An unregistered assignment agreement cannot support specific performance against a company in liquidation.

The Applicants sought an order requiring the Official Liquidator to convey four tenanted properties in Lalbaug to them under an unregistered Deed of Assignment dated 7 May 2013, or alternatively to recognize their claimed payment of ₹12,13,65,000, with interest, as a charge having priority over other creditors.

They also sought delivery of title documents.

The deed linked the purported assignment to the Applicants’ earlier mortgage of their flat to IFCI as third-party security for Orbit’s loan; the mortgage was executed on 31 December 2010, more than two years before the assignment.

The Applicants claimed that the flat’s sale proceeds were used, among other things, to discharge Orbit’s liability to IFCI.

Orbit was in liquidation following the admission of a winding-up petition and appointment of an Official Liquidator.

1. Whether the Applicants could obtain specific performance or confirmation of rights over the Lalbaug properties under the unregistered and allegedly incomplete Assignment Agreement.

2. Whether the Applicants established an entitlement to a charge, priority, or payment from the liquidation estate based on their third-party security and the Assignment Agreement.

The Court treated the absence of registration as a material bar to considering the Assignment Agreement in an application seeking specific performance, where the document purported to assign interests in immovable property.

It also considered whether the agreement was complete and supported by credible evidence, including the absence of further agreements said to be required, board resolutions, and witnesses.

The Court referred to Pankaj Mehra v. State of Maharashtra, (2000) 2 SCC 756, and Navjivan Mills Ltd., In re, (1986) 59 Comp Cas 201 (Guj), concerning dispositions by a company after presentation of a winding-up petition; it held that those authorities did not assist the Applicants in the circumstances of this case.

The SARFAESI Act, 2002, was mentioned in the factual context of IFCI’s enforcement action, not as the basis for the decision.

The Court found the deed’s timing and substance doubtful: the Applicants’ mortgage predated it by over two years, there was no contemporaneous agreement providing for subrogation, and the deed was unregistered.

The Applicants’ close connections with Orbit, shared address and Orbit-based email arrangements, and the deed’s incomplete character further undermined its credibility and suggested an attempt to create an interest in the liquidation estate in competition with other creditors.

Even if the Applicants had established loss from the enforcement of their third-party security, the Court considered that they would rank as unsecured creditors rather than obtain priority over other creditors.

It therefore declined to grant relief on the basis of the Assignment Agreement; the cited winding-up authorities did not alter that conclusion.

It refused to direct conveyance of the Lalbaug properties, recognize the claimed charge or priority, or grant the related relief concerning title documents.