TaxTMI 
TaxTMI 
2002 (12) TMI 497
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....aterial used in the manufacture of cement. The petitioner and respondent-company have business dealings since 1988-89. The respondent-company used to place purchase orders with the petitioner-company on yearly basis from 1st April to 31st March and both the parties were maintaining a running account. The petitioner, on a review of the outstanding dues, found that the respondent is due an amount of Rs. 4,02,248 as on 1-9-2001. They requested the respondent to pay the same, in vain. The petitioner also sent a detailed statement of accounts requested by the respondent under a covering letter dated 10-10-1992. The same was replied to by the respondent vide their letter dated 27-10-1992 enclosing a reconciliation statement showing the outstanding dues as on that date at Rs. 6.22 lakhs. There was exchange of correspondence between the petitioner and respondent. In the meanwhile, as the net worth of the respondent eroded, a reference was made to the Board for Industrial and Financial Reconstruction (BIFR) under Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). BIFR sanctioned a rehabilitation scheme in case No. 33 of 1990 for rehabilitation of the respondent-company and ....
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....or the petitioner, Sri C. Kodandaram, submits that before ordering advertisement of the petitions, what is required is a prima facie case to invoke the provisions of sections 433 and 434 of the Companies Act and the question of exercising discretion whether or not to order winding up would arise at a later stage when the parties in support and against winding up lead their evidence. At the initial stage of ordering advertisement of petitions, he would contend, it is not necessary to go into the questions of limitation, equities and whether the debt is disputed or not. He also submits that the notice as required under section 434 of the Companies Act was duly served at the Registered Office of the respondent-company. In the alternative, he submits that when a company petition is presented for winding up under section 433(1)(e) and (f) even if a company petition for winding up would not lie for non-compliance of section 434(1)(a), still a company petition under section 433 would be maintainable if the petitioner can made out a case under section 434(1)(c) of the Companies Act. He placed reliance on the judgment of this Court in Ramdas & Co. v. Kitti Steels [2001] 103 Comp. Cas. 199 .....
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....her the company petitions are not maintainable in view of sub-section (1) of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 ? (2)Whether the debt of the respondent-company is barred by limita-tion ? and (3)Whether it is not equitable to order winding up of the respondent-company ? At the outset, as rightly contended by Sri Kodandaram, learned counsel for the petitioner, the questions of equities and limitation cannot directly fall for consideration at this stage, although the question of limitation, as it is intricately connected with section 22 read with section 22(5) of SICA, falls for determination to the extent it is necessary. Therefore, the question of equities need not be decided notwithstanding the vehemence with which the submission is placed before this Court. Therefore, ignoring the third point for consideration for the present, the consideration has to be directed on the first two questions framed. BIFR approved the rehabilitation scheme on 16-6-1994, which inter alia, vide clause D provided that the respondent would phase out settlement of other creditors (presumably unsecured creditors) over a period of seven years from the date....
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....ie and no proceedings for winding up the industrial company or for execution lie against any of the properties of the industrial company. They remain suspended when (i) an enquiry under section 16 of the SICA is pending; (ii) when any scheme under section 17 of SICA is under preparation or consideration; (iii) when a sanctioned rehabilitation scheme is under preparation/implementation and/or when an appeal under section 25 of SICA, to the appellate authority, is pending. The company petitions were presented on 19-2-2002 and as on that date the rehabilitation scheme sanctioned by BIFR on 16-6-1994 has been under implementation. Therefore, winding up proceedings would not lie. That is not an end in itself. The scheme provided that the respondent-company must discharge all the other creditors within a period of seven years. The question, therefore, would be after expiry of seven years i.e., on 15-6-2001, whether the sanctioned rehabilitation scheme can be said to be under implementation insofar as the other creditors is concerned? In the considered opinion of this Court, for the reasons infra, the rehabilitation scheme though, may provide different periods for accomplishing differe....
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.... in the scheme. The scheme prepared by an agency shall be submitted to BIFR which shall examine and publish a draft scheme in brief in the newspapers inviting suggestions/objections from the shareholders/creditors. Under clause (b) of sub-section (3) of section 18, BIFR may make such modifications in the draft scheme in the light of the suggestions and objections. If the sanctioned scheme is revised and a fresh scheme is prepared under sub-section (5) of section 18, again the BIFR has to follow the provisions of sub-sections (3) and (4). Then only the scheme is given finality as stipulated under section 18(7) of SICA. As seen from the above synopsis, a scheme which has been sanctioned and made enforceable after duly complying with various provisions of section 18 of SICA, can even be modified by BIFR in accordance with clause (b) of sub-section (3) of section 18 of SICA. Therefore, the implementation of rehabilitation scheme is a continuous process and can never be said to have been completely implemented with reference to one step or steps in the process of rehabilitation. By reason of the fact that by 15-6-2001, the time granted by BIFR for discharging other creditors is over,....