2009 (8) TMI 689 - HC - Companies Law

Winding up - Power of Tribunal to stay winding up - Held that - Contention of Mr. Rao that in the event of the revival of the Mill, the Mill will be employing new workmen and consequently on the land mortgaged to the Bank, further rights will be created deserves to be forthwith rejected because even when the charge was initially created in favour of the State Bank of India in 1982, the Mill was operational with approximately 5000 to 7000 workmen. The State Bank of India now cannot be heard to say that since certain workers will be working on the Mill lands consequent to its revival, the same will prejudice the rights if any, of the State Bank of India. This contention of the Bank also lacks bona fides and is therefore rejected. As recorded in the order passed by this Court dated 14-5-2009, satisfied about the genuineness of the attempt of the applicant to revive the company in liquidation. Also such revival would be in public interest and conform to commercial morality.Official Liquidator shall hand over the properties and records of the company to the applicant within a period of 2 weeks from today, after receiving his costs, charges and expenses

Issues:
1. Payment of dues to workmen employed at the time of closure.
2. Claims of workers not employed at the time of closure.
3. Disposal of Company Application No. 1294 of 2007.
4. Objections raised by the State Bank of India.
5. Protection of State Bank of India's interests.
6. Revival of the company in liquidation.
7. Handover of company properties and records to the applicant.
8. Disposal of all applications with no order as to costs.
9. Investment of remaining funds by the Official Liquidator.

Analysis:

1. The judgment addresses the issue of payment of dues to workmen employed at the time of closure. The Senior Counsel made a statement outlining the benefits to be provided, including legal/statutory dues, interest, and ex gratia compensation. Workers not employed at the time of closure were also allowed to lodge claims for pending dues, which would be adjudicated by the Official Liquidator.

2. Regarding the claims of workers not employed at the time of closure, the judgment specified that such workers could lodge claims for legal/statutory dues, with their status to be determined by the Official Liquidator. Eligibility for benefits was extended to workers whose services were not terminated between 1981-1984, subject to verification.

3. Company Application No. 1294 of 2007 was disposed of based on the minutes of the order submitted by the Senior Counsel. The applicants did not press their respective company applications, indicating no objection to the disposal of the mentioned application.

4. The objections raised by the State Bank of India were reiterated during the proceedings. The Bank's concerns were related to the recovery of dues and the protection of its interests, particularly regarding the immovable properties mortgaged by the company in liquidation.

5. The judgment addressed the protection of State Bank of India's interests, emphasizing that the Bank's claim was fully protected, and objections lacked bona fides. The Court rejected the contention that the revival of the company and the employment of new workers would prejudice the Bank's rights.

6. The judgment focused on the revival of the company in liquidation, highlighting the genuineness of the applicant's efforts and the public interest served by the revival. The Court found the revival to be in line with commercial morality and noted the steps taken by the applicant to secure repayment to creditors and restart operations.

7. Company Application No. 1294 of 2007 was allowed based on the satisfaction of the Court with the applicant's undertakings and efforts towards revival. The disposal of all related applications was done without any order as to costs, indicating a resolution of the legal matters involved.

8. The Official Liquidator was directed to hand over the company properties and records to the applicant within a specified timeframe, subject to receiving costs, charges, and expenses. The applicant undertook to pay any outstanding amounts due to the Liquidator promptly upon notification.

9. The remaining funds were to be managed by the Official Liquidator, who was instructed to invest the balance amount in fixed deposits of nationalized banks to maximize interest earnings. This step aimed to ensure the efficient handling of the company's financial resources post-revival.

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