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1. The principal question which arises for consideration of the court in these proceedings is whether the impugned transaction dated February 18, 1987, entered into by and between Kishco Mills Pvt. Ltd. (hereinafter referred to as "the company") and Monark Enterprises relating to transfer of leasehold rights in plot No. 10, Government Industrial Estate, Kandivli, Bombay, and the structures thereon is liable to be treated as void ab initio or is liable to be annulled by the company court under one or the other provisions of the Companies Act I of 1956 (hereinafter referred to as "the Act").

6. On September 24, 1987, Monark Enterprises executed a deed of mortgage in respect of the same property, i.e., plot No. 10 and the structures thereon situate at Government Industrial Estate, Kandivli (leasehold rights) in favour of the Bank of Maharashtra. It is the contention of Monark Enterprises and the Bank of Maharashtra that plot No. 10 was not an asset of the company on the relevant date, that the impugned transaction dated February 18, 1987, and the abovereferred mortgage were arrived at in good faith and for valuable consideration and that the said asset cannot be considered as an asset of the company on the relevant date. It is also the contention of Monark Enterprises that the said transaction dated February 18, 1987, cannot be treated as "disposal of property" by the company after August 12, 1987, merely because the Collector of Bombay granted sanction thereto on September 14, 1987, the company having already exercised its disposing power on February 18, 1987. It is the contention of the petitioners and the official liquidator that the impugned transaction dated February 18, 1987, is liable to be treated as void ab initio and that the leasehold plot No. 10 referred to hereinabove along with the structures thereon is liable to be treated as an asset of the company available to all the creditors for distribution in accordance with the provisions of the Act.

7. Sometime prior to September 6, 1988, the official liquidator took possession of plot No. 10 and the structures thereon the assumption that the said leasehold plot was not an asset of Monark Enterprises but was an asset belonging to the company under liquidation. By their advocate's letter dated September 6, 1988, addressed to the official liquidator, Monark Enterprises protested against the said action of the official liquidator and called upon the official liquidator to unseal the premises and return possession thereof to Monark Enterprises. Correspondence ensued between the parties.

8. On November 9, 1990, the official liquidator submitted his report to this court for directions on the question whether the official liquidator may take out proceedings under section 531A of the Act against the ex-directors and Monark Enterprises to declare the alleged transfer and sale of plot No. 10 void against the official liquidator. In paragraph 6 of the said report, the official liquidator referred to Summary Suit No. 2334 of 1986 filed by Monark Enterprises against the company for recovery of its outstandings and passing of a decree by this court in this suit. In the said paragraph of the report, the official liquidator referred to the fact that the said decree was made payable by instalments of Rs. 1.50 lakhs per month. In paragraph 6 and 7 of the said report, the official liquidator stated that the company had entered into an agreement dated February 18, 1987, to sell its right, title and interest in leasehold plot No. 10 situate at Government Industrial Estate, Kandivli, to Monark Enterprises for a total consideration of Rs. 32,74,294. In the said paragraphs of the report, the official liquidator stated that the decretal amount of about Rs. 20,76,056.40 was adjusted against the stipulated consideration of Rs. 32,74,294. It was further stated in the above-referred two paragraphs of the said report that Monark Enterprises had agreed to pay the outstanding dues of the company payable to the income-tax department, Collector of Bombay, Municipal Corporation of Greater Bombay, etc., on behalf of the company and adjust much payments towards their obligation to pay the stipulated consideration of Rs. 32,74,294. It was further stated in paragraph 7 of the said report that Monark Enterprises had obtained a certificate under sections 230A and 269UL of the Income-tax Act and had also applied to the Collector of Bombay for transfer of leasehold rights in their favour. It was further stated in paragraph 7 of the said report that Monark Enterprises had subsequently mortgaged the said plot No. 10 to the Bank of Maharashtra by a deed of mortgage dated September 24, 1987.