9911796707
TMI Blog1999 (7) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... on, New Delhi ( AIFR ). A copy of the order passed by the AIFR would indicate that the opinion of the BIFR to the effect that the company s operations would not be viable to any scheme of either rehabilitation or of arrangement and that the company needed to be wound up came to be confirmed finding that there was no reason for interfering with the impugned order passed by the BIFR. This order was passed by the AIFR on 31-7-1996. Accordingly, by order dated 30-11-1998 notice was directed to the respondents returnable on 18-1-1999. Since then this petition has remained pending for hearing. It was noticed that in other petitions for winding up moved by the unsecured creditors in one or some of the petitions Mr. S.I. Nanavati s name appeared as an advocate for the respondent-company. Hence, by order dated 26-6-1999 all the matters were directed to be listed on 15-7-1999 while also showing the name of Mr. S.I. Nanavati appearing for the respondent-company. 2. Under the aforesaid circumstances, all these matters have been heard, although no one canvassed any submission on behalf of the respondent-company. Short submission on behalf of the petitioning creditors made by Mr. Singhi, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 20, acts as a judicial body consisting of experts in the field. No doubt, section 432 of the Companies Act specifies the grounds on which the court may order winding up of a company. One of the grounds is that if the court is of the opinion that it is just and equitable that the company should be wound up, it can order winding up of the company. Under the Companies Act, if a winding up proceeding has to be initiated under Chapter II of Part VIII, persons seeking winding up of a company have to satisfy certain conditions as prescribed under section 439 or 440, as the case may be, of the Companies Act to maintain the proceedings. When once the report is submitted by the Board, no such requirements of section 439 or 440, as the case may be, of the Companies Act need be looked into. In this case, we are not concerned with Chapters III and IV of Part VIII relating to voluntary winding up and winding up subject to supervision of court . The report of the Board would become the basis for a proceeding to be continued against the sick industrial company for winding up in accordance with the provisions of the Companies Act. Sub-section (2) of section 20, which is already reproduced, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g up of the sick industrial company once it receives an opinion from the Board in this regard without examining the correctness of such opinion, on hearing the concerned parties. However, normally, such opinion being one tendered by the Board consisting of experts acting judicially will have a greater weight in deciding the question as to proceeding with the winding up of the sick industrial company. Such opinion of the Board cannot be lightly brushed aside. Even otherwise, it is a jurisdiction conferred upon the High Courts under the Companies Act. Any jurisdiction conferred on High Courts under a statute has to be exercised, subject to the limitations prescribed under the statute, and such jurisdiction can also be taken away or modified by appropriate amendment to the very statute, or by any other law passed by the competent legislative body. In the instant case, even if it were to be held that section 20, to a certain extent, mutilates the jurisdiction of the High Court, it cannot be held to be unconstitutional on that ground. Because both the enactments are passed by Parliament, therefore, it is open to Parliament to modify the powers conferred on the High Courts under the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. He has first made a reference to rule 96 of the Companies (Court) Rules, 1959. That rule reads as under : "Upon the filing of the petition, it shall be posted before the Judge in Chambers for admission of the petition and fixing a date for the hearing thereof and for directions as to the advertisements to be published and the persons, if any, upon whom copies of the petition are to be served. The Judge may, if he thinks fit, direct notice to be given to the company before giving directions as to the advertisement of the petition." It has been submitted that rule 96 would be applicable where a regular petition for winding up has been filed and in case if the petitions so filed by the unsecured creditors were required to be proceeded with, the procedure as contemplated by rule 96 as quoted above, would need to be followed. In the present case that stage, namely, the stage as contemplated by rule 96 is not required to be followed by virtue of the provisions contained in section 20 of the SICA as considered by the Madras High Court from the observations excerpted hereinabove. According to his submission, in the present case no writ petition has also been filed by any party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission on principle. He was so permitted. He, therefore, submit- ted that the provision of rule 96 of the Companies (Court) Rules quoted hereinabove is mandatory insofar as the admission of the petition, fixing the date of final hearing and accordingly issuing directions as to the advertisement to be published are concerned. For making good this submission he also made reference to rules 99 and 24 of the Companies (Court) Rules, 1959. They read as under : "99. Advertisement of petition. Subject to any directions of the court, the petition shall be advertised within the time and in the manner provided by rule 24 of these rules. The advertisement shall be in Form No. 48. 24. Advertisement of petition. (1) Where any petition is required to be advertised, it shall, unless the Judge otherwise orders, or these rules otherwise provide, be advertised not less than fourteen days before the date fixed for hearing, in one issue of the Official Gazette of the State or the Union territory concerned and in one issue each of a daily newspaper in the English language and a daily newspaper in the regional language circulating in the State or the Union territory concerned, as may be fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter has come up before the court under section 20, procedure for admission of petition registered under that provision will have to be followed as per the aforesaid rules, namely, rules 96, 99 and 24. It is only then that a person interested even in challenging the Board opinion might have had a notice to do so, since it is possible that all persons interested might not be parties before the BIFR or might not be aware of the proceedings before the BIFR. 6. As against the aforesaid submission of Mr. Mihir Joshi, Mr. Singhi submitted that rule 96 of the Companies (Court) Rules would apply where winding up petition is preferred under section 433 of the Companies Act and for that matter in proceedings under Chapter II, Part VII of the Companies Act. According to his submission the provisions of the aforesaid rules will not apply to a case where opinion is formed by the Board under section 20(1) of the SICA and the court has a discretion under section 20(2) whether to follow the procedure prescribed under the aforesaid rules. He submitted that this would apply with greater force in the present case where there is no challenge to the opinion formed by the Board. To strengthen his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be projected." According to his submission the execution part spoken to by the Delhi High Court is one that follows the stage of order of winding up being passed by the Company Court by virtue of section 20. 7. Mr. Singhi read the provision of section 2 of the SICA coupled with article 31C of the Constitution of India, which also came to be dealt with by the Delhi High Court in the aforesaid decision. The same appears in paras 11 and 12 of the citation, which might be reproduced : "11. All this having been said, it will appear that the real question has escaped our attention which is the effect of declaration made under section 2 of the SICA. Under article 31C of the Constitution, law giving effect to certain Directive Principles have been saved. This article is as under : 31C. Saving of laws giving effect to certain Directive Principles. Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred, article 14 or article 19, and no law con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of employment and optimise the use of the funds of the banks and financial institutions, it would be imperative to revive and rehabilitate the potentially viable sick industrial companies as quickly as possible. It would also be equally imperative to salvage the productive assets and realise the amounts due to the banks and financial institutions, to the extent possible from the non-viable sick industrial companies through liquidation of those companies." 9. Dealing with the decision in V.R. Ramaraju s case ( supra ) the learned author has observed that the vires of section 20(2) of the SICA came to be upheld by the Madras High Court by reading down the word shall appearing in section 20(2) of the SICA as may and that process of interpretation of section 20(2) has been upheld by the Supreme Court in the said matter. According to the learned author section 20(2) is not required to be read down, in view of the settled proposition that very purpose of the enactment might be defeated and might lead to absurd result and serious consequences might flow from not following the mandatory sense appearing in section 20. The learned author has made reference to earlier decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
