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2017 (2) TMI 519 - HC - Companies LawWinding up petition - Held that:- The record of the instant appeal would show, and we highlight that it is the case of the appellant itself, that it had entered into settlement agreement with 14 other petitioners who had filed company petitions seeking winding up of the appellant. It is the case of the appellant that it is actively negotiating to settle the disputes with 8 other petitioners who have likewise filed the company petitions. We find that the appellant filed an affidavit on July 19, 2016 bringing to the notice of the learned Company Judge the endeavours made to settle the claims of the creditors. The conduct of the appellant before the learned Company Judge is clearly indicative of the appellant acquiescing in the order admitting the winding up petition and proceeding to settle the disputes with a number of creditors. This itself establishes that the appellant company is heavily in debt. Learned Senior Counsel for the appellant urge that merely because the appellant is in debt would be no ground to wind up the appellant if it otherwise is a viable company. We have serious doubts on that. From the statement of affairs filed, the manner of giving the information is primafacie suggestive of diversion of funds. Petition under Section 9 of the Arbitration and Conciliation Act, 1996 - Held that:- Surprisingly, in the appeal, the appellant itself has pleaded that the learned Company Judge had directed the appellant to formulate a scheme of compromise/arrangement with other creditors and if such a scheme was filed the learned Judge would consider removing the Provisional Liquidator. The appellant did not file any scheme but chose to selectively settle the disputes with a few creditors. During arguments in appeal Sh.Atul Nanda, learned Senior Counsel for the appellant, had requested us to defer hearing of the appeal to enable appellant to file a scheme of compromise/arrangement with the other creditors. The appellant is free to do so before the learned Single Judge. The facts which we have noted, which emanate from the statement of affairs filed by the directors of the appellant do not warrant any of the impugned order to be set aside in appeal. The debts owned by the appellant are much. The rosy picture painted in the balance sheet, is not so rosy. The situs of the assets of the appellant is not known. The persons who have to pay money to the appellant are unknown as of today. The persons with whom deposits have been made are unknown today. As regards the interim applications filed we decline relief for the reason any direction by way of an interim order to honour the settlement which the directors of the appellant have entered into after the Provisional Liquidator was appointed would require either payments to be made or flats to be handed over to the persons with whom the appellant through its directors has entered into a settlement and this would prima-facie amount to a preferential payment to an unsecured creditor. We dismiss the appeal and CM for the reason compromise orders obtained by the applicants would be in the nature of a decree and the applicants are free to file applications before the learned Company Judge seeking permission to institute execution proceedings. The appellant which is under provisional liquidation cannot be now represented by any of its ex-Directors and no settlement or undertaking by any ex-Director would bind the appellant company.
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