SHIVAPPA K S Vs. STATE BANK OF MYSORE

JUDGEMENT

(1.) Heard the learned counsel for the parties.

(2.) This application is taken out by one of the Guarantors for the secured debt in favour of the first respondent herein owed by the Company (in liquidation), namely, My Leaf Tobacco Development Company Pvt. Ltd., represented by the Official Liquidatpr, who is third respondent herein. It is not in dispute that the first respondent State Bank of Mysore had obtained a mortgage of the properties of the Company (in liquidation as security for the payment of certain amounts loaned by it to that Company. The Company having failed to pay the said amount, a Suit was instituted by the first respondent-Bank in O. S. 78/1977 on the file of the Civil Judge, Davanagere. The Suit was decreed on 23.3.1979 and in execution case No. 1341 80 which was filed on 10.12.1980 the first respondent sought for the sale of the mortgaged properties in satisfaction of the decree against the Company (in liquidation). Accordingly, the properties were brought to sale on 25.8.1981, the sale was confirmed on 298.1981 and the Sale Certificate was subsequently issued in favour of the 2nd respondent Auction purchaser. The Auction Purchaser purchased these properties for a sum of Rs. 1,75,000/-, though it is the case of the appl'cant that the properties measuring 3 and half ?cres of vacant land and two Factory sheds as also a Guest house situate therein could have easily fetched Rs. 5 lakhs at the market value prevailing then. The grievance of the applicant is that he was deputed as an Official to work for the Company (in liquidation) and he had no personal interest in the loan transaction between the first respondent and the Company. On account of his offcial position as an Officer deputed to work for the said Company, he had to sign as a Guarantor and as Guarantor, there is a decree against him in the original suit and thus he is now saddled with the liability to pay the balance amount due to Respondent-1 after part satisfaction of the decree by the sale of the properties. According to the learned counsel for the applicant, the Court sale in favour of the 2nd respondent is void under Sec. 537(1) of the Companies Act, 1956 (in short the Act) as in Company Petition No. 7/1981 filed by respondent-4 for the compulsory winding up of thp third respondent - Company a winding up order by this Court had been made on 15.4.1982. But the proceedings for winding up had commenced under Sec. 441 of the Act, when the winding up petition was presented before this Court and therefore for the purpose of Sec. 537(1) of the Act the winding up of the Company by the Court was deemed to have commenced at the time of presentation of the petition for winding up. In the circumstances, the sale effected without leave of this Court after the commencement of the winding up proceedings was void under Sec. 537 (1) of the Act. The facts relating to the presentation of the windirg up petition and sale of the properties in the Court auction sale are not in dispute.

(3.) However, it is contended by the learned counsel for the first respondent that the petitioner being a Guarantor has no locus standi to invoke the provisions of Sec. 537 of the Act. Secondly, even assuming that the Official Liquidator did not take leave of the Court for the sale of the properties in question, he should be deemed to have waived such leave under Sec. 537 of the Act on the facts and circumstances of this case, since he did not raise any objection before the executing Court for the sale of the properties. Thirdly, such leave could be given even now by this Court by making an order granting ex-post facto leave for the sale effected by the Civil Court.