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TMI Blog2013 (8) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act 1987 any transfer of immovable assets during pendency of the reference before the BIFR is prohibited. Appeal of ICICI Bank – Held that:- The direction of His Lordship for restoration of the assets was nothing but a direction upon the Official Liquidator to take lawful steps against the wrong - Such step would obviously deserve a regular proceeding upon notice to the transferee and/or the persons claiming title under them - ICICI bank claiming to be the mortgagee would be at liberty to contest such proceeding - Their apprehension is premature – Neither of the observations would suggest forcible repossession of the properties - it would require a lawful proceeding to be brought for the purpose - In case such proceeding was brought ICICI bank would be free to contest - intervention at this stage was not warranted – Decided against appellant. - A.P.O. No. 50, 65 & 105 of 2013 & C.P. No. 233 of 2008 & 513 of 2011 - - - Dated:- 2-5-2013 - ASHIM KUMAR BANERJEE AND R. MRINAL KANTI CHAUDHURI , JJ. For the Appearing Parties : Partha Sarathi Sengupta, Srenik Singhvi, Soumava Ghose, Ranjan Deb, Rohitendra Deb, Ravi Kapoor, Ms. Manju Bhutoria, R.N. Jhunjhunwala, J.B. Pand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of provisional Arbitrator. By a judgment and order dated March 26, 2012 the learned Judge appointed Official Liquidator as the provisional liquidator and asked the provisional liquidator to take steps as against the fraudulent transfer of the immovable properties referred to above. The Division Bench termed it as Special Officer, however, did not disturb the process of inventory. The company ultimately faced the final hearing of the winding up proceeding. By judgment and order dated January 31, 2013 the learned Judge passed an order of winding up that became the subject matter of three appeals that we heard on the above mentioned dates. APPEALS : Altogether three appeals were filed as observed herein before. M/s. Kanti Commercial Ltd. filed the first appeal claiming to be a creditor of the company opposing the winding up. Mr. Utpal Bose, learned counsel initially represented the said appellant. Subsequently, Mr. S.N. Mookherjee, learned senior counsel represented the said appellant. Mr. Mookherjee would contend, he had no nexus with Dunlop, he was a mere creditor, yet he did not want winding up as it would not enure to the benefit of the body of creditors. The erstwhile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in 2005. They were trying their level best to settle the claims of the creditors. In fact, many creditors settled their claims and disappeared from the scene. The workers' claim were also paid off as would appear from the letters of the recognized Trade Unions. Those factors should have been considered by His Lordship before passing the order of winding up. According to Mr. Sengupta, at best there would be a quantified claim of Rs.23 crores approximately out of which the company already deposited Rs.10 crores after the order of winding up. The company should be given opportunity to deposit further Rs.13 crores in four months time and the order of winding up should remain permanently stayed. Appearing for the Kanti Commercial Pvt. Ltd., Mr. S.N. Mookherjee, learned senior counsel would adopt the submissions made by Mr. Sengupta. He would add, learned Judge should have ascertained the wishes of the creditors under Section 557 of the Companies Act, 1956. Having not done so, the learned Judge committed illegality that should be cured by the Court of Appeal. According to Mr. Mookherjee, the learned Single Judge did not demonstrate as to why the order of winding up would benefit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Mr. Gupta would initially contend, the company had no nexus with Dunlop although we find at page-3629, the India Tyres letter-head would have the logo of "Dunlop" printed on it. After the hearing was concluded, Mr. Gupta came back at the time of rising of the Court and tendered apology and corrected his submission by admitting, India Tyre would belong to the same Group. Per contra, Mr. Ranjan Deb learned senior Counsel appearing for SMIFS Private Limited, a creditor of the company categorically contended, the judgment and order impugned was well-reasoned and the company could not confront effectively the said decision. In fact, each and every claim was gone into by the learned Judge that could not be confronted. He referred to various claims referred to in the judgment. He drew our attention to page- 3349 wherein the learned Judge in His Lordship's judgment and order impugned observed, the claim of SMIFS was in excess of Rs.8 crores. Mr. Deb would contend, the plea of "just and equitable" was duly pleaded in paragraph 20 of the winding up petition. He would refer to pages 3199-3200 wherein the learned Judge observed, the company's net worth became negative that would forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of the Bank, Mr. Kapoor would rely upon the order of the Division Bench, particularly at page-3272 and 3298, and contended, the Bank having not preferred any appeal from the said order, was precluded from maintaining the present appeal. He would rely upon and support the judgment and order impugned particularly the observation of His Lordship as contained in pages 3181, 3190 and 3195 of the paper book. Mr. Kapoor distinguished the decision in the case of Bharat Petroleum Corpn. Ltd. (supra)to say, neither any scheme was proposed by the company in the present case nor any proposal was mooted by the company as to how to clear off the dues of the creditors. In absence of such definite scheme and/or proposal being mooted the ratio decided in the case of Bharat Petroleum Corpn. Ltd. (supra) would have no relation. Ms. Manju Bhutoria adopted the submissions made by Mr. Deb and Mr. Kapoor and contended, her client the Century Textile did have a decretal claim of Rs.39 lakhs as principal sum and Rs.87 lakhs as interest. She also drew our attention to the Balance Sheet of the company for the year 2011-2012 to show Kanti Commercial was an associate company of Dunlop. She would also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .77 crores in respect of Sahaganj unit and Rs.21 crores in respect of Ambattur unit. Mr. Chowdhury contended, the company was not at all serious about the workers. They could still deal with the claims made by the workers that they did not choose to. Mr. Chowdhury also contended, Section 557 would empower the learned Company Judge to ascertain the wishes of the creditors. In the instant case, all the creditors appearing before the learned Company Judge supported the order of winding up hence, question of holding any further meeting did not and could not arise. He further contended, the property at Worli, Mumbay was transferred on January 3, 2008 whereas Ambattur land was transferred in two phases on June 28, 2007 and July 23, 2007. Referring to the above dates, Mr. Chowdhury contended, the company deliberately violated the norms applicable to the sick companies and surreptitiously transferred the assets for illegal gain. According to Mr. Chowdhury, if any one property is returned to the company that would make the company again viable. He relied on the following decisions: 1. Siemens Aktiengasellschaft v. JMD Madicare Ltd. [2008] 142 Comp. Cas. 475 (para 20), 2. SKF S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould direct its revival. CASES CITED AT THE BAR : Mr. Mookherjee relied on the decision in the case of Madhusudan Gordhandas and Co. (supra) and Bharat Petroleum Corpn. Ltd. (supra) to support his contention, the Court must ascertain the wishes of the creditors before putting the death nail on the jurist entity. In the case of Bharat Petroleum Corpn. Ltd. (supra), the Bombay High Court considered the earlier decision of the Apex Court in the case of Madhusudan Gordhandas and Co. (supra) and observed, the company Court even at the stage of admission must consider the views of the creditors having clear mandate of Section 557. We do not find any further scope to deliberate on such well-settled principle of law. Mr. Kapoor would however contend, in the case of Bharat Petroleum Corpn. Ltd. (supra), the Court considered a situation when the secured creditors wanted to intervene in a winding up proceeding.. The question arose as to whether the creditors would have a say in the matter. The Bombay High Court observed, "At the present stage the Court has only to consider the question whether the creditors should be heard in the company petition. For the reasons recorded herein above, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to be a fraudulent preference and in terms of Section 536(2), in case of winding up any disposition of property made after the commencement of winding up would be void unless otherwise ordered by Court. On a combined reading of the aforesaid two provisions any transfer prior to date of the commencement of winding up proceeding or during the pendency would be void. Similarly, under the Sick Industrial Companies Act 1987 any transfer of immovable assets during pendency of the reference before the BIFR is prohibited. Transfer of four properties referred to above, were either made during the pendency of the reference or immediately before or during pendency of the winding up proceeding. In such event, the learned Judge was justified in directing Official Liquidator to take steps in this regard. Mr. Sengupta argued on behalf of the company. He would try to raise dispute with regard to the creditor's claim. His contradiction would at best hint towards quantum however, liability was not in dispute. When a company was not in a position to dispute the liability towards its creditors for revival they must suggest as to how they would propose to discharge such liability, at least t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom its associates save and except a bold statement from the bar expressing intention to deposit Rs.13 crores in four months, that too, after the running the units. We are constrained to hold, the management was not at all serious for revival. The assets are no more safe in the hands of the erstwhile management. It is fit and proper, Official Liquidator must take immediate step for possessing the assets and proceed with the winding up. With regard to the appeal of ICICI bank, we are of the view, the direction of His Lordship for restoration of the assets was nothing but a direction upon the Official Liquidator to take lawful steps against the wrong. Such step would obviously deserve a regular proceeding upon notice to the transferee and/or the persons claiming title under them. ICICI bank claiming to be the mortgagee would be at liberty to contest such proceeding. Their apprehension is premature. If the mortgage was lawful, they would at liberty to say so in the proceeding, if any, brought for the purpose. The order of the learned Company Judge could not be construed to mean a forcible attempt by the Official Liquidator repossessing the assets that was not contemplated by His Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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