K. Kannan, J. - (1.) (I) Scope of Enquiry in Appeal
(2.) THE issue involved in the Company Appeal is whether the Company Court exercising jurisdiction in an application under Sections 433,434 and 439 of the Companies Act, has the power to appoint a provisional liquidator giving him liberty to sell properties not merely the property standing in the name of the Company but also the properties standing in the names of other Companies on the premise that such assets have been created with the funds collected by the Company. (II) Material on which plea for winding up was made On complaints of large scale commission of frauds by the Directors of the Company involving siphoning off the Company funds for private ends and for purchasing all properties in the names of other front companies, thus stashing away large assets from the reach of the creditors, an application had been moved for winding up of the company. It had been brought on record at the time of application was moved that the Income Tax Authorities had raided the Company and seized its current assets in the year 1995 and on the basis of complaints registered at the instance of members/investors of the Company for commission of offences under Sections 406, 420, 120B Indian Penal Code, FIR No. 72 of 1998 had been registered against the Managing Director Mr. B.M. Jain and other officers of the sister company, M/s. Alphine Floretec Ltd. and other associated concerns. In the application filed under Section 450 of the Companies Act the Company Court passed an order on 31 -7 -2003 which is impugned in this appeal, appointing a provisional liquidator under whose control of the property, effects and actionable claims to which the Company claims to be entitled, assist in calculated shall vest. This direction was issued on a perusal of the pleadings and with the availability of prima facie material that the funds of the Company were transferred to other companies formed by one of the Directors Sh. Rajesh Sayal. The Company Court also recorded satisfaction on the basis of materials placed before it that the affairs of the Company, including assets in the names of other companies which had been created with the funds collected by the Company was required to be investigated and that such systematic investigation would bring out the extent of assets owned by the Company, legal and valid, so as to make available the properties for discharge of debts of the investors. While so regarding the Company Court had also given liberty to Sh. Rajesh Sayal to move appropriate applications to show that such other companies and concerns had nothing to do with the affairs of the company under liquidation. (III) Subsequent important events
(3.) IT is Pointed out by the respondents even at the outset that after passing of the order, the Official Liquidator has been assiduously gathering all the details relating to the Company, identified the properties belonging to the Companies and at the time of the hearing of the appeal, the proceedings have already become ripe for bringing up several properties for sale. It was also the contention that property that had been identified as belonging to the Company were really handed -over to the liquidator on the affidavit given on behalf of the Company by the erstwhile Directors and therefore the appellant is not entitled to resile from the affidavit and to contend that the properties that shall be brought for sale do not belong to the Company or that the Company cannot have offered to the liquidator to take possession of all the assets including the assets that did not stand in the name of the. Company. (IV) Statutory powers of Provisional Liquidator;