IMPORTANT POINT
Where a transaction of sale of its immovable property by a Company in favour of wives of the directors is alleged to be sham and collusive, the Court will be justified in piercing the veil of incorporation to ascertain the true nature of the transaction as to who were the real parties to the sale and whether it was genuine and bona fide.

JUDGMENT

Syed Shah Mohammed Quadri, J.-This appeal is directed against the judgment and decree of the High Court of Judicature at Patna (Ranchi Bench), in Appeal from Appellate Decree No. 21 of 1979 (R) passed on November 11, 1997. The appellants-plaintiffs filed Title Suit No. 28(A) of 1976 in the court of the Subordinate Judge, 1st Court, Dhanbad, praying for a declaration of title in respect of a bungalow and a piece of land measuring 1.38 acres consisting of survey plot Nos. 91 to 94 appertaining to Khatian No. 2 of mouza Nichitpur (hereinafter referred to as the suit property ) and for permanent injunction restraining the respondents from interfering with their possession.

2. The suit property was owned by M/s. Nichitpur Coal Company Private Limited (hereinafter referred to as the Company ), which is registered under the Indian Companies Act. By a resolution of the board of directors of the Company dated September 21, 1970, it was resolved to sell the suit property to the appellants for a consideration of Rs. 5,000/-. However, the appellants paid Rs. 7,000/- to one of the directors under receipt dated December 30, 1970 (Ext. 10). An agreement to sell the suit property to the appellants for Rs. 7000/- (Rs. 5000/- as consideration of the Bungalow and Rs. 2000/- as price of the land) was executed by the Company on January 3, 1971 (Ext. 8). The Company executed the sale deed in their favour on March 20, 1972 (Ext. 9).

3. The Coal Mines (Nationalisation) Act, 1973 (for short the Act of 1973 ) came into force on May 1, 1973 and from that the date the right, title and interest of the owners in relation to the coal mines specified in the Schedule appended to the Act of 1973 (the said Company is mentioned at serial No. 133 of the Schedule) vested in the Central Government (they will hereinafter be referred to as the vested properties ). Thereafter under the order of the Central Government, the vested properties stood transferred to and vested in the Government Company named M/s. Bharat Coking Coal Ltd. (for short BCCL ). As the appellants did not hand over the possession of the suit property to BCCL, it initiated proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (for short the P.P. Act ) for their eviction from the suit property on October 15, 1976.

4. Being faced with eviction proceedings under the P.P. Act, the appellants filed the said suit against BCCL for declaration of their rights in, title to and interest over the suit property. The suit was resisted by BCCL, inter alia, on the ground that with effect from the appointed date the suit property vested in it and that the alleged sale transaction in favour of appellants was sham, collusive, without any consideration and was brought into existence to avoid the effect of vesting of the suit property under the Act of 1973. It was also stated that the appellants are wives of the directors of the Company, who are real brothers. On appreciation of the evidence placed before it, the trial court held that the appellants got no title to the suit property and were, therefore, not entitled to any relief and thus dismissed the suit on September 22, 1977. Aggrieved by the judgment and decree of the trial Court, the appellants filed Title Appeal No. 147 of 1977 before the learned District Judge, Dhanbad. On reappraisal of the evidence on record, the learned District Judge allowed the appeal and set aside the judgment and decree of the trial Court and decreed the suit of the appellants, as prayed for on October 6, 1978. The BCCL then unsuccessfully carried the matter, in second appeal, before the High Court of Judicature at Patna (Ranchi Bench). The judgment and decree of the High Court dismissing the second appeal on October 7, 1985, was challenged by BCCL in Civil Appeal No. 838 of 1986 in this Court. On August 17, 1993, this Court set aside the impugned judgment and decree of the High Court and remitted the matter to the High Court to decide the follow