Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Bom) 861

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ARIF S. DOCTOR, J.
M.M. Styles Private Limited - Applicant
In the matter between: Rajkumar Mohansing Bajaj
Versus
Milestone Interactive Pvt. Ltd. - Respondent
Interim Application (L) No. 23350 of 2025 In Official Liquidator’s Report No. 53 of 2019 In Company Petition No. 525 of 2015 And Official Liquidator’s Report No. 53 of 2019 In Company Petition No. 525 of 2015
Decided On : 04-05-2026

Advocates:
Advocate Appeared:
For the Applicant : Mr. Mustafa Kachwala a/w. Ms. Sakshi Sri i/b. K. Law
For the Respondent: Mr. Shadab Khan, for Pharma Access Pvt. Ltd, Mr. Mohit Sahani i/b. King Stubb & Karia, for Standard Chartered Bank, Mr. Sushanth Murthy, Mr. Anirudh Hariani, for the Official Liquidator, Mr. Satyajit Roul, Official Liquidator, present. Mr. Anil Bhagure, Dy. Official Liquidator, present.

Under Section 536(2), post-petition dispositions voidable; court validates bona fide property transfers benefiting creditors via fair value payments where buyer ignorant via due diligence, despite directors' knowledge.

Headnote:(A) Companies Act, 1956 - Section 536(2) - Winding up - Disposition of property after presentation of petition - Word “void” implies “voidable” not ab initio void - Enabling jurisdiction to validate bona fide transactions during pendency if in ordinary course, for commercial necessity, benefiting company/creditors, even pre-winding up order - Burden on applicant to prove good faith, due diligence, fair value, no prejudice - Validated where no knowledge by buyer, payments discharged creditor dues, above market value, no opposing claims/workmen. (Paras 2-12, 25A)

(B) Ex-directors’ knowledge of petition and proceeding despite notice indicates lack of bona fides on their part - Open to action for statutory dues recovery - Subsequent private sale post-winding up order derived from first not covered by provision. (Paras 13-24, 25E)

Facts of the case:
Winding-up petition presented under Companies Act. Company sold sole property via agreement and registered deed post-petition pre-admission to applicant for full consideration partly paid direct to secured creditor obtaining no-dues. Applicant resold post-winding up order/public notice. Official Liquidator sought void declaration; applicant validation.

Findings of Court:
First transaction bona fide, fair, protected; second between private parties outside scope.

Issues: Whether dispositions void ab initio or voidable/validatable; criteria including buyer ignorance, director knowledge, creditor benefit, value; ambit post-winding up order.

Ratio Decidendi: Avoid extremes of all dispositions void/permissible - Validate if genuine, ordinary business, keeps company going, no undervalue/fraud; buyer due diligence, proceeds settle dues suffice despite director lapses.

Result: Interim Application allowed in part validating first transaction; Official Liquidator’s Report dismissed.

Table of Content
1. timeline of winding-up petition and property sales. (Para 1 , 1)
2. section 536(2) renders dispositions voidable, court validates bona fide. (Para 3 , 4 , 5 , 6)
3. bona fide transaction with diligence benefited creditors. (Para 7 , 8 , 9 , 10 , 11 , 12)
4. ex-directors knew petition; no commercial compulsion. (Para 13 , 14 , 15 , 16 , 17)
5. second transaction invalid as derivative and post-notice. (Para 18 , 19 , 20)
6. sale proceeds settled all creditor dues. (Para 21 , 22 , 23 , 24)
7. void means voidable; validate beneficial, bona fide transactions. (Para 25)

JUDGMENT :

ARIF S. DOCTOR, J.

1. Since the captioned Interim Application and the Official Liquidator’s Report (“OLR”) are intrinsically linked and the issues which arise for determination in both are really two sides of the same coin, by consent of the Learned Counsel, they were heard together and are being disposed of by this common order. For convenience, reference to the parties shall be as they appear in the Interim Application.

The facts in brief:

i. The captioned company petition (“the said petition”) was presented on 27^th April 2015 under the provisions of Section 433 of the Companies Act, 1956 (“the Companies Act”), seeking the winding up of the Respondent, i.e., Milestone Interactive Pvt. Ltd. (“the company”).

ii. It is not in dispute that the company owned a property situated at 702, Supreme Chambers, Shah Industrial Estate, Near Veera Desai, V.D. Road, Andheri (West), Mumbai 400 053 (“the said Property”), which in fact was the registered office of the company.

iii. On 9^th September 2016, the company entered into an agreement to sell the said property to the Applicant for a total consideration of Rs. 27 crores.

iv. Consequently, on 1^st October 2016, the company executed a registered deed of apartment in favour of the Applicant on payment of full consideration. The agreement to sell and the deed of the apartment are collectively referred to as the “first transaction.”

v. The company petition was admitted by an order dated 29^th November 2016, and a public notice of admission was issued on 12^th April 2017. The final winding-up Order was passed on 1^st February 2018, and the Official Liquidator was appointed as the liquidator of the company.

vi. The Official Liquidator, on 26^th February 2019, filed the captioned OLR seeking possession of the said property and seeking a declaration that the first transaction was void and of no legal effect.

vii. The Applicant then, vide a registered deed of apartment dated 2nd December 2019, sold the said property to one Pharma Access Pvt. Ltd.(“Pharma Access”) for a total consideration of Rs. 28 crores (“second transaction”). The OLR was thereafter amended to also include the second transaction and similarly declare it void.

viii. It is the Applicant's case that the Applicant became aware of the winding-up proceedings only when they were served with the OLR. The Applicant thus filed the captioned Interim Application under the provisions of Section 536(2) of the Companies Act, 1956, seeking validation of the first and second transactions (“the said transactions").

ix This Court vide an Order dated 15^th December 2017, directed notices to be issued to the secured creditors of the company, namely ICICI Bank Ltd., Fullerton India Credit Company Ltd., Standard Chartered Bank and HDFC Bank Ltd., calling upon them to submit their respective claims. Admittedly, no claims were received from any of the said secured creditors, nor were any claims received from the workmen of the company.

Submissions on behalf of the Applicant:

2. Mr. Kachwala, learned counsel appearing on behalf of the Applicant, at the outset, submitted that the present application was necessitated on account of the fact that the said transactions had been entered into after the presentation of the winding-up petition and before the winding-up order was passed. He pointed out that, as per Section 526(2) of the Companies Act, the winding-up order would relate back to the date

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2026 Supreme(Bom) 861

Under Section 536(2), post-petition dispositions voidable; court validates bona fide property transfers benefiting creditors via fair value payments where buyer ignorant via due diligence, despite directors' knowledge.

Cases Referred (1)