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TMI Blog2002 (4) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, by another ex parte order dated 3-2-1994, the order dated 14-2-1990 passed by BIFR was also stayed. An application (A-17) was filed on behalf of the company in Miscellaneous Company Application No. 1 of 1991 praying that winding up order dated 2-5-1991 be kept in abeyance on account of the stay orders passed in the above writ petition. After hearing the learned counsel for respondent-company and official liquidator, this Court vide its order dated 2-11-1994 directed that the winding up order dated 2-5-1991 shall remain in abeyance till further orders of this Court. 3. On 16-7-1992, the respondent-company entered into an agreement with a society named as Uttar Railway Sahkari Avas Samiti, Kanpur for selling 51,730 sq. mts. of land situate in the factory premises at 84/63, Anwarganj, Kanpur for a sum of Rs. 5 crores, out of which, Rs. 27.98 lakhs had been received as advance payment. The respondent-company had disposed of scraps, machineries, raw materials and chemicals stored in the factory premises at Kanpur and had utilised the said amount for clearing a substantial part of the liabilities of company. After counter-affidavit (A-22) was filed by the official liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal payment towards its dues. By an order dated 19-1-2001, time for execution or remaining sale deeds was extended up to 19-4-2001 and an amount of Rs. 4.90 lakhs was directed to be paid and that on such payment, the dues of UPFC was also discharged. 6. Application A-63 was filed on behalf of respondent-company with a prayer that since networth of the company has become positive, the proceedings for winding up of the company, may be dropped and the order dated 2-5-1991 passed by this Court be recalled. Along with the application, an audited balance sheet of the company had been annexed showing the profits and loss of the company from which it can be found that the company had total liability of Rs. 80,20,389.18 whereas an amount of Rs. 2,12,62,289 is in deposit with official liquidator and the land measuring 3,700 sq. mtrs. of the agreed value of Rs. 1,25,46,000 is still to be sold. By an order dated 28-2-2002 the official liquidator pointed out that from Director s report in terms of section 217(2AA) of the Companies Act, 1956, filed along with the rejoinder affidavit of Shri Satish Chand Singhal, the matter was reported that the Directors of company did not provide complete i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces 22,53,424.14 Rs. 1,22,54,535.99 Rs. 2,70,12,660.10 Surplus of assets Rs. 1,47,58,124.11. 5. That even depreciation as provided in the Balance-sheet is considered which is Rs. 25,36,154.14 on the fixed assets the surplus of assets over liabilities will be Rs. 1,22,21,969.97. 6. That the Company is still having some land which is to be sold out, therefore, according to the Balance-sheet the company is having surplus of assets over liabilities and is able to meet out its liabilities. 7. That the paid up capital and reserve and surplus as per Balance-sheet is Rs. 1,51,92,823.72 whereas the accumulated losses of the Company are Rs. 1,94,35,760.53. However, the auditors in its notes on account of para 15 has stated that the accumulated losses standing at the debit of profit and loss A/c have been set off from the profits arising on the sale of company s land. Therefore, the share capital and reserve of the company has not been written off and the net worth is not in negative. 8. That the unsecured loans to be paid by the Official Liquidator has been verified by the auditors from the books of A/c of the Company and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f is not likely to become viable in future and that it is just and equitable that the company should be wound up. It may record and forward its opinion to the concerned High Court. While affirming a judgment of Tamilnadu High Court, which had upheld the vires of section 20(2). Supreme Court in V.R. Ramraju v. Union of India [1997] 89 Comp. Cas. 600, agreed with the reasoning and conclusion of the Madras High Court in J.M. Malhotra v. Union of India and V.R. Ramraju v. Union of India [1997] 3 Comp. L.J. 222 that the said provision did not take away the power of the High Court in examining the correctness of the opinion of the Board as to winding up of the sick industrial company and instead of accepting the normal connotation of the term shall in the mandatory sense of making it scheme and aims and objects of the Act read down the provision in the context of further expression used therein may . 11. In Crescent Iron Steel Corpn. Ltd. v. Union of India [1992] 4 SCC 680, BIFR passed an order on 15-2-1991 proposing the winding up of appellant-company. On 16-5-1991, the appellant-company passed a special resolution at a general meeting of the shareholders resolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive. The assets, including paid up capital and free reserve without their revaluation or reducing by depreciation, are more than its total liability. It is submitted that taking into account the aforesaid subsequent developments, the opinion of BIFR requires reconsideration and that, instead of sending the matter back to the BIFR, the Court may examine the viability of the company to become a profit earning industrial company within a reasonable time. 14. In Official Liquidator v. Chase Bright Steel Ltd. (BIFR Case No. 38 of 1987), vide order dated 1-11-2001, the Bombay High Court considered the opinion of BIFR in almost similar circumstances. In the said case, respondent-company had settled dues with Allahabad Bank, the only secured creditor and had expressed his expectation from the creditors in case of recommencement of business activities, the company would get cash flow from the normal business activities, which would further enable the company to repay the agreed amount to creditors, and that after recording a finding that the company has potential of rehabilitation and it could be revived, it cannot be said hat it has lost its substratum. The Court did not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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