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TMI Blog2013 (4) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... .Anuroop Singhi and Mr.P.C.Bhandari for the respondents. Facts in brief, indispensable for the present adjudication, are that the appellant-Company (hereafter also referred to as 'the Company') had taken loan from various financial institutions and in its bid to salvage its productive assets approached the Board for Industrial and Financial Reconstruction, New Delhi (hereafter also referred to as 'the Board') for its revival and rehabilitation under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA') together with other appropriate reliefs. The Board, however, forwarded its opinion dated 11.6.2003 under Section 20 of SICA to this Court to wind up the Company. This notwithstanding, to resuscitate itself the appellant submitted an offer for one time settlement to the Industrial Development Bank of India (IDBI), the operative agency for the consortium of secured creditors, and several parleys were held in connection therewith. While such efforts were in progress, the learned Company Judge, on a scrutiny of the records forwarded by the Board, by order dated 23.1.2004, appointed Mr.B.C.Meena as the Provisional Official Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply and contest the application dated 21.12.2004. On the next date i.e.13.7.2007 fixed for confirmation of the sale, it was pleaded on behalf of the appellant-Company that the finalization of the bids offered in the auction sale be deferred as it was still in the process of negotiations with its creditor, IDBI and Canara Bank to work out the scheme for compromise. This prayer was resisted on behalf of the bidders on the ground that they had deposited huge amount of earnest money which was lying with the official liquidator since long and that the ground of negotiation was only a ruse to further delay the proceedings. The learned counsel for the appellant-Company, on instructions, having conveyed its willingness to pay interest on the earnest money by way of compensation, the learned Company Judge deferred further orders on the confirmation of the bids by a week, leaving it (appellant-Company) at liberty to effect a compromise as was sought to be represented to be in the offing. On the next date i.e.20.7.2007 as the appellant-Company sought for further time to complete the negotiations, the learned Company Judge, on a consideration of the relevant aspects and noticing, amongst other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with law, are beyond reproof. It was argued as well that with the interim restraint granted by this appellate forum, the process has come to a standstill and though the property is in the custody of the official liquidator, the state of status quo in all respects, is not in overall benefit, more particularly, of the auction purchaser and the creditors. Learned counsel for M/s.Arpit Granites Private Limited, the nominee of the highest bidder M/s.Chaudhary & Sons (Forgings) Pvt.Ltd., Ghaziabad (UP) has urged further, with reference to the order dated 11.6.2003 of the Board, that in terms of Section 20(2) of SICA, the High Court is obligated to wind up the appellant-Company and that the proceedings thereof being only a formality, the challenge to the auction sale is misconceived. In absence of any grievance with regard to the mode of conduct of such sale and allegation of collusion or irregularity in connection therewith, the present impugnment ought to be rejected in limine as every day's delay is causing immense detriment and hardship to the auction purchaser and all concerned, he urged. Reliance was placed on the decision of the Apex Court in FCS Software Solutions Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof 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. (2) The High Court, shall on the basis of the opinion of the Board, order winding up of the sick industrial company and may proceed and cause to proceed with the winding up of the sick industrial company in accordance with the provisions of the Companies Act, 1956 (1 of 1956). (3) For the purpose of winding up of a sick industrial company, the High Court may appoint any officer of the operating agency, if the operating agency gives its consent, as the liquidator of the sick industrial company and the officer so appointed shall for the purposes of the winding up of the sick industrial company be deemed to be, and have all the powers of, the official liquidator under the Companies Act, 1956 (1 of 1956). (4) Notwithstanding anything contained in sub-section (2) or sub-section (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to Section 20(4) of the enactment, the Board alone had the jurisdiction as regards sale of its assets, till the order of winding up of a Company is passed. While underlining that SICA was a special statute, and later in point of time, compared to 1956 Act and that sub-section (4) of Section 20 contains a non obstante clause, the Hon'ble Apex Court enunciated that though on receipt of the recommendation of the Board, the High Court could initiate a proceeding for winding up of the sick industrial company, Section 536(2) of the 1956 Act did not ipso facto confer any jurisdiction upon the Company Court to direct sale of its assets. Elaborating this proposition, their Lordships observed that notwithstanding the fact that the procedure outlined in the 1956 Act would apply for the sale of the assets of the sick industrial company, the process with regard thereto can be initiated only after the order of winding it up is passed in the company petition. The Hon'ble Apex Court was of the view that the scheme of SICA suggested that the Board retains control over the assets of the sick industrial company pending decision of the High Court on the issue of winding up thereof and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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