9911796707
TMI Blog2001 (2) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Financial Corporation of the assets of the company now in liquidation sometime prior to the winding up order. The details would be adverted to later at the appropriate place. Company Application No. 529 of 1999 is filed by all the ex-directors of the company now in liquidation and some of the shareholders who stood as guarantors to the various financial institutions for the amounts of loans secured by the company once again for the relief praying that the sale conducted by the State Financial Corporation be set aside. Company Application No. 528 of 1999 is an application filed by the same persons as the applicants in Company Application No. 530 of 1999 praying that the guarantors of the company be discharged from their liability on the ground that the sale conducted by the State Financial Corporation of the assets of the company in liquidation is unauthorised and fraudulent. Company Application No. 530 of 1999 is filed once again by the same applicants who are the applicants in Company Application No. 529 of 1999 praying for a direction to have an enquiry conducted into the circumstances under which the State Financial Corporation conducted the sale. Company Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court of Judicature at Hyderabad for further necessary action. A certified copy of the relevant proceeding dated 26-12-1995 of the Bench alongwith certified copies of earlier orders/proceedings dated 17-7-1990, 11-4-1991, 15-10-1991, 18-2-1992, 7-7-1992, 9-10-1992, 2-4-1993, 15-9-1994, 10-1-1995 and 27-9-1995 are enclosed. Yours faithfully, Sd/- Rupa Dutta (Rupa Dutta) Registrar". On the same day the Deputy Registrar of this Court addressed another letter to the Registry of the BIFR enquiring whether any appeal had been preferred against the orders of the BIFR. The said letter was despatched on 31-8-1998 from this Court. Though the BIFR did not respond to the above correspondence of this Registry of this Court, a letter dated 9-9-1998 was received by this Court purported to have been sent by one Mr. T. Rajive who is one of the applicants in Company Application Nos. 529, 530 and 531 of 1999 claiming to be the authorised signatory who admittedly was the Managing Director of the company now in liquidation as on the date of the winding up of the company. The relevant portion of the letter reads as follows : "BIFR had referred to the High Court of Andhra Pradesh, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 23-6-1997, Penna Textiles - 5th respondent in Com- pany Application No. 88 of 1999 became the successful bidder and the assets of the company now in liquidation were sold for a valuable consideration of Rs. 2.2 crores and in fact a sale deed was also executed to that effect in favour of the said Penna Textiles on 30-8-1997. For the sake of convenience, it is also relevant to mention here that about an year thereafter Penna Textiles itself sold away the assets so purchased by it to P.S. Textiles Ltd. This is an admitted fact on all hands. 5. For the purpose of deciding various applications referred to earlier, the following are the crucial dates : ( 1 ) The auction conducted by the State Financial Corpn. on 23-6-1997, ( 2 ) the sale deed executed in favour of Penna Textiles pursuant to the above mentioned auction is dated 30-8-1997 and ( 3 ) on 16-11-1998, this Court directed that the company now in liquidation be wound up. 6. I shall now examine the individual applications : Company Application No. 529 of 1999 is filed by the ex-directors of the company now in liquidation along with some other shareholders, who are guarantors for the loans secured by the said company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y divested of their right in their capacity as shareholders to challenge any action which would adversely effect their rights as shareholders. Because, the directors of the company may opine and agree with the BIFR that it is not worthwhile continuing the existence of the company, therefore, allow the Court to pass an order for winding up. But that does not necessarily mean that the assets of the company should be allowed to be sold at a price which is less than the value of the assets are worth. By allowing it, not only the interest but also the interest of all other shareholders and creditors would be jeopardised. 10. The question that falls for the consideration of this Court is whether the directors or the shareholders can raise an objection with regard to a sale of the assets of the company in liquidation conducted by a secured creditor. In this case it happens that it is done (in exercise of the statutory right under section 29 of the State Financial Corporation Act). If the answer to this question were in the positive, then, the further question would be what are the legal principles or parameters, which regulate such a right. 11. The company court exercises its juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; therefore, it cannot be said that the sale transaction conducted by the State Financial Corporation is hit by section 446. 14. However, the learned counsel for the applicants - Shri Ramanarayana argued that in view of the Scheme of sections 20, 22 and 22A of the Sick Industrial Companies (Special Provisions) Act, the proceedings in the company petition are only a continuation of the proceedings before the BIFR which is a body created under section 4 of the above said Act. By virtue of the declaration made under section 22 that during the pendency of the proceedings before BIFR, no creditor could have initiated legal proceedings of whatever nature for the recovery of the amounts due to such a creditor. If that is so on the completion of the enquiry if the BIFR reaches the conclusion that the company is not likely to make its net worth positive within a reasonable time to meet all its obligations, and, therefore, it is just and equitable that the company be wound up, the BIFR is required to record the same and forward the matter to the concerned High Court for winding up of the company. It would be illogical to say that the assets of the company could not be proceeded against p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a declaration, the Parliament cannot be said to have made such a declaration by necessary implication. 18. The more important aspect of section 22A is a direction is to be issued only to the company but not its creditors. Whereas in contradiction sec-tion 22 injuncts the creditors from taking any proceedings against such a company during the pendency of the proceedings before the BIFR. Obviously the purpose behind section 22A appears to be that the assets of the company may not be disposed off by the management and thereby making the claims of the creditors and others more difficult to be realised. 19. Shri Ramanarayana submitted that in view of the declaration contai-ned under section 441 of the Companies Act that the winding up of a company shall be deemed to commence on a particular date depending upon the nature of the winding up proceedings also, in my view, does not in any way supports the submission made by Shri Ramanarayana. The fictions created under section 441 might have bearing for certain purposes under the Companies Act and what exactly are those purpose may not be necessary for this Court to go into, but in my view, having regard to the language of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid fraudulent and negligent conduct and to restore the said assets to the said company under winding up and pass such other order or orders". In the light of the orders passed in Company Application Nos. 529 and 530 of 1999, I do not see any reason to grant any relief in this petition apart from the fact the relief such as the one sought, cannot be granted by the company court. 23. Company Application No. 88 of 1999 : This is an application filed by the Official Liquidator with the following prayers : "( a )kindly consider and pass appropriate orders declaring the sale of assets conducted by the Andhra Pradesh State Financial Corporation as null and void, ( b )direct the Andhra Pradesh State Financial Corporation to deposit the sale proceeds of Rs. 220.60 lakhs with the Official Liquidator immediately, ( c )direct the Andhra Pradesh State Financial Corporation to furnish a copy of panchanama prepared at the time of taking possession of the assets of the company and also a list of assets disposed of by it and also a list of assets if any remaining in their hands unsold, ( d )order the costs of this application to be come out of the assets of the company, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
