THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.1072 of 2009 In C.P.No.11 of 1999 (Dated : 08-09-2011) Between: Smt. G.Seethalakshmi and another …Applicants A n d M/s. The Commercial Benefit Corporation (in liqn.) High Court of Andhra Pradesh. …Respondent THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.1072 of 2009 In C.P.No.11 of 1999 ORDER: This company application has been taken out by Smt. G.Seethalakshmi and Smt. M.Sunanda under Rule 9 of the Companies (Court) Rules, 1959 seeking a direction to the Official Liquidator representing M/s.The Commercial Benefit Corporation ( a company, in liquidation) to release the property bearing No.4-2-27 (Sundar Raj Petrol Bunk), Madanapalli along with the amounts standing to the credit of M/s. Commercial Benefit Corporation relatable to Sundar Raj Petrol Bunk. 2. The case of the applicants, as set out in the affidavit filed in support of the application, in brief, is: - 2(a) By an order dated 26-11-1999 passed in a batch of Company Petition Nos.10 to 16, all the seven firms including M/s. Commercial Benefit Corporation (in short, ‘the respondent-company’) were directed to be wound up. Prior to the order of winding up of the seven firms, the District Collector seized the Indian Oil Corporation outlet and disposed of the stocks. After an order of winding up, the District Collector delivered the value of the stocks and possession of the land along with Indian Oil Corporation outlet to the Official Liquidator, as per the orders passed in Company Application No.59 of 2005 dated 10-2- 2006. According to the applicants, they along with two others namely, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh purchased 1181 square feet under registered sale deed No.2797 of 1997, 1500 square feet under registered Sale deed No.2861 of 1997 and 435 square feet under registered sale deed No.2862 of 1997 from Bingi Sreeramaiah Chetty, Managing partner of the respondent-company. The predecessors-in-title to the property covered under three sale deeds were G.V.Narsimhulu Chetty and M.Prabhakar and they were partners of the respondent-company. The remaining three partners of the respondent firm ratified the sales by executing ratification deeds bearing No.4991 of 2000 and 4992 of 2000 and 4993 of 2000. 2(b) The property purchased by the applicants along with two others was let out for running a Filling station under the name and style of M/s. G.Sunder Raj India Oil Dealers under lease deed bearing No.5772 of 2001 on a monthly rent of Rs.10,000/-. After seizure of the Filling Station consequent on the complaints by the depositors in the respondent firm and six other firms, the Indian Oil Corporation, with the permission of the District Collector started operations on payment of Rs.30,000/- towards monthly rent. After the District Collector handed over the seized properties to the Official Liquidator, the Official Liquidator is in custody of the Filling station and collecting the rentals. The liability of the seven firms is totally cleared and even if there are any dues, the assets of the firms, which are in the custody of the firm, are sufficient to clear the dues. The owners of the property, wherein Filling station is being run by the Indian Oil Corporation as a lessee, are entitled to receive the lease amounts deposited with the Official Liquidator and also for release of the property bearing No.4-2- 227. 3. The Official Liquidator representing the respondent-company (in liquidation) has placed on record his reports bearing OLR Nos.341 of 2009 dated 15-9-2009 and 81 of 2010 dated 17-3-2010. The sum and substance of the reports is that the Petrol bunk is in the name of the respondent-company and the applicants are none other than the wives of the partners of the respondent-company and the alleged sale deeds are sham and nominal and the rectification deeds were brought into existence after an year of winding up and therefore, they are void and unenforceable. For better appreciation, I may refer paragraph (6) of the report bearing O.L.R.No.81 of 2010, which reads as hereunder:- “6. That in addition to the above, it is submitted that the company petition for winding up of the firms were filed during the month of June, 1999 and the Official Liquidator was appointed as the Provisional Liquidator on 26-11-1999. On verification of the photo copies of the title deeds, it is noticed that the ratification deeds were executed by the ex-partners during the month of September 2000 i.e., after the appointment of the Official Liquidator as the Provisional Liquidator, which is void. As per Section 536(2) of the Companies Act, “in the case of winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the company and any transfer of the shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall unless the Court otherwise orders, be void. Further under Section 537 (1)(b), “where any company is being wound up by or subject to the supervision of the Court, any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement, shall be void”. Hence, the ratification deeds executed in favour of the applicants are also void.” 4. On behalf of the applicants, two witnesses are examined and 15 documents are marked. Applicant No.1-Smt. G.Seethalakshmi is PW- 1. Her husband Sudar Raj is PW-2. Ex.A-1 is the certified copy of Sale Deed dated 3-7-1997 under the original of which Seethalakshmi w/o Sundar Raj, Smt. M.Sunanda w/o M.Mohan, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh purchased 131.27 square yards from Bingi Sreeramaiah Chetty, Managing Partner of the respondent-company for a consideration of Rs.3,50,000/-. Ex.A-2 is the certified copy of sale deed dated 4-6-1997 under the original of which G.Seethalakshmi w/o Sundar Raj, Smt. M.Sunanda w/o M.Mohan , B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh purchased 166.66 square yards for a consideration of Rs.2,50,000/- from Bingi Sreeramaiah Chetty, Managing Partner of the respondent-company. Ex.A-3 is the certified copy of the sale deed dated 6-6-1997 under the original of which G.Seethalakshmi w/o G.Sundar Raj, M.Sunanda w/o M.Mohan, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh purchased 48.33 square yards from Bingi Srremaiah Chetty, Managing Partner of the respondent-company. Ex.A-4 is the certified copy of the Ratification Deed executed by G.V.Narasimhulu Chetty and Makam Prabhakar in favour of G.Seethalakshmi w/o Sundar Raj, M.Sunanda w/o M.Mohan, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh in respect of 131.27 square yards. Ex.A-5 is the certified copy of Ratification Deed dated 11-9-2000 executed by G.V.Narasimhulu Chetty and Makam Prabhakar in favour of G.Seethalakshmi w/o G.Sundar Raj, M.Sunanda w/o M.Mohan, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh in respect of 166.66 square yards. Ex.A-6 is the certified copy of the Ratification Deed dated 11-9-2010 executed by G.V.Narasimhulu Chetty, Makam Prabhakar in favour of G.Seethalakshmi w/o G.Sundar Raj, M.Sunanda w/o M.Mohan, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh in respect of 48.33 square yards. In all the Ratification deeds, the executants confirmed the sale deeds executed by Bingi Sreeramaiah Chetty, as managing partner of the respondent-company in favour of G.Seethalakshmi w/o Sundar Raj, M.Sunanda w/o M.Mohan, B.Shyamala Vijay. Ex.A-7 is the Lease Deed executed by G.Seethalakshmi, M.Sunanda, B.Shyamala Vijay and O.Jayaprada in favour of M/s. G.Sundar Raj, Indian Oil Dealers, letting out the site and the building thereon on a monthly rent of Rs.10,000/-. Ex.A-8 is the endorsement bearing No.191/200/A2, dated 12.12.2000 issued by the Commissioner, Madanapalli council. Ex.A-9 is the ownership certificate issued by the Commissioner, Madanapalli Municipality. Exs.A-10 to A-13 are the land revenue tax receipts. Ex.A-14 is the Property tax Demand Notice- cum-Cash-challan issued by Madanapalle Municipality. Ex.A-15 is the receipt for payment of property tax issued by E-sea, Government of Andhra Pradesh. 5. On behalf of the respondent-company, no evidence has been adduced. 6. Heard learned counsel appearing for the applicants and learned counsel representing the Official Liquidator representing the respondent-company (in liquidation). 7. Learned counsel appearing for the applicants submits that the applicants along with two others purchased properties wherein Filing station is located and the said property came to be seized by the District Collector initially and subsequently handed over the same to the Official Liquidator. A further submission has been made that since the applicants are the owners of the premises, they are entitled for release of the property as well as rents, lying to the credit of the said property with the Official Liquidator. Learned counsel refers the sale deeds executed by Seethalakshmi w/o Sundar Raj, Smt. M.Sunanda w/o M.Mohan, B.Shyamala Vijay w/o B.Vijaya Bhaskar and O.Jayaprada w/o O.Jagadeesh and Ratification Deeds executed by G.V.Narasimhulu Chetty, Makam Prabhakar in support of his contentions. 8. Learned counsel appearing for the Official Liquidator submits that the applicants are none other than the wives of the partners in the respondent-company, which went in liquidation and the sale deeds which are pressed into service are sham and nominal and therefore, the applicants cannot claim any title over the property covered under the said documents. He would also contend that the Ratification deeds which have been exhibited as Ex.A-4 to A-6 came into existence after an year of the order of winding up and therefore, the said ratification deeds are void and they need no consideration. He would also contend that PW-2 is none other than the husband of the applicant No.1. There is no consistency in his evidence. In the chief examination he states that the property wherein the Indian Oil outlet situates does not belong to the respondent-company and it is individual property of the executants of the sale deeds. Whereas in the cross-examination, he states that the property wherein Filling station is situated belongs to the respondent-company, which is in liquidation. 9. The basic issue that calls for determination is:- Whether the application is liable to be dismissed for non joinder of necessary parties ? 10. POINT: The applicants claim that they along with two others, namely, B.Shyamala Vijay and O.Jayaprada claim to have purchased the properties under sale deeds dated 3-6-1997, 4- 6-1997 and 6-6-1997 and obtained ratification deeds on 11-9-2000. It is a matter of record that the ratification deeds are obtained after an year of order of winding up of the respondent-company and six other firms. It is not the case of the applicants that the other two purchasers, namely, Smt. M.Sunanda and O.Jayaprada have relinquished their shares. Nothing is indicated in the affidavit filed in support of the application that the other two purchasers have authorized the applicants to institute the proceedings for release of the property from the custody of the Official Liquidator. The relief sought for in the application is seeking a direction to the Official Liquidator to release the entire property and also pay the amounts realized by sale of the stocks in the Filling Station and also the subsequent rents from the Indian Oil Corporation. 11. There is a distinction between a necessary party and a proper party to the proceedings. A necessary party is one whose presence is essential and indispensable to institute the proceedings and without whose presence, no finality to the dispute can be arrived at. A necessary party is one without whom no order can be made effectively. A proper party is one in whose absence, an effective order can be made, but whose presence is necessary for a complete and final decision on the question involved in the proceedings of the suit. 12. The applicants claim that they have purchased the property along with two others, namely, Smt. B.Shyamala Vijay and Smt. O.Jayaprada under registered sale deeds dt. 3-6-1997, 4-6-1997 and 6-6-1997. It is also their case that they along with two others obtained ratification deeds. In the given facts and circumstances, Smt.B.Shyamala Devi and O.Jayaprada are necessary parties to this application and without their presence, no effective adjudication can be made on this application. Therefore, the application deserves to be dismissed at the threshold on the ground of non joinder of necessary parties. 13. Accordingly, the Company Application is dismissed. _____________________ B.SESHASAYANA REDDY, J Dt.08-09-2011 RAR THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Application No.1072 of 2009 In C.P.No.11 of 1999 DATED : 08-09-2011