2017 Supreme(Kar) 469

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
VINEET KOTHARI, J.
Government of Karnataka - Applicant
Vs.
NGEF Limited (in liquidation) - Respondent
Company Application No. 184 of 2015 In Company Petition No. 154 of 2002
Decided On : 22-06-2017

Headnote:

Companies Act, 1956 - Sections 391,466,481,392,391,394-A,560,643,529A - Companies (Court) Rules, 1959 - Rules 6,9 - Application - Seeking for recall of winding up order - Company Application that State Government has 90.28% shareholding of Respondent Company-NGEF Ltd., and only other shareholder is, now known as ‘EHG Elektoholding GmbH (EHG) (‘German Company’ for short) which held 9.72% of its shareholding - Whether any additional tests have to be satisfied when Company concerned is in liquidation and a compromise or arrangement in respect of it is proposed - Whether Scheme contemplates revival of business of Company makes provisions for paying off creditors or for satisfying their claims as agreed to by them and for meeting liability of workers in terms of Section 529 and Section 529A of Act - Whether a compromise or arrangement put forward in terms of Section 391 of Companies Act should be accepted or not - Whether there is a genuine attempt to revive Company that has gone into liquidation and whether such revival is in public interest and conforms to commercial morality - Whether liquidation was liable to be stayed for a period or permanently while adverting to question whether scheme is one for revival of Company or that part of business of Company which it is permissible to revive under the relevant laws or whether it is a ruse to dispose of assets of Company by a private arrangement - Whether court can pass an order in nature of and having effect of recalling order of winding up - Whether winding up proceedings were pending or had come to an end when Appellate Bench froze winding up order by keeping it in abeyance? - Company Application is allowed and winding up order passed by a co-ordinate bench of this Court is stayed or sisted and kept in suspension sine-die and recommendation of BIFR forwarded to this Court for winding up of Company is also stayed permanently subject to the further orders of this Court - Official Liquidator may now take steps to handover assets and records of Company with Status Report as soon as he is informed about constitution of Board of Directors by Applicant - State of Karnataka with approval of this Court - Winding up order made by the learned company judges in respect of appellant-company has neither been quashed set aside cancelled revoked nor recalled - On contrary after directing that winding up order shall be held in abeyance Appellate Bench directed that official liquidator shall continue to act as provisional liquidator as provided by section 450 and that itself is a stage in winding up proceedings - When winding up order is kept in abeyance it is in a state of suspended animation - Duty of court in which properties are vested on liquidation to dispose of properties realise assets and distribute same in accordance with law - Principles as highlighted above are precisely what this Court intends to follow in present case - But facts in that case were very different from the facts of present case - In that case, a private Textile Mill was purportedly sought to be revived through sale of its land to another Private Company in Mumbai and Court found that the proposed revival Scheme was a ruse to dispose of land of Company while the creditors and workers were not yet paid off and a vague proposal for re-employment of workers was given in Scheme under Section 391 of Act - While in present case State Government a majority shareholder wants to utilize land of Company - NGEF Ltd., only for public purposes - State goes back on its aforesaid Undertaking and assurance to utilize said land for public purposes with due approval of this Court only in aforesaid manner this Court may even recall or modify this order either suo motu or on appropriate application with relevant evidence - It is also made clear that once aforesaid process of revival of Company in form of utilization of assets of Company in public interest is completed under supervision of this Court as indicated above winding up order itself may be recalled by Court lateron - Ordered Accordingly