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2024 Supreme(Mad) 2110

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Senthilkumar Ramamoorthy, J.
Maxworth Orchards (India) Limited and ors. – Applicants
Versus
Koduru Venkateswara Prasad, S/o (Late) Subramanyeswara Rao and ors. – Respondents
Comp.A.Nos.189 to 192 of 2013 & 159 of 2020 in C.P.No.57 of 1998
Decided On : 18-12-2024

Advocates:
Advocate Appeared:
For the Applicant : Mr.H.Karthik Seshadri, Mr.P.S.Raman,
For the Respondent: Assisted by Mrs.Nagasaila Suresh, Administrator, Mrs.Ambili, B, Deputy Liquidator, Senior Counsel, for Mr.V.Karthikeyan, Mr.R.Karunagaran, Mr.Rahul Balaji
For the Intervenors : Mr.T.Mohan, Senior Counsel for M/s.Abhinav Parthasarathy

Sale deeds executed post-winding up are void under Section 536(2) of the Companies Act, 1956, and powers of attorney executed for fraudulent purposes do not confer rights over property.

Headnote:(A) Companies Act, 1956 - Sections 446(2), 450, 456, 457 - Company Court Rules, 1959 - Sections 9, 11(b), 19 - Applications to set aside fraudulent sale deeds executed by ex-employees of a company in liquidation - The court declared the sale deeds void, affirming that dispositions post-winding up are void unless validated by the court. (Paras 30, 32)

(B) Powers of Attorney - The court ruled that powers of attorney executed by ex-employees of the company were unauthorized and did not confer any rights post-winding up. (Paras 30, 31)

Facts of the case:
The company, facing financial difficulties, was placed under liquidation. The Official Liquidator filed applications to set aside fraudulent sale deeds executed by ex-employees, asserting that these transactions were unauthorized and detrimental to the company's interests.

Findings of Court:
The court found sufficient evidence that the company had paid the total sale consideration to the original landowners, and the subsequent sale deeds executed by ex-employees were void. The Official Liquidator was directed to take necessary steps to secure the property.

Issues: The main issues included the validity of sale deeds executed post-winding up and the authority of ex-employees to execute such deeds.

Ratio Decidendi: The court held that any disposition of a company's assets after the commencement of winding up is void unless validated by the court, reaffirming the principle that powers of attorney executed for fraudulent purposes do not confer rights.

Result: Applications C.A.No.189 to 192 of 2013 allowed; C.A.No.159 of 2020 dismissed.

ORDER :

Senthilkumar Ramamoorthy, J.

PRAYER IN C.A.No.189 OF 2013: This application is filed under Order XIV Rule 8 OS Rules read with Section 446(2), 450, 456 and 457 of the Companies Act, 1956 and Section 9, 11(b) and 19 of the Company Court Rules, seeking to (A) set aside the sale deeds bearing nos.2369/1998, 2370/1998, 2371/1998, 2372/1998, 2373/1998, 2374/1998 all dated 3/8/1998, 5240/1999, 5241/1999, 5242/1999, 5243/1999, 5244/1999, 5245/1999, 5246/1999, 5247/1999 all dated 29/10/1999, 4297/2000, 4298/2000, 4299/2000, 4300/2000 all dated 28/11/2000, 4348/2000, 4349/2000 all dated 4/12/2000, 263/2001, 264/2001 all 5/12/2001, 2836/2004, 2837/2004, 2838/2004 all dated 26/6/2004, 4118/2000, 4119/2000, 4377/2000, 4378/2000 all dated 6/12/2000, 731/2001 dated 3/2/2001, 1747/2002, 1748/2002, 1749/2002, 1750/2002, 1751/2002 all dated 5/6/2002, 259/2003, 260/2003, 261/2003, 262/2003 all dated 24/1/2003, 263/2003 dated 25/1/2003, 278/2003 dated 27/1/2003, 377/2003 dated 3/2/2003, 3771/2003 dated 12/11/2003, 2830/2004, 2831/2004, 2832/2004 all dated 26/6/2004, 2913/2004 dated 1/7/2004, 2975/2004, 2976/2004 all dated 6/7/2004, 3064/2004, 3065/2004, 3066/2004, 3067/2004, 3068/2004 all dated 12/7/2004, 3148/2004, 3149/2004 all dated 15/7/2004, 3703/2004, 3704/2004, 3705/2004, 3706/2004, 3707/2004, 3708/2004 all dated 17/8/2004, 3970/2004, 3971/2004 all dated 9/9/2004, 4872/2004, 4873/2004, 4874/2004, 4875/2004, 4876/2004, 4877/2004 all dated 21/12/2004, 2588/2006 dated 29/3/2006, 1377/2012, 1378/2012, 1379/2012, 1380/2012, 1381/2012, 1382/2012, 1383/2012 all dated 27/4/2012, 1598/2012, 1599/2012, 1600/2012, 1601/2012, 1602/2012 all dated 15/5/2012 registered in the office of the 59th respondent as null and void and consequently declare that the conveyance of the properties under the sale deed do not convey any right, title or interest in the schedule property (Schedule Nos.2 to 84) in favour of the respondents 1 to 58 and consequently grant an permanent injunction restraining the respondent no 1 to 58, their men, agent or servants or any one claiming through them from in any way interfering with the lawful possession of the Applicant Company over the scheduled property (Schedule No.1);

PRAYER IN C.A.No.190 OF 2013:- This application is filed under Order XIV Rule 8 of the O.S.Rules read with Sections 446(2), 450, 456 & 457 of the Companies Act & Sections 9, 11(b) & 19 of the Companies Court Rules, 1959, seeking an interim order of injunction restraining the Respondent Nos.1 to 58, their men, agent or servants or anyone claiming through them from any way alienating by way of Sale, Mortgage, Lease or otherwise the property covered under Schedule 1 and consequently granting an injunction restraining the 59th respondent from registering any further Sale, Mortgage or lease on the property covered under Schedule 1 and direct the respondent no 60 not to issue any patta in the survey nos. covered in the Schedule of Property 1;

PRAYER IN C.A.No.191 OF 2013:- This application is filed under Order XIV Rule 8 of the O.S.Rules read with Sections 446(2), 450, 456 & 457 of the Companies Act & Sections 9, 11(b) & 19 of the Companies Court Rules 1959 seeking an interim order of injunction restraining the Respondent Nos.1 to 58, their men, agent or servants or anyone claiming through them from any way interfering with the applicant's lawful possession of Scheduled property covered under Schedule 1 of the applicant company;

PRAYER IN C.A.No.192 OF 2013:- This application is filed under Order XIV Rule 8 of the O.S.Rules read with Sections 446(2), 450, 456 & 457 of the Companies Act & Sections 9, 11(b) & 19 of the Companies Court Rules, 1959, seeking to direct the respondent Nos.61 and 62 to give protection to the Care Taker and to the landed property acquired by the Applicant Company and receive any complaint lodged by the Care Taker, file FIR and take suitable action against the Culprits.

PRAYER IN C.A.No.159 OF 2020:- This application is filed under Order XIV

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