2009 (9) TMI 586 - HC - Companies Law

Dismissal of Winding-Up Petition Upheld: Secured Creditor's Dues Satisfied, No Decree for Pending Claim.

The High Court dismissed the appeal against the order rejecting the petition for winding up under section 483 of the Companies Act, 1956. The decision was ... Winding up - Circumstances in which a company may be wound up Issues:1. Appeal against order dismissing petition for winding up under section 483 of the Companies Act, 1956.2. Consideration of BIFR recommendation and secured creditor's compromise.3. Pending claim by Punjab State Electricity Board and Company Court's discretion.Issue 1: Appeal against order dismissing petition for winding up under section 483 of the Companies Act, 1956The appeal was filed against the order dated 17-4-2009, dismissing the petition for winding up, which was registered following a recommendation by the Board for Industrial and Financial Reconstruction (BIFR). The Company Judge declined to pass the winding-up order due to a compromise between the only secured creditor, State Bank of India, and the appellant-company, where a significant payment was made. The Company Judge also allowed a Company Application for recovery of additional funds by the State Bank of India. The Punjab State Electricity Board remains a claimant with a pending suit for a substantial amount.Issue 2: Consideration of BIFR recommendation and secured creditor's compromiseThe High Court analyzed the BIFR recommendation and the subsequent events leading to the satisfaction of the dues of the only secured creditor. It was emphasized that the Company Court is not bound by BIFR recommendations and has the discretion to evaluate the circumstances independently. Referring to a Supreme Court judgment, it was clarified that while the Company Court should consider BIFR recommendations, it is not mandatory to follow them in every case. In this instance, since the secured creditor's claim was settled and the electricity dues were pending with no decree in place, the Court found no legal grounds to interfere with the Company Judge's decision to dismiss the winding-up petition.Issue 3: Pending claim by Punjab State Electricity Board and Company Court's discretionThe Court noted that the claim by the Punjab State Electricity Board had not materialized into a decree, leaving the recovery actions to be pursued as per legal provisions. The judgment highlighted that in cases where the claims of secured creditors are satisfied, and other claims are pending without a decree, the Company Court has the discretion to decide on the necessity of a winding-up order. The Court concluded that in this scenario, the appeal did not merit admission, and the Company Judge's decision was deemed legally sound without any infirmities warranting intervention by the High Court.In conclusion, the High Court dismissed the appeal, upholding the Company Judge's decision to reject the petition for winding up based on the satisfaction of the secured creditor's dues and the pending nature of the claim by the Punjab State Electricity Board. The judgment underscored the Company Court's discretion in evaluating BIFR recommendations and subsequent events to determine the necessity of a winding-up order in a given case.