Court dismisses ICICI's application seeking to remit shares without permission in winding up proceedings.

The court dismissed the application by ICICI seeking vacation of an order and permission to remit shares of the State Government and State Bank of Bikaner and Jaipur out of sale proceeds in winding up proceedings. The court emphasized the implications of the restoration of the winding up order under relevant sections of the Companies Act, highlighting the need for court permission for any sale of company property during winding up. As the sale in question was conducted without court permission, the court found the applicant had not established a case for the requested relief, resulting in the dismissal of the application.

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Issues:
Application for vacation of order and permission to remit shares of State Government and State Bank of Bikaner and Jaipur out of sale proceeds in winding up proceedings.

Analysis:
The case involved an application by the Industrial Credit and Investment Corporation of India (ICICI) seeking vacation of an order and permission to remit shares of the State Government and State Bank of Bikaner and Jaipur out of the sale proceeds held by them in the winding up proceedings. The Board for Industrial and Financial Reconstruction (BIFR) had formed an opinion for winding up the company, which was forwarded to the court. Subsequently, the company was wound up, and various legal proceedings ensued. The Division Bench directed the winding up to proceed under section 20(3) of the Sick Industrial Companies (Special Provisions) Act, 1985, and appointed the official liquidator as the liquidator for the company. However, the operating agency did not consent to act as the liquidator, resulting in the official liquidator being re-appointed. During the stay of the winding up order, the company entered into agreements with financial institutions, leading to the attachment and sale of its assets. The Bombay High Court passed a consent decree for the sale of the company's properties despite the pending winding up proceedings and appeal. The appellate court's order restored the winding up, triggering the application of various provisions of the Companies Act.

The judgment highlighted the implications of the restoration of the winding up order, particularly under sections 446, 447, and 537 of the Companies Act. Section 447 provides that the winding up order operates in favor of all creditors and contributories, limiting legal proceedings against the company without court leave. Section 537 deems any sale of company property without court leave after the commencement of winding up as void, subject to certain exceptions for government dues. The court emphasized that the sale in question was conducted without court permission, rendering it potentially void under section 537. The court noted the absence of any application seeking court leave for the sale, indicating a need for further consideration and arguments from the parties. Ultimately, the court found that the applicant had not established a case for the requested relief, leading to the dismissal of the application.

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