2005 (12) TMI 294 - HC - Companies Law

Summary

Issues:
- Challenge to winding up order based on BIFR recommendation
- Dismissal of writ petition as infructuous
- Submission of scheme for compromise/arrangement revival

Analysis:
The High Court of Rajasthan heard an appeal challenging a winding up order issued by the Company Judge based on a recommendation from the Board for Industrial and Financial Reconstruction (BIFR). The appellant company contended that the Company Judge should have independently assessed the situation before ordering winding up. The court noted that the appellant had previously filed a writ petition challenging the BIFR's recommendation, seeking permission to deposit a sum with the ICICI Bank. The writ petition was dismissed as infructuous, but the court granted liberty for revival, indicating a possibility of reinstating the company.

During the appeal, XLO India Limited, a major shareholder of the appellant company, submitted a scheme for compromise/arrangement revival under section 391 of the Companies Act, 1956. The court observed that the appellant had shown efforts for revival during the appeal, leading to a prima facie satisfaction that revival was feasible. Consequently, the court allowed the appeal, setting aside the original winding up order and remitting the case back to the Company Judge for fresh consideration of the creditor's petition. The parties were directed to appear before the Company Judge for further proceedings, with no costs imposed on either party.