Only Rs 5.5 lakh paid before the winding-up petition: Bombay HC rejects two Mantri flat claims
Justice Somasekhar Sundaresan declined to use the Section 536(2) Companies Act power for the daughter and son of Mantri Realty promoters, citing unregistered agreements with no execution date, unproven authority to sign for the company and a payment trail that does not reconcile.
Two flats in a Bangalore project, claimed by the children of the people who ran the developer, rested on agreements that carried no date, no witness signatures and no registration. On 5 November 2026 the Bombay High Court refused to confirm either claim against the liquidation estate of Mantri Realty Limited.
Justice Somasekhar Sundaresan, sitting in the Commercial Division, dismissed Company Application No. 9 of 2025 by Rhutu S. Mantri and Company Application No. 10 of 2025 by Siddhant S. Mantri. Both are children of Sunil Mantri, the company’s Managing Director, and Sarita Mantri, a director.
On the court’s reading of the record, only Rs 5,50,000 of the Rs 44 lakh or so claimed as paid for Rhutu’s flat reached the company before the winding-up petition was presented. The rest followed the petition, some of it after a provisional liquidator had taken charge.
A winding-up that froze the company’s assets
The first petition to wind up Mantri Realty was presented on 22 January 2014. Orders of 12 and 23 December 2014 restrained the company and its directors from disposing of assets without leave of the court. On 4 February 2015 the Official Liquidator was appointed provisional liquidator, and the company was eventually wound up.
In an order of 24 November 2015, Justice K.R. Shriram found that the injunction against creating third-party rights had been flouted, with registrations done without leave. On 8 January 2016 he recorded that Sunil Mantri’s conduct was utterly dishonest, and directed the Official Liquidator to take possession of all assets.
The Bangalore project, Mantri Premero, stands on land belonging to the family of Smt. Shanta, the Landowner. Her Company Application No. 615 of 2016, seeking leave to complete the project, became the vehicle for the flat-purchaser claims.
On 22 September 2016 Justice G.S. Patel approved a scheme for registering purchasers’ sale deeds between 17 and 19 October 2016, with a representative of the Official Liquidator present. Statements of 166 purchasers were compiled. On 2 April 2019 the court recorded that the Mantri Realty quota of flats vested in the provisional liquidator.
What the siblings claimed
Each applicant relied on an unregistered Agreement for Sale and an unregistered Agreement to Build. Each asked the court to confirm the agreements under Section 536 of the Companies Act, 1956 and to direct the Official Liquidator to execute and register them. By consent, CA 9 was taken as the lead application, and CA 10 would follow it.
Rhutu claimed Flat C-1503, on the 15th floor of Tower C, measuring 1,663 sq ft, priced at Rs 39,36,570, plus an undivided share of 428 sq ft at Rs 6,41,835. She pleaded a total of Rs 44,17,659 and payments of Rs 43,07,170 between 20 August 2011 and 7 April 2015. Siddhant claimed Flat C-1603.
She relied on a company receipt of 8 April 2015 and an Axis Bank certificate of 18 October 2016. An additional affidavit of 26 September 2025 restated the price as Rs 44,24,889, including service tax and VAT, and said it was paid in full.
Mr Mandar Soman appeared for both applicants. Mr Rushabh Sheth appeared for the Official Liquidator, who called the agreements dubious and undated, with no clear trail linking the money paid to the price of the flat.
Why Section 536(2) was the hurdle
Under Section 441(2) of the Companies Act, a winding up by the court is deemed to begin when the petition is presented, here on 22 January 2014. Section 536(2) makes any disposition of the company’s property after that date void, unless the court otherwise orders.
The applicants were therefore asking the Company Court to save transactions the statute treats as void. The judge framed the issue this way:
“whether the jurisdiction to permit transactions that are statutorily void is worthy of being exercised to allow the captioned Company Applications.” (para 22)
The jurisdiction, he said, is equitable, and the record must inspire confidence before equities can be perceived. It was for the applicant to plead and prove that the transaction was in the ordinary course of business and for the benefit of the company in liquidation.
No date, no witness, no authority
Rhutu’s papers gave the date of execution as 19 November 2011 in one place and 19 November 2012 in another. The Agreement for Sale bore no date at all. The Agreement to Build carried the year 2011, with a handwritten 19 November.
On the execution page, the name of the company’s signatory, the date of the Board Resolution said to authorise the signing and the witness placeholders were all blank. The agreements gave Rhutu’s age as about 20 in one and about 22 in the other.
Nothing independent fixed when the agreements were signed. There was no contemporaneous email or correspondence showing Rhutu booking the flat as a third-party buyer would, and no record that the related-party contract met legal requirements.
The date claimed also appeared to have been picked to fall before 22 January 2014. Both agreements recorded an initial payment by cheque no. 906906, yet the Axis Bank certificate showed that cheque cleared on 22 August 2011, well before 19 November 2011.
On authority, Rhutu said Sarita had been authorised by a Board Resolution of 21 August 2010. The judge found nothing on the record to show such a resolution was ever passed.
In another matter, an order of Justice Bharati Dangre recorded, on Sarita’s own affidavit, that she ceased to be a director on 1 August 2011. The Official Liquidator put the date at 1 January 2011. Either way, the agreements were purportedly signed after she left the board.
A Letter of Authority of 1 February 2011, signed by director Ranjit Rane, was not backed by any Board Resolution. The judge said the claim of valid authority did not inspire confidence.
Payments that would not reconcile
The receipt listed seven payments totalling Rs 44,24,889. The bank certificate showed Rs 66,00,000 moving from Rhutu’s account, with different dates, amounts and, in one entry, a different cheque number.
Cheque no. 906906 was recited in each agreement as Rs 25,000, while the receipt and the bank certificate said Rs 50,000. The additional affidavit described the first cheque as drawn on an HDFC account, but every other document pointed to Axis Bank. The two agreements together added up to Rs 45,78,405, against the Rs 44,17,659 pleaded.
The flats themselves were inconsistently identified. Demand letters produced by the Official Liquidator carried identical figures for two different units, one naming Siddhant for Flat C-1503 and the other naming Rhutu for Flat D-1302. Justice Patel had directed the provisional liquidator in 2016 to take possession of Flat D-1302.
Mr Soman argued that some remittances covered several flats. Of an RTGS of Rs 6,50,000 on 2 May 2014, only Rs 1,100 was attributed to this flat, with the rest meant for three flats in Mantri Serene. Of Rs 4,00,000 on 30 July 2014, Rs 2,41,262 was attributed to it and the rest to an Imperial flat.
The judge preferred the Official Liquidator’s answer. Nothing justified picking out particular payments of odd amounts for this flat. Rhutu’s own balance sheet at 31 March 2014 showed Rs 41,59,832 against the flat, while the company’s receipt showed only Rs 5,50,000 paid by then, and the same balance sheet listed many other Mantri flats.
The money arrived after the petition
Only Rs 50,000 on 20 August 2011 and Rs 5,00,000 on 26 July 2012 were paid before 22 January 2014. The remaining Rs 38,74,889 was paid after that date, including after the provisional liquidator was appointed on 4 February 2015. The company’s own receipt is dated 8 April 2015.
The original application did not disclose that Rhutu was the daughter of the promoters; she acknowledged it only in her rejoinder. The burden lay on her to plead and prove arm’s-length dealing at prices third parties paid, and the lack of specifics about flats and amounts undermined that.
Mother and daughter had signed for the company and the buyer, with funds moving between the company, the promoters and Rhutu. Rhutu was 20 or 22 at the time, and the judge thought it most plausible that her parents managed her account, absent proof of independent income.
Why registration mattered here
The judge said that if the agreements had been dated and registered, the case would have stood on a different footing. Section 17(1-A) of the Registration Act, 1908 strips an unregistered contract of the protection of Section 53-A of the Transfer of Property Act, 1882. That protection also depends on possession passing to the buyer.
Under Clause 9 of the Agreement for Sale, possession was to follow registration of the final sale deed. Clause 8 said the sale deed would be executed only after the entire payment was received. Title, he said, was therefore never meant to pass without a deed.
On Rhutu’s own showing, then, she was an unsecured creditor when the prohibited period began, with only Rs 5,50,000 paid. The Company Court, he held, does not direct completion of transactions that were incomplete when insolvency triggered the winding-up provisions.
Parity with other buyers rejected
Mr Soman argued that other members of the flat purchasers’ association stood similarly placed, citing agreements with Mr Vikram M. Rao and Ms Anju Sharma. The Official Liquidator, he said, had let other agreements signed by Sarita be registered, and only Sunil’s children were singled out.
The judge said the Anju Sharma agreement at least carried a recorded date, which Rhutu’s lacked. Infirmities excused for third-party home buyers do not entitle the son and daughter of the promoters to be treated as third parties.
The people the court protects in a winding up, he said, are statutory protectees such as creditors, workmen and contract counterparties. Related-party deals that are not explained with precision cannot be lightly approved.
The Mantri Serene order distinguished
The applicants leaned on an order of 28 August 2023 in Interim Application (L) No. 9434 of 2021, which approved transactions for Flats 1607 and 1608 in Mantri Serene, Mumbai. Justice Sundaresan held it distinguishable at its foundation.
That agreement was dated 12 May 2014 and registered on 30 May 2014. It was admittedly executed after the winding-up petition, which squarely brought it within Section 536(2). The flats had been bought jointly by Rhutu and Sarita, with the approval resting on Sarita’s independent resources and gifts to Rhutu.
Here, he said, the applicants needed two leaps of faith across wide gaps. First, a post-petition date had to be found; failing that, this was an incomplete pre-petition deal with Rs 5,50,000 paid. Second, Rhutu’s claim of independent means had to be squared with the Serene order’s reliance on her mother’s resources.
Each application, he said, must be judged on its own merits. The Company Court had already taken a dim view of Sunil’s alienations in the teeth of its injunctions.
The precedents behind the result
The judgment relies on several earlier rulings. Arambhan Hospitality, an Official Liquidator’s report decided on 14 January 2020, holds that the applicant under Section 536(2) must plead and prove that the transaction was in the ordinary course of business and for the benefit of the company. The Official Liquidator need not prove fraud.
Hindustan Transmission, decided by Justice S.J. Kathawalla on 5 September 2012, holds that a transfer not completed before the winding-up order cannot be completed afterwards by directing the Official Liquidator to do it. It was affirmed in appeal in Sunita Vasudeo Warke.
After winding up, no new rights can be created and no uncompleted rights can be completed, the court said. Relying on that Division Bench ruling, Bhairav Industries endorsed the view that an agreement to assign, completed after winding up, could not be validated.
The court also cited Suraj Lamp and Industries v. State of Haryana (Supreme Court, 2012): immovable property passes only by a registered deed, and an agreement of sale does not convey title. It may support specific performance or a Section 53-A defence of possession, but with no possession here that did not help.
Order
The judge listed his conclusions in eight points and ended with the finding that “the jurisdiction under Section 536(2) of the Companies Act is not exercised” (para 57). Company Application No. 9 of 2025 was dismissed, and Company Application No. 10 of 2025 was dismissed with it, by agreement that the two stood identically placed.
All actions required under the order are to be taken on receipt of a downloaded copy from the court’s website. The order was pronounced on 5 November 2026.