Selling Immovable Property by a Private Limited Company

Legal Framework

1. Deed of Conveyance Requirement:

2. The transfer of immovable property must be executed through a registered deed of conveyance (sale deed). According to the Supreme Court in Suraj Lamp and Industries Private Limited v. State of Haryana, no right, title, or interest in immovable property can be transferred without a duly stamped and registered sale deed SAWICHHUNGI VS LALRUATI - Gauhati (2018)Annasani @ Hanumasani Rajender Kumar S/o. A. Laxmaiah VS Annasani Anasuya @ A. Hamsamma C/o. A. Laxmaiah - Telangana (2021).

3. Agreement to Sell:

4. An agreement to sell does not confer any title or interest in the property. It is merely a contract evidencing the intention to sell, and does not create any interest or charge on the property itself SAWICHHUNGI VS LALRUATI - Gauhati (2018)SWARAJ KISHORE ARORA VS INDIAN BANK - Delhi (2016). The title remains with the original owner until a registered sale deed is executed Ram Sharma vs Ashok Kumar Sharma - Delhi (2022).

Methods of Sale

1. Private Treaty:

2. A private limited company can sell its immovable property through a private treaty. This method is permissible under Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, which allows for the sale of immovable property by private treaty after obtaining a valuation and fixing a reserve price Pahwa Buildtech Pvt. Ltd. VS Jagmohan Singh Arora - Delhi (2022)K. P. Jayan, Konackal House, Edathala VS Hong Kong And Shanghai Banking - Kerala (2009).

3. Other Sale Methods:

4. The property can also be sold through:
   • Public auction
   • Inviting tenders from the public
   • Obtaining quotations from interested buyers K. P. Jayan, Konackal House, Edathala VS Hong Kong And Shanghai Banking - Kerala (2009)M. M. Gupta VS Maars Software International Ltd. - Madras (2006).

Steps to Effect Sale

1. Valuation:

2. Before selling, the company must obtain a valuation of the property from an approved valuer and consult with secured creditors to fix a reserve price M. M. Gupta VS Maars Software International Ltd. - Madras (2006)K. P. Jayan, Konackal House, Edathala VS Hong Kong And Shanghai Banking - Kerala (2009).

3. Execution of Sale Deed:

4. Once a buyer is identified and the sale price is agreed upon, a registered sale deed must be executed to transfer ownership legally SAWICHHUNGI VS LALRUATI - Gauhati (2018)Annasani @ Hanumasani Rajender Kumar S/o. A. Laxmaiah VS Annasani Anasuya @ A. Hamsamma C/o. A. Laxmaiah - Telangana (2021).

5. Compliance with Legal Requirements:

6. Ensure compliance with all legal requirements, including obtaining necessary approvals from shareholders or regulatory authorities, if applicable.

Summary of Key Findings

• A private limited company can sell its immovable property through a registered sale deed, which is mandatory for the transfer of ownership.
• The sale can be conducted via private treaty, public auction, or tender, provided that proper valuation and reserve pricing are established.
• An agreement to sell does not transfer ownership and must be followed by a registered deed to effectuate the transfer.

Recommendations

• Ensure that all sales are conducted in compliance with the legal requirements outlined above.
• Engage legal counsel to draft and execute the sale deed to avoid any potential disputes or legal challenges post-sale.
• Maintain transparency with all stakeholders involved in the sale process to mitigate risks associated with the transaction.

References: SAWICHHUNGI VS LALRUATI - Gauhati (2018)Pahwa Buildtech Pvt. Ltd. VS Jagmohan Singh Arora - Delhi (2022)M. M. Gupta VS Maars Software International Ltd. - Madras (2006)K. P. Jayan, Konackal House, Edathala VS Hong Kong And Shanghai Banking - Kerala (2009)Annasani @ Hanumasani Rajender Kumar S/o. A. Laxmaiah VS Annasani Anasuya @ A. Hamsamma C/o. A. Laxmaiah - Telangana (2021)Ram Sharma vs Ashok Kumar Sharma - Delhi (2022).].