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2017 (11) TMI 785 - HC - Companies LawRejecting the proposal submitted by the petitioner on the OTS policy - accepting one time settlement as submitted by the petitioner after winding up order was passed - Held that - From perusal of the record, it reveals that respondent NO.2 has extended the facility of ICD to the petitioner of the different amount. The petitioner-company could not repay the said amount to respondent No.2- Corporation in time. Respondent No.1/State has framed one time settlement policy. As per the said policy, the petitionercompany has offered his proposal for one time settlement. The said proposal was not accepted by respondent No.2 saying it is not in accordance with the OTS policy. On 02/05/2008 respondent No.2-Corporation filed a company petition before the Delhi High Court for winding up of the company on account of non-payment of dues. During pendency of the company petition, offer was again made to settlement the dues under the OTS policy, but, finally it failed as respondent No.2 refused to adjust the amount of ₹ 50 lakh which was paid to respondent No.2 by the petitionercompany. Thereafter the Delhi High Court passed an order for winding up of the company on 03/05/2013 The Delhi High Court in its order after exploring the possibilities of settling the dues as per OTS policy was of the view that the settlement is not possible on account of the fact that already numerous opportunities was made available to the petitioner-company to comply with the requirement of OTS amount offered by respondent No.2. The Delhi High Court has, therefore, held that the case is made out and, therefore, appointed provisional liquidator for petitionercompany. The order passed by the Delhi High Court was affirmed by Hon ble the Apex Court in SLP vide order dated 26/09/2016. Thus, the order passed by the Delhi High Court in company petition has attained finality. After dismissal of the SLP, the petitioner has again submitted a proposal for settlement of the amounts. The said proposal was rejected by the respondents vide order dated 29/10/2016. The State Government thereafter has revised the OTS policy and stated that the OTS policy dated 16/05/2007 would be operational till 30/06/2017. Accordingly, the petitioner again submitted proposal on 29/05/2017 which was rejected by respondent No.2 in its meeting dated 20/06/2017. As per the settlement of respondent No.2, the total dues against the petitioner as on 31/05/2017 is 172.40 crores. As the order passed by the Delhi High Court in company petition was affirmed up to the Apex Court and as there is no statutory provision for accepting one time settlement as submitted by the petitioner after winding up order was passed, respondent No.2 has rightly rejected the proposal submitted by the petitioner-company.
Issues Involved:
1. Rejection of the petitioner's proposal under the One Time Settlement (OTS) policy. 2. Financial difficulties and defaults by the petitioner-company. 3. Legal proceedings and winding up petition against the petitioner-company. 4. Applicability and enforcement of the OTS policy. 5. Jurisdiction and authority of the courts in the context of the OTS policy and winding up proceedings. 6. Public interest considerations and economic implications of winding up the petitioner-company. Issue-wise Detailed Analysis: 1. Rejection of the petitioner's proposal under the OTS policy: The petitioner challenged the respondents' rejection of its proposal under the OTS policy. The petitioner-company, engaged in liquor manufacturing, faced financial difficulties due to changes in the State Excise Policy. Despite partial repayments, the petitioner could not settle the entire loan amount. The respondents introduced the OTS policy to aid economic recovery, but the petitioner's proposals were repeatedly rejected for not aligning with the policy. The respondents argued that the petitioner's case was ineligible under the OTS Scheme and emphasized that no statutory provision mandated acceptance of the petitioner's proposal. 2. Financial difficulties and defaults by the petitioner-company: The petitioner-company accepted Inter Corporate Deposits (ICDs) from respondent No.2 between 1998 and 2000. Due to a sudden change in the State Excise Policy in 2001-02, the petitioner suffered significant losses and defaulted on repayments. Despite repaying part of the loan, the petitioner could not settle the entire amount. The respondents initiated legal proceedings under Section 138 of the Negotiable Instruments Act and filed a winding-up petition. 3. Legal proceedings and winding up petition against the petitioner-company: Respondent No.2 filed a winding-up petition before the Delhi High Court in 2008, which was contested by the petitioner. The Delhi High Court ordered the winding up of the petitioner-company and appointed a provisional liquidator. The petitioner's appeal to the Division Bench and subsequent SLP to the Supreme Court were dismissed. The Supreme Court directed the respondents to consider the petitioner's settlement proposal, but it was ultimately rejected. 4. Applicability and enforcement of the OTS policy: The petitioner argued that the OTS policy was designed to aid struggling industries and should be applied to their case. The respondents maintained that the petitioner's proposals did not comply with the OTS policy. The Delhi High Court noted that the petitioner failed to meet the deadlines for paying the OTS amount and concluded that the petitioner had no bona fide defense in the winding-up petition. The court emphasized that the OTS policy did not hold good for the petitioner due to repeated failures to comply with its terms. 5. Jurisdiction and authority of the courts in the context of the OTS policy and winding up proceedings: The petitioner contended that the High Court had plenary powers under Article 226 of the Constitution to issue directions in public interest. The respondents argued that the OTS policy was not framed under any statutory provision, and deviations could not be enforced through the court's extraordinary writ jurisdiction. The Delhi High Court and the Supreme Court upheld the winding-up order, emphasizing the petitioner's failure to settle dues under the OTS policy. 6. Public interest considerations and economic implications of winding up the petitioner-company: The petitioner argued that winding up the company would result in significant public interest losses, including unemployment for over a thousand employees and loss of revenue for the state. The petitioner highlighted its role as a profit-making company contributing to the public exchequer. The respondents countered that the petitioner's failure to comply with the OTS policy justified the winding-up proceedings. The court noted that holding up loan recoveries through unwarranted court orders could harm the economy and emphasized the need to exercise jurisdiction based on well-settled principles. Conclusion: The court dismissed the writ petition, upholding the respondents' rejection of the petitioner's OTS proposal. The court emphasized that the petitioner's repeated failures to comply with the OTS policy and the finality of the winding-up order justified the respondents' actions. The court also noted that the petitioner could approach the Tribunal for appropriate relief under Section 446 of the Companies Act.
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