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High Court Of Calcutta
Patherya, J.
Union Of India : Appellant
Versus
Official Liquidator : Respondent
C.A. No. 662 of 2006, C.A. No. 663 of 2006, C.A. No. 208 of 2008, Arising out of BIFR Case No. 538 of 1992
Decided On : Aug 02, 2012
BENGAL IMMUNITY LTD. - WINDING UP - STAY - SETTING ASIDE ORDER - MODIFICATION OF ORDER - [SECTION 20(1), 22, 446 COMPANIES ACT, 1956; SECTION 15, 17(3), 20 COMPANIES (TEMPORARY PROVISIONS) ACT, 1985]
Fact of the Case:
The Union of India, the 100% shareholder in Bengal Immunity Ltd. (BIL), filed two applications for stay of the winding-up order and to set aside and modify certain orders related to the sale of the company's land. The company was under liquidation, and a reference had been filed before the Board for Industrial and Financial Reconstruction (BIFR) in 1992, which recommended winding up in 2003. The Appellate Authority (AAIFR) dismissed an appeal by the Workers' Union in 2005 but later restored it and set aside the BIFR's winding-up order. The Company Court, however, passed a winding-up order on July 6, 2005.
Finding of the Court:
The court held that the winding-up order passed by the Company Court on July 6, 2005, was valid as there was no pending appeal at that time. The AAIFR was not empowered to consider the appeal or the recall application in view of the winding-up order. The court also held that the employees of the company had accepted Voluntary Retirement Scheme (VRS) on September 30, 2003, and therefore the Employees' Union could not have maintained the appeal as the only appeal filed was by the Employees' Union being aggrieved by the order dated February 25, 2003. The court further held that the order dated March 1, 2006, granting leave to HSCL to deposit the balance consideration for the sale of the land was rendered infructuous as HSCL failed to make the payment within the specified time. The court also held that the constitution of the Expert Committee was invalid as the AAIFR was not competent to take a decision on the appeal without recalling the order of dismissal.
Issues: 1. Whether the winding-up order passed by the Company Court on July 6, 2005, was valid? 2. Whether the Employees' Union could have maintained the appeal before the AAIFR after the employees had accepted VRS? 3. Whether the order dated March 1, 2006, granting leave to HSCL to deposit the balance consideration for the sale of the land was valid? 4. Whether the constitution of the Expert Committee was valid?
Ratio Decidendi: 1. The winding-up order passed by the Company Court on July 6, 2005, was valid as there was no pending appeal at that time. The AAIFR was not empowered to consider the appeal or the recall application in view of the winding-up order. 2. The Employees' Union could not have maintained the appeal before the AAIFR after the employees had accepted VRS as the only appeal filed was by the Employees' Union being aggrieved by the order dated February 25, 2003. 3. The order dated March 1, 2006, granting leave to HSCL to deposit the balance consideration for the sale of the land was rendered infructuous as HSCL failed to make the payment within the specified time. 4. The constitution of the Expert Committee was invalid as the AAIFR was not competent to take a decision on the appeal without recalling the order of dismissal.
Final Decision: The court dismissed the applications filed by the Union of India and the Workers' Union. The court also held that the orders dated March 1, 2006, and March 24, 2006, did not suffer from any infirmity and that the Company Court was entitled to exercise its inherent powers under Rules 7 and 9 of the Company (Court) Rules.
PATHERYA, J.
1. TWO applications have been filed by the Union of India, the 100% share- holder in Bengal Immunity Ltd. (BIL) for stay of the winding up order dated 6th July, 2005 and for setting aside the order dated 1st March, 2006 and modification of the order dated 24th March, 2006. Case of the Applicant
2. THE case of the applicant contributory is that a reference was filed before the Board for Industrial and Financial Reconstruction (BIFR) in 1992. An order was passed on 25th February, 2003 recommending winding up of the Company (in liquidation). An appeal was filed by the Workers' Union before the Appellate Authority (AAIFR). Such appeal was dismissed on 13th May, 2005 and thereafter restored and order passed setting aside the order recommending winding up passed by BIFR. Prior to the order of AAIFR the matter was placed under Section 20 of the 1985 Act before the Company Court and by order dated 6th July, 2005 an order of winding up was passed. The applicant seeks stay of the winding up order as bonafide steps has been taken by the contributory to revive the Company (in liquidation) on the basis of a revival report submitted. United Bank of India is the only secured creditor of the Company and a compromise has been reached with it.
3. THE basis for calling tenders for sale of 392.04 cottahs of land at 88, Akshay Kumar Mukherjee Road, Calcutta no longer exists as the offer made though accepted initially was subject to a forfeiture clause. The terms of the offer have not been satisfied as certain new terms were imposed for implementation of the offer made by HSCL. Therefore, the agreement stands terminated which termination is to the knowledge of HSCL as it has called upon the applicants to repay the money with interest. The agreement between HSCL and Avinash Raj Construction Pvt. Ltd. (ARCPL) is a private agreement and in no way is the applicant involved with the same. In fact an order was passed on a writ application filed by ARCPL (W.P. 2060 of 2003) on 29th September, 2003. An application has been filed to re-call the said order and the same is pending. BIFR's order dated 25.2.2003 no longer exists as the said order was set aside by the order dated 3rd March, 2008. Therefore the jurisdiction of the Company Court stands ousted. For the said proposition reliance is placed on the decisions reported in 89 Company Cases 609, 89 Company Cases 600 and (2000) 1 CLT 69.
4. THE order dated 6th July, 2005 has been passed contrary to the decisions cited above and the mandatory provisions of winding up and formalities of sale have not been followed as no opportunity was given to the contributories. For the said proposition reliance is placed on (2005) 8 SCC 219. By the order dated 1.3.2006 the Company Court has sought to transfer the said property to a private party. The Court could not have passed such an order as it is BIFR alone who is empowered to sell the same. For the said proposition reliance is placed on (2003) 9 SCC 490. The dispute is between two Government agencies and it will be proper that the high powered committee constituted do settle such dispute. The order dated 3rd March, 2008 has been passed on an application filed by the Workers' Union. Ten crores have been paid to the secured creditor and there is no concluded contract between BIFR and HSCL. The Union of India is the 100% share holder and the order dated 29th September, 2003 passed in W.P. 2060 of 2003 filed by ARCPL has not been implemented as no payment has been made there under and it is only pursuant to order dated 1st March, 2006 that the balance payment has been made. For all the said reasons the orders sought be passed.
5. CASE of the Workers' Union : On the appeal filed by the Workers' Union BIFR's order dated 25th February, 2003 has been set aside by AAIFR on 3rd March, 2008 with a direction upon BIFR to consider the scheme propounded by the workers in the appeal. Therefore the application filed by the contributory be allowed and orders sought
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