1 APP.43/2008 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.43 OF 2008 IN CHAMBER SUMMONS NO.1061 OF 2006 IN EXECUTION APPLICATION NO.270 OF 2006 IN COMPANY PETITION (C.L.B.) NO.94 OF 2000 Richline Finvest Pvt. Limited ] a Company having its Registered ] Appellant Office at 132, Rewa Apartment, ] (Ori. applicant) Bhulabhai Desai Road, ] Mumbai - 400 026 ] Vs. 1. John D’Silva ] 101, Rajnigandha ] Prof. V.S. Agashe Road, ] Dadar (West), Mumbai - 400 028 ] ] 2. Shri Amalanand D’Silva ] ] 3. Mrs. Gladys D’Silva ] ] 4. Shri Amitanand D’Silva ] ] 5. Shri Robin Corea ] Respondents ] (Ori. Petitioners) 6. Mrs. Kishori ] 7. Neoson Electronics Limited ] 446, Shah and Nahar Indl. Estate, ] S.J. Marg, Lower Parel, ] Mumbai - 400 028 ] ] 8. Shri Niranjan B. Shah ] 132, Rewa Apartment, ] B. Desai Road, ] Mumbai - 400 023. ] 9. Shri Tapaskumar Rekshit ] ] 10.Shri Satyanarayana D. ] ] Respondents 11.Shri Suresh Kalro ] (Ori. respondents) 2 APP.43/2008 Mr. R.C. Nichani i/by Mr. Amit Sheth, Advocate for appellant. Mr. L.R. Castelino, Advocate for respondents. Coram : D.K. Deshmukh & Smt.R.P. SondurBaldota, JJ. Date : 9th July, 2010 P.C.: 1. This appeal takes exception to the order dated 13th March 2007 passed by the learned Single Judge dismissing the Chamber Summons taken out by the appellant for raising the attachment levied on its property. 2. Respondent nos. 1 to 6 had filed petition before the Company Law Board against respondent no.7- Company and respondent nos. 8 to 11, it’s Directors alleging that the respondent no. 7- Company was in complete financial mis- management and respondent no.8 as it’s Chairman was siphoning of the funds of the Company. The main relief sought in the petition was that either respondent no.8 and his group should be directed to purchase the shares held by respondent nos. 1 to 6 at face value or, in the alternative, all the amounts taken over by respondent no.8 should be brought back into the Company and the Company be declared as defunct in terms of Section 560 of the Company’s Act and the funds remaining with the Company be distributed amongst the shareholders. The Company Law Board disposed off the petition by it’s order dated 8 th 3 APP.43/2008 June 2004 directing respondent no.7- Company to purchase the shares held by respondent nos.1 to 6 for the consideration of Rs.13.8 lacs and reduce the paid-up share capital to the extent of the face value of the shares. The amount was to be paid latest by 30th October 2004 and on receipt of the consideration, the respondents no.1 to 6 were to surrender the share certificate, if any, to the Company. When the Company failed to pay the amount of Rs. 13.8 lacs to respondent nos. 1 to 6, they filed execution proceedings in this Court and obtained warrant of attachment dated 27th June 2006 to attach and sell the alleged right, title and interest of respondent no.8 in the property at Flat No.132, Rewa Apartments, Bhulabhai Desai Road, Mumbai. 3. The appellant then filed Chamber Summons No.1061 of 2006 to raise the attachment levied on the flat. Respondent no.8 also filed Chamber Summons No.1060 of 2006 for the same relief. Both the appellant, as well as, respondent no.8 contended in their respective Chamber Summons that the flat in question is owned not by respondent no.8 but by the appellant. It was also contended that the order of the Company Law Board sought to be executed was only against the respondent no.7- company and not against respondent no.8. As such, execution proceedings could not be directed against properties of respondent no.8. 4 APP.43/2008 4. The flat in question was initially owned by one Ramesh Shah as seen from the share certificate dated 1st December 1976. Geeta Niranjan Shah, wife of respondent no.8 purchased it from the original owner on 14th June 1977. It was next transferred to Dhaval Shah son of Geeta Shah and respondent No.8 and from him to the appellant. The learned Single Judge has expressed doubts about the purchase of the flat by the wife of respondent No.8 by observing: “Whether the consideration shown in the consideration clause of the document came for her funds and whether she had any funds, independent of her husband, is also not shown. In fact, it cannot be seen whether the consideration shown in the document represents an adequate consideration, which would have been the market value of the flat at the time of the transaction”. As regards the claim of ownership of the appellant, the learned Single Judge rejected the same with following observations :- 9. The company petition came to be filed on 26th September 2000. The transfer deed showing the transfer of the attached flat from Dhaval Shah, son of respondent no.2 to the applicant- Company in Chamber Summons No.1061 of 2006 is dated 10th August 2000, a month prior to the filing of the petition. However, the document has been registered three months after the filing of the petition on 29th/30th.2.2000. Interestingly, an entry in the name of Dhaval Shah, son of respondent no.2 has been made in the share certificate with regard to attached flat on 30.9.2000, also after filing of the company petition and before the deed of transfer is registered in favour of the applicant-company. Hence, it is seen that at the time of filing of the company petition, the applicant-company was not the owner of the attached flat. The name of Dhaval Shah has been recorded as the owner after the filing of the company petition 5 APP.43/2008 and he has transferred the flat to the applicant company thereafter, pursuant to its registration. The deed of transfer dated 10th August 2000, the date prior to the company petition being filed is, therefore, of no consequences. The transfer relates to the date after the filing of the company petition”. 5. Perusal of the order dated 8th June, 2004 passed by the Company Law Board shows that though respondents no.1 to 6 had in the company petition sought directions against respondents no.8 to 11, the petition was allowed by issuing directions not against them but against the company alone. In the circumstances, warrant of attachment obtained by respondents no.1 to 6, individually against respondent no.8 showing the flat in question as the flat belonging to him was not proper. The execution of the order passed by the Company Law Board could have proceeded only against the property belonging to the company and not against the property belonging to respondent no.8, even if the flat in question were to belong to him. 6. The appellant acquired the flat in question from Dhaval N. Shah under agreement of sale dated 10th August, 2000 which was duly registered under Sub- Registrar,Mumbai vide registration no.6628 of 2000. The finding of the learned Single Judge that the document transferring the flat in question to the 6 APP.43/2008 appellant was registered after filing of the Company Petition and therefore at the time of filing of the petition, the appellant was not it’s owner is erroneous in view of Section 47 of the Registration Act, 1908. The section provides that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration. In other words, the registration relates back to the date of the document. Similarly delayed recording of transaction on the share certificate can also be of no consequence. Respondents no.1 to 6 alleged that the purchase of the flat by the appellant is not a genuine transaction since the appellant has purchased the flat admeasuring 1000 sq.ft located in the prime locality of Mumbai from the son of respondent no.8 for the paltry sum of Rs.5,04,260/- as reflected in the annual returns filed by the applicant-company. Once the appellant has purchased the flat in question by registered document and transfer having been effected in its name, any objection to the validity of the transaction is required to be raised by filing appropriate independent proceedings. It is not the contention of respondents no.1 to 6 that the 7 APP.43/2008 appellant-company is in anyway connected either to the company against which directions have been issued by the Company Law Board or respondent no.8. They only allege that the sale of the flat in question by Dhaval Shah to the appellant is subject to the tenancy rights of a company by name `Crystal Audio Limited’ of which respondent no.8 is the Chairman and Managing Director. Even if that is so, it cannot affect the title of the appellant to the flat. Hence, we allow the appeal. The impugned order dated 13th March, 2007 is set aside. Chamber Summons No.1061 of 2006 is allowed in terms of prayer clause (a). (SMT.R.P. SONDURBALDOTA, J.) (D.K.DESHMUKH, J.)