2010 (2) TMI 591 - HC - Companies Law

Winding up - whether the learned Single Judge was justified in passing the order impugned by refusing the prayer of the applicants for framing the scheme of revival? Held that - From the conduct of the appellant it was apparent that the object of the second application was to confer on the present financier a preferential right over others knowing well that it was not possible to revive the company in liquidation by any fresh scheme. Therefore, we are of the opinion that the learned trial Judge rightly dismissed the application being C.A. No. 651 of 2009 under section 466 of the Companies Act in the absence of any constructive scheme offered. , vacate the interim order passed by the appellate court earlier permitting the running of the business under the order of the court passed earlier by the trial court and continued by virtue of the order of the appellate court and the business of the company should be immediately stopped. The official liquidator should, however, pay the dues of the landlord towards occupational charges from 1-9-2009, till date at the rate fixed by the Single Judge of this court in the pending proceedings, i.e., ₹ 6,14,000 a month from the money lying in his hand and no further amount should be paid except in accordance with the law on usual investigations. We pass this order in favour of the landlord only because after the order of winding up when the company was permitted to run by virtue of the interim order, there is no just reason why the dues of the landlord for using his property for the sake of business for the period in question even after the order of winding up should be withheld.

Issues Involved:
1. Application for stay of winding up under Section 466 of the Companies Act, 1956.
2. Application for sale of assets under Section 457 of the Companies Act, 1956.
3. Intervention applications by third parties.
4. Justification of the learned Single Judge's order.

Issue-wise Detailed Analysis:

1. Application for Stay of Winding Up under Section 466 of the Companies Act, 1956:
The appellant, one of the unsuccessful applicants, sought a stay on the winding up of SST Media (P.) Ltd., a company running the news channel Kolkata TV. The company was directed to be wound up on May 21, 2009, due to liabilities amounting to Rs. 74 crores. The appellant, along with another individual, filed C.A. No. 651 of 2009 under Section 466, seeking to stay the winding up orders and allow R.P. Techvision (India) (P.) Ltd. to manage and revive the company. They argued that liquidation would serve no purpose other than the "burial of a dead person" and proposed running the company under R.P. Techvision's management to pay off creditors through a scheme. However, no concrete revival plan was presented, and the learned Single Judge dismissed the application, noting the absence of any constructive scheme.

2. Application for Sale of Assets under Section 457 of the Companies Act, 1956:
The appellant filed a second application, C.A. No. 699 of 2009, under Section 457, seeking the sale of the company's assets as a going concern to R.P. Techvision (India) (P.) Ltd. or their nominee. The learned Single Judge dismissed this application, citing the lack of a viable revival scheme and the need for a public auction to ensure maximum value for the assets. The court emphasized that the assets should be sold in a public auction to fetch the highest price, allowing R.P. Techvision (India) (P.) Ltd. to participate in the auction after complying with the necessary formalities.

3. Intervention Applications by Third Parties:
Two separate applications for intervention, A.C.O. No. 16 of 2010 and A.C.O. No. 17 of 2010, were filed by third parties seeking to be made parties to the appeal. The court dismissed these applications, finding no reason to add them as parties, as their involvement was neither necessary nor proper for the effective disposal of the appeal.

4. Justification of the Learned Single Judge's Order:
The appeal questioned whether the learned Single Judge was justified in dismissing the applications. The court upheld the Single Judge's decision, noting that no fruitful suggestion for revival had been presented. The appellant's conduct indicated an attempt to confer a preferential right on R.P. Techvision (India) (P.) Ltd. without a feasible revival plan. The court agreed that the assets should be sold in a public auction to ensure transparency and fairness. The court also vacated the interim order allowing the company to continue operations and directed the official liquidator to take immediate possession and proceed with the sale of assets.

Conclusion:
The court affirmed the decision of the learned Single Judge, dismissing both applications due to the lack of a viable revival scheme and the necessity of a public auction to ensure maximum value for the company's assets. The intervention applications were also dismissed as unnecessary for the appeal's resolution. The court directed the official liquidator to take immediate steps to sell the assets in a public auction and ensure the payment of dues to the landlord for the period the company continued operations under the court's interim order.

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