Pavlova Estates Private Limited vs MSTC Limited and Others

G.S. Patel, J.—The reliefs sought in these two Company Applications are identical. The applicant claims to be the purchaser of commercial office premises being office unit No. 105, Free Press House, 10th floor, Free Press Journal, Nariman Point, Bombay 400 021 and the attendant car parking space ("the Free Press House premises"). It seeks a declaration that it is the bona fide purchaser of these premises; that its transactions relating to these premises are valid and that the Official Liquidator of Shri Ishar Alloy Steels Limited ("the company in liquidation"; "the Company"; "Shri Ishar Alloys") has no claim whatsoever in respect of those premises. There are two applications because there were two company petitions for winding up. The prayers are otherwise identical in each.

The facts of these two applications are illustrative, among other things, of the sometimes catastrophic consequences of the delays in the judicial system and the effect these delays can have on unsuspecting third parties. The circumstances in which these companies were ordered to be wound up are also most peculiar.

The applicants, Pavlova Estates Private Limited ("Pavlova") identified the Free Press House Premises, and the attendant car parking space, as suitable for their needs. At the relevant time, i.e., in 2005, these apparently were owned by Neco Tech Auto Components Limited ("Neco Tech"). Pavlova learnt that Neco Tech had purchased the Free Press House Premises from Shri Ishar Alloys under a Deed of Transfer dated 25th November 2001. On 2nd November 2005, Advocates for Pavlova issued a public notice in the Economic Times and in the Maharashtra Times setting out that Pavlova was interesting in purchasing these premises free of any encumbrances and inviting all persons with claims to make these claims known within 15 days. A search report of 8th November 2005 in respect of Neco Tech showed that there were no encumbrances in respect of these Free Press House Premises. On 16th December 2005, Neco Tech and Pavlova executed a Sale Deed for a consideration of 3,43,08,000/-. This Sale Deed is registered. On 16th December 2005, Pavlova mortgaged the Free Press House Premises to Kotak Mahindra Bank Limited. A few days later, Form Nos. 8 and 13, as required by Sections 125, 127 and 135 of the Companies Act were filed in relation to this charge.

On 10th March 2006, Pavlova''s Advocates issued a title report in respect of the Free Press House Premises. This report recorded that search had been taken in the records of the Sub-Registrar of Assurances, and, on 8th November 2005 with the Registrar of Companies, and that these showed no encumbrances over the premises. There was also no response to the public notices issued on 2nd November 2005. The report noted that by three Deeds of Transfer dated 15th February 2001 and one Deed of Transfer dated 25th February 2001, Shri Ishar Alloys had transferred its premises to Neco Tech; and that while Neco Tech had paid the stamp duty by having these deeds adjudicated, the deeds were not registered as the Collector''s NOC was not obtained. In September 2005, Neco Tech lodged these Transfer Deeds under the share certificate with the Free Press House Cooperative Society Ltd. ("FPH Society"), following which the premises were duly transferred to the Neco Tech''s name. Pavlova''s Advocates, on this basis, certified Neco Tech''s title as being cleared and marketable.

Four year later, on 18th March 2010, a memorandum of deposit of title deeds was executed by Kotak Mahindra Bank Limited recording the past transactions by which Pavlova created an equitable mortgage of its immovable properties, including the Free Press House premises, in favour of Kotak Mahindra Bank.

From 2005 to 2011, Pavlova used and occupied the Free Press House premises. It exercised its rights as a member of FPH Society. It paid all taxes and outgoings. On 15th November 2011, six years after Pavlova''s sale deed, the Official Liquidator of Shri Ishar Alloys wrote to the Free Press House Cooperative Society Limited saying that registered office of that company (in liquidation) was in these very premises; and that by an order dated 16th January 2008 in Company Petition No. 1214 of 1999 and Company Petition No. 649 of 1999, i.e., the present company petitions, this Court had ordered Shri Ishar Alloys to be wound-up. The Official Liquidator claimed that he was required, therefore, to take possession of the Free Press House premises and demanded the relevant documents after 28th September 1999, stated to be the date of commencement of winding-up proceedings under Section 441 of the Companies Act, 1956.

On 21st November 2001, the FPH Society replied to the Official Liquidator. It said that Shri Ishar Alloys was a member of the society from 29th July 1989 to 8th September 2005 as the owner of those premises; that at no point of time had the Society been informed of the pendency of these winding-up petitions either by Shri Ishar Alloys; that the premises had been transferred first to Neco Tech on 8th September 2005 and then to Pavlova; that Pavlova was in occupation and use of the premises ever since; and that the premises were mortgaged to Kotak Mahindra Bank Limited. The Society provided photocopies of all documents of transfer.

On 1st December 2011, Pavlova''s Advocates wrote to the Official Liquidator setting out the circumstances of its purchase of these premises, and saying that these had been purchased at the market price after exercising of due caution. Pavlova claimed to be bona fide purchaser of these premises.

The present company applications were filed on 17th January 2012. The Official Liquidator, Pavlova and the Petitioners in Company Petition No. 649 of 1999 filed affidavits in reply.

To fully appreciate the circumstances preceding these applications, I believe it is necessary to set out the sequence of events in somewhat fuller detail than might otherwise have been necessary:

(a) Incorporated in the late 1960''s as a public limited company, Shri Ishar Alloys began manufacturing alloys, and carbon and stainless steel billets in M.P. Till 1996, it was a profit-making enterprise. Its commercial fortunes declined in the years that followed. By the end of the fiscal year 1997, it carried a loss of 105 lakhs on its books. Even so, its net worth was Rs. 1230 lakhs. By end-March 1998, however, its carry-forward losses had increased to Rs. 6394 lakhs. On 5th June 1998, Vysya Bank filed Company Petition No. 479 of 1998 and Company Petition No. 412 of 1998 against Shri Ishar Alloys.

(b) At that time, Shri Ishar Alloys had its registered office at the Free Press House premises (the very premises with which the present applications are concerned). On 5th July 1998, Ishar Alloy created a monthly tenancy in respect of these premises in favour of one Steel and Tube Exports Private Limited.

(c) On 30th September 1998, Shri Ishar Alloys granted an option to one M/s. Jayaswals Neco Ltd. to purchase the Free Press House premises (including the car parking space). Jayaswals Neco Ltd. was a creditor of Shri Ishar Alloys. The purchase option was a comfort measure to establish Shri Ishar Alloys'' bona fides and commitment to repay to Jayaswals Neco Ltd. dues. It was agreed that this option was not to be exercised before 31st March 1999, but only after 1st April 1999 and till 1st October 1999. The occupancy by Steel and Tube Export Private Limited as the monthly tenant of these premises was noted, and provisions were made for its eviction.

(d) A month later, on 31st October 1998, Shri Ishar Alloys made a reference to the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985. The reference was numbered as Case No. 304 of 1998 and Shri Ishar Alloys was informed of the registration of its reference on 18th November 1998. Later proceedings before the BIFR, including in particular those of 30th March 1999, show that BIFR then declared Shri Ishar Alloys to have become a sick industrial unit. Holding that measures under Section 18 of the SICA were necessitated, the BIFR appointed ICICI was appointed as an operating agency to formulate a rehabilitation scheme. Shri Ishar Alloys and its promoters were directed not to dispose of any of the company''s assets without the BIFR''s consent.

(e) In the meantime, on 2nd June 1999, Company Petition No. 649 of 1999 (one of the Company Petitions above) was filed by one IFGL Refractories Limited seeking the winding up of Shri Ishar Alloys. At this time, the reference to the BIFR by Shri Ishar Alloys had been made, and was registered and pending, and an operating agency had been appointed. On 1st July 1999, IFGL Refractories Limited''s petition No. 649 of 1999 was accepted. Notice was issued to Shri Ishar Alloys. The petition was made returnable on 12th August 1999. On 22nd September 1999, the second winding-up petition above, Company Petition No. 1214 of 1999 was filed by MSTC against Shri Ishar Alloys. On 14th December 1999, IFGL Refractories Limited''s Company Petition No. 649 of 1999 came to be admitted. It was made returnable on 7th February 2000. The petitioner was directed to advertise the petition.

(f) It seems that Shri Ishar Alloys thereafter submitted a rehabilitation scheme to BIFR. This scheme specifically states that one of the means of finance would be the sale of Shri Ishar Alloy''s premises in Mumbai, i.e., the Free Press House premises.

(g) On 14th December 2000, an order was made on IFGL Refractories Limited''s Company Application No. 139 of 2000 setting aside the order of admission and adjourning the company petition sine die in view of the pendency of the reference before the BIFR. As we shall see, the order ought to have been one of dismissal of the petition since Section 22 of the SICA does not allow such a petition to "lie or be proceeded with" once a reference has been registered. In other words, no winding up petition after the registration of the SICA reference before the BIFR could have been filed, accepted, admitted or kept pending. This is a circumstance that may not be of consequence to Shri Ishar Alloys; it is a pivotal factor in assessing Pavlova''s case today.

(h) On 13th January 2001, agreements for sale were entered into by Shri Ishar Alloys as the transferor, and (i) one Tarunkumar Trade and Exports Private Limited; (ii) one Abhijit Iron Processors Private Limited; and (iii) one Jayaswal Holdings Private Limited as nominees of Jayaswal Neco Private Limited, following the option agreement dated 30th September 1998. Each of these three companies took a one quarter share (i.e. a total of a 75% share) in the Free Press House premises on ''as is where is'' basis for a consideration of Rs. 56.25 lakhs per nominee. All these sales were subject to the occupancy of Steel & Tubes Export Private Limited, the monthly tenant.

(i) On 15th February 2001, four deeds of transfer were executed by Shri Ishar Alloys as the transferor and Neco Tech Auto Components Limited as transferee and the three companies mentioned earlier as confirming parties. By each of these four deeds, a one-fourth undivided share in the Free Press House premises and the attendant garage was sold and transferred for a total consideration of Rs. 2.25 crores. Once again, the sale was subject to the occupancy of Steel & Tubes Exports Private Limited, the monthly tenants. Neco Tech claimed that these purchases were done after they took search at the Registrar of Companies and made enquiries with the FPH Society and satisfied itself as to the marketability of the title. At this stage, it must be noted that contemporaneous sales of July and November 2000 of the sixth and twelfth floor of the same building indicate that the rate per square feet of the sale to Neco Tech, i.e., Rs. 10,393/-, was not an undervaluation. The sixth floor premises were sold in July 2000 at Rs. 9,300/- per square foot, while those on the twelfth floor, admeasuring 1,736 square feet, were sold in November 2000, for about Rs. 11,710/- per square foot. Also, at about this time, Neco Tech arrived at a settlement with Steel & Tube Exports Private Limited and secured vacant possession of the Free Press House premises. For the next four years, till 2005, when the Free Press House premises were transferred to Pavlova, Neco Tech continued in possession and occupation of these premises. The premises were also duly transferred to Neco Tech''s name in the records of the FPH Society.

(j) On 19th September 2001, the BIFR passed an order inter alia holding that it was of the prima-facie opinion that Shri Ishar Alloys was not likely to make its net worth positive within a reasonable time and that it would not be able to meet its financial obligations. It held that Shri Ishar Alloys was not likely to become viable in future and, it was, therefore, just, equitable and in the public interest that it be wound up under Section 20(1) of the SICA. This opinion was directed to be forwarded to this Court along with copies of earlier orders. Shri Ishar Alloys''s appeal was dismissed on 26th February 2002, and, on 9th July 2002, so was its writ petition in the Delhi High Court.

(k) For the next two and a half years, there seems to have been a quietus. On 28th December 2004, Shri Ishar Alloys executed four deeds of confirmation between itself and Neco Tech Auto Components Limited as the transferee, and also (i) Jayaswal Holding Private Limited; (ii) Abhijit Iron Processors Private Limited; and (iii) Tarunkumar Trade and Exports Limited as confirming parties respectively, confirming the execution of the four sale deeds in February 2001, and further confirming that these sale deeds were valid, binding and enforceable against the parties. This was necessary because those deeds of transfer had not yet been lodged for registration. These deeds were then adjudicated for stamp duty under an amnesty scheme and the deficit stamp duty was paid on 6th December 2004. These deeds contained a noting that the market value of the entire property was Rs. 3,49,34,000/- and that 1/4th of the stamp duty computed was Rs. 8,73,350/-. The certificate issued under Section 41 of the Bombay Stamp Act, 1958 recorded that the proper stamp duty was Rs. 8,73,350/-, and that a penalty of Rs. 13,110/- had been paid.

(l) Following another two-year hiatus, on 1st December 2006, an order was passed in Company Petition No. 1214 of 1999 (the MSTC petition) with Company Application (L) No. 4234 of 1995 and Company Application (L) No. 435 of 1999. This Court directed the registry to write to the BIFR for confirmation as to whether any recommendation for winding up of Ishar Alloy had been sent by the BIFR to this Court and whether there were any proceedings pending before the BIFR in respect of Shri Ishar Alloys. The matter was then placed for further directions on 22nd December 2006.

(m) On 8th February 2007, Company Petition No. 154 of 2007 filed in this Court for winding up Shri Ishar Alloys was admitted. This was the petition on the recommendation for winding up of Shri Ishar Alloys made by the BIFR. This petition was made returnable on 27th March 2007. A Provisional Liquidator was appointed and directions were issued for advertisement.

(n) On 26th July 2007, an order was passed in Company Petition No. 479 of 1998 (with Company Application No. 412 of 1998) - the winding up petition filed by Vysya Bank - inter alia to the effect that the registry had received a communication from BIFR recommending the winding up of Shri Ishar Alloys. The Court noted that it was unclear from this communication whether Shri Ishar Alloys had filed an appeal or not. A direction was issued to the registry to ascertain this, and the matter was then adjourned for three weeks.

(o) On 13th September 2007, an order was passed in Vysya Bank''s Company Petition No. 479 of 1998. This Court noted that it had received confirmation of BIFR''s recommendation for winding of Shri Ishar Alloys; that the BIFR''s recommendation had been converted into a winding up Company Petition No. 154 of 2007, which was admitted on 8th February 2007 with a provisional liquidator being appointed and directions being issued for advertisement. In view of that, Vysya Bank''s winding up petition was also admitted and further directions were issued, including for advertisement and for deposit of Rs. 10,000/- by the petitioners, Vysya Bank, with the Prothonotary & Senior Master toward publication charges. This was a self-operative order that provided that should Vysya Bank fail to make that deposit, the petition would stand dismissed for non-prosecution without further reference to the Court. On 16th January 2008, a further order was passed in Vysya Bank''s Company Petition No. 479 of 1998. This Court noted that the petitioners, Vysya Bank, had not deposited the amount of Rs. 10,000/- towards publication charges; and that, therefore, in view of the self-operative order of 13th September 2007, the petition stood dismissed. The petition was, therefore, removed from board.

(p) The position on 16th January 2008 was, therefore, that that the only petition filed prior to the reference to the BIFR, i.e., the petition by the Vysya Bank, stood dismissed. But, on that very day, 16th January 2008, when the Vysya Bank winding up petition was dismissed, the present two petitions were allowed, and an order was passed that the company, Shri Ishar Alloy Steels Limited, be wound up. The Official Liquidator was appointed. Similarly, an order was also passed in the suo-motu Company Petition No. 154 of 2007, (filed on the BIFR''s recommendation for winding up), inter alia stating that no further orders were required on that petition. For some reason, all three petitions were treated as "disposed of". It was also directed that should the present two petitions filed by MSTC and IFGL Refractories revive, then, the suo-motu petition would also revive.

This was the factual background that emerged from the affidavits filed in the present two Company Applications. Clearly, the antecedent facts were not to Pavlova''s knowledge till after it filed the present company applications.

To complete the narrative: on 26th April 2012 an order was made in Company Application No. 80 of 2012 directing the Official Liquidator not to take further orders or furthers steps as regards Free Press House premises, and restraining Pavlova from creating dispositions of third party rights in respect of those premises. On 26th July 2012, by another order, Neco Tech Auto Components Limited was added as party respondent No. 2 to the Company Applications, so that they could produce the documents of purchase of the Free Press House premises from Shri Ishar Alloys. On 25th February 2013, Neco Tech Auto Components Limited/Jayaswal''s Neco Industries Limited, filed a further affidavit, following an earlier order on 31st January 2013, saying that Company Petition No. 649 of 1999 filed by IFGL Refractories Limited had been filed and entertained in June 1999 despite the fact that the BIFR reference had been filed and registered well prior thereto by the BIFR. Two days later, on 27th February 2013, by another order, notice was directed to be given to the petitioners in the present Company Petition. On 26th September 2013, the Company Applications were amended to include a prayer [by inserting prayer (aa)] for a declaration that Company Petition No. 649 of 1999 and all orders in that petition including the order dated 16th January 2008 were null and void in view of the then pending reference of the BIFR. I must straightaway note that this amended prayer, included in both Company Applications in relation to the orders of admission and winding up passed in those petitions, is not pressed by Mr. Chinoy, learned senior counsel for the applicants.

From these dates it is apparent that there were as many as four separate petitions for the winding up of Shri Ishar Alloys. The first was Company Petition No. 479 of 1998 filed by Vysya Bank. The second and third were the present two petitions, Company Petition No. 649 of 1999 filed by IFGL Refractories Limited and Company Petition No. 1214 of 1999 filed by MSTC. The fourth was the suo-motu Company Petition No. 154 of 2007 on the recommendation made by BIFR for winding up Shri Ishar Alloys. Of these, only the Vysya Bank winding up petition was prior to the reference to BIFR made by Shri Ishar Alloys on 31st October 1998, and registered by the BIFR on 18th November 1998. The present two petitions were filed, respectively, on 1st July 1999 (Company Petition No. 649 of 1999, IFGL Refractories Limited) and 22nd September 1999 (Company Petition No. 1214 of 1999 filed by MSTC). These were, in fact, filed after the BIFR appointed ICICI as the operating agency and undertook steps for an examination of a viable rehabilitation scheme. That was done on 30th March 1999. In view of Section 22 of the SICA, neither of these petitions was maintainable. That section is unambiguous in its terms when it says that no proceedings for winding up, execution, distress or the like against a Company which has made a reference to BIFR shall "lie or be proceeded with." There was, therefore, no question of passing any orders on these two petitions. Vysya Bank''s petition was subsequently dismissed by a self-operative order, as I have already noted above. This means that the only ''effective'' petition, one on which an order of winding up could have been passed, was Company Petition No. 154 No. 154 of 2007 on the recommendation made by BIFR for winding up Shri Ishar Alloys.

Sections 536 and 441 of the Companies Act, 1956 read as follows:

AVOIDANCE OF TRANSFERS, ETC., AFTER COMMENCEMENT OF WINDING UP

(1) In the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of the winding up, shall be void.

(2) In the case of a winding up by or subject to the supervision of the Court 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.

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 the 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 any 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.

(emphasis supplied)

From this, it is clear that the date of winding up by a court is the date of presentation of the petition. Given that the present two petitions were not maintainable and that the Vysya Bank petition was subsequently dismissed, the only petition whose presentation date could be reckoned for the purposes of Section 441, was, therefore, the petition on the BIFR recommendation, i.e., Company Petition No. 154 of 2007. The presentation date of that petition was 8th February 2007. By that time, the sales in favour of Pavlova had already been completed. In fact, they had been completed two years earlier. At this stage, it must be noted that the order of admission on the present two petitions filed by IFGL Refractories and MSTC was set aside on 14th December 2000. Those two petitions then lay dormant and they were only again taken up along with the BIFR suo-motu Company Petition No. 154 of 2007. The order dated 16th January 2008 allowing the present two petitions and ordering the winding up of Shri Ishar Alloy Steels Limited, could not, in my view, have been made. Those petitions, as I have noted, were clearly not maintainable and did not lie. That order ought to have been made, and made only, in the suo-motu BIFR Company Petition No. 154 of 2007.

It would seem, from these assessment of the facts, that the applicants are today, a victim of a series of circumstances not only beyond their control but a series of missteps that ought never have to have been taken. Mr. Chinoy is justified in saying that it is not possible to do a complete roll-back of all these orders, or to completely set right all that happened several years in the past. The consequence of any such endeavour would be extreme. However, he is equally justified in his submission that the consequences of those errors or missteps ought not to be visited on the present applicants, Pavlova.

Mr. Chinoy points out that before the BIFR too, it was clear that a sale of these very office premises was very much in contemplation. This is evident inter alia from the minutes or summary record of the proceedings held on 30th March 1999 before the BIFR and also from paragraph 11 of the summary record or proceedings of the hearing held on 22nd May 2000. Indeed, the latter record indicates that it was specifically stated that the promoters of Shri Ishar Alloys would bring in Rs. 18 crores by way of their contribution, of which Rs. 2 crores would be through the sale of the office premises. There was, therefore, Mr. Chinoy submits, and in my view rightly, no injunction per se or any restraining order in respect of the sale of these premises at that time from Shri Ishar Alloys to Neco Tech or its nominees. Consequently, the further sale by Neco Tech to Pavlova could not be invalidated, in as much as Neco Tech not only paid a fair market value for the premises, but also acquired a good, clear and marketable title.

Mr. Chinoy relies on two decisions of a learned Single Judge of this Court, in Vasa Pharma-chem Private Limited, in re National Packaging vs. The Official Liquidator of Eupharma Laboratories Limited,1 and in Alkaben Rajeshbhai Shah vs. The Official Liquidator of Eupharma Laboratories Limited.2 In both these orders, in circumstances that are perhaps not quite as extreme as the present case, the Court exercised its discretion having regard to the peculiar facts and circumstances of each of those cases and did not invalidate the sales. In Alkanben Rajeshbhai Shah, the Court ordered a valuation on condition that if a difference in valuation was found, the purchaser would pay the differential. 19. Mr. Sen, learned senior counsel appearing for the Official Liquidator, however, contests this formulation by Mr. Chinoy. He relies on the decision of a Division Bench of this Court in Keshrimal Jivji Shah and Another Vs. Bank of Maharashtra and Others, to contend that a transfer of immovable property in violation of an order of injunction or prohibition is no transfer and it confers no right, title or interest in the transferee. In his submission, it makes no difference who issues this injunction. As long as there is a prohibition on the transfer, whether by a Court, a Tribunal, a Board or by operation of statute, no further transfer of title is possible. Any such attempted transfer of title is of no effect. I am unable to accept or even to appreciate this submission. The argument proceeds on the a priori assumption that there was, as a matter of demonstrable fact, such a restraint, or that there was some order that, by operation of statute, had the effect of being such a restraint. There would, therefore, have had to be (and specifically so shown to exist), either an injunction of the BIFR or of this Court, or that there was some valid order of admission of a winding up petition that resulted in a prohibition on a transfer. There being no such injunction of the BIFR, I understand this submission to mean that the order of admission on 16th January 2008 on the IFGL Refractories Petition and the MSTC Petition would relate back to the date of presentation of those petitions, even leaving aside the Vysya Bank petition since that was dismissed. Since those petitions were presented before the sale to Pavlova, the statutory restraint is in place and must be enforced. Here, too, there is a fallacy: the statutory restraint under section 536(2) read with section 441 must be in the context of a petition that is maintainable. I have very little doubt that Mr. Chinoy is entitled to an order in terms of his amended prayer (aa), setting aside the order of winding up on both those petitions; that he does not press it for reasons of prudence is immaterial.

A I have noted, before the BIFR there was no injunction on or restraint of the sale of the Free Press House premises. To the contrary: the proposed sale of those premises was specifically placed before the BIFR as a potential source of funding and of the promoters'' contribution. No injunction was ever granted by the BIFR. What Mr. Sen seems to contend, as I understand it, is that since in the Vysya Bank petition there was an order of admission, that would have operated as a restraint; or, alternatively, since the present two petitions were admitted, those orders would operate in the form of an injunction. Therefore, according to Mr. Sen, there was in operation at least an order of injunction prior to the transfers in 2005 in favour of Pavlova. However, it must be noted that Vysya Bank''s winding up Company Petition No. 479 of 1998 was not admitted or ordered to be advertised till 13th September 2007. The mere pendency of Vysya Bank''s winding up petition, without any order of admission, advertisement or appointment of a provisional liquidator, could never have operated as an injunction in 2005. This mean that the only order which could possibly be said, on Mr. Sen''s formulation, to have operated as an injunction was the order of 14th December 1999 by which IFGL Refractories Company Petition No. 469 of 1999 was admitted and ordered to be advertised. The trouble with this formulation is two-fold. First, that order of admission was set aside on 14th December 2000, exactly one year later. Therefore, from 14th December 2000, even in the present Company Petition No. 649 of 1999 there was no restraint order or any order that would have the effect of functioning as an injunction. Secondly, as I have already noted, both these petitions, Company Petition No. 649 of 1999 and Company Petition No. 1214 of 1999, could never have been filed in view of the reference previously made, prior to the filing of these petitions, before the BIFR and which was duly registered by the BIFR.

The Vysya Bank petition was dismissed and therefore falls from reckoning; the IFGL Refractories and MSTC petitions did not lie in view of the pending BIFR reference; and therefore the only validly presented petition whose presentation date was material was the suo-motu Company Petition No. 154 of 2007 on the BIFR''s recommendation. That presentation date is well after the sale to Pavlova.

In my view, Mr. Chinoy is right when he suggests that it was not appropriate that all these orders be attempted to be set right at this stage or to suggest that any order of the BIFR resulted in a voidness of the transactions in favour of Pavlova. There is, as he points out, material to indicate that even the BIFR did not consider the sale of the office premises as a violation. One must have regard to the entire basket of equities while assessing whether a case has made out for the exercise of an equitable discretion under Section 536(2) of the Companies Act, 1956.

For all these reasons, I am satisfied that these applications deserve to be allowed. Certainly it cannot be that, at this distant remove in time and given the series of missteps, both judicial and forensic, made in the past, the applicants should be put to any loss. I note that there are no allegations of fraud, collusion or undervaluation. In any case, there is no cogent material to indicate any such fraud, collusion or undervaluation. To the contrary, the material indicates, as I have noted earlier, that the sales to Neco Tech and Pavlova were both within an acceptable range of property values at the relevant time.

There is one final aspect. To succeed in his submission, Mr. Sen must show that there is no discretion vested in the Court, and that every such transfer is absolutely void. This, as Mr. Sen readily concedes, is not the wording of Section 536(2). The words "unless the Court otherwise orders" must receive due consideration. Though knowledge of the presentation of a winding up petition is immaterial,3 transactions bona fide entered into and completed in the ordinary course should be protected.4 The expression "unless the Court otherwise orders" is one that imposes a duty on the court; it must deal with each case on its own facts, and have regard to questions of good faith and honest intention, to do what is just and fair. Certainly the legislature could not have intended that such honest, bona fide and genuine transactions be thrown to the winds. There are no statutory or legislative restrictions or stated principles governing or controlling the exercise of this discretion. It is, therefore, at large and the same principles that apply to every kind of judicial discretion must, too, apply here proprio vigore.5 25. In Monark Enterprises Vs. Kishan Tulpule and others, a learned single Judge of this Court enunciated the principle thus:

"The basic principle is clear. Section 536(2) of the Act cannot be invoked unless the transferor exercises disposing power after the commencement of winding up. In this case, the disposing power had already been exercised by the transferor prior to the commencement of winding up and the only thing which remained to be done was obtaining of sanctions and permissions from various authorities. Thus the transaction cannot be treated as ''disposition of property'' effected after the commencement of winding up."

I see no reason why the essence of this principle cannot be applied to Pavlova''s case. The disposing power was exercised and the sale to Pavlova was completed before the presentation of the suo-motu BIFR-recommended Company Petition No. 154 of 2007. In fact, unlike in Monark, absolutely nothing remained to be done. The disposition was complete. The previous three petitions were all of no legal consequence as far as Pavlova is concerned. It would, I think, be piling an injustice on an error to invalidate the sale to Pavlova on account of the orders in the Vysya Bank, MSTC and IFGL Refractories winding up petitions. The latter two did not lie. The former, by Vysya Bank, was dismissed. To invalidate Pavlova''s purchase, one would have to hold that the MSTC and IFGL Refractories petitions were maintainable. That is contrary to the express words of the SICA. Invalidating a disposition on the basis of an order that ought never to have been made can only result in the kind of injustice against which the expression of discretion in Section 536(2) is a bulwark.

For these reasons, Company Application No. 80 of 2012 in Company Petition No. 1214 of 1999 and Company Application No. 81 of 2012 in Company Petition No. 649 of 199 are made absolute in terms of prayers (a), (a1), (a2) and (b), which read thus:

(a) that this Hon''ble Court be pleased to declare that the Applicant is a bonafide purchaser of the said property being Office Unit No. 105, Free Press House, 10th Floor, Free Press Journal Marg, Nariman Point, Mumbai 400 021 as more particularly described in Exhibit "A" hereto;

(a1) that this Hon''ble Court be pleased to declare that the transactions relating to the property being Office Unit No. 105, Free Press House, 10th Floor, Free Press Journal Marg, Nariman Point, Mumbai 400 021 as more particularly described in Exhibit "A" hereto under three Deeds of Transfer dated 15th February 2001 and one Deed of Transfer dated 25th February 2001 and read with four Deeds of Confirmation dated 28th December 2004 are valid and legal;

(a2) that this Hon''ble Court be pleased to declare that the transaction relating to the property being Office Unit No. 105, Free Press House, 10th Floor, Free Press Journal Marg, Nariman Point, Mumbai 400 021 as more particularly described in Exhibit "A" hereto under Sale Deed dated 16th December 2005 is valid and legal;

(b) that this Hon''ble Court be pleased to declare that the Official Liquidator of the Respondent has no claim whatsoever in respect of the said property being Office Unit No. 105, Free Press House, 10th Floor, Free Press Journal Marg, Nariman Point, Mumbai 400 021 as more particularly described in Exhibit "A" hereto;

Certified copy expedited.

1 Order dated 23rd July 2013 in Company Application No. 108 of 2013 in Company Petition No. 945 of 1998, per N.M. Jamdar, J. 2 Order dated 24th September 2013 in Company Application No. 416 of 2012, per N.M. Jamdar, J. 3 Tulsidas Jasraj Parekh Vs. The Industrial Bank of Western India, . 4 Park Ward & Co. Ltd., Re: (1926) 1 Ch 828; Andhra Bank Ltd., Bhimavaram Vs. D.P. Narayana Rao, Provisional Liquidator, Godavari Sugar and Refineries Ltd., Madras, . 5 Re: Steane''s (Bournemouth) Ltd., (1950) 1 All ER 21; In Re: T.W. Construction Ltd., (1954) 24 Com Cas 180 (Ch D); Travancore Rayons Ltd. Vs. Registrar of Companies, .