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2023 Supreme(Mad) 2530
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUBRAMANIAN, V. LAKSHMINARAYANAN, JJ.
Sunkara Venkateshwara Rao – Appellant
Versus
Maxworth Orchards (India) Limited, Represented by its Administrator/Provisional Liquidator K. Alagiriswami, Chennai & Others – Respondents
O.S.A. Nos. 181 to 183 of 2012, 315 to 318 of 2013 & M.P. Nos. 1, 1, 1 of 2012 & 1,1,1,1 of 2013 & 1 of 2014
Decided On : 07-08-2023
For the Petitioner:Kumarpal R. Chopra, N. Surya Senthil, M/s. Surana & Surana, Advocates. For the Respondents:R1, Karthik Seshadri for M/s. Iyer & Thomas, R4, Rama Brahma, P. Subba Reddy, R7 & R8, J. Saravanakumar, Advocates.
The central legal point established in the judgment is the limitation of the Company Court's jurisdiction to properties belonging to the company at the time of the winding up petition, and the determination that the validity of sale deeds should be decided by a competent Civil Court.
Headnote:
Company Court Jurisdiction - Sale Deeds - C.P.No.57 of 1998 - O.S.A.Nos.181 to 183 of 2012, O.S.A.Nos.315 & 316 of 2013, O.S.A.Nos.317 & 318 of 2013 - Section 446 of the Companies Act - Jurisdiction of Company Court - Validity of Sale Deeds
Fact of the Case:
The appeals were filed by purchasers of immovable properties, which were subject to winding up proceedings before the Company Court. The properties were purchased for a novel project of developing Orchards through community farming, but the project did not materialize, leading to winding up proceedings. The Administrator sought injunctions and cancellation of sale deeds executed by employees of the Company.
Finding of the Court:
The Court found that the Company Court's jurisdiction does not extend to properties that did not belong to the company at the time of the winding up petition. It concluded that the Company Court did not have jurisdiction to set aside the sale deeds and that the validity of the sale deeds should be decided by a competent Civil Court.
Issues: The main issue was the jurisdiction of the Company Court to set aside the sale deeds and the validity of the sale deeds executed by employees of the Company.
Ratio Decidendi: The Court's decision was based on the interpretation of Section 446 of the Companies Act and the determination that the Company Court's jurisdiction is limited to properties belonging to the company at the time of the winding up petition.
Final Decision: All the appeals were allowed, setting aside the order of the Company Court and allowing the impleading petition. The Court clarified that it did not decide the validity of the sale deeds and directed the District Judge to decide the matter based on the evidence before it.
JUDGMENT
(Common Prayer in O.S.A.Nos.181 to 183 of 2012: Original Side Appeals filed under Order XXXVI Rule 9 of O.S. Rules read with Clause 15 of Letters Patent, against the order passed by His Lordship Mr. Justice P.Jyothimani made in Company Application Nos.1937 to 1939 of 2003 in C.P.No.57 of 1998, dated 17.09.2010.
In O.S.A.Nos.315 & 316 of 2013: Original Side Appeals filed under Order XXXVI Rule 9 of O.S. Rules read with Clause 15 of Letters Patent, against the fair and decretal order passed by His Lordship Mr. Justice P.Jyothimani made in Company Application No.1748 & 1749 of 2005 in C.A.No.63 of 2001, dated 17.09.2010.
In O.S.A.Nos.317 & 318 of 2013: Original Side Appeals filed under Order XXXVI Rule 9 of O.S. Rules read with Clause 15 of Letters Patent, against the fair and decretal order passed by His Lordship Mr. Justice P.Jyothimani made in Company Application No.319 & 320 of 2006 in C.P.No.57 of 1998, dated 17.09.2010.)
Common Judgment
R. Subramanian, J.
1. All these seven appeals have been filed at the instance of the purchasers of the immovable properties, whose purchases were made subject matter of the proceedings before the Company Court at the instance of the Administrator, who was also nominated as a provisional liquidator.
2. The Company namely, M/s.Maxworth Orchards India Limited came up with the novel project of developing Orchards through community farming. The Company accumulated lands in various places across the country. In certain cases, the purchases were made in the names of the employees of the Company and the lands were plotted out in to small bits of various extents. Those small bits that were plotted out were sold to gullible buyers with the promise of developing Orchards in the lands. However, down the line, the project did not take off and the Company eventually landed in the Company Court for winding up.
3. In the winding up proceedings, a Senior Advocate of this Court was appointed as an Administrator and he took over the affairs of the Company, since he found that vast extent of immovable property has been purchased and employees of the Company were appointed as Power of Attorney Agents to deal with the properties, in order to protect the properties of the Company from being swindled by the employees, who had by then realised that the Company had no future, the Administrator sought for prohibitory injunction against the employees as well as some of the purchasers from alienating or encumbering the properties. Simultaneously, the applications were also moved for cancellation of various sale deeds that were allegedly executed by the employees of the Company based on the Powers of Attorney or taking advantage of the fact that the sale deeds stood in their name. Such applications came to be allowed by this Court on various grounds.
4. As far as these batch of appeals are concerned, it relates to about 27 acres of land in Kollur and Osman Nagar Villages of Ramachandrapuram Mandal, erstwhile Medak District of Andhra Pradesh, now in Sangareddy District of Telangana.
5. Challenge by the Administrator was to the sale deeds dated 17.04.2003 registered as document Nos. 2409 & 2410 of 2003 and the sale deeds dated 13.08.2003 registered as document Nos.7314 to 7317 of 2003. Injunction was also sought for from restraining the respondents, who had claimed title under those sale deeds from interfering with the possession of the Company. These application numbers were C.A.Nos.1937 to 1939 of 2003, 1748 & 1749 of 2005, 301 to 303 of 2006, 319 and 320 of 2006 in C.P.No.57 of 1998. In C.A.Nos.1937 of 2003, 303 of 2006, 1748 of 2005, 319 and 320 of 2006, the prayer sought for was for injunction restraining the respondents from interfering with the possession of the Company. In the other applications, the prayer sought for was to set aside the sale deeds referred to supra. All these applications came to be allowed by a common order of this Court dated 17.09.2010, leading to these appeals by the purchasers.
6. Pending thes
