2010 (8) TMI 1129

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.... to the history of this litigation which will only cause confusion, the basic facts are that the Company became sick, its case was considered by the BIFR under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA). Under Section 20 of SICA, the BIFR recommended that the Company be wound up as its rehabilitation was not possible. 4. Pursuant to the recommendation of the BIFR, the learned Company Judge ordered the company to be wound up. It has not been pointed out that there was any appeal under Section 25 of the SICA to the AAIFR against the said order/recommendation of the BIFR. Thus the order of BIFR which can be challenged only by way of such appeal, and thereafter by way of a....

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....est a technical argument because the basic question which is discussed below in this order does not involve the Respondent No. 2 or his I.A. No. 746 of 2010. 8. The basic question to be examined in this appeal is, whether it is open to the promoters to submit a rehabilitation package before the Company Judge in proceedings for winding up initiated on the recommendation of the BIFR, at any stage of such winding up proceedings and to claim entitlement to consideration of such rehabilitation package by the Company Judge. 9. The scheme of SICA is as follows. 10. By Section 32, the Act has been given overriding effect. 11. The case of a sick company is referred to the BIFR Under Section 15. 12. An enquiry is made into the working ....

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....urt by virtue of Section 20(2) of the SICA (which at the cost of repetition has overriding effect) is bound to proceed to wind up the Company. 19. We may also point out here that accepting the contention of the Appellant that it is open to the promoters or the company or other persons to continuously pester the Company Judge with one after another scheme of rehabilitation would result in indefinite stalling of the winding up proceedings to the detriment of the creditors and workers by depleting the resources of the sick company under winding up, by passage of time. 20. That being the position, we are of the opinion that learned Company Judge was right in refusing to sanction the alleged scheme of rehabilitation and to direct the windi....

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....tion and whether such proposal satisfies the elements of public interest and commercial morality. The Supreme Court has further said that if the Court finds the scheme to be a ruse to dispose of the assets by a private arrangement, then it is the duty of the Court to dispose of the properties of the company in liquidation, realize the assets and distribute the same in accordance with law. 23. Therefore, the decision cited is of no benefit to the Appellant. 24. The Appellant has relied upon another decision of the Supreme Court in the case of Vijay Kumar Karwa v. Official Liquidator, Rohtas Industries Ltd. Reported in (2008) 4 SCC 222, for the proposition that this appeal must be admitted and must be heard after notice to the parties. ....