1998 (2) TMI 518 - HC - Companies Law

Court Allows Continuation of Suits Pre-Winding-Up Order, Receiver to Stay, Personal Guarantees Dismissed

Canara Bank Versus Bopanna Oils Ltd.

Canara Bank Versus Bopanna Oils Ltd. - [2000] 101 COMP. CAS. 191 (AP) Issues Involved:1. Leave to continue and proceed with suits filed in City Civil Court, Hyderabad, and High Court of Mumbai.2. Appointment of receiver to remain in possession of mortgaged assets.3. Objections raised by the second respondent regarding the enforcement of personal guarantees.4. Verification of claims from workmen/employees and other secured creditors.5. Conditions imposed for granting leave under section 446(1) of the Companies Act.Issue-wise Detailed Analysis:1. Leave to Continue and Proceed with Suits:The applications were filed under section 446(1) of the Companies Act seeking leave of the court to continue and proceed with the suits filed in the City Civil Court, Hyderabad, and the High Court of Mumbai. The court granted leave for the continuance of the suits instituted by the applicants before the winding-up order was passed. It was noted that all the secured creditors having first and second charges over the properties were before the court, and none objected to proceeding with the suits. The court found no material indicating other secured creditors and deemed it unnecessary to withdraw the suits or involve the official liquidator in pursuing the legal proceedings.2. Appointment of Receiver:In C.A. No. 241 of 1994, the applicants sought relief to allow the receiver appointed by the Mumbai High Court to remain in possession of the mortgaged assets to recover dues. The High Court of Mumbai had already appointed a court receiver to take charge of the immovable and movable properties of the respondent-company and granted an injunction restraining the company from dealing with the properties. The court found no impediment in allowing the receiver to remain in possession as it would not harm any party involved.3. Objections by the Second Respondent:The second respondent contended that the applicants could not proceed against respondents Nos. 2 to 4 without first realizing dues from the hypothecated/mortgaged properties of the company, alleging that the suit was instituted to enforce personal guarantees. The court dismissed this objection, stating it lacked relevance to the present application and did not deserve serious consideration.4. Verification of Claims from Workmen/Employees and Other Secured Creditors:The official liquidator was directed to call for claims from workmen/employees via advertisement and local publication. The liquidator reported no claims from workmen and no indication of other secured creditors from the statement of affairs submitted by the ex-directors. The court emphasized the need to protect the interests of all secured creditors and workmen, referencing the Supreme Court's guidelines on the matter.5. Conditions for Granting Leave:The court imposed several conditions while granting leave under section 446(1) to ensure transparency and protection of all parties' interests:- The official liquidator must be apprised of the suit's stages at six-month intervals.- The official liquidator shall have custody of the company's account books and records.- The official liquidator is allowed to inspect the company's properties and take inventory.- Certified copies of judgments and decrees must be provided to the official liquidator without delay.- The official liquidator must be informed of the proposed sale dates of properties.- Permission from the court is required before confirming or finalizing the sale of properties.- The official liquidator can obtain information on amounts realized from sales.- Applicants must deposit money with the official liquidator to discharge workmen/employees' dues pari passu before confirming the sale.- The official liquidator can seek directions from the court if workmen's claims arise.- The official liquidator must file a list of secured creditors before finalizing the sale.- Any surplus after satisfying secured creditors and workmen's dues must be made available to the official liquidator for distribution according to the Companies Act and Rules.The company applications were disposed of with no costs.