JUDGEMENT 1. Re: O.L. Report dated 2.12.2008 at Flag 19, I.A. No. 2462/2009 and S.A., at Flags 21 and 21/A: Heard Mr. Umesh Prasad Singh learned Senior Counsel appearing for the applicants, Rajesh Verma and Rakesh Verma and the Official Liquidator. 2. By the report dated 2.12.2008 the Official Liquidator had, inter alia, pointed out that during the discussion with the Circle Officer, Gaya it came to the notice of the Official Liquidator that M/s Shivshakti Builders & Financial Company Limited, the company in liquidation, had transferred the land appertaining to Khata No. 191, Plot No. 1053 area 0.77 acres to one Shri Om Prakash who, in turn, transferred the same to Shri Rakesh Verma and Shri Rajesh Verma, the applicants, by different sale deeds and accordingly it was prayed that notices may be issued to the holders of Khata No. 191 to produce the respective sale deeds before the Court at the earliest to ascertain the transfer date in order to safeguard the interest of the company in liquidation. 3. On the basis of the aforesaid report, by order dated 9.1.2009 notices were issued to Rajesh Verma and Rakesh Verma to produce their respective sale deeds before this Court at the earliest for due consideration and verification by this Court regarding the date of registration of the same. Pursuant to the notice, Rajesh Verma and Rakesh Verma appeared and filed I.A. No. 2462/2009. From perusal of the same, it transpired that they are subsequent purchasers of the land of the company from Surjeet Singh, Charanjeet Singh, both sons of Sri Prakash Singh, Sri Prakash Singh, son of Sri Hanuman Singh and Sri Om Prakash Singh, son of Sri Govind Singh, who had purchased the said land on 19.5.1998 after the winding up petition was filed and the Official Liquidator had been appointed as the Provisional Liquidator. Therefore, by order dated 3.7.2009 notices were issued to the aforesaid original purchasers also to show cause as to why the sale deed executed in their favour with respect to the aforesaid land which was transferred after the presentation of winding up petition and appointment of Provisional Liquidator be not declared null and void ab initio. Despite valid service of notices upon them, the four original purchasers have not turned up before this Court. Accordingly, the matter is being taken up ex parte against them. 4. Despite valid service of notices upon them, the four original purchasers have not turned up before this Court. Accordingly, the matter is being taken up ex parte against them. 4. In the interlocutory application, the applicants Rajesh Verma and Rakesh Verma have produced four sale deeds by which they have purchased the aforesaid lands from Surjeet Singh, Charanjeet Singh, both sons of Sri Prakash Singh, Sri Prakash Singh, son of Sri Hanuman Singh and Sri Om Prakash Singh, son of Sri Govind Singh all having equal shares and resident of Mohalla-Gurudwara Road, Gaya, P.S.-Kotwali, District-Gaya. It is further stated that the company in liquidation had purchased the land measuring 0.77 acres of Khata No. 13(old), Plot No. 747, New Plot No. 1053 under two registered sale deeds dated 27.12.1995 and 13.12.1995 from Shri Bharat Kumar, Managing Director and Shri Dinesh Prasad, Executive Director of Karmath Savings and Investment Co. Ltd. then having its office at 51, Swarajyapuri Road, Anand Bazar, P.S.- Civil Line, Town and District-Gaya, for a consideration of Rs. 64,000/-. The land measuring 38½ decimals was purchased on 27.12.1995 for a sum of Rs. 32,000/- and remaining 38½ was purchased by the sale deed dated 30.12.1995 for the same consideration of Rs. 32,000/-. 5. It is further stated in the application that Shri Krishna Saha, Managing Director of Shivshakti Builders and Financial Co. Ltd., the company in liquidation, sold the aforesaid land to the vendors of the applicants on 19.5.1998. It is further stated that the applicant No. 1, Rajesh Verma purchased 19¼ decimals each under three separate sale deeds dated 18.6.1999, 18.6.1999 and 18.12.1999 from Shri Prakash Singh, Shri Charanjit Singh and Sri Surjeet Singh respectively and the applicant no. 2, Rakesh Verma purchased 19% decimal land from Shri Om Prakash Singh for Rs. 40,000/- under separate sale deeds. Both the applicants claim to be in possession of the land since the date of purchase and further they got the same mutated in their respective names. They claim to be bona fide purchasers for value with no knowledge about the Company Petition No. 7/1998 having been filed earlier for the winding up of the company. Both the applicants claim to be in possession of the land since the date of purchase and further they got the same mutated in their respective names. They claim to be bona fide purchasers for value with no knowledge about the Company Petition No. 7/1998 having been filed earlier for the winding up of the company. It is also stated that subsequently they learnt about the winding up petition having been filed on 15.4.2008 and thereafter they made inquiries from their vendors whether they had any prior knowledge of the winding up proceedings and their venders were also surprised to know the fact and denied the knowledge of the proceedings. They have accordingly prayed to hold and declare the transfers made in their favour as not affected adversely nor illegal but having been made in the ordinary course of business and they being bona fide purchasers for value and as such acquired legal title to the lands and further validate the transactions and allow the application. 6. Learned counsel for the applicants submits that the applicants are bona fide purchasers for value and thus their sale deeds ought not to be treated as void. It is submitted that no disclosure was made by the ex-Managing Director to the vendors of these applicants and these applicants as also their vendors were unaware of the fact that a winding up petition had been filed and thus they having purchased the land for value in a bona fide manner, their sale deeds should not be set aside. 7. It is further pointed out by learned counsel that the company in liquidation had itself purchased the lands for an amount of Rs. 64,000/- only in the year 1995 whereas the same has been sold four years later to these applicants for an amount of Rs. 1,64,500/- and thus the company had received a fair value for the said asset. Learned counsel also contends that the sales have been made in the ordinary course of business and the same were permissible under the other objects of the company. 8. 1,64,500/- and thus the company had received a fair value for the said asset. Learned counsel also contends that the sales have been made in the ordinary course of business and the same were permissible under the other objects of the company. 8. In support of the aforesaid proposition, learned counsel relies upon a decision of the Supreme Court in the case of N. Subramania Iyer V/s. Official Receiver, Quilon and Another: AIR 1958 Supreme Court 1, wherein it was held in the context of proceedings under Section 53 of the Provincial Insolvency Act, 1920 that it is not necessary that the transferor who has been subsequently adjudged an insolvent should have been honest and straightforward in the matter of transaction impeached and even if the transferor was wanting in bona fides, unless it is found that the transferee was wanting in bona fides in respect of the transaction in question, he cannot be affected by the dishonest course of conduct of the transferor. 9. Learned counsel also relies upon a decision of the Supreme Court in the case of Pankaj Mehra and Another V/s. State of Maharashtra and Others: (2000)100 Company Cases 417 in which it is held that under Section 536(2) of the Companies Act, 1956 all disposition of property made by a company during the interregnum between the presentation of a petition for winding up and the passing of the order for winding up would not be null and void. At page 425 of the said decision, the Apex Court held as follows: "It is difficult to lay down that all dispositions of property made by a company during the interregnum between the presentation of a petition for winding up and the passing of the order for winding up would be null and void. If such a view is taken the business of the company would be paralysed, for, the company may have to deal with very many day-to-day transactions, make payments of salary to the staff and other employees and meet urgent contingencies. An interpretation which could lead to such a catastrophic situation should be averted. That apart, if any such view is adopted, a fraudulent company can deceive any bona fide person transacting business with the company by stage-managing a petition to be presented for winding up in order to defeat such bona fide customers. An interpretation which could lead to such a catastrophic situation should be averted. That apart, if any such view is adopted, a fraudulent company can deceive any bona fide person transacting business with the company by stage-managing a petition to be presented for winding up in order to defeat such bona fide customers. This consequence has been correctly voiced by the Division Bench in the impugned judgment." 10. Learned counsel for the applicants also submits that the Official Liquidator merely steps into the shoes of the company and thus he cannot be permitted to raise such plea as he represents the company and if the company is equally guilty of entering into the transaction, the principle contained in the maxim "In pari delicto porior est condition defendentis" would be applicable as laid down by the Apex Court in the case of Sita Ram V/s. Radha Bai and Others: AIR 1968 Supreme Court 534. In this regard he also relies upon a decision of the Supreme Court in the case of M/s.Hari Prasad Jayantilal and Co. V/s. V.S. Gupta, Income-tax Officer, Ahmedabad and Another: AIR 1966 Supreme Court 1481, in the relevant part of para-5 of which it has been held as follows: It is urged by counsel for the Company that power under sub-section (10) of S. 35 cannot be exercised because distribution of accumulated profits by the Liquidator is not distribution by the Company. The argument is wholly without substance. On the passing of a special resolution by the company that it be wound up voluntarily under the Companies Act 1 of 1956, the company does not stand dissolved. That is so expressly provided by S. 487 of the Companies Act. A company which has resolved to be voluntarily wound up may be dissolved in the manner provided by S. 497(5) till then the Company has corporate existence and corporate powers. The property of the Company does not vest in the Liquidator, it continues to remain vested in the Company. On the appointment of a Liquidator, all the powers of the Board of Directors and of the managing or wholetime directors, managing agents, secretaries and treasurers cease (S. 491), and the Liquidator may exercise the powers mentioned in S.312, including the power to do such things as may be necessary for winding up the affairs of the Company and distributing its assets. The Liquidator appointed in a members winding up is merely an agent of the Company to administer the property of the Company for purposes prescribed by the statute. In distributing the assets including accumulated profits the Liquidator acts merely as an agent or administrator for and on behalf of the Company." 11. The Official Liquidator, on the other hand, submits that no such plea is permissible to the original purchasers and the subsequent purchasers. It is urged by him that the original purchasers have not even come forward before this Court despite valid service of notice. The admitted position according to him is that the Company petition was presented on 15.4.1998 and thereafter on 15.5.1998 the Official Liquidator was appointed as Provisional Liquidator of the Company. Further, the original purchasers had themselves purchased the lands through sale deeds dated 19.5.1998 as per the own admission of the applicants. Thus, the purchases had been, made after the appointment of the Provisional Liquidator by the original purchasers from the ex-Managing Director, who had no authority to make the sale after appointment of Provisional Liquidator and the sale must be held to be void. 12. It is urged by the Official Liquidator that in this regard the provisions of Section 536(2) of the Companies Act are clear and unequivocal and all such transactions or sales made after the commencement of the winding up proceedings by the Court would be void unless the Court otherwise orders. It is submitted that although an order of winding up has been passed on 9.1.2009, by the application of Section 441(2) of the Act, the winding up commenced at the time of presentation of the petition for winding up. However, according to him, in this case, the position is much worse since the appointment of the Provisional Liquidator had been made on 15.5.1998 the effect of which would be that the ex-Management would immediately go out of office and the Official Liquidator acting as Provisional Liquidator would alone have authority to execute any sale deed on behalf of the Company. It is thus submitted by him that the sale deeds executed in favour of the original purchasers and consequently the sale deeds in favour of the applicants would be void and illegal. 13. It is thus submitted by him that the sale deeds executed in favour of the original purchasers and consequently the sale deeds in favour of the applicants would be void and illegal. 13. In this regard the Official Liquidator relies upon a decision of a Division Bench of this Court dated 22.4.1996 passed in LPA No. 90/1988 (Sarju Thakur V/s. The Registrar of Company and Others) in which similar provisions of Section 537 of the Act were under consideration. In paras 4 and 5 of the said decision the Division Bench held as follows: "4. If we analyse this Section 537 of the Act it will be evident that when the Company being wound-up by or subject to supervision of Court, any sale held without leave of the Court with respect to any property after commencement of the winding-up of the Company shall be void. In the present case before us, winding-up of the Company commenced, as noted above, on September 30, 1977. The sale has been held without leave of the Court after the commencement of the winding-up. Thus, Section 537 of the Act squarely covered the case against the appellant. 5. We also refer to the following passage from the Guide to the Companies Act by a Ramaiya, which is based on the decision of the Rajasthan High Court in Rajashtan Finance Corporation V/s. Official Liquidator: "...This does not mean after the winding-up order but after the presentation of the petition for winding-up.." This section read with Section 441 (2) fixes the date of the commencement of the winding-up as the date of the presentation of the petition..." 14. He also relies upon a decision of the Andhra Pradesh High Court in the case of B. Suresh V/s. A.P. Mahesh Co-operative Urban Bank Ltd. and Others: (2002)108 Company Cases 283, at page 289 of which it has been held as follows: " In my view, while section 446 of the Act deals with the effect of the winding up order or an order appointing a Provisional Liquidator on the pending suits or "other legal proceedings" which expression must necessarily be understood in the light of the preceding expression "suit" wherein the rights of the parties are pending adjudication before either a court or any other authority which is vested with the power to make such an adjudication. Section 537 of the Act deals with the situation where such adjudication is already made under the provisions of any law, and an attachment or distress or execution is sought to be made to give effect to such an adjudication or if permissible even during the pendency of such adjudication. Section 537(1)(a) declares such execution, etc., if put in force without the leave of the Company Court wherein the winding up proceedings are pendingto be void. Sub-section (b) of Section 537 of the Act deals with the consequences of the sale of the properties or effects of the company in liquidation, it does not speak about the sale as a consequence of any adjudication nor does it say that such a sale should be held at. the instance of a third party. The language of Section 537 of the Act, in my view, could even take a sale of the assets of the Company by itself or a sale brought about by the third parties in execution of an adjudicated right." 15. Section 536(2) of the Company Act is in the following terms: "536(2) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the Company, and any transfer of shares in the Company or alteration in the status of its members, made after the commencement of the winding up, shall unless the Court otherwise orders, be void." 16. It is evident from a bare reading of the aforesaid provisions that any disposition of the property of the company which is made after the commencement of the winding up proceeding shall be void unless it is otherwise ordered by the Court. Section 441(2) of the Act provides that the winding up of a company by the Court shall be deemed to commence at the time of presentation of the petition for winding up. In the present case, the winding up petition was presented on 15.4.1998 by the company itself by passing a special resolution. Thereafter by order dated 15.5.1998 this Court considered the application filed for appointment of Provisional Liquidator and ordered that the Official Liquidator be appointed as Provisional Liquidator of the Company and he was directed to take charge of the assets and records of the Company and take necessary steps as required under the Companies Act. Thereafter by order dated 15.5.1998 this Court considered the application filed for appointment of Provisional Liquidator and ordered that the Official Liquidator be appointed as Provisional Liquidator of the Company and he was directed to take charge of the assets and records of the Company and take necessary steps as required under the Companies Act. Ultimately, the winding up order was passed on 9.1.2009. 17. It is thus evident that the winding up proceedings would be deemed to have commenced from 15.4.1998, when the company petition was presented for winding up by the company. In the present matter, in fact there would be no need to rely upon such deeming provisions in view of the specific order of appointing Provisional Liquidator for the Company on 15.5.1998 by the Court. The admitted position is that the original purchasers, namely, Surjit Singh, Charanjeet Singh, Sri Prakash Singh and Om Prakash Singh had purchased the property on 19.5.1998 after the Provisional Liquidator had been appointed by this Court. Thus, the whole transaction in their favour would be directly hit by the provisions of Section 536(2) of the Act. 18. This Court is also of the view that once the Official Liquidator is appointed there was no authority in the ex- Managing Director or any other person on behalf of the Company in liquidation to have executed a sale deed in favour of any one; the same would be clearly void under Section 536(2) and this Court does not find any reason to order otherwise. 19. In this regard, the reliance by learned counsel for the applicants, Rajesh Verma and Rakesh Verma on the decision of the Apex Court in the case of Pankaj Mehra (supra) would be of no avail as the Court in that case was considering a situation where a winding up petition had been filed but no winding up order had been passed and in the said backdrop it came to the conclusion that it cannot be laid down as a rule that all dispositions made between the presentation of a winding up petition and passing the order of winding up, would be mandatorily null and void, and it would be open to the Company Court to hold otherwise. The said statement itself clearly goes to show that the position would be very much different after the order of winding up is passed, since once the winding up order is passed, the Official Liquidator by virtue of his office becomes the Liquidator of the Company. The appointment of Official Liquidator as Provisional Liquidator has a similar effect with respect to the assets of the Company and once the Provisional Liquidator is appointed the case would be similar to that of any one dealing with the assets after the winding up order has been passed. No person except the Provisional Liquidator would have any authority to deal with the assets of the Company after the appointment of Provisional Liquidator. 20. The maxim "in pari delicto" can have no application in the face of the statutory provisions of Section 536(2) of the Act. For the same reasons the question of being bona fide purchaser for value can also be of no assistance to the purchasers as their vendor had no authority to sell after the appointment of Provisional Liquidator. The other submissions of learned counsel for the applicants must also fall to the ground in the said legal and factual matrix. 21. This Court is, therefore, of the view that no disposition could have been validly made of the properties of the Company under the sale deeds in question. For the said reasons, the sale of land of Khata No. 191, Plot No. 1053, measuring 0.77 acres made in favour of Surjit Singh, Charanjeet Singh, Sri Prakash Singh and Om Prakash Singh by the ex-Managing Director of the Company in liquidation or by any other person on behalf of the Company is declared null and void. Consequently, the subsequent sale made by the said persons in favour of the applicants, Rajesh Verma and.Rakesh Verma by the sale deeds dated 18.12.1999, 18.6.1999, 18.6.1999 and 18.6,1999 respectively are also declared null and void. 22. The O.L.s report dated 2.12.2008 to the extent it concerns the aforesaid land and the I.A. No. 2462/2009 are accordingly disposed of.