TaxTMI 
TaxTMI 
2014 (7) TMI 841
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....h November, 1997, by an order of S.K. Sinha J. of this Court. It was at the instance of R.K. Garodia and company, in a winding up application (C.P. 355 of 1997). Several applications are before me for consideration. They have been made by various entities. There is a company by the name of Ashray Vyapar (Pvt.) Ltd. It claims to have obtained assignment of the secured debts of the company towards Industrial Instrument Bank of India Allahabad Bank, Indian Bank and United Bank Of India by Deeds of Assignment. This debt close to Rs. 50 Crores was allegedly acquired by Ashray for only about Rs. 9.5 crores. Now, they claim to be in the shoes of these secured creditors. Hence, they say they are the only secured creditor. There is another company by the name of Hilton Vinimay (Pvt.) Ltd. It claims to have bought 32.46% of the paid up capital, of the company in liquidation i.e., 3,11,664 shares after the winding up order. On 25th August, 2011, Ashray apparently entered into a Memorandum of Understanding with Hilton, as a result of which Ashray is today supporting the cause of Hilton to run the undertakings as a going concern. The company, before liquidation had 3700 workers. They should....
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....and ward service to the assets of the company. Provisions of Law: Now, certain provisions of the Companies Act, 1956 have to be noticed. The first is Section 466 (1). It is inserted below: 466. (1) The Court may at any time after making a winding up order, on the application either of the Official Liquidator or of any creditor or contributory, and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the Court thinks fit. The right to move the company court is vested in a creditor or a contributory. Under this section the court has the power, on an application by a creditor or a contributory, to stay the winding up proceedings, after a winding up order. The stay of proceedings is to be on such terms and conditions as the Court thinks fit and proper. This section, in my opinion vests the court with the power of entrusting the management of the company (in liquidation) with a person or persons in whom it has confidence, by temporarily keeping the winding up in abeyance. This person or body of person could be as....
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....an application to the Court to convene a meeting of either of these classes. Ordinarily, any decision taken by 3/4th of the creditors or the members, the percentage being the percentage of share holding value on that date, would be binding on all members of the class taking the decision and the company. For example, a decision taken by a body of creditors would be binding on the company and its creditors whereas such a decision taken by the members would be binding on the company and its members. This binding effect would be subject to sanction by the Court. In the case of a company which is being wound up, it would be binding on the company and its contributories. There is no question of invocation of Section 391 of the Companies Act, 1956 because the Official Liquidator has not come up with any application requesting the court to convene a meeting of creditors or members of the company. This section makes it explicit that in the case of a company being wound up a meeting can only be convened at the instance of the Official Liquidator. The section does not say that an application may be made by the Official Liquidator "also". It just says "Official Liquidator", so as to exclude a....
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....ise its powers under section 466 of the said Act. For invocation of powers under this section one has to be a creditor or a contributory. No doubt, there is a considerable body of authorities which says that the court must make a genuine effort, in appropriate cases, to revive or restart a company in liquidation. The object of this exercise is to restore the source of livelihood to the hundreds of workers who have been thrown into unemployment, to restart a stopped industrial activity or a manufacturing process, and to pay off creditors out of the profits of a running business. There is also a belief that industrial undertakings in a state must not shut down by winding up of companies. They must grow and the shut ones should reopen. All this would directly or indirectly result in industrial growth and prosperity for the state. More often than not, after a winding up order is made in relation to a company, the court is moved with applications by various persons containing proposals for revival of the company in liquidation. Applications are often made by unscrupulous persons with promises to revive the company but without the intent, financial resources and expertise to do so. Onc....
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....s even worse the so called promised down payment would go to Ashray, the collaborator of Hilton together with the subsequent payments. The proposals contained in the scheme are mere dreams. There is no likelihood of their realisation. I reject the scheme outright. 2) Sprint Communication Pvt. Ltd and Pradeep Kumar Jhawar (C.A. 1079 of 2011) The second applicant Pradeep Kumar Jhawar was described as an unsecured creditor of the company of the sum of Rs. 1,24,57,500/-. This debt allegedly arose on account of unpaid price of goods. The applicant company Sprint claims to be the assignee of the debt of one Dilip Kumar Maheshwari of a sum of Rs. 14,19,794.10/-. By the application Sprint prayed for convening of a meeting of the unsecured creditors of the company for the purpose of considering and if thought fit approving with or without modification the scheme of arrangement/compromise proposed by the scheme. The least said about this company and its scheme, the better. It is evident from their balance sheet for the year ending 31st March,2011 that the loan and advances obtained by the company is close to double its shareholders` funds and Reserve and Surplus combined. Its fixed assets....
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....31st March, 2011. A sum of Rs. 27 Crores is carried over to the balance sheet taking into account profit carried forward from the previous year. However, the company has a loan fund of about Rs. 75 crores and a net block of over Rs. 25 crores. The scheme is as bad as that of Sprint. It does not say how the raw-materials will come, who will start the machinery, how production is to commence and continue. It does not tell us anything about the market, sale and so on. The scheme only makes tall promises to the creditors for payment of their dues when no foundation on the basis of which these payments are promised, is disclosed. There is nothing in the scheme to impress the Court. 5) Dolphin Vintrade Pvt. Ltd. and Rakhecha Trading Company (C.A. 453 of 2013) This application is made by Dolphin Vintrade Pvt. Ltd. and Rakhecha Trading Company as applicants. They want an order from this Court convening a meeting of unsecured creditors for the purpose of considering the scheme of arrangement/compromise proposed by the applicants. It is averred in paragraph-9 of the application that the second applicant is an unsecured creditor of the company. The debt of the company towards this applica....
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....not invited claims of creditors under Rules 147, 148 (1) and 148(2) of the Companies (Court) Rules, 1959. Hence, there is no settlement of the list of creditors of the company by the Official Liquidator. Even otherwise, some evidence ought to have been produced by the creditors to support their claims against the company. Even the alleged assignment of debts is insufficiently stamped. It was argued before me that a scheme, if supported by the secured creditors should be very appealing to the court. The workers tried to back the scheme of Hilton. Hilton was also supported by Ashray, the alleged assignee of the four secured creditors. These secured creditors seem to have assigned a debt nearly Rs. 50 crores owning to them by the company, to Ashray for a little over Rs. 9 Crores. The assignment certificate touches immovable property. It is strange how this assignment could be made without registration and without proper stamps. This assignment of debts in favour of Ashray by the four secured creditors is dubious in my opinion. No credence can be given to their support for Hilton. Submissions were made before me that shares were goods under Section 2(7) of the Sale of goods Act. 1930....