TaxTMI 
TaxTMI 
TaxTMI 
2004 (5) TMI 571
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....ted 17.5.2002 it was held by the Court that there was a liability of ₹ 3,22,91,636/- admitted by M/s Modi Rubber Limited. On 21.5.2002 the Court again recorded a finding that the company was unable to pay its debts. Hence the petition was admitted and a direction was given to issue an advertisement under Rule 24 of the Rules. 4. On 9.7.2002 while granting the said company liberty to furnish a payment schedule for repayment of its admitted dues to its creditors the Court recorded a finding that the application of the company did not make a complete and truthful disclosure of the financial arrangements proposed with the banks and financial institutions, and hence two weeks' time was granted to make complete and truthful disclosure of the financial status of the company as it obtained on 30.6.2002 alongwith the proposals submitted to the financial institutions. This disclosure was not made and hence on 23.7.2002 one week further time was granted to the company as a last opportunity to comply with the order dated 9.7.2002 with the rider that if the order was not complied with the prayer for appointment of a provisional liquidator would be considered. 5. Again on 4.3.2003 ad....
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....sal was ridiculous and deserves to be rejected outright. 9. The learned Single Judge by the impugned order held that the adjournment sought by the Modi Rubber Limited was nothing but dilatory tactics on frivolous excuses and hence he refused to adjourn the case. The learned Single Judge held that there was no doubt that M/s Modi Rubber Limited was unable to pay its debts as had been observed in the earlier orders also. The debts were huge and the financial condition of the company was not sound. Hence he was of the opinion that it was just and equitable that Modi Rubber Limited be wound up. He directed accordingly. He also directed that the official liquidator was appointed as liquidator of the company and he will proceed to take charge of the assets of the company and submit his report alongwith the inventory within six weeks. 10. Sri Vijai Bahadur Singh, learned counsel for the appellant has submitted that on 6.12.2003 the Board of Director of M/s Modi Rubber Limited passed a resolution to file a reference to the Board of Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985. Accordingly reference application under the aforesaid Act was sen....
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....Rubber Limited was itself conscious of the fact that there was no enquiry under Section 16 of the Sick Industrial Companies Act pending when the order dated 12.3.2004 was passed . Hence it did not take plea of the prohibition of Section 22 before the learned Single Judge. Now in special appeal this new plea is sought to be taken by M/s Modi Rubber Limited, and we have to consider whether the plea can be taken now. 15. Under Section 22 of the Sick Industrial Companies Act proceedings for winding up shall be suspended if an enquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or when an appeal under Section 25 is pending. In our opinion none of these conditions were satisfied when the impugned order dated 12.3.2004 was passed. 16. It was not brought to the knowledge of the learned Single Judge that any reference application had been sent by M/s Modi Rubber Limited to the BIFR. However this averment has come in paragraph 22 of the affidavit filed by the appellant alongwith the stay application in this appeal. In this paragraph it is mentioned that the company filed a refere....
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.... ultimate order passed on such petition is the order of dissolution of the company under Section 481 of the Companies Act. In paragraph 10 of the said judgment in Rishabh Agro Industries Ltd. (Supra) the Supreme Court also repelled the contention that after the order of winding up and appointment of the Liquidator, the Board of Directors had no jurisdiction to move the BIFR or to take any other steps. The Supreme Court observed: " It is contended that after the order of the winding up and appointment of the Liquidator, the Board of Directors had no jurisdiction to move BIFR by passing a resolution. Such a submission cannot be accepted. In a winding up petition the Liquidator is appointed to protect the assets of a company for the benefit of its creditors, secured and unsecured and others. It is not the function of the Official Liquidator to start the process of rehabilitation of the company as is aimed at under the Act. Despite appointment of the Official Liquidator, the Board of Directors continue to hold all residuary powers for the benefit of the company which includes the power to take steps for its rehabilitation." 21. In view of the above observation of the Suprem....
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....rt The Sick Industrial Companies Act, 1985 is a special law and hence its provisions will prevail over the general provisions of the Companies Act. 25. Of course a suit may lie against the company after obtaining consent of the Board as provided for in Section 22(1) but otherwise the winding up of the proceeding have to remain stayed under Section 22(1) vide Patheja Brothers Forgings & Stamping v. ICICI Ltd, (2000)6 SCC 545. There is nothing on record to show that the consent of the BIFR or the appellant authority has been taken under Section 22(1) in this connection for filing a suit against the Company. 26. Learned counsel for the respondent has relied on the decision of the Supreme Court in Sirmur Chemical and General Industries v. Union of India, 1962 (32) Company Cases 826 and General Indian Motor Works v. Their Employees, AIR 1959 SC 1186 and the decision in Sri Tej Pratap Mills v. Granaries Ltd., 1961 (31) Company Cases 610 etc. and has contended on the strength of those decisions that this appeal by the company is not maintainable and in fact only the Official Liquidator could have filed the appeal. We do not agree. A careful perusal of the above decisions shows that thes....