CHETAN K. SINGH Vs. CITI BANK N.A.

JUDGEMENT

(1.) POST sale of the property, which was held by the company -in -liquidation but sold without reference to the official liquidator or the company court, the company seeks for validation of the sale on the ground that the sale had been made in satisfaction of claim by a secured creditor and being a bona fide transaction, the action of the company requires to be approved under Section 536(2) of the Companies Act, 1956.

(2.) THE facts are not in dispute that the company -in -liquidation had mortgaged the leasehold interest of the property, which was located in Bhubneshwar in favour of the Allahabad Bank and an application had been filed before the Debts Recovery Tribunal -II, Delhi, by the Allahabad Bank and obtained an attachment of the property on July 19, 2002. Pending adjudication of the application, the Debts Recovery Tribunal had permitted the sale of the property itself on October 12, 2004 (annexure A2) and agreement of sale had been entered into with the third party on March 3, 2005. A one -time settlement was arrived at with the creditor -bank on March 23, 2005, for Rs. 2 crores. For the same price and for the same amount, the property had been sold on March 31, 2005, in favour of the third party. It is this sale, which is sought to be validated by an application under Section 536(2) of the Companies Act.

(3.) THE contention of learned Counsel for the petitioner is that the disposition of law by the hon'ble Supreme Court in Allahabad Bank v. Canara Bank : [2000] 4 SCC 406 : [2000] 101 Comp Cas 64, allowed a financial institution to stay outside the process of winding up and enforce the security or take action before the Debts Recovery Tribunal unfettered by any order of the court under the proceedings for winding up. He would not, however, go as far as to say that it was not necessary at all for him to obtain any concurrence of the court, especially on account of the fact that the sale had taken place pending proceedings for winding up before this Court but would state that the transaction of sale even without permission of this Court would not be void but it only required permission of the court, which was what he was seeking for, by applying to the court under Section 536(2). Admittedly, he did not apply to the court even before effecting the sale, although the proceedings were pending before that date but was seeking for approval post the transaction of the sale itself.