The main legal point established in the judgment is that an agreement for sale does not create any right in favor of the appellant and a transaction can be deemed a fraudulent preference, defeating the interest of creditors and against public interest.

M. Chockalingam, J.

This appeal challenges an order of the learned Single Judge of this Court made in Company Application No.1208 of 2002 an application seeking a direction to the respondents to execute and register a sale deed in respect of the petition mentioned property pending the winding up proceedings in C.P.No.179 of 2001 in respect of Kothari Orient Finance Limited.

2.The appellant/petitioner bank made an application under Sec.446(2)(b) of the Companies Act seeking the said direction with the averments that Kothari Orient Finance Limited was a constituent of the petitioner, which was provided with certain facilities during the year 1992; that the liability became irregular; that the company owed to the petitioner a sum of Rs.60,55,055/- as on 33. 1999; that the company approached the petitioner for one time settlement and offered the property in question in respect of which execution of sale deed is sought for at the market value; that the petitioner was constrained under the circumstances to enter into an agreement for sale dated 12. 2000; that the consideration was fixed at Rs.105 lakhs; that a sum of Rs.41 lakhs was paid by the petitioner as advance at the time of agreement itself; that the balance was entirely settled out of the amounts owed by the company to the petitioner; that no objection certificate from the Income Tax Department dated 14. 2000, was received; that on 11. 2000, the petitioner had taken possession of the said property; that as such the petitioner had rights to compel the winding up company to execute and register a sale deed; that on 11. 2000, the transfer was complete; that the petitioner was also put in possession of the said property; that only there was an obligation on the part of the vendor to execute and register the sale deed; that the sale deed could not be registered since there was an income tax attachment which the petitioner had taken up; that the company petition was filed only recently; that however the transaction between the petitioner and the company was pursuant to the agreement dated 12. 2000; that the entire advance was also paid and the balance was also adjusted; that the petitioner had not paid any other amount to the said company; that apart from that, the petitioner was neither aware of the income tax attachment which came to its light only at the time of the company having applied for the income tax clearance certificate at the instance of the petitioner; that the petitioner had no knowledge about the financial crunch of the above company; that the petitioner was a bonafide purchaser who was never aware of the arrears and claims of the other creditors if any of the said company or the interest of the other creditors; that under the circumstances, there was no option than to approach this Court for suitable direction, and hence the application was to be ordered.

3. The Administrator appointed by this Court filed his report inter alia stating that the alleged agreement for sale dated 12. 2000 relied on by the petitioner, was a fraudulent preference in favour of the petitioner; that the petitioner is just as any other creditor of the company; that when the company was in a financial crunch, the petitioner appeared to have prevailed upon persons in the management of the company; that at that point of time, the petitioner entered into an agreement for purchase of the property at Rs.1.05 crores and upon the said process had conveniently attempted to adjust the outstanding receivable from the company while thousands of creditors of the company whose moneys have been utilised for the purpose of acquisition of the assets of the company, and who are entitled to due payments of the deposits, have been deprived of their right to receive the deposits by due share of the proceeds in the said company; that it appears a sum of Rs.41 lakhs had been paid by the petitioner as advance which was to be verified from the records; that even at the time when the agreement was alleged