Company court limits on enforcing disputed sale agreements; winding up followed Board's recommendation under sick industry law.

A company court cannot, in winding-up proceedings, enforce a disputed private agreement of sale or direct execution of a sale deed in favour of one claimant, because its role is to preserve the company's assets rather than adjudicate inter se contractual rights. That application was therefore declined. Where the Board had found no feasible rehabilitation scheme under the Sick Industrial Companies (Special Provisions) Act, 1985 and recommended winding up, the court accepted the recommendation, admitted the company petition, and ordered winding up with the Official Liquidator to take charge of the company's assets and affairs.

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Issues: (i) Whether the company court could direct the respondent-company to execute a sale deed in favour of the applicant on the strength of an alleged agreement of sale; and (ii) whether the company petition deserved admission and a winding-up order in light of the Board's recommendation under the Sick Industrial Companies (Special Provisions) Act, 1985.

Issue (i): Whether the company court could direct the respondent-company to execute a sale deed in favour of the applicant on the strength of an alleged agreement of sale.

Analysis: The relief sought was essentially enforcement of a disputed private agreement between the applicant and the company. The agreement's enforceability was contested by the company as well as by secured creditors, and the court held that such questions could not be adjudicated or converted into an execution-type direction in company proceedings. At the stage when winding-up proceedings were in contemplation, the company court's function was to protect the company's assets and not to determine inter se contractual rights or grant specific performance-like relief in favour of one claimant.

Conclusion: The application was not maintainable in company jurisdiction and the requested direction to execute the sale deed was declined.

Issue (ii): Whether the company petition deserved admission and a winding-up order in light of the Board's recommendation under the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The Board had concluded that no feasible rehabilitation scheme was possible and had recommended winding up under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The court noted that the company was financially distressed, the secured creditors supported winding up, and the statutory object was to preserve and realize assets for equitable distribution among stakeholders. In these circumstances, the court accepted the recommendation and directed winding up, with the Official Liquidator to take charge of the company's affairs, property and effects.

Conclusion: The company petition was admitted and the company was ordered to be wound up.

Final Conclusion: The applicant's request for a sale-deed direction was rejected, while the company was placed in winding up and the Official Liquidator was appointed to take charge of its assets and affairs.

Ratio Decidendi: A company court cannot, in winding-up proceedings, enforce a disputed private sale agreement or grant specific-performance-like relief in favour of one claimant; its role is to preserve the company's assets and act on a winding-up recommendation where statutory conditions are satisfied.

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