1972 (4) TMI 68 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of appeals.
2. Removal of the sole surviving director.
3. Sale of company assets.
4. Interim ex parte order on debenture-trustees.
5. Constitution and personnel of the board.

Detailed Analysis:

1. Maintainability of Appeals:
The preliminary objections raised concerning the maintainability of the appeals were addressed comprehensively. It was argued that the appeals were maintainable under section 5(1) of the Delhi High Court Act and section 483 of the Companies Act. The court clarified that orders passed under sections 397 and 398 of the Companies Act could be considered as orders made in the matter of winding up, thus making them appealable under section 483. The court also noted that the appeals were properly filed against the common orders passed in Company Applications Nos. 323 and 254 of 1971. The court concluded that the appeals were maintainable both under section 483 of the Companies Act and section 5(1) of the Delhi High Court Act.

2. Removal of the Sole Surviving Director:
The court addressed the issue of the removal of the sole surviving director, Ganga Prasad Morarka, from the directorship. The court directed that all decisions made by the newly constituted board affecting the rights of the appellants as secured creditors should be made available to the debenture-trustees or their authorized representatives. The court found that the question of whether the sole surviving director was properly removed did not arise for consideration due to the agreed direction.

3. Sale of Company Assets:
The appellants contended that the sale of company assets should be conducted in accordance with the law and not independently directed by the company judge. The court clarified that the company judge did not specifically direct the sale of any particular asset but emphasized the need for proper and planned sales to fund the running of the Kanpur unit. The court reiterated that any sale of assets must be conducted according to the law and not merely based on the impugned order.

4. Interim Ex Parte Order on Debenture-Trustees:
The court noted that the interim ex parte order passed on June 17, 1971, restraining the debenture-trustees from enforcing their rights, was not addressed by the company judge in the impugned orders. The court directed that the company judge should consider this aspect and pass appropriate orders. The court refrained from expressing any opinion on the merits of the allegations concerning the validity of the debentures and the creation of security.

5. Constitution and Personnel of the Board:
There was no complaint regarding the constitution or personnel of the newly formed board. The court noted that the suggestion to include one of the secured creditors on the board was not pursued further after it was pointed out that Shri Jindra Lal was made chairman based on a suggestion from all parties.

Conclusion:
The appeals (Company Appeals Nos. 2 to 5 of 1972) were dismissed, subject to the clarifications provided, and no costs were awarded. The court ensured that the decisions affecting the secured creditors would be communicated to the debenture-trustees and that any necessary sales of assets would be conducted according to the law. The court also directed the company judge to address the interim ex parte order concerning the debenture-trustees.