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TMI Blog2010 (6) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... her with interest at the rate of 12 per cent per annum. The said decree gave time of 60 days to the judgment debtor to pay the said amount with the stipulation that in default, the bank would be at liberty to sell the property of the judgment debtor by public auction or by private contract. For the inability on the part of the judgment debtor to pay the decretal dues, the bank put the decree in to execution. In the meantime, the official liquidator having given an advertisement for sale of the factory and assets as a going concern with the obligation to the purchaser to reemploy the workers, the bank preferred two special leave applications before the Supreme Court of India against two such orders dated 23-2-1998, and 10-7-1998, authorizing such sale. (2)Those two special leave applications were disposed of by granting time of 10 weeks for concluding the sale with further observation that, in cases the sale was not concluded within the said period, the order of the High Court directing sale of the company as a going concern would stand set aside and the official liquidator should proceed to sell the assets of the company, first, by selling the plant and machinery and other movable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the source of making payment of Rs. 95 lakh in the scheme, it appeared that such scheme is further subject to the permission to be obtained from the State Government and other appropriate authorities for the change of usurer of the land from industrial use to the residential one. (3)There was no indication in the scheme as to the source from which the unsecured creditors would be paid the principal amount of their dues. (4)The appellant did not disclose the names of the unsecured creditors in the application. (5)The sole motive of the appellant was, as it appears from the scheme, to sell the factory land after converting those into various small plots for residential purposes in the disguise of revival of the company-in-liquidation. 4. Being dissatisfied, the unsuccessful applicant under section 466 of the Act has come up with the present appeal. 5. During the pendency of the appeal, one Deccan Traders Private Limited filed an application for being added as respondent in this appeal on the allegation that it has acquired the interest of the Allahabad Bank in the decree obtained against the company-in-liquidation by virtue of a registered instrument. This court allowed such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956. According to Mr. Banerjee, the appellant, as a contributory or a shareholder, has the power to apply under section 466 of the Companies Act, 1956, for stay of winding up and the court can make an order staying the proceedings either altogether or for a limited one on terms and conditions as the court thinks fit. Mr. Banerjee submits that sections 443 and 446 of the Companies Act, 1956, also empowers the court to stay a winding-up petition and to deal with all questions whatsoever which relate to or arise in the course of a winding up of the company and by virtue of the aforesaid provisions of the Companies Act, 1956, the court has the power to retain control over the winding-up proceeding and to ensure the purpose for which the winding-up proceeding should be stayed. 9. According to Mr. Banerjee, the appellant is the only one who has taken interest in protecting the factory land and has spent a sum of Rs. 7,50,000 for fencing of the said land pursuant to leave granted by an order of the court dated 14-6-2007, and has been spending a sum of Rs. 22,612 a month towards security expenses for protection of the land since June, 2007. No other creditor has come forward for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-7-2007, but bank did not mention anything about termination or any proposed assignment. Interim order was passed in appeal on 25-7-2007; (iii)The assignment deed made and executed during the pendency of the appeal without leave of the appellate court, is mala fide. It appears that there were two assignment deeds on 2-8-2007 by which Allahabad Bank first assigns the debt to Calcutta Securities Private Limited for the same sum of Rs. 3.80 crore and again Calcutta Securities Private Limited assigns by another deed of 2-8-2007 to Deccan Traders Private Limited. The assignment deeds are all drawn up by Sandip Agarwal and Co., Advocates, who had been representing Sylvan in all proceedings. (iv)The consideration which has been shown to be paid by Calcutta Securities Private Limited in the first deed of assignment of 2-8-2007 is also on account of Deccan Traders Private Limited. It is not explained in the deed of assignment as to why there had to be two deeds on 2-8-2007. (v)The assignment by Allahabad Bank is illegal and bad as Allahabad Bank did not have the power to make any assignment under the Banking Regulation Act. (vi)The assignment is without notice to the appellant which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eghal Homes (P.) Ltd. v. Shree Niwas Girni K.K. Samiti AIR 2007 SC 30781, referred to by Mr. Kar, which should be followed by a court before taking decision of staying the order of winding up for the purpose of examining the proposed scheme of revival: "We see no difficulty in reconciling the need to satisfy the requirements of both sections 391 to 394A and section 466 of the Companies Act while dealing with a company which has been ordered to be wound up. In other words, we find no incongruity in looking into aspects of public interest, commercial morality and the bona fide intention to revive a company while considering whether a compromise or arrangement put forward in terms of section 391 of the Companies Act should be accepted or not. We see no conflict in applying both the provisions and in harmoniously construing them and in finding that while the court will not sit in appeal over the commercial wisdom of the shareholders of a company, it will certainly consider whether there is a genuine attempt to revive the company that has gone into liquidation and whether such revival is in public interest and conforms to commercial morality. We cannot understand the decision in Miheer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposal is for payment of their dues within a specified period by treating them as terminated employees. It is further pointed out that the proposed scheme is subject to the approval of the State Government and other appropriate authorities for change of user of the land from industrial purpose to residential purpose. 19. It is, therefore, apparent that the object of the scheme is not to revive the activities of the wound up company but it is a ruse to dispose of the assets of the company by a private arrangement and, in such a situation, as pointed out by the Apex Court in the case of Meghal Homes (P.) Ltd. (supra), it is the duty of the court in which the properties are vested on liquidation, to dispose of the properties, realize the assets and distribute the same in accordance with law. Therefore, without entering into the question whether the agreement of the appellant with the Allahabad Bank is still subsisting or whether the respondent No. 8 has taken a valid assignment from the Allahabad Bank, we feel no hesitation to conclude that the proposed scheme does not come within the purview of section 466 of the Act justifying staying of the order of winding up of the company. More ..... X X X X Extracts X X X X X X X X Extracts X X X X
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