An interim application sought to declare a sale agreement dated 5th September 2007 as unaffected by Section 536(2) of the Companies Act, 1956, and to ratify the sale. The property, initially leased by MIDC to Ferral Anant Machinery Manufacturers Pvt. Ltd., was under winding-up proceedings since 2003. The applicant, unaware of these proceedings, negotiated and completed the sale in 2007, and later invested in the property. The winding-up order was passed in 2010, and the Official Liquidator (OL) sought to void the sale, claiming it violated Section 536(2). The applicant argued for the validity of the sale based on bona fide purchase and lack of claims against the company. The court validated the sale, deeming it bona fide and fair, ruling that Section 536(2) did not apply.

Liquidation Proceedings and Discovery

• The OL initiated liquidation, held meetings with ex-directors, the petitioner, and Bank of Baroda.
• On 17th June 2011, Bank of Baroda confirmed dues settlement and a credit balance to be deposited with the OL.
• The OL visited the factory premises on 25th June 2011 and found the Applicant operating there.
• The Applicant purchased the factory premises in 2007 for Rs.1,25,00,000/-.

Official Liquidator’s Report and Applicant’s Application

• The OL filed a report seeking to declare the sale void and to direct Bank of Baroda to deposit Rs.353.17 lacs.
• The Applicant filed an application to declare the sale agreement valid and to restrain the OL from taking possession of the property.

Court Proceedings and Temporary Orders

• On 13th October 2011, the court allowed the Applicant to withdraw with liberty to adopt appropriate proceedings and directed the OL to invite claims.
• Bank of Baroda was directed to deposit Rs.3,53,17,000/- if claims were received.
• No claims were received, and Bank of Baroda sought to recall the order.

Civil Suit and Court Orders

• The Applicant filed a civil suit for declaration of the sale agreement’s validity and obtained a temporary injunction.
• The OL’s application to reject the plaint was granted, declaring the civil court had no jurisdiction.
• The OL issued a letter requesting the Applicant to hand over possession of the property.

Consideration of Sale Transaction Validity

• The court considered the due diligence conducted by the Applicant, payment of consideration, and no dues confirmation from Bank of Baroda.
• The Applicant invested substantially in the property and employed around 100 workers.

Legal Interpretation of Section 536(2) of the Companies Act

• The court referred to precedents indicating that “void” in Section 536(2) means “voidable” and discretionary.
• Bonafide transactions for consideration during the winding-up process can be validated.

Court’s Decision

• The court validated the sale agreement dated 5th September 2007, recognizing it as bona fide and protecting it under Section 536(2).
• Permanent injunction granted restraining the OL from disturbing the Applicant’s possession of the property.
• Request for stay of the order was rejected.