Back
2025 Supreme(All) 3349
HIGH COURT OF JUDICATURE AT ALLAHABAD
PIYUSH AGRAWAL, J.
In The Matter Of Swadeshi Mining & Manufacturing Co. Ltd. - Applicant
Versus
Official Liquidator – Respondent
(Ref:- Misc. Company Application No. 79 of 2023) with (Ref:- Misc. Company Application No. 37 of 2019) & (Ref:- Misc. Company Application No. 11 of 2018) IN MISC. Company Application No. 7 of 1996
Decided On : 30-04-2025
The shares of a subsidiary do not encompass ownership of its properties; the rehabilitation scheme confirmed valid ownership transfers while prioritizing SICA provisions over general company laws.
Headnote:(A) Sick Industrial Companies (Special Provisions) Act, 1985 - Winding up of companies - National Textile Corporation's claim over subsidiary's properties challenged.
(B) The shares of a subsidiary do not include ownership of its properties according to precedent.
(C) Rehabilitation scheme and merger confirmed, allowing transfer of properties.
(D) LAws applicable to winding up proceedings do not override SICA's provisions. (E) NTC lacked standing to contest the properties' sales as it never challenged various prior sales. (F) The plea for ownership over plots dismissed as 'the sale deed is neither challenged nor void.' (Hansard report quoted.) (Paras 1, 6, 16, 66, 70)
Facts of the case:
The application involved properties formerly belonging to a sick company under winding up procedures, with disputes over rightful ownership and the legitimacy of transfer sales. The Official Liquidator's actions to retain control were contested by entities asserting ownership through registered sales.
Findings of Court:
The properties were confirmed as being free from liquidation proceedings, affirming BCML's ownership after a validated rehabilitation scheme.
Issues: Whether NC's claims on property sales were valid considering the subsidiary's legal standing and the unchallenged nature of previous sales.
Ratio Decidendi: The Court ruled that subsidiary companies maintain their independent legal status, therefore, the vesting of shares does not transfer property ownership automatically. The prior approval of rehabilitation schemes implies acceptance of all ownership transfers by affected parties.
Result: Applications allowed; properties confirmed in favor of BCML.
| Table of Content |
|---|
| 1. hearing of multiple counsels (Para 1) |
| 2. filing of multiple misc. company applications (Para 2 , 3 , 4) |
| 3. common order for interconnected matters (Para 5) |
| 4. historical context of smmcl and ntc (Para 6 , 7 , 8 , 10 , 11) |
| 5. nationalization and ownership implications (Para 9 , 12 , 13) |
| 6. legal distinctions of subsidiary companies (Para 22 , 25 , 26 , 39 , 42) |
| 7. review of winding up proceedings (Para 30 , 31) |
| 8. rehabilitation scheme approval under sica (Para 57 , 58 , 60) |
| 9. consequences of failure to challenge sales (Para 61 , 64 , 66) |
| 10. court's order and consequences (Para 67 , 68 , 70) |
JUDGMENT :
PIYUSH AGRAWAL, J.
1. Heard Sri Naveen Sinha, learned senior counsel assisted by Sri Tarun Agarwal and Sri Prakhar Saran Srivastava, learned counsel for the applicants, Sri J.Nagar, learned senior counsel assisted by Sri Pratik J. Nagar, learned counsel for N.T.C., Sri S.P.Singh, learned Senior Advocate and ASGI assisted by Sri Purnendu Kumar Singh, learned counsel for the Union of India and learned counsel for the Official Liquidator.
2. Misc. Company Application No. 37 of 2019 has been filed by the applicant - by M/s Balrampur Chini Mills Limited for directing the Official Liquidator to exclude the 10 plots, being plot nos. 394, 395, 393, 391, 337, 339, 340, 351-Ka, 351-Kha and 351-Ga (total area 6.76 hectares) situated at Village – Maraya, Magahar, Purab, Tehsil – Khalilabad, District – Sant Kabir Nagar for the purposes of valuation in pursuance of the order dated04.09.2018 passed by this Court in Misc. Company Application No. 7/1996 and release them from the attachment of Official Liquidator.
3. Misc. Company Application No. 11 of 2018 has been filed by the applicant - M/s Balrampur Chini Mills Limited for release of plot nos. 9 area 0.1200 hectare, 11 area 0.0490 hectare, 50 area 0.1260 hectare, 51 area 0.0380 hectare (total area 0.3330 hectare) situated at Village – Uska Kalan as well as plot nos. 1 area 0.1050 hectare, 80 area 0.1650 hectare, 81-K area 0.0390 hectare, 82 area 0.4490 hectare and 83-Kha area 0.3650 hectare (total area 1.1230 hectares) situated in Village – Uska Khurd.
4. Misc. Company Application No. 79 of 2023 has been filed by the applicants - M/s Aisshpra Developers Private Limited and M/s Sri Raghuvar Industries Private Limited to quash/set aside the letter dated 14.08.2023 issued by the Official Liquidator and to restrain the Official Liquidator from meddling with the affairs of two plots bearing plot nos. 389 (area 2.979 hectares) and 390 (area 4.155 hectares) situated in Village – Maraya as well as to reject the Official Liquidator Report No. (Judl.) 335 of 2023.
5. Since learned counsel for the parties submit that the issues involved in these applications, i.e., Misc. Company Application Nos. 37 of 2019, 11 of 2018 and 79 of 2023, are similar and inter-connected, therefore, the same are being decided by the common order with the consent of the parties. Misc. Company Application No. 79 of 2023 is taken as a leading case for deciding the controversy involved in these applications.
(Ref:- Misc. Company Application No. 79 of 2023)
6. The brief facts of the case are that M/s Ganesh Sugar Mills at Maharajganj being only unit of Swadeshi Mining & Manufacturing Company Limited (hereinafter referred to as, 'the SMMCL') and being a subsidiary Company of SCMCL, was taken under the administrative control of NTC. SMMCL became a sick Company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as, 'the SICA') and a reference under section 21 of the SICA was made in the year 1996. In spite of several efforts to revive and restart the Sugar Unit failed, the Board of Industrial & Financial Reconstruction (hereinafter referred to as, 'the BIFR') finally recommended to this Court for winding up. The appeal against the order of Appellate Authority for Industrial & Financial Reconstruction (hereinafter referred to as, 'the AAIFR') was dismissed. The order of BIF
