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TMI Blog2004 (7) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... first appellant company under section 15 of the 1985 Act. The appellants had filed the aforesaid petition under sections 391 to 394, read with section 81(1A) and sections 100 to 103 of the Companies Act, 1956, being Company Petition No. 13 of 2003 in this court on November 17, 2003, for obtaining sanction and approval of a scheme of arrangement between both the appellant-companies and the shareholders and creditors of these companies. Various prayers were made in the aforesaid company petition of the appellants with which we are not concerned in this appeal. The object of the aforesaid company petition, however, was to obtain sanction of this court to the aforesaid arrangement between the two appellant-companies and their shareholders and creditors whereby and whereunder the textile division of appellant No. 1-company together with all its assets, liabilities and all rights and claims relating thereto was proposed to be transferred to and be vested in appellant No. 2-company on the terms and conditions which had been enumerated in the said scheme of arrangement. The salient features of the proposed scheme of arrangement between both the appellant-companies and their shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y this court to hold a meeting of the creditors and submit their respective reports to the court along with the result of the meeting within seven days of the conclusion of the meeting. The reports were ordered to be duly sup ported by the respective affidavits of the chairman/alternate chairman. The respective chairman accordingly held the meetings and submitted their reports to this court. As per the report submitted by Mr. Naresh Kumar Sood, Advocate-Chairman, as may as sixty two creditors of the first appellant-company, including secured creditors, namely, IDBI, IFCI, ICICI, Exim Bank, West Bengal Industrial Development Corporation, State Bank, Indore, Allahabad Bank and other unsecured creditors voted in favour of proposed modifications being adopted and for being carried into effect in furtherance of the scheme of arrangement. However, State Bank of India and Industrial Investment Bank of India, the secured creditors opposed the modified scheme of arrangement. The modified scheme of arrangement was prepared, adopted and carried into effect by more than three-fourths majority. Thereafter, the modified scheme dated November 16, 2003, was submitted before the court. The first an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority." In the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [1992] 75 Comp. Cas. 440 ; [1992] 3 SCC 1, a landlord of the premises had filed an eviction petition against a company under section 21(1) of the Kamataka Rent Control Act, 1961, even though the BIFR had ordered the winding up of the tenant company and the appeal filed by the tenant-company against the aforesaid winding up order of the BIFR had been reported by the Appellate Authority for Industrial and Financial Reconstruction. The tenant-company had challenged the aforesaid order in a writ petition filed by it in the Delhi High Court b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her held (page 450) : ''Eviction proceedings initiated by a landlord against the tenant company would not fall in categories (1) and (3) referred to above. The question is whether they fall in category (2). It has been urged by learned counsel for the appellant-company that such proceedings fall in category (2) since they are proceedings against the property of the sick industrial company. The submission is that the leasehold right of the appellant-company in the premises leased out to it is property and since the eviction proceedings would result in the appellant-company being deprived of the said property, the said proceedings would be covered by category (2). We are unable to agree. The second category contemplates proceedings for execution, distress or the like against any other properties of the industrial company. The words 'or the like' have to be construed with reference to the preceding words, namely, 'for execution, distress' which means that the proceedings which are contemplated in this category are proceedings whereby recovery of dues is sought to be made by way of execution, distress or similar process against the property of the company. Proceedings for eviction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otion or on the application of any person interested in the affairs of the company, make an order winding up the company, and such an order shall be deemed to be an order made under section 433 of this Act." A hare look at sub-section (2) of section 392 clearly leaves no room for any doubt that the order of winding up of a company, either on its own motion, or on the application of any party interested in the affairs of the company, can be passed by the court only after it is satisfied that a com promise or an arrangement sanctioned under section 391 of the Act cannot be worked satisfactorily. The stage therefore, when an order of winding up of a company can be passed, under section 392(2) of the Act comes only after an order of compromise or arrangement has been passed by the court in terms of section 391 of the Act and after the passing of such an order, the court finds and is satisfied that the compromise order, the arrangement sanctioned by it cannot work satisfactorily On this reasoning. Therefore, it can be held that an order in terms of section 391 cannot be construed in the nature of a winding up order at all because, actually the order under section 391 is entirely diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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