Jmd Medicare Ltd. (In Liquidation) vs Siemens Aktien Gasellschaft on 24 June, 2009

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Calcutta High Court

Jmd Medicare Ltd. (In Liquidation) vs Siemens Aktien Gasellschaft on 24 June, 2009

The Court : There are two applications in connection with winding up proceeding of JMD Medicare Ltd., a company in liquidation. The petitioning creditor at whose instance the present winding up proceeding is initiated is a company, Siemens Aktien Gasellschaft, which appears to have been incorporated under the laws of Germany.

The company was directed to be wound up by an order passed by an Hon'ble Single Bench of this Court on 10 January 2007. The company had prayed for stay of operation of the order. Such stay was granted for a limited period on condition that the company deposits a sum of Rs.50 lacs. Thereafter appeal was preferred against this order before an Appellate Bench of this Court, and thereafter, the matter had reached the Hon'ble Supreme Court. During the pendency of the appeal before the Hon'ble Division Bench, the company had paid Rs.50 lacs. However, no further sum appears to have had been paid, and the company had preferred a petition for Special Leave to Appeal before the Hon'ble Supreme Court of India. On 30 April 2007, the Hon'ble Supreme Court was pleased to direct status-quo to be maintained, and a further sum of Rs.50 lacs was directed to be paid, which was volunteered by the company themselves. Thereafter, on 25th February 2008, the Hon'ble Supreme Court disposed of the petition, observing that the Division Bench would hear the appeal on merits. Subsequently, the Hon'ble Division Bench also dismissed the appeal by an order passed on 15 May 2008. Today, this matter was brought in the list under the heading "To Be Mentioned" at the instance of the company and in course of hearing, an oral prayer was made by Mr. Roy, learned Advocate 3 for the petitioning creditor, to direct the police authority to render assistance to the Official Liquidator for taking possession and custody of one of the properties of the company in which it appears a medical center is being operated. A report has been filed by the Official Liquidator today. The substance of the report is that the Official Liquidator was resisted from taking possession of the said property.

An application has also been taken out by some of the employees of the company and Mr. Kalyan Bandopadhyay, learned Senior Advocate appearing for them resisted the prayer of Mr. Roy for directing police help. Mr. Bandopadhyay submitted that the employees of the company had made an application for being added as parties before the Hon'ble Division Bench, and this application was rejected by the Hon'ble Division Bench. Against this order of rejection, the employees of the company have filed a petition for special leave to appeal. In that proceeding, he submitted, notice has been issued by the Hon'ble Supreme Court. He argued that in the event the Official Liquidator was permitted to take physical possession of the property in question, then the entire petition for special leave to appeal would be rendered infructuous. He submitted that the special leave petition is likely to come up for hearing shortly before the Hon'ble Supreme Court.

The second limb of submission of Mr. Bandopadhyay is that the petitioning creditor cannot seek police assistance on oral prayer, particularly in view of the fact that under Section 456(1A) of the Companies Act, 1956, procedure has been laid down as regards the manner in which the Official Liquidator shall take custody and control of the properties of a company in liquidation. This provision essentially contemplates an application before the Chief Presidency Magistrate or the District Magistrate for this purpose.

Learned Counsel appearing for the bank in CA No.352 of 2009 submitted that the possession of the property in question has already been taken by the bank. The bank, as a secured creditor is trying to realize a sum of Rs.2.50 crores approximately which was lent to the company. The possession in this regard has been claimed to have been taken by the bank in terms of Rule 8(1) of Security interest (enforcement) Rules 2002. He has relied on two decisions, being an unreported decision of an appellate Bench of this Court in ACO No.206 of 2007 in the case of Centurian Bank of Punjab Ltd. -vs- Classic Credit Ltd. (In Liquidation) and Anr. and a decision of the Hon'ble Allahabad High Court in the matter of M/s. B.P.L. Display Devices Ltd., Ghaziabad, reported in 2009(1) Bank CLR 257 (All). Relying on these two decisions, he sought to establish the primacy of the bank's claim over these properties.

Mr. Roy, in response to such submissions argued that so far as the bank is concerned, their debt has not yet crystallized and the direction of this Court passed in the winding up proceeding ought to prevail. So far as the application of the employees of the company is concerned, Mr. Roy submits that it is not maintainable as at no point of time on any earlier occasion the employees had approached this Court, and never showed any interest on the subject proceeding. His further case is that in any event even if the company is wound up, the employees' dues would be paid from the sale proceeds of the assets of the company.

Having considered the rival submissions, in my opinion, at this stage, the oral prayer for police help to enable the Official Liquidator to take custody and control of the properties of the company in liquidation ought not to be passed. Since the statute itself provides a particular mode to enable the Official Liquidator to take steps for obtaining possession of the properties of a company in liquidation, my prima facie view is that recourse has to be taken to such statutory 5 provisions for this purpose. The scope of jurisdiction of the Company Court to pass an order directing police assistance to the Official Liquidator for taking possession of the assets of a company in liquidation without taking recourse to the provisions of Section 456(1A) of the Companies Act, 1956 can be examined if an appropriate application is filed praying for such direction. As regards the application of the bank and the employees, I am of the view that these matters would have to be decided after filing of affidavits.

Let Affidavit in opposition to the respective applications be filed within one week from date, Affidavit in reply within one week thereafter. Let all these matters appear in the list after two weeks under the heading "For Orders". The respective applicants shall serve copies of their applications on the parties appearing before me in course of the day's hearing. Such service shall be effected within 48 hours.

Let a copy of the report of the Official Liquidator be made available to all the parties.

All parties concerned are to act on a xerox signed copy of this order upon the usual undertakings.

(ANIRUDDHA BOSE, J.) G/

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Calcutta High Court