Transactions involving the sale of company assets after winding up are void unless validated by the court, emphasizing the necessity of registered sale deeds for property transfers.

ORDER :

SENTHILKUMAR RAMAMOORTHY, J.

Background:

Maxworth Orchards (India) Limited (the Company) was engaged in the business of acquiring lands and setting up fruit orchards/plantations thereon. Upon the Company running into financial difficulties, one of its creditors filed C.P.No.57 of 1998 for winding up the Company. The said petition was presented on or about 24.02.1998. By order dated 06.02.2006 in Comp.A.No.353 of 2006, the then Administrator (Shri.K.Alagiriswami), was conferred with all the powers of the Official Liquidator. By subsequent order dated 17.09.2010 in Comp.A.Nos.884 to 886 of 2008, the Official Liquidator was appointed as the Provisional Liquidator of the Company.

2. While the Company was in operation, one of the projects developed by the Company was the Maxworth-Thimmapuram – M & Extension Project. In respect of this project, the Company approached the owners of about 81 parcels of land and obtained one registered sale deed (Document No.715/1995) dated 06.06.1995 and about 80 powers of attorney. The total extent of land in this project was about 284.915 acres. Thereafter, the lands were divided into one acre, 1/2 acre and 1/4 acre plots, which were partly conveyed to customers. The unsold extent of 182.165 acres was brought for sale by public auction pursuant to a sale notice. At the auction, Damodar Techno System Private Limited was declared as the successful bidder for a total sale consideration of Rs.3.40 crores. These applications were filed thereafter by three rival claimants.

3. The rival claimants are S.Mahendran (applicant in Comp.A.Nos.421 & 422 of 2022), K.Singili (applicant in Comp.A.Nos.578 & 579 of 2022) and K.Karuppaiah (applicant in Comp.A.Nos.580 & 581 of 2022). By these applications, the respective applicants seek to set aside the auction sale in so far as the lands described in the respective Judge's summons are concerned and also seek a stay of further proceedings in relation to such sale.

Counsel and their contentions:

4. Oral arguments on behalf of the applicant in Comp.A.Nos.421 & 422 of 2022 were advanced by Mr.M.C.Swamy, learned counsel. Oral arguments in Comp.A.Nos.578 to 581 of 2022 were advanced on behalf of the respective applicants by Mr.Nanchill J.Rajkumar, learned counsel. Mr.H.Karthik Seshadri, learned counsel, advanced arguments on behalf of the Administrator.

5. Mr.M.C.Swamy submitted that the applicant in Comp.A.Nos.421 & 422 of 2022 asserts ownership over an aggregate extent of 5.27 acres in the survey numbers mentioned in the Judge's summons of such applications. He further submitted that title is asserted on the basis of two sale deeds, both dated 14.06.2006, which were executed by the original owners, namely, S.Subbiah and others and K.Paranjothi and another, represented by their power of attorney, Mr.J.Jesuraj. Both the sale deeds were in favour of Vardhan Foods Private Limited (Vardhan Foods). He next pointed out that Vardhan Foods, represented by its Director, Mrs.Anju Jain, executed a general power of attorney dated 06.03.2012 in favour of Mr.Sanjay Mehra. Thereafter, on 18.03.2019, Vardhan Foods, represented by Mr.Sanjay Mehra, executed sale deed bearing Document No.813/2019 in favour of Mr.R.Pramod Kumar. Mr.R.Pramod Kumar, in turn, executed a sale deed dated 26.04.2019, bearing Document No.1176 of 2019, in favour of the applicant, Mr.S.Mahendran. He also referred to and relied upon Patta No.691 in favour of Vardhan Foods and Patta Nos.852, 858 & 910 in favour of the applicant. He concluded his submissions by pointing out that the applicant is the bona fide purchaser of 5.27 acres for valuable consideration and that such purchase was made after examining the encumbrance certificate for the relevant period. Therefore, he submitted that the auction sale is liable to be set aside as regards the 5.27 acres owned by the applicant.

6. Mr.Nanchill J.Rajkumar made submissions next on behalf of Mr.K.Singli, the applicant in Comp.A.Nos.578 & 579 of 2022. He submitted that the appl