2022 (1) TMI 270 - HC - Companies Law

Rajasthan HC Revives State Agro Industries Corp., Overturns Winding Up Order

The Rajasthan HC allowed the State Government's application for revival of the Rajasthan State Agro Industries Corporation Limited, a Government Company, ... Seeking revival of the Rajasthan State Agro Industries Corporation Limited. - Sections 391 & 443 of the Companies Act, 1956 read with Sections 230 and 273 of the Companies Act, 2013 - voluntary winding up was sought earlier - HELD THAT:- This Court finds that though Sub-clause (c) of Section 434 of the Act, 2013, speaks of transfer of certain proceedings to the National Company Law Tribunal including the proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of the Companies pending before the High Court, however, in the present case, since the order of winding up has already been passed of a Government Company and the State files an application for recalling the order passed by this Court of winding up, the same can be done by the High Court. The application filed by the State of Rajasthan deserves to be allowed and winding up order dated 03.09.1997 is recalled and the Company-Rajasthan State Agro Industries Corporation Limited, is revived - Application allowed. Issues involved:1. Application for revival of a company under Sections 391 & 443 of the Companies Act, 1956 read with Sections 230 and 273 of the Companies Act, 2013.2. Ownership of the company by the State Government and its officials.3. Proposal for withdrawal of winding up petition and revival of the company.4. Objections raised by the Official Liquidator regarding revival.5. Jurisdiction of the High Court vs. National Company Law Tribunal.6. Consideration of expenses incurred post-winding up order.7. Compliance with provisions of the Companies Act, 2013.8. Precedents cited by the parties.Detailed Analysis:1. The application filed sought the revival of the Rajasthan State Agro Industries Corporation Limited, a Government Company, citing a rise in property values and a decision by the State Cabinet to withdraw the winding up petition and take back the properties from the Official Liquidator. The State Government proposed to pay off outstanding liabilities and revive the company based on the ownership structure and potential for development.2. The Official Liquidator, appointed after the winding up order in 1997, raised objections regarding the timing of the State Government's applications, lack of proper proposal for resource allocation, and absence of an approved revival scheme. The State Government reiterated its authority as the major shareholder and creditor, emphasizing the Cabinet-approved revival plan.3. Legal counsels discussed the jurisdictional implications of the Companies Act, 2013, particularly Section 434, regarding the transfer of cases to the National Company Law Tribunal. The State argued that the High Court could recall the winding up order and permit revival, citing judgments from other High Courts to support the position that the High Court retains authority in such matters.4. The Court acknowledged the State Government's bona fides in seeking revival, considering the value of the company's properties and the intention to reimburse expenses incurred by the Official Liquidator. Technical objections about transfer under Section 434 were addressed, clarifying that the High Court could recall the winding up order for a Government Company.5. Relying on precedents from the Delhi and Gujarat High Courts, the Rajasthan High Court allowed the State's application for revival, recalling the 1997 winding up order and directing the revival of the Rajasthan State Agro Industries Corporation Limited. The Court emphasized the High Court's authority in such matters and set a future date for further proceedings.