Delhi High Court
Ratlam Ispat Ltd. vs Greaves Feseco Ltd. on 10 May, 1991
Equivalent citations: [1991]72COMPCAS548(DELHI), 1992(22)DRJ31, 1991RLR333
Author: Arun Kumar
Bench: Arun Kumar
JUDGMENT M.C. Jain, C.J.
1. This is an appeal under section 482 of the Companies Act, 1959, against the order of the company judge dated August 31,1990, whereby the learned company judge ordered the appellant company to be wound up.
2. The controversy in this appeal is a narrow one. The appellant has no grievance against the winding up of the appellation company. The appellant's grievance is only this; that the company judge should have proceeded to wind up the company under section 20 of the Sick Industrial Companies ( Special Provisions ) Act, 1985. It would be relevant to mention here hat , on June 23,1988, the Board for Industrial and Financial Reconstruction passed and order recommending to this court that the appellant company he wound up.
3. The board sent its opinion under sub-section (1) of section 20 of the Act. According to the appellant, the learned company judge ought to have proceeded to pass the order of winding up under sub-section (2) of section 20 and, thereafter, is required to proceed under sub-section (3) of section 20. The learned company judge should not have proceeded with the winding up petition filed by the respondent and passed an order for winding up of the petition.
4. We find force in the aforesaid submission of learned counsel for the appellant. We may reproduce section 20 of the Act for facility of reference.
"Winding up of sick industrial company. ---- (1) Where the Board, after making inquiry under section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to al concerned parties, is of opinion that it is just and equitable that the sick industrial company should be wound up, it may record and forward its opinion to the concerned High Court.
(2) The High Court shall, on the basis of the opinion of the Board, order winding up of the sick industrial company and may proceed or cause to be proceeded with the winding up of the sick industrial company in accordance with the provisions of the Company Act, 1956.
(3) For the purpose of winding up of the sick industrial company, the High Court may appoint any officer of the operating agency, if the operating agency gives its consent, as the liquidator of the sick industrial company and the officer so appointed shall for the purpose of the winding up of the sick industrial company be deemed to be, and have all the powers of, the official liquidator under the Companies Act, 1956.
(4) Notwithstanding anything contained in sub-section (2) or sub- section (3), the Board may cause to be sold the asset of the sick industrial company in such manner as it may deem fit and forward the sale proceeds to the High Court for orders for distribution in accordance with the provisions of section 529A, and other provisions of the Companies Act, 1956.
5. Under sub-section (1) of section 20, if after inquiry under section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, the Board is of the opinion that it is just and equitable that the sick industrial company should be wound up, the Board would record its opinion and forward the same to the concerned High Court. As already stated above, the Board forwarded its opinion under sub-section (1) of section 20 on June 23, 1988. Further, on receipt of opinion by this court, this court was required to proceed under sub-section (2) of section 20. Sub-section (2) of section 20 lays down that the High Court shall order winding up of the sick industrial company on the basis of the opinion of the Board and further the High Court is required to proceed with the winding up in accordance with the provisions of the Companies Act. But, sub-section (3) of section 20 lays down that, for the purpose of winding up of a sick industrial company, the High court may appoint any officer of the operating agency, if the operating agency gives its consent as the liquidator of the sick industrial company and if such an appointment is made , the office shall be deemed to be and have all the powers of the official liquidator under the Companies Act. So, the officer of the operating agency would be an official liquidator in case such an officer is appointed by the High Court on consent being given by the operating agency.
6. The sick industrial company, i.e., the appellant had to be wound up but now it would be taken that the appellant company had been wound up under section 20 of the aforesaid Act and the company judge shall proceed as if the company has been wound up under section 20.
7. The parties are directed to appear before the company judge on July 15,1991.
8. The appeal is disposed of with the above consideration and directions.
9. We set aside the direction given by the learned company judge whereby the official liquidator has been ordered to have charge of all the assets of the company. It will be for the company judge to proceed in accordance with section 20 , sub-section (3) of the Act.