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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 ..... Financial Reconstruction (hereinafter referred to as 'BIFR'). While the proceeding was pending before the BIFR, Ruias came in control of the company. Ruias claimed, they got control through purchase of controlling block of shares. Be that as it may, Ruias came in control of both the factories at Sahaganj in the State of West Bengal and Ambattur in the State of Tamil Nadu. Initially Ruias opened the Sahaganj factory and started manufacturing process at least, it was claimed so. Ambattur unit was however functioning. It now appears, during the period when matter was pending before the BIFR or so soon thereafter four valuable properties having an estimated value of Rs.2300 crores were surreptitiously transferred. The management wanted to avoid the restrictions of Section 22 of the Sick Industrial Companies Act, 1985, window dressed the accounts showing the net worth of the company positive and thus came out of the fold of BIFR. The management neither paid the creditors nor the workers. Both the units were shut down in course of time. The creditors started making application for winding up since 2008. There had been earlier winding up petitions that were kept in abeyance in view of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not assign any plausible reason to wind up the company. The learned Judge did not adjudicate the claims of the creditors that would be pre-requisite for entertaining a winding up proceeding at the instance of the unsecured creditors. Mr. Sengupta would also say, the petitioning creditor in whose petition the order of winding up was passed, settled the issue with the company and did not proceed with his petition. The petitioning creditor was also throughout absent at the hearing. The other creditors had independent petitions of their own. Hence, the learned Judge, without adjudicating their respective claims, could not have permitted substitution in place of the original petition to proceed with the pending winding up proceeding at the instance of someone who was also throughout absent. Mr. Sengupta would also relate to one of the creditors whose claim was relegated to suit. The learned Judge should have considered all the issues before sending the company in liquidation. Mr. Sengupta would further contend, the pre-requisite of Section 434 would require a just claim to be forwarded by the creditor to maintain his petition for winding up. The learned Judge failed to appreciate, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.129 crores to Kanti Commercial Pvt. Ltd. Kanti was also a contributory. He would rely upon the Apex Court decision in the case of Madhusudan Gordhandas and Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125and the decision in the case of Bharat Petroleum Corpn. Ltd. v. National Organic Chemical Industries Ltd. [2004] 51 SCL 593 (Bom.). Appearing for the ICICI Bank Ltd., Mr. Ratnanko Banerjee, learned counsel being led by Mr. Sudipto Sarkar, learned senior counsel would contend, Bank was not interested in the winding up of the company. There was no privity of contract between the Bank and the Company. Company lent and advanced huge sum to one of its constituents having no nexus with Dunlop. The properties mentioned above would belong to M/s. Salini Commercial and SPR Investments. Those two properties situated at Channai and Mumbai were mortgaged to the Bank. Earlier, Chennai property was owned by Dunlop Properties Ltd. whereas Mumbai Property would belong to Bharatia Hotel Ltd. He would rely upon the order of Madras High Court in this regard. ICICI Bank would claim, they lent and advanced a sum of Rs.625 crores to an American company. To secure such debts tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Commenting on the appeal of Kanti Commercial, Mr. Deb contended, no creditor approached the learned single Judge opposing the winding up proceeding. Commenting on the appeal of the ICICI bank, Mr. Deb would contend, the transfers being fraudulent having entered into either during pendency of the BIFR proceeding or winding up proceeding was void and the learned Judge was right in directing the Official Liquidator to take steps against such fraudulent transfer. Mr. Deb prayed for dismissal of the appeal. Mr. Ravi Kapoor, the learned Counsel appearing for another creditor M/s Madura Coates would contend, out of total dues of Rs.9 crores approximately the company admitted the dues to the extent of Rs.2.02 crores that was duly recorded in the BIFR proceeding. The Court relegated the parties to suit with regard to the disputed liability however, while filing the suit through inadvertence the creditor claimed the entire sum. Subsequently on an application for amendment being made Rs.2.02 crores was kept out of the civil suit and was pressed before the company Court in the winding up proceeding. Mr. Kapoor would contend, such unequivocal admission to extent of Rs.2.02 crores would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sarkar, learned counsel represented the Electric Supply company having a claim of Rs.12.5 crores whereas Mr. Swapan Kumar Ash, learned counsel represented M/s Industrial India Enterprise having a claim of Rs.12.27 lakhs. Learned counsel appearing for India Road Ways Corporation pressed his claim for Rs.1.08 crores and another learned Counsel appearing for Global Entreade pressed his claim for Rs.78 lakhs that the company admitted in its proposed scheme of compromise. Appearing for the State, Mr. Debangshu Basak, learned Counsel being led by Mr. Ashok Kumar Banerjee, learned Government pleader contended, the workers' interest should be looked into and this Court should consider the workers' interest as a paramount consideration before taking a final decision in the appeal. He referred to paragraph 11 of the affidavit filed by the State wherein the State highlighted the plight of the workers. Paragraph 11 is quoted below: "This Hon'ble Court be pleased to pass appropriate orders in the facts and circumstances of the case. This Hon'ble Court be pleased to ensure that the factory at Sahaganj is reopened and/or restarted as soon as possible to provide employm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel appearing for Provident fund authority informed this Court, a sum of Rs.130 crores was due on account of arrear provident fund. No records could be found at the office of the company record. He referred to two Apex Court decisions in this regard reported in Municipal Corporation of Delhi v. Association of Victims of Uphar Tragedy AIR 2012 SC 100 in Maharashtra State Co-operative Bank Ltd. v. Asstt. Provident Fund Commissioner [2009] 10 SCC 123. Mr. Ratnanko Banerjee learned Counsel appearing for the appellant in ICICI Bank appeal contended, the loan was given to one UK based company against co-lateral securities that had nothing to do with Dunlop. It was nothing but a re-financing done by ICICI Bank. The Worli property had already been mortgaged for repayment of loan to the UK based company. He relied on documents appearing at page 620-628 of his paper book. Mr. Srenik Singhvi, learned Counsel appearing for the company contended, company paid the provident fund dues. The company also cleared off all the dues of the workers who either died or committed suicide after the closure. The workers who took voluntary retirement were also paid to a substantial extent. Mr. Singhvi conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to set it aside. It is automatically null and void without more ado, though it is sometime convenient to have the Court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse". The Apex Court in the case of Mannalal Khetan (supra) observed, "a contract which involves in its fulfilment the doing of an act prohibited by statute is void. Where a contract, express or implied, is expressly or by implication forbidden by statute, no Court can lend its assistance to give it effect". In the case of Prem Singh (supra) the Apex Court once again observed, "When a document is void ab initio, a decree for setting aside the same would not be necessary as the same is non est in the eye of the law, as it would be a nullity". In the case of ABC Coupler & Engineering Co. Ltd. (supra) the English Court observed, the Court should consider the wish of the majority of the creditors before passing an order of compulsory winding up. OUR VIEW: The well-reasoned decision of the learned Single Judge would clearly show, the Court tried its best to find out a solution for revival of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either by the company or by its associates. No concrete proposal was before the Court for revival. Kanti Commercial one of the appellants, tried to maintain an independent character although Ms. Bhutoria was successful in demonstrating from the record, it was an associate company. Kanti claimed, they had a claim of Rs.129 crores. Such claim featured for the first time in the Balance Sheet of 2011-2012 being the period when winding up proceeding was in vogue. Under what circumstance such liability was created, is not clear to us. Another creditor, M/s. India Tyres Limited was also a group company as would be apparent from their letter head, Mr. Chayan Gupta appearing for them also admitted so. Hence, we do not find a single creditor having entity independent of the company, to come forward and support the prayer for revival made by the company and/or its associates. We fail to appreciate, what the creditors would decide, even if we call a meeting for the said purpose, in case we are not able to give them food for thought being a scheme of compromise for consideration. Mr. Sengupta tried to demonstrate, the claims of the pressing creditors were in dispute. Even if we give credence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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