TaxTMI 
TaxTMI 
TaxTMI 
2010 (3) TMI 1292
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....e opinion that SRPL was unable to make its net worth exceed its accumulated losses within a reasonable time while meeting all its financial obligation and that the company, as a result thereof, was not likely to become viable in future and hence it was just, equitable and in public interest that SRPL be wound, up under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1989 (hereinafter called SICA). 2. The facts in brief are the following: 2.1 Shivam Rosins (P) Ltd. (SRPL), incorporated under the Companies Act, 1956, was engaged in manufacturing dry ice and liquid C02 (by product) at Murtal Industrial Area, Sonepat, on the basis of the ABS [audited balance sheet] as on 31.3.1999 when its net worth was eroded complet....
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....8. The company sent its ABS for the year ending to the OA on 13.7.2002. In spite of several letters written to the OA and HSIDC by the company in regard to the inspection of the unit in order to formulate a revival scheme, the inspection could not take place. However, the company submitted a DRS to the OA as well as to the BIFR, vide letters dated and 19.4.2003, respectively. On 15.2.2004, it also submitted a revised revival scheme to the OA and BIFR. However, BIFR, vide its order dated 13.9.2005, issued a show cause notice (SCN) for winding up of the company, since PSB (OA) vide their letter dated 22.8.2005 had submitted to the BIFR that the company had not submitted any rehabilitation scheme nor submitted any acceptable OTS for the settle....
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....osal of the company. On the contrary, it informed BIFR that no rehabilitation proposal was submitted by the company. There was no lapse on the part of the company which would justify an order of BIFR to wind up the company. (iii) The impugned order has been passed without following the prescribed procedure under sections 17 and 18 of SICA, and the company has been ordered to be wound up without following the mandatory sequential approach for revival under SICA. Thus the purpose of SICA has been defeated. 8. The counter-arguments advanced by the respondents like Haryana Finance Corporation (HFC), Punjab and Sind Bank (PSB) and Haryana State Industrial Development Corporation (HSIDC) were mainly that the company had not submitted any rehab....
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.... Crescent Iron and Steel Corporation Ltd. v. Union of India [1992] 3 Comp LJ 226 (SC): AIR 1992 SC 1248 of Hon'ble Supreme Court. BIFR v. B.R. Steel Products Ltd. [1993] 3 Comp LJ 25 (Bom) of Hon'ble High Court of Bombay and BIFR v. Gwalior Synthetics (P) Ltd. [1996] 4 Comp LJ 557 (MP): [1998] 91 Comp Case 514 (MP), it was argued that since the circumstances in which the BIFR's impugned order was passed have changed and huge infusion of funds by the management has taken place, the relevance of the impugned order no longer exists, and therefore, the company should be re-considered for revival. 10. Having heard the arguments on both sides and having gone through the relevant records, we find that when the company submitted a revi....
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....uying time. It is seen from the records that the company was declared sick on 3.10.2001 and thereafter SCN for winding up was issued on 13.9.2005 after almost four years The OA did not take pains to examine the DRS submitted by the company and ' place its detailed comments before BIFR on the revivability of the company. Then, on 3.1.2006, the BIFR issued the impugned order confirming its opinion to wind up the company. It is, therefore, quite apparent that the company's prospects for revival were not seriously explored as mandated by SICA. This Authority in Appeal No. 134 of 2005 (M.P. Petroleum Ltd. v. BIFR) has affirmed the inescapable necessity of the sequential approach towards revival through different prescribed measures' ....
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....oper to proceed further with the winding of the company. As such a direction is given to the Board to reconsider the matter in the light of the facts stated above." 13. In all these judgments, the main thrust is on the revival of a company if certain positive initiatives have been taken by the promoters subsequently which are conducive to revival. If such developments take place, and a company under, winding up orders has a chance to revive it is in public interest to give that chance to such a company. It results in a win-win situation which benefits the company, creditors and above all the nation. 14. In this case, since such initiatives have been taken, it will be just, fair and also equitable to give the company another chance fo....