2019 (7) TMI 966 - HC - Companies Law

Recall of order - sufficient reason for recall of order present or not - delay in filing the application - HELD THAT - The reasons are heart and soul of any judicial determination, in absence of which the order cannot survive. A Judge, who decides an issue in one or the other way, is required to disclose his mind and give the reasons to enable not only the superior court but also the litigating parties as what weighed with him in deciding the matter the way he did, otherwise they would remain unaware of the premise on which decision of the Court is founded. Therefore, it is always necessary for the learned Presiding Judge to disclose his mind, even if not in details, at least briefly. Application revived - appeal allowed - The Registry to list the application before the learned Company Judge on 19.07.2019.

Issues Involved:
1. Delay in filing the recall application.
2. Settlement of dues with unsecured creditors.
3. Confirmation of sale of assets by the Official Liquidator.
4. Requirement for a reasoned and speaking order.

Detailed Analysis:

1. Delay in Filing the Recall Application:
The appellant challenged the order dated 30.08.2018, dismissing his application for recall of the winding-up order dated 18.07.2003 due to delay. The appellant argued that the Company Judge dismissed the recall application summarily without considering the reasons for the delay. The appellant contended that the delay was justified as the winding-up order was ex-parte, and the dues were settled in 2007. However, the Company Judge found no reasons for the delay, dismissing the application as highly belated.

2. Settlement of Dues with Unsecured Creditors:
The appellant argued that the dues of the unsecured creditor, M/s. Ispat Industries Limited (now Jindal Steel and Power Limited), were settled in 2007, and the creditor had informed the Bank of Baroda about this settlement. The appellant believed that the winding-up proceedings would not continue post-settlement. However, the respondent argued that the appellant failed to produce concrete evidence of the settlement, such as a settlement deed or NOC letter, and thus, the winding-up proceedings could not be assumed to be terminated.

3. Confirmation of Sale of Assets by the Official Liquidator:
The respondent no.2 (Official Liquidator) and respondent no.3 (auction purchaser) contended that the assets of the company were sold through public auction under the Company Court's directions. The highest bid of ?1.81 crore by M/s. ECR Buildtech Pvt. Ltd. was accepted, and possession was handed over. They argued that the recall of the winding-up order would adversely affect the auction purchaser, who had incurred significant liabilities and obligations. The appellant's assurance to clear statutory dues in the future was deemed insufficient.

4. Requirement for a Reasoned and Speaking Order:
The Court emphasized the necessity for judicial orders to be supported by reasons. The Company Judge's order dismissing the recall application was criticized for being non-speaking and lacking detailed reasoning. The Court cited several precedents, including Sant Lal Gupta & Others Vs. Modern Cooperative Group Housing Society Ltd. & Others, which stressed that judicial orders must disclose the reasons for decisions to ensure transparency and fairness. The absence of reasons renders an order indefensible, particularly when subject to further challenge.

Conclusion:
The Court set aside the impugned order due to its non-speaking nature and remanded the matter to the Company Judge for a reasoned and speaking order. The appeal was allowed, and the recall application was revived for reconsideration. The Registry was directed to list the application before the Company Judge on 19.07.2019.

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