Karnataka High Court
Credit: DH File Photo
The Karnataka High Court has quashed the sale of a 3,831.8 sq ft property by the UB Group on the third floor of the Canberra Block in UB City to Brunton Developers in 2012.
The court has now directed the official liquidator to take possession of the property and auction it in accordance with the law.
"On taking possession of the said premises, the official liquidator is directed to bring the said property for auction after taking necessary permission from this court and complete the auction process in accordance with the law by obtaining such orders from this court as and when are necessary,” Justice Suraj Govindaraj said while dismissing the company application filed by Brunton Developers, Bengaluru.
The petitioner had approached the High Court seeking a directive for the issuance of a khata and other necessary documents related to the property.
The petitioner claimed that United Breweries (Holding) Limited, the company in liquidation, had conveyed the property through a registered sale deed dated May 21, 2012, for Rs 3 crore. United Breweries had stood as a guarantor for money lent to liquor baron Vijay Mallya’s Kingfisher Airlines.
The petitioner further claimed that the amount paid exceeded the guidance value by nearly Rs 31 lakh.
The official liquidator filed objections, contending that since the sale took place after the initiation of winding-up proceedings, it was deemed a fraudulent transaction under Section 536 of the Companies Act, 1956.
The court noted that the sale by the company in liquidation was void under sections 536 and 537 of the Companies Act, 1956, as well as sections 334 and 335 of the Companies Act, 2013. It also pointed out that, according to a memo submitted by the official liquidator, properties on other floors of the same building had been sold at a higher price.
The court observed that the winding-up petition was filed on March 26, 2012, while the sale occurred on May 21, 2012. Since the winding-up order was passed on February 7, 2017, the purchaser’s application, filed on June 30, 2023, was ex facie barred by limitation under Article 113 of the Limitation Act, 1963.
“The sale price at which the subject property has been sold to the applicant is not the market value at the time of the sale. The valuation is much less than the value at which the developer sold his share of the same unit under a contemporaneous document. The measurements indicated also being completely different, the transaction is not bona fide and has been structured in a way to benefit a related party to the managing director of the company in liquidation,” the court said.