IN THE HIGH COURT OF JUDICATURE AT MADRAS

Reserved On                         :        07.08.2023

Pronounced On : 22.08.2023 CORAM:

THE HON’BLE MR JUSTICE R. SUBRAMANIAN and

THE HON’BLE MR JUSTICE V.LAKSHMINARAYANAN

COMP.A.Nos.470 to 473 of 2007 in C.P.No.57 of 1988

In all Company Applications.

1.Maxworth Orchards (India) Ltd.

No.9, Mahalingampurm, Nungambakkam,

Represented by its Adminstrator/Provisional Liquidator,    MR.K.Alagarisami,    Chennai – 600 034.

2.The Official Liquidator,

2^nd Floor, Rajaji Salai, Chennai       …Applicants

[2^nd Applicant impleaded as per order of this Court dated 16.11.2010 in

C.A.No.884 to 886 of 2008 in C.P.No.57 of 1998 on memo.]

Vs.

1.B.Ravi Babu

2.Mr.Koduru Venkateswara Prasad

3.M/s.Agri Gold Farms Limited

Rep. by its Chairman-Cum-Managing

Director, Mr.Venkararaman Rao

40-1-21/21,

Mahatma Gandhi Road,    Vijayawada, Krishna District   Andhra Pradesh.

4.SRO, Badvel

Kadapa district,   Andhra Pradesh.

5.Mandal Revenue Officer

Porumammila Mandal

Kadapa district    Andhra Pradesh.

6.The Commissioner Of Police,

Greater Chennai, Egmore, Chennai.  …Respondents.

Prayer in C.A.No.470 of 2007: This Company Application is filed under

Order XIV Rule 8 of the Original Side Rules read with Section 446 (2), 450,

456 and 457 of the Company’s Act read with Rules 9, 11 (b) and 19 of the

Company Court Rules, 1959 to direct the Commissioner of police, Greater Chennai, Egmore the 6th respondent herein or such other competent police authorities to investigate the transactions stated in the  report annexed herewith and file a report into this High Court.

Prayer in C.A.No.471 of 2007: This Company Application is filed under

Order XIV Rule 8 of the Original Side Rules read with Section 446 (2), 450,

456 and 457 of the Companies Act read with Rules 9, 11 (b) and 19 of the Company Court Rules, 1959 to set aside the 12 sale deeds out by the 1st and 2nd Respondents bringing Nos.192 to 195 dated 10.3.2000,  226 to 229 dated 22.03.2000, 233 to 235 date 23.03.2000 and 1083 dated 27.6.2000 all registered in favour of the 3rd respondent herein  SRO, Badvel, Cuddapah District in the Year 2000-2001 for in the respect of the 297.96 Acres and consequently declare that the conveyance any right, title or interest in the schedule property in favour of the respondents and consequently grant order of permanent injunction restraining the respondents, their men agent or any one claiming through them from anyway interfering with the possession to Applicant Company  over the Schedule property.

Prayer in C.A.No.472 of 2007: This Company Application is filed under

Order XIV Rule 8 of the Original Side Rules read with Section 446 (2), 450,

456 and 457 of the Companies Act read with Rules 9, 11 (b) and 19 of the Company Court Rules, 1959 to grant an order of interim injunction restraining the respondents 1 to 3 and their men agents or servants or anyone claiming through them from any way alienating by sale, mortgage, lease or otherwise over the Schedule property and consequently granting an injunction restraining the 4th and 5th respondents from registering any sale, mortgage or lease on the schedule of the properties  pending disposal of the application.

Prayer in C.A.No.473 of 2007: This Company Application is filed under

Order XIV Rule 8 of the Original Side Rules read with Section 446 (2), 450,

456 and 457 of the Companies Act read with Rules 9, 11 (b) and 19 of the Company Court Rules, 1959 to grant an order of interim injunction restraining the respondents, their men, agent or servants or anyone claiming through them from any way interfering with lawful possession of Schedule property of the applicant company pending disposal of this application.

In all C.A.Nos.

For Petitioners/Applicants      : Mr.Karthik Seshadri

: for M/s.Nagasaila,

: The Administrator.

For Respondents

For R3                : Mr.P.R.Raman,

Sr.Counsel for M/s.C.Seethapathy For RR1,2,4,5 & 6 : Served – No Appearance.

For Administrator :Ms.D.Nagasaila

C O M M O N O R D E R

(Order of the Court was delivered by V.LAKSHMINARAYANAN,J.)

This reference is placed before us as the Hon’ble Mr.Justice Vinod Kumar Sharma differed from the view taken by Mr.Justice P. Jyothimani in a batch of company applications. He had framed the following questions for reference:-

“(1).Whether application for setting aside the sale can be entertained, which is not supported by any affidavit, but based on a report of the Administrator/Official Liquidator;

(2).Whether in view of the provisions of the Benami Transactions (Prohibition) Act, 1988, the Company can be said to be the owner of the property, though the property is shown to be under ownership of the true owners throughout;

(3).Whether in absence of a petition under Sections 542 and 543 of the Companies Act, the transaction in favour of third party can be questioned by way of simple company application or company is required to file a civil suit to challenge the sale in competent Court having jurisdiction with permission of Company Court;

(4). What is the effect of Civil Court decree which has attained

finality;

(5).Whether in absence of positive evidence of false misrepresentation, a finding can be recorded of fraud and misrepresentation, without trial only on basis of

Administrator/Provisional Liquidator.

(6).Whether the Company Court has the jurisdiction to determine question of title of land falling outside jurisdiction of this Court in view of Clause 12 of Madras High Court Letters Patent.”

2.There existed a company by name Maxworth Orchards (India) Limited. The business model of the company was to buy land and to get customers to invest in its plantations. The customers, in turn, used to be given a small piece of land and the company undertook to maintain the land, by entering into separate maintenance agreement with them.

3.Towards that end, the company entered into an agreement for supply of

Drip Irrigation System. The supplier was one, M/s.EPC Industries Limited. The said company raised a bill for Rs.2,22,96,465.54/- out of which a sum of Rs.1,70,93,353.60/- had been paid that left out a balance of Rs.52,03,111.96/-. As the outstanding amount was not paid, a statutory notice was issued on 02.12.1997. By the time the notice was issued, the company had closed its operation and therefore, a winding up petition came to be presented.

4.On 24.02.1998, the company petition presented by M/s.EPC Industries Limited came to be admitted. This Court vide an order dated 12.02.2001 appointed Mr.K.Alagiri Swami, a learned Senior Counsel of this court as the administrator of the company. Pursuant to orders of the court on 06.02.2006, he came to be appointed as the provisional liquidator. After the administrator took charge, he had been overseeing the functions of the company and had taken various steps to protect the interest of the creditors of the company. The company attempted to present the scheme of arrangement and that was dismissed on 05.03.2008.

5.While in business, the company used to make payments to the land owners and used to get powers of attorney in favour of its employees. The employees thereafter, used to alienate small portions of land in favour of its customers. The employees used to abide by the directions of the company.

After the company went into financial distress, the learned Administrator found that there are possibilities of the powers of attorney being misused and therefore, filed several “reports” before the court and had obtained interim injunctions in order to protect the interest of the company and its creditors.

6.One such report was filed in C.A.Nos.1937 to 1939 of 2003 etc. batch. After an analysis of the averments and after receiving counter from the parties, the said application was ordered. This application was with respect to the properties situated at Ramachandrapuram Mandal, Medak District of Andhra Pradesh (Sangareddy District of Telangana state today).

7.Noticing that similar situation exists with respect to the property situated at Siddavaram Village of Porumammilla Mandal Kadappa District, the Learned Administrator filed a report and sought for similar orders. At that stage, the attention of the learned judge was invited to the order passed in C.A.Nos.1937 to 1939 of 2003 batch and he was requested to apply the same. The learned judge differed from the opinion taken by Justice Jyothimani and referred the aforesaid questions to be answered by a Division Bench.

8.Heard Mr.Karthik Seshadri for The Administrator and Mr.P.R.Raman for the Respondents.

9.For the sake of understanding, we shall deal with one question after another in seriatim:-

Question No.1.Whether application for setting aside the sale can be entertained, which is not supported by any affidavit, but based on a report of the Administrator/Official Liquidator?

Answer:It has been an established practice of this Court that the Official Liquidator does not file an affidavit accompanied by a judge’s summons. He only files a “report” which is of course signed and sealed by him at the end of every page. This is a practice which has been followed by this Court for decades. The Learned Judge felt that even an Official Liquidator should follow the same practice as being done by a private litigant by filing an affidavit together with a judge’s summons.

10.We would like to recall a latin maxim at this point – “Cursus curiae est lex curiae”. The meaning of this latin maxim is that “the practice of the

Court is the law of the Court”. Following this maxim, Coke C.J. in Burrowes Vs. High Commission Court, 3 Bulst. 48, 53 held that the Court should always adopt the practice which has been prevailing before it. In Freeman Vs. Tranah (1882) 12 CB 414, Creeswell J. held that the course of the court is the practice of the court.

11.Following these two precedence, a division bench of the Calcutta High Court, consisting of Mookerjee and Panton, JJ., held in Habibar Rahaman Vs.

Saidannessa Bibi ILR (1924) 51 Cal 331 as follows:-

“4.We are consequently of opinion that till a new procedure is introduced by competent authority, the Court should not deviate from its established practice.  From this point of view, it has been maintained by high authorities that where a practice has existed, it is convenient, except in cases of extreme urgency and necessity, to adhere to it, because it is the practice, even though no reason can be assigned for it; see the observations of Lord Ellenborough in Bovill v. Wood (1813) 2 M. & Section 23 and of Lord Campbell in Edwards v. Martin (1851) 17 Q.B.

693. As Lord Abinger said in Jacobs v. Layborn (1843) 11 M. & W. 685; 690 an inveterate practice in the law generally stands upon principles that are founded in justice and convenience; and the Court will not sanction a speculative novelty for the sake of novelty without the warrant of any principle, precedent or authority: Exp. Tollerton Overseers (1842) 3 Q.B. 792, 799, Cowan v. Duke of Buccleugh (1876) 2 App. Cas. 344,

347, A.G. v. Marquess of Ailesbury (1887) 12 App. Cas. 672, Exp. James

Bell Cox (1887) 20 Q.B.D. 1, Liverpool and Manchester Aerated Bread

Co. v. Firth [1891] 1 Ch. 367.”

12.Prior to this, a special Bench of this Court consisting of five Judges took a view that a settled practice must not be unsettled and the court should follow the practice which has been followed in that court as well as that had been followed by its predecessors. The Sadr courts were following a particular procedure and after the Indian High Courts Act, 1861, the Sadr Courts came to be abolished creating the Madras High Court. It was argued before the Special Bench that the practice of the Sadr court should not be adopted but the High Court should adopt a new procedure. Rejecting the argument, the Special Bench held in Muttu Chidambara Vs. Karuppa (1884) ILR 7 Madras 382 as follows:-

“It was held by the Sadr Court that raiyatwari holdings were not estates paying revenue to Government, and this construction has always been acted upon in this Presidency. It would unsettle a large number of titles to adopt a different construction now, and whatever we might have thought if the matter had come before us as res-integra, we are not   prepared to disturb a practice so long established.  ”

13.The view taken by the Calcutta High Court came for consideration before the Supreme Court in Rao Shiva Bahadur Singh and Another Vs. The State Of Vindhya Pradesh AIR (1955) SC 446. Writing for the majority, SR Dass J. (as His Lordship then was) was pleased to hold that the view taken by the Calcutta High Court is correct and made the principle of practice of the Court as the law of the Court, a part of the post constitutional Indian Legal Jurisprudence.

14.We are not going to expand the authorities on this point as the constitutional bench judgment continues to hold the field. Suffice it to say, the principle of “Cursus curiae est lex curiae” has been applied repeatedly by the Supreme Court (See, Rais Ahmad Vs. State of U.P. And Ors. (1999) 6 SCC

391 and in Jamal Uddin Ahmad Vs. Abu Saleh Najmuddin and Anr. (2003) 4

SCC 257.

15.In light of the above, we hold that the practice developed by this Court

of the Official Liquidators or Administrators filing a report instead of an affidavit, has to be followed till a new procedure is introduced. We answer the first question accordingly.

Question No.2.Whether in view of the provisions of the Benami Transactions (Prohibition) Act, 1988, the Company can be said to be the owner of the property, though the property is shown to be under ownership of the true owners throughout?

Answer: This is an interesting question that has been raised by the Learned Judge. As pointed out before, the business model of the company was to pay the landowners and obtain powers of attorney from the owners in favour of its employees. Its employees thereafter used to execute sale deeds in favour of the customers of the company on the directions of the company. Thereafter, the company used to enter into a separate maintenance agreement for the orchards proposed.

16.The Learned Single Judge felt that the provision of the Benami

Transactions (Prohibition) Act, 1988 [hereinafter referred to as “the Benami Act”] might apply. This is because, the property stands in the name of the owners but for all practical purposes, the company had become the owner of the property. This argument had also been raised by the learned Senior Counsel for the respondents.

17.It is here that the discussion made by the learned Judge becomes relevant at Para 23 and 24 which are extracted below:-

“23. Though facts in the said cases were different, as respondent no.1 in these cases had categorically admitted, that she was acting on behalf of the Company under its instructions of the Company, but at the same time, this Court has recognised the ownership of the Company, even in absence of conveyance deed in favour of the Company, showing it to be the registered owner, even though transactions were after coming into force of the Benami Transactions (Prohibition) Act, 1988. Section 4 of the Benami Transactions (Prohibition) Act, 1988 reads as under:

4. Prohibition of the right to recover property held benami:

• No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
• No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person shall be allowed in any suit, claim or, action by or on behalf of a person claiming be the real owner of such property. (3) Nothing in this section shall apply,

…

(b) where the person in whose name the property is held is a trustee or other standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity.

24.The reading of the admitted facts would show that respondent no.1 could not be said to be trustee or a person standing in the fiduciary capacity on behalf of the company, as admittedly the land was not in the name of respondent no.1, but continued to be in the name of the true owners. The facts also prima facie proved that the Company, at no stage, became registered owner of the property. And for the reason best known to it, was satisfied by getting the Power of Attorney in the name of its employers, who were to act on behalf of the true owners, and not on behalf of the Company. The vendors were never acting as attorney of the Company, as Power of Attorney was given by true owners. The Company was at liberty to have a Power of Attorney in its name, and thereafter could by resolution authorize any its employee to act on its behalf.”

18.In order to apply the plea of Benami, there has to be a sale/a conveyance. Title must pass from the existing owner to an other person who is a benamidar for the other. The transaction in the present case required 3 persons namely, the vendor, the benamidar/ostensible owner and the actual owner. The effect of the Benami Act, is that the relationship between the ostensible owner & the real owner is snapped. In this case, as pointed out by the Learned Judge in his order of reference, there is no transfer at all. On receipt of monies, the owner executes a Power of Attorney in favour of the employees of the Company. The transfer in favour of the customers is done by the employee as a Power of Attorney agent of the original owner. Therefore, the question of benami does not arise here. It is at best “a Power of Attorney Sale” which we shall address later.

19.Let us now analyze the provisions of the Benami Act. The Benami Act came into force on 05.09.1988. A question arose before the Supreme Court as to whether the Act is retrospective or prospective in nature. It is here that Sections 3 and 4 of the Benami Act become relevant. Section 3 being penal in nature, obviously it only has to be prospective. This is because a new offence has been created for any person entering benami transactions. Insofar as Section 4 of the Benami Act is concerned, it created substantive rights in favour of Benamidars (ostensible owners) and destroyed the right of the real owners.

20.Interpreting Sections 3 and 4, a three (3) Judges Bench in R. Rajagopal Reddy And Ors. Vs. Padmini Chandrasekharan (1995) 2 SCC 630 held that Section 4 of the Act is not declaratory in nature and it is not retrospective in operation. One aspect we have to carefully analyze is the application of the Indian Trust Act of 1882. The Benami Act repealed, Sections 81 and 82 of the Indian Trust Act, 1988 with effect from 18.05.1988. However, it did not touch the provisions relating to Sections 88, 91 and 92 of the Indian Trust Act. The principles which flows out of these 3 Sections are that where a person contracts to buy a property, to be held on trust for certain beneficiaries and buys that property, accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract.

21.In a different context, the Supreme Court was called upon to interpret whether there exists a fiduciary relationship between the Power of Attorney & his principal. Dr Justice D.Y. Chandrachud was pleased to hold as follows in

Central Public Information Officer, Supreme Court of India Vs. Subhash Chandra Agarwal (2020) 5 SCC 481.

“244.A fiduciary must be entrusted with a degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. [ Tamar Frankel, Fiduciary Law, Oxford University Press, 2011] The greater the independent authority to be exercised by the fiduciary, the greater the scope of fiduciary duty. [ Scott, Austin W. “The Fiduciary Principle”, California Law Review 37, No. 4 (1949) : 539-55.] The person so entrusted with power is required to determine how to exercise that power. [ Tamar Frankel, Fiduciary Law, Oxford University Press, 2011] Fiduciaries are identified by ascendancy, power and control on the part of the stronger party and therefore, a fiduciary relationship implies a condition of superiority of one of the parties over the other. [ Ken Coghill, Charles Sampford and Tim Smith “Fiduciary Duty and the Atmospheric Trust”, Ashgate (2012)] It is not necessary that the relationship has to be defined as per law, it may exist under various circumstances, and exists in cases where there has been a special confidence placed in someone who is bound to act in good faith and with due regard to the interests of the one reposing the confidence. Such is normally the case with, inter alia, attorney-client, agent-principal, doctor-patient, parent-child, trustees-beneficiaries [ Section 88, Indian Trusts Act, 1882] , legal guardian-ward [ Section 20, Guardians and Wards Act, 1890] , personal representatives, court appointed receivers and between the Directors of company and its shareholders. In Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., (1981) 3 SCC 333] and Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan [Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan, (2005) 1 SCC 212] , this Court held that the Directors of the company owe a fiduciary duty to its shareholders. In P.V. Sankara Kurup v. Leelavathy Nambiar [P.V. Sankara Kurup v. Leelavathy Nambiar, (1994) 6 SCC 68] , this Court held that an agent and power of attorney can be said to owe a fiduciary relationship to the principal.

245. Other structural properties of the fiduciary relationship are dependence and vulnerability, where the beneficiary is dependent upon the fiduciary to exercise power and impact the practical interests. [ Gold, Andrew S.; Miller, Paul B. “Philosophical foundations of fiduciary law”, Oxford University Press, 2016.] Once a fiduciary relationship is established, fiduciary duties include the duty of loyalty and duty of care towards the interests of the beneficiaries. [ Tamar Frankel, Fiduciary Law, Oxford University Press, 2011
246. From the discussion above, it can be seen that a fiduciary is someone who acts for and on behalf of another in a particular matter giving rise to a relationship of trust and confidence. A fiduciary relationship implies a condition of superiority of one of the parties over the other, where special confidence has been reposed in an individual to act in the best interests of another.”

22.This concludes that the relationship between the Power of Attorney and his principal is fiduciary. As seen from above, the relationship between the owner & the purchaser is also one such. Fiduciary capacity existing in both the transactions, even if the Benami Act were to apply, it falls within the exemptions contemplated under the Act.

23.Apart from that, a combined reading of Sections 88, 91 and 92 of the Indian Trust Act, put both the employees as well as the landowners in a fiduciary capacity with the company. When the parties hold the property in a fiduciary capacity, Section 4 (3) (b) applies. The said provision reads as follows:-

“4. Prohibition of the right to recover property held benami.—

…………

(3) Nothing in this section shall apply,—

…………

(b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity.”

24.Therefore, the Benami Act, 1988 would be inapplicable. We also have to take note of the fact that the said legislation was amended by the Parliament under Act 43 of 2016. It introduced Section 2 (9) (b), clause (ii) which reads as follows:-

“2.Definitions-

(9). “benami transaction” means,-

….(b).the property is held for the immediate or future benefit,

direct or indirect, of the person who has provided the consideration, except when the property is held by-

….(ii). A person standing in a fiduciary capacity for the

benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1966 (22 of 1996) and any other person as may be notified by the Central

Government for this purpose.”

25.The manner of transactions set forth above would go to show that it is a kind of power of attorney sale. Such sales came up for consideration before the Supreme Court in Suraj Lamp & Industries (P) Vs. State Of Haryana & Anr (2009) 7 SCC 363 and Suraj Lamp and Industries Private Limited (2) Vs.

State of Haryana, (2012) 1 SCC 656.

26.Mr.P.R.Raman, learned counsel would submit that by virtue of the aforesaid judgments, the transactions entered into between the landowners and an employee of the company under winding up is a power of attorney sale and therefore hit by the aforesaid judgments.

27.This argument is no doubt very attractive but explaining the judgment in Suraj Lamps (1), the Supreme Court in Suraj Lamp (2) held as follows:-

“27. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a power of attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding ‘SA/GPA/will transactions’ are not intended to apply to such bona fide/genuine transactions.”

28.Further, The Supreme Court held in Maya Devi Vs. Lalta Prasad (2015) 5 SCC 588 that the judgment of the Suraj Lamp would only be prospective in operation and therefore, inapplicable to transactions which had been taken place before that. It held that the operation of Suraj Lamp (1) judgment was pointedly and poignantly prospective.

29.In the case before us, the powers of attorney were executed in the last decade of the previous millennium and therefore, the argument based on Suraj Lamps necessarily has to fail.

30.This makes it clear that neither the Act as it stood in 1988 nor its subsequent avatar apply to the provision of the Benami Act as to the transactions among the landowner, powers of attorney & the company.  We answer the second question accordingly.

Question No.3.Whether in absence of a petition under Sections 542 and 543 of the Companies Act, the transaction in favour of third party can be questioned by way of simple company application or company is required to file a civil suit to challenge the sale in competent Court having jurisdiction   with permission of Company Court? 

Answer: The third question framed deals with an issue as to whether in the absence of a petition under Sections 542 and 543 of the Companies Act, that issue can be gone into by the Company Court. The powers of the Company Court under section 446 (1) and (2) are necessary for answering the question. If a winding up petition is pending and a Provisional Liquidator is appointed, the Company Court ipso facto would have jurisdiction to entertain all the proceedings that are covered under Sections (a) to (d) of Section 446 (2). This principle has been laid down at least five (5) decades ago in Sudarsan Chits (I)

Ltd vs O. Sukumaran Pillai & Ors (1984) 4 SCC 657.

31. Apart from this, under Section 456 of the erstwhile Companies Act, the Company Court not only had the jurisdiction with respect to the properties of the company but also with respect to the properties which “appear to be” the properties of the company. Therefore, we answer this question stating that a combined reading of Section 446 read with Section 456 of the Companies Act, shows that the Company Court will have jurisdiction to deal with the issue relating to a transaction alleged to be in favour of a third party. The caveat to this proposition is that the jurisdiction of the Company Court, commences one year prior to the date of presentation of the company petition. The said power cannot be exercised by a Company Court for the transactions which have been concluded & to which the company is a party and if the title has vested in third parties, one year prior to the presentation of the petition.

  Question Nos.4   What is the effect of Civil Court decree which has attained finality?

5.Whether in absence of positive evidence of false misrepresentation, a finding can be recorded of fraud and misrepresentation, without trial only on basis of Administrator/Provisional Liquidator?

Answer: As seen from Section 446 of the Companies Act, the power of the Company Court is wide. Therefore, the Company Court can always decide on the validity of a decree when it is presented before it. Whether the decree is binding on the Company and consequently on the official liquidator are matters which have to be gone into at the time of the Trial. We add, the Company Court has the power not only to entertain suits or other proceedings but it can also decide the said suit or proceeding after taking evidence. This answers Question

No.5 also.

  Question No.6   Whether the Company Court has the jurisdiction to determine question of title of land falling outside jurisdiction of this Court in view of Clause 12 of Madras High Court Letters Patent?

Answer: The answer to this question lies under Section 10 of the

Companies Act of 1956. If a Company is registered within the jurisdiction of a High Court exercising its jurisdiction under the Companies Act of 1956, then necessarily by virtue of Section 10 of the Act, the Company Court has the power to determine the title of the land of properties falling outside the Ordinary Original Jurisdiction of the Court. We have to note that Letters Patent has been treated as a parliamentary statute and it is held to be in force till it is replaced by another parliamentary statute. Companies Act of 1956 is a parliamentary statute and it has conferred the power on the company courts under section 10 of the Companies Act. Therefore, we hold in this case, though the properties in this case are situated in the state of Telangana and Andhra Pradesh, as the company was registered within the jurisdiction of this Court, the

Company Court has the jurisdiction to deal with the said issues.

32.The answers to the reference having been given by us, the matter will now be placed before the Learned Single Judge in order to proceed in accordance with law.

[R.S.M.J,]               [V.L.N.J,]

22.08.2023             

nst                                           

Index    : Yes/No

Speaking Order : Yes/No

Neutral Citation Case     : Yes/No

To:

1.The Commissioner Of Police,    Greater Chennai, Egmore, Chennai.

2.The Official Liquidator,    2^nd Floor, Rajaji Salai,    Chennai.

3.SRO, Badvel

Kadapa district,   Andhra Pradesh.

4.Mandal Revenue Officer

Porumammila Mandal

Kadapa district

Andhra Pradesh.

1. SUBRAMANIAN,J. and V. LAKSHMINARAYANAN, J.

nst

Pre-Delivery Order In

        COMP.A.Nos.470 to 473 of 2007 in

C.P.No.57 of 1988 and

O.S.A.Nos.181, 182 & 183 of 2012  and

O.S.A.Nos.315, 316, 317 and 318 of 2013 .08.2023