Bombay HC Rejects Mantri Realty Promoters’ Children’s Bid To Validate Undated, Unregistered Flat Deals During Winding-Up

Mantri Realty Limited was ordered to be wound up following a petition presented on 22 January 2014.

Rhutu S. Mantri and Siddhant S. Mantri, children of the Company’s promoters and former directors, claimed flats in the Company’s Bangalore project under purported agreements for sale and to build.

They sought confirmation of those agreements under Section 536 of the Companies Act, 1956, and directions to the Official Liquidator (OL) to execute and register them.

The agreements were unregistered, and Rhutu’s agreement was undated; the record also contained conflicting dates, discrepancies in payment amounts and flat particulars, and no Board resolution establishing the signatory’s authority.

The OL opposed the applications.

By consent, Rhutu’s application was treated as the lead application, with the parties agreeing that the decision would also dispose of Siddhant’s application.

Under Section 441(2) of the Companies Act, 1956, a court winding up is deemed to commence when the petition is presented; under Section 536(2), a disposition of company property made after that date is void unless the Court otherwise orders.

The applicant seeking relief under Section 536(2) bears the burden of establishing that the transaction was in the ordinary course of business and for the benefit of the company in liquidation (Arambhan Hospitality Services Ltd. v. Official Liquidator of GOL Offshore Ltd.).

An incomplete transfer cannot, after winding up, be completed through a direction to the liquidator (Board of Industrial and Financial Reconstruction v. Hindustan Transmission Products Ltd.; M/s Bhairav Industries v. Official Liquidator of Shri Ghanshyam Parts Pvt. Ltd.; Sunita Vasudeo Warke v. Official Liquidator).

Under Sections 17 and 49 of the Registration Act, 1908, specified instruments affecting immovable property require registration, and non-registration limits their legal effect; under Section 17(1-A), an unregistered contract cannot support protection under Section 53-A of the Transfer of Property Act, 1882.

Section 53-A requires, among other things, possession delivered or continued in part performance.

A sale agreement, without a registered conveyance, does not itself transfer title (Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana).

The Court found that the applicants had not established reliable execution dates or due authority for the agreements: the documents were unregistered, Rhutu’s agreement was undated, and the asserted authority of Sarita Mantri was unsupported by a Board resolution.

The payment records did not reconcile with the agreements, receipt, bank certificate, affidavits and demand letters, and the claimed payments could not reliably be attributed to the specific flats.

Only Rs. 5,50,000 was shown as paid before the winding-up petition; substantial further payments were made after its presentation, including after appointment of the provisional liquidator.

The applicants’ relationship to the Company, coupled with the absence of cogent evidence of an arm’s-length transaction, further weakened the case for equitable relief.

Nor could Section 53-A assist: possession was to pass only after execution and registration of the sale deed, and the agreements were unregistered.

The Court distinguished the relied-on Mantri Serene decision because it concerned a dated, registered agreement.

Company Application Nos. 9 and 10 of 2025 were dismissed.