2006 (9) TMI 286 - HC - Companies Law

Summary

Issues Involved:
1. Recalling and reviewing the winding up order.
2. Condonation of delay in filing the application.
3. Maintainability of the application and locus standi of the applicant.
4. Official liquidator's objections and actions.

Summary:

1. Recalling and Reviewing the Winding Up Order:
The applicant, an original respondent-company, sought to recall and review the winding up order dated August 25, 2005, passed by the court in Company Petition No. 66 of 2002. The applicant argued that they had settled dues with the secured creditor, Bank of India, and had executed a consent term for full and final settlement of the outstanding liability to the original petitioning creditor, Shreeji Oxygen P. Ltd., amounting to Rs. 55 lakhs. The court found that since the matter was settled between the petitioning creditor and the applicant-company, and no objections were raised against recalling the winding up order, the order should be recalled.

2. Condonation of Delay:
The application for recalling the winding up order was filed late, on April 26, 2006. The court condoned the delay, citing the principles of section 5 of the Indian Limitation Act and various judgments that advocate a liberal interpretation of delay condonation. The court emphasized that a strong and meritorious case should not be dismissed on technical grounds of delay, especially when the real interested party did not object.

3. Maintainability of the Application and Locus Standi:
The official liquidator contended that the applicant had no locus standi to file the application after the winding up order was passed. However, the court rejected this argument, referencing the Supreme Court's decision in Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd., which held that the board of directors retains residual powers for the benefit of the company, including steps for its rehabilitation, even after a winding up order is passed.

4. Official Liquidator's Objections and Actions:
The official liquidator objected to the application, arguing that the applicant had no standing and that the application was filed late. The liquidator also took possession of the company's assets and properties, alleging fraudulent preference in transactions involving the company's properties. The court found these actions unjustified, noting that the properties were sold to settle debts and were not preferential or fraudulent transfers. The court directed the official liquidator to remove the seal and legal notice from the company's premises.

Conclusion:
The court allowed M.C.A. No. 100 of 2006, recalled the winding up order, and restored Company Petition No. 66 of 2002. The original petitioning creditor was permitted to withdraw the petition. O.L.R. No. 11 of 2006 was disposed of without granting any prayers, and the official liquidator was directed to remove the seal and legal notice from the premises.