9911796707
TMI Blog2005 (7) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... United Motor Transport Company (P) Limited must succeed on the short ground that the only asset of the Company consists of certain route permits and the Company is admittedly unable to pay its debts and has indeed failed to pay to the petitioning creditor in spite of a number of opportunities that there given for that purpose. A cheque that was last handed over to counsel for the petitioner has bounced. Shri Khanna who appears for the Company is, Therefore, unable to oppose an obvious order of winding up by prays that it may be in a position to make arrangement to pay the petitioning creditor, even though he admits that appropriate directions may be made so that till the winding up order comes into effect, the status quo is maintained with reference to the permits and whatever other assets the Company may possibly hold. Having regard to all the circumstances, I direct that the Company be wound up in accordance with law. However, the order would not be effective for a period of one month and if the Company pays to the petitioning creditor or otherwise compounds with him the claim forming subject-matter of the petition, the winding up order would be deemed to have been rescinded and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Official Liquidator. Time is sought on behalf of the Petitioning creditor to file reply. Petitioning creditor may file his reply within two days. Counsel for the applicant who is a former Managing Director of the company states that if the winding up is partially stayed pending the hearing of this application to enable the applicant to seek revival of the route permits on behalf of the company and to take steps to revive the activities of the company, he would be willing to deposit in the account of the company in any bank a sum of ₹ 1,00,000/- and accept and reasonable condition that may be imposed by the court with regard to withdrawal of the amount from the account. He further states that he is willing to enter into an appropriate arrangement with the petitioning creditor in accordance with law. I would, Therefore, partially stay the winding up and permit the applicant to act for and on behalf of the company for the purpose of obtaining renewal of the route permits and do all other things that are necessary for the purpose of consultation with the Official Liquidator. This is subject to the condition that the applicant opens a new account on the name of the company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propounded therein. Sh. Harshvinder Singh, propounder is the director. The landlord, namely, Mr. Suresh Jindal has filed objections to this scheme. The old has also objected to the scheme. Thus, there are three proceedings pending in relation to the company, namely, (a) CP No. 64/1978 in which winding up orders dated 3rd August, 1979 were passed and there is partial stay of these winding up orders vide orders dated 28th August, 1984; (b) CP No. 31/1993 which is a scheme of arrangement proposing to pay up the creditors in a particular manner and seeking sanction thereof, and (c) Eviction petition filed by the landlord seeking eviction of the company from Asaf Ali Road on the ground of non-payment of rent. It would be in the fitness of things to first deal with CP No. 31/1993 as outcome thereof will have bearing on other proceedings. CP No. 31/1993 9. In this petition, the propounder has proposed to pay the entire amount in full to the unsecured creditors in a phased manner within a period of three years from the date of sanction of the scheme. It is proposed not to pay any interest to any unsecured creditors. It is also stated that the propounder shall arrange the finances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeting of the equity shareholders was held and four equity shareholders of the company having shareholding of 698 shares of ₹ 100/- each approved the scheme.(The issued and subscribed share capital is 1300 shares of ₹ 100/- each i.e. ₹ 1,30,000/-). The meeting of the unsecured creditors was attended personally and by proxy by four creditors entitled together to ₹ 82,932.48 paise . In the said meeting also unsecured creditors approved the scheme. In these circumstances, sanction of the scheme is prayed for. 11. The salient aspects which emerge from the aforesaid narration, may be recapitulated. The company was carrying on the business of transport of passengers and at the time of winding up of the company it had four buses and three route permits, one of them for a mini bus. There are no buses with the company now. Route permits also expired long ago. When this matter was earlier heard on 11th March, 1999, after taking note of these facts the court, inter alia, passed the following order: "I feel that having regard to the facts and circumstances of the case, when the only valuable asset of the company is stated to be the route permits to ply the buses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would not be possible for the company to function without buying peace with the said secured creditors. What is the present position of the secured creditors' claims is not known as nothing has come on record, particularly in the absence of any provision made in respect of their dues. In this backdrop, one may note the fact that the shareholders having shares of 698 shares out of 1300 shares only attended the meetings. Likewise, the creditors who were present in the meeting worth ₹ 82,932.48 paise only. This aspect is highlighted only to show that the total number of shareholders and unsecured creditors present in the meetings were much less although I am conscious of the fact that it is the 75% of present and voting shareholders/creditors who are necessary to pass the resolution for sanction of the scheme which formality has been completed. The Regional Director, in his reply to the petition, has objected to the scheme on the ground that the objects of the scheme cannot be achieved by the propounder unless claims of creditors are settled by the old under Sections 529, 529-A and 530 of the Act and they are to be paid in full before revival of the company since the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the scheme. If the scheme is intended to be a cloak to achieve some other purpose rather than projected purpose of the revival of the scheme, it would be unfair to the creditors and other persons if such scheme is sanctioned and propounders are allowed to achieve their oblique purpose. In Re., Saroj G. Poddar (1996) 22 C.L.A.200, the court refused to sanction the proposed scheme after it was found that the entire exercise undertaken by the sponsored with the support of the workers union was intended to acquire the land of the company for its exploitation. The court also found that the scheme was not genuine but patently fraudulent as it had been evolved as a cloak to cover the misdeeds of the directors to avoid misfeasance proceedings against them. 14. Therefore, I am forced to conclude that neither the scheme propounded is bona fide nor viable and further lacks completeness as well. It cannot be treated as a valid scheme in the eyes of law as it does not deal with all the aspects required for revival of the company. Therefore, I am constrained to dismiss CP No. 31/1993. CP NO. 64/1978 15. As noted above, in this petition seeking winding up of the company, order dated 3rd A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as most of these grounds have genesis in the revival scheme filed and the petition seeking sanction to the scheme of arrangement has been dismissed and the winding up orders are revived and in company proceedings itself directions are given to hand over the possession as the premises are not required by the old for the purpose of liquidation proceedings. The company would not require the tenanted premises any longer, and Therefore, this court in winding up proceedings can direct the old to hand over the premises to the landlord. In CP No. 64/1978, it is ordered that the old shall hand over the same to the landlord. 19. Dehors the orders passed to this effect in Company petition/winding up proceedings, I am of the view that even otherwise the landlord is entitled to the eviction orders in the present petition filed by him. Admittedly, the ground for non-payment of rent has been proved as there is no dispute that the company fell in arrears and demand notice dated 4th February, 1986 asking the company to pay the arrears of rent was given and the company did not pay the amount within two months of the receipt of the said notice. Vide order dated 16th November, 1978 the company wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument of learned senior counsel for the company was that there was no service of a valid notice as required under Section 14(1)(a) of the Rent Act as notice was not served on the OL. This is a hypertechnical plea, to say the least. When the landlord had sought possession of the premises by filing CA No. 19/1985, it was not granted on the ground that winding up orders had been partially stayed but at the same time direction was given to the company to pay the rent as is clear from order dated 21st February, 1985 passed in the said application. Thus winding up was partially stayed; premises in question were handed back to the erstwhile management by the OL; specific direction was given to the company/management to pay the arrears of rent. After the partial stay of the winding up order on 28th August, 1984, the old was not performing any role in these proceedings and, Therefore, default notice was rightly served on the management of the company. 24. Another ingenuous plea taken is that the rent was not legally recoverable in view of winding up orders passed inasmuch as when the company is in liquidation, rent is not payable. I may point out that this argument was earlier noted by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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