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TMI Blog2022 (8) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... r or for a limited time and impose appropriate terms and conditions. A copy of the order of the stay is required to be forwarded to the Registrar forthwith who is required to make a minute of the order in his books relating to the company - In the present case, applications for permanent stay of winding up proceedings being CA 191 of 2002 and CA 186 of 2001 are pending. Proof to the satisfaction of the Court as required by Section 466 is yet to be recorded by the Company Judge. It is worth noting that Section 466(1) does not use the phrase permanent stay but the expression order staying the proceedings altogether has the effect of permanent stay of proceedings. So far as the effect of order of permanent stay of winding up proceedings is concerned, in the case of SUDARSAN CHITS (I.) LTD. VERSUS O. SUKUMARAN PILLAI [ 1984 (8) TMI 242 - SUPREME COURT], Hon ble Supreme Court has held in para 14 that when winding up order is kept in abeyance it is in the state of suspended animation meaning thereby it was effectively subsisting but inoperative for the time being. This court cannot lose sight of the settled legal position that winding up should be resorted to as the last resort after exh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Yash Singhi, Advocate … for Namokar Vinimay Pvt. Ltd. (appellant in APO 143 of 2020) Mr. Jishnu Chowdhury, Advocate Mr. Balaji Chakraborty, Advocate … for Baranagore Jute Mills Employees' Union (INTUC) (applicant in ACO/15/2022 in APOT/74/2021 and (appellant in APOT/74/2021 Mr. Surajit Nath Mitra, Sr. Advocate Mr. Sankarsan Sarkar, Advocate Mr. Subhrangsu Ganguly, Advocate … for Yashdeep Trexim Pvt. Ltd. (appellant in APOT 76/2021 and APOT 80/2021) Mr. Kishore Dutta, Sr. Advocate Ms. Susmita Shaw, Advocate Mr. Rajib Mullick, Advocate Mr. Rakesh Sarkar, Advocate… for Lakshmi Singh and INTUC Mr. Jishnu Saha, Senior Advocate Mr. Deepak Jain, Advocate Mr. Ishan Saha, Advocate Mr. Lal Pratap Singh, Advocate Mr. Umesh Pratap Singh, Advocate … for Chaitan Choudhury & Ridh Karan Rakecha. Ms. Manju Bhuteria, Advocate. Mr. Arun Kumar Mishra, Advocate Ms. Arundhati Barman Roy, Advocate Ms. Tanvi Luhariwala, Advocate… for Official Liquidator. Ms. Manju Agarwal, Advocate Mr. Bajrang Manot, Advocate… for Radheshyam Ajitsaria & other unsecured creditors Mr. Pradeep Aggarwal, Advocate Mr. Arjun Aggarwal, Advocate Mr. Sourav Kumar Mukherje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporated in England on 22 July 1872 under the Companies Act 1862 for the purpose of carrying on the business of jute manufacturers at Barnagore, near Calcutta, in what is now the Republic of India. That remains the sole business of the Company. It is common ground that the Company has, now, no connection with England; save that it was incorporated here, maintains its registered office in London and is required to make annual returns to Companies House." 5. C.P. No. 2 of 1987 was filed at the instance of a Partnership Firm being the creditor for winding up of the Baranagore Jute Factory PLC (for short, 'BJF') on the ground that BJF had failed to repay its debt. 6. The Company Judge by order dated 11th of February, 1987 had admitted the company petition subject to the scrutiny and had given directions for publication of advertisements. By the same order the Company Court had stayed its order for one week. The order dated 11th February, 1987 reads as under: "Under these circumstances, this court admits this petition, subject to scrutiny, for the principal sum of Rs. 13,13,751.51 together with interest and cost of this application assessed at 80 Gms. This court gives necessary d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the cost of the Jute Mill to paid by Mr. Mitra's client in the first instance." 9. The order of the learned Company Judge dated 15th September, 1988 was the subject matter of challenge in the Company Appeal wherein the Hon'ble Division Bench by order dated 22nd September, 1988 had stayed the winding up proceedings for six months for the time being, by directing as under:- "(cc) The winding up proceedings shall remain stayed for six months for the time being." 10. In addition to staying the winding up proceedings the Division Bench had issued various directions including the following: (i) Mr. Nirmal Mitra, Barrister was appointed as Joint Special Officer. (ii) The Committee of Management consisting of one representative each of the three groups and one representative from State Bank of India, one from I.C.I.C.I. and two representatives of the workmen one Jute Technologist and a Chartered Accountant to be nominated by the six Unions, was directed to run the Mill under the Joint Special officer. (iii) The three groups who had submitted scheme for revival were directed to deposit the sum of Rs. 25 lakhs each to the Joint Special Officer for making payment to the workers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stay of the winding-up proceedings of the Company and for revival of the Company as per a Scheme submitted and for appointment of an ad hoc Committee of Management to run the affairs of the said Company. The six Unions agreed to the Scheme as it was to the benefit of the workers. The learned Company Judge stayed the winding up by order dated 15.9.1988 and appointed an ad-hoc Committee of Management to re-open the mills, but however maintained the assets of the Company under the Official Liquidator. One of the creditors filed an appeal against the order dated 15.09.1998. An interim order was passed by the Division Bench of the High Court appointing Joint Special Officers under whose supervision the Committee of Management was to be constituted on an ad-hoc basis with other directions. 5. Mr. Raj Kumar Nemani being aggrieved by the order dated 27.09.1988 passed by the Division Bench filed a special leave petition before this Court on 07.10.1988 and this Court, by an order dated 30.11.1988 directed that the scheme proposed by Raj Kumar Nemani supported by the workers and unsecured creditors be accepted with a direction for implementation of detailed Scheme. The learned Company Judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 18.12.1981, reiterated on 24.3.1992 directing payment of 1% of the respective claims to all creditors on or before 7.1.1992. The Bench also stayed the order passed by the learned Company Judge dated 16.12.1991 ordering cancellation of the Scheme. A special leave petition was filed against the order dated 24.03.1992 by one of the creditors. This Court directed the appeal pending before the Division Bench of the High Court to be disposed of expeditiously, while also directing payment to the unsecured creditors to be made @ 2% per month from 01.03.1993. The said order dated 22.03.1993 in S.L.P.(C) No. 6505 of 1992 reads as follows: "Acumen Trading Corporation & Anr. .. Petitioners -Versus- Committee of Management of Baranagore Jute Factory & Ors. ..Respondents ORDER 1. We have heard counsel for all the parties. 2. By an order dated 16th December 1991, the learned Company Judge of the Calcutta High Court cancelled the scheme earlier sanctioned on the ground that the terms of the scheme particularly in the matter of the schedule of payments to the creditors had not been complied with. That order was carried up in appeal before the Division Bench of the High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was to be deposited in the Registry of this Court. The said amount was kept in term deposits. On 11.03.1994, this Court set aside the order of the Division Bench of the Calcutta High Court passed on 24.03.1992 reducing rate of payment from 2% to 1%. This Court also directed the Committee of Management to deposit from the month of April, 1994 onwards a sum of Rs. 8 lacs per month with the Registry of Calcutta High Court. Further directions were also issued while remanding the matter back to the learned Company Judge for distribution of Rs. 40 lacs amongst the creditors. The above order reads as follows:- "Acumen Trading Corporation & Anr. .. Petitioners Versus Committee of Management of Baranagore Jute Factory & Ors. .. Respondents ORDER 1. We have heard counsel on both sides, originally the learned Company Judge in the High Court directed the "Committee of Management" to deposit sums equivalent to 2 per cent per month calculated on the basis of the extent of unsecured indebtedness of the company. Subsequently, there was a modification of this order as to the rate of the payment reducing the extent from 2 per cent month 1 per cent per month. This was done b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the list approved in the Court's Scheme prior to cut- off dates in October, 1987 before issuing advertisement inviting claims from creditors, while directing payments to be made to certain parties. 12. In appeal against the said order dated 13.12.1994, the Division Bench allowed the Jain-Jalan group to continue and carry on with the process of the Scheme, but set aside the direction for preferential payment to six named unsecured creditors. 13. The learned Company Judge by order dated 23.12.1996 also directed all unsecured creditors to lodge their claims with the Registrar of the High Court. The learned Company Judge, on the note of the Registrar, directed, inter alia, the Registrar of the High Court to confine to the claims of those unsecured creditors as on 28.10.1987 i.e. the date of winding-up order and the amounts quantified against their names in the list of unsecured creditors appended to the Company Application No.63 of 1987 affirmed on 27.4.1997. Pre-scheme unsecured creditors including the appellants lodged their respective claims with the Registrar on 27.02.1997. The Registrar submitted the second report excluding the names of the appellants (Radheshyam Ajitsari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.12.2002, inter alia, holding that the possession of the Company by the alleged Board of Directors was wrongful, while directing the Official Liquidator to take possession of the Company (in liquidation). Several appeals were preferred from the order. The Division Bench, while staying the operation of the order dated 19.12.2002, directed the Joint Special Officers to take possession. 16. The Division Bench in appeals filed against the order dated 08.03.2001 made an order dated 3.3.2004 directing re- adjudication of the claims of the appellants which had already been adjudicated. According to the appellant, the Division Bench without appreciating that the appeal itself was not maintainable having been filed by 9 outsiders having no locus standi is not correct in directing re-adjudication of the claims of the petitioner. The Bench also dis-allowed the appellant's rights to claim the said amount as a member approved in the list of unsecured creditors distinct from the Nemani group. Being aggrieved by the impugned judgment dated 3.3.2004, the appellants filed the above appeals in this Court. This Court, on 08.04.2004, issued notices in the special leave petitions and also direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Chetan Choudhary Group is being allowed to be continued on the same terms and conditions as under the original sanctioned scheme, thus making them liable to make payments of all dues, past or present. (d) Therefore, the Company being a running concern, the alleged dues of the workers cannot be claimed against any specific member of the Management Committee. The dues, if any, are against the Company and not against any individual members of the Committee of Management. There is no question therefore of holding up payment due to the unsecured creditors on the ground that workers' dues are alleged to be outstanding. (e) Further, since the Company still continues to function, Section 529-A of the Companies Act cannot be pressed into service by the workers. The protection of Section 529-A is available only when a company has been wound up, the Official Liquidator has taken over the assets and disbursements are being made by the Official Liquidator in the course of winding up of the company. There is no question of the worker claiming a preferential right or payment while a company is running and carrying on business in the usual course and incurring daily expenses and liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers and other statutory dues are to be paid by the Committee of Management. Even at present the Company is being run by a Committee of Management and is now supported by the workers as would appear from the order dated 18-11-2004." 18. In paragraph 59 of the above judgment, it was very clearly found by the Hon'ble Supreme Court that the Company was not wound up but allowed to continue as a going concern by holding as under: "59. It is important to note that by orders of the Court, the Company (in liquidation) was not in fact wound up but was allowed to continue as a going concern. This was undoubtedly in the interest of the workers. So long as the Company continued as a going concern, the workers not only continued to get their wages and other benefits and also retained their rights to be reimbursed out of the assets of the Company in the event that the assets have to be sold in winding up. In fact, the fixed assets of the Company are enormously valuable. It has land in excess of 50 acres in prime locations out of which 17 acres was acquired by the National Highway Authority upon payment of compensation of Rs 41 crores recently to the present Company. The dues of workers ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racts, etc. provides that pending any enquiry under Section 16 or scheme referred to under Section 17, no proceedings for winding up of the industrial company or for execution, distress, etc, shall lie or be proceeded with further except with the consent of the Board or by the Appellate Authority. 21. At this stage, it would not be out of place to note that in Madura Coats Limited vs. Modi Rubber Limited and Another reported in (2016) 7 SCC 603 the Hon'ble Supreme Court, in a case wherein a company directed to be wound up but the winding up proceedings were stayed, has held that when proceedings are pending both before BIFR and the Company Court but no order of winding up has been passed against the company, in such a situation the provisions of SICA would prevail over the provisions of the Companies Act. It has been held that the reference can also be made to the BIFR and then SICA will over-ride the Companies Act. 22. Three separate writ petitions bearing No. 12377, 12406 and 12412 of 2010 were filed challenging the jurisdiction of BIFR to entertain the reference and to frame the scheme. The learned Single Judge had disposed of these petitions by order dated 25th January, 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard are as under: "14. Having noted the broad features of the grievances raised in each of these appeals we may now take note of certain connected facts on the basis of which we will be required to decide the necessity and expediency to adjudicate the core question arising in these appeals and the other issues that have been sought to be agitated before us. It has already been stated in the earlier part of this order that the respondent Company is the owner of vast tracts of immovable property in and around Kolkata which has, with the passage of time, appreciated in value. Way back in the year 1988 an area of about 24 acres of land owned by the Company was acquired for the purpose of building, maintenance, management and operation of the second Vivekananda Bridge across River Hoogly. In the year 2003 provisional compensation was assessed at Rs 21,28,21,000 and on deposit of the said amount possession of the land was taken over. The acquisition of the land came to be challenged before the High Court and the said challenge was also carried to this Court. The net result of the aforesaid exercise(s) was an enhancement of the compensation initially by the High Court to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icability of SICA to the respondent Company, therefore, does not arise. 20. I f the respondent Company no longer falls within the ambit of a "sick industrial company" as defined by Section 3(1)(o) of the Act and the Act has ceased to apply to the Company and the rehabilitation package worked out by the Board has not yet been implemented, the question(s) arising in the present appeals have surely become academic and redundant. If that be so, we do not see why we should answer the said question(s) in the present group of appeals. Instead, in the fitness of things, we should leave the said question(s) open for determination in an appropriate case and as and when the occasion would arise." 25. In respect of the issue of management of the company, in Yash Deep Trexim (P) Ltd. (supra) it was directed that for the present, the management of the company as on date would continue until further order, by holding as under: "21. Insofar as the other issues, particularly, with regard to the management of the Company is concerned we have already found that none of the said issues arise from the order of the High Court under appeal before us. Even otherwise, we will not be justified to go in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding, leads us to investigate deep into the matter to find out the present stage of the said winding up proceeding. In this regard, it is worth mentioning here that apart from mentioning that the Company is a going concern and the winding up proceeding against the said company has been permanently stayed under Section 466 of the Companies Act, 1956, by the Hon'ble Supreme Court in the said judgment dated 24th May, 2006 passed in the Civil Appeals No.4101-4103 of 2004, the order passed by the Company Court and/or any other competent Court staying the winding up proceeding against the said company permanently under Section 466 of the Companies Act, 1956, could not be produced before this Court by the appellant/petitioner in spite of repeated insistence of this Court. An order of permanent stay of the winding up proceeding is a judicial order to be passed by the Company Court under Section 466 of the Companies Act, 1956, which the appellant/petitioner has failed to procedure before this Court." "If the winding up proceeding was permanently stayed, then how the affairs and the management of the said company were directed to be managed by the Committee of Management and/or the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tum of its liability, coupled with the facts that even the workers have not been paid their dues, we do not feel it safe to allow a particular group of shareholders, who are described as interloper by the creditors, to withdraw the money deposited with the Registrar, Original Side of this Court without deciding the said issue finally, particularly when we find that the appellant/applicant themselves have filed an application being C.A.No. 957 of 2010 praying for permanent stay of the company petition No.2 of 1987 which is yet to be decided finally. In the aforesaid context, we do not find any illegality in the impugned order passed by the Learned Company Court proposing to dispose of all the pending applications simultaneously." 27. The Hon'ble Division Bench with the aforesaid observation had affirmed the order of the learned Single Judge. 28. Against this order, SLP (C) No. 2814-2815 of 2015 was preferred wherein, Hon'ble Supreme Court by order dated 12th of March, 2015 granted leave and by a reasoned order found that the proper remedy would be to dispose of all the pending applications and directed the learned Company Judge to dispose of the pending applications. The appeal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of part of the Company's dues, has remained largely unpaid till date. (vii) About cut-off date the Company Judge found the argument to be more deserving that the status of the creditors and/or other claimants to the dues has acquired a representative character. (viii) The creditors, workers, bankers, financial institutions, then and now can be considered to be in queue for their dues up to the stage of their proximate transactions with the Company at the time the Company was referred to the BIFR. (ix) The Company's Books of Accounts remain a mystery wrapped in an enigma. 31. The Company Judge in the impugned order has recorded further findings and has issued following directions: (a) The Company Court continues to be in the position of custodia legis of the Company/BJF. (b) Ipso facto there is no permanent stay of winding up. (c) The Company Judge appointed a three member Committee of Management (CoM) and held it entitled to appoint an auditor to do complete audit, and to hold consultation with professionals. (d) The creditors, workers etc. are directed to submit claims to the CoM and CoM is directed to quantify and prioritise the claims and submit a schedule o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the learned Single Judge is, in our view, not merely a possible view to take but the only correct view based on the facts and circumstances of the case." 35. The moot question in these appeals is if there is a permanent stay of winding up proceedings. Rival submissions have been advanced by the learned counsel for the parties on the observation of the Hon'ble Supreme Court about permanent stay in the matter of Radheshyam Ajitsaria & Anr. (supra). Submission of Mr. Mitra, learned Senior Counsel for the appellant, placing reliance upon the judgment of the Hon'ble Supreme Court in the matter of S. Nagaraj (Dead) by LRs. And Others vs. B.R. Vasudeva Murthy and Others [(2010) 3 SCC 353] is to the effect that even if the judgment of the Hon'ble Supreme Court is per incuriam, bar of res judicata operates and that once the Hon'ble Supreme Court has held that there is permanent stay of the winding up proceedings, then even if the said observation is held to be obiter and is per incuriam, the order would be treated as final and binding. Opposing the submission, learned Counsel for the other side have placed reliance upon the judgments of the Hon'ble Supreme Court in the matter of Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the Court thinks fit. (2) On any application under this section, the Court may, before making an order, require the Official Liquidator to furnish to the Court a report with respect to any facts or matters which are in his opinion relevant to the application. (3) A copy of every order made under this section shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the company." 38. A bare reading of the said Section reveals that following two conditions are required to be satisfied for bringing an order of permanent stay of winding up in existence: (i) filing of an application either of the Official Liquidator or of any creditor or contributory for stay of winding up proceedings. (ii) proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed. 39. If the above two conditions are satisfied, the Company Judge has the discretion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the English Companies Act. An early decision on the subject in the UK was a judgment of Lord Esher, M.R. speaking for the Court of Appeal in Re Flatau 2. The judgment of the Court of Appeal followed an earlier decision in re Hester 3 which had laid down the rules for a rescission of a receiving order in bankruptcy. In that context, Lord Esher had held as follows: 18-A. In the Court of Appeal, Lord Esher, M.R., stated (p.639): Although the consent of all the creditors has been obtained, the Court will still consider whether what they have agreed to is for the benefit of the creditors as a whole. The Court has gone still further, and, I think rightly so, and has said that under the present Bankruptcy Act it will consider not only whether what is proposed is for the benefit of the creditors, but also whether it is condusive or detrimental to commercial morality and to the interests of the public at large; and they will take into consideration the position of the bankrupt with regard to his creditors, and see whether what is proposed will not place his future creditors, who must come into existence immediately, in a position of imminent danger. The Court has said this before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in bankruptcy against an individual. The Court refuses, therefore, to act upon the mere assent of the creditors in the matter, and considers not only whether what is proposed is for the benefit of the creditors, but also whether the stay will be conducive or detrimental to commercial morality and to the interests of the public at large. In particular, the Court will have regard to the following facts; That directors have not complied with their statutory duties as to giving information to the official receiver or furnishing a statement of the affairs; that there has been an undisclosed agreement between the promoter and the vendor to the company as to the participation by the former in fully paid up shares forming the consideration for the purchase of property by the company on its formation; that the promoter has made gifts of fully paid up shares to the directors, that there are other matters connected with the promotion, formation, or failure of the company or the conduct of its business or affairs, which appear to the Court to require investigation. The same principles are apparently applicable whether the company has or has not invited the public to subscribe for its shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow in proper circumstances a resumption of the business of the company, (9) the Court is to consider whether the proposal for revival of the company is for benefit of the creditor but also whether the stay will be conducive or detrimental to the commercial morality and to the interest of the public at large, (10) before making any order Court must see whether the Ex-directors have complied with their statutory duties as to giving information to the Official Liquidator by furnishing the statement of affairs, (11) and any other relevant fact for granting or not granting the stay having regard to the peculiar facts of a particular case." 44. The above judgment has been duly noted by the Division Bench of Calcutta High Court in the matter of Bank of India vs. Official Liquidator and Others reported in 1999 (1) Cal LT 322. 45. So far as the effect of order of permanent stay of winding up proceedings is concerned, in the case of Sudarshan Chits (I) Ltd. vs. O. Sukumaran Pillai, (1984) 4 SCC 657 Hon'ble Supreme Court has held in para 14 that when winding up order is kept in abeyance it is in the state of suspended animation meaning thereby it was effectively subsisting but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen dismissed on merits are traditionally not recorded or disposed of but permanently stayed. "11. A note by way of a post-script: Company petitions, even when dismissed on merits are traditionally not recorded as dismissed or disposed of; but are permanently stayed. Dismissal is recorded only when the petition is not maintainable or is barred by law. The effect may not be any different from recording a disposal, but there is a history of more than a century that goes behind such recording, which must be respected." 47. Calcutta High Court in the matter of In Re: Prudential Capital Markets Ltd., (2008) 1 CompLJ 314 (Cal) has held that even if there is an order of stay, it is not a permanent stay without effect of completely obliterating the order of winding up, so the order of stay keeps the order of winding up in abeyance or suspended animation but does not altogether wipe it off. 48. It is also not in dispute that none of the following steps which are required to be taken after passing of the winding up order, have been taken in the present case:- a. Under Section 456 of the Companies Act, 1956, copy of winding up order is required to be filed before the Registrar. b. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "...4. That in terms of the orders passed by the Hon'ble High Court at Calcutta from time to time on 26.12.1994 the Official Liquidator handed over all the assets and properties of the company to the then Committee of Management appointed by the Hon'ble High Court at Calcutta. A godown space which was given on rent to the Central Warehousing Corporation was kept in possession under the office of the Official Liquidator and the Official Liquidator continued to receive the rent from the Central Warehousing Corporation. A copy of the minutes of handing over the properties dated 26.12.1994 is annexed hereto and marked as "A". 5. It is stated that after the stay of the winding up order by the Hon'ble Court, the company was running as a going concern under different Committees of Managements appointed initially Management Committee appointed by the Board for Industrial and Financial Reconstruction (BIFR) on a sanctioned Scheme propounded by the IDBI, the Operating Agency. 7. That a writ proceedings was filed before the Hon'ble Calcutta High Court challenging the sanctioned approved by BIFR. In the said proceedings the Hon'ble High Court of Calcutta quashed the reference of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red creditors of Raj Kumar Nemani, be accepted and a detailed scheme on that basis be formulated and be implemented as soon as possible, therefore, the Company Judge was directed to work out the scheme. The Record further reflects that the Company Judge had approved the scheme dated 16.06.1989. Though the Company Judge by order dated 16.12.1991 had cancelled the scheme observing that the scheme had totally failed but the Division Bench in appeal had passed the interim order dated 18.12.1981 staying the order of the Company Judge dated 16.12.1991. In S.L.P.(C) No. 6505 of 1992 by the order dated 22.3.1993, Hon'ble Supreme Court had directed the Division Bench to dispose of the appeal by observing that the stay of operation of the order of the learned Single Judge dated 16th December, 1991 will continue. The judgment of the Hon'ble Supreme Court in the matter of Radheshyam Ajitsaria & Anr. (supra) clearly mentions that the Company is functioning as a going concern on and from the date of implementation of the scheme of arrangement as formulated by the High Court as well as the Supreme Court. 52. The Division Bench of this Court headed by Hon'ble Justice Ruma Pal (as she then was) by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment put forward in terms of Section 391 of the Companies Act should be accepted or not. The Judgment in the matter of Meghal Homes (P) Ltd. (supra) has been noted with approval by the Hon'ble Supreme Court in the matter of Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Another [(2021) 7 SCC 474]. Hon'ble Supreme Court in the matter of M/s. J.K. (Bombay) Private Ltd. vs. M/s. New Kaiser-I-Hind Spinning and Weaving Co. Ltd. [AIR 1970 SC 1041] has held that the scheme of payment to creditors has statutory force and is binding on creditors and share holders. So long as company is carrying out the scheme no winding up order can be passed. The Hon'ble Supreme Court in this regard has held that: "35. .............. The principle is that a scheme sanctioned by the court does not operate as a mere agreement between the parties: it becomes binding on the Company, the creditors and the shareholders and the statutory force, and therefore, the joint-debtor could not invoke the principle of accord and satisfaction. By virtue of the provisions of Section 391 of the Act, a scheme is statutorily binding even on creditors and shareholders who dismanted from or opposed to its being s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contesting parties having an eye on it cannot be ruled out. Hence, every effort is required to be made to ensure the amount is utilized for rightful purposes. 56. Thus, on the basis of the aforesaid analysis and after perusal of the record, we find that: a. The winding up order passed by the Company Judge on 28th of October, 1987 was stayed by the Division Bench by order dated 22nd of September, 1988 for a period of 6 months. Thereafter, there is no material available on record indicating that the order of stay was extended by the Division Bench any further. b. On staying the winding up order for six months by order dated 22nd of September, 1988, the Division Bench had appointed Joint Special Officer and Committee of Management and had directed the Committee of Management to run the mill under the Joint Special Officer. c. There is no order of the Company Court or the Division Bench of this Court in appeal, granting permanent stay of winding up proceedings in terms of Section 466 of the Companies Act, 1956 or granting stay in terms of Section 391of the Act. d. There is no consideration earlier either by the Company Judge or the Division Bench or any other Court of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and recording a finding relating to satisfaction of settled conditions for such order. 58. The Company Judge is right in observing that the Company/BJF continues to be monitored by the Court at various stages through its CoMs, Joint Officers etc. In the facts of the case, we also find no error in the conclusion of the learned Company Judge about the transformation of BJF into an entity custodia legis. However, we are unable to concur with the conclusion of the learned Company Judge about the cut-off date for creditors, workers, financial institutions and bankers as the period when the company was referred to BIFR for rehabilitation scheme. Rule 154 of the Company (Court) Rules provides estimated value of all debts and claims against the company as far as possible according to the value thereof at the date of the order of the winding up of the Company. Hence, 28th of October, 1987 should be treated to be the cut-off date for such claim which is the date of passing of the order of the winding up in the present case. Since, large sum is in deposit with the Registrar of this Court, therefore, we are of the view that claim of creditor on the cut-off date as also of the worker as per d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action in accordance with law. v. On passing the order of permanent stay of winding up proceedings, the parties will be at liberty to approach NCLT or any other appropriate forum for settling their dispute relating to right of management and issue of mismanagement, oppression, etc. in accordance with law. vi. This Court has the responsibility to ensure that the amount in deposit with the Registrar of this Court does not go to the wrong hands, therefore, it is directed that on passing the order of permanent stay by the Company Judge, the amount in deposit with the Registrar will not be released to any of the parties for six months or till such further time as the Company Judge deems proper from the date of the order of the Company Judge, to enable the parties to approach the competent Court/Forum for necessary orders about their entitlement. vii. The one member Committee with the help of the Official Liquidator will also indentify the workers or their legal heirs entitled to receive their dues in compliance of the order of the Hon'ble Supreme Court dated 24.03.2021 in SLP (C) No. 11476/2020 and will quantify the amount and submit the report to the Company Judge, who after app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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