TaxTMI 
TaxTMI 
2018 (12) TMI 96
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.... Section 446 of the Companies Act 1956 to enforce the Consent Decree dated 9th July 2009 is refused; (b) the Consent Decree dated 9th July 2009 is declared illegal and void as fraudulent preference; and (c) applicant is directed to refund with interest at 12% p.a. the amount of Rs. 10,17,03,493/- withdrawn by it from the sale proceeds of the Ambattur property." 3] The challenge arises in the context of an application filed by the appellant seeking leave of the learned Company Judge under section 446 of the Companies Act, 1956 (Companies Act) to execute consent decree dated 9th July 2009 in Suit No. 164 of 2009 instituted by the appellant against Coromandal Garments Ltd., now in liquidation (Company) - respondent No.2. The impugned order made by the learned Company Judge disposes of not only such application made by the appellant, but also the Official Liquidator's Report No. 94 of 2017 seeking inter alia that the consent decree dated 9th July 2009 be set aside, being a fraudulent preference and for directions to the appellant to restore the amounts recovered by the appellant on the basis of such consent decree. As it is clear from the operative portion of t....
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....out for seeking a decree on admission and in any case interim reliefs for appointment of the Court Receiver etc.. 6] The Company in fact resisted the grant of any reliefs in favour of the appellant by filing appropriate replies in Suit No. 164 of 2009 in the months of February and March 2009. However, barely three months later, the appellant and the Company filed consent terms, in which, the Company agreed to suffer a decree on admission in a sum of Rs. 12,49,27,897/- together with interest thereon at the rate of 15.76% per annum with quarterly rests from 8th June 2009 till payment and/or realization. 7] In the meanwhile by order dated 27th August 2009, the learned Company Judge ordered the admission of the proceedings for winding up of the company on the basis of BIFR's recommendation made by the order dated 22nd January 2007. This was followed by a further order dated 24th June 2011 by which the learned Company Judge ordered the winding up of the Company. 8] The impugned order made by the learned Company Judge also makes brief reference to the proceedings taken out by the Kotak Mahindra Bank Limited claiming rights as purported assignee of Bank of Baroda in the proce....
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....racted to the transaction in question. The learned Company Judge has therefore, seriously erred in treating such transaction as some preference, much less a fraudulent preference; (b) That there was ample and uncontested material on record which establishes that the appellant had in fact advanced to the Company a loan of Rs. 325 Lakhs, which was payable with interest as per the schedule of repayment set out in the Loan Agreement. In Suit No. 164 of 2009 instituted by the appellant against the Company, later specifically admitted that it was due and payable to the appellant an amount of Rs. 12,49,27,897/- together with interest thereon at the rate of 15.76% per annum payable with quarterly rests. Based upon all such uncontested material on record, the learned Company Judge seriously erred in styling the very filing of consent terms has some fraud or holding that the consent decree dated 9th July 2009 was result of some collusion or fraud; (c) In order to conclude fraud, the learned Company Judge has mainly relied upon the presumed circumstance that the appellant was a 'substantial stake holder' of Swadeshi Mills Co. Ltd., of which the Company in question wa....
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....to the submissions. We have also perused the impugned order and the material on record. On analysis of the material on record as well as the legal position, which according to us has been correctly appreciated by the learned Company Judge, we see no good grounds to interfere with the impugned order. 13] In the present case, the proceedings for winding up of respondent No.2 commenced on the basis of recommendation made by the BIFR vide its order dated 22nd January 2007. Section 441 of the Companies Act provides that the winding up of a Company by the Court shall be deemed to commence at the time of the presentation of the petition for winding up. Though this was not a case of presentation of a petition for winding up by some Creditor, nevertheless, on conjoint consideration of the provisions of section 441 of the Companies Act and section 20 SICA, it is quite clear that the date on which the BIFR made its recommendations for winding up of the respondent No.2 Company, must be regarded as the date of presentation of petition for winding up of the respondent No.2 Company. Accordingly, the date of commencement of winding up, in the present case, would be 22nd January 2007 and not the....
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....ant on one hand and the respondent No.2 Company on the other. The learned Company Judge has, therefore, addressed such issues in the proper perspective and by giving due weightage to the material and the circumstances borne on the record. 17] Mr. Dwarkadas's third contention in support of this appeal is really nothing but some exercise in semantics. The record establishes and it is even otherwise not disputed that the appellant held a stake of about 22% in Swadeshi Mills Co. Ltd., of which, the Company was a wholly owned subsidiary. There is also material on record that the appellant was indeed a Promoter Group Company of the Company. This is evident from the orders made by the BIFR as well as the Loan Agreement itself, in terms of which the appellant advanced a loan to the Company. The Loan Agreement specifically records that the appellant held 'significant portion of the share capital of Swadeshi Mills Co. Ltd.'. On the basis of such material, if the learned Company Judge has observed in the impugned order that the appellant was a 'substantial stake holder' of Swadeshi Mills Co. Ltd., then, it cannot be said that such an finding is vitiated by perversity or....
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.... record indicates that the fact that BIFR had made a fresh recommendation for winding up of the Company on 22nd January 2007 was not pointed out to the Company Court when it made its order dated 16th October 2008. The record also indicates that the BIFR by its order dated 2nd June 1998 had required the promoter contribution for revival of the Company to be interest free. The learned Company Judge has quite correctly noted that from the pleadings as well as correspondence on record, it is quite clear that the appellant was fully aware that no interest was payable on the promoter's contribution, yet, interest at an exorbitant rate was claimed and further even consent terms were filed in which the Company agreed to pay interest at the rate of 15.76% with quarterly rests. The learned Company Judge has noted that the Company had aggressively opposed grant of any interim relief in favour of the appellant in Suit No. 164 of 2009 including any decree of admission for an amount of Rs. 325 Lakhs. However, merely three months after such aggressive opposition, the Company filed the consent terms agreeing to a decree on admission in an amount of Rs. 12,49,27,897/- and that too with interest....
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....pellant recovered an amount of Rs. 10,17,03,493/- from the Company (from sale proceeds of Amabattur property), the learned Company Judge has quite correctly ordered the refund of this amount with interest at the rate of 12% per annum, so that such amount can be appropriately dealt with in the course of winding up proceedings by the Official Liquidator. 23] In DCM Financial Services Ltd. vs. Neel Kamal Plastics Ltd. And anr. - (2008) 145 Comp. Cas 179 (SC), the Apex Court had clarified that the proceedings for liquidation of a Company under the Companies Act are not the same as an intra-party suit for recovery of money. In a money suit it may be open to the plaintiff to accept any money outside the Court from or on behalf of the defendant towards full or partial satisfaction of his claim in the suit and to report the payment to the Court for passing appropriate orders. But such is not the position in proceedings for liquidation of the company. Once such proceedings commence, even the party at whose instance the proceedings are initiated does not enjoy any preferential claim and any proceeds from the sale of assets of the Company must be disposed of in terms of the scheme as provi....