THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.1053 of 2009 ORDER: This Company application has been taken out by the Official Liquidator representing M/s Shakthi Sai Flowers and Tissues Public Limited (in Liquidation) under Section 536 of the Companies Act, 1956 r/w Rule 9 of the Companies (Court) Rules, 1959 to set aside the sale of land admeasuring Ac.8.00 and Ac.13.04 guntas situated at Duddeda village, Kondapap Mandal near Siddipet, Medak District as null and void. By an order dated 06.03.2002 made in Company Petition No.174 of 2001, this Court directed for winding up of M/s Shakthi Sai Flowers and Tissues Public Limited. By virtue of Section 449 of the Companies Act, 1956, Official Liquidator attached to this Court came to be appointed as the Liquidator of the company. The Official Liquidator issued notices under Sections 454 and 456 of the Companies Act, 1956 to the Ex- Directors of the company in liquidation. But none of the Directors appeared before the Official Liquidator to furnish the statement of affairs of the company in liquidation. The Official Liquidator seized the books of accounts with the assistance of Police Officials of Central Crime Station, Hyderabad during the year 1999. The records seized from the premises of the registered office of the company show that certain lands are owned by the company in liquidation. The Official Liquidator addressed a letter dated 01.10.2004 to the Sub-Registrar, Siddipet seeking details of the lands owned by the company in liquidation and so also the other two sister concerns. The Sub-Registrar furnished the details of lands registered in the name of the company in liquidation. The details of the lands are as follows: S.No. Document No. & Date Extent of Land in Ac.Gts. Name of the Vendor Name of the Vendee 1 2270/1995 5-7-1995 1-00 Md.Jahangir Shaik Ismail, Director of the company in liquidation 2 2304/1995 7-7-1995 1-00 G.Chandra Reddy Shaik Ismail, Director of the company in liquidation 3 2305/1995 7-7-1995 14-00 G.Chandra Reddy & 2 others M/s.Shakthi Sai Flowers & Tissues Ltd. 4 2269/1995 5-7-1995 13-04 Md.Jaffer Khan & others M/s.Shakthi Sai Flowers & Tissues Ltd. Total (3+4) Ac.27-04Gts. The information furnished by the Sub-Registrar reveals that the sale deeds came to be effected by the Managing Director of the company in liquidation after commencement of the liquidation proceedings. The liquidation proceedings commenced with the filing of the petition on 09.11.2001. An order for winding up of the company came to be passed on 06.03.2002. The company has sold an extent of Ac.8.00 to one D.Raja under a document No.515 of 2002 dated 30.1.2002, who in turn has disposed of the same to Smt.Umera Fatima, vide document No.201/2004, dated 02.01.2004. Copies of the sale deeds are marked as Exs.A.2 and A.3. Further, the land admeasuring Ac.13.04 guntas under sale deed No.2269 of 1995 mentioned above, has also been sold by the company in favour of V.Venugopal Reddy under document No.514/2002 dated 30/1/2002. Out of which, an extent of Ac.3.14 guntas was transferred by V.Venugopal Reddy in favour Smt.Umeira Fatima under document No.200/2004 dated 02.01.2004. Exs.A.3 and A.4 are Photostat copies of the sale deeds. Out of Ac.27.04 guntas of land, only an extent of Ac.6.00 is left out in the name of the company in liquidation as on the date. The Ex.Directors of the company have not put in possession of the left over Ac.6.00 to the Official Liquidator. Another Ac.2.00 of land has been purchased in the name of Sri Shaik Ismail, Ex.Director of the company in liquidation out of the funds of the company. The said Ac.2.00 is required to be taken into possession by the Official Liquidator after survey in coordination with the concerned revenue authorities. Since the above referred sale deeds covered in Exs.A.1 to A.4 have been affected after commencement of the liquidation proceedings, the instant application has been moved by the Official Liquidator seeking declaration that the sale deeds are void. Respondent No.1 filed counter. He denied of alienating any of the properties of the company. Para 7 and 8 of the counter affidavit needs to be noted and they are thus: “In reply to para-6, I submit that, I have not alienated any of the properties as alleged therein and the alleged documents purported to have been executed by me are fabricated, created by impersonating me. The vendees of the said documents are strangers to me. In reply to para 7 of the affidavit, I submit that I have not affected any transfers with regard to the subject lands in this application and the documents alleged to have been executed and registered by me in the capacity of the Managing Director of the Company in liquidation do not bear my signature and I have no objection for allowing the present application by this Hon’ble Court as prayed for by the applicant”. Respondent No.5 filed counter contending that he is a bonafide purchaser from Smt.Umera Fathima and subsequently he sold the lands in favour of the respondents 6 to 9 under registered agreement of sale-cum-Irrevocable General Power of Attorney dated 24.01.2007. It is alleged in the counter that respondents 6 to 9 are in possession of the land pursuant to the registered agreement of sale-cum- Irrevocable General Power of Attorney dated 24.1.2007. Respondents 6 to 9 filed counters contending that they are the bona fide purchasers of land admeasuring Ac.10.00 under an agreement of sale-cum- Irrevocable General Power of Attorney dated 24.1.2007 executed by the 5th respondent. Para 9 and 10 of the counter need to be noted and they are thus: “I submit that the Original Vendors Mrs.Umera Fathima had purchased the land admeasuring Ac.8.00 gts under a registered sale deed dated 02.01.2004 bearing document No.201/2004 from its previous owner D.Raju, who in turn purchased the same from M/s Shakthi Sai Flowers and Tissues Public Limited (in liquidation) under a registered sale deed dated 30.01.2002 bearing document No.515/2002 for a valid sale consideration. Likewise she had also purchased the land admeasuring Ac.3.14 gts under a registered sale deed dated 02.01.2004 bearing document No.200/2004 from V.Venugopal Reddy for a valid sale consideration, who in turn had purchased the above said property along with other extents from M/s Shakthi Sai Flowers and Tissues Public Limited (in liquidation) under a registered sale deed dated 30.01.2002 bearing document No.514/2002 for a valid sale consideration. The first transaction was done before the pendency of the present case and said fact was not disclosed by the 1st respondent. I submit that from the date of purchase the 5th respondent was in possession and enjoyment of the above said property of Ac.10.00 gts till its alienation to me and the other respondent Nos.7 to 9 herein under the registered agreement of sale-cum-Irrevocable General Power of Attorney dated 24.01.2007 bearing document No.1781.2007. Thereafter myself and the other 7 to 9 respondents are possessors of the above said property. Further I was a bonafide purchaser of the property which I was in possession and 7 to 9 respondents are in possession of the property.” On behalf of the applicant, Exs.A.1 to A.5 are marked. Respondents did not choose to adduce any oral or documentary evidence. Heard the learned counsel appearing for the parties. Learned counsel appearing for the applicant submits that under Section 441 of the Companies Act, 1956 the proceedings deemed to have been commenced from the date of filing of the application and as the sales are effected after the filing of the winding up of the company Petition, sale deeds referred in application are liable to be set aside. Section 441 reads as hereunder: “1) Where, before the presentation of a petition for the winding up of a company by the Court, a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the Court, on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken. 2) In any other case, the winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up.” Learned counsel appearing for the petitioner in support of his submissions relied on the judgment of this Court in Srinivasa Enterprises, rep.by its Managing Partner M.Srinivasa Rao S/o Sri M.Madhava Rao v The Official Liquidator of High Court of Andhra Pradesh[1]. Learned counsel appearing for the respondents 6 to 9 submits that the respondents are the bona fide purchasers and the sales are affected by the company in the ordinary course of business and in which case the application filed by the applicant is liable to be dismissed. The learned counsel by relying on the self-same decision on which the counsel appearing for the petitioner/applicant placed reliance drew my attention to para 20 of the cited judgment which reads as hereunder: “In K. and Co., v Aruna Sugars and Enterprises Ltd., (supra), a learned single Judge of Madras High Court, while considering the provisions of Section 536(2), held that the dispossession of the property by a Company after commencement of winding up proceedings, can be sanctioned if necessary for general interest of company without causing harm to creditors. It was held that the hands of the Court are not fettered under Section 433(1) of the Companies Act from exercising its inherent powers. If the transaction is bone fide and it has done in the ordinary course of business without causing any harm to the general body of the creditors, such disposition of properties of the Company after commencement of the winding up can be sanctioned if it is necessary in the general interest of the Company also.” Exs.A.1 to A.4 are true copies of the sale deeds. Two dates are required to be noted and they are the date of filing of the company petition and the date of the order, and they are dated 9.11.2001 and 06.03.2002. Under Sub-section 2 of Section 441 of the Act, in case of winding up petition in the Court, the winding up of the company shall be deemed to be commenced at the presentation of the petition for the winding up. The date of commencement of proceedings is 09.11.2001. All the sales came to be effected after the presentation of the petition. Therefore, the said sales are void and they do not bind the Official Liquidator. Accordingly, the application is allowed declaring the above said sale deeds as void and they are hereby set aside. _____________________ B.SESHASAYANA REDDY, J Dt.13th July, 2011 PNV [1] (2007) 2 Comp LJ 500 (AP)