D. P. BUCH, J. ( 1 ) THIS is an appeal under section 374 of the Code of Criminal Procedure, 1973 (for short, code) in order to challenge the judgment and conviction order dated 20. 7. 1987 in Special Case No. 2 of 1983 under which the learned Special Judge, Surat convicted the present appellant for offence punishable under section 5 (2) of the Prevention of Corruption Act, 1947 and sentenced him to suffer R. I. for three months. The trial court also directed the appellant to pay fine of Rupees two hundred. In default of payment of fine, the appellant was directed to undergo further R. I. for 15 days. The appellant was also convicted for an offence punishable under section 161 of Indian Penal Code. However, no separate sentence was imposed on him for that offence. ( 2 ) THE facts of the case of the prosecution before the trial court may be briefly stated as follows: in September, 1981, the present appellant was functioning as Talati-cum-Mantri, Group Gram Panchayat in Palsana Taluka of Surat District and as such he was a public servant. The informant had filed a FIR before the concerned police station on 22. 9. 1981. It seems that about 3-4 months prior to the date of filing of FIR, the informant Dayaram Zaverbhai Mistry was required to have mutation of entries of agricultural land in his name on the basis of a will executed by his father. It seems that the said informant approached the appellant for the said purpose and, therefore, the appellant prepared certain notices and other documents and handed over the same to the said informant. Thereafter, the petitioner also required certified copies of the mutation entries made in his name. The informant approached the appellant and at that time, the appellant told him that the will did not contain the signature of the father of the informant and the informant was, therefore, required to spend some amount for the said mutation purpose. On enquiry, the appellant made it clear that the informant would be required to pay a sum of Rs. 400. 00 for making entry and Rs. 100. 00 for supplying copies of Village form VII - VII A, XII etc. Therefore, the appellant in all demanded Rs. 500/from the informant. On enquiry, the appellant made it clear that the informant would be required to pay a sum of Rs. 400. 00 for making entry and Rs. 100. 00 for supplying copies of Village form VII - VII A, XII etc. Therefore, the appellant in all demanded Rs. 500/from the informant. At that stage, the informant told him that he did not have money with him and, therefore, he would pay the same afterwards. This episode took place, according to the case of the prosecution, on 22. 9. 1981. Thereafter the informant, according to the case of the prosecution, consulted his friends and he was given to understand that if money was not paid, the work would not be done and since the informant was a resident of U. K. , it would not be possible for the informant to again come to India for the said purpose. Ultimately, the informant approached the Police Inspector of Anti Corruption Bureau and filed his FIR which was reduced into writing and the informant was told to come to the ACB office on the next morning. Accordingly the informant went to the said office on 23. 9. 1981. The ACB Police Officer had already invited two persons as panchas from the office of the Sales Tax Commissioner. They were introduced to the informant and the informant was introduced to the panchas. ( 3 ) AT the instance of the police officer, the informant had given details of his grievance to the panchas in a brief manner and then the FIR filed by the informant was also read over to the panchas and their signatures were obtained thereon. Thereafter, Police Sub-Inspector Puwar brought anthracene powder and explained ultra violet lamp and showed experiment with respect to the use of ultra violet lamp and anthracene powder and the characteristics thereof. Thereafter, the informant supplied currency notes of Rs. 500. 00 (Five notes of Rs. 100. 00 each ). Anthracene powder was applied on those currency notes and when they were seen under the ultraviolet lamp, it was noticed that light blue fluorescence was visible on those notes. Thereafter, the said currency notes were placed in the upper pocket of the T-shirt of the informant and he was told not to touch them till the demand was made by the appellant. Thereafter, the said currency notes were placed in the upper pocket of the T-shirt of the informant and he was told not to touch them till the demand was made by the appellant. The first panch was told to accompany the informant and witness what may happen in his presence. Preliminary panchnama was drawn and thereafter two panchas, informant and the police officers and other police personnel started to go to the office of the appellant. They reached the said office and the informant and panch no. 1 were required to enter the office of the appellant whereas panch no. 2 and the Police Inspector and other police personnel occupied their position outside the office. ( 4 ) PROSECUTION has further alleged that when the informant and the panch entered the office of the appellant, the appellant inquired from the informant about the aforesaid transaction. The informant took out the currency notes from the upper pocket of the T-shirt and handed over the same to the appellant. The appellant accepted the said amount and placed it under the papers on his table. Those papers were again placed on the currency notes and paper weight was also placed thereon. AT that time, signal was given to the raiding party and, therefore, the Police Inspector and the raiding party entered the said office of the appellant. ( 5 ) THERE also further process was undertaken. Ultraviolet lamp experiment was demonstrated, the three fingers and thumb of right hand of the appellant were found showing the presence of anthracene power. Similarly presence of anthracene power was visible on the right hand of the informant and on his pocket. Search was carried out and the aforesaid currency notes were seized. The presence of anthracene was noticed thereon also. Other relevant documents were also seized and at the end of the said process, the Investigating Police Officer concluded the panchnama. Thereafter statements of witnesses were recorded and at the end of the investigation, charge sheet was filed against the present appellant for the aforesaid offence. The appellant was enlarged on bail. He was supplied with copies of police investigation papers. Charge was framed, it was read over and explained to the appellant. The appellant pleaded not guilty to the said charge. Therefore, evidence was recorded. The appellant was enlarged on bail. He was supplied with copies of police investigation papers. Charge was framed, it was read over and explained to the appellant. The appellant pleaded not guilty to the said charge. Therefore, evidence was recorded. At the end of the trial, the trial court recorded further statement of the appellant under section 313 of the Code and after hearing the arguments, the trial court found the appellant guilty for the aforesaid offence. After hearing the appellant and his advocate on the point of quantum of punishment, the learned trial Judge imposed the punishment on the appellant as aforesaid. ( 6 ) FEELING aggrieved by the said judgment and conviction order of the trial court, the appellant has preferred this appeal before this court. It has been mainly contended before this court that the Police Sub-Inspector Puwar was not examined as a witness before the trial court though he was mainly responsible for demonstrating the effect of anthracene powder and ultra violet lamp at the office of the ACB. That though the Supreme Court has laid down since long that in such traps the ACB should use phenolphthalein powder and sodium carbonate solution, the I. O. in the present case has used anthracene powder and ultra violet lamp. That the entries were already made and the copies were ready before the incident in question and, therefore, it is not probable that the appellant would demand money and the informant would part with the said money in favour of the appellant. That the Investigating Officer was also a member of the raiding party and, therefore, he could not have undertaken the investigation and he ought to have entrusted the same to another officer. That the trial court has not properly appreciated the evidence on record and, therefore, there is serious error on the part of the trial court in convicting the appellant. That on the whole, the judgment and conviction order of the trial court are erroneous and illegal and deserve to be set aside. It is, therefore, prayed that the present appeal be allowed, the judgment and conviction order of the trial court be set aside and the appellant be acquitted of the offence in question. ( 7 ) ON receiving the appeal, it was admitted and the appellant was enlarged on bail. Thereafter the matter came up for final hearing. It is, therefore, prayed that the present appeal be allowed, the judgment and conviction order of the trial court be set aside and the appellant be acquitted of the offence in question. ( 7 ) ON receiving the appeal, it was admitted and the appellant was enlarged on bail. Thereafter the matter came up for final hearing. On behalf of the appellant, Mr A D Shah, learned Advocate has advanced his arguments. On the other hand, Mr S J Dave, learned APP has advanced arguments on behalf of the respondent State. Both of them have taken me through the entire evidence and the relevant portions of the judgment of the trial court. In fact, learned advocate for the appellant has read the entire evidence of all the witnesses on record in order to substantiate his argument on the aforesaid counts. ( 8 ) NOW if we look to the evidence on record, it is very clear that the trial court had examined certain witnesses. PW 1 Dayaram Zaverbhai Mistry, Exh. 12 is the first witness who is also the informant. He has deposed that by the end of 1980, he had come from U. K. to India. That he was staying at village Kadodara at a distance of 1 k. m. from village Chalthan, which is adjacent to the land which stood in the name of his father. His father had executed a Will in his favour and, therefore, he wanted to get the said land mutated in his name and, therefore, he had approached the appellant, herein, i. e. the Talati-cum-Mantri at the relevant point of time. That he had also handed over the Will of his father to the appellant in order to show that he was the owner of the land in question. It is also deposed by him that the appellant demanded a sum of Rs. 400. 00 and Rs. 100. 00 for carrying out the process and for supplying copies to the informant. That he said that he did not have money with him and, therefore, he had agreed to come again on the next day. He has further deposed that he, thereafter, consulted certain people in the village and thereafter approached the ACB office and contacted the P. I. Mr Bunneth. That he said that he did not have money with him and, therefore, he had agreed to come again on the next day. He has further deposed that he, thereafter, consulted certain people in the village and thereafter approached the ACB office and contacted the P. I. Mr Bunneth. That he had given details of the aforesaid episode and on hearing him, the P. I. enquired as to whether he wanted to file FIR and when he said yes, the P. I. recorded FIR as per his instructions. That thereafter he signed it and the P. I. had told him to come on the next morning with an amount of Rs. 500. 00. That accordingly, he again approached the said office in the morning hours on 23. 9. 1981 i. e. on the next day of recording of FIR and that he had gone there with currency notes of Rupees five hundred. That two panchas were brought to the office and he was introduced to the panchas. That thereafter P. S. I. Puwar was also invited there and he (the witness) produced the aforesaid currency notes of five hundred in presence of P. I. , Mr Puwar and panchas. That PSI Mr Puwar informed them about the characteristics of anthracene powder and ultraviolet lamp and then experiment was demonstrated to them. That thereafter anthracene powder was applied to the said currency notes and on seeing those currency notes under the ultra violet lamp, light blue fluorescent colour was visible on these notes. That thereafter the said currency notes were placed in the upper pocket of his T-shirt and the extra powder, the paper, cotton etc. used for this purpose were destroyed. It is also deposed by him that he was told not to touch the said currency notes till demanded by the appellant. That panchnama was prepared and signatures were obtained. That even in the panchnama, numbers of the currency notes were recorded. ( 9 ) HE has also deposed that thereafter, the raiding party proceeded towards the office of the appellant. That the first panch accompanied him and panch no. 2 stayed with the raiding party outside the office but around it. Thereafter the informant and the first panch entered the office of the appellant. The appellant asked them to sit and as soon as they occupied their position, the appellant enquired about the demand. That the first panch accompanied him and panch no. 2 stayed with the raiding party outside the office but around it. Thereafter the informant and the first panch entered the office of the appellant. The appellant asked them to sit and as soon as they occupied their position, the appellant enquired about the demand. Therefore, he took out the said currency notes and handed them over to the appellant. The appellant accepted the same and placed it under the papers lying on his table and then again placed those papers on those currency notes and also placed paper weight thereon. Thereafter, signal was shown and the raiding party entered the said office of the appellant, the currency notes were seized from the said place and thereafter, panchnama was prepared and signatures of panchas were obtained. This is the evidence of those witness. ( 10 ) THE witness has been cross examined at length. An attempt was made, during the cross-examination to show that before 23. 9. 1981, entries were posted and they were ready for being supplied to the informant. The witness has not accepted the said suggestion. ( 11 ) THEN, the said evidence got support from the evidence of his own FIR which has been produced by him at Exh. 16. In support of the said evidence, the prosecution also examined PW 2 Dalpatbhai Chauhan, Exh. 21. This witness was serving as Sales Tax Inspector. He was invited as panch and according to him, he had gone to the office of the ACB on 23. 9. 1981. That the panchas and the informant were introduced to one another and FIR was read over to them and their signatures were obtained. That, the experiment of anthracene powder and ultraviolet lamp was demonstrated. He has also deposed that the informant produced currency notes of five hundred, anthracene powder was applied to these currency notes and thereafter they were placed in the upper pocket of the T-shirt of the informant. Preliminary panchnama was drawn and then the raiding party proceeded to the office of the appellant. He has, further, deposed that he and the informant both had entered the office of the appellant. That the appellant supplied copies of the village Form Nos. Preliminary panchnama was drawn and then the raiding party proceeded to the office of the appellant. He has, further, deposed that he and the informant both had entered the office of the appellant. That the appellant supplied copies of the village Form Nos. VII-VII-A-XII to the informant and that the appellant enquired from the informant as to whether he had brought the money as per the discussion taken place earlier, at which the informant had agreed that he had brought it. That thereafter, the informant took out the said currency notes from his pocket and handed them over to the appellant, which were accepted by the appellant and he placed the same on the table under the papers. He also deposed that thereafter signal was given and the raiding party entered the said office and currency notes were seized from the said place. He has also deposed as to how further procedure with anthracene powder and ultraviolet lamp was carried out on the currency notes, on the hands of the informant and the appellant etc. Therefore, according to the case of the prosecution, this panch witness has fully supported the case of the informant. Then there is the evidence of Panchnama at Exh. 22 which also supports the case of the prosecution and the evidence of the informant and the panch witness. The said evidence is further supported by the evidence of PW 3, Padamsingh at Exh. 23. His evidence also supports the evidence of the informant and the panch witness and it is further supported the panchnama also. This is the state of affairs so far as the oral evidence is concerned. 11. Even if we agree that demand, acceptance and recovery of bribe amount are the three important ingredients in trap cases, then we find in the case on hands as follows: (i) The fact of initial demand has been proved through the evidence of the informant-PW. 1, Exh. 12. (ii) It is supported by his FIR Exh. 12 (iii) It is further supported by the conduct of the informant inasmuch as he informed the police and filed his FIR. Then he again went there with bribe money. Then he approached the appellant on the trap day. 1, Exh. 12. (ii) It is supported by his FIR Exh. 12 (iii) It is further supported by the conduct of the informant inasmuch as he informed the police and filed his FIR. Then he again went there with bribe money. Then he approached the appellant on the trap day. (iv) This fact of initial demand gets further support from the evidence of the informant that on the trap day, when he, in the company of the first panch met the appellant the appellant inquired from him if he had brought bribe money. On this point, even the first panch has supported the evidence of the informant. (v) As regards the demand of bribe money on the date of the trap, there is evidence of the informant, the first panch, the FIR and panchnama. (vi) The evidence of consequent recovery of bribe money further supports the case and evidence of pre-trap demand and trap day demand. (vii) The evidence of acceptance can be gathered from the evidence of informant, first hand, FIR and panchnama. (viii) The evidence of recovery of bribe money further supports the case and evidence of demand and acceptance. (ix) The fact of recovery of bribe money is proved on records through the evidence of the informant, first panchas, I. O. , FIR, panchnama, presence of anthracene powder on the marked currency notes on the person of the informant, on the person of the appellant, on the paper under which the powder marked notes were placed and on the table cloth on which they were kept. (x) The evidence that the required and relevant copies of revenue records were kept ready for delivery on the trap day and the evidence that they contained the date of trap day lends additional support to the case and evidence of demand, acceptance and recovery of bribe money. ( 12 ) AN attempt was made to show that the first panch was known to the informant and they were found moving together. This attempt and effort has met with a failure as there is absolutely no material on records to show or to suggest or to prove the said defence. The I. O. had simply addressed a letter to the officer of the first panch and the said officer told this first panch to go to the office of the ACB. This attempt and effort has met with a failure as there is absolutely no material on records to show or to suggest or to prove the said defence. The I. O. had simply addressed a letter to the officer of the first panch and the said officer told this first panch to go to the office of the ACB. There is no material to show that the panchas were known to the I. O. or to the informant or that the I. O. had selected them as panch. ( 13 ) IT has also been argued that the informant was required to pay taxes to the panchayat. That the appellant had prepared receipt but the informant did not have Indian currency and therefore, there was some oral exchange of words between the informant and the appellant and, therefore, the informant had arranged for the trap. Even the Sarpanch has deposed, as defence, witness that he had intervened and hence the matter was settled between the two. The informant had no reason then to file a false FIR. ( 14 ) THE appellant has nowhere explained the presence of anthracene powder on the tips of his fingers and thumb as well as on the paper and table cloth lying on his table. He has also not explained the presence of currency notes of Rs. 500. 00 on his table. He has not explained the presence of powder on those currency notes. Had it been the case of planting of the currency notes, then the presence of powder on his fingers and thumb could not be there. ( 15 ) AGAIN, he has rendered no explanation as to why he had kept certified copies ready on the trap day and as to why they contained that date and as to why he neither kept them ready nor did he hand them over to the informant before the date of trap. He has also not explained as to why he did not inform the informant before the trap day, that the relevant entries were made and certified and the informant could get those copies at any point of time. ( 16 ) NOW, learned Advocate for the appellant has argued at length before this court that the evidence of the witnesses is highly improbable and not acceptable. ( 16 ) NOW, learned Advocate for the appellant has argued at length before this court that the evidence of the witnesses is highly improbable and not acceptable. Learned advocate for the appellant has also argued that if the currency notes were lying on the table within the knowledge of the informant and the first panch, then there was no necessity for the Investigating Police Officer to carry out personal search of the appellant. That the very fact that the personal search of the appellant was first carried out by the Investigating Officer clearly suggests that none was aware as to whether the said currency notes were lying on the table. It is also his argument that the personal search of the appellant was carried out under the pretext that the appellant was possessing the currency notes on his person. ( 17 ) NOW the evidence on record discloses that the P. I. did not enquire at the first instance, as to where the currency notes were. It is also not on record that the first panch and the informant had conveyed it to the Investigating Officer that the currency notes were lying on the table under certain papers. It, therefore, appears that the I. O. was not aware at that time that the currency notes were lying on the table. It may be for this reason that the I. O. conducted personal search of the appellant at the first instance. Simply because the personal search of the appellant was undertaken at the first instance, it does not go to show or suggest that even the informant and the first panch were not aware as to whether the currency notes were lying. ( 18 ) IT is then contended that though the paper weight was lifted by the appellant, according to the case of prosecution, the said paper weight was not examined under ultra violet lamp in order to find out the presence or otherwise of anthracene powder thereon. It seems that it is nobodys case that the appellant had lifted the said paper weight by using his right hand. It is also nobodys case that the appellant had used his right hand for again placing the said paper weight on those papers. It seems that it is nobodys case that the appellant had lifted the said paper weight by using his right hand. It is also nobodys case that the appellant had used his right hand for again placing the said paper weight on those papers. Therefore, when the witnesses have not deposed and when it is not recorded in panchnama that the appellant had used his right hand for touching the paper weight, then there was no reason for the I. O. to examine the paper weight under the ultra violet lamp. It is moreso, when there is no evidence on records to show that the left hand of the appellant had come in contact of the powdered currency notes. ( 19 ) IT is because of the aforesaid witness supported by the informant that the right hand of the appellant was examined under the ultra violet lamp and the anthracene powder presence was noticed on three fingers and thumb of his right hand. ( 20 ) ON this aspect of the case, it has been argued that when a particular person receives a particular amount, normally he would count the same and once the notes are counted, the anthracene powder would not appear only on the fingers of one hand but presence would be noticed elsewhere and on another hand also. This argument is not acceptable on the ground that this was not a recovery of Rs. 500. 00 on the basis of any legal dues of the appellant. This was an amount of bribery. Moreover, when the currency notes of Rs. 100 have been tendered, then the appellant would have taken it for granted that they were currency notes of Rs. 500. 00. This may be a matter of trust and faith. Therefore, simply because the appellant did not count the said currency notes it cannot be said that the evidence is not genuine. It is nobodys case that the appellant had counted the said currency notes. Therefore, the remaining part of the hand of the appellant could not show presence of anthracene powder thereon. Therefore, this argument cannot and does not hold any ground. ( 21 ) IT has then been argued that sine long it has been observed by Courts that ACB should not use anthracene powder and ultra violet lamp. There is no dispute about the said argument also. Therefore, this argument cannot and does not hold any ground. ( 21 ) IT has then been argued that sine long it has been observed by Courts that ACB should not use anthracene powder and ultra violet lamp. There is no dispute about the said argument also. Long back in 1976, Honble the Supreme Court had an occasion to deal with such an issue in the case of Raghbir Singh v. State of Punjab, reported in AIR 1976 SC 91 . In para 11 of the said judgment, the Supreme Court has observed that it would be desirable if in cases of this kind where a trap is laid for a public servant, the marked currency notes, which are used for the purpose of trap, are treated with phenolphthalein powder so that the handling of such marked currency notes by the public servant can be detected by chemical process and the court does not have to depend on oral evidence which is sometimes of a dubious character for the purpose of deciding the fate of the public servant. There is no dispute about the said desire expressed by the Supreme Court with respect to the use of a particular chemical for the purpose of trap. It is required to be considered that in para 8 of the said judgment, the Supreme Court has observed that the prosecution case also suffers from another serious infirmity and it is that it rests entirely on the evidence of witnesses who are either interested witnesses or police witnesses. ( 22 ) IN the present case we find that the present informant cannot be treated to be an interested witness who was willing to part with money. On compulsion, he was required to give bribe to the appellant. Therefore, he could not be treated to be a willing bribe giver. It is moreso, when his evidence has been supported by independent panch witness. An attempt has also been made to show that a public servant coming to a court as a panch witness is normally required to support the prosecution case, otherwise he may be dealt with departmentally. There is nothing on record to show that the panch witness was directed to give evidence in a particular fashion and that on his failure to do so, he would be departmentally dealt with. There is nothing on record to show that the panch witness was directed to give evidence in a particular fashion and that on his failure to do so, he would be departmentally dealt with. The witnesses are after all witnesses coming to the court who are expected to tell the truth to the court. With a view to judge the veracity and reliability of a witness, cross-examination of a witness is a very strong weapon in the armory of the defence which may be effectively used by the defence at an appropriate stage. In the present case, the panch witness has been cross examined but by and large his evidence is not found to be contradictory to the evidence of the informant and the evidence in the form of panchnama. He is not shown to be a witness interested in the present case. Therefore, when the evidence of the informant has been amply corroborated by the evidence of panch witness, FIR and panchnama, then, simply because the prosecution has used anthracene powder and ultra violet lamp and not phenolphthalein powder and sodium carbonate solution, it would not be proper to extend benefit of reasonable doubt to the appellant. ( 23 ) IT is also required to be seen that in the case of Ramsing Bhadrasing v. State, reported in 1960 GLR 138 , this court had observed that in cases of offence under the Prevention of Corruption Act, the prosecution must lead positive evidence by way of expert evidence or books of science to prove the method of detection of anthracene powder, the nature of the test to be applied, the nature of the result to be expected and whether a layman can detect anthracene powder when such test is applied. ( 24 ) IN the present case we find that the informant as well as the panch witness both have said that they were explained about the characteristics of anthracene powder and ultra violet lamp by the PSI at the time when the first part of the panchnama was drawn. These characteristics have, by now, become very much known through several reported cases. ( 25 ) IT is required to be considered here that it is true that the said PSI has not been examined. However, the witnesses have said positively that the aforesaid effect was explained to them in details. These characteristics have, by now, become very much known through several reported cases. ( 25 ) IT is required to be considered here that it is true that the said PSI has not been examined. However, the witnesses have said positively that the aforesaid effect was explained to them in details. On that aspect, no serious cross-examination appears to be on record with respect to these two witnesses. Therefore, the evidence of these two witnesses supported by the evidence, panchnama and oral evidence of the P. I. is required to be considered from that angle also. In other words, simply because the prosecution has not examined PSI Puwar, it cannot be said that the effect of anthracene powder and ultra violet lamp was not made known to the prosecution witnesses. ( 26 ) IN the case of Ambalal Motibhai Patel v. State, reported in 1960 GLR 113 also this court was required to deal with an appeal by the accused persons convicted for an offence punishable under section 5 (2) of the Prevention of Corruption Act. There the Court has observed that "as observed by Their Lordships of the Supreme Court such a person cannot be treated as an accomplice. As observed by Their Lordships of the Supreme Court, a person who is not a willing party to giving of bribe and who is only actuated by the motive of traping another, cannot be regarded as an accomplice, but the evidence of such a witness is that of a partisan witness who was out to entrap another". However, in the present case, we find that the evidence of the informant has been fully and amply supported by the evidence of panch witness, panchnama, FIR and the evidence of P. I. Bunneth. Therefore, when this witness has been supported by other independent evidence, on material particulars, evidence of the informant cannot be thrown away simply because he is an informant. ( 27 ) LEARNED Advocate for the appellant has relied upon a decision in the case of Kanubhai Kantibhai Patel v. State of Gujarat, reported in 1998 (1)GLH 924. There the evidence was to the effect that the panchnama was not dictated by panchas and they were simply asked to sign panchnama. This court found that the conviction should not be sustained as demand and acceptance being vital ingredients were not established. There the evidence was to the effect that the panchnama was not dictated by panchas and they were simply asked to sign panchnama. This court found that the conviction should not be sustained as demand and acceptance being vital ingredients were not established. In the present case, we find that the evidence of the informant and panch witness is supported by FIR and panchnama and is further supported by the evidence of police inspector Mr Bunneth. It clearly shows that the appellant had demanded and accepted an amount of Rs. 500. 00. This is not a matter of mere acceptance. This is not a matter of mere demand or mere recovery. In fact, even if we take it that demand, acceptance and recovery of currency notes are the three basic ingredients required to be proved through evidence, then also the evidence of the aforesaid witnesses supported by documentary evidence clearly proves the presence of the said three ingredients. In the present case, demand, acceptance and recovery of currency notes are all proved through the evidence as aforesaid. ( 28 ) SO far as use of anthracene powder and ultra violet lamp is concerned, certain observations were made in the said judgment. However, in another matter a different view has been adopted by the Division Bench of this Court. Here we come across a decision of this Court in the case of Gopalbhai Oghadbhai Parekh v. State of Gujarat, reported in 2002 (1) GLR 89 . There it has been observed by the Division Bench of this Court that with regard to the contention of using anthracene powder for the trap and no explanation by the prosecution having been coming forth as to why the phenolphthalein powder was not used, and therefore, the accused is entitled to be acquitted, the Court may only observe that there cannot be any hard and fast rule that the prosecution must use only phenolphthalein powder for the trap. It is also observed that when the Apex Court has held that it is desirable to use phenolphthalein powder, it cannot be contended that it is a mandatory requirement. This Court has, therefore, observed that decision of Gopalla Chhipa v. State ( 1999 (1) GLR 546 ) was not correctly decided. It is also observed that when the Apex Court has held that it is desirable to use phenolphthalein powder, it cannot be contended that it is a mandatory requirement. This Court has, therefore, observed that decision of Gopalla Chhipa v. State ( 1999 (1) GLR 546 ) was not correctly decided. Moreover, it is well settled that there are hardly two to four elements, which are very rarely and hardly available, which would give light bluish fluorescent colour under ultra violet lamp. Therefore, it cannot be said that the experiment is not acceptable for any purpose. It, therefore, cannot be said that conviction based on the said experiment of anthracene powder and ultraviolet lamp cannot be sustained in appeal. ( 29 ) IN the case of Meena, w/o Balwant Hemke v. State of Maharashtra, reported in 2000 0 SCC (Cr) 878, the facts were quite different. However, observations made in para 10 at page no. 884 are important and relevant. It would therefore, be desirable to refer to the said observations as follows:"neither the quality of the material produced nor their proper evaluation could, in this case, be held sufficient to convince or satisfy the judicial conscience of any adjudicating authority to record a verdict of guilt, or such slender evidence. Indisputably, the currency note in question was not recovered from the person or from the table drawer, but when the trap party arrived it was found only on the pad on the table and was seized from that place only. The question is as to whether the appellant accepted it and placed it on the table or that the currency note fell on the paid on the table in the process of the appellant refusing to receive the same by pushing away the hands of PW 1 when the currency note was attempted to be thrust into her hands. PW 2, one of the panch witnesses, who accompanied PW 1, as a shadow witness, did not support the prosecution case. He had been treated hostile and his evidence eschewed from consideration by the courts below. The lady constable, another shadow witness, who first arrived on the spot after the signal was given by PW 1, was not examined at the trial. He had been treated hostile and his evidence eschewed from consideration by the courts below. The lady constable, another shadow witness, who first arrived on the spot after the signal was given by PW 1, was not examined at the trial. Law has always favoured the presence and importance of a shadow witness in the trap party, not only to facilitate such witness to see but also to overhear what happens and how it happens. In this case, the role of the lady constable was to enter first and hold the hands of the accused immediately after the acceptance of the bribe amount and she was stated to have done that, as planned. For reasons best known, such a vital and important witness had been withheld by the prosecution, from being examined J, who scribed the application for getting copies and who admittedly was all along with PW 1 and gave even the idea of lodging a complaint with the Anti-Corruption Bureau, had also been withheld from being examined. The other person, who was present at the place of occurrence though cited initially as a witness, was not examined by the prosecution but later was got examined as DW 1 and the evidence of this person completely belies the prosecution story. The corroboration essential in a case like this for what actually transpired at the time of the alleged occurrence and acceptance of bribe is very much wanting in this case. Even the other panch witness, PW 5 categorically admitted that even as the Inspector of Police, PW 6 arrived, the appellant gave the same version that PW 1 tried to force into her hands the currency note which she turned down by pushing it away, and his evidence also does not lend credibility to the case of the prosecution. The contradictory version of PW 1 of the very incident when earlier examined in departmental proceedings renders his testimony in this case untrustworthy. PW 3, the Head Copyist, seems to be the brain behind all this and PW 1 as well as J appear to be working as a group in this affair and despite the blunt denial by PW 3, his closeness to PW 1 and J stands well substantiated. All these relevant aspects of the case seem to have been completely overlooked by the courts below. All these relevant aspects of the case seem to have been completely overlooked by the courts below. " ( 30 ) ON going through the facts of the said case, it is found that the accused and the complainant had some sort of scuffle and it was found that in view of the aforesaid scuffle, some phenolphthalein powder might have touched the body of the accused and, therefore, the person of the accused showed purple colour when solution of sodium carbonate was sprinkled on the said said currency notes. This was a matter decided on the facts of the said case and therefore, it cannot be used for any other purpose so far as laying down a principle. 30. A. ONE important aspect should not escape our consideration. The proof of movement of currency notes from hand to hand and place to place through the proof of presence of anthracene powder, with the use of ultraviolet lamp, is not being used as substantive piece of evidence. It is used to lend support to the oral evidence of the witnesses, who initially get support from the evidence of panchnama and FIR. In other words, the oral evidence of witnesses get, support from the panchnama and the FIR and this oral and documentary evidence is being further supported by the presence of powder. ( 31 ) AGAIN, it has been argued that the entries were posted very early and even copies were ready for being supplied to the informant. That when the process was over in the beginning of September, no prudent person would be prepared to pay bribe of Rs. 500. 00 to the present appellant. That in the present case, entries were posted very early and in September, 1981 and, therefore, it is not probable that the appellant would demand bribe of Rs. 500. 00 from the informant on 22. 9. 1981 and that the informant would be agreeable to pay the said amount on 22. 9. 1981 and would actually pay the same to the appellant on 23. 9. 1981. ( 32 ) IT is true that the record shows that the entries were posted and certified in the beginning of September, 1981. There is no serious dispute about the same. 9. 1981 and would actually pay the same to the appellant on 23. 9. 1981. ( 32 ) IT is true that the record shows that the entries were posted and certified in the beginning of September, 1981. There is no serious dispute about the same. However, there is absolutely no material on record to show that the said fact was conveyed to the informant by the appellant at any point of time before 22. 9. 81 or 23. 9. 81 that the entries were posted and certified by the Mamlatdar and when the copies were ready for being supplied to the informant. It is not on record that the informant came to know from other sources that the entries were posted and certified by the Mamlatdar and that copies were ready for being supplied to the informant. The prosecution has not come with a case that the aforesaid fact was conveyed to the informant before 22. 9. 1981 or 23. 9. 1981. Therefore, the fact that the entries were posted and certified in the first week of September, 1981 will not be a useful material in order to create any sort of doubt. ( 33 ) ). ON the other hand, it is required tobe considered that when the entries were posted and certified in early September, 1981, then what was the explanation or reason with the appellant for not supplying relevant copies to the informant and for not informing the informant about the same. This would mean that the appellant very well knew that the entries were posted and certified by the Mamlatdar and, therefore, copies could be very well supplied to the informant as and when the bribe amount is paid to him. It is also required to be considered that mere posting of entry would not be enough and it is required to be verified and certified by the Mamlatdar. Therefore, the appellant must have completed the process and thereupon, he appears to have demanded money so that as soon as money is received, the copies could be supplied to the informant without any loss of time. ( 34 ) ). IT is then required to be considered that the relevant documents were seized through panchnama at the office of the appellant. It shows that those copies bear date 23. 9. 1981. Now, if the entries were posted and certified on 5. 9. ( 34 ) ). IT is then required to be considered that the relevant documents were seized through panchnama at the office of the appellant. It shows that those copies bear date 23. 9. 1981. Now, if the entries were posted and certified on 5. 9. 1981, then the appellant had no reason to prepare these documents on 23. 9. 1981. On the contrary, the fact showing that the certified copies were kept ready on 23. 9. 1981 clearly shows that there was a clear talk between the appellant and the informant about the payment of bribe amount of Rs. 500. 00. It was also clear to the appellant that the informant would approach him on 23. 9. 1981 with bribe money. Therefore, before the arrival of the informant to the office, the appellant kept those certified copies ready bearing the said date 23. 9. 1981. If there was no such understanding between the two and if the appellant was not aware that the informant would come to him on 23. 9. 1981, then there was no reason or necessity for the appellant to keep those documents ready on 23. 9. 1981 bearing date 23. 9. 1981. Therefore, it cannot be said that since the entries were posted and certified on 5. 9. 1981, it is not probable that the informant would still pay bribe amount of Rs. 500. 00 to the appellant. On the contrary, the date 23. 9. 1981 posted on those certified copies clearly suggests that the informant did meet the appellant on 22. 9. 1981, that there was an understanding that the informant would bring bribe money on 23. 9. 1981 and therefore, the appellant was ready with the certified copies bearing date 23. 9. 81 when the informant met him on 23. 9. 81 with bribe money. ( 35 ) ). IT has also been argued that the I. O. himself was a member of the raiding party and he also carried out the remaining investigation and, therefore, the investigation may not be honest and genuine. It is required to be considered that not only the P. I. , even the PSI and other police personnel of ACB were all members of the raiding party. Panchnama was drawn and muddamal articles were seized. Thereafter there was hardly any formality required to be observed for the purpose of completing investigation. It is required to be considered that not only the P. I. , even the PSI and other police personnel of ACB were all members of the raiding party. Panchnama was drawn and muddamal articles were seized. Thereafter there was hardly any formality required to be observed for the purpose of completing investigation. It is a known fact that in an Anti-corruption trap, statements of panch witnesses are normally being recorded which normally does not happen in case of other police investigation. Therefore, if statements of those panch witnesses were not recorded, then nothing was required to be done by the I. O. ( 36 ) ). IT has been argued there that the informant had met the appellant on 18. 9. 81 and at that time, the appellant had informed the informant that the entries were posted and certified and the I. O. could have investigated into this fact, had the I. O. been an independent Officer. Now, it is not disclosed that this fact had come out during the course of investigation. Therefore, there was no scope for any I. O. to investigate the same. Moreover, if the copies were really on hand on the said date, then it has not been explained as to why they were not supplied to the informant till 23. 9. 81 and as to why the date 23. 9. 81 was put on those copies. ( 37 ) ). IT has also been contended by the learned Advocate for the appellant that the informant had earlier approached the appellant on 18. 9. 1981 and even there before and therefore, the informant can be presumed to know that the entries were posted and certified. However, it is not on record that either on 18. 9. 1981 or before the said date, the appellant had informed the informant that the entries were posted and certified. There is no evidence to show that on those dates, the informant came to know about the same from other sources. Again, the fact remains that if the copies were ready on 18. 9. 1981, then there was no reason for the appellant not to supply the same to the appellant on 18. 9. 1981 or therebefore. The fact that the informant was not supplied with copies of documents before 23. 9. Again, the fact remains that if the copies were ready on 18. 9. 1981, then there was no reason for the appellant not to supply the same to the appellant on 18. 9. 1981 or therebefore. The fact that the informant was not supplied with copies of documents before 23. 9. 1981 clearly shows that the informant was never aware of the posting and certification of the entry and he was never allowed to know about the same. ( 38 ) ). IT has also been argued on behalf of the appellant that the concerned Police Investigating Officer had prepared a draft of sanction and the competent authority had accorded sanction which is pari materia with the draft supplied to him. It has, therefore, been contended that there was total non-application of mind on the part of the competent authority while according sanction to the prosecution. In the present case, we find that it is very clear that under section 6 of the said Act of 1947, the court is prevented from taking cognizance of offence punishable under the said Act of 1947 unless a valid sanction has been accorded by a competent authority to prosecute a particular public servant. In the present case, we find that in the past, sanction was accorded by a subordinate officer and therefore, those proceedings were required to be set at naught. However, fresh application was made and sanction was sought. Sanction was thereafter accorded by the competent authority. There is no dispute that the authority which sanctioned prosecution was not a competent one. The only contention is that the sanction accorded is pari materia, with the draft supplied to the said authority. ( 39 ) ). IT happens that sometimes disputes are being raised about non-application of mind by the competent authority sanctioning prosecution. There may be some technical error here or there in drafting the said sanction. Therefore, if a draft has been supplied by a police officer or even by a subordinate officer, then the sanction accorded will not be treated to be illegal unless it is found that there was non-application of mind. Mere acceptance of a draft sanction by the competent authority for according sanction will not be a ground to hold that there was non-application of mind. ( 40 ) ). Mere acceptance of a draft sanction by the competent authority for according sanction will not be a ground to hold that there was non-application of mind. ( 40 ) ). IN the case of State of M. P. v. Shri Ram Singh, reported in AIR 2000 SC 870 , an observation has been made that merely because authorization order was in typed proforma investigation and consequent proceedings could not be quashed. The argument in that case was that typed proforma was provided for authorization on a particular action in the matter which was used by the authority concerned. The Supreme Court has observed in it that simply because typed proforma was provided, it could not be said that the proceedings are vitiated. While taking the help of some observations from a case of R S Nayak v A R Antulay, (1984) 2 SCC 183 and in AIR 2000 SC 870 , para 9), the Court has observed that whenever a question of construction arises upon ambiguity or where two views are possible of a provision, it would be the duty of the Court to adopt that construction which would advance the object underlying the ACt, namely, to make effective provision for the prevention of bribery and corruption and at any rate not defeat it. The Supreme Court has also observed in para 8 of the judgment that the menace of corruption was found to have enormously increased by first and second world war conditions. In para 10 it was observed that procedural delays and technicalities of law should not be permitted to defeat the object sought to be achieved by the Act. Any way, it is very clear that simply because a draft was supplied and simply because sanction was accorded in terms of the draft supplied, the competent authority cannot be said to have failed in applying his mind to the facts and materials placed before him. In the present case, we find that the relevant papers were placed before the competent authority and the competent authority has, after fully considering the same, accorded sanction for the prosecution of the present appellant. In that view of the matter, the sanction accorded cannot be treated to be illegal on the aforesaid ground. ( 41 ) ). In the present case, we find that the relevant papers were placed before the competent authority and the competent authority has, after fully considering the same, accorded sanction for the prosecution of the present appellant. In that view of the matter, the sanction accorded cannot be treated to be illegal on the aforesaid ground. ( 41 ) ). IT is also required to be considered that as per the evidence of witness and panchnama, the paper under which the currency notes were kept on the table and the table cloth on which the currency notes were placed both were examined under the ultraviolet lamp and they both showed presence of anthracene powder thereon. It is not explained as to how the anthracene powder was present on the table cloth as well as on the paper under which the said currency notes were kept. This would be an important piece of evidence linking the currency notes with the appellant and the informant since no other person was found to have his person stained with anthracene powder. ( 42 ) ). IT is also argued that only the hand of the appellant was examined under the ultraviolet lamp. When the currency notes were not placed in pocket and when they were found from the table, it was not at all necessary to examine other part of his body under the ultraviolet lamp. There may be some contradiction with respect to the colour of the bottle in which anthracene powder was kept in the office of the Anti-corruption Bureau. After all the incident took place at one point of time and the evidence was recorded after some lapse of time and, therefore, the prosecution witness may not be in a position to exactly reproduce whatever may have happened before 5 to 6 years. It is also not an important contradiction on material particulars. ( 43 ) ). IT is true that such a case should be disposed of on expeditious basis but there are reasons and reasons for a delay in disposal of the case. Sometimes the courts are busy in conducting old cases and conducting cases of undertrial prisoners, sometimes they are busy with trial of other serious offences, sometimes they are busy with old matters pertaining to compensation under the Motor Vehicles Act, land acquisition cases wherein the people stand in que for getting compensation for the loss suffered by them. Sometimes the courts are busy in conducting old cases and conducting cases of undertrial prisoners, sometimes they are busy with trial of other serious offences, sometimes they are busy with old matters pertaining to compensation under the Motor Vehicles Act, land acquisition cases wherein the people stand in que for getting compensation for the loss suffered by them. Sometimes they are busy with hearing of bail applications wherein the accused may be in jail for a long time. There may also be delay due to paucity in number of judicial officers in the State. At the same time, it is also a fact that at times, the Advocates for the accused persons may also not be ready for conducting their cases. Sometimes, they may be busy elsewhere in conducting some other cases in other courts. Sometimes they go on strike for a very long time and do not attend the court , sometimes the witnesses may not be available on the given dates. Therefore, there are numerous reasons for delay in disposal of the cases. Therefore, on account of delay for one or the other reason, there will be some contradictions coming on record. In the present case, some contradictions here or there are not found touching the root of the case. Then such contradictions are required to be overlooked. In the present case, we find those contradictions are not found to be material contradictions and minor contradictions have to be accepted as genuine ones. In that view of the matter, simply because there are some minor contradictions in the evidence of witness and contradictions between oral evidence and documentary evidence on record, it would not be a ground for rejecting the evidence of the witnesses whose evidence is otherwise reliable. It is moreso, when the witnesses corroborate one another and when their evidence is further supported by documentary evidence like panchnama, FIR and the revenue records referred to hereinabove. ( 44 ) ). THE said Act of 1947 also provides for a statutory presumption. It is moreso, when the witnesses corroborate one another and when their evidence is further supported by documentary evidence like panchnama, FIR and the revenue records referred to hereinabove. ( 44 ) ). THE said Act of 1947 also provides for a statutory presumption. For the purpose, section 4 (1) of the said Act of 1947 may be reproduced for ready reference:"4 (1) Where in any trial of an offence punishable under section 161 or section 165 of the IPC (45 of 1860) punishable under sub-section (20 thereof it is proved that an accused person has accepted or obtained, or has agreed to accept or attempted to obtain, for himself or for any other person, any gratification (other than legal remuneration) or any valuable thing from any person, it shall be presumed, unless the contrary is proved, that he accepted or obtained, or agreed to accept or attempted to obtain, that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in the said section 161, or, as the case may be, without consideration or for a consideration which he knows to be inadequate. " ( 45 ) ). IN the case on hand, the prosecution has satisfactorily proved, through cogent and convincing evidence which inspires confidence, that the appellant did demand illegal gratification from the informant, that the unwilling informant did pay the same to the appellant, that the appellant did accept the same from the informant and the said bribe money was received from the table of the appellant where he had placed the same after receiving the same from the informant. ( 46 ) ). THEREFORE, when the facts of demand-acceptance and recovery have been satisfactorily established, beyond any reasonable doubt, then the prosecution has become statutorily entitled to the benefit of the said presumption under section 4 (2) of the said Act of 1947. In other case, the prosecution has to be held to have proved that the appellant received the money in question as an illegal gratification which was not his legal remuneration and which he was not entitled to receive. Even considering the amount in question (in 1987), it could not be treated to be a triffle money in order to attract the provision of sub-section (3) of section 4 of the said Act of 1947. ( 47 ) ). Even considering the amount in question (in 1987), it could not be treated to be a triffle money in order to attract the provision of sub-section (3) of section 4 of the said Act of 1947. ( 47 ) ). THEN the appellant had opportunities to rebut the said statutory presumption during the cross examination of the prosecution witnesses as well as during the course of his statement recorded by the trial court under section 313 of the Code. However, it has to be recorded that nowhere the appellant rebutted the said statutory presumption nor did he even make an attempt to do so. Therefore, the oral evidence of the informant that the appellant demanded and accepted illegal gratification stands fortified and strengthened by this presumption also. ( 48 ) IN a decision reported in 2000 SC (Cri.) 1206 in the case of Aditya Nath Pandey v. State, it has been observed that there was a passage of long time after the date of the commission of the offence under Prevention of Corruption Act, 1947, a lenient view was required to be taken and the period already undergone was found to be sufficient. At the same time, in the case of State of Gujarat v. Jivraj Manjibhai Patel, ( 1999 (2) GLR 1236 ), the respondent was acquitted in 1998 by the trial court in an offence of 1984 and the appeal was allowed in 1998 and there it was held that if there is a delay in disposal of cases by the High Court, then it would not be a ground in favour of the accused. In that case, this court had inflicted R. I. for three years. It was a matter relating to a bribe amount of Rupees One thousand. It shows that the quantum of punishment is always a matter of discretion of the court. In the present case, we find that the appellant was convicted at relevant point of time and there was some delay in disposing of the appeal of the appellant. In that view of the matter, this is not a fit case for interfering with the quantum of punishment inflicted by the trial court. ( 49 ) ). ANY way, it is found that there was sufficient evidence on records of the trial court to hold that the appellant did demand and accept bribe money from the informant. In that view of the matter, this is not a fit case for interfering with the quantum of punishment inflicted by the trial court. ( 49 ) ). ANY way, it is found that there was sufficient evidence on records of the trial court to hold that the appellant did demand and accept bribe money from the informant. It is not a defence even before this court that the informant owed this money (Rs. 500/-) to the appellant and that, when it was paid to the appellant or while paying it to the appellant the informant converted into bribe demand/acceptance. The trial court has given cogent and convincing reasons for accepting prosecution evidence. In my opinion also, this evidence inspires confidence and then, there is not a single reason which would enable the court to agree with the defence that the prosecution evidence be rejected. Once the prosecution evidence is found to be acceptable and reliable and once it is found that it inspires confidence, then there is no option for this court but to dismiss the appeal and to confirm the judgment and conviction order of the trial court. ( 50 ) ). AS regards the quantum of punishment, it is true that there is some delay in disposal of this appeal. But that would not be sufficient to reduce the quantum of sentence. It is said that the cancer of corruption in public service/govt. service is on increase and therefore, deterrent sentence is also required to be considered. Viewing from this angle, the punishment imposed of only three months R. I. and fine of Rs. 200/only, was on the side of leniency and hence no further lenient view is now required to be taken. ( 51 ) ). FOR the foregoing reasons, the appeal is meritless and deserves to be dismissed. This appeal is accordingly dismissed and the judgment and conviction order recorded in Special Case No. 2 of 1983 dated 20. 7. 1987 by the learned Special Judge at Surat are hereby confirmed. The appellant is on bail. He shall surrender forthwith to the custody. His bail bonds are cancelled. The office shall immediately send intimation of this order to the trial court so that the said court may issue non-bailable warrant against the appellant and notice to the surety/sureties in order to enable the appellant to surrender and to serve out the sentence. . He shall surrender forthwith to the custody. His bail bonds are cancelled. The office shall immediately send intimation of this order to the trial court so that the said court may issue non-bailable warrant against the appellant and notice to the surety/sureties in order to enable the appellant to surrender and to serve out the sentence. . TEXT OF JUDGMENT (March 21, 2003) 2003 (TLS)210669 2003-Tlgj-0-170 PIRAMAL FINANCIAL SERVICES LIMITED Vs. RESERVE BANK OF INDIA K. M. MEHTA, J. ( 1 ) REPORT OF THE OFFICIAL LIQUIDATOR: the Official Liquidator as Liquidator of M/s. Piramal Financial Services Limited (hereinafter referred to as "the Company in liquidation or PFSL") has filed this report with a prayer for directions of this court on the following question. " (A) Whether this court may permit the Official Liquidator to deseal the flats in question as requested by the flat owners" ( 2 ) THE facts giving rise to this petition as contained in the report of the Official Liquidator are as under:2. 1 m/s. Piramal Financial Services Limited (the company in liquidation or PFSL) was a Company incorporated on 8. 10. 1992. Reserve Bank of India (hereinafter referred to as "r. B. I. ") had issued a certificate under Section 45 I (f) of the Reserve Bank of India Act, 1934 that it was a non-banking financial Company and it was bound by the directions issued by the R. B. I. as amended from time to time. 2. 2 r. B. I. , a body Corporate, established by the Reserve Bank of India Act, 1934 (hereinafter referred to as the "r. B. I. Act") had filed winding up petition under the provisions of R. B. I. Act before this court for winding up of PFSL. On 10. 5. 2000 this court passed order to the effect that the Official Liquidator attached to this court be appointed as Provisional Liquidator of the company in liquidation. 2. 3 this court by the judgement and order dated 20. 10. 2000 (since reported Reserve Bank of India Vs. Piramal Financial Services Ltd. reported in (2000) 41 (4) G. L. R. 3476) admitted the said petition and appointed Provisional Liquidator to the said company. 2. 4 thereafter, this court by its order dated 20. 3. 2001 passed an order winding up PFSL and the Official Liquidator who was appointed as Provisional Liquidator earlier by the order dated 20. 10. Piramal Financial Services Ltd. reported in (2000) 41 (4) G. L. R. 3476) admitted the said petition and appointed Provisional Liquidator to the said company. 2. 4 thereafter, this court by its order dated 20. 3. 2001 passed an order winding up PFSL and the Official Liquidator who was appointed as Provisional Liquidator earlier by the order dated 20. 10. 2000 was directed to be appointed as Liquidator of the company with usual powers under Companies Act, 1956. Thereafter, this court by its order dated 20. 7. 2001 passed in Company Application No. 44 of 2001 directed the Official Liquidator to take possession of the properties and assets as mentioned in Schedule-A to the report of the Official Liquidator dated 12. 7. 2001 in the aforesaid company application. 2. 5 pursuant to the aforesaid orders the Official Liquidator had deputed his representative on 8. 8. 2001 for taking possession of flat Nos. 8, 16, 17 situated at Haridwar Apartment, Panchvati, Near Gulbai Tekra, Ahmedabad, after giving due notice to the persons concerned. A copy of the notice is annexed at Annexure-A to the report. 2. 6 the representative of the Official Liquidator, in presence of the representative of the company, representative of Bank of India and representative of Nutan Nagrik Sahakari Bank Ltd. , took possession of flat Nos. 8, 16 and 17 on 8. 8. 2001. A copy of the minutes recorded at the time of taking possession of flats is annexed to the said report at Annexure-B. 2. 7 the Official Liquidator in his report has stated that he has received three applications from the owners, M/s. Rajiv Enterprises Pvt. Ltd. of the flats requesting him to deseal the flats immediately otherwise he has to pay charges of rent and compensation to the owners of the flats. In support of the contentions, M/s. Rajiv Enterprises Pvt. Ltd. has filed certain documents. 2. 8 the Official Liquidator, thereafter, in his report dated 25. 10. 2001 stated that while examining the said papers / documents it is seen from the Certificate issued by Housing Development Finance Corporation Ltd. (HDFC for short) that Piramal Finance Services Ltd. had availed Corporate Loan of Rs. 50 lakhs from HDFC and title deeds of the flats were mortgaged with HDFC as security by the Company (in liquidation) and title deeds were returned to the company (in liquidation) by HDFC. 50 lakhs from HDFC and title deeds of the flats were mortgaged with HDFC as security by the Company (in liquidation) and title deeds were returned to the company (in liquidation) by HDFC. A copy of the said Certificate dated 10. 3. 1999 is annexed at Annexure-C to the said report. 2. 9 the Official Liquidator in his report has stated that it is seen from the Sale Deeds that the aforesaid flats were sold by the company (in liquidation) to M/s. A. R. Mehta, Rajiv Vastupal and Rajiv Vastupal Mehta on 7. 5. 1999 in full consideration as per the Sale Agreements which are registered with the Sub-Registrar. A copy of the said document is annexed at Annexure-D to the report. 2. 10 after examining the same, the Official Liquidator in his report stated that his representative visited the premises and the flats were found to be locked and the owners were not present at that moment. Then all such properties and flats were sealed by the Official Liquidator by taking symbolic possession. The Official Liquidator is not having keys of these flats. 2. 11 in view of the above, the Official Liquidator stated that from the records produced before the Official Liquidator it appears that all the formalities for sale have been duly complied with by owners of flats and it is clear from above that the flats do not belong to the Company (in liquidation) i. e. PFSL. 2. 12 in view of the aforesaid report of the Official Liquidator, the question which has been set out earlier hereinbefore, has been posed before the Official Liquidator. The said report was filed on 25. 10. 2001. 2. 13. As the matter pertains to a large number of immovable properties of the Company (in liquidation), it may be noted that the Official Liquidator has also filed further reports dated 30. 1. 2002 and 30. 9. 2002. It may be noted that in view of the importance of the matter, this court requested the Official Liquidator that if he desires to have assistance of an advocate, this court may appoint any advocate of this court. Accordingly, Mr. Roshan Desai, who has appeared on behalf of the Official Liquidator, has been requested to appear and he has readily agreed to appear in this behalf and he has rendered very valuable assistance to this court in this important matter. 2. Accordingly, Mr. Roshan Desai, who has appeared on behalf of the Official Liquidator, has been requested to appear and he has readily agreed to appear in this behalf and he has rendered very valuable assistance to this court in this important matter. 2. 14 it may be noted that in view of the same, the court initially issued notice to the R. B. I. who was respondent in the said report in this behalf. The learned counsel for the R. B. I. , Shri Amar Bhatt, has filed affidavits dated 9. 1. 2002, 7. 2. 2002 of General Manager, Shri A. K. Khound, Department of Non-Banking Supervision of the R. B. I. , respondent herein, and affidavit dated 28. 8. 2002 of Deputy General Manager, P. Radhakrishnan, Department of Non-Banking Supervision of the R. B. I. 2. 15 looking to the importance of the matter, Shri Rajesh C. Shah, Chartered Accountant, who was also appearing in Company Application No. 44 of 2001 has also filed affidavit. Shri Rajiv Vastupal Mehta, has also filed affidavit dated 14. 9. 2002 and further affidavit dated 27. 9. 2002. It may be noted that Shri Rajiv Vastupal Mehta has been represented by Shri S. N. Soparkar, learned senior advocate. Shri Rajesh C. Shah, Chartered Accountant, was represented by Shri D. S. Vasavada, learned advocate and in the original winding up petition for one of the creditors Shri Ashwin L. Shah was appearing who was also permitted to appear as intervener. 2. 16 it may be noted that total four flats have been sold namely, flat Nos. 8, 16, 17 and 18 but as flat No. 18 has been sold subsequently to other person and he has taken out separate judges summons, I am not dealing with the contentions of flat No. 18 but only flat Nos. 8, 16 and 17. I will consider the case of flat No. 18 separately. So far as flat No. 18 is concerned, Shri Nigam P. Maniar claiming to be its purchaser (of flat No. 18) has preferred Company Application No. 220 of 2002 intimated that the said flat No. 18 is in his possession and his family is occupying the said flat and his possession may not be disturbed. It may be noted that flat No. 18 is purchased by Shri Nigam P. Maniar from Shri Rajiv V. Mehta. It may be noted that flat No. 18 is purchased by Shri Nigam P. Maniar from Shri Rajiv V. Mehta. Shri Nigam P. Maniar has filed separate petition before this court and this court by order dated 24. 8. 2001 permitted Shri Nigam P. Maniar and his family members to reside in the said flat No. 18. That is how I am not dealing with flat No. 18 in the present judgement. 2. 17 looking to the importance of the matter, I also requested learned counsel to file written submissions and accordingly written submissions were filed by the learned counsel for respective parties. ( 3 ) ( 4 ) IT may be noted that over and above R. B. I. , other creditors have also filed winding up petition under the provisions of the Companies Act and in Company Petition No. 296 of 1999 this court also passed winding up order dated 23. 8. 2002. SUBMISSIONS ON BEHALF OF THE OFFICIAL LIQUIDATOR:4. 1 the learned counsel for the Official Liquidator submitted all these facts in his report which I have stated earlier in this behalf. It may be noted that this petition relates to flat Nos. 8, 16, 17 and 18 situated at Haridwar Apartment, Panchvati, Near Gulbai Tekra, Ahmedabad. Regarding flat No. 8 - 4. 2 it appears that flat No. 8 was purchased by Rajiv Petro Chemical Pvt. Ltd. vide Deed of Sale dated 7. 5. 1999 from Piramal Financial Services Limited (hereinafter referred to "the company in liquidation" ). The said Sale Deed was lodged for registration with the Sub-Registrar of Assurances under Serial No. 1261. From the correspondence which has been produced in this case it appears that consideration of flat No. 8 as per the Sale Deed is Rs. 13,00,000. 00. The said flat was acquired by the company in liquidation at the cost of Rs. 16,50,000/as evidenced from the application for Certificate under Section 230a (1) of the Income-tax Act, 1961, produced at pages 91 to 96 of the paper book. From the letter dated 11. 1. 1999 it appears that the company in liquidation had addressed a letter to Rajiv Petrochemicals Pvt. Ltd. It appears that Inter Corporate Loan of Rs. 10 lakhs for a period of six months carrying interest payable quarterly was received by the company in liquidation and fixed deposit receipt dated 9. 1. From the letter dated 11. 1. 1999 it appears that the company in liquidation had addressed a letter to Rajiv Petrochemicals Pvt. Ltd. It appears that Inter Corporate Loan of Rs. 10 lakhs for a period of six months carrying interest payable quarterly was received by the company in liquidation and fixed deposit receipt dated 9. 1. 1999 was issued in which maturity period is stated as 8. 7. 1999. It may be noted that loan agreement was also entered into between the company in liquidation and Rajiv Petrochemicals Pvt. Ltd. Interest at the rate of 27% from 9. 1. 1999 to 8. 4. 1999 after deducting TDS is Rs. 54,000. 00. A copy of Banakhat and Sale Deed and other documents have also been produced at pages 64 to 115 of the paper book. When this flat was purchased by Rajiv Petrochemicals Pvt. Ltd. at Rs. 13 lakhs, the said sum of Rs. 10 lakhs was adjusted. In this transaction the company has suffered loss of Rs. 3,50,000/ -. Over and above this, the company in liquidation vide letter dated 6. 5. 1999 which is produced at page 97 of the paper book intimated Sashya Association to transfer maintenance deposit of Rs. 50,000. 00 to Rajiv Petrochemicals Pvt. Ltd. Thus the company in liquidation has suffered further loss of Rs. 50,000. 00. It is not clear who has paid the transfer fee for transfer of flat No. 8 from the company in liquidation to Rajiv Petro Chemical Pvt. Ltd. which is required to be paid as per the Rules and Regulations of the Non-trading Association and/or Co-operative Society. 4. 3 as regards flat No. 16, the said flat was sold for a sum of Rs. 12,28,000. 00 while the cost of acquisition of the said property is Rs. 16,50,000. 00. In this transaction the company in liquidation has suffered a loss of Rs. 4,22,000. 00. Over and above the same, the company in liquidation has intimated to Sashya Association vide its letter dated 6. 5. 1999 produced at page 46 of the paper book to transfer Rs. 50,000. 00 being the amount of maintenance deposit in the name of Smt. Aarti Rajiv Mehta. It was therefore submitted that the company in liquidation has suffered in all loss of Rs. 4,72,000/ -. 5. 1999 produced at page 46 of the paper book to transfer Rs. 50,000. 00 being the amount of maintenance deposit in the name of Smt. Aarti Rajiv Mehta. It was therefore submitted that the company in liquidation has suffered in all loss of Rs. 4,72,000/ -. It is not clear who has paid the transfer fees for transfer of flat No. 16 from the company in liquidation to Aarti Rajiv Mehta. It may be noted that Smt. Aarti Rajiv Mehta has given deposit of Rs. 15 lakhs to the company and the said sum of Rs. 15 lakhs has been adjusted against the purchase of the said flat. 4. 4 as regards flat No. 17, it appears that Rajiv Enterprise, sole proprietor Shri Rajiv Vastupal Mehta had granted bill discounting facility to the tune of Rs. 15 lakhs to the company in liquidation. The said facility was granted for a period of six months from 25. 11. 1998 to 24. 5. 1999. The said fact has been gathered from letter dated 26. 11. 1998 which is produced at 116 of the paper book. Against the said loan the company in liquidation has issued cheque dated 24. 5. 1999 in favour of Rajiv Enterprise for Rs. 15,00,000. 00 which is at page 117 of the paper book. The Sale Deed has been lodged for registration with the Sub-Registrar of Assurances under serial No. 1260. The Company in liquidation sold the said flat No. 17 to Shri Rajiv Vastupal Mehta, sole proprietor of Rajiv Enterprise for consideration of Rs. 14,43,000/ -. A copy of the agreement for Sale, Deed of Sale and other relevant documents are produced at pages 119 to 151 of the paper book. The Sale Deed dated 7. 5. 1999 executed between Rajiv Vastupal Mehta on one hand and the company in liquidation on the other particularly clause 18 at page 138 of the paper book. This shows that out of sum of Rs. 15 lakhs, the price of the flat being Rs. 14,43,000. 00 is adjusted and balance amount of Rs. 57,000. 00 has been paid by the company in liquidation. It may be noted that Rs. 14,000. 00 has been paid on 6. 5. 1999 and Rs. 43,000. 00 was already adjusted earlier. Thereby, total amount of Rs. 57,000. 00 has been paid to Rajiv Enterprise, sole proprietor Shri Rajiv Vastupal Mehta. 00 is adjusted and balance amount of Rs. 57,000. 00 has been paid by the company in liquidation. It may be noted that Rs. 14,000. 00 has been paid on 6. 5. 1999 and Rs. 43,000. 00 was already adjusted earlier. Thereby, total amount of Rs. 57,000. 00 has been paid to Rajiv Enterprise, sole proprietor Shri Rajiv Vastupal Mehta. It may be noted that cost of acquisition of the said flat as is evident from the application for a certificate under Section 230a (1) of the Income-tax Act, 1961 is Rs. 17,38,750. 00. In view of the same, the company has suffered a loss of Rs. 4,95,750. 00. Over and above this, the company in liquidation vide letter dated 6. 5. 1999 which is produced at 147 of the paper book intimated to Sashya Association to transfer Rs. 58,750/being the amount of maintenance deposit placed by the company in liquidation in the name of Shri Rajiv Vastupal Mehta. It is not clear who has paid the transfer fee for transfer of flat No. 17 from the company in liquidation to Shri Rajiv Vastupal Mehta which is required to be paid as per the Rules and Regulations of the Non-Trading Association and/or Co-operative Society. 4. 5 on possession being taken by liquidator and sealing flat Nos. 8, 16 and 17, purchasers Rajiv Petro Chemicals Pvt. Ltd. , Smt. Aarti Rajiv Mehta and Shri Rajiv Vastupal Mehta forwarded an application to the liquidator to deseal the flats, otherwise, liquidator has to pay the charges and rent and compensation to the owners of the flats. The documents mentioned in para 6 on page 3 of the Official Liquidators Report were submitted by the purchasers to the liquidator. 4. 6 the learned counsel for the liquidator has submitted that Form Nos. 13 and 17 were filed with the Registrar of Companies for satisfying the charge created by PFSL in favour of Housing Development Finance Corporation. One of the Forms, namely, Form No. 17 filed with the Registrar of Companies, is produced at page 103 of the paper book. In the said form it is stated that the charge created in favour of HDFC, the particulars of which were registered with the Registrar of Companies on 30. 1. 1997, is satisfied in full on 7. 5. 1999. 4. In the said form it is stated that the charge created in favour of HDFC, the particulars of which were registered with the Registrar of Companies on 30. 1. 1997, is satisfied in full on 7. 5. 1999. 4. 7 the learned counsel for the Official Liquidator therefore submitted that in view of the aforesaid facts, transfer of flat Nos. 8, 16 and 17 is fraudulent preference in favour of Rajiv Petrochemicals Pvt. Ltd. , Smt. Aarti Rajiv Mehta and Shri Rajiv Vastupal Mehta and covered by Sections 531 and 531a of the Companies Act. 4. 8 to substantiate the aforesaid contention, the learned counsel for the Official Liquidator relied on Sections 441, 531 and 531a of the Companies Act which read as under:- section 441 of the Companies Act reads as under: "section 441 - Commencement of winding up by Court - (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 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 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. " section 531 of the Companies Act reads as under: "531 - Fraudulent preference - (i) any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a company within six months before the commencement of its winding up which, had it been made, taken or done by or against an individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the Company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly. Provided that in relation to things made, taken or done before the commencement of this Act, this sub-section shall have effect with substitution, for the reference to six months, of a reference to three months (2) for the purpose of sub-section (1), the presentation of a petition for winding up in the case of a winding up by or subject to the supervision of the Court, and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to the act of insolvency in the case of an individual" Section 531a of the Companies Act reads as under: "avoidance of voluntary transfer - Any transfer of property, movable or immovable, or any delivery of goods, by a company not being a transfer or delivery, made in the ordinary course of its business or in favour of a purchaser or encumbrances in good faith and for valuable consideration, if made within a period of one year before the presentation of a petition for winding up by or subject to the supervision of the court or the passing of a resolution for voluntary winding up of the company, shall be void against the liquidator. " 4. 9 after relying on the aforesaid provisions of the Act, the learned counsel for the Official Liquidator submitted the following facts to show the transfer by the company in liquidation as fraudulent preference as under: 4. 10 the first petition against the company in liquidation is filed by Unnati Enterprise on 18. 10. 1999 being Company Petition No. 296 of 1999. The transaction of sale has taken place on 7. 5. 1999 i. e. within a period of one year before presentation of Company Petition No. 296 of 1999. The learned counsel for the Official Liquidator further relied on Section 441 (2) of the Companies Act which provides that winding up of the company shall be deemed to commence at the time of presentation of the petition for winding up. 4. 11 the flats are transferred against deposit/bill discounting facilities given to the company. The date of maturity of the said deposits/bills was 8. 7. 1999 / 24. 5. 1999. The company in liquidation had transferred flats in favour of Rajiv Mehta and others in discharge of their deposits/bills rediscounting facilities much prior to the maturity dates. 4. 4. 11 the flats are transferred against deposit/bill discounting facilities given to the company. The date of maturity of the said deposits/bills was 8. 7. 1999 / 24. 5. 1999. The company in liquidation had transferred flats in favour of Rajiv Mehta and others in discharge of their deposits/bills rediscounting facilities much prior to the maturity dates. 4. 12 he submitted that according to the depositors against whose deposits the flats in question are transferred (hereinafter referred to as Rajiv Mehta and others), they had placed inter corporate deposits with the Company and had given bills discounting facilities to the company. The details emerging from the documents produced may be summarised as under: Deposits/bills Date Due date Date of transfer Discounting of flats in lieu facility of amount due from the company to Rajiv Mehta and others -- 1. Rs. 10 lacs 8. 1. 99 8. 7. 99 7. 5. 1999 (Deposit) 2. Rs. 15 lacs 8. 1. 99 8. 7. 99 7. 5. 1999 (Deposits) 3. Rs. 15 lacs 25. 11. 98 24. 5. 99 7. 5. 1999 (Bills re- discounting) 4. Rs. 15 lacs 25. 11. 98 24. 5. 99 7. 5. 1999 (Bills re- discounting) 4. 13 the Official Liquidator further submitted that several depositors preferred petition before the Company Law Board, Bombay. One of the petitions was filed by Shri Pranjivandas C. Parikh and others. The depositors by filing the petition before the Company Law Board prayed that PFSL be directed to pay amount of deposit with interest. In the said petitions PFSL filed reply vide letter dated 4. 5. 1999 produced at pages 271 to 291. In the said reply in clauses 2. 2 and 3 at page 274 it is stated that the reason for failure on the part of Piramal Financial Services Ltd. to meet with its obligation was financial crunch and due to delay in recovery of its dues. It was also submitted that it was a temporary financial problem and its assets are in excess of its liabilities and most of the assets are blocked up in real estate markets where the recovery is very slow. It was also stated that PFSL is making all efforts to meet its obligations within a reasonable time. It was also submitted that it was a temporary financial problem and its assets are in excess of its liabilities and most of the assets are blocked up in real estate markets where the recovery is very slow. It was also stated that PFSL is making all efforts to meet its obligations within a reasonable time. In clause 9 of the said reply it stated that in order to ensure that all the depositors receive back the amount of deposits placed by them over a period of time as may be prescribed by the Board. It was prayed that it is necessary to issue directions/guidelines. The said guidelines may be on the line as suggested in Annexure-IV to the said letter which is produced at page 285 of the paper book. In the said letter it is specifically admitted by the Company that the Company had no funds. The proposal given in Annexure-IV which is produced at page 285 is that the amount will be paid within a period of five years from the date of maturity. Clause 8 of the said Annexure provides that all the deposits of Rs. 10 lakhs to Rs. 25 lakhs will be paid within five years from the date of maturity. From the aforesaid facts, it is clear that the company had no funds and it proposed to pay all the deposit holders including Rajiv Enterprise Pvt. Ltd. and Rajiv Petro Chemical Pvt. Ltd. the amount of deposit as per clause 8 of Annexure IV i. e. within a period of five years from the date of maturity meaning thereby that from 8. 7. 1999 the amount will be paid within a period of five years. 4. 14 it appears that even before the said reply was filed, Agreement for Sale was entered into on 8. 4. 1999. It is submitted that the said Agreement for Sale is not genuine for the reason that there was no confirming party in the Agreement for Sale which is produced at page 18 of the paper book. The said agreement only referred to two parties. However, clause 18 of the Deed of Sale at page 37 refers to confirming parties. It is clear that clause 18 in the Deed of Sale dated 7. 5. 1999 at page 37 is similar to clause 11 of the Agreement for Sale. The date of agreement is in handwriting as 8. The said agreement only referred to two parties. However, clause 18 of the Deed of Sale at page 37 refers to confirming parties. It is clear that clause 18 in the Deed of Sale dated 7. 5. 1999 at page 37 is similar to clause 11 of the Agreement for Sale. The date of agreement is in handwriting as 8. 4. 1999 and Notary has certified the Agreement for Sale and Deed of Sale on 7. 5. 1999. It is submitted that Notary has certified the Deed of Sale as true copy before it is lodged for registration with the Sub-Registrar of Assurances. The learned advocate for the Liquidator has made this submission on the basis that the Sub-Registrar after document is lodged for registration will return the document only after registering the same. It appears that Notary has certified the Deed of Sale as true copy without comparing the same with the original Deed of Sale. These facts leads to belief that the Agreement for Sale is not genuine and is not executed on 8. 4. 1999 when particularly in reply filed before the Company Law Board no reference with regard to Agreement for Sale has been made. On the contrary it is stated that the deposit will be repaid within five years from the date of maturity. 4. 15 mr. Roshan Desai, learned advocate for the liquidator, has relied on certain affidavit of R. B. I. which is also referred to in the argument of Shri Amar Bhatt. He has also relied on the report dated 13. 9. 2002 which is produced at pages 299-306 of the paper book. From the said report it was submitted that when the original report was filed winding up order on 20. 3. 2001 was passed by this court in Company Petition filed by R. B. I. under the provisions of the R. B. I. Act. In the said report it was also submitted that another event has also taken place which has changed the complete picture since the court has passed the winding up order on 23. 8. 2002 in Company Petition No. 296 of 1999 filed on 18. 10. 1999 with other Company Petitions ordering that the Company be wound up. In the said report it was also submitted that another event has also taken place which has changed the complete picture since the court has passed the winding up order on 23. 8. 2002 in Company Petition No. 296 of 1999 filed on 18. 10. 1999 with other Company Petitions ordering that the Company be wound up. Company Petition No. 296 of 1999 and other Company Petitions are filed under the provisions of the Companies Act, 1956 and on winding up order being passed, the provisions of the Companies Act are applicable and the said fact has been submitted by the liquidator in his report dated 13. 9. 2002 at pages 303 to 310 of the paper book. On these facts, the liquidator has submitted that the transactions of sale of flat No. 8 in favour of Rajiv Petro Chemicals Pvt. Ltd. , flat No. 16 in favour of Smt. Aarti Rajiv Mehta and Flat No. 17 in favour of Shri Rajiv Vastupal Mehta are void transactions in view of the provisions of the Companies Act, 1956. It has been further stated that RBI vide its letter dated 19. 7. 2002 submitted copy of the last scrutiny Report dated 30. 8. 1999. Para 2 (iii) of the said report which has been mentioned on pages 305-306 of the paper book that outstanding under the Bills Discounting facility was brought to Nil as on 31. 3. 1999 as per the trial balance sheet as on that date. The relevant bills were not made available for scrutiny as it was reported that the same has been returned to concerned parties. 4. 16 he further submitted that from the facts which have emerged from the records, it is clear that the transfer is voluntary transfer and is not transfer under compulsion i. e. in the circumstances which exist and which require the company to sell the said flats to save its own skin. Since it is voluntary transfer and in selling the said flat Nos. 8, 16, 17 and 18 preference is shown to the purchasers namely Rajiv Petro Chemicals Pvt. Ltd. Rajiv Enterprise Pvt. Ltd. (Smt. Aarti Rajiv Mehta) and Rajiv Vastupal Mehta as sole proprietor and as Karta of HUF the transaction is void and not binding on the Liquidator. 4. Since it is voluntary transfer and in selling the said flat Nos. 8, 16, 17 and 18 preference is shown to the purchasers namely Rajiv Petro Chemicals Pvt. Ltd. Rajiv Enterprise Pvt. Ltd. (Smt. Aarti Rajiv Mehta) and Rajiv Vastupal Mehta as sole proprietor and as Karta of HUF the transaction is void and not binding on the Liquidator. 4. 17 in view of the same, it clearly shows that there is fraudulent preference shown to the said three depositors amongst other depositors and these flats are sold without adequate consideration. In view of the same, transaction is void under Section 531a of the Companies Act, 1956. 4. 18 the learned counsel for the Official Liquidator further submitted that the aforesaid facts clearly establish beyond doubt that the transaction in question is not done in good faith and not for valuable consideration and as such is void against the liquidator. 4. 19 in support of the aforesaid contention, the learned counsel for the R. B. I. has relied on the decision of this court (Coram: D. A. Desai, J (as he was then)) In Re MANECKCHOWK AND AHMEDABAD MANUFACTURING CO. LTD. reported in (1970) 40 Company Cases 819 in which on pages 846-848 the court has observed as under: "it was next contended that the deed of mortgage executed by the company in favour of the Central Board of Trustees for the Provident Fund on May 21, 1968, would be a fraudulent preference given to the said trustees. It appears that Rs. 15,05,418. 37 were due and payable by the company in respect of the provident fund contribution and Rs. 47,693. 80 for administration charges to the Regional Provident Fund Commissioner. It appears that the company had committed default in payment of this amount and the properties of the company were attached. Subsequently, on May 21, 1968, the company executed a mortgage deed in favour of the Central Board of Trustees. It was urged that a petition for winding up the company was pending when this mortgage deed was executed by the company and that, in the absence of the mortgage, the Central Board of Trustees for the Provident Fund would be unsecured creditors and they are given fraudulent preference by executing the mortgage deed in their favour and that would be a fraudulent preference. It is undoubtedly true that the mortgage deed in favour of the Central Board of Trustees was executed on May 21, 1968, when the petition for winding up the company was pending in the Court. It is, at any rate, executed within six months prior to the institution of the petition which is now pending and in which prayer for winding up the company is made. If that petition succeeds, investigation will have to be made whether the mortgage in favour of the Central Board of Trustees would amount to a fraudulent preference within the meaning of Section 531 of the Companies Act. Mr. R. M. Gandhi, learned advocate who appeared for the Regional Provident Fund Commissioner, urged that the properties of the company were already attached by the revenue authorities at the instance of the Central Board of Trustees right from the year 1961-62 and the Central Board of Trustees gave further time to pay up the amount on the company executing the mortgage deed in favour of the Central Board of Trustees. Accordingly, the company executed the mortgage deed. Mr. Gandhi, however, urged that, even apart from this, the circumstances in which the mortgage deed came to be executed would themselves indicate that it would not be avoided as a fraudulent preference. Mr. R. M. Gandhi referred to the arguments of Mr. D. C. Gandhi in which he has stated that the directors of the company were threatened with prosecution and under the threat of prosecution they executed the mortgage deed. Mr. R. M. Gandhi, however, urged that, assuming that this submission is factually correct, yet, execution of the mortgage in favour of the Central Board of Trustees would not be a fraudulent preference. . . . . . . . . . . . . . . . . . . . . . . In order to find out whether a transfer of property would amount to fraudulent preference, the question should be addressed whether it was done to prefer one of the creditors to the exclusion of others. If it was done not with a view to prefer one of the creditors but to save ones own skin, say a threat of prosecution looking large or to avoid prosecution, certainly the transfer could not in such circumstances be fraudulent preference. This decision has been followed in In Re M. I. G. Trust 3 Comp. Cas. If it was done not with a view to prefer one of the creditors but to save ones own skin, say a threat of prosecution looking large or to avoid prosecution, certainly the transfer could not in such circumstances be fraudulent preference. This decision has been followed in In Re M. I. G. Trust 3 Comp. Cas. 345 (C. A. ). Reference may also be made to In re F. L. E. Holdings Ltd. (1968) 38 Comp. Cas. 214 (Chd. D. ). In that case a passage from Buckley on the Companies Acts, 13th Edition (1957), is quoted which shows that as preference implies selection and selection implies freedom of choice, a payment must in order to constitute a preference be voluntarily made, and that a payment made under pressure, e. g. , in the shape of proceedings actual or threatened by the creditor concerned, or fear of such proceedings, is not for this purpose a voluntary payment. Viewed from this angle the transfer by way of mortgage by directors in favour of the Central Board of Trustees would not prima facie appear to be fraudulent preference as it appears that it was done under the threat of imminent prosecution. " 4. 20 he has also further relied on the decision in the case of MONARK ENTERPRISES VS. KISHAN TULPULE AND OTHERS reported in 74 Company Cases 89 in which on pages 108-109 the Court has observed thus: "the prospect of further legal proceedings by Monark Enterprises against the company to recover the decretal dues was too obvious. Reasonable inferences can be easily drawn if required. The court must endeavour to take a view consistent with common sense and the ordinary course of human conduct. It is obvious to me that the impugned transaction dated February 18, 1987, was entered into by and between the company with Monark Enterprises after hard bargaining not with a view to preferring one creditor to another creditor but in view of the lawful pressure exercised by Monark Enterprises on the company. Learned counsel for Monark Enterprises filed a compilation of judgements and passages from various text books on the subject. I do not propose to deal with all the cases included in the compilation though I have considered all the cases cited by learned counsel for all the parties. Learned counsel for Monark Enterprises filed a compilation of judgements and passages from various text books on the subject. I do not propose to deal with all the cases included in the compilation though I have considered all the cases cited by learned counsel for all the parties. I propose to refer to only one case to justify the approach of the court to the problem under consideration. In Maneckchowk and Ahmedabad Mfg. Co. Ltd. , In re (1970) 40 Comp Cas 819, 847, D. A. Desai, J (as His Lordship then was) of the High Court of Gujarat summed up the legal principle in such a situation in his own inimitable style, after referring to the judgement of the House of Lords in Sharp, Official Liquidator V. Jackson (1899) AC 419. The High Court of Gujarat observed that, if the transaction was done not with a view to prefer one of the creditors but to save ones own skin, the transfer could not, in such circumstances, be treated as a fraudulent preference. After referring to a passage from Buckley on the Companies Acts, 13th edition (1957), the learned judge observed that the expression "preference" implied selection and selection implied freedom of choice. The learned judge observed that a payment, in order to constitute a preference, must be voluntarily made, and that a payment made under pressure, e. g. in the context of proceedings, actual or threatened, by the creditor concerned, or fear of such proceedings, could not be considered as a fraudulent preference under the company law. In the instant case, the facts are quite eloquent. Learned counsel for the official liquidator and the petitioners have submitted that Monark Enterprises had not issued any notice to the company to the effect that it would execute the decree in view of the default committed. No such notice need be actually issued. Since Monark Enterprises were receiving threatening letters from the Bank of Maharashtra, Monark Enterprises must have threatened the company to pay its dues as the primary liability in respect of unpaid hundis executed by the company for the price of goods sold and delivered by Monark Enterprises to the company was of the company and Monark Enterprises were facing threats from the Bank of Maharashtra mainly because of the company having defaulted in respect of its obligation to discharge its liability to pay the amount in question. " 4. " 4. 21 he has also referred to Halsbury, 4th Edition, Volume 3, Bankruptcy and Insolvency, particularly clause (iv) Avoidance of Fraudulent Preference on page 496. Paragraph 908 provides object of avoidance and paragraph 909 provides meaning of "fraudulent preference". Paragraph 909 "fraudulent preference" reads as under: 4. 21a "every conveyance or transfer of property or charge thereon made, every payment made, every obligation incurred, and every judicial proceeding affecting his property taken or suffered, by any person unable to pay his debts as they become due from his own money, in favour of any creditor or of any person in trust for any creditor, is deemed to be fraudulent and void as against his trustee in bankruptcy, provided four conditions be fulfilled. These conditions are: (1) the debtor must, at the date of the transaction, be unable to pay from his own money his debts as they fall due; (2) the transaction must be in favour of a creditor, or of some person in trust for a creditor; (3) the debtor must have acted with the view of giving that creditor, or a surety or guarantor for the debt due to that creditor, a preference over his other creditors, (4) the debtor must be adjudged bankrupt on a bankruptcy petition presented within six calendar months after the date of the transaction sought to be impeached. The first and fourth of these conditions have an important connection with one another, for their combined effect is to render it unnecessary to inquire whether the debtor acted in contemplation of bankruptcy; this question is now irrelevant, at any rate so far as its determination in the affirmative would be a condition precedent to the avoidance of a transaction as a fraudulent preference; the test which these two conditions create is sufficient. Although the term "fraudulent" preference is currently used, the term "fraudulent" is used in the section, fraud in the strict common law sense need never be proved, although it may often be present. " 4. 22 he has also referred to paragraph No. 910 of above Volume 3 which provides debtor, creditor and surety. In order to avoid a transaction as a fraudulent preference, it is, as a general rule, essential that the relation of debtor and creditor should exist between the parties to the transaction. Paragraph 911 provides act done must be in favour of creditor or surety. In order to avoid a transaction as a fraudulent preference, it is, as a general rule, essential that the relation of debtor and creditor should exist between the parties to the transaction. Paragraph 911 provides act done must be in favour of creditor or surety. Paragraph No. 913 provides transaction with view of preferring creditor. 4. 23 the learned counsel for the Official Liquidator has submitted that unless transaction of company property amounts to a fraudulent preference under the Insolvency Law and it is entered into within a period of six months prior to the commencement of winding up, the transaction cannot be treated as void under Section 531 of the Companies Act, 1956. It is held that law does not presume that the transaction was fraudulent transaction. The question is as to whether the company entered into the transaction to save its own skin for its own benefit in the circumstances prevailing or whether the dominant motive of the company in effecting the transaction was to favour one creditor to another. After relying on the said judgement he submitted that the facts of the present case clearly establish that though the creditors and the depositors have initiated action and some depositors have filed petition before the Company Law Board, instead of making payment to creditors, the amount is paid to the purchasers by selling the flats that too at the price much lower than cost of acquisition and also before the date of maturity of the deposits. In two cases no consideration has been received. The said fact clearly establishes the situation that the transaction amounts to fraudulent preference and it should be declared as invalid void and not binding on the liquidator and creditors of the company. He has further relied on the decisions of the Kerala High Court in the case of K. N. NARAYANA IYER Vs. C. I. T. reported in (1993) 78 Company Cases 156 (Ker), BANK OF MAHARASHTRA VS. OFFICIAL LIQUIDATOR reported in (1999) 96 Company Cases 234, 236. 4. 26 it was further submitted that the Liquidator has proved beyond reasonable doubt that the transaction is a voluntary transaction and in effecting the transaction fraudulent preference has been given to the purchasers against all other creditors. Therefore, the transaction is void. ( 5 ) CONTENTIONS OF MR. AMAR BHATT ON BEHALF OF THE RESERVE BANK OF INDIA:5. 4. 26 it was further submitted that the Liquidator has proved beyond reasonable doubt that the transaction is a voluntary transaction and in effecting the transaction fraudulent preference has been given to the purchasers against all other creditors. Therefore, the transaction is void. ( 5 ) CONTENTIONS OF MR. AMAR BHATT ON BEHALF OF THE RESERVE BANK OF INDIA:5. 1 for properly appreciating the aforesaid contention we will have to consider the contentions of Reserve Ban of India who has been shown as respondent in the report of the Official Liquidator and who has originally filed winding up petition before this court. As indicated earlier, R. B. I. had also filed detailed affidavit. From the contentions which were raised by the R. B. I. , the following facts emerge: i) Reserve Bank of India filed Company Petition No. 147 of 2000 against PFSL for its winding up under Section 45 MC of the Reserve Bank of India Act, 1934. The said petition was filed on 10. 5. 2000 ii) Orders in connection with winding up have been passed on 20. 10. 2000, 20. 3. 2001 and 20. 7. 2001 which I have already narrated earlier and therefore I do not repeat the same facts at this stage. 5. 2 the learned counsel Mr. Amar Bhatt appearing on behalf of the R. B. I. on the basis of the aforesaid facts has submitted that over and above R. B. I. , other creditors had also filed winding up petitions under the provisions of the Companies Act against the Company (PFSL ). The first winding up petition was filed on 21. 10. 1999 being Company Petition No. 296 of 1999 filed by one Unnati Investments Pvt. Ltd. The details of winding up petitions have been given in the affidavit dated 7. 2. 2002 of A. K. Khound, General Manager of Non-Banking Supervision of R. B. I. which is on page 180 of the paper book. 5. 3 the learned counsel further submitted that transfer of flats in this case by PFSL to Rajiv Petro Chemicals Pvt. Ltd. , Aarti Rajiv Mehta and Rajiv Vastupal of flats 8, 16 and 17 amounts to fraudulent preference in favour of Rajiv Mehta and others and hence covered by Section 531 of the Companies Act which will be clear from the following facts: (i) The first petition against PFSL is filed on 21. 10. 10. 1999 being Company Petition No. 296 of 1999. The transactions have taken place on 7. 5. 1999 i. e. within the period of six months from the date of presentation of the first petition. He has also relied on Section 441 (2) of the Companies Act which provides that winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for winding up. (ii) The flats are transferred by the company against the deposits/bills discounting facility given by Rajiv Mehta and others to the Company. The due dates / maturity dates for the said deposits / bills rediscounting facilities were 8. 7. 1999 and 24. 5. 1999. Thus the transfer of flats on 7. 5. 1999 against the deposits / bills rediscounting facilities is made prior to the due dates / maturity dates. 5. 4 the above details have been given in the affidavit of one P. Radhakrishnan, Deputy General Manager of Department of Non-Banking Supervision of R. B. I. which is on page no. 265. 5. 5 the learned counsel for the R. B. I. therefore submitted that it is clear that the transfers of flats in discharge of debt have taken place prior to the due date (s)/maturity dates. He submitted that it is an admitted fact that the Company was facing financial difficulty. As per the reply dated 4. 5. 1999 to the Company Law Board, the Company proposed a scheme of repayment of dues of various depositors. In the said reply it was admitted by the company that it is unable to pay the depositors. However, on 7. 5. 1999 the company transferred flats in favour of Rajiv Mehta and others in discharge of their deposits/bills rediscounting facilities much prior to the maturity dates. This conduct of the company is nothing but a fraudulent preference shown in favour of a few selected depositors. The company did not make payments of the several depositors whose payments became due on or about 7. 5. 1999. However, the company went out of the way and transferred the flats in discharge of the debts of only four depositors namely Rajiv Mehta and others even though their debts had not become due. He submitted that in the affidavit of Rajiv V. Mehta, it is clearly admitted that the due dates of the deposits were 8. 7. 1999 and 24. He submitted that in the affidavit of Rajiv V. Mehta, it is clearly admitted that the due dates of the deposits were 8. 7. 1999 and 24. 5. 1999 and that the parties renegotiated the deal and the company agreed to transfer its properties on 7. 5. 1999 meaning thereby that the transfer of flats from the company on 7. 5. 1999 was a voluntary transfer. Thus the company showed fraudulent preference in repaying the deposits of Rajiv Mehta and others by transferring flats. The transactions are, therefore, hit by provisions of Section 531 of the Companies Act. 5. 6 in support of the aforesaid contention, the learned counsel for the R. B. I. relied on the following statutory provisions, namely, Section 441, 531 and 531a of the Companies Act. After relying on the provisions of the Companies Act, the learned counsel for the R. B. I. has relied on the following decisions: 5. 7 gandabhai GULABCHAND VS. BALKRISHNA VAMAN reported in AIR 1930 Bombay 217 in which on page 218 the Court held as under: "the words "with a view of giving a creditor a preference over other creditors" have formed the subject of numerous decisions, the corresponding sections in most of the Bankruptcy Acts in different parts of the Empire being identical. It suffices to refer to the decision of the House of Lords in SHARP V. JACKSON (1899) A. C. 419 in appeal from the case in NEW PRANCE GARRARDs TRUSTEE VS. HUNTING (1897) 2 Q. B. 19 referred to above, and the decision of their Lordships of the Privy Council in SIME, DARBY and CO. V. OFFICIAL ASSIGNEE A. I. R. 1928 P. C. 77 followed in SHOLAPUR SPINNING CO. LTD. V. PANDHARINATH A. I. R. 1928 Bom. 341. It was observed in the last case (p. 291) (of 30 B. L. R.): "the question to be determined is one of fact; was the dominant motive actuating the debtor in making the transfer, a desire to prefer the particular creditor or was it of a different character? As the solution of this question involves an inquiry into the state of a mans mind, and as it must very seldom be the case that there is direct evidence on the point, the decision generally depends on the inference properly to be drawn from the circumstances attending the transfer as established by the evidence. As the solution of this question involves an inquiry into the state of a mans mind, and as it must very seldom be the case that there is direct evidence on the point, the decision generally depends on the inference properly to be drawn from the circumstances attending the transfer as established by the evidence. " The court on page 219 of the said judgement has further held as under: "it is true that because the ultimate result of a payment made was preference, it does not follow that the view in the sense of dominant motive at the time of payment was preference. As the case referred to above show the view on the part of insolvent implies that the payment is firstly voluntary, and secondly, that it is deliberate preference of one creditor over the others. In order that the payment may be voluntary on the part of the insolvent, it is necessary that there should be neither outside pressure nor even inward mental apprehension of such pressure. " 5. 8 gopal RAO Vs. HIRALAL AND ANOTHER reported in 1925 Nagpur 225 wherein on page 226 it is held thus: "both the Courts below hold that the inclusion of the amount of lease money not due was indicative of the mala fides of the transaction. Not only this but I would add that the repayment of the debt not yet due by a person in insolvent circumstances amounts to undue preference. In re Official Receiver Ex parte (1902) 2 K B 58 quoted with approval by Mittra, A. J. C. , in Daolat Vs. Pandurang M. A. No. 5 B of 1919 where Wright, J. , says "i cannot help thinking that if a creditor of a debtor takes the whole, or substantially the whole, of the property of his debtor in payment of a past debt, and knowing that there are other creditors, he cannot be said to be acting in good faith," is an authority for this view. In view of this proof of the transaction of lease which gave rise to the liability for rent, the position of the appellant as a creditor was not disputed before the appellate Court. In view of this proof of the transaction of lease which gave rise to the liability for rent, the position of the appellant as a creditor was not disputed before the appellate Court. The Court of appeal therefore treating the case even from that stand-point, took the view that it was also a case of fraudulent preference under S. 37 of the Act and that the transfer was rightly annulled by the first Court. " 5. 9 appana VEERARAGHAVAMMA VS. CHANDALADA PADMARAJI reported in AIR 1954 Madras page 93. 5. 10 on the basis of the aforesaid authorities the learned counsel for R. B. I. submitted that for fraudulent preference the dominant motive of the company must be to prefer a creditor which is clearly established on facts. The transfer of property or payment to that creditor should be voluntary transfer and not under some pressure or threat. That is also clear from the affidavit of Rajiv Vastupal Mehta at page 187 of the paper book. 5. 11 from the documents and the conduct of Rajiv Mehta and the company, it is clear that the case is also covered by Section 531a and the transfer is not a bona fide transfer. In support of the same, the learned counsel for the R. B. I. has referred to affidavit of P. Radhakrishnan, Deputy General Manager, R. B. I. , dated 28. 8. 2002 produced at page 263 particularly pages 267-270, the details of which have been referred to earlier. He further submitted that there are several discrepancies in the documents produced with the OLR (Official Liquidators Report) as well as with the affidavit of Rajiv V. Mehta. He submitted that the letter from the company to Rajiv Enterprises Pvt. Ltd. dated 11. 1. 1999 and the letter from the Company to Rajiv Petro Chemicals Ltd. dated 11. 1. 1999 refer to inter corporate loan whereas in the affidavit of Rajiv V. Mehta it is described as deposit although the document produced with the OLR shows that the printed words Fixed Deposit Receipt have been cancelled and the words loan receipt are typed. In the banakhat between Rajiv Enterprises Pvt. Ltd. and the company alleged to have been executed on 8. 4. 1999 there is a reference to the payment of Rs. 15 lakhs as deposit by "confirming party". However, there is no confirming party in the banakhat dated 8. 4. 1999. In the banakhat between Rajiv Enterprises Pvt. Ltd. and the company alleged to have been executed on 8. 4. 1999 there is a reference to the payment of Rs. 15 lakhs as deposit by "confirming party". However, there is no confirming party in the banakhat dated 8. 4. 1999. He has further stated that Rajiv Enterprises Pvt. Ltd. was the confirming party only in the Sale Deed dated 7. 5. 1999 between Aarti Mehta and the company. Again the witnesses in the banakhat and the witnesses in the Sale Deed are same and the banakhat and the Sale Deed are notarized on the same day i. e. on 7. 5. 1999. Clause 14 of the Sale Deed in question mentions that the sale is between the member and the member of the association which does not appear to be correct statement. Similar discrepancies are also there in the other banakhats and sale deeds which are in question. Along with the OLR a certificate from the HDFC dated March, 10, 1999 is produced stating inter alia that the HDFC is releasing the flats in question from mortgage and that the company has repaid the dues of the HDFC in full. However, the register of charges and form No. 17 under the Companies Act, 1956, produced with OLR shows that the charge of the HDFC was satisfied in full on 7. 5. 1999. The depositors / purchasers have claimed to have purchased the flats after obtaining the title clearance certificate. The so-called title certificate dated April 17, 1999 given by Shri B. R. Patel, advocate, is produced with the O. L. R. (See: page 57 of the paper book) (search report on title: page 59) 5. 12 apart from the fact that the said title certificate is addressed to the President / Secretary, Sashya Association it does not show that the titles of the company in respect of flats were clear on 17. 4. 1999. In any case as per form No. 17 referred to above the charge of the HDFC appears to have been satisfied only on 7. 5. 1999. Therefore, it cannot be said that on 17. 4. 1999 the title of the company to the said flats was clear and without any charges. 5. 4. 1999. In any case as per form No. 17 referred to above the charge of the HDFC appears to have been satisfied only on 7. 5. 1999. Therefore, it cannot be said that on 17. 4. 1999 the title of the company to the said flats was clear and without any charges. 5. 13 in view of the aforesaid submissions the learned counsel for R. B. I. stated that the contention of Rajiv Mehta and others that they obtained title clearance certificate before purchasing the flats in question is not factually correct. 5. 14 taking the aforesaid grounds into consideration, the transfer of flats by the company in favour of Rajiv Mehta and others are required to be declared as covered by Section 531 and 531a of the Companies Act, 1956 and hence null and void. 5. 15 learned counsel for the R. B. I. has further submitted that along with the affidavit of Rajiv V. Mehta valuation reports have been produced to show that the consideration involved in the transactions was adequate. However, the said valuation reports are dated 16. 2. 202 i. e. after filing of the OLR. Again the person giving the valuation reports has not given any comparative sale instances and therefore the said valuation reports cannot be relied upon. At any rate from the totality of the documents produced in this OLR it is clear that the transactions cannot be called good faith transactions nor can they be called bona fide transactions. In fact, in these transactions the seller has paid the amounts to Rajiv Mehta and others over and above selling the flats which is not usual in the transactions of the transfer of properties. Apart from the difference being paid by the company to the purchasers / depositors for adjusting them towards the dues of the depositors the company has also transferred maintenance deposit of Rs. 50,000. 00 for each flat (total Rs. 2 lakhs) by requesting Sashya Association, a non-Trading Corporation who developed the said flats to transfer the said deposits in the name of the purchasers. Thus, Rajiv Mehta and others not only got back the principal amount of their dues in preference to the other depositors but they also got additional amount by way of maintenance deposit towards interest. The transactions, thus, are covered by Section 531a of the Companies Act. SUBMISSIONS OF LEARNED SENIOR ADVOCATE MR. Thus, Rajiv Mehta and others not only got back the principal amount of their dues in preference to the other depositors but they also got additional amount by way of maintenance deposit towards interest. The transactions, thus, are covered by Section 531a of the Companies Act. SUBMISSIONS OF LEARNED SENIOR ADVOCATE MR. S. N. SOPARKAR ( 6 ) SHRI S. N. Soparkar, learned senior advocate along with Mrs. Swati S. Soparkar, appearing on behalf of purchasers Rajiv Mehta and others, has initially relied on the report of the Official Liquidator. He has also filed affidavits of Rajiv Vastupal Mehta dated 14. 2. 2002 and 27. 9. 2002. He ha also filed written submissions. He has also referred to documents which I have referred to earlier and from the documents, he has made the following submissions:6. 1 he has submitted that M/s. Rajiv Petrochemicals Pvt. Ltd. (RPPL for short) and M/s. Rajiv Enterprise Pvt. Ltd. (REPL for short) had placed Inter Corporate Deposits (ICD) with the Company (in liquidation) for amounts of Rs. 10 lakhs on 8. 1. 1999 and Rs. 15 lakhs on 8. 1. 1999 respectively and M/s. Rajiv Enterprise had deposited the amount of Rs. 15 lakhs for Bill Re-Discounting on 25. 11. 1998 for a period of 6 months. The due date of the above said deposits was 8. 7. 1999, 8. 7. 1999 and 24. 5. 1999. However, the parties renegotiated the deal and it was agreed by the Company (in liquidation) to sell its properties and therefore sold three flats to three group companies for a consideration agreed between them and Sale Deeds were executed on 7. 5. 1999. 6. 2 the learned counsel has submitted that the company had sold flat No. 8 to RPPL for Rs. 13 lakhs against its due of Rs. 10 lakhs. It is stated that RPPL had issued a further cheque of Rs. 3 lakhs on 6. 5. 1999 against the final consideration of flat No. 8 which is clear from the Sale Deed which is annexed at Annexure-A to the affidavit dated 14. 2. 2002. 6. 3 the learned counsel further submitted that the company had sold flat No. 16 for Rs. 12. 28 lakhs to REPL against its dues of Rs. 15 lakhs and the difference of Rs. 2. 72 lakhs was received by cheque from the company in liquidation. 2. 2002. 6. 3 the learned counsel further submitted that the company had sold flat No. 16 for Rs. 12. 28 lakhs to REPL against its dues of Rs. 15 lakhs and the difference of Rs. 2. 72 lakhs was received by cheque from the company in liquidation. However, the said agreement was arrived at between the company in liquidation and Mrs. Aarti R. Mehta, the director of REPL, where REPL stood as a confirming party. It is submitted that the said amount of Rs. 12. 28 lakhs which was due from Mrs. Aarti R. Mehta had been given to REPL vide cheque No. 551865 dated 7. 5. 1999. It is therefore submitted that Mrs. Aarti R. Mehta has purchased the said flat for full consideration and is the owner of the said flat. 6. 4 the learned counsel submitted that the Company (in liquidation) had sold flat No. 17 for Rs. 15 lakhs to Rajiv Enterprise. Against its dues of Rs. 15 lakhs, Rs. 14. 43 lakhs payable under Fixed Deposit was adjusted and for the difference of Rs. 57,000. 00 the Company (in liquidation) issued a cheque of Rs. 14,000. 00 on 6. 5. 1999 and balance of Rs. 43,000. 00 was adjusted against interest. 6. 5 the learned counsel has further submitted that all the three flats were sold at the market value and the purchasers have paid full consideration. 6. 6 the learned counsel appearing for the purchasers has submitted that the said properties were transferred vide Sale Deed dated 7. 5. 1999 and the first winding up petition of the company (in liquidation) was presented on 21. 10. 1999. The only fact that the transfer was made within one year before the presentation of the winding up petition is not the only criterion for proving the violation of Section 531-A of the Companies Act. The other conditions to be seen are whether the transfer was made in ordinary course of its business and whether the consideration is valuable. It is submitted that the properties were transferred to the purchasers in ordinary course of business and the consideration arrived is based on market value of the properties and hence is reasonable. The other conditions to be seen are whether the transfer was made in ordinary course of its business and whether the consideration is valuable. It is submitted that the properties were transferred to the purchasers in ordinary course of business and the consideration arrived is based on market value of the properties and hence is reasonable. It is further submitted that the transaction is not covered by Section 531 and/or 531a of the Companies Act and hence there is no violation of Sections 531 and / or 531-A of the Companies Act and the transfer is not void. 6. 7 it is submitted that the liquidator has stated in his report dated 25. 10. 2001 that all formalities for sale have been duly complied with by owners of the flats and it is clear that flats do not belong to company (in liquidation ). It is further submitted that the liquidator has by his statement meant that the sale is genuine and bona fide. It is submitted that it is not open to the liquidator to take up completely contrary position at this stage. 6. 8 section 531 of the Companies Act states that any transfer of property done by or against the Company within six months before the commencement of its winding up be deemed to be a fraudulent preference and be invalid accordingly. In the present case Sale Deed is executed on 7. 5. 1999. Six months prior to that will be 7. 11. 1998. It is respectfully submitted that there was no petition pending on 7. 11. 1998. Hence the transaction is not hit by Section 531. 6. 9 it is submitted that no other creditors came forward to take the flats of the company (in liquidation ). It is stated that therefore the flats were offered to the purchasers against the dues of the purchasers. The purchasers were only interested in purchasing the flats amongst all the creditors and hence have entered into the transaction. It is, therefore, stated that there is no fraudulent preference and violation of Section 531 of the Act. 6. 10 the learned counsel for the purchasers has relied on the judgement of the Honble Supreme Court in the case of N. SUBRAMANIA IYER VS. OFFICIAL RECEIVER reported in AIR 1958 SC 1 . It is, therefore, stated that there is no fraudulent preference and violation of Section 531 of the Act. 6. 10 the learned counsel for the purchasers has relied on the judgement of the Honble Supreme Court in the case of N. SUBRAMANIA IYER VS. OFFICIAL RECEIVER reported in AIR 1958 SC 1 . In the said case the Honble Supreme Court has observed in paras 4 on page 4 thus: "a number of points were raised on behalf of the appellant and at the threshold of the arguments it was contended, and in our opinion rightly, that the Courts below had erred in throwing the burden on the transferee of proving affirmatively that the transaction impeached namely, the usufructuary mortgage bond dated 18th August, 1924, was supported by good faith and valuable consideration". At para 7 on page 6 the Honble Supreme Court further observed as under: "the contrary proposition has not been pressed upon us and we need not therefore pronounce upon that. If the burden lay on the Receiver, in our opinion, his application for annulment can be allowed on proof either that there was no consideration for the transaction or that the consideration was so inadequate as to raise the presumption of want of good faith". 6. 11 the learned counsel for the purchasers after relying on the decision of the Honble Supreme Court in the case of N. SUBRAMANIA IYER (supra) has submitted that the burden to prove that transaction is mala fide lies on the persons who impeach the transaction. The initial burden of proving that the transaction impeached had not been made in good faith and for valuable consideration lies on the party seeking to set aside the transaction. If the transaction impeached was a real and not a fictitious one, the receiver could not be said to have brought the case within Section unless he proved that the transferee knew that the transferor was insolvent at the time the transfer was made, even though the transfer was of the entire assets of the transferor. If the transaction impeached was a real and not a fictitious one, the receiver could not be said to have brought the case within Section unless he proved that the transferee knew that the transferor was insolvent at the time the transfer was made, even though the transfer was of the entire assets of the transferor. The receiver may also succeed on showing that though there was a valuable consideration for the transaction impeached, there was want of good faith in the sense that the transferee knowing all the circumstances of the transferor who had since been adjudged as insolvent entered into the transaction with a view to screening the assets of the insolvent from the receiver in whom the insolvents property vests for the benefit of the creditors. However, in the present case it is nobodys case that there is want of good faith. 6. 12 the learned counsel has relied on the above referred 40 Company Cases 819 in the case of Manekchowk and Ahmedabad Manufacturing Co. Ltd. It is submitted that in the said case it is held that in order to avoid a transfer of property in favour of a creditor on the ground of its being a fraudulent preference, it must be shown that the debtor, with intent to prefer the creditor, has transferred the property, and it must be a free and volitional act of the party. It refers to the state of mind of the debtor and it must be shown that the debtor intended to prefer the creditor or acted in a manner solely with a view to prefer the creditor to the exclusion of others. Therefore, if it could be shown that the debtor acted under an apprehension that he would be prosecuted or under a threat of prosecution, the transfer of property by him could not be said to be a free volitional act of the debtor disclosing an intention to prefer the creditor. In order to find out whether a transfer of property would amount to fraudulent preference, the question should be addressed whether it was done to prefer one of the creditors to the exclusion of others. In order to find out whether a transfer of property would amount to fraudulent preference, the question should be addressed whether it was done to prefer one of the creditors to the exclusion of others. If it was done not with a view to prefer one of the creditors but to save ones own skin, say a threat of prosecution looming large or to avoid prosecution, certainly the transfer could not in such circumstances be fraudulent preference. It is held that the intention of the company in entering into the said transaction was to salvage the situation as far as possible and not to prefer one creditor over another. Therefore, the transaction was not vitiated by Section 531 of the Companies Act. 6. 13 he has further relied on the above referred decision in the case of MONARK ENTERPRISES VS. KISHAN TULPULE (BOM.) reported in 74 Company Cases 89 and submitted that if the court comes to the conclusion that such transfer, though made within a period of one year before presentation of the petition, was made within a period of one year before presentation of the petition, was made either in the ordinary course of business or in good faith and for valuable consideration, such transfer would not be annulled. The burden of proving that the impugned transaction was not entered into in the ordinary course of business or in good faith and for valuable consideration would be on the Official Liquidator or the creditors impugning the transaction. 6. 14 he has further referred to the decision in the case of SUNDER LAL JAIN VS. SANDEEP PAPER MILLS P. LTD. AND OTHERS (Pandh) reported in 60 Company Cases 77 and submitted that in a case where there was valuable consideration, the liquidator may show want of good faith in the sense that the transferee, knowing all the circumstances of the transferor company which is since wound up, entered into the transaction with a view to shield the asset against the claim of the creditors. Unless it is found that the transferee was wanting in bona fide in respect of the transaction in question, he cannot be affected by the dishonest course of conduct of the transferor company. 6. Unless it is found that the transferee was wanting in bona fide in respect of the transaction in question, he cannot be affected by the dishonest course of conduct of the transferor company. 6. 15 it was further observed that it was not necessary for upholding the transaction that the transferor who had been subsequently adjudged as an insolvent should have been honest and straightforward in the matter of transaction impeached. Both the transferor and transferee must have common intention to defraud the creditors. The test is that the purchasers have acted honestly. A thing shall be done in good faith where it is in fact done honestly, whether it is done negligently or not. 6. 16 he has further submitted that winding up petition is proceeding in rem and not in personam. Once the winding up order is passed in one matter, it operates against the world at large. It is submitted that on 20. 10. 2001 the winding up order was passed in the company petition No. 147 of 2000 preferred by R. B. I. Hence there is no need to pass winding up order once again in any other company petition. Winding up order passed again in any other company petition is a nullity and void in eyes of law. Therefore, the second winding up order dated 23. 8. 2002 passed in Company Petition No. 296 of 1999 is required to be ignored and for the purpose of Section 441 only the first order is required to be taken into consideration. ( 7 ) CONTENTIONS OF MR. ASHWIN LALBHAI SHAH ON BEHALF OF THE INTERVENER:7. 1. MR. Ashwin Lalbhai Shah, learned advocate, appearing for some of the interveners has stated that he is supporting Mr. Roshan Desai, learned advocate for the Official Liquidator and Mr. Amar Bhatt, learned advocate for R. B. I. However, for additional submissions, from the Companies Act he has made the following submissions: 7. 2 he has submitted that the preferred creditor has relied upon the following documents for the purpose of showing that the transactions in question were not hit by the provisions of Sections 531 or 531a of the Companies Act, 1956. 2 he has submitted that the preferred creditor has relied upon the following documents for the purpose of showing that the transactions in question were not hit by the provisions of Sections 531 or 531a of the Companies Act, 1956. a) Banakhats for the sale of various properties to the above parties; b) Sale deeds of the above properties; c) Income-tax clearance certificate; d) No due certificate issued by HDFC; e) Form filed with the Registrar of Companies regarding the satisfaction of charge created in favour of HDFC; f) title clearance certificates issued by the advocate; g) valuation reports of the above properties; h) letters issued to the company for the transfer of maintenance deposits in favour of the preferred creditor. 7. 3 the learned counsel has submitted that the above documents do not support the preferred creditor but on the contrary, go against him as stated hereinafter. 7. 4 as regards banakhats, no party is shown to be confirming party as shown in the Sale Deeds. All the said banakhats are dated 8. 4. 1999 and the total consideration in all the said banakhats is Rs. 40 lakhs and that too in favour of the same party. 7. 5 as regards Sale Deeds, the said Sale Deeds are dated 7. 5. 1999. The sale deed of flat No. 16 has been in favour of Mrs. Aarti Rajiv Mehta, the wife of Shri Rajiv V. Mehta. The sale deed has been also executed by M/s. Rajiv Enterprise Pvt. Ltd. as the confirming party. Similarly, the sale deed of flat No. 17 has been in favour of Shri Rajiv V. Mehta, the sole proprietor of M/s. Rajiv Enterprise. The said sale deed has been executed by the said M/s. Rajiv Enterprises through its said sole proprietor as the confirming party. The sale deed of flat No. 8 has been executed in favour of M/s. Rajiv Petrochemicals Pvt. Ltd. belonging to the preferred creditor. Thus, all the said flats have been sold to the same preferred creditor. 7. 6 no monetary consideration has passed from the purchasing parties to the company but only the adjustment of the amounts alleged to be due by the company to the various parties is made and on the contrary, the balance has been actually paid by the company to the concerned parties as is stated in the respective sale deeds. 7. 7. 6 no monetary consideration has passed from the purchasing parties to the company but only the adjustment of the amounts alleged to be due by the company to the various parties is made and on the contrary, the balance has been actually paid by the company to the concerned parties as is stated in the respective sale deeds. 7. 7 the Company has been paid much less consideration of about Rs. 59 lacs for the total of four flats being flat Nos. 8, 16, 17 and 18 against the total value of about Rs. 84 lakhs, thus Rajiv Mehta and others gaining a benefit of about Rs. 25 lakhs as will be evident from what is stated hereinunder: a) In the application for the income-tax clearance certificate for flat No. 8, the cost of acquisition of flat No. 8 is shown to be Rs. 16. 50 lakhs while the said flat is sold for Rs. 13 lakhs. The said application is dated 22. 4. 1999 and the date of acquisition is shown to be 1. 8. 1997. The banakhat has been dated 8. 4. 1999. Thus, within 1 1/2 years of the date of acquisition, the said flat has been agreed to be sold at a price of Rs. 13 lakhs being less than its acquisition price by Rs. 3. 5 lakhs. The argument of the preferred creditor that the sale price is less than the acquisition price because of the alleged recession in the real estate market is not tenable firstly because there is nothing to show that there was recession in the said market and no judicial notice of any such alleged fact can be taken by the Court and secondly because there could not be recession of this extent of almost 25% within a period of 1 1/2 years. Moreover, there is nothing to show the recession to that extent. b) Similarly, in the application for income-tax clearance certificate for flat No. 16, the cost of acquisition is shown to be Rs. 16,50,000/while the same is agreed to be sold for Rs. 12,28,000. 00 in the concerned banakhat, the same being less by Rs. 4,22,000. 00 within 1 1/2 years of the date of acquisition. Thus, there is a loss of more than 30%. The learned counsel submitted that what is stated above in connection with flat No. 8, also applies here. 16,50,000/while the same is agreed to be sold for Rs. 12,28,000. 00 in the concerned banakhat, the same being less by Rs. 4,22,000. 00 within 1 1/2 years of the date of acquisition. Thus, there is a loss of more than 30%. The learned counsel submitted that what is stated above in connection with flat No. 8, also applies here. c) Similarly, in the application for income-tax clearance certificate for flat No. 17, the cost of acquisition is shown to be Rs. 19,38,750. 00, while the same is agreed to be sold for Rs. 14,43,000/- in the concerned banakhat the same being less by Rs. 4,95,750. 00 within 1 1/2 years of the date of acquisition. Thus, there is a loss of more than 25%. The learned counsel submitted that what is stated above in connection with flat No. 8, also applies here. d) Thus, there is a total loss of Rs. 14. 22 lakhs being the amount realised less than the total amount of cost of acquisition of the said 3 flats only in a period of 1 1/2 years. In addition to this, the amount of Rs. 50,000. 00 in case of each of the said 3 flats deposited by the Company with Sashya Association by way of maintenance deposits is transferred to the purchasers. The Company has thus, in effect, paid the total sum of Rs. 1,50,000/- to the preferred creditor. The said amount of Rs. 50,000. 00 has to be deducted from the amount received by the Company from the preferred creditor in each of the said three cases. e) In addition to the above, there is nothing to show as to who has paid the stamp duty and registration charges for the said sale deeds. Normally, the said charges are required to be paid by the purchasers and since the same has not been paid by the purchasers, they have benefited in the said transactions to that extent. The stamp duty payable is about 12% of the sale consideration in each of the said cases and since the purchasers have not paid the same, the preferred creditor has benefited to a considerable extent even on that count. Same is the case with respect to the registration charges of the said sale deeds. The stamp duty payable is about 12% of the sale consideration in each of the said cases and since the purchasers have not paid the same, the preferred creditor has benefited to a considerable extent even on that count. Same is the case with respect to the registration charges of the said sale deeds. The preferred creditor has not produced anything to show that the purchasers have paid anything towards the said stamp duty in spite of the arguments to the above effect at the time of the hearing of the above application. As such, an adverse inference has to be drawn against the purchasers in this connection. f) Moreover, certain amount has to be paid to the said Association for the transfer of the said flats to the purchasers. This also must have been paid by the Company though the purchasers are liable to pay. Thus they have benefited in this respect also to a considerable extent. The Company has been out of pocket to that extent. This point was also argued at the time of the said hearing. However, the preferred creditor has thought it fit not to controvert the same by producing anything in his support. g) In addition to the above, it is pertinent to note that in Form No. 13 filed by the Company with the Registrar of Companies registering the creation and satisfaction of the charge created in favour of HDFC, a loan of Rs. 50 lakhs from HDFC is shown to have been obtained from HDFC which is secured by a mortgage of the said 4 flats in favour of HDFC. It can safely be assumed that when giving the said loan, HDFC must have kept a margin of at least 40% of the value of the said flats. This will mean that the value of the said 4 flats must have been at least Rs. 84 lakhs. Even otherwise, the cost of acquisition of the said four flats disclosed in the applications for income-tax clearance certificate comes to about Rs. 82 lakhs. Against this, the total amount realised is about Rs. 59 lakhs only, assuming that flat No. 18 has been sold at Rs. 14,43,000. 00 being the price of flat No. 17 since the area of both the flats are the same, namely 235 sq. yds. In addition to this, the total amount of the transfer of the maintenance deposit Rs. Against this, the total amount realised is about Rs. 59 lakhs only, assuming that flat No. 18 has been sold at Rs. 14,43,000. 00 being the price of flat No. 17 since the area of both the flats are the same, namely 235 sq. yds. In addition to this, the total amount of the transfer of the maintenance deposit Rs. 50,000. 00 in each case as also the payment of the stamp duty, registration charges and transfer fees in each case mentioned above has to be deducted. All this can lead one to an irresistible conclusion that the said flats are not sold for valuable consideration and the preferred creditor has acquired the same at much less consideration in collusion with the company. 7. 8 the learned counsel has referred to Section 441 (2) of the Companies Act and submitted that under Section 441 (2) of the Companies Act, 1956, the winding up of a company by the Court is to be deemed to have commenced at the time of the presentation of the petition for the winding up. This provision is to be given effect to in case of every petition when an order of winding up is passed in case of a company irrespective of whether or not any order of winding up is passed with respect to the same company earlier. Section 441 (2) is to be read to the effect that winding up is deemed to have commenced from the respective dates of the filing of the petitions when there are more than one orders passed for winding up of a company. 7. 9 the learned counsel has submitted that the valuation reports relied upon by the preferred creditor has no value and the same cannot be relied upon on account of the following: a) The said valuation reports are made on 5. 5. 1999 while the valuer has stated that he had inspected the properties on 15. 2. 2002 i. e. after about three years after making the reports. In addition to this, he has signed the reports on 16. 2. 2002 i. e. before the alleged inspection. b) In the column "owner" in the said reports, the names of the respective purchasers are shown, while, as a matter of fact, on the date of the making of the said valuation namely, on 5. 5. In addition to this, he has signed the reports on 16. 2. 2002 i. e. before the alleged inspection. b) In the column "owner" in the said reports, the names of the respective purchasers are shown, while, as a matter of fact, on the date of the making of the said valuation namely, on 5. 5. 1999, no sale deed was executed and the concerned parties were not at all the owners of the respective flats. c) No sale instances have been taken into consideration by the valuer which is much necessary for making such valuation. No reason for the same is stated in the said reports. d) An absolutely general valuation has been made and general observations have been made without any basis whatsoever. e) The value stated in the reports is much less in view of the above referred loan of Rs. 50 lakhs granted by HDFC. 7. 10 the learned counsel has submitted that in view of the above, the said valuation reports do not lend any credence and have to be ignored. 7. 11 as regards search report, the learned counsel has submitted that search reports relied upon by the preferred creditor are useless in view of the following: a) The search reports and the title clearance certificates are dated 17. 4. 1999 stating that the title of Sashya Association is clear. However, in the above referred Form No. 17, the Company has stated that the charge in favour of HDFC has been satisfied on 7. 5. 1999. that means that till then the charge of HDFC was subsisting and the title to the said properties was not clear. Admittedly, on the date of the said report, the said flats were under mortgage with HDFC. Moreover, at the relevant time, the Company was the owner of the said flats. There is no title certificate of the ownership of the company to the said flats. The said title certificate refers to the title of Sashya Association which was admittedly not an owner of the said flats. b) The said reports state that a search of the record of the Sub-Registry and revenue authority was taken. Nothing in support is produced. Moreover, no search of the office of the Registrar of Companies has been taken which if taken, would have disclosed the above charge. 7. 12 the learned counsel has referred to various authorities. b) The said reports state that a search of the record of the Sub-Registry and revenue authority was taken. Nothing in support is produced. Moreover, no search of the office of the Registrar of Companies has been taken which if taken, would have disclosed the above charge. 7. 12 the learned counsel has referred to various authorities. He has also referred to the judgement of the Court of Appeal in Re Grays Inn Construction Co. Ltd. (1982) 1 Company Law Journal 255 (CA) in which it is held thus: "the concept of English law is clear on this point, that is to say, the free assets or the insolvents estate shall be distributed rateably among the unsecured creditors. The Court has power u/s. 227 to validate transactions such as sale of the company as a going concern at best price available. " 7. 12a he has also referred to Companies Act, 1948 (Part V, p. 745) - Buckley 7th Edition in the heading Motive and deeds of arrangement- (pages 745 and 746) - On the question of fraudulent preference the court looks at the dominant or real intention and not the result. . . . . . . . Where the intention is to discharge a legal obligation, or what is thought to be a legal obligation, or voluntarily to repair a wrong done, or to protect the paying party from penal consequences or from exposure, the payment is not a fraudulent preference. . . . . . . . . . . . . . To prove the motive or intention to prefer evidence of other acts of preference in favour of other creditors committed at or about the same time is admissible. Burden of proof - The onus is on those who claim to avoid the transaction to establish what the debtor really intended and that the real intention was to prefer. The onus is only discharged when the court, upon a review of all the circumstances, is satisfied that the dominant intent to prefer was present. That may be a matter of direct evidence or of inference, but when there is not direct evidence and there is room for more than one explanation it is not enough to say, there being no direct evidence, the intent to prefer must be inferred. That may be a matter of direct evidence or of inference, but when there is not direct evidence and there is room for more than one explanation it is not enough to say, there being no direct evidence, the intent to prefer must be inferred. But this does not mean that unless there is no other possible explanation the intent to prefer will not be inferred; the ordinary principles adopted by the court in drawing inferences of fact apply. 7. 13 the learned counsel has also referred to the judgement of the Kerala High Court in the case of JAYANTHI BAI AND OTHERS VS. POPULAR BANK LTD. (IN LIQUIDATION) BY OFFICIAL LIQUIDATOR reported in (1966) 2 Company Law Journal 36 in which at pages 42-43 the Court has observed and held as follows: "the bank cannot with a dominant intent prefer one creditor over the others in the guise of making an adjustment or payment. The existence of a legal right is not conclusive that what was done was in the exercise of such right, though in normal circumstances the action would be referable to it. In many instances, except perhaps in the case of a naked or patent fraud, there might be some antecedent right to serve as the ostensible basis of a fraudulent preference. But once it is seen that what was achieved was the preferring of one creditor over the others with a dominant intent so to do, the vice of Section 531 of the Companies Act is attracted, and the transaction is in fact a fraudulent preference. Direct evidence of such preference is not often forthcoming and is not necessary either. In Cohen In re Trustee Ex parte, a voluntary payment, made on the eve of the bankruptcy, with knowledge of insolvency, was held, in the absence of proof of some other dominant motive, to be sufficient to establish a fraudulent preference. As held in In re M. Kashler Limited , the dominant intent to prefer may be proved by circumstantial evidence leading to a necessary inference, like any other fact. The rule is stated thus in Halsburys Laws of England, 3rd Edition, Volume 2, page 556, paragraph 1103. As held in In re M. Kashler Limited , the dominant intent to prefer may be proved by circumstantial evidence leading to a necessary inference, like any other fact. The rule is stated thus in Halsburys Laws of England, 3rd Edition, Volume 2, page 556, paragraph 1103. "in order that a transaction may be set aside as a fraudulent preference, it is necessary to prove that it was carried out with the substantial or dominant view of giving the creditor, or surety or guarantor for the debt, a preference over the other creditors. This need not be the primary result aimed at; it is sufficient that it should be the object aimed at in bringing about the primary result. If the transaction can properly be referred to some other motive than that of giving a particular creditor or surety a preference over the other creditors, the payment is not fraudulent and void, for it is from the intention of the debtor to act in fraud of the law (i. e. to prevent the distribution of the bankrupts property rateably among all his creditors) that the invalidity of the transaction arises" and at page 557, paragraph 1104: "on the other hand, in the absence of direct evidence, the existence of some other possible explanation for the transaction will not of itself exclude the drawing of an inference that there was an intention to prefer. " It is not necessary to discuss decided cases cited at the bar, in which the debtor was found to have acted not with a dominant intent, but say, with a belief that he was under a legal obligation to do the act whether such belief was well-founded or not, or with an intent to keep his business going or to set right his financial position, or even to take an advantage for himself if the law would permit such a course. If on the facts and circumstances there is room for more than one explanation, an intent to prefer is not of necessity to be drawn. The onus of proof is of course on the liquidator. We may examine the circumstances, having regard to these considerations. 7. If on the facts and circumstances there is room for more than one explanation, an intent to prefer is not of necessity to be drawn. The onus of proof is of course on the liquidator. We may examine the circumstances, having regard to these considerations. 7. 14 the learned counsel has also referred to the decision in the case of Re Eric Holmes (Property) Ltd. (Chancery Division) reported in (1966) 1 Company Law Journal page 19 in which on page 25 it is observed thus: "i was referred to a number of authorities on the effect of Section 44 of the bankruptcy Act, 1914, in particular Peat V. Gresham Trust Ltd. , Re M. Kushler Ltd. and Re T. W. Cutts, Ex p. Bognor Mutual Building Society V. Trustee in Bankruptcy. I do not propose to quote from these authorities at length. It will be sufficient at this stage to say that it is well established that for the purpose of Section 44 "view" means "intention"; that the relevant intention is that of the debtor; that the burden of establishing the relevant intention lies on the party seeking to avoid the transaction; that the debtors intention is a matter of fact; and that in reaching its conclusion of fact the Court is bound to draw all proper inferences from the evidence and circumstances. " 7. 15 the learned counsel for the interveners has submitted that the say of the preferred creditor is that the transfers in question were made in the ordinary course of business. He has submitted that admittedly when the transfers were made, the Company was not carrying on any business and as such the argument that the same have been made in the ordinary course of business is baseless. Moreover, the sale of flats was not the business of the Company. The business of the Company was to give finance for the various purposes and not to purchase and sell immovable properties. No instance of any such activity is produced so as to suggest that the Company was as a matter of fact carrying on such activity as business. He has further submitted that the transfer should be within six months before the commencement of winding up. As such, if the winding up commenced within six months of the date of transfer, such transfer will be covered by Section 531. He has further submitted that the transfer should be within six months before the commencement of winding up. As such, if the winding up commenced within six months of the date of transfer, such transfer will be covered by Section 531. One has to go forward from the date of transfer and not backward from that date which is exactly the thing argued in the said paragraph. A winding up petition was pending within six months after the date of transfers in question and as such the said transfers are clearly covered by Section 531 of the Act. 7. 16 the learned counsel has submitted that there is a distinction between the point of time when an order of winding up is made and the point of time when an order of dissolution is made. The company continues to exist between the two terminii. 7. 17 in view of the above, the learned counsel submitted that the sale transactions are not bona fide, for valuable consideration and entered into in the ordinary course of business of the Company and as such, are void. ( 8 ) CONTENTIONS OF MR. D. S. VASAVADA, LEARNED ADVOCATE, APPEARING ON BEHALF OF RAJESH CHIMANLAL SHAH, CHARTERED ACCOUNTANT:8. 1 mr. Vasavada, learned counsel appearing on behalf of Rajesh Chimanlal Shah, Chartered Accountant, has submitted that the transfer of flats in question is a voluntary transfer and the Company showed preference in repaying the dues of only a few select depositors. Even the documents produced before the court do not inspire confidence and the same are fraudulent transfers and in view of the same, OLR No. 81 of 2001 is required to be dismissed. The said affidavit of Shri Rajesh Chimanlal Shah is produced at page No. 293 to 298 of the paper book. Over and above the said affidavit of Mr. Rajesh C. Shah, Mr. Vasavada has supported the contentions of Mr. Roshan Desai, Mr. Amar Bhatt and Mr. Ashwin L. Shah, learned advocates for the other parties. ( 9 ) ( 10 ) IN this matter very complicated facts and law were involved and learned counsel Mr. Roshan Desai on behalf of the Official Liquidator, Mr. Amar Bhatt on behalf of Reserve Bank of India, Mr. Vasavada on behalf of Textile Labour Association, Mr. Ashwin Lalbhai Shah on behalf of interveners, and learned senior counsel Mr. S. N. Soparkar, with learned advocate Ms. Roshan Desai on behalf of the Official Liquidator, Mr. Amar Bhatt on behalf of Reserve Bank of India, Mr. Vasavada on behalf of Textile Labour Association, Mr. Ashwin Lalbhai Shah on behalf of interveners, and learned senior counsel Mr. S. N. Soparkar, with learned advocate Ms. Swati Soparkar, have assisted this Court in resolving the complicated facts and law. This Court puts on record its sense of appreciation for their able assistance. BEFORE parting, I would like to quote the following: Fraud and collusion vitiate even most solemn proceedings in any civilised system of jurisprudence (Re: Derry Vs. Peek 1889 14 AC 337) .