The court emphasized that the direction sought must be for the benefit of all the creditors and shareholders, and that the enforceability of the agreement was crucial in determining the outcome of the application.

D.V. Shylendra Kumar, J.--Order on Company Application No. 1589/2003

1. This is an application filed under Rules 6, 7 and 9 of Company Rules read with Section 151 of C.P.C. by a person, who claims to have had certain agreement with the respondent-company, seeking direction to be issued by this court to the respondent-company to execute a sale deed in favour of the applicant-company pursuant to the agreement of sale dated 17-1-2002, purported to have been executed by the respondent-company.

2. The application is supported by an affidavit by one Bijay Kumar Agarwal, Director of Applicant-company, inter alia stating that an agreement of sale of certain properties, belonging to the respondent-company was entered into on 17-1-2002; that pursuant to the said agreement of sale, certain amounts have been paid by way of an advance; that the respondent-company has not completed the sale transaction within the stipulated time, in spite of several requests made by the applicant. The respondent-company having not executed the sale documents and on coining to know that the reason for not so executing the sale document was that the company petition No. 154/2002 was pending before this court, and the applicant is required permission of this court in this petition. Hence, the application has been filed.

3. The application is opposed by the counsel for the respondent. The respondent counsel has entered his appearance and also filed his objections, inter alia stated in objections that the applicant has failed to pay the balance sale consideration in terms of the contract of sale agreement etc.; that the applicant has lost all rights on agreement of sale; that the property value in question has been increased substantially for the last 16 months subsequent to the date of agreement; that the Board for Industrial Finance and Reconstruction has already made a recommendation to this court for passing an order to wind up the affairs of the respondent-company, and in such circumstances, the company will also be not in a position to execute the sale deed and on such premise, prayed for rejecting the application.

4. Many secured creditors of the company, who have intervened the matter in paper publication that, had been carried out in this regard. They have also filed their statement of objections opposing the application, inter alia contended that the State Bank of Mysore and other Banks formed a consortium, who had financed the respondent-company; that the subject-matter of property in question has been mortgaged in their favour by way of security to secure the loan that the Banks have advanced to the company; that the so-called agreement of sale between the applicant and the respondent-company is neither to their knowledge nor with their consent; that it is not binding on them; that a direction of this nature cannot be sought on the basis of said agreement of sale; that it is virtually adopted by the applicant to pass proceedings, though it was required before the civil court for their specific enforcement of the agreement that caused in his favour; that the companies' court has no jurisdiction in the matter to act; an execution court for giving effect to agreement of sale, based on which the directions arc sought for; that the respondent-company having been declared a sick company by the Board for Industrial Finance and Reconstruction, and further Board having already recommended the company to be wound up in terms of provisions of Section 20(1) of the Sick Industrial Companies (Special) Provisions Act, 1985, any properties belonging to the company cannot be ordered to be sold, without there being an order for winding up the affairs of the respondent-company and in the circumstances, the application is liable to be dismissed. The consortium of Banks have also raised other objections regarding the enforceability of the agreement; that the subject-matter has not been properly valued; that in fact, the applicant has not made out any ground or cause fo