1999 (1) TMI 489 - HC - Companies Law

Summary

Issues:
1. Validity of ordering sale of assets before winding up the company.
2. Non-supply of company accounts affecting moving the Board for Industrial and Financial Reconstruction (BIFR).

Analysis:

Issue 1:
The appeal challenged an order for the sale of the appellant-company's assets before winding up the company. The court noted the argument that the sale should only occur after winding up. The court, however, justified the sale to protect all parties involved and reduce the company's liabilities. The judge emphasized that the company's current status was similar to what it would be post-winding up. The court highlighted the importance of maximizing benefits for all concerned parties and reducing the company's financial liabilities. It was stated that secured creditors should not be excluded from the winding-up process. The court agreed with the reasoning of the learned company judge in ordering the sale of the assets.

Issue 2:
Regarding the non-supply of company accounts hindering moving the BIFR, the court did not address this issue directly in the judgment. The court left it open for the appellant-company to approach the learned company judge with an application regarding this matter. If such an application was submitted, appropriate orders would be passed. The court emphasized that the appellant had sufficient time to show their ability to pay off liabilities but did not take action until after the impugned order was implemented. As a result, the court found no merit in the appellant's argument related to the non-supply of company accounts affecting BIFR proceedings.

In conclusion, the court dismissed the appeal, upholding the order for the sale of the company's assets before winding up and leaving the issue of non-supply of company accounts for potential future consideration by the learned company judge.