9911796707
TMI Blog2013 (6) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... revival of the company but the company will not approach BIFR once again without leave of the learned Trial Judge. - A.P.O. No. 129 of 2012 C.P.13 of 2009, - - - Dated:- 19-7-2012 - KALYAN JYOTI SENGUPTA AND ASIM KUMAR MONDAL JJ. K.J. SENGUPTA, J.:- This appeal is directed against judgment and order dated 26th March, 2012 passed by the learned Single Judge on the application made by the respondent above-named for appointment of provisional Liquidator pending disposal of the winding up petition. The summary of the fact on which the present appeal is preferred is set out hereunder:- The respondent above-named M/s. Madura Coats Limited (hereinafter in short Madura) claiming itself to be one of the creditors filed the application for winding up being C.P. No.13 of 2009 which is yet to be admitted by the learned Company Judge and the hearing of which is awaiting. Pending disposal of the above matter application being C.A. No.34 of 2012 was filed on which the impugned judgment and order was passed. The claim of the Madura in its winding up petition is based on admission of a sum of Rs.2.02 crores made in course of reference proceedings before BIFR. Admission was made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of unencumbered assets of the company if any. That apart the present management of the appellant company had indulged in acts of manipulation and purported transactions which appear on their face to be subterfuges or bogus and this will be evident from the fact that company had sold its assets without the information to BIFR or AAIFR or the Assets Sale Committee and without following open tender process. The four properties worth Rs. 320 crores have been transferred as per the valuation of the appellant. The same was transferred to its four subsidiaries namely Dunlop Property Private Limited, Dunlop Infrastructure Private Limited, Dunlop Estates and Bhartia Hotels. The real value of the aforesaid four immovable properties would be around Rs.2000 crores and the transferee companies are under the same management receiving almost no consideration. In consideration of transfer of the four assets to its own subsidiaries shareholding of all the subsidiary companies have been transferred without paying any money consideration in favour of the appellant company. All the sales and/or transfer were made when the company was still under the purview of the Board for Industrial and Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayer for appointment of provisional Liquidator. The basis of passing impugned order was transfer of assets made by the company during the period 2006-07. The legality and validity of those transfer cannot be questioned nor the learned Trial Judge can decide this matter in this proceedings. The transfer of assets and properties were made for the benefit of the company and such order of transfer was within the knowledge of BIFR and AAIFR and further Madras High Court has also taken note of such transfer impliedly with approval. Whether transfer is bad or good can only be questioned before the BIFR and AAIFR. The learned Company Judge has no jurisdiction to do so hence the order passed by the learned Trial Judge is not sustainable. Moreover the order of injunction initially passed by the learned Company Judge on 14th November, 2011 and also by the Hon ble Appeal Court dated 29th March, 2012 are adequately protective measure and no further order was required to be passed. In view of this situation the learned Trial Judge should have dismissed the application as no ground has been made out. Since a number of creditors who filed their separate winding up petitions were allowed to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and to prevent Directors from dissipating them. It is indisputable that the assets of the company are not safe in the hands of the present management. The element of public interest which has been judicially recognized to have been incorporated in the manner in which the Company Court s discretion under Section 450 is to be exercised, demands that the assets of the company ought not to be left with the hands of the present management. He contends that sale of these four properties by the company is void ab initio, non est in the eye of law and nullity. Placing reliance on the Supreme Court decisions reported in (2006) 5 SCC 353 and in AIR 1977 SC 536 he urges that a decree for setting aside such a sale is not necessary. He contends that this legal principle is not only accepted by our Courts, it is almost settled by English Court as well, as it could be found from an English decision reported in (1961) 3 All ER 1169 that if an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the Court to set it aside. It is automatically null and void without more ado, though it is sometimes convenient to have the Court declared it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, ICICI Bank agreed to grant credit facilities of value of Rs.575 crores. Such fraudulent transfers were made when the company was under the purview of BIFR and thereafter such paid up equity shares were used to show that the company had become positive and the company managed to come out of the purview of the AAIFR. Learned counsel further contends that in view of the aforesaid antecedent it is reasonably apprehended that the present management of the company would resort to various method to defeat the claim of all the creditors, and therefore in order to protect interest of the creditors including workmen, preservation of assets is the only measure that has been taken by the learned Trial Judge. According to the estimation of this creditor the company unable to pay the debts which runs into over 300 crores, therefore, there is no reason for the company should be kept alive and must be wound up. We have heard the learned counsel for the parties in this appeal as well as the learned counsel appearing for the creditors not being parties in this proceeding. We have gone through the materials placed before us. It appears from the records that impugned judgment and order was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and give a reasonable opportunity to it to make its representations, if any, unless, for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice. (3) Where a provisional liquidator is appointed by the Tribunal, the Tribunal may limit and restrict his powers by the order appointing him or by a subsequent order, but otherwise he shall have the same powers as a liquidator. (4) The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made. It appears that this power can be exercised at any time after presentation of winding up petition and before making of final winding up order as an interim measure. It is well settled that same principle while appointing Receiver followed by the Civil Court is required to be applied before passing an order of provisional Liquidator. In the process question of maintainability as raised by the appellant, whether prima facie case has been made out as to indebtedness of the Company to the petitioning creditor and then whether the assets and properties are at the hands of the company are safe or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets of the properties of the company. Keeping in view of the above principle and the aforesaid provision we have to examine whether in the application for appointment has disclosed such a strong case for appointment is warranted or not. On reading of the affidavit in support of the Judge s Summons of the respondent and the affidavit-inopposition of the company it appears that some of the properties of the company have been transferred without any dispute whatsoever by the company to the third party which is absolutely separate juristic entity. But those transferee belong to the same group of management as that of appellant company and it is clear findings of the learned Trial Judge and those fact finding has not been assailed at all before us. The learned Trial Judge found with judicial investigation that four immovable properties have been transferred to one M/s. Dunlop Properties Private Limited, Dunlop Infrastructure Private Limited and Dunlop Estates and Bhartiya Hotels and those transferee companies are controlled and managed by the same shareholders and in fact they are having same place of business as that of the appellant company. In fact these are the subsidiary companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending reference before the BIFR, and thereafter AAIFR gave direction under Section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to SICA) of the said properties of the appellant-company have been sold. It appears from the record that this fact has not been disputed at all. However, to verify such factual position we notice that BIFR on 23rd July, 2007 has recorded the fact of such sale effected in violation of the direction given under Section 22A of SICA. The relevant portion of the said order in paragraph 24 is as follows: From Schedule-17B(2). Notes to Accounts it appears that certain assets of the company have been transferred/sold to its wholly owned subsidiaries/others. The company is directed to explain why this has been done without the permission of BIFR when restrictions u/s 22A of SICA were in force and further, why action should not be taken against the company/its Directors/officials u/s 24 of SICA and the sale/transfer nullified. The company should also explain whether valuation of the assets was done and reserve price fixed, advertisements given as required and whether the assets were transferred/sold through a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... views of the learned Trial Judge while overruling the contention of Mr. Bandyopadhyay that, there exists prima facie case for maintainability of the winding up petition and the prima facie strong case of indebtedness of the company amongst other Madura. Such indebtedness appears to have been established not only in relation to the dues of the respondent but also in relation to the dues of another creditor who appeared before us namely SBI Global Factor Limited. This creditor supports the measure taken by the learned Trial Judge. We however add that our views as to maintainability are prima facie and this has to be finally adjudicated by the learned Trial Judge before whom winding up application of the respondent is pending. We find as rightly pointed out by Mr. Chatterjee that the claim made in the winding up petition has no nexus with the claim made in the suit and the learned Trial Judge has recorded findings in the judgment and order of learned Trial Judge and appellate Judge while disposing of a proceeding for summary judgment. The claim made in the winding up petition relates to the amount covered by the draft rehabilitation scheme which was submitted to the BIFR though ult ..... X X X X Extracts X X X X X X X X Extracts X X X X
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