Allowed

M/s Monarch Finlease Ltd. (In Liqn) v. -

Telangana HC20 Apr 2010COMPA/1854/2009

Case brief

AI extract

What is this about?

This order applied to a company application by an Official Liquidator seeking to retain attachment on land pending an audit into potential fund diversion by the former company management in favor of the applicants.

What did the court decide?

The company application allowing the applicants to deal with the properties was allowed. The attachment standing was raised subject to prior intimation of any future lease or mortgage.

M/s Monarch Finlease Ltd. (In Liqn) Vs - — Company and Corporate | Telangana HC (2010)

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THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY s Company Application No.1854 of 2009

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(Dated : 20-04-2010)

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Between:

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M/s.Monarch Finlease Ltd. (in Liqn.) Rep. By the Official Liquidator, High Court of Andhra Pradesh, Hyd.

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…Applicant.

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THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY

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Company Application No.1854 of 2009

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ORDER:

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This Company Application has been taken out under Rule 9 of the Companies (Court) Rules, 1959 by the Official Liquidator representing M/s.Monarch Finlease Ltd. (In Liqn.) to pass appropriate orders as regards the request of Tekula Govardhan Reddy and 2 others for selling the land admeasuring Ac.11.20 guntas comprised in Sy.No.179, Ac.4.00 in Sy.No.182, Ac.2.00 in Sy.No.183.

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2. This Court, by order dated 12.2.2002, appointed the Official Liquidator as provisional liquidator of M/s.Monarch Finlease Ltd. (In Liqn.). The company was directed to be wound up and the Official Liquidator came to be appointed as its liquidator in terms of Section 449 of the Companies Act, 1956, by order dated 01.11.2006. The Official Liquidator filed Company Application No.229 of 2006 for attachment of land admeasuring Ac.51.26 guntas owned by M.Nagendra Vishnuvardhan S/o Sri

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K.Naganna, Ex. Director in various survey numbers at Nerelapally village, Balangar Mandal, Mahaboobnagar District. The said application came to be ordered on 8.6.2002. The Official Liquidator was permitted to take possession of the lands, by order dated 9.8.2006 passed in Company Application No.1137 of 2006. The Official Liquidator on coming to know that the lands in question were alienated way back in the year 2005, approached this Court seeking direction to the Mandal Revenue Officer to handover possession of the land. This Court, by order dated 11.10.2006 directed the Mandal Revenue Officer to hand over possession of the land which was complied on 22.11.2006 by the Mandal Revenue Officer and caution Boards were erected on the said lands about possession of the land with Official Liquidator. Upon erection of caution boards, Smt. Jalagam Suryakantamma, Smt. Jalagam Venkata Mythili and Tekula Govardhan Reddy approached this Court claiming to have purchased parts of the land from Sri Nagendra Vishnuvardhan during the year 2000 and sought raising of attachment.

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3. The application filed by them came to be disposed of on 18.11.2008, vide Company Application Nos.58, 59 & 1122 of 2007. The relevant portion of the order reads as hereunder:-

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“ I have given my anxious considerations to the rival submissions. As at present advised, copies of the sale deeds produced by the applicants in all the three Applications certainly indicate that they have acquired

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right, title and interest over these immovable properties much prior to the affairs of the company being reported adversely. Prima facie, if the son of the Managing Director was a truthful owner of these properties, he has a perfect and legitimate right to deal with such property in the manner considered appropriate by him. If it is ultimately established that the properties in question have been acquired by the son of the former Managing Director only from out of the funds of the company under liquidation, then, perhaps, a valid dispute with regard to the title to the property in question can be agitated or thought of. I am of the opinion that without first establishing that the funds of the company under liquidation have been permitted to be utilized for acquisition of the assets in the name of the son of the former Managing Director, it will not be proper for one to suspect the title.

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I, therefore, consider it appropriate to raise the attachment of the immovable properties belonging to the applicants for the present. However, the applicants shall not alienate or create any permanent 3^rd party interests by way of entering into lease, for long term, or mortgaging the property, without intimating the said fact in advance of at least 15 days, to the Official Liquidator under registered post, so that the Official Liquidator will be able to react in the manner considered appropriate by him, at that stage. Subject to the above condition, the attachment of the immovable properties ordered on 8^th June 2006 in Company Application No.229 of 2006 shall stand raised and these three Company Applications stand allowed. No costs”

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4. On an application moved by the Official Liquidator, this Court appointed Sri Kishore Reddy, Chartered

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Accountant to inspect and audit the books of account of the company and also inspect and interact with the bankers of the company and ascertain as to whether any of the funds of the company have been utilized for the purpose of acquiring assets in the name of any relative including the son of the former Managing Director of the company. The Chartered Accountant, vide his letter dated 18.9.2009, informed that the list of inventory of available records is not sufficient to come to a conclusion, whether there is any diversification/mismanagement of funds of the company by its management to their own or to their related companies or firms in which they are interested.

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5. T.Govardhan Reddy and 2 others approached the Official Liquidator in the form of letters seeking release of the landed properties admeasuring Ac.11.20 guntas in Sy.No.179, Ac.4.00 in Sy.No.182, Ac.2.00 in Sy.No.183 attached by this Court with an intention to sell the same. Hence, this application by the Official Liquidator with the prayer stated supra. 6. Heard leaned counsel appearing for the Official Liquidator.

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7. As on this day, no material has been placed on record to show that the lands in question were purchased by diverting funds of the company (in liquidation). Even

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the Chartered Accountant appointed by this Court for the purpose of verification of record of the company (in liquidation) as to any diversion/mismanagement of the funds, has expressed his inability to give true and fair report on the diversion or mismanagement of the funds by the Management of the company. Such is the situation, I deem it appropriate to allow Smt. Jalagam Suryakantamma, Smt.Jalagam Venkata Mythili and Tekula Govardhan Reddy to deal with the property, as they like.

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8. Accordingly, the Company Application is allowed. No costs.

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_____________________ B.SESHASAYANA REDDY, J

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Dt. 20-04-2010 RAR

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THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY

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Company Application No.1854 of 2009

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DATED : 20-04-2010

M/s Monarch Finlease Ltd. (In Liqn) v. -

Case brief

What is this about?

What did the court decide?

M/s Monarch Finlease Ltd. (In Liqn) v. -

Case brief

What is this about?

What did the court decide?

What the court decided

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