2005 (9) TMI 302 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up, Winding up - Powers of liquidator

Summary

Issues Involved:
1. Recommendation by B.I.F.R. for winding up the respondent-company.
2. Non-payment of dues leading to company petition No. 1068/1997.
3. Disposition of assets by the High Power Committee.
4. Role and authority of the High Power Committee post winding-up order.
5. Appointment and role of the Official Liquidator.
6. Sale of immovable assets of the respondent-company.

Detailed Analysis:

1. Recommendation by B.I.F.R. for winding up the respondent-company:
The Board of Industrial and Financial Reconstruction (B.I.F.R.) recommended winding up the respondent-company under section 20(1) of the Sick Industrial Companies (Special Provisions) Act due to its inability to make its net worth exceed its accumulated losses within a reasonable time while meeting all its financial obligations. This recommendation was registered as B.I.F.R. case No. 50/1998 and formally admitted by the Court on 13-2-2002.

2. Non-payment of dues leading to company petition No. 1068/1997:
Company petition No. 1068/1997 was filed due to the respondent-company's non-payment of dues acknowledged under an award requiring payment of US dollars 40,937.40. The respondent-company initially agreed to pay Rs. 28 lakhs under consent terms dated 25-3-1998, but failed to do so, leading to supplementary consent terms on 5-3-1999, which were also not honored. Consequently, the Court admitted the company petition on 13-2-2002.

3. Disposition of assets by the High Power Committee:
The State of Maharashtra constituted a High Power Committee to facilitate the disposal of the respondent-company's assets. The High Power Committee was authorized to sell the movable assets, including plant and machinery, which were sold to M/s. Bhavna Enterprises for Rs. 15,53,45,217. The proceeds were to be deposited with the Official Liquidator.

4. Role and authority of the High Power Committee post winding-up order:
The Court clarified that once a winding-up order is passed, the Official Liquidator must take over the custody of the company's assets and proceed in accordance with the law. The High Power Committee cannot independently dispose of the immovable assets without Court confirmation. Any disposition of property post winding-up commencement must be validated by the Court.

5. Appointment and role of the Official Liquidator:
The provisional Liquidator, appointed by the Court, would act as the Official Liquidator with full powers. The Official Liquidator is responsible for taking possession of the company's assets and dealing with them according to sections 448 to 463 of the Companies Act. The Court rejected the suggestion to appoint a person other than the Official Liquidator attached to the Bombay High Court, as the amended provisions of section 448 were not yet in force.

6. Sale of immovable assets of the respondent-company:
The Court directed that the High Power Committee could act as an "agent" of the Official Liquidator for the sale of immovable assets, following a structured process under the supervision of the Official Liquidator. The High Power Committee must report periodically to the Official Liquidator and comply with all directions. The sale process includes issuing advertisements, inviting tenders, and seeking Court confirmation for the sale.

Conclusion:
The Court ordered the winding up of the respondent-company under its supervision, with the Official Liquidator taking charge. The High Power Committee was permitted to assist as an agent in the sale of immovable assets, ensuring compliance with legal procedures and Court oversight. All related petitions were disposed of with instructions for claim submissions to the Official Liquidator.