2018 (6) TMI 25 - HC - Companies Law

Winding up recalled - compromise or arrangement with creditors and members - Held that - Section 391 of the Act deals with the power to compromise or make arrangement with creditors and members. This provision on its cursory reading by itself would reveal that it can have no application to the facts of this case where apparently even despite the publication of notice there are no other creditors apart from EDC and the State Bank of India and the petitioner all of whom have affirmed on oath that their respective dues have been settled by the company under winding up. Hence applying the judgment in Omprakash J. Mehra (2012 (11) TMI 246 - BOMBAY HIGH COURT), in the factual matrix and that there were no dues remaining to be settled, i find that this is a fit case for recall of the winding up order dated 26/06/2009 and to permit the withdrawal of the petition.

Summary

Issues:
1. Maintainability of application for recall of winding up order.
2. Settlement of dues by the company under winding up.
3. Revival of the company under winding up.
4. Applicability of Section 391 of the Companies Act, 1956.

Issue 1: Maintainability of application for recall of winding up order

The advocate for the company under winding up argued that an application for recall of the winding up order was maintainable, citing a relevant judgment. The petitioner and other creditors, including EDC Ltd. and the State Bank of India, confirmed that all dues had been settled, and they had no objection to the recall of the winding up order and withdrawal of the petition. The Official Liquidator expressed no opposition to the revival of the company, provided a financial reconstruction scheme was presented. The Court noted that despite the order for winding up, no official winding up order had been drawn, and only EDC and the State Bank of India remained as creditors with settled dues.

Issue 2: Settlement of dues by the company under winding up

The Court observed that the company under winding up had settled all dues with the petitioner, EDC Ltd., and the State Bank of India. The petitioner sought permission to withdraw the petition, while the advocate for the company under winding up requested the recall of the winding up order and discharge of the Official Liquidator. The Court considered the submissions and records to assess the situation comprehensively.

Issue 3: Revival of the company under winding up

The judgment discussed relevant cases, including one where a winding up order was recalled based on settled dues and lack of outstanding creditors. The Court highlighted the distinction between cases involving schemes for revival and the present scenario where only EDC and the State Bank of India were creditors with no pending dues. The Court concluded that recalling the winding up order and allowing the withdrawal of the petition was appropriate in the absence of outstanding dues.

Issue 4: Applicability of Section 391 of the Companies Act, 1956

The Court examined the applicability of Section 391, which deals with compromises or arrangements with creditors and members. Given the absence of other creditors besides EDC and the State Bank of India with settled dues, the Court found that Section 391 did not apply in this case. Referring to relevant judgments, the Court determined that recalling the winding up order and permitting the withdrawal of the petition was justified. Consequently, the winding up order was recalled, the petition was allowed to be withdrawn, and the Official Liquidator was discharged from the proceedings.

This detailed analysis of the judgment addresses the issues involved, the arguments presented by the parties, and the Court's reasoning leading to the final decision to recall the winding up order and allow the withdrawal of the petition.