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High Court of Madhya Pradesh
Prakash Shrivastava, J.
VIRENDRA SINGH BHANDARI - APPELLANT
Versus
NANDLAL BHANDARI AND SONS P. LTD. (IN LIQUIDATION) - RESPONDENT
Company Petition No. 8 of 1981
Decided On : 14-11-2019
The Court held that the sale of property at 60, Ada Bazar, Indore, transfer of business of Central Hotel and transfer of 8299 shares of Shri N. B. Mills to G. R. Oil Mills was not made in good faith and for valuable consideration, therefore, the same are void as against the Liquidator under section 531-A of the Act.
Fact of the Case:
This case involves a company in liquidation, Nandlal Bhandari and Sons Pvt. Ltd., and various transactions that occurred within a year prior to the presentation of the petition for winding up. The transactions in question include the sale of several properties, the transfer of a business, and the transfer of shares. The Official Liquidator (OL) filed an application under section 531-A of the Companies Act, 1956, seeking to set aside these transactions as void against the liquidator.
Finding of the Court:
The Court held that the sale of property at 60, Ada Bazar, Indore, transfer of business of Central Hotel and transfer of 8299 shares of Shri N. B. Mills to G. R. Oil Mills was not made in good faith and for valuable consideration, therefore, the same are void as against the Liquidator under section 531-A of the Act.
Issues: The issues in this case were whether the transactions in question were made in good faith and for valuable consideration, and whether they were void against the liquidator under section 531-A of the Companies Act, 1956.
Ratio Decidendi: The Court held that the transactions were not made in good faith and for valuable consideration based on the following factors: * The sale of property at 60, Ada Bazar, Indore was not supported by a resolution of the Board of Directors and there was no evidence of payment of the sale consideration. * The transfer of the business of Central Hotel was not supported by a deed of transfer and there was no evidence of payment of the sale consideration. * The transfer of 8299 shares of Shri N. B. Mills to G. R. Oil Mills was not supported by a resolution of the Board of Directors and there was evidence that the sale price was significantly lower than the price at which the shares had been purchased by the company.
Final Decision: The Court held that the sale of property at 60, Ada Bazar, Indore, transfer of business of Central Hotel and transfer of 8299 shares of Shri N. B. Mills to G. R. Oil Mills was not made in good faith and for valuable consideration, therefore, the same are void as against the Liquidator under section 531-A of the Act.
ORDER : – IA No. 1714/1984 and OLR No. 23/2018 have been filed by the Company Petitioner and OL for declaring sale/transfer of the property of the company in liquidation by the Ex. Directors/Ex. Management and the consequential sale deeds made within a period of one year before the date of filing of the company petition as null and void under section 531-A of the Companies Act, 1956.
2. The brief facts are that this company petition was filed on 16-8-1972 seeking to wind up the company M/s Nandlal Bhandari and Sons Pvt. Ltd under section 433(e) and (f) of the Companies Act. On 27-4-1981 this Court had passed the winding up order to the following effect : –
“In the light of the discussion above, I hold that : –
(1) the company is unable to pay its debts; and
(2) it is just and equitable that the company should be wound up.
I, therefore, order that the respondent-company be wound up. A copy of the winding-up order shall be drawn by the Additional Registrar as per company rules and shall be forwarded to the official liquidator and also to the Registrar of Companies as required under section 444 of the Act. The official liquidator shall forthwith take into his custody all the property and effects, books and papers of the said company. The official liquidator shall also cause a sealed copy of this order to be served on the company as also to the directors thereof by registered post. The petitioners shall get advertised within fourteen days a notice ind the prescribed form of the making of this order in one issue each of, (1) Daily Naiduniya, Indore, (2) Daily Indore Samachar, and (3) Daily Hitwad, an English daily of Bhopal. The official Liquidator shall take all other necessary steps in the Winding-up Proceedings of the said company, in accordance with the provisions of the Companies Act, 1956. Costs of this petition shall be borne by the company. Advocate’s fee Rs. 500/-”.
3. After passing of the above winding up order, IA No. 1714/1984 dated 27-4-1984 was filed by the company petitioner under section 467(1), 531-A and 543 of the Companies Act with a prayer to set aside the transactions which have been impugned in the said I. A. Following are the transactions which are impugned in this I. A : –
(1) Sale of Nandanvan, 1, M. G. Road, Indore, Rampurawala, 27, M. G. Road, Indore and other properties scheduled in the petition.
(2) Transfer of the business of Central Hotel.
(3) Sale of shares of Nandlal Bhandari Mills Ltd.
(4) Equitable mortgage of Yeshwant Niwas Palace.
(5) Disposal of properties of preferential payment of various creditors during the pendency of the petition.
4. The OLR No. 23/2018 has also been filed by the OL on 18-9-2018 for the same purpose praying for the following reliefs : –
“(1) Report of the Official Liquidator may kindly be perused and taken on record.
(2) In view of above submissions, the sale/transfer of property of the company (In-Liqn.), by the ex-directors/ex-management and consequently sale deeds executed in favour of purchaser may kindly be declared void/annulled under the provisions of section 531-A, 536(2) and 537(1) read with section 441(2) of the Companies Act, 1956, with a direction to purchaser/transferees to handover the possession of the said properties to the Official Liquidator.
(3) In view of submissions in Para No. 23 above, notice of present OLR No. 23/2018, may kindly be issued to purchasers/transferees of the subject properties of the company (In-Liqn.), to file their say in the matter. And Such other order(s) as this Hon’ble Court deem fit and proper may kindly be passed in the circumstances of the case.”
5. The purchaser/transferee of the impugned assets have been served with the notice of above I.A and OLR.
6. Learned counsel for applicant and the OL have submitted that since the impugned transactions have been done within one year prior to passing of the winding up order and th
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