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TMI Blog2008 (9) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ms. Manisha Gandhi, Ms. Punita Sethi, Alok Jagga, Anand Chhibber and Manish Jain for the Appearing Parties. JUDGMENT Permod Kohli, J. Company Petition No. 416 of 2002 was presented by M/s. Winsome Textiles Industries Ltd. under section 439 read with sections 433 and 434 of the Companies Act, 1956, for winding up of M/s. Mangla Kotex Limited, a company incorporated under the Companies Act. This company was ordered to be wound up by order dated January 16, 2004, and official liquidator was appointed as the liquidator of the company to takeover the movable and immovable assets and properties of the company. Subsequently, the assets and properties of the company were put to sale through the advertisement published in The Tribune in its issue dated April 22, 2006. Two applications being C.A. Nos. 449 and 498 of 2006 have been filed for confirmation of sale. While these proceedings were pending, C.A. No. 387 of 2006 has been preferred by Ashwani Kumar, son of Padam Kumar Jain, one of the promoters and shareholders of the company (in liquidation) under order 9, rule 13 of the Code of Civil Procedure for setting aside the ex parte order dated March 23, 2006, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany court directed the transposition of the Canara Bank as petitioner in winding up petition, i.e. , C.P. No. 416 of 2002 and permitted to continue with the winding up petition earlier filed by Winsome Textile Industries Ltd. Official liquidator as also the secured creditors, namely, IDBI Bank through Stressed Assets Stablisation Fund (hereinafter referred to as "the SASF") and Canara Bank filed their objections opposing the petition for recalling the order dated March 23, 2006, as also recalling of the winding up order dated January 16, 2004. The applicant seeks setting aside of the order dated March 23, 2006 and recalling of the order dated January 16, 2004 with the following averments : It is stated that the applicant-company was established with the investment of Rs. 60 lakhs in the share capital contributed by the promoter and shareholder. The company established an export oriented unit under the EPCG Scheme for manufacture and export of fabrics and garments. It is one of the scheduled industries specified in the First Schedule at Sr. No. 23, sub-heading (1), under the heading of Textiles under the IDR Act, 1951. The company has been established in joint sector with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival scheme under sections 391 to 394 of the Companies Act that too by paying the claims of the secured creditors. It is further the case of the secured creditors that the attempt of the applicant is to delay the payment of claims of the secured creditors by stalling the liquidation proceedings. It is further stated that the assets of the company have already been sold for Rs. 6.70 crores and the applications for confirmation of the sale are pending before this court. I have heard learned counsel for the parties. From the record, it is evident that the company was ordered to be wound up vide order dated January 16, 2004. Before passing of this order when the petition was admitted to hearing, the company was put to notice and one Mr. A.K. Rampal, advocate, appeared on March 13, 2003. He sought time to file reply which was granted to him and the case was adjourned to May 22, 2003. The case was again adjourned to July 11, 2003 and then to September 5, 2003 and thereafter to September 12, 2003. The company remained unrepresented and the petition was admitted on October 31, 2003. The order of admission was duly published in The Indian Express (Chandigarh edition) and Dainik Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief can be granted to the applicant. It has also been urged on behalf of the respondents-secured creditors that the remedy of the applicant is not by way of recall of the winding up order, but to proceed under sections 391 and 394 of the Companies Act with a viable scheme of revival and unless such claim of revival is approved by the court and the company in liquidation is revived, winding up order cannot be recalled or set aside. Ms. Manisha Gandhi, learned counsel for the applicant representing the ex-management has referred to and relied upon various judgments in support of her contention for recalling of the impugned order. In the case of G.T. Swamy v. Goodluck Agencies [1990] 69 Comp. Cas. 819 the Karnataka High Court while considering the jurisdiction and power of the company court, held that the company court has inherent powers under rules 6 and 9 of the Companies (Court) Rules, 1959, framed by the Supreme Court to recall the winding up order. In the case of R. Ganesha v. H.R. Engineering Works [1995] 82 Comp. Cas. 250 (Kar.), it has been observed that where the company is in a position to pay its debts and no other creditors have come up in support of winding up, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ex-management of the company has also lodged counter claims. The issues involved as to whether any amount is payable by the company or whether counter claims are to be awarded have to be decided by the DRT and thus the company court cannot go into this aspect of the matter and thus the prayer for winding up of the company be declined. She has relied upon Allahabad Bank v. Canara Bank [2000] 101 Comp. Cas. 64 ; AIR 2000 SC 1535, wherein the hon'ble Supreme Court made following observations regarding the exclusive jurisdiction of the Tribunal constituted under the Recovery of Debts Due to Banks and Financial Institutions Act for adjudication of liability of debtor (page 78 of 101 Comp. Cas.) : "25. Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other court or authority much less the civil court or the company court can go into the said questions relating to the liability and the recovery except as provided in the Act. . ." It is further argued that it is also within the exclusive domain of the Tribunal to adjudicate upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout requiring the creditor to quantify the debt precisely (see Tweeds Garages Ltd., In re [1962] 32 Comp. Cas. 795 (Ch. D); [1962] Ch. 406). The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends." From the ratio of the aforesaid judgments, following principles emerge : (1)The company court has the jurisdiction to recall the winding up order at any stage. (2)Where the debt is bona fide disputed, winding up should not be ordered. (3)Where the liability is established and the defence of the company to dispute the liability is not based upon substantial material, winding up cannot be refused. (4)Despite inability of company to pay its debts, if there are still apparent prospects of the company coming back to life, the death of the company should not be affirmed and another chance be given to the company to survive. Applying the aforesaid principles emerging, the case of the applicant, ex-management is to be examined. Admittedly, the claim of the M/s. Win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the apex court, it is clear that the winding up order cannot be passed by this court, if the court is of the opinion that the company is in a position to pay off its debts and no other creditor has come up in support of the winding up. In the present case, both the secured creditors have supported the winding up and have vehemently opposed the revival of the company in the absence of any revival proposal. There is a1so no proposal by the ex-management of the company or the applicant-promoter as to how the company will be revived, the source of finances, the method and mode of resurrection or resuscitative measures initiated for survival of the company. In the absence of any such proposal or step, mere desire does not inspire confidence to stay or stall winding up and jeopardise the interest of secured creditors (public sector banks) and eventually the public interests. C.A. No. 387 of 2006 is for setting aside the ex parte order dated March 23, 2006, whereby sale of the assets of the company in liquidation was ordered which is only a consequential order of winding up. The winding up order is dated January 16, 2004 and two applications, being C.A. Nos. 815 and 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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