IMPORTANT POINT
An order of injunction and the undertaking in accordance therewith does not create a charge on the assets of a company under liquidation.

Headnote:Companies Act, 1956 – Section 125 – Court directing respondent not to encumber or create charge in favour of third parties over the assets of the company in liquidation – Company filing undertaking – Its only an injunction – Does not create charge on the assets of the company – Appellant is only entitled to recover the dues at par with other unsecured creditors. (Para 20, 21, 23)
       (1998) 5 SCC 401 – Relied upon
       1990 (Supp) SCC 397; (1969) 2 SCR 866; (1984) 56 Comp. Cas.214 (Cal) –Distinguished

       Facts of the case:
       The ONGC was supplying gas to industrial units in Gujarat, the respondent was one of them.
       Dues of the appellant on respondent got accumulated and the appellant had to file cases before the High Court.
       The respondent went into liquidation.
       The High Court did not allow appellant’s plea that its dues should get priority over all other claims including those of workmen.
       Finding of the Court:
       Impugned judgment does not require interference.
       Result: Appeal dismissed.

JUDGMENT

SURINDER SINGH NIJJAR, J. –

1. The appellant, Oil and Natural Gas Corporation Ltd. is a statutory corporation constituted by and under the Oil and Natural Gas Commission Act, (Central Act, 43 of 1959). In 1967, the appellant commenced supply of natural gas to the industries in and around Vadodra. The Federation of Gujarat Mills and Industries agreed to purchase the gas supplied by ONGC at Rs.100/- per unit.

2. The industries subscribing to the gas supplied by the appellant formed an association in 1978 called “The Association of Natural Gas Consuming Industries of Gujarat” (hereinafter referred to as ‘Association’). Respondent- Ambica Mills Co. Ltd. is one among the members of the said Association. The supply of gas to the member industries was based on individual contracts entered into with each of the concerns. The appellant and the members of the said Association entered into an agreement for supply of natural gas. The agreement provided the price payable for supply of gas and the rate of interest in the event of failure to pay the stipulated prices.

3. On 30th March, 1979, the contractual period of the aforesaid contract expired. After the expiry of the contract, a new contract stipulated prices for supply that were prevalent at the time of the respective contracts. The then levied price for supply of gas was Rs.504/- per unit.

4. The Association formed a Society registered under the Cooperative Societies Act. The Association filed Special Civil Application No. 833 of 1979, before the Gujarat High Court praying to issue appropriate writ directing the Respondent therein (Appellant herein) to supply the break up and data on the basis of which price structure was arrived at by ONGC, for supply of the gas etc.

5. The Gujarat High Court by an interim order dated 30th March, 1979 in the said Application, directed the Appellant herein to continue supply of gas at the old rate, i.e., Rs.504/- per 1000 cubic meter. On 29th December, 1982, the High Court modified the aforesaid interim order and directed the Appellant to supply gas to the member industries of the Association at Rs.1000/- per 1000 cubic meter.

6. On 30th July, 1983 the said Civil Application was partly allowed by the Division Bench setting aside the price demanded by the Appellant herein, leaving it open to deal with the question of price fixation in any one of the three modes suggested in Para 36 of the judgment in the case of Association of Natural Gas Consuming Industries of Gujarat & Ors. Vs. ONGC & Anr. reported in 24 (2) GLR 1437.

7. The Appellant preferred an appeal being C.A. No. 8530-8540 of 1983 against the aforesaid order. On 15th April, 1987, this Court passed an interim order directing that the members of the Association including the Respondent shall be supplied gas at the rate of Rs.1000/- per 1000 cubic metres subject to an undertaking that the respondent shall not charge, encumber or alienate except with the leave of this Court any of the immovable assets.

8. Pursuant to the order dated 15th April, 1987, an undertaking was given by Ambica Mills Co. Ltd. thereby making available their immovable assets for discharge of its respective liability on 27th May, 1987.

9. Appellant filed Company Petition No. 66 of 1983 seeking winding up of Respondent No. 1- Ambica Mills Co. Ltd.

10. C.A. No. 8530-8540 of 1983 was finally decided by this Court and the judgment was delivered in the same matter on 4th May, 1990 (reported in 1990 Suppl. SCC 397). This Court, as regards the price fixation, had set aside the direction given by the High Court in Para 36 of the judgment dated 30th July, 1983. It was observed that the ONGC would be at liberty to take immediate steps to recover the charges due from the respondents therein, in the light of this judgment.

11. Soon after the aforesaid judgment, ONGC filed an application for certain directions and modifications of the aforesaid judgment. When the matter was taken up for hearing on 8th December, 1992, learned senior counsel

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2014 Supreme(SC) 318

IMPORTANT POINTAn order of injunction and the undertaking in accordance therewith does not create a charge on the assets of a company under liquidation.

Cases Referred (2)

IMPORTANT POINT
An order of injunction and the undertaking in accordance therewith does not create a charge on the assets of a company under liquidation.