were issued vide interim order dated 23.12.2010, which were duly served upon the respondents-directors on 28.02.2011.
23.4 Howsoever, in due course of the winding up petition, a Board resolution was passed on 17.03.2011 by the respondents- directors in favour of the respondents-purchasers for sale of the said disputed property for a consideration amount of Rs. fifty-five Lacs (Rs. 55,00,000/-).
23.5 That it is not disputed that the respondents-directors were acknowledged with the fact that a winding up petition is pending qua the said company before the concerned Court for adjudication.
23.6 Moreover, it is not disputed that out of Rs. fifty-five Lacs (Rs. 55,00,000/-), Rs. 18 lacs approximately was paid in cash to the respondents-directors for which no evidence is placed on record to validate that the same was not siphoned to avoid the transfer or to the contrary, made with bonafide intention in order to carry out the business of the company.
23.7 Furthermore, upon a bare perusal of the provisions under Section 531, 531A, 533, 536(2), 537 it can be deduced that any disposition of property during the pendency of winding up application is void. The relevant provisions are reproduced herein below:
"531. FRAUDULENT PREFERENCE:(Downloaded on 19/11/2024 at 10:07:26 PM)
[2024:RJ-JP:46928] (11 of 16) [COAP-19/2018] (1) Any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a company within six months before the commencement of its winding up which, had it been made, taken or done by or against an individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly.
Provided that, in relation to things made, taken or done before the commencement of this Act, this sub-section shall have effect with the substitution, for the reference to six months, of a reference to three months. (2) For the purposes of sub-section (1), the presentation of a petition for winding up in the case of a winding up by the Tribunal, and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to the act of insolvency in the case of an individual. 531A. AVOIDANCE OF VOLUNTARY TRANSFER Any transfer of property, movable or immovable, or any delivery of goods, made by a company, not being a transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration, if made within a period of one year before the presentation of a petition for winding up by the Tribunal or the passing of a resolution for voluntary winding up of the company, shall be void against the liquidator.
533. LIABILITIES AND RIGHTS OF CERTAIN FRAUDULENTLY PREFERRED PERSONS:
(1) Where, in the case of a company which is being wound up, anything made, taken or done after the commencement of this Act is invalid under section 531 as a fraudulent preference of a person interested in property mortgaged or charged to secure the company's debt, then (without prejudice to any rights or liabilities arising apart from this provision), the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as surety for the debt, to the extent of the mortgage or charge on the property or the value of his interest, whichever is less. (2) The value of the said person's interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the mortgage or charge for the company's debt was then subject.
(3) On any application made to the Tribunal with respect to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the Tribunal shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (12 of 16) [COAP-19/2018] the payment was made and the surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do for the purposes of the winding up, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case of a suit for the recovery of the sum paid. This sub-section shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies in relation to payments of money.
536. AVOIDANCE OF TRANSFERS, ETC., AFTER COMMENCEMENT OF WINDING UP:
(1) In the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of the winding up, shall be void. (2) In the case of a winding up by the Tribunal, 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 Tribunal otherwise orders, be void.
537. AVOIDANCE OF CERTAIN ATTACHMENTS, EXECUTIONS, ETC., IN WINDING UP BY TRIBUNAL (1) Where any company is being wound up by the Tribunal -
(a) any attachment, distress or execution put in force, without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Tribunal of any of the properties or effects of the company after such commencement; shall be void.
(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government."
23.8 That sale transaction of the said disputed property is void, wherein such a transfer is made through fraudulent means, concealing a fact qua pending winding up proceedings to avoid preferential transfer after adjudication of pending winding up petition.
23.9 That there is no question of doubt that such a transfer was made to defraud the creditors of the said company, otherwise the transfer would have been effected in accordance with the (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (13 of 16) [COAP-19/2018] relevant provisions under Section 536(2) of the Companies Act, 1956 with the leave of this Court.
23.10 Thus, placing reliance upon the relevant provisions of the Companies Act, 1956 and the facts & circumstances of the instant matter, this Court is of an opinion that the submissions made by the learned counsel for the respondent-directors are false and baseless without any corroboration to the same. Additionally, the submissions made by the learned counsel for the respondents- purchasers stating that the purchase of the land is above the rate of DLC, is also without any corroborating evidence and the judgments cited, which are Hawa Controls versus O.L. of Tirupati Foundry Private Limited & Ors (Supra); Helbon Engineers Pvt. Ltd. versus Ferral Anant Machinery Manufacturers Pvt. Ltd. & Another (Supra) & Sharun Wires Pvt Ltd versus M & A Orient Accessories Pvt Ltd (Supra) not applicable to the matter in hand in-toto as they are of distinguishable factual narrative and issues of law. Furthermore, the averments made by the learned counsel on behalf of the respondent-bank are outstayed as it seems that the respondents- directors were hand in glove with the respondent-bank, wherein it appears before this Court that there is a lapse of due-diligence on part of the respondent-bank. It is the duty of the respondent-bank to do due diligence qua the re-financing of mortgaged property and being a party to sale of the said disputed property, however a contrary approach was adopted.
24. In summation of the aforementioned, it can be noted that a winding up petition against the said company was presented on (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (14 of 16) [COAP-19/2018] 14.12.2010; that a notice(s) were served upon the respondents- directors qua winding up petition on 28.02.2011; that the Board resolution was passed on 17.03.2011 by the respondents-directors to sell the said disputed property in favour of respondents- purchasers; that the sale of the said disputed property was executed in favour of the respondents-purchasers was done on 25.05.2011; that the sale of the said disputed property was not done in a bonafide manner as it was done in haste during the course of the pending winding up application before the concerned Court and a Board resolution was passed within one month of issuance of notice(s) in the winding up application qua the said company; that the sale transaction was done immediately after presentation of the said winding up application, within a period of barely 7-8 months to evade from the futuristic winding up obligations of the assets of the said company; that upon a conjoint perusal of the provisions enshrined under Section 531A and 536(2) read with Section 441 of the Companies Act, 1956, wherein an embargo is given that any transfer of property within a period of one year before the presentation of a petition for winding up or any disposition of property after the commencement of the winding up shall be void against the liquidator if such an attempt was not made in a bonafide manner and due course of business with an intention to siphon the consideration amount qua sale of the said disputed property. Further, the consideration amount is partly paid in cash having placed no records before this Court about its whereabouts; that such an act of disposition of the said disputed property by the respondents-directors appears to be (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (15 of 16) [COAP-19/2018] done with an ulterior motive, otherwise there is no apparent reason submitted before this Court that the sale could have been done with the leave of the Court.
25. For the sake of brevity and considering the overall observations made insofar; specifically taking note of the provisions enshrined under the Companies Act, 1956 i.e. Sections 531, 531A, 533, 536(2), 537, this Court is of the opinion that the Companies Act of 1956 is a special statute and jurisdiction as chosen to introduce the relevant provisions such as Sections 531, 531A, 533, 536(2), 537 of the Act of 1956, whereby upon a harmonious interpretation of these provisions altogether makes the legislative intent clear which is to safeguard the interest of creditors and workmen foremost, during the death of a legal entity. Howsoever, the facts and circumstances of the present application meet out the criteria for avoidance of such transfer in accordance with the afore-stated provisions, on account of the facts that sale of the said disputed property was done in haste without any leave of the concerned Court, with a fraudulent intention by concealment of fact qua pending winding up petition by the respondents-directors qua the respondents-purchasers, wherein the process under Sections 531, 531A, 533, 536(2), 537 of the Companies Act, 1956 is consequentially frustrated and made otiose.
26. Accordingly, S.B. Company Application No. 19/2018 is allowed.
27. Qua S.B. Company Application No. 11/2019, it is noted that the said application was filed seeking directions for taking (Downloaded on 19/11/2024 at 10:07:26 PM) [2024:RJ-JP:46928] (16 of 16) [COAP-19/2018] cognizance of offence committed under Section 454 of the Companies Act, 1956 r/w Rule 124-127 of Companies (Court) Rules, 1959 against the respondents-directors, however, it is noted that during the currency of the said application on 12.01.2023, an affidavit along with the Statement of Affairs under section 454 of the Act of 1956 was filed. Therefore, the lis in- question does not survives.
28. Accordingly, S.B. Company Application No. 11/2019 is disposed of.
29. Office is directed to proceed further accordingly.
(SAMEER JAIN),J DEEPAK/17-19 (Downloaded on 19/11/2024 at 10:07:26 PM) Powered by TCPDF (www.tcpdf.org)