Punjab-Haryana High Court
Sudhir Kumar Jain vs Official Liquidator And Others on 29 November, 2012
Bench: Ajay Kumar Mittal, G.S. Sandhawalia
CAPP No. 21 of 2012 1
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
CAPP No. 21 of 2012
Date of Decision:- November 29, 2012
Sudhir Kumar Jain ..............PETITIONER(S)
vs.
Official Liquidator and others ...........RESPONDENT(S)
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
HON'BLE MR. JUSTICE G.S. SANDHAWALIA
Present:- Mr. Puneet Kansal, Advocate,
for the appellant.
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
G. S. SANDHAWALIA, J.
1. The present appeal has been filed against the order dated 26.07.2012 passed by the learned Company Judge in C.P. No. 119 of 2010 whereby, appellant-Sudhir Kumar Jain, who is the Ex-Managing Director of the company namely M/s. Mangla Cotex Ltd. (in liquidation) moved the petition under Sections 391 to 394 of the Companies Act, 1956 (hereinafter referred to as 'The Act') read with Rules 6 and 9 of the Companies (Court) Rules, 1959 (hereinafter referred to as 'The Rules') seeking a direction to convene a meeting of the secured creditors of the company to approve the scheme of arrangement/revival which has been dismissed.
2. The learned Company Judge, in the impugned order, took into account the fact that the company in liquidation was wound up by order dated 16.01.2004 in Company Petition No. 416 of 2002 presented by M/s. Winsome Textiles Industries Ltd. and it was noticed by the Company Judge that two C.A. Nos. 815 and 682 of 2007 were moved by the ex-management to recall the winding up order, which were dismissed on 30.09.2008 and the said order was upheld in appeal and the SLP was also dismissed and had thus attained finality. It CAPP No. 21 of 2012 2 was also noticed that the secured creditors namely the IDBI Bank-SASF and Canara Bank had turned down the OTS offer made by the ex-management and the negotiations with the secured creditors had failed. The Company Judge over-ruled the objection of the appellant that the claim of the Canara Bank was yet to be determined before the Tribunal and the IDBI's original application had been dismissed in default and, therefore, winding up petition could not be entertained and accordingly came to the conclusion that the ex-management was playing hide and seek not only with the secured creditors but with the Court as well. Consequently, a finding was recorded that the application lacked bona fide and was merely a cloak to delay the confirmation of sale or the release of sale proceeds. The submission of the appellant that since there was no winding up petition which was pending, was held to be mis-conceived in view of the order dated 30.09.2008 and one opportunity of two weeks was granted to the appellant to approach the secured creditors to settle their claim. The highest bid of `6.7 crores was not accepted and it was ordered that bidding would be held inter se the applicants and the case was posted for the said purpose.
3. Counsel for the appellant has contended that C.A. No. 333 of 2011 was still pending, which was filed by Manish Kumar Jain-brother of the petitioner, in which prayer had been made for dismissal of the original winding up petition i.e. C.P. No. 416 of 2002 and accordingly prayed that once the application was pending, the said issue should have been treated as a preliminary issue before opining on the petition filed under Sections 391 to 394 of the Act. Strong reliance was placed on Rules 101 and 102 of the Rules. It was submitted that the original petitioner was M/s. Winsome Textiles Industries Ltd., who had filed the original Company Petition No. 416 of 2002 and the said creditor had withdrawn the aforesaid petition on account of its debt being satisfied whereas Canara Bank was transposed as a petitioner on 16.11.2006. Accordingly, it was contended that once the winding up petition on account of inability to pay had been withdrawn by the CAPP No. 21 of 2012 3 original creditor there was no finding that there was any debt pending against the appellant-company and its inability to pay and thus, the Company Judge has no jurisdiction whatsoever to order inter se bidding for the property of the company which was in the possession of the official liquidator. Learned counsel relied upon various judgments namely Ashok Kumar and others vs. Akal Transport Co. (Pvt.) Ltd. 1991 (Vol. 72) P & H 158, Union of India and another vs. State of Haryana and another (2000) 10 SCC 482, Union of India and others vs. Adani Exports Ltd. and another (2002) 1 SCC 567, Chairman-cum-Managing Director, Coal India Ltd. and others vs. Ananta Saha and others (2011) 5 SCC 142, Sarup Singh and another vs. Union of India and another (2011) 11 SCC 198, Raghunath Rai Bareja and another vs. Punjab National Bank and others (2007) 2 SCC 230, Orissa Public Service Commission and another vs. Rupashree Chowdhary and another (2011) 8 SCC 108, Sanvijay Alloys Pvt. Ltd. Company Cases (Vol. 122) 2004 754, IBA Health (India) Pvt. Ltd. vs. Info-Drive Systems Sdn. Bhd. (2010) 10 SCC 553, M/s. Yamuna Enterprises, Yamunanagar vs. Haryana Financial Corporation and others 2002 (2) PLR 194, M.C. Mehta vs. Kamal Nath and others (2000) 6 SCC 213. Before a finding is recorded on the merits of the case, it would be appropriate to take into account the history of litigation inter se the parties over the last one decade and for that purpose, the relevant files of the connected cases were summoned from the company branch.
4. Respondent no. 2-IDBI Bank, who had advanced a loan to the company in liquidation, filed original application No. 325 of 2002 before the Debts Recovery Tribunal (hereinafter referred to as 'DRT') on 04.07.2002 after having issued notice dated 22.04.2002 wherein, it demanded a sum of `10,66,92,906/- upto 15.04.2002. In the meanwhile respondent no. 3-Canara Bank locked the warehouse of the company in litigation resulting in stopping of commercial production in pursuance to the order appointing a Local Commissioner in O.A. No. 315 of 2004. Thereafter, M/s. Winsome Textiles Industries Ltd. filed C.P. No. CAPP No. 21 of 2012 4 416 of 2002 on 19.12.2002 for winding up of the company on account of bouncing of cheques and inability to pay `20,77,183/- plus interest apart from initiating proceedings under Section 138 of the Negotiable Instruments Act, 1881. Thereafter, notice dated 30.12.2002 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'The SARFAESI Act') was issued by respondent no. 3- Canara Bank demanding a sum of `7,50,75,519-50 ps. That the winding up petition was never contested and was ordered to be admitted on 31.10.2003 and no objections were received in pursuance to the publication of admission of the petition. Accordingly on 16.01.2004, on account of failure to discharge the admitted liability of over `15,00,000/- plus interest, the appellant company was ordered to be wound up and the official liquidator attached to this Court was appointed as liquidator, who took possession of the assets of the company in February, 2004. That on 23.03.2006, the official liquidator was permitted to sell the property of the company and accordingly, C.A. No. 387 of 2006 came to be filed by Ashwani Kumar Jain, another brother of the appellant, for setting aside the ex parte order, vide which the property of the company had been put to sale. Two more C.A. Nos. 682 of 2007 and 815 of 2007 were also filed for recalling the winding up order dated 16.01.2004. That C.P. No. 364 of 2006 was also filed by the appellant-Sudhir Kumar Jain under Order 9 Rule 13 read with Section 151 CPC for staying operation of order dated 16.01.2004 for winding up of the company and order dated 23.03.2006 for putting the property of the company to sale. Notice of the said application was issued to the original petitioner Winsome Textiles Industries Ltd., who gave their no objection if the winding up order was recalled since they had received a sum of `25,00,000/-. The petitioner-creditor also undertook to withdraw the complaints filed under Section 138 of the Negotiable Instruments Act, 1881.
5. Counsel for the appellant also gave his readiness and willingness to CAPP No. 21 of 2012 5 settle his claim with the official liquidator towards the expenses incurred and notice was also issued to secured creditors-Canara Bank and IDBI Bank. Subsequently on 25.05.2006, a sum of `8,00,000/- was paid to the official liquidator as expenses incurred by him whereas the secured creditors sought time to file reply. That on 16.11.2006, C.A. No. 650 of 2006 filed by the Canara Bank was allowed whereby, it was transposed as a petitioner being a creditor of the appellant-company and authorized to pursue the winding up proceedings filed by Winsome Textiles Industries Ltd. This order of transposition was challenged by Ashwani Kumar Jain in Company Appeal No. 24 of 2009 after filing an application for condonation of delay of 892 days. The appeal was admitted for regular hearing on 05.10.2009 and no stay was granted. Thereafter Review Petition No. 171 of 2009 was filed against the declining of stay since the sale of the assets of the appellant-company was scheduled for 29.10.2009. The stay application as well as the company appeal were dismissed as withdrawn on 13.11.2009 with liberty to pursue the remedy of review before the learned Company Judge. C.A. No. 682 of 2007 and C.A. No. 815 of 2007 for recalling the winding up order dated 16.01.2004 were dismissed by the Company Judge on 30.09.2008 alongwith C.A. No. 387 of 2006 for setting aside the ex parte order dated 23.03.2006 for sale of assets of the company by holding that there were no valid grounds for setting aside or recalling of winding up order after noticing that there was huge liability towards the two secured creditors and there was a secured charge registered in the record of the register of the company.
6. Thereafter, Company Appeal No. 20 of 2008 was filed against the said order by both Ashwani Kumar Jain and Sudhir Kumar Jain (present appellant) alongwith application for stay of the confirmation of sale proceedings which was allowed by interim order on 04.12.2008. Thereafter, on 14.01.2009, M/s. Winsome Textiles Industries Ltd. was deleted from the array of the parties in view of the order passed in C.A. No. 650 of 2006 dated 16.11.2006 whereby, Canara CAPP No. 21 of 2012 6 Bank had been transposed as the petitioner. The appeal was admitted on 04.03.2009 and stay was declined. SLP No. 7095 of 2009 against the said declining of stay was dismissed on 06.04.2009 by the Hon'ble Apex Court. Thereafter, the company appeal was dismissed as withdrawn with no objections from the other side. In the meantime, C.A. No. 834 of 2006 was filed by the appellant for receiving on record copy of C.P. No. 364 of 2006 regarding review of ex parte order dated 16.01.2004 and order dated 23.03.2006 permitting the official liquidator to sell the assets. C.A. No. 835 of 2006 was also filed for condonation of delay of 2 years and 17 days firstly and 71 days pertaining to order dated 23.03.2006. Since C.P. No. 364 of 2006, which was not traceable was made available, C.A. No. 834 of 2006 was dismissed as infructuous by the Company Judge and notice was issued in C.A. Nos. 835 and C.P. No. 364 of 2006. Thereafter, the learned Company Judge, vide detailed order dated 07.05.2010, came to the conclusion that the petition for winding up was not only for recovery of money but also for the benefit of all creditors and shareholders and a secured creditor could be permitted to continue with the winding up process. Accordingly, the submission of the promoter-Sudhir Kumar Jain was rejected that the secured creditor could not be permitted to continue with the winding up order.
7. Against the said order, Company Appeal No. 11 of 2010 was preferred by Sudhir Kumar Jain, which was dismissed on 30.07.2010 on the ground that in case the appellant wanted to show his bona fides, he should bring a bidder of `9 crores and deposit a sum of `90,00,000/- within two weeks from 30.07.2010. It was further directed that the amount of `90,00,000/- would be liable to be forfeited in case the offer of `9 crores did not fructify. Thereafter, C.A. No. 119 of 2010 under Sections 391 to 394 of the Act was filed by the appellant claiming that he was in a position to revive the company. Notice in the application was issued and Canara Bank and the IDBI Bank, both the secured creditors, opposed the said application. IDBI bank took the plea that the debt had CAPP No. 21 of 2012 7 been assigned to Stressed Asset Stabilization Fund (SASF) which was entitled to continue and initiate any proceedings with regard to the company in liquidation. Accordingly, it was pleaded that guarantees were invoked on 29.04.2002 and in pursuance of the tenders invited for sale of assets by the official liquidator, a sum of `6.70 crores was offered by M/s. SCL Manufacturing Company, Ludhiana. It was submitted that on 16.01.2004, the date of winding up, the debt of the respondent was for an amount of `14,66,87,766/-. Similarly, in the reply filed by respondent no. 3, it was pleaded that on 20.07.2004, as per the original application, the debt of `13,57,13,040/- alongwith interest pendente lite in future was due. The counter claim filed by the company in liquidation was more than claimed by the bank and that had to be adjudicated by the civil Court. That thereafter, the impugned order dated 26.07.2012 was passed by the Company Judge, which is now the subject matter of challenge before this Court.
8. As noted in paragraph 3 above, the main contention of counsel for the appellant is that since C.A. No. 333 of 2011 was pending, therefore, in view of the Company Court Rules 101 and 102, there had to be a proper substitution of the creditor wherein, the procedure was prescribed and an amended petition had to be filed which would have been deemed to be presented on the date on which the original petition was presented. Rules 101 and 102 of the Company Court Rules read as under:-
"R.101. Substitution of creditor or contributory for original petitioner - Where a petitioner:-
1) is not entitled to present a petition, or
2) fails to advertise his petition within the time prescribed by these rules or by order of Court or such extended time as the Court may allow, or
3) Consents to withdraw the petition, or to allow it to be dismissed, or the hearing to be adjourned or CAPP No. 21 of 2012 8 fails to appear in support of his petition when it is called on in Court on the day originally fixed for the hearing thereof, or any day to which the hearing has been adjourned, or
4) if appearing, does not apply for an order in terms of the prayer of his petition Or, where in the opinion of the court there is other sufficient cause for an order being made under this rule, the court may, upon such terms as it may think just, substitute as petitioner any creditor or contributory who, in the opinion of the Court, would have a right to present a petition, and who is desirous of prosecuting the petition.
R. 102. Procedure on substitution.- Where the Judge makes an order substituting a creditor or contributory as petitioner in a winding-up petition, he shall adjourn the hearing of the petition to a date to be fixed by him and direct such amendments of the petition as may be necessary. Such creditor or contributory shall, within seven days from the making of the order, amend the petition accordingly, and file two clean copies thereof together with an affidavit in duplicate setting out the grounds, on which he supports the petition. The amended petition shall be treated as the petition for the winding up of the company and shall be deemed to have been presented on the date on which the original petition was presented."
9. The said submission of the counsel for the appellant is without any basis in the facts and circumstances of the present case. The main winding up CAPP No. 21 of 2012 9 petition was never contested and was ordered to be admitted on 31.10.2003. Thereafter, winding up order was passed on 16.01.2004. The appellant had filed an application under Order 9 Rule 13 bearing C.P. No. 364 of 2006 for staying the operation of the order of winding up and the order dated 23.03.2006 for putting up the property of the company for sale. The petitioner-M/s. Winsome Textiles Industries Ltd. had given their no objection on account of the fact that they received a sum of `25,00,000/-. A sum of `8,00,000/- was also paid to the Official Liquidator as expenses since he was in possession of the property of the company. However, thereafter in C.A. No. 650 of 2006, the Canara Bank was transposed as a petitioner being a creditor of the appellant-company on 16.11.2006. The order was challenged by the brother of the petitioner in Company Appeal No. 24 of 2009, which was subsequently withdrawn on 13.11.2009 with liberty to pursue the remedy of review before the learned Company Judge. A review application bearing C.P. No. 364 of 2006 had been filed alongwith application for condonation of delay of 2 years and 17 days bearing C.A. No. 835 of 2006 and for condoning delay of 71 days in the review pertaining to order dated 23.03.2006 for sale of the property of the company in which, it was averred that the jurisdiction of the Company Court stood ousted and it had no jurisdiction to entertain the company petition and orders dated 16.01.2004 and 23.03.2006 were without jurisdiction in view of the pendency of the original application Nos. 325 of 2002 and 315 of 2004 before the DRT.
10. The Company Judge, vide detailed order dated 07.05.2010, came to the conclusion that the four brothers had filed different applications to achieve the same object for setting aside the order of the winding up and the permission of the official liquidator to sell the assets of the company. Accordingly, the Court came to the conclusion that the said application was not bona fide and an attempt was being made to circumvent the order passed by this Court on 30.09.2008. It was further held that the DRT set up under the Recovery of Debts Due to Banks & CAPP No. 21 of 2012 10 Financial Institutions Act, 1993 was a Statute providing for adjudicatory process and proceedings for execution of the amount due and occupied a different field. The secured creditor could be permitted to continue with the winding up process. Accordingly, the application was dismissed with the following observations:-
"For the sake of argument, if it is assumed that CA No. 835 of 2009 is an application for setting aside of winding up order dated 16.1.2004 and order dated 23.03.2006 permitting sale of the assets of the company, even then the said application is not meritorious and does not warrant any indulgence from this Court at this stage. The said application filed on 1.12.2009 lacks bona fide. Earlier, CA No. 387 of 2006, CA No. 682 of 2007 and CA No. 815 of 2007 were filed by the brothers of the present petitioner on 10.05.2006, 03.10.2007 and 15.11.2007 respectively to seek setting aside of the order dated 23.03.2006 and order dated 16.01.2004. The said applications were dismissed on 30.09.2008. The appeal against the said order stands withdrawn on 4.12.2009. It appears that the four brothers have filed different applications to achieve the same object i.e., to seek setting aside of the order of winding up and permission to the Official Liquidator to sell the assets of the company. The applications filed by Ashwani Kumar, Manish Kumar and Rajesh Kumar have been dismissed by the Hon'ble Company Judge on 30.09.2008. One of the applications i.e., CP No. 387 of 2006 was filed by the same counsel who has filed the present CP No. 364 of 2006 as well. Therefore, it appears that the petitioner has pressed the present application after the application filed by his three brothers have been CAPP No. 21 of 2012 11 dismissed. The present application has been filed on the pretext of lack of proper mental and physical health. The application now filed not only lack bona fide but an attempt to circumvent the order passed by the Court on 30.09.2008. The proceedings for winding up were initiated in the year 2002 whereas the excuse of lack of proper mental and physical health has been raised in the year 2009 after similar applications filed by the brothers of the petitioner stand declined. CA No. 835 of 2009 is neither an application for setting aside of ex parte proceedings nor I find that such application discloses sufficient and good reasons for non appearance of the petitioner or any of the promoters and shareholders in not appearing before this Court at the time of winding up.
xxx xxx xxx xxx xxx Therefore, the petition for winding up is not a petition for recovery of money. The petitioner creditor invokes jurisdiction of the Company Court not for his benefit but for all the creditors, shareholders and contributors. On the other hand, DRT Act is a statute providing adjudicatory process and proceedings for the execution of the amount due. Thus, two statutes occupy different field enacted to achieve different objectives. Thus, the secured creditor can not be said to be prohibited to continue with the winding up process. Therefore, the argument raised by the petitioner that secured creditor cannot invoke more than one remedy i.e. DRT Act and Companies Act, is without any merit.
Though reference has been made to a large number of CAPP No. 21 of 2012 12 judgments but the issue raised in the aforesaid judgments primarily relate to the proceedings under Sick Industrial Companies (Special Provisions) Act, 1956 and the Companies Act. The issues decided therein are not the issues raised in the present case. The judgment in Deva Ram and another vs. Ishwar Chand and another, AIR 1996 SC 378 deals with the bar of a subsequent suit under Order Rule 2 of the Code of Civil Procedure, 1908. The said bar arises if the subsequent suit is based upon same cause of action. In the aforesaid case, the Court has found that the earlier suit for recovery of sale price is based upon a different cause of action and the suit for possession even in the said judgment has no applicability to the facts of the present case. Thus, I am of the opinion that the argument that secured creditor cannot be permitted to continue with the winding up proceedings is not tenable in law nor such an argument can be permitted to be raised on behalf of the petitioner.
In view of the discussion above, the applications filed by the petitioner are without any merit. The same are dismissed."
11. Interestingly, there was no reference to this order by the counsel for the appellant in his arguments or in the grounds of appeal filed before this Court. The said order having become final as the appeal was dismissed on 30.07.2010 counsel for the appellant now cannot turn around and contend that the procedure to be followed for substitution was wrong. Rather, this only shows that there has been patent concealment on the part of the appellant regarding the factual aspect. Once there has been concealment on the part of the appellant, there is weight in the observations of the learned Company Judge also that the appellant and the CAPP No. 21 of 2012 13 promoters are only playing the game of hide and seek to delay the confirmation of sale and there is mala fide intention on their part. The appellant or his brother cannot be permitted time and again to file applications and appeals against orders for their convenience and raise issues which have become final between parties. The judgment of Ashok Kumar's case (supra) regarding the procedure of substitution, therefore, would not be applicable in the facts and circumstances of the present case since that was a case where the Company Judge had dismissed the petition on the ground that there was a totally new claim filed by the petitioner and it was to be treated as a fresh or independent petition and thus was not maintainable.
12. The second submission made by the counsel for the appellant was on the issue of jurisdiction on the ground that the Company Judge had no such jurisdiction to order the sale of the property in view of the fact that the winding up petition stood satisfied. The said submission also cannot be accepted in view of the findings recorded on the first argument that once the order dated 07.05.2010 had been challenged unsuccessfully by the appellant by which the learned Company Judge came to the conclusion that the order dated 16.11.2006 allowing substitution had become final and a second creditor could be permitted to continue with the winding up proceedings.
13. Reference to the judgment of the Bombay High Court in Sanvijay Alloys Pvt. Ltd.'s case (supra) again cannot be of any help to the appellant once the Company Judge, vide order dated 07.05.2010, has specifically in the present case held that the secured creditor is entitled to continue with the winding up not only for his own benefit but also for the benefit of all the shareholders and contributors. The judgment of IBA Health (India) Pvt. Ltd.'s case (supra) pertains to the fact where the bona fide dispute was present and it was held that in such facts, the Court should dismiss the winding up petition and leave the creditor to establish his claim in action and there was a danger of abuse in the winding up CAPP No. 21 of 2012 14 procedure.
14. Similarly, reference to M.C. Mehta's case (supra) is without any basis since it is a case pertaining to a dispute regarding environment and the flow of river water pertaining to M/s. Span Motels. The case in Orissa Public Service Commission's (supra) again pertains to the rounding off of marks given and whether the High Court could have allowed rounding off in the absence of any such provision. The judgment of Division Bench of this Court in M/s. Yamuna Enterprises's case (supra) pertains to the failure of the Haryana Financial Corporation to sell the computers and the direction of this Court was to give the benefit of the value of the computers to the industrial concern in his account.
15. Adverting to the other judgments cited by learned counsel for the appellant, Union of India and another vs. State of Haryana's case (supra) would be of no avail since the issue in dispute in the said case in Special Leave Petitions was that the High Court dismissed the writ petitions on the ground of an alternative remedy. The Hon'ble Apex Court was of the opinion that the matter should have been examined by the High Court. Similarly, the judgment in Union of India and others vs. Adani Exports Ltd.'s case (supra) relates to the issue of the territorial jurisdiction of the High Court of Gujarat regarding the benefit to be given to the manufacturer regarding the import-export policy and the pass book scheme and has no applicability to the present facts and circumstances of the case. Similarly, the judgment in Chairman-cum-Managing Director, Coal India Ltd. and others's case (supra) pertains to a dispute arising out of departmental proceedings and whether there was any proper initiation of any disciplinary proceedings and cannot have any relevance to the issue in question. The judgment in Sarup Singh and another's case (supra) pertains to proceedings under the Land Acquisition Act, 1894 and as to whether a decree was passed without jurisdiction whereby enhanced compensation was granted to persons who were not entitled under the amendment carried out in the Land Acquisition Act, 1894. CAPP No. 21 of 2012 15 Again, in Raghunath Rai Bareja's case (supra), the dispute was regarding the transfer of the execution petition to the Tribunal and the Hon'ble Apex Court came to the conclusion that the recovery itself was time barred and quashed the same.
16. It was next contended that since original application by IDBI had been dismissed in default on 23.03.2012, therefore, in the absence of any proceedings, the Company Judge had no jurisdiction to continue with the proceedings for the sale of the property. Counsel for the appellant submitted that an amount of `13 crores had been proposed to be paid to the secured creditor-the IDBI in full and final settlement in three installments, subject to the creditor consenting.
17. The said submission cannot be accepted since in the winding up petition, Canara Bank has been transposed as the petitioner way back on 16.11.2006. Nothing was submitted about the claim of the Canara Bank which, admittedly, as per the reply before the learned Company Judge, had claimed a sum of 13,57,13,040/- as on 20.07.2004 plus interest and, therefore, the claim of the appellant that the amount could be settled and the application for revival was justified, cannot be accepted and nothing has been brought on record to show how the amount of the Canara Bank was to be adjusted. This fact was also noticed by the learned Company Judge in the order dated 30.09.2008. The relevant portion reads as under:-
"Applying the aforesaid principles emerging the case of the applicant, ex-management is to be examined. Admittedly, the claim of the M/s. Winsome Textiles Industries Ltd., the original petitioner in the winding up petition in C.P. No. 416 of 2012 has been paid. The liquidation expenses of the official liquidator also stand paid. However, there is huge liability towards the two secured creditors, i.e., IDBI through the SASF and the Canara Bank, although both the CAPP No. 21 of 2012 16 secured creditors have initiated recovery proceedings before the Debts Recovery Tribunal. Nevertheless, the liability is that of the company in liquidation. One of the secured creditors, namely, Canara Bank, has assumed the role of the petitioner in the winding up petition on its transposition as the petitioner therein meaning thereby that now the present liquidation proceedings are deemed to be at the instance of the Canara Bank, in view of the order dated November 16, 2006, passed in C.A. No. 650 of 2006. The debt of the Canara Bank is unpaid as on date. Although the ex- management has raised counter claim before the DRT and the counter claim as also the liability of the company in liquidation is yet to be finally adjudicated upon by the Tribunal, but fact remains that there are huge claims against the company. All the claims of the company in liquidation against the secured creditors are in the nature of damages/compensation for non-disbursement of the loan. To what extent, the company will succeed cannot and should not be commented upon in these proceedings lest it may prejudice the cause of any of the parties before the Tribunal. Suffice it to say that the claims against the company in liquidation are on account of loan advanced by the IDBI and Canara Bank and the assets and properties of the company are subject to the charge for such loans. The loans having secured, charge has been registered in the record of Registrar of Companies. This Court cannot ignore that there are recovery proceedings against the company in liquidation and its assets and properties are subject to the charge for the CAPP No. 21 of 2012 17 liabilities towards secured creditors, if they ultimately succeed. One of the secured creditors, namely, Canara Bank is already the petitioner in the winding up petition. No material has been placed on record to even suggest how the company in liquidation or the ex-management intends to liquidate huge liability in the event recovery is ordered by the DRT. In the two judgments of the Karnataka High Court relied upon by Ms. Manisha Gandhu, including the judgment of the apex court, it is clear that the winding up order cannot be passed by this court, if the court is of the opinion that the company is in a position to pay off its debts and no other creditor has come up in support of the winding up. In the present case, both the secured creditors have supported the winding up and have vehemently opposed the revival of the company in the absence of any revival proposal. There is also no proposal by the ex-management of the company or the applicant-promoter as to how the company will be revived, the source of finances, the method and mode of resurrection or resuscitative measures initiated for survival of the company. In the absence of any such proposal or step, mere desire does not inspire confidence to stay or stall winding up and jeopardise the interest of secured creditors (public sector banks) and eventually the public interest."
18. A perusal of letter dated 14.07.2012 (CA/1) issued by the Canara Bank shows that the proposal of one time settlement had also been rejected by the competent authority of the bank.
19. In the present case, the winding up order has already been passed way back on 16.01.2004, the transposition was allowed on 16.11.2006. Successive CAPP No. 21 of 2012 18 applications for recall have been dismissed by the Company Judge on 30.09.2008 (against which appeals and SLPs were filed unsuccessfully) and on 07.05.2010. The review application was dismissed which order was upheld in appeal on 30.07.2010 with the following observations:-
"We are of the view that the real bonafide of the appellant can be tested if he will bring the bidder of Rs. 9 crore within the time to be fixed by the Company Judge but to show his bonafide, he must deposit a sum of Rs. 90 lacs i.e. 10% of the price suggested by him within two weeks from today with the Registrar General of this Court subject to the orders of the learned Company Judge. Needless to say, in case the offer of Rs. 9 crores does not fructify, the amount of Rs. 90 lacs will be liable to be forfeited. In case an offer in these terms is made before the learned Company Judge, he may consider the same."
20. Therefore, in the facts and circumstances of the case, the appellant or his brother cannot be allowed to thwart the process of this Court to sell the property of the company in liquidation by filing one application or the other and the mere pendency of C.A. No. 333 of 2011 would not entitle the appellant to contend that winding up petition stood withdrawn. Ordinarily, exemplary costs should have been imposed upon the appellant due to the fact that no reference has been made to the order dated 07.05.2010 and 30.07.2010. However, keeping in view the fact that the appeal is being dismissed in limine, we refrain ourselves from imposing such costs.
21. Accordingly, the company appeal is dismissed in limine.
(G.S. Sandhawalia)
Judge
29.11.2012 (Ajay Kumar Mittal)
shivani Judge
CAPP No. 21 of 2012 19