2010 (8) TMI 1129 - HC - Companies Law

Summary

Issues involved:
The judgment deals with the submission of a rehabilitation package by the promoters in winding up proceedings initiated based on the recommendation of the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).

Summary:
The judgment addresses the legality of submitting a rehabilitation package in winding up proceedings initiated based on the BIFR's recommendation under SICA. The BIFR recommended winding up of the sick company as rehabilitation was not feasible, a decision not challenged in appeal or writ jurisdiction. The promoters' submission of a revival package was deemed a backdoor method of acquiring the company. The Court held that continuous submission of rehabilitation schemes would stall proceedings to the detriment of creditors and workers. Refusing to sanction the alleged scheme, the Court directed winding up to continue. The Supreme Court's decision in Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti was cited, emphasizing the need to prevent disposal of assets through private arrangements. Another Supreme Court decision in Vijay Kumar Karwa v. Official Liquidator highlighted the importance of not admitting frivolous appeals to avoid delaying winding up proceedings. The judgment concluded that the Company Judge was correct in refusing to consider the rehabilitation scheme due to the finality of BIFR's recommendation and the legislative mandate under SICA. Consequently, the Company Petition was dismissed.