The Hindu : Sale of MCC Finance assets declared null and void

Online edition of India's National Newspaper
Saturday, Jun 21, 2003

Southern States

Southern States - Tamil Nadu

Sale of MCC Finance assets declared null and void

By A. Subramani

CHENNAI JUNE 20. Share transfers, sale of moveable and immoveable property and agreements, all involving several crores, by the MCC Finance Limited to other corporate entities in the M.A. Chidambaram group over a period have been declared null and void by the Madras High Court.

Justice E. Padmanabhan — passing orders on a batch of applications arising out of a company petition filed by the official liquidator — also declared that the MCC Finance, the SPIC, the South India Corporation (Agencies) Limited (SICAL) and the SPIC Holdings and Investments were members of the MAC Group. They were not only associate companies but also belonged to the single economic unit along with the MCC Finance Limited, he added.

Describing the sale of assets as an attempt to "defeat the rights of innumerable depositors", the judge said: "The very transaction in favour of the MAC Group is doubtful and not bona fide. From the facts, it is obvious that the MCC and the three other companies (mentioned above) have joined hands in secreting all assets of the MCC. It was done to defeat the claims of creditors and the depositors". (The beleaguered MCC Finance owes its depositors nearly Rs. 165 crores).

"When, admittedly, the MCC was unable to pay any of its depositholders for nearly four years, the very action of secreting substantial assets — and what remains being the husk — would show the dishonest intentions as well as the fraudulent preference in favour of the MAC Group of companies", Mr. Justice Padmanabhan observed.

"In the circumstances, all transfer of immoveable property, shares and agreements entered into for the transfer of shares or property by the MCC and its directors in favour of the three companies are set aside."

The property in question includes land and buildings at Adayar, Kotturpuram and on Armenian Street here, besides assets in Tiruchi and Coimbatore. Also, there are flats in Mumbai, New Delhi, Baroda and Bangalore. It includes the third floor office space of the Temple Tower building on Anna Salai.

Listing the property, the liquidator prayed for a direction to the respondent-companies to surrender the original title deeds along with the parent documents and sought to declare null and void two agreements signed between the SPIC and the SICAL in July 1999.

Allowing the pleas, Mr. Justice Padmanabhan directed the liquidator to sell the property through public auction and "proceed as per law".

The directions shall be complied with in three weeks.

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