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TMI Blog2017 (11) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... etitionercompany. Thereafter the Delhi High Court passed an order for winding up of the company on 03/05/2013 The Delhi High Court in its order after exploring the possibilities of settling the dues as per OTS policy was of the view that the settlement is not possible on account of the fact that already numerous opportunities was made available to the petitioner-company to comply with the requirement of OTS amount offered by respondent No.2. The Delhi High Court has, therefore, held that the case is made out and, therefore, appointed provisional liquidator for petitionercompany. The order passed by the Delhi High Court was affirmed by Hon'ble the Apex Court in SLP vide order dated 26/09/2016. Thus, the order passed by the Delhi High Court in company petition has attained finality. After dismissal of the SLP, the petitioner has again submitted a proposal for settlement of the amounts. The said proposal was rejected by the respondents vide order dated 29/10/2016. The State Government thereafter has revised the OTS policy and stated that the OTS policy dated 16/05/2007 would be operational till 30/06/2017. Accordingly, the petitioner again submitted proposal on 29/05/2017 which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement) in the year 2007. OTS policy granted an opportunity to the borrower to pay back the amount along with predetermined interest. Due to an overall depression in the business and especially change in the excise policy for liquor, the industries in the State of Madhya Pradesh were affected and there was a subsequent default in repayment of loan. MPSIDC, in order to help out the industries from the economic depression, framed the OTS policy. The introduction of such policies, in order to help the industries, is not a favour but an attempt on the part of the Government to ensure that there is a steadiness and continuation of economic activity in the market, which in turn ensures revenue generation for the Government and livelihood for thousands of people. 4. The petitioner-company being in need of money accepted the ICDs from respondent No.2 during the period from 1998 to 2000. However, due to a sudden change in the State Excise Policy in the year 2001-02, the petitioner company suffered huge losses. The petitioner-company had although repaid a part of the said amount obtained from respondent No.2, but could not repay the entire amount. OTS policy was introduced by responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents failed to consider the reasonable request of the petitioner in adjusting the said amount against the principal amount which ultimately resulted in passing of winding up order on the basis of allegedly admitted amount of ₹ 10.97 crore as per the balance sheet of the petitioner-company vide order dated 03/05/2013. Against the order passed by the Company Judge, the petitioner-company had preferred an appeal before the appellate Court. The Division Bench of the Delhi High Court also dismissed the said appeal. The order passed by the Division Bench was assailed before the Apex Court by filing SLP (C) No.19834/2013. Vide order dated 19/06/2013, the Apex Court has also stayed the order passed by the Company Judge after the petitioner deposited ₹ 7,60,47,000/-. After filing of the SLP, the petitioner again vide letter dated 08/05/2014 requested respondent No.2 to settle the dispute. Respondent No.2 vide order dated 29/05/2014 declined the proposal of the petitioner on the ground that winding up petition of the petitioner company is pending before the Supreme Court. The Supreme Court vide its order dated 07/07/2014 directed the respondents to consider the proposal of settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sbursed Rs.two crore in favour of the petitioner-company again by way of ICD for which the petitioner-company executed a demand promissory note and corporate guarantee. The date for repayment was 6th February, 2002. The third promissory note was issued on 9th August, 1999 in the sum of Rs.one lakh. Accordingly ICDs were issued in favour of the petitioner-company from time to time. On 28th March, 2003, the petitioner-company cited financial difficulties and requested respondent No.2 not to pursue the recovery proceedings against it. On 16th June, 2003 respondent No.2 issued a legal notice calling upon the petitioner-company to make payments under the ICDs. On 24th April, 2005, the petitioner company submitted a proposal for one time settlement. As the said proposal was not in terms of the policy/guidelines of the State of Madhya Pradesh, it was not accepted. The respondent No.2 thereafter again sent a statutory notice on 30th November, 2007 to the petitioner-company under Section 433 (e) and 434 of the Companies Act. 10. As the petitioner-company failed to repay the amount, respondent No.2, therefore, filed company petition before the Delhi High Court. Delhi High Court took into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was not accepted by respondent No.2 saying that it is not in accordance with the OTS policy. However, the corporation by the said letter informed that under the OTS policy, an amount of ₹ 798.96 crores is payable which may be paid within 15 days subject to reconciliation. In the meanwhile, respondent No.2 filed a company petition against the petitioner at Delhi High Court for winding up of the company on account of non-payment of its dues. During pendency of the said company petition, offer was again made to settle the dues under the OTS policy, but finally it failed as respondent No.2 refused to adjust an amount ₹ 50 lakh which was paid to respondent No.2. The Delhi High Court thereafter passed an order for winding up of the petitioner-company vide order dated 03/05/2013. While disposing of the company petition, the Court has granted 15 days' time to the petitioner-company to repay the admitted amount. Special Leave Petition was filed by the petitioner-company before the Apex Court which was also dismissed. He submitted that the order passed by the Delhi High Court in its judgment for winding up is only for the purpose of making an order of winding up and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the claim of the unsecured creditor like respondent No.2 would be considered on pari pasu basis. There are huge amounts for payment to the secured creditors as well as statutory dues and there is more than a surety that in liquidation proceeding, nothing would be left after the payment of secured creditor and statutory dues and respondent No.2 may have to remain satisfied with its wishful thinking and it may not get a single penny. 14. Learned senior counsel for the petitioner relied upon the judgment passed by the Apex Court in the case of Sardar Associates and others Vs. Punjab and Sind Bank and others, reported in (2009) 8 SCC 257 wherein the Supreme Court has approved the settlement under OTS scheme after the judgment and decree passed by the Debts Recovery Tribunal. He further relied upon the judgment passed by the Apex Court in the case of Biharilal Soni Vs. Bank of India and others , reported in 2004(1) MPLJ 247 wherein the Division Bench of this Court has held that even after dismissal of the appeal against money decree in favour of Bank, directed for consideration of proposal under the OTS scheme. It is submitted that similar view has been taken by the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement have resulted in failure. Settlement process has been undertaken right from 2007 to 20/06/2017. As per clause-1 of OTS Policy, the respondent No.2 is empowered to reject the proposal of settlement of amounts without giving any reason, in case statutory mechanism is available for securing the due amounts. In the aforesaid backdrop, respondent No.2 is not bound under any provision of Act upon any settlement or proposal or representation of petitioner-company whatsoever. One time settlement policy is framed by the Reserve Bank of India under Sections 21 and 35A of the Banking Regulation Act. However, in the present case, one time settlement policy framed by the State Government has not been framed as per any statutory provision of law, therefore, any settlement in deviation from OTS policy cannot be enforced in exercise of extraordinary writ jurisdiction of this Court under Article 226 of the Constitution of India. The Delhi High Court in its judgment dated 03/05/2013 held that the petitioner-company failed to meet the deadlines for paying the OTS amount repeatedly. The OTS no longer holds good as far as respondent No.2 is concerned. Delhi High Court also held that in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as paid to respondent No.2 by the petitionercompany. Thereafter the Delhi High Court passed an order for winding up of the company on 03/05/2013 in which in para-25 to 32 has held as under : 25. From the correspondence, it appears that SDBL was unmindful of the fact that it was for MPSIDC to determine, on the basis of the offer made by SDBL, what the OTS amount should be. The sequence of events shows that on 18th March, 2011, MPSIDC had only worked out an approximate OTS amount of ₹ 789.96 lacs which was subject to reconciliation. SDBL was advised on that basis to submit OTS proposal in accordance with the prevailing OTS policy within three days. On 26th March, 2011, MPSIDC clearly informed SDBL that the proposal made by SDBL by its letter dated 21st March, 2011 was not acceptable to it. It conveyed to SDBL on what basis it might consider an OTS proposal and on that basis again, SDBL was advised to submit OTS proposal in accordance with prevailing OTS policy. On 12th April, 2012 also, a letter was written by MPSIDC, following the order dated 30th March, 2012 by this Court to SDBL stating that so far MPSIDC has not received any settlement proposal in accordance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 MPSIDC gave yet another chance to SDBL to pay ₹ 7,52,66,77 after forgoing ₹ 25 lakhs out of the OTS amount of ₹ 7,77,66,667. Instead, SDBL has been consistently haggling what the OTS amount should be and its stand has been demonstrably untenable. With SDBL failing to meet the deadlines for paying the OTS amount repeatedly, the OTS no longer holds good as far as MPSIDC is concerned. 28. In the circumstances, the Court concludes that SDBL has no bonafide defence in the winding up petition and is unwilling and, therefore, unable to pay the admitted liability. In other words, the defence of SDBL as to why it will not pay the admitted debt is neither one of substance nor in good faith. SDBL has also not been able to satisfy the Court that it is willing to make payment of the admitted debt. The Court is, therefore, satisfied that a case has been made out for admitting the petition and appointing a provisional liquidator for SDBL. 29. The petition is, therefore, admitted. A copy of this petition be served on the Official Liquidator ('OL') attached to this Court. The OL is appointed as the Provisional Liquidator ('PL') of the SDBL. The OL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OL and the OL will proceed to take steps in terms of paras 29 to 31 of this order. In that even, a compliance report shall be filed by the OL before the next date of hearing. 19. The Delhi High Court in its order after exploring the possibilities of settling the dues as per OTS policy was of the view that the settlement is not possible on account of the fact that already numerous opportunities was made available to the petitioner-company to comply with the requirement of OTS amount offered by respondent No.2. The Delhi High Court has, therefore, held that the case is made out and, therefore, appointed provisional liquidator for petitionercompany. The order passed by the Delhi High Court was affirmed by Hon'ble the Apex Court in SLP vide order dated 26/09/2016. Thus, the order passed by the Delhi High Court in company petition has attained finality. After dismissal of the SLP, the petitioner has again submitted a proposal for settlement of the amounts. The said proposal was rejected by the respondents vide order dated 29/10/2016. The State Government thereafter has revised the OTS policy and stated that the OTS policy dated 16/05/2007 would be operational till 30/06/2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tayed on winding up order.- (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of winding up order, shall be proceeded with against the company, except by leave of the (Tribunal) and subject to such terms as the (Tribunal) may impose. (2) [The Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of- (a) any suit or proceeding by or against the company; (b) any claim made by or against the company (including claims by or against any of its branches in India); (c ) any application made under Section 391 by or in respect of the company; (d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company; whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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