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TMI Blog1995 (8) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... ition was filed against the company by another creditor Krishna Kumar Sinha being C.P. No. 121 of 1986 for non payment of ₹ 68 thousand. On 20-3-1986. Notice in respect of C.P. No. 120 of 1986 was admittedly served on the company. On 23-4-1987 the applications being C.P. No. 120 of 1986 and C.P. 121 of 1986 were admitted by the Court and directions were given for advertisements. On 5-7-1988 winding up order was passed in C.P. No. 120 of 1986 against the company and official liquidator was appointed in respect of the assets of the company. On 25-4-1990 the Official Liquidator took possession of the assets of the company upon notice and in presence of the representatives of the directors of the company. In September, 1980 the Official Liquidator filed a petition of complaint, inter alia, against the ex-directors of the said company in liquidation including Nil Kanta Koley for taking cognizance and for punishment of the offence committed by them by not filing the statement of affairs as envisaged under Section 454 of the Companies Act, 1956. On 10-9-1990 the summons were directed to be issued under Section 454 of the Companies Act, 1956 against the accused persons including Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t until the instant application was made on 20-1-92. It is to be noted that neither the petitioner nor any other person has as filed the statement of affairs which is required to be filed by the petitioner and other Officers of the company under the provisions of the Companies Act, 1956. It is difficult to believe that the petitioner or other officers of the company did not come to know about the order for winding up even when the Official Liquidator took possession of the factory and assets of the company on 25-4-90. Ordinarily it was for the petitioner and the other co-Directors of the company to keep a watch in respect of the winding up proceedings and the orders made therein, when the notice was admittedly served on the company as admitted in paragraph 9 of the petition, in March, 1986. 7. Advertisements were issued in newspapers by the Official Liquidator long after he took possession, in April, 1990, inviting offers regarding sale of the assets of the company in liquidation on or about 7-3-91 and 8-3-91. On 12-4-91 order was made by Justice Padma Khastgir (as His Lordship then was) concluding sale in favour of one Ram Avtar Singhania for ₹ 7.60 lacs being the highest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator in Court on that day. On 4-10-91 order was passed by Justice Ruma Pal turning down the offer of Amit Steel Corporation and confirming sale in favour of Shiva Shakti at ₹ 9.25 lacs. The said Amit Steel Corporation failed to bring the amount offered by them but in spite of that sale already confirmed in favour of Shiva Shakti at a sum of ₹ 8.25 lacs by order dated 16-9-91 was set aside and again confirmed at ₹ 9.25 lacs in favour of Shiva Shakti. It was directed that the said additional sum of ₹ 1 lac shall be paid by Shiva Shakti after obtaining possession of the assets. On 9-10-91 possession of the assets was handed over to Shiva Shakti by the Official Liquidator and ₹ 1 lakh was paid by Shiva Shakti to Official Liquidator in accordance with the order dated October 8, 1991. Before that on 8-10-91 Justice Ruma Pal passed an order giving the authority to the Official Liquidator to execute the agreement on behalf of the company with Shiva Shakti and was directed to make over possession of the assets of the said company to Shiva Shakti, who would make over ₹ 1 lakh to the Official Liquidator. On 21-10-91 and 1-11-91 notices were published in Aa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said company was taken by the Official Liquidator and the order for sale was passed on 20-12-84. On or about 5-2-85, the Official Liquidator published advertisement for sale of the assets of the said company (in Hqn.). 11. On or about 21st February, 1985 Nilkanta Kolay and Arunananda Banerjee on behalf of the Company made another application praying of the dues of the petitioner creditor in C.P. No. 140 of 1981. On the said application an order was passed on 22nd February, 1985 by Mr. T. K. Basu, J. (as His Lordship then was) directing payment of the dues of the petitioning creditor by the Company and the order for winding up dated 20th June, 1983 was stayed. On or about 8th July, 1985 Mr. B. N. Sett, Barrister-at-Law was appointed Receiver over the assets of Kolay Re-rolling Mills Pvt. Ltd. in the said transferred Suit No. 4 of 1984. 12. On 23rd December, 1985 the Appeal Court presided over by Mr. Justice B. C. Basak and Mr. Justice S. K. Ganguly disposed of the appeal then pending before the said Court being Appeal No. of 1985 (Kolay Re-rolling Mills Pvt. Ltd. v. State Bank of India). By the said order the Appeal Court by consent of the parties treated the suit as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.P. No. 140 of 1981 wherein the Company appeared and CON-tested through Lawyers and made applications before this Court. The said Nilkanta Kolay and/or the Company engaged Mr. Kinjal Kumar Boral, Mr. Subhas Medda and others from time to time. 16. In paragraph 10 of the petition the petitioner has alleged as follows: 23. Nilkanta Kolay vs. The Official Liquidator (30.08.1995 - CALHC) : MANU/WB/0025/1996 10. The said Company was carrying on business at Burdwan. All the Directors including your petitioner also residing at Burdwan. Neither your petitioner nor any of the Principal Officer of the said Company were acquainted with any Court matter nor they were aware of any Advocate of this Hon'ble Court who can render any assistance to the Company in respect of the said winding up application. Your petitioner has also the other Directors and/or Principal Officers of the said Company including your petitioner were also not familiar with the city of-Calcutta. 17. The allegations made in the said paragraph are apparently incorrect in view of the proceedings relating to C.P. No. 140 of 1981, suit and the proceedings in the Transferred Suit No. 4 of 1984 and the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 proceedings on 22nd November, 1990 could still allege lack of knowledge until 9th October, 1991 as has been sought to be alleged by the petitioner. 22. The petitioner has admitted in they petition that since 1984 the said Company started facing financial difficulty and the said Company were also enjoying credit facility with the said Bank. Other impediments were also being faced by the said Company, such as electricity, labour paucity of working capital and various unforeseen expenses. The factory of the Company was lying closed according to the respondent No. 2 since 1982. The petitioner and the other Directors of the Company have not yet filed the Statement of Affairs nor has the Official Liquidator invited arty claims from the creditors. They are in default in filing the Statement of Affairs. No latest balance-sheet of the Company has been annexed to the petition nor has any particulars been given with regard to the list of creditors. Even the proceedings of the Company Petition No. 121 of 1986 have been suppressed by the petitioner. The said Company Petition was started by Krishna Kumar Saha for non-payment of ₹ 68,000/-. The claim of the petitioning creditor in C.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay-off the ordinary creditors and the secured creditors and carry on the business of the Jute Mills with commercial morality and for public interest. Some of the petitioners seems to be delinquent Directors of the Company (in liquidation) who have committed gross violation of the provisions of the Companies Act disclosed in the report of the Official Liquidator which is based on the records with the Registrar of Companies, West Bengal. Therefore, it is not only understandable but it is positively dangerous on the ground of commercial morality and interest to stay the winding up. On the other hand, the winding up process should be expedited and efforts should be made to see that the assets of the company are recovered as early as possible without incurring further liability by the company in respect of the said leasehold right of the Jute Mills under the lessor Prem Chand Jute Mills Limited. The Court should not be swayed by catch words and gimmic of reviving an industry and providing employment to the unemployed workers on the ground of socio-economic development of the State, but it has to carefully examine whether it applies to a particular case and 1 have no doubt in my mind on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied to maintain this application insofar as it is one under this section. The company, however, independently of the Liquidator, does not appear to me to have any locus standi in such an application. The section requires proof to the satisfaction of the Court that all proceedings in relation to the winding-up ought to be stayed. What has happened to justify a stay of proceedings? I have already dealt with and rejected the allegations of collusion between Shiva Prosad and Manabendra and the suppression of service of the petition. Has anything happened since the order was made? All that has happened is that the petitioning creditor has been satisfied, not by the company but by Dulichand a creditor of the company. But is the satisfaction of the petitioning creditor's' debt by itself sufficient to stay the winding-up when there are other creditors? It is said that Dulichand who in his firm of Murarilal Dulichand claims about ₹ 90,000, Jewraj Ram Kissen who claims about also ₹ 90,000 and is represented by Mr. M. N. Banerjee are supporting this application. On the other hand there is the creditor Manabendra. Manabendra claims to be a creditor in the sum of ₹ 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic to subscribe for its shares except, possibly, in the case of a private company, where all the shareholders have full knowledge of what has been done. The summary of the law is based on the observations of Buckley, J. in the case of In re: Telescriptor Syndicate Ltd. (1903) 2 Ch 174 pp. 180 : (72 LJ Ch 480) wherein reference was made to the Trenchand observation of French, L.J. in the earlier case of In re : Hester (1882) 22 QBD 632 at p. 641 : (60 LT 943). I, therefore, proceed to consider the facts in the light of these principles. In the instant case an unverified Project Feasibility Statement had been submitted before the Appeal Court but the ready availability of the funds is not to be found. Only vague statements have been made in the said unverified Project Feasibility Statement to some land belonging to Nilkanta Kolay and the members of his family but no particulars are there whether the sale has been or could be made at an early date is also not clear. The factory was lying closed since 1982 until the Official Liquidator took possession and apparently even the instalments to the Bank were not paid. The Court cannot act on an unverified Project Feasibility State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the Companies Act, 1956. There is no firm or accepted proposal for satisfying all the creditors with any material particulars before this Court. Merely obtaining an affidavit from one Basudeb Kundu on behalf of the workers as alleged by him is not sufficient. Even his position as Secretary of the Workers Union is disputed and one of the Unions has been carrying on negotiation with the purchaser. It is also difficult to believe that a factory can be run with ₹ 20,000/-only as has been alleged by Basudeb Kundu. I am satisfied that the Ex-Directors of the company, have not even complied with their statutory duties as to giving information to the Official Liquidator by furnishing the Statement of Affairs. 24. So far as the other relevant factors are concerned, it is to be seen that the factory was sold by this Court to Shiva Shakti pursuant to orders of this Court. The order for winding-up was made in 1988 and the possession was taken in 1990. The said purchaser had paid the entire consideration money and has taken possession of the assets. His case is that he had invested large sums of money after taking possession and in putting the factory in order. Various challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 lakhs. Official Liquidator has also opposed the application and he represents the other creditors. The application for stay from giving effect to the sale cannot be made except in the presence of Shiva Shakti and, in my opinion, Shiva Shakti has locus standi to oppose the application. 26. I have considered the facts of this case and I am of the view that the petitioner has not made out any ground for stay of the winding-up under Section 466 of the Com-panics Act as enunciated in the judgments, cited hereinabove. I am also satisfied that the petitioner has not made out any ground foti setting aside the sale or stay of the sale in favour of Shiva Shakti Iron Steel Industries. 27. In the premises, the instant application of Nilkanta Kolay is dismissed. All restrained orders against the respondents or any of them are vacated. In terms of the aforesaid order of the Appeal Court, the sale in favour of Shiva Shakti Iron Steel stands confirmed. The said Shiva Shakti Iron Steel will be entitled to give effect to the sale in its favour and to act in accordance with the sale held in its favour. 28. Stay is asked for on behalf of the petitioner and is declined. 29. All par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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