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2015 Supreme(Cal) 31
High Court of Judicature at Calcutta
ASHIM KUMAR BANERJEE & SAMAPTI CHATTERJEE, JJ.
Re: Kamlapur Sugar and Industries Ltd. & Another – Appellant
Versus
The Official Liquidator, H.C. – Respondent
A.P.O.No. 450 of 2014 & C.P.No. 241 of 2009 (Original Side)
Decided On : 29-01-2015
For the Appearing Parties:Deepnath Roy Chowdhury, Shayantee Dutta, Abhrajit Mitra, Sr. Adv., Sarbapriya Mukherjee, Soumabha Ghosh, Indranil Nandi, R.L. Mitra, Priyanka Dhar, Amiya Kumar Sur, Ruma Sikder, Advocates.
The provisions of SICA would prevail over the Companies Act in case of a conflict, but the two statutes should be read harmoniously to determine their applicability in a given situation.
Headnote:
SICK INDUSTRIAL COMPANIES ACT - WINDING UP - STAY - SECTION 22 - APPLICATION OF SICA AT POST WINDING UP STAGE - FACTUAL CONTEXT - INTERPRETATION OF PROVISIONS - JUDICIAL DISCRETION - REVIVAL OF COMPANY - EFFECT OF WINDING UP ORDER - ROLE OF COMPANY COURT - CONDUCT OF RESPONDENT - DISHONESTY - APPEAL ALLOWED.
Fact of the Case:
Kamlapur Sugar and Industries Limited (Kamlapur) faced financial difficulties and was unable to discharge its obligations to secured and unsecured creditors. Dena Bank, a secured creditor, issued a statutory notice of demand and initiated a proceeding before the Debt Recovery Tribunal. The Tribunal granted a certificate for recovery of dues. Kamlapur appealed, but the appellate authority affirmed the decision. Dena Bank filed an application for winding up in 2009, which was granted by the Company Court. Kamlapur appealed, but the Division Bench upheld the winding-up order. While the winding-up process was underway, Kamlapur approached the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies Act (SICA). The BIFR registered the reference and stayed the winding-up proceedings. Dena Bank challenged the stay order before the Company Court, which allowed the challenge and lifted the stay.
Finding of the Court:
The Court held that the provisions of SICA would prevail over the Companies Act in case of a conflict. However, in the present case, there was no conflict as the winding-up order had already been passed before the reference to BIFR was made. The Court observed that the winding-up process had already commenced, and the Company Court had become functus officio on the issue of winding up. The Court further held that the erstwhile management of the company had no role to play in the revival process after the winding-up order and that they could only approach the Company Court with an appropriate scheme for revival.
Issues: 1. Whether SICA can be applied at the post winding-up stage? 2. Whether the order of winding up can be stayed once the reference is made to BIFR? 3. Whether the erstwhile management of the company can initiate revival proceedings after the winding-up order?
Ratio Decidendi: 1. SICA can be applied at the post winding-up stage only if there is a conflict between the provisions of SICA and the Companies Act. 2. The order of winding up cannot be stayed once the reference is made to BIFR if the winding-up order was passed before the reference was made. 3. The erstwhile management of the company cannot initiate revival proceedings after the winding-up order unless they approach the Company Court with an appropriate scheme for revival.
Final Decision: The appeal was allowed, and the judgment and order of the Company Court were set aside. The stay of the winding-up proceedings was lifted.
Ashim Kumar Banerjee, J.
FACTS:
Kamlapur Sugar and Industries Limited (hereinafter referred to as “Kamlapur”) obtained financial assistance from various finance institutions including Dena Bank, the appellant above named. The company became sick and was unable to discharge its obligation towards secured and unsecured creditors. Dena Bank issued a statutory notice of demand under Section 434 of the Companies Act on September 18, 2003 asking them to pay off the outstanding. The Kamalapur did not adhere to the request. Dena Bank initiated a proceeding before the debt recovery Tribunal Lucknow and obtained certificate dated February 14, 2008 permitting Dena Bank to recover Rs.17 crores approximately. Kamalapur preferred an appeal before the appellate authority. The appellate authority affirmed the decisions vide judgment and order dated December 15, 2008. In this backdrop, Dena Bank filed an application for winding up in 2009 before this Court inter-alia claiming, the Company was in involved circumstances and was unable to pay its debts hence, it should be wound up. The company opposed the application. They contended, being a secured creditor, Bank was not entitled to pray for winding up. Their remedy would lie in execution of the decree. His Lordship negated the contention and ultimately passed the order of winding up vide order dated July 30, 2010 appearing at pages-34-45 of the paper book. Kamlapur filed an appeal. The Division Bench upheld the judgment and order of the learned Single Judge vide judgment and order dated July 23, 2012 appearing at pages 50-71. Pertinent to note, the Division Bench heard the matter for five days on and from June 25, 2012. The Division Bench dismissed the appeal on July 23, 2012. Kamlapur never informed the Court, they were trying to initiate proceedings before Board for Industrial and Financial Reconstruction (herein after referred to as “BIFR”) established under the Sick Industrial Companies Act, 1985 (hereinafter referred to as SICA).
The Official Liquidator took charge of the assets and proceeded to sell the same by public auction. The learned Company Judge conducted the sale on September 20, 2013 and October 8, 2013. When the sale was being concluded, the erstwhile management of the company suddenly informed the learned Company Judge, they had already approached the BIFR. Pertinent to note, even after the order of winding up, Kamlapur tried to stall the winding up process, firstly on January 27, 2012 when an application for sanction of a scheme was dismissed by the learned Company Judge making serious comments about their conduct. The second attempt also failed on February 10, 2012 when the learned Single Judge again rejected the proposal for revival vide order dated February 10, 2012 appearing at pages 80-82.
The third attempt failed on October 19, 2012 when the learned Judge while passing an order appearing at pages 75-76, rejected the prayer for adjournment on the plea of settling with the creditors. Similarly, attempt was made on September 21, 2012. Since all the avenues were closed and desperate attempt to forestall the sale was not successful the company approached the BIFR in June 2013. The BIFR initially declined to entertain the reference. Subsequently, by an order dated October 7, 2013 appearing at pages-10-11 BIFR registered the reference under Section 15(1) of SICA. On October 7, 2013 one Manoj Saha claiming to be the authorized representative of the erstwhile management filed an application for stay of the winding up and all connected matters as also for consequential order of restraint on the Official Liquidator from selling the assets. The learned Single Judge, vide judgment and order dated January 28, 2014, allowed the said application. His Lordship vide judgment and order of the said date appearing at pages 106-115, granted stay of the winding up proceeding subject to the order of the BIFR or the appellate authority.
Being aggrieved, Dena Bank filed the instant appeal
