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TMI Blog2014 (7) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... e re-opened and run. There is no market survey, projection of sales etc.. Only tall promises are made in the scheme, for payment to creditors. LOCUS STANDI - Held that:- None of the applicants, who made applications for convening meetings of creditors for the purpose of consideration of their respective schemes for revival of the company, impressed me with regard to their locus standi. - The applicants who held themselves out to be the creditors of the company could not furnish any proof of the company’s debt towards them. No evidence of supply of goods like delivery receipts, challans, contract papers etc between them and the company were produced before the court. Ownership of shares - transfer of shares after order of winding up - Held that:- in the case of winding up any disposition of shares after commencement of winding up shall be void unless otherwise ordered by the court. - If the transaction is void there is no value of the shares certificates. Neither can it be said that the property in the shares has passed. The transferee gets no title. Equally flawed is the argument that the transferors’ in such cases are trustees for the transferees. If the transfer is void ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be on the rolls maintained by the Official Liquidator. They have six unions. The claim by the workers on account of their unpaid dues is around ₹ 11 crores. Hilton has entered into a Memorandum of Understanding with the workers, also on 3rd September, 2011. As a result of this their learned counsel, Mr. Sarbapriyo Mukherjee submitted that the workers were supporting Hilton to run the company. Other companies and persons have also made applications for orders from this court convening meetings of creditors to consider their respective schemes of arrangement for revival of the company. I will first briefly discuss the nature and scope of the applications before me which are for other reliefs but indirectly connected with the schemes for revival of the company. 1) Hilton Vinimay Pvt. Ltd. (C.A. 145 of 2009) Hilton made an application on 25th February, 2009 for stay of the winding up order and for appointment of a Special Officer to transfer 3,11,664 equity shares allegedly purchased by them from the Poddar Group. They also asked for prayers for calling a general meeting of the company for constituting the Board of Directors with the Special Officer as the Chair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s person or body of person could be asked by the court to run the business of the company, for a limited period of time. The court is to always supervise this activity. This kind of running of the affairs of the company after winding up can only be with a view to its revival. The court should constantly watch this new organisation and ascertain whether it is successfully reviving the company. If it does, by effectively paying off the creditors of the company, the court might eventually order setting aside of the winding up order and entrust its affairs in such hands as it thinks fit and proper. If the Court finds, after a specific period of time that this person or body of persons is unable to revive the company, it might vacate its order staying the winding up and order that the winding up of the company be carried out (see Mahabir Prasad Agarwalla Vs. Ashkaran Chattar Singh reported in 85 CWN 567 at 581, 582). Another section which was cited, was Section 391(1) and (2) of the said Act. It is inter alia in the following terms. 391. (1) Where a compromise or arrangement is proposed_ (a) between a company and its creditors or any class of them; or (b) between a company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust says Official Liquidator , so as to exclude all other persons including creditors and contributories (see S.K.Gupta Vs. K.P.Jain reported in (1979) 49 Company Cases 342 at page 350). The other important provisions cited by learned counsel were Section 536(1) and (2). They are in the following terms: 536. (1) in the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of the winding up, shall be void. (2) In the case of a winding up by or subject to the supervision of the Court, any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall, unless the Court otherwise orders, be void. The Official Liquidator has filed a most responsible written submission to supplement the submissions of Mrs Sikdar, learned advocate, which is noted at this stage. Industrial Security Agency was engaged by the four secured creditor banks to provide security ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the company but without the intent, financial resources and expertise to do so. Once such a person is inducted by the court to reopen a closed enterprise and that person turns out to be a fraud or an incapable person, it becomes a very difficult task for the Court to evict him and restore the status quo ante. In the months or years he is in charge of the affairs, he does no good to the company or its workers , other creditors, contributories so on. Hence, the court is given a very onerous task of screening these applications, considering some of them and taking the decision whether to handover the reins of the company to a person or enterprise. Now, let me analyse the merits of the applications for convening meetings of creditors to accept their schemes for revival of the company. I will consider the locus standi issue later. 1) Hilton Vinimay Pvt. Ltd. (C.A. 894 of 2011) The applicant allegedly acquired after winding up of the company, 3,11,664 equity shares of ₹ 10/- each of the company in liquidation from the Poddar Group . As a result of the winding up order the applicant has not been registered in the register of members of the company as the owner of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d advances obtained by the company is close to double its shareholders` funds and Reserve and Surplus combined. Its fixed assets after depreciation is less than ₹ 10 lacs. It earned a slender profit of only ₹ 4,22,689.98, in the year ending 31st March, 2011 according to the Profit and Loss account for the same period. They have stated in their submissions that they would borrow money from the market but would not charge the assets of the company. One wonders how much money they would be able to borrow on the basis of the above Balance Sheet and Profit and loss account. These applicants have not been able to bring any fund. There are tall promises in the scheme of phase wise payment towards the liabilities of the company. There is nothing to suggest how this jute mill closed down for decades would be started. Nothing about how the static machinery would be set into motion again. One wonders from where the raw materials and other stock in trade would come, who would pay for them. If at all the mill is started, how much would be produced initially, how much when, is not started in the scheme. Nobody has bothered to make a market survey or make a projection. I do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicants. It is averred in paragraph-9 of the application that the second applicant is an unsecured creditor of the company. The debt of the company towards this applicant was ₹ 16,55,762/-. On 14th March, 2013 the second applicant has assigned ₹ 8,00,000/- of its claim to the first applicant. Hence, both are creditors of the company and have the necessary locus standi to maintain this application, it was submitted. As rightly pointed out by learned counsel for some of the other applicants, the alleged deed of assignment is doubtful. It is on a ₹ 100/- non-judicial stamp paper. The second applicant has not been able to produce any document to establish their claim to the above debt. It has not applied before the official liquidator to adjudicate it. If the claim of the second applicant is dubious, what could be said about the right of the first applicant which asserts an assignment of the said claim. in its favour? The first applicant has been able to show a slender profit of ₹ 19,583.50 for the period ending 31st March, 2012. I do not think that this company has any fixed assets. The scheme proposed by the applicant is equally unimpress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ashray by the four secured creditors is dubious in my opinion. No credence can be given to their support for Hilton. Submissions were made before me that shares were goods under Section 2(7) of the Sale of goods Act. 1930. Possession of shares certificate was prima facie evidence of ownership of the shares, under Section 84, of the Companies Act, 1956. But this provision has got nothing to do with Section 536 (2) of the Companies Act, 1956 which makes it explicit that in the case of winding up any disposition of shares after commencement of winding up shall be void unless otherwise ordered by the court. If the transaction is void there is no value of the shares certificates. Neither can it be said that the property in the shares has passed. The transferee gets no title. Equally flawed is the argument that the transferors in such cases are trustees for the transferees. If the transfer is void ab initio the relationship of trustee and beneficiary does not arise. Therefore, all these arguments fail. I refuse to pass any order validating any transaction in shares of this company after commencement of its winding up. None of the applicants with schemes has the locus standi t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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