Bombay High Court Declares 5 Paintings, Including 2 By M.F. Husain, Mafatlal's Liquidation Assets

The Bombay High Court on 21 October declared five of 44 paintings, including works by M.F. Husain, as assets of Mafatlal Dyes & Chemicals Limited, which is undergoing liquidation, allowing their sale to realise proceeds for the company's creditors and other stakeholders.

Justice Somasekhar Sundaresan considered rival ownership claims over the paintings and the Official Liquidator's application seeking permission to sell the five paintings identified as company assets. The Bench held:

“...I am persuaded that the five Identified Paintings can indeed be held to belong to the liquidation estate of the Company,”

Mafatlal Dyes & Chemicals Limited was ordered to be wound up by the Bombay High Court on 19 July 2010, in a company petition filed by Vinyl Chemicals (India) Limited over its inability to pay debts.

The dispute concerns 44 paintings by reputed Indian artists, which the Mumbai Crime Branch seized on 18 January 2014 during an investigation arising from disputes among members of the Mafatlal family. The paintings are currently kept at Sir J.J. School of Art.

The Mumbai Police identified five paintings as belonging to the company. The Official Liquidator approached the Company Court to establish ownership and seek permission to sell them for the benefit of the company's creditors and other stakeholders.

Sheetal Mafatlal, wife of Atulya Mafatlal, claimed ownership of all 44 paintings, relying on consent terms executed by certain family members in 2012. Under those terms, she was permitted to retain artwork involved in a criminal complaint concerning 35 paintings. Gayatri Jhaveri, another family member, also claimed ownership of the remaining 39 paintings.

The Court noted that Sheetal had received multiple opportunities to establish her ownership claim but had failed to lead evidence. She ultimately declined to enter the witness box. Neither Sheetal nor the family members who executed the consent terms produced evidence establishing their ownership of the paintings.

It held that the family settlement allowing Sheetal to retain the paintings could not establish ownership against the company, as the family members first had to prove their own title. The company's asset register, purchase vouchers and seizure records, corroborated by the police investigation and confirmation from Synergy Art Foundation, established that the five paintings belonged to the company's liquidation estate. It also drew an adverse inference from Sheetal and Atulya's failure to lead evidence.

The five paintings included works by M.F. Husain, Biren De, F.N. Souza and Jogen Chowdhury. The Bench clarified that although its analysis referred to all 44 paintings, its findings were confined to the five paintings that the Official Liquidator sought to sell.

It observed that conventional auctions used for land, machinery and other industrial assets were unsuitable for works of art. It held that specialist expertise was necessary to maximise their value and improve price discovery.

Accordingly, the High Court appointed art expert Sonal Singh Naharwar to oversee the sale of the five paintings, requested Advocate Ranjeev Carvalho to assist her, and directed Sheetal Mafatlal and Gayatri Jhaveri to deposit Rs. 15 lakh each with the Official Liquidator within four weeks to help preserve the remaining artwork.

For Petitioners: Advocates Rajesh Sahani, Pritham Kunvare, Devmani Shukla, Meena A Ruparel, Kari Tamboly, Ryan D'Souza, Shivam Laturiya and Utkarsh Sanadi

For Official Liquidator: Advocate Ranjeev Carvalho, Satyajit Roul, Official Liquidator and Chetan Shelke, Dy. Official Liquidator

For State: Advocate Jyoti Chavan, Addl. G.P