IDBI BANK LIMITED THROUGH DGM (LEGAL) versus THE OFFICIAL LIQUIDATOR, OFFICE OF THE OFFICIAL LIQUIDATOR OF COMPANIES & ANR.

IDBI BANK LIMITED THROUGH DGM (LEGAL) versus THE OFFICIAL LIQUIDATOR, OFFICE OF THE OFFICIAL LIQUIDATOR OF COMPANIES & ANR.

The execution of the sale deed in favour of the petitioner cannot be allowed due to absence of approval by the general meeting under Section 293(1). The agreement to sell cannot be termed a fraudulent preference under Section 531 as it was executed more than six months before filing of the winding up petition. The winding up petition cannot be dismissed for non-advertisement where other unsatisfied creditors exist; the Company Court must direct advertisement to protect all creditors’ interests.

Parties
Petitioner: IDBI Bank Limited through DGM (Legal); Respondent No.1: The Official Liquidator, Office of the Official Liquidator of Companies; Respondent No.3/other Petitioners: Anr. (including S. Ramaiah and his wife)
Jurisdiction
India
Judgment Date
17 October 2019
Procedural Posture
Special Leave Petition (civil) / Final Judgment by Supreme Court on Appeal Against High Court Judgments
Outcome
Special Leave Petitions dismissed; High Court decisions upheld.
Legal Topics
Winding Up, Fraudulent Preference, Execution of Sale Deed, Secured and Unsecured Creditors, Advertisement of Winding Up Petition
Company Law Winding Up Fraudulent Preference Execution of Sale Deed Secured and Unsecured Creditors Advertisement of Winding Up Petition

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Parties

IDBI Bank Limited through DGM (Legal)

Petitioner

The Official Liquidator, Office of the Official Liquidator of Companies

Respondent No.1

Anr. (including S. Ramaiah and his wife)

Respondent No.3/other Petitioners

Procedural Posture

Special Leave Petition (civil) / Final Judgment by Supreme Court on Appeal Against High Court Judgments

Legal Issues

  1. 1 Whether the winding up petition can be dismissed for non-advertisement and satisfaction of creditors.
  2. 2 Whether the agreement to sell executed by KOFL in favour of the petitioner is a fraudulent preference under Section 531 of the Companies Act, 1956.
  3. 3 Whether execution of sale deed in favour of the Petitioner is permissible without approval under Section 293(1) of the Companies Act, 1956.

Ratio Decidendi

The execution of the sale deed in favour of the petitioner cannot be allowed due to absence of approval by the general meeting under Section 293(1). The agreement to sell cannot be termed a fraudulent preference under Section 531 as it was executed more than six months before filing of the winding up petition. The winding up petition cannot be dismissed for non-advertisement where other unsatisfied creditors exist; the Company Court must direct advertisement to protect all creditors’ interests.

Court Disposition

Special Leave Petitions dismissed; High Court decisions upheld.

Orders

  • Dismissal of C.A. No. 1208 of 2002 seeking execution of sale deed in favour of petitioner is affirmed.
  • Revival of winding up proceedings in C.P. No. 179 of 2001 affirmed.