Calcutta High Court
Prateek Plastometals Private Limited vs Shining Vyapar Pvt. Ltd. & Ors on 17 February, 2014
Author: Patherya
Bench: Patherya
ORDER SHEET
CP NO.191 OF 2013
WITH
CP NO.145 OF 2012
CP NO.160 OF 2012
CP NO.475 OF 2013
CP NO.744 OF 2013
CP NO.747 OF 2013
CP NO.758 OF 2013
IN THE HIGH COURT AT CALCUTTA
Original Jurisdiction
ORIGINAL SIDE
IN THE MATTER OF: PRATEEK PLASTOMETALS PRIVATE LIMITED
-AND-
SHINING VYAPAR PVT. LTD. & ORS.
.........
BEFORE:
The Hon'ble JUSTICE PATHERYA Date : 17th February, 2014.
Mr. R. Banerjee, Mr. B. Chatterjee...appear.
Mr. S. Talukdar, senior advocate, Mr. P. Sinha...appear.
Mr. M. Bose...appears.
Mr. D. K. Basu, senior advocate...appears.
Ms. M. Bhutoria...appears.
Mr. A. Sen... appears.
The Court : Several winding up applications have been filed against the company and the only plea taken by the company is that a reference is pending under the 1985 Act, therefore, the bar under Section 22 of the 1985 Act becomes operative and all proceedings initiated be stayed. This contention has been opposed by the unsecured creditors, who have taken recourse to the third proviso of section 15 of 2 the 1985 Act so also the definition of 'borrower' under Section 2[1][f] of the 2002 Act. As the term 'borrower' under the 2002 Act includes a guarantor so also the persons, who have created mortgage the possession notice issued on 6th September, 2013 in so far as it includes the property of the guarantor will attract the third proviso to section 15 of the 1985 Act and the proceedings before BIFR shall abate. The Andhra Bank is the only unsecured creditor. Therefore, no consent also will be required as envisaged under the third proviso of section 15. As recourse has been taken under Section 13[4] to proceed against the borrower, which includes the guarantor, the reference stands abated. Section 3[1][o] of the 1985 Act defines a 'sick industrial company' to mean an industrial company registered for not less than five years. Ancillary and small-scale industrial undertakings are excluded from the definition of 'industrial undertaking' as per Section 3[1][f] of the 1985 Act. In the information given to BIFR so also from the letter of sanction the assets mortgaged to the Andhra Bank was given on lease by the West Bengal Small Industries Development Corporation Ltd. to the company. Therefore, it is a small-scale industrial undertaking under Section 3[1][f][ii] and no reference could have been filed before BIFR. An application for issuance of licence under the Factories Act was allowed and licence granted on 1st April, 2009, therefore, the registration is for a period less than five years. Rule 8 of the 2002 Rules contemplates affixation of possession notice. As borrower includes guarantor, 3 therefore, the notice under Section 13[4] of the 2002 Act has effectively been served on the company and no separate notice under Section 13[4] of the 2002 Act is required to be served. In the affidavit filed by the company in CP no.145 of 2012 it has been admitted that subsequent to the Section 13[2] notice a Section 13[4] notice has also been issued against the company. Therefore, in view of the third provision of section 15 of the 1985 Act the proceedings before the BIFR stands abated and the company cannot get the benefit of Section 22 of the 1985 Act.
Counsel for the company submits that although a notice under Section 13[2] of the 2002 Act was issued to the company on restructuring of debt the said notice was rendered infructuous. The notice, which has been issued on 3rd July, 2013 is to one M/s. Emco Plastic Works Pvt. Ltd. as a borrower and to the company as a guarantor. The notice under Rule 8[1] of the 2002 Rules is also in respect of M/s. Emco Plastic Works Pvt. Ltd. No notice under Section 13[4] of the 2002 Act has been issued to the company herein. The word 'borrower' to which recourse has been taken is to be confined to the 1985 Act alone and its definition in the 2002 Act ought not to be extended to the meaning of the expression in the 1985 Act, in view of AIR 1929 Privy Council 181 and Section 3[2][a] and 3[2][b] of the 1985 Act. The licence issued under the Factories Act was renewed on 1st April, 2009 and will stand renewed also from 2013. Therefore, in view of the issuance of licence under the Factories Act much earlier than 2009 4 the five years requirement has been satisfied. The date of incorporation of the company is 2005 while the reference was made on 13th November, 2013 i.e. after 8 years. The inquiry will start on and from the date the defects have been removed, which defects have been removed under cover of letter dated 9th January, 2014 and 60 days is to be calculated on and from 9th January, 2014. As the requirements of the 1985 Act have been satisfied and no recourse taken under Section 13[4] of the 2002 Act, the question of the reference before BIFR abating does not arise and Section 22 of the 1985 Act be made applicable to the company in the instant case.
Having considered the submissions of the parties, the question that has arisen for consideration is whether the company will be allowed to take protection under Section 22 of the 1985 Act which he seeks to do in view of the reference filed by it in November, 2013 before the Board under the 1985 Act. This protection would have been granted to a company, which had satisfied not only the five years criteria but also if it was not an ancillary or a small scale industry. On examination of documents, which have been placed before this Court in the pleadings filed and the most important documents being the documents submitted to the Board for conducting an inquiry it will appear that in Form A certain particulars have been given by the company itself; the first of such particulars given relates to the date of incorporation which is 23rd August, 2005, which covers a span of eight years. This would have been 5 sufficient to counter the five years' criteria but the licence under the Factories Act was issued on 1st April, 2009. Therefore, the industrial undertaking did not start functioning till issuance of the licence under the Factories Act. Clause 3[b] of the Information sheet required the applicant to give the date and number of all factories registered under the said Act along with a copy of the application. The date given of registration is 1st April, 2009. There is no mention of renewals. Therefore, a company, which has been incorporated in 2005 stands to reason to be registered under the Factories Act in 2009, and its manufacturing activity started only after 2009. 2009 to 2013 would mean four years i.e. less than the five years needed. This would not make the company eligible to apply. In fact to query no.3[f] which deals with small scale industrial undertaking information has been given and that the company is a small scale industrial undertaking in view of the information given cannot be doubted. Another reason for not extending the benefit of section 22 of the 1985 Act to the company is that at the time of grant of sanction the company relied on a long term lease deed between itself and the West Bengal Small Industries Development Corporation Ltd. which Corporation is engaged in giving incentives and facilities to small scale industries. Therefore, it was on the basis of the representation made by the company which is well within its knowledge that land was given to it in September 2009 on a long term basis by the Corporation mentioned above. Section 3[1][f] has defined an industrial 6 undertaking not to include a small-scale industrial undertaking. In fact, it is on the representation of the company itself that the company is to be treated as a small scale industrial undertaking and cannot seek protection of Section 22 of the 1985 Act.
Accordingly, the applications filed by the unsecured creditors will have to be proceeded with.
The issue with regard to section 22 of the SICA Act has been decided against the company. Therefore, as the matter is at the post advertisement stage and all the company petitions have been admitted undoubtedly there was direction for making payment, which has not been honoured by the company. Accordingly, let 5% of the claim of each of the unsecured creditors be paid by the company by 24th February, 2014. Matter to appear in the list on 25th February, 2014.
It is made clear that 5% directed to be paid is on account of principal sum and directions with regard to payment of interest will be given at a later date. Another reason for passing this order is that from the orders admitting the company petitions no appeal has been preferred.
All parties concerned are to act on a signed photocopy of this order on the usual undertakings.
(PATHERYA, J.) pkd.
A.R.[C.R.]