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TMI Blog2015 (3) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... ould however, be dealt with by the Company Court in judicial side that would be an extension of the role of the Company Court in supervising the process of winding up. The matter may be viewed from another angle. Even on completion of the inquiry and upon consideration of the chance of revival the BIFR or AAIFR as the case may be, comes to conclusion, there was no such scope and the company was liable to be wound up, it would recommend for winding up. In the instant case order of winding up has already been passed hence in case BIFR or AAIFR ultimately comes to such a conclusion they would have to recommend winding up that would be superfluous. Such eventuality would cause an absurd situation that was never contemplated in SICA. We cannot be a mere on looker as to the deliberate disregard that the respondent had shown to this Court by making deliberate suppression. They left no stone unturned in stalling the process of winding up. However, they could not bring any plausible scheme that could take care of an effective process of discharge of debt and at the same time revival of the unit. All such attempt failed before this Court. Each and every order was passed upon giving due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould lie in execution of the decree. His Lordship negated the contention and ultimately passed the order of winding up vide order dated July 30, 2010 appearing at pages-34-45 of the paper book. Kamlapur filed an appeal. The Division Bench upheld the judgment and order of the learned Single Judge vide judgment and order dated July 23, 2012 appearing at pages 50-71. Pertinent to note, the Division Bench heard the matter for five days on and from June 25, 2012. The Division Bench dismissed the appeal on July 23, 2012. Kamlapur never informed the Court, they were trying to initiate proceedings before Board for Industrial and Financial Reconstruction (herein after referred to as BIFR ) established under the Sick Industrial Companies Act, 1985 (hereinafter referred to as SICA). The Official Liquidator took charge of the assets and proceeded to sell the same by public auction. The learned Company Judge conducted the sale on September 20, 2013 and October 8, 2013. When the sale was being concluded, the erstwhile management of the company suddenly informed the learned Company Judge, they had already approached the BIFR. Pertinent to note, even after the order of winding up, Kamlapur tried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icals Limited Vs. Nester Pharmaceuticals Limited reported in 1993 Volume-I Calcutta High Court Notes Page-368. He would pray for setting aside of the judgment and order of the learned Company Judge impugned herein. Appearing for the Official Liquidator, Ms. Ruma Sikder learned Counsel would inform the Court, Official Liquidator for the first time came to know of BIFR proceeding on September 20, 2013 when the management informed the Court about such proceeding. Ms. Sikder would also inform, till December 2014 Official Liquidator could spend ₹ 40 lacs to protect the assets of the company and taking various other steps for beneficial winding up. She would also complain, the applicant never handed over any document to the Official Liquidator pertaining to the BIFR proceeding. Mr. Ranjan Lal Mitra learned Counsel appearing for the supporting creditor adopted the contention of Mr. Roy Chowdhury. Mr. Indranil Nandi learned Counsel also appearing for another creditor also adopted the submission of Mr. Roy Chowdhury. So was Mr. Amiya Kumar Sur for other financial institutions. He would rely upon the decision in the case of Inderjeet Arya and another Vs. ICICI Bank Limited report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors Limited Vs. Pharmaceutical Products of India Limited and another reported in 2008 Volume-VII Supreme Court Cases Page-619. He would also rely upon an unreported decision of the Delhi High Court in the case of Zenith Infotech Limited Vs. Union of India. He would contend, the decisions cited at the bar would clearly show, the subject Act would apply also at the post winding up stage and such application was considered to be in accordance with the law as held by the Apex Court in the case of Rishabh Agro (supra). While giving reply, Mr. Roychowdhury reiterated what he had argued while opening the appeal. In addition, Mr. Roychowdhury would contend, the decisions cited at the bar on behalf of the Company would not in any way be applicable in the facts and circumstances of the case. JUDGMENT AND ORDER IMPUGNED: The arguments made before us, were also advanced before the learned Single Judge as we find, on perusal of the judgment and order impugned. The learned Judge held, when the reference under Section 15 was pending Section 22 would operate as a bar in proceeding for winding up. His Lordship interpreted Section 22 and came to conclusion, when a reference was pending as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses Page-515: In the said case, the Company Court passed an order of winding up however, the Division Bench stayed the order of winding up. During the period when the company was enjoying stay Company approached the BIFR. The creditor contended, it was a misconceived attempt. Moreover, on the date of the passing of the order by the Division Bench, no proceeding was pending before BIFR. In this backdrop, the Apex Court held, the proceeding was maintainable. The Apex Court, in paragraph 10, held, in a winding up petition when the Official Liquidator was appointed to protect the assets it was not the function of the Official Liquidator to start the process of rehabilitation that would come within the domain of the BIFR. Paragraph 10 and 11 being relied upon are quoted below: It has been further suggested on behalf of the respondent Bank that the action of the appellant was mala fide in as much as it sought time from the Court to make the payment of the amount due and after seeking indulgence mala fidely made the reference to BIFR on 30.9.1997. it is contended that after the order of the winding up and appointment of the Liquidator, the Board of Directors had no jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Madrass High Court held, when the company Court passed an order of winding up, the said order could not be set aside however, could be stayed during pendency of the reference before BIFR. Learned Single Judge relied upon the observation of the Apex Court made in Rishabh Agro (supra). 6. Modi Rubber Limited Vs. Madura Coats Limited and Another reported in 2006 Volume-130 Company Cases Page-32: Division Bench of the Allahabad High Court also relied upon Rishabh Agro (supra). In this case BIFR registered the reference on February 4, 2004 and the order of winding up was passed on March 12, 2004 that would violate Section 22. The Division Bench allowed the appeal and quashed the order of winding up. 7. Tata Motors Limited Vs. Pharmaceutical Products of India Limited and another reported in 2008 Volume-VII Supreme Court Cases Page-619: The Apex Court interpreted various provisions of SICA and observed, the provisions of this Act, being a special Act, would prevail over the Companies Act 1956. 8. Ksl and Industries Limited Vs. Arihant Threads Limited and others reported in 2008 Volume-IX Supreme Court Cases Page-763: In paragraph 66 the Apex Court discussed Rishabh Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority to exercise its discretion as to whether the company would be wound up or not. Such exercise might be at the instance of the creditors or at the instance of shareholders or contributory. In a given situation it could also be at the instance of the Central Government. SICA would prevail upon a totally different field i.e. rehabilitation/revival. If we read the provisions, we would find, a complete procedure was laid down, commencing from Section 15 to Section 22 as well as Section 26 as to the consideration to be made by the BIFR or the AAIFR in a given situation examining the chance of revival of a company. Section 15 would require an industrial company to refer to the BIFR when it s worth becomes negative and would become sick Industrial Company being an Industrial Company registered for not less than five years whose net worth became negative at the end of the financial year. Once the reference is made under Section 15 the BIFR would start operation examining the scope of revival. Section 16 permits them to make an enquiry into the affairs of the company, preparation of the scheme by appointment of a director. Section 16 would empower the Board to make suitable order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g their grievance which they could otherwise do before a civil Court or a company Court as the case may be. This is well-settled principle of law that would deserve no relook. The decisions cited at the bar consistently upheld such principle of law. The present case would however, stand on a complete different footing. In the instant case, admittedly the order of winding up was passed on a date when there was no reference pending. Pertinent to note, the order of winding up was passed on July 30, 2010 whereas the reference was registered on September 12, 2013. Once the order of winding up was passed the lis brought by the creditor stood disposed of and the company Court would become functus officio on such issue. However the process would start for beneficial winding up through the Official Liquidator and the Company Court would have a supervisory and/or administrative role in the process as the Official Liquidator would act as custodian of the company in liquidation subject to the supervision of the Court. In the process of execution of such order of winding up, there might arise be various problems that Official Liquidator may face. Interested parties might have various conflic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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