City Limo chief's properties to be auctioned in six months: HC

Swati Deshpande | TNN | Jun 10, 2017, 06.50 AM IST

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MUMBAI: The Bombay high court on Friday directed its official liquidator to take possession of and auction within six months four properties belonging to Sayyed Masood, chairman of investment company City Group, which had allegedly duped thousands of investors in 2010 by promising 48% returns on their investments.

Seven years on, the high court order comes as a relief to investors of one of his companies, City Limouzines (India) Ltd. The high court wound up the company in 2010.

Significantly , the high court has held that when a company has been wound up, its assets can be dealt with only by the official liquidator (OL)--a central government official appointed under the Companies Act--and not by either a special court or a competent authority under the Maharashtra Protection of Interest of Depositors (MPID) Act.

Personal properties of company directors will be secured by the MPID court, ruled Justice R D Dhanuka in a landmark judgment which has settled an issue of whether criminal investigation agencies, special MPID court or the liquidator has rights over the company's assets.

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The high court did not accept submissions by state lawyer G W Mattos that criminal law will have precedence over the Companies Act. It accepted arguments by counsel Naushad Engineer and Prathamesh Kamat that the OL is entitled to the company's assets. It also ac cepted their plea that a bail amount of Rs 60 lakh deposited by a former company director with the special MPID court be handed over to the liquidator towards settling claims.

The OL, who functions under the high court's supervision, facilitates sale of assets of companies in liquidation to pay off secured and unsecured creditors, in that order.

Justice Dhanuka, in a 70 page judgment, held that "provisions of the MPID Act and the Companies Act will have to be construed harmoniously by holding that on winding up of such companies, which are financial establishments as defined under the provisions of the MPID Act, assets of such wound-up companies would vest in the official liquidator and all the creditors, including the depositorsinvestors, can lodge their claims before the official liquidator."