Judgment :

Leave granted. Heard the counsel.

2. The first respondent Company (`Company' for short), was the owner of an odd shaped (triangular) plot of land bearing No.23, G.N. Chetty Road, T. Nagar, Chennai measuring 9315 sq. ft. The first respondent had mortgaged the said property in favour of Bank of Madura Ltd. in the year 1998 for a loan of Rs.60 lakhs. The first respondent decided to sell the said property to pay its depositors and the secured creditor. It took out advertisements on 22.11.1998 and 21.3.1999 for sale of the property. After considering the responses, on 22.4.1999, the Board of Directors of first respondent passed a resolution to sell the said property to the appellant for a consideration of Rs.1.65 crores and entered into an agreement of sale with appellant on the same day. In pursuance of it, the first respondent, under a Sale Deed dated 13.8.l999, sold the said property to the appellant herein for a consideration of Rs.1.65 crores. The sale deed recited that out of the sale price, Rs.95,80,275/-was paid to the vendor (first

respondent); and as the property was subject to a mortgage in favour of Bank of Madura Ltd, Rs.69,19,725/- was retained for payment to the said Bank towards full and final settlement of the dues of the vendor. On 9.9.1999, the appellant paid Rs.10 lakhs towards the Bank's dues. The appellant offered the balance amount due to the Bank by a demand draft under cover of its letter dated 17.9.1999 with a request to the Bank to accept the same and discharge the mortgage.

3. In the meanwhile in July, 1999, Company Petitions No.233 to 238 of 1999 were filed against the first respondent in the Madras High Court for winding up. By order dated 7.9.1999, the High Court appointed the Official Liquidator as the Provisional Liquidator, to take over the assets of the company into custody. In view of the pendency of the liquidation proceedings, the Bank refused to accept the balance amount and discharge the mortgage. The appellant therefore made an application to the High Court and sought confirmation and validation of the sale in its favour. It also sought permission to pay the balance money due to the secured creditor and receive the title deeds from the bank.

4. The learned company Judge by order dated 30.4.2002 dismissed the appellant's application. The learned company Judge held that the transfer of the said property was made during the pendency of the petition for winding up; that there was no material to show that the entire sale proceeds had been used to discharge the liabilities of the first respondent company; that the payment of a deficit stamp duty of Rs.23,60,956/-in regard to the sale deed by the appellant without demur, demonstrated that the property was undervalued in the sale deed; and that the transaction was not bona fide. Consequently, the learned company Judge held that the sale was void under section 531 A of the Companies Act, 1956 (`Act' for short). The appeal filed by the appellant was dismissed by a Division Bench of the High Court on 7.10.2005. The said judgment is challenged in this appeal by special leave.

5. The appellant contended inter alia that it was a bona fide purchaser for value; that the price paid by it was the prevailing true market value having regard to the peculiar shape and size; that when the property had earlier been put up for sale with a minimum bidding price of Rs.2.25 crores, it could not be sold due to want of response; that the sale was made in pursuance of a Board Resolution dated 22.4.1999 and sale agreement dated 22.4.1999, for the benefit of the company and in the interests of the depositors; and that the High Court had misled itself by taking note of subsequent increase in land prices, ignoring the market value on the date of the sale.

6. This Court issued notice on the special leave petition on 27.3.2006. During the pendency of the matter before this Court, there were a series of meetings among the creditor Bank (which by then was succeeded by I