2005 (8) TMI 744 - HC - Companies Law

Summary

Issues:
1. Winding up petition filed by U.P. Stock Exchange Association Ltd. against Vegepro Foods and Feeds Ltd. for outstanding dues.
2. Contention regarding the applicability of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Interpretation of the legal provisions concerning the timing of winding up proceedings in relation to the BIFR reference.
4. Arguments regarding the necessity of seeking permission from BIFR before initiating winding up proceedings.
5. Dismissal of the company petition with the option to apply for permission from BIFR or await the conclusion of proceedings under the Act of 1985.

Analysis:
1. The U.P. Stock Exchange Association Ltd. filed a winding up petition against Vegepro Foods and Feeds Ltd. for outstanding dues amounting to Rs. 2,40,750.00. The petition was based on Section 433(1)(e) of the Companies Act, 1956, following a statutory demand notice issued on 19.4.2003.
2. The respondent company argued that since a reference was made to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of the Act of 1985, the provisions of Section 22(1) of the Act would apply. This section prohibits winding up proceedings until the proceedings under the Act of 1985 are concluded.
3. The interpretation of Section 22(1) was crucial in determining the timing of winding up proceedings vis-a-vis the BIFR reference. The respondent relied on legal precedents to support the contention that the bar created by the Act of 1985 would prevent the initiation of winding up proceedings until the BIFR's decision is obtained.
4. The argument regarding seeking permission from BIFR before initiating winding up proceedings was raised by both parties. The petitioner had not applied for permission, leading to the conclusion that no exception could be taken in this case.
5. Ultimately, the company petition was dismissed with the option given to the petitioner to either seek permission from BIFR to file a winding up petition or wait for the conclusion of proceedings under the Act of 1985. It was emphasized that the period of limitation would remain suspended during the pendency of proceedings before BIFR or AAIFR under the Act of 1985.