IMPORTANT POINT
The main legal point established in the judgment is the significance of compliance with the directions of the expert body in cases of winding up of sick industrial companies, and the weight given to the expert opinion in such matters.

JUDGMENT :

Ravi Krishan Kapur, J.

1. This is an application for recalling of an order dated 16 January, 2017 inter alia directing winding up of Bells Control Limited and consequential directions for the Official Liquidator to take possession of the assets of the company.

2. Briefly, in or about 2003 the company had made a reference before the Board of Industrial and Financial Reconstruction (BIFR) which subsequently formed an opinion under section 20 (4) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) that the company be wound up. The relevant portion of the order dated 16 May, 2007 is as follows:

After considering the submissions made and the material on record, the Bench observed that this case is pending with the Board for the last four years and there is no fully tied up rehabilitation proposal available before the Board for consideration even after issue of show cause notice for winding up of the company. Even today when the Board heard the objections/suggestions on the winding up notice dated 2.3.2007, the company did not deposit 25% of the promoters contribution towards the cost of rehabilitation and has not been able to come forward with a fully tied up rehabilitation proposal. Further, even till date and despite adequate time and opportunities having been given in this regard, the company has not been able to comply with the directions of the Board to submit a fully tied up rehabilitation proposal. The Board, therefore, concludes that the present promoters are neither serious nor resourceful enough to revive the company. The Board confirms its prima facie opinion formed on 2.3.2007 that the sick industrial company – M/s. Bells Controls Ltd. – is not likely to make its net worth exceed its accumulated losses within a reasonable time, while meeting all its due financial obligations, and that the company, as a result thereof, is not likely to become viable in future and that it would be just, equitable and in public interest that it is wound up u/s 20(1) of the Act. This opinion may be forwarded to the concerned High Court along with copies of all the earlier orders/proceedings for necessary action according to law.

3. Being aggrieved by the order dated 16 May, 2007 an appeal was filed before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) which was dismissed on 13 April, 2011. The AAIFR inter-alia held as follows:

Thus, considering the totality of the facts and circumstances of the case, we are of the view that the BIFR has rightly confirmed its prima facie opinion that the sick industrial company is not likely to make its net worth exceed its accumulated losses within a reasonable time, while meeting all its financial obligations and the company as a result thereof is not likely to become viable in future and that it would be just, equitable and in public interest that it be wound up under section 20 (1) of SICA. The appellant company has illegally leased out the property without the permission of the BIFR and has also failed to utilize the amount received in reviving the company and has acted contrary to the directions issued by the BIFR and has not submitted any fully tied up rehabilitation proposal despite repeated directions by the BIFR. Therefore, no case is made out for interfering in the impugned order passed by the BIFR. Consequently, this appeal fails and is hereby dismissed.

4. Thereafter, a secured creditor of the company Kotak Mahindra Bank filed an application seeking a final order of winding up of the company in view of the opinion of the BIFR. By an order dated 16 January, 2017, this Court had inter alia directed winding up of the company and also directed the Official Liquidator to take possession of the assets of the company (in liquidation). Subsequently, by an order dated April 17, 2017 this Court had also directed the Official Liquidator to continue in symbolic possession of the assets of the company (in liquidation). The said order was modified on May 17,