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2025 Supreme(Online)(Kar) 30401
KARNATAKA HIGH COURT
SURAJ GOVINDARAJ, J
M/S. BRUNTON DEVELOPERS – Appellant
Versus
UNITED BREWERIES (HOLDINGS) LIMITED – Respondent
COMPANY APPLICATION NO. 242 OF 2023
For the Appellants/Petitioners: SRI. C.K. NANDAKUMAR, SRI. RAGHURAM CADAMBI
For the Respondents: SRI. SHRISHAIL NAVALAGUND, SRI. B.L. SANJEEV
The sale of property by a company in liquidation post-winding-up proceedings is void as per statutory provisions, and related-party transactions require heightened scrutiny for bona fides.
Headnote:(A) Companies Act, 1956 - Sections 536 and 537 - Sale deed executed post commencement of winding-up proceedings - Sale deemed void as per statutory provisions - No relief sought for validation of the sale - Court affirms that the transaction occurred without the intention to defraud creditors. (Paras 79.1 to 79.14, 80.1 to 80.6, 81.1 to 81.11)
(B) Limitation Act, 1963 - Article 113 - Application filed after statutory limitation period - Relief barred by limitation as per Article 113. (Paras 82.1 to 82.5)
(C) Sale conducted between related parties - Transaction not at arm's length - Undervaluation evident from comparative sales. (Paras 83.1 to 83.4)
(D) Overall, the applicant’s purported offer to pay additional amount rejected, not a genuine attempt at resolution. (Paras 85.1 to 85.3)
Result: Application dismissed, sale deed formally declared void.
| Table of Content |
|---|
| 1. applicant seeks relief to validate sale deed. (Para 1 , 2 , 3 , 4) |
| 2. arguments on validity of the sale deed after winding-up. (Para 5 , 10 , 12 , 13 , 14 , 24 , 26 , 36) |
| 3. court's observations on case complexities regarding property sale. (Para 15 , 18 , 27 , 32 , 34 , 37 , 46 , 47 , 48) |
| 4. judgment on validity of sale in the context of company law. (Para 79 , 80 , 81 , 82 , 83) |
| 5. final order on sale deed being void, directing auction. (Para 86) |
CAV JUDGMENT
1. The applicant is before this court seeking for the following reliefs:
“WHEREFORE, to allow the accompanying application as prayed for and grant such other and further reliefs as are just.”
2. The application is supported by an affidavit of one Sri T.B. Venkatesh, partner and authorized signatory of the applicant, who has deposed that the applicant is a registered partnership firm involved in the real estate business.
Contentions in the Company Application
3. A sale deed dated 21.05.2012 was executed by respondent No.1- United Breweries (Holdings) Ltd. (in liquidation), conveying the undivided retail space measuring 2316 sq. ft. of saleable super built-up area out of 4210 sq. ft., forming a portion of Unit No. 202, (New No. 222) situate in Level/Floor-III of ‘CANBERRA’ Block in ‘UB City’, which is stated to be inclusive of a proportionate share in all the common areas such as passages, lobbies, lifts, staircase, and other areas of common use with two basement car parking spaces in the building, assigned with Municipal No.24/4, Vittal Mallya Road, Ward No.76, Shantinagar, Bangalore, together with exclusive right to use open space of 1515.80 sq. ft., attached to the retail space forming portion of Unit No.202, (New No. 222).
4. It is contended that the company in liquidation conveyed the above property under a duly stamped and registered sale deed for a valuable consideration of Rs.3,00,00,000/- paid by the applicant to the company in liquidation who had a pay order (demand draft) bearing No.146544, dated 19.05.2012 drawn on the Royal Bank of Scotland, Bangalore Branch.
5. It is further contended that the same was a fair market price and was over and above the guidance value of the property fixed by the concerned Government Department. It is further stated that since valuable consideration being the fair market value price was paid, there was no intention whatsoever to defraud the creditors of the company in liquidation and as such, it is contended that said transaction must be held to be binding against the company in liquidation.
6. Along with the said application, a valuation report of one Sri Eswar Associates dated 19.08.2022 has been produced indicating that the value of the property is Rs.2,69,50,000/- and therefore, it is contended that the sale concentration paid is both above the guidance value and the valuation submitted by a valuer.
7. In the affidavit, it is also stated that in the annual report of the company in liquidation for the year 2011-12, it has been clearly set out that the company in liquidation intended to sell portions of the building known as UB City, including the properties sold to the applicant. It is on the basis of the said sale deed and the above averments that it is contended that the applicant became the absolute owner of the properties. However, the Katha of the property continued to remain with the company in liquidation, though the applicant had been making payment of the applicable property tax from the date of sale.
8. It is further stated that the applicant owns the remaining portion of Unit No.202 (new No. 222) of about 1895 sq. ft. covered area out of 4210 sq. ft. in the name of M/s. Prestige Cuisine and due to the liquidation of the company, the applicant was unable to seek for transfer and bifurcation of the Katha standing in the name of the company in liquidation, to the name of the applicant and M/s Prestige Cuisine.
9. It is stated that on 26.03.2012, winding-up proceedings in Company Petition No.57 of 2012 was instituted
