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2013 Supreme(Del) 1770
DELHI HIGH COURT
S.Muralidhar, J.
Newcawnpore Flour Mills Ltd. - Appellant
Versus
Bakemans Industries P.Ltd. - Resopndent
Co.Pet. 204 of 2003
Decided On : 08-01-2013
For the Appellant : None
Through:Mr. Vikas Pahwa, Sr. Advocate with Abhinit Das, Adv. for ex-Management of Respondent
Mr. Rajiv K. Garg, Mr. Ashok Rana , Ms. Kavita Rawat, Advs. for Applicant (CA No.1367 of 2005)
Mr. P.S. Bindra , Ms. Shweta Priyadarshini, Advs. for IFCI in CA No.1547 of 2012 Mr. Atul Sharma, Adv. for IDBI Mr. Jayant K. Sud, AAG, Punjb with Ms. Tara V. Ganju, Ms. Etti Sharma, Mr. Vishal , Mr. Chigra Khurana, Advs. for PSPCL
Ms. Rama Ahluwalia, Adv. for Sales Tax Department, State of Maharashtra Mr. Jay Salva , Ms. Amrita Mishra, Advs. for SICOM Mr. C.A. Sundaram, Sr. Advocate with Ms. Rohini Musa, Ms. Aanchal Yadav , Ms. Sara Sundaram, Advs. For Ceylon Biscuit Ltd. Mr. Anoop Bagai, Sr. Advocate with Mr. Amitesh Kumar, Adv. in CA No.1367 of 2005. Mr. Rajiv Bahl, Adv. for OL.
The main legal point established in the judgment is the Court's authority to make directions regarding winding up petitions, property sale, Receiver appointment, possession handover, valuation, statutory dues, SARFAESI Act notice, claims settlement, trademark protection, and mortgaged property sale under the Companies Act.
Headnote:
Companies Act - Winding up petitions - Supreme Court judgment - Receiver appointment - Plant and machinery valuation - Statutory dues - Electricity dues - Valuation report - SARFAESI Act notice set aside - Payment to CBL - Expert appointment - Possession handover - OL directions - Claims settlement - Trademark protection - Mortgaged property sale - Application disposal
Fact of the Case:
The case involved winding up petitions filed by creditors of Bakemans Industries Pvt. Ltd. (BIPL) under the Companies Act. The Supreme Court held that the Company Court erred in effecting the sale of BIPL's property and appointed Ceylon Biscuits Pvt. Ltd. (CBL) as a Receiver. CBL sought the return of the auction price and reimbursement of expenses. The Court directed the appointment of a valuer, settlement of statutory dues, and possession handover to the Official Liquidator (OL). Various applications were filed regarding valuation, statutory dues, SARFAESI Act notice, and claims settlement.
Finding of the Court:
The Court directed the payment to CBL, appointment of experts, possession handover, and settlement of statutory dues. It set aside the SARFAESI Act notice, allowed claims applications, and directed the OL to protect BIPL's rights. It disposed of applications related to trademarks, copyrights, and the sale of mortgaged property. Other applications were either disposed of or scheduled for future hearings.
Issues: Winding up petitions, property sale, Receiver appointment, possession handover, valuation, statutory dues, SARFAESI Act notice, claims settlement, trademark protection, mortgaged property sale, application disposal
Ratio Decidendi: The Court emphasized compliance with the Companies Act provisions, directed payment to CBL, appointment of experts, and possession handover. It set aside the SARFAESI Act notice, allowed claims applications, and directed the OL to protect BIPL's rights. It disposed of applications related to trademarks, copyrights, and the sale of mortgaged property. Other applications were either disposed of or scheduled for future hearings.
Final Decision: The Court made various directions regarding payment to CBL, appointment of experts, possession handover, settlement of statutory dues, SARFAESI Act notice, claims applications, trademark protection, and mortgaged property sale. It disposed of or scheduled applications for future hearings.
S. Muralidhar, J.—
Co.App. No.1156 of 2012, 1280 of 2012, 1399 0f 2012, 1940 of 2012, 1547 of 2012, 1623 of 2012, Co.App. 105 of 2011, Co. App.1005 of 2011, CA No.1212 of 2010, CA No.1547 of 2012, Co.App. 2367-68 of 2012 and C.A. No.___(by CBL) (to be numbered) Background
1. The background to these applications is that, in 2003, 16 separate winding up petitions were filed by the creditors of Bakemans Industries Pvt. Ltd. (‘BIPL’) under Section 433(e) read with Section 433(f) and Sections 434 and 439 of the Companies Act, 1956 (‘Companies Act’). By an order dated 6th April 2004, the petition filed by New Cawnpore Flour Mills Ltd. (‘NCFML’) was admitted and the citations were directed to be published. Prior to this, one of the secured creditors, State Industrial Corporation of Maharashtra Limited (‘SICOM’), had issued notice under Section 29 of the State Financial Corporation Act, 1951 (‘SFC Act’) on 22nd January 2003. After the windingup petitions were filed in this Court, a second notice was issued by SICOM on 6th June 2003 under Section 29 of the SFC Act.
2. The disputes between BIPL and one NRI lead Bank was referred to the arbitral Tribunal (‘AT’) pursuant to an agreement entered into by BIPL with the said Bank. An Award was rendered on 16th August 2003 in which SICOM, IDBI, IFCI and some other banks and State Financial Corporations were impleaded as parties. Relying on the Award, BIPL took possession of the factory premises on 14th September 2003. Upon an application made by SICOM in the execution petition following the Award, an order was passed by the Court on 15th September 2003 directing the status quo to be maintained.
3. In the execution proceedings Ceylon Biscuits Ltd. (‘CBL’), a Sri Lankan company, filed an application expressing its willingness to submit a bid for the land and plant and machinery of BIPL in Patiala, Punjab. It made an offer of Rs. 12.5 crores and deposited the earnest money of Rs. 25 lakhs in US Dollars (‘USD’). In view of the winding-up proceedings, the proceedings before the execution Court were directed to be placed before the Company Court.
4. By an order dated 17th July 2004, CBL’s bid of Rs. 12.5 crores was accepted by the Company Court and the sale in its favour was confirmed. Meanwhile, an application had been filed by BIPL in the Company Court for a direction to SICOM not to sell the property and for maintaining status quo in respect thereof. The appeal filed by BIPL against the order dismissing the said application was dismissed by the Division Bench (‘DB’). Thereafter an appeal was filed in the Supreme Court. Judgement of the Supreme Court
5. By a judgment dated 16th May 2008 in Bakemans Industries Private Limited v. New Cawnpore Flour Mills (2008) 15 SCC 1 the Supreme Court held that the Company Court erred in effecting the sale of the property in favour of CBL by treating SICOM as an agent. It was held that the Company Court was under a statutory obligation to comply with the provisions of the Companies Act and the rules framed thereunder before selling the property. It was held that the High Court could not have ignored the Official Liquidator (‘OL’) only on the ground that the Provisional Liquidator (‘PL’) had been appointed. The Court noted that in the meanwhile the factory had started operations and the Court had to take into consideration the fate of not only the workers, but also those who had claims against BIPL. While allowing the appeal, the Supreme Court requested the Company Judge “to go into the question afresh in accordance with the provisions of the Companies Act and hold a fresh auction”. It was further held that CBL’s offers would also be considered and the Company Judge would consider the question of granting some preference to it. It was emphasized that the auction should follow a proper valuation of the assets of BIPL, both movable and immovable. It was also left to the Company Court to consider the question of framing an appropriate scheme if it was found that
