9911796707
TMI Blog1984 (12) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs, it is necessary to note a few relevant facts leading to the present proceedings. The applicant company owns a textile unit which is known as Commercial Ahmedabad Mills Co. Ltd. in this city and it is engaged in the manufacture of cotton and blended textiles. The company ran into difficulties somewhere in the beginning months of this year. The result was that the Ahmedabad Electricity Co. Ltd. disconnected supply of electricity to the company. Consequently, the company was compelled to close down its textile unit on May 19, 1984. At that time, the company was giving employment to about 2,300 workers, it being a composite textile unit. One of the unpaid creditors of the company filed Company Petition No. 163 of 1984 requesting this court to wind up the applicant company. Notice was ordered to be issued in the said company petition. In the meantime, the management of the company went on endeavouring its best to restart operations of the company. For that purpose, the management of the company approached the company's bankers, State Bank of India, Commercial Branch, Ahmedabad, and the Industrial Development Bank of India. Similarly, the management of the company also took up the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of India. Accordingly, the State Bank of India agreed to grant Rs. 98 lakhs which will carry concessional interest at 13½%. It also agreed to give the following financial facilities to the applicant company : Rs. (in lakhs) Demand cash credit limit 208 Usance bills discounting 160 Funded interest account 137 Working capital term loan 152 Short-term loan for labour rationalisation 18 Letters of credit limit 155 Ordinary guarantee limit 200 Thus, substantial amounts are being made available by the State Bank of India as well as IDBI to the applicant company with a view to putting it once again on its legs. The company has moved this court by way of the present proceedings with a view to seeing that in future, it cannot be urged by any one that pending the winding up petition, at this stage, the company had entered into financial transactions which may be branded as vulnerable on any account. Thus, by way of abundant caution, the present application is moved by the applicant company. Mr. S. I. Nanavati for the applicant company heavily relied upon a precedent in this connection which is supplied by a decision of the Division Bench of this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the said undertaking was declared to be a relief undertaking, and any remedy for enforcement thereof shall be suspended and all proceedings relating thereto before any court, tribunal, officer or authority shall be stayed for the given period. It is, therefore, obvious that if any proceedings are initiated against the company for enforcement of any pre-existing rights of the applicant and for enforcement of any pre-existing corresponding obligations of the company, they will remain stayed during the currency of the notification under section 4(1)(a)( iv) of the Relief Undertakings Act. The present application is not of that type. It is not any proceeding relating to enforcement of any right against the company or for enforcement of any obligation of the company. On the contrary, it is an application by the company itself seeking clearance to financial transactions with the financiers so that, in future, these transactions may not be attacked as void or illegal only on account of the fact that a winding up petition has been filed against the company and it has remained stayed, which may, in future contingencies, stand allowed with the result that the winding up order may relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such application as the present one as filed by the applicant company itself with a view to effectively restarting the mills, is contra-indicated. This objection, therefore, stands overruled. It was next contended that such an application would not lie under section 536(2) of the Act. This objection squarely stands answered against the objectors in view of the Division Bench judgment of this court in Company Application No. 95 of 1984 in Company Petition No. 105 of 1983 referred to above. A similar contention was raised in the said proceedings and was repelled by the Division Bench. This objection also, therefore, does not survive. Coming to the objections on the merits of this application, it was, firstly, contended that the present application is merely a camouflage and that the promoters are financially sound enough to canalise finance from any other source. But instead of doing so, they are resorting to the present modus operandi of drawing upon the financing institutions like SBI and IDBI. It was also submitted that detailed requirements of execution of necessary documentation as put forward by the IDBI as per the letter at annexure 'B' have not been complied with and, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce letter was to be sent by the mill company to the IDBI 30 days from the date of the receipt of the letter and that there was nothing in the application to show that such letter was sent. Mr. S.I. Navavati for the applicant company on instructions from the secretary of the mill company stated before me that this objection is unfounded and that such a letter was duly written to the IDBI. It must be kept in view that Mr. B. R. Shah, who represented IDBI before me, did not make any such grievance about any non-compliance with the requisition made by the IDBI as reflected by the letter at annexure 'B'. In short, it was not his contention that any of the procedural requirements have not been duly complied with by the applicant company. It is, therefore, too late for the petitioning creditors to contend that these procedural requirements have not been followed. It goes without saying that if these procedural requirements were not followed, the concerned financing agency would never have agreed to advance loans which they have agreed to advance. Mr. Oza next contended that the draft resolution was to be passed by the board of directors of the company as mentioned in para 9 of the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Mr. Oza then submitted that para 11 of the Appendix provides for sale of surplus land and sale proceeds thereof for the proposed rehabilitation-cum-modernisation at Ahmedabad. Mr. Oza submitted that at present, no such efforts seem to have been made by the company. Mr. Nanavati for the company as well as Mr. Shukla, representative of TLA, made it clear that, at present, the company has no surplus land but after this package deal goes through, some of the administrative blocks may be demolished after scrapping of looms, ring frames, etc., as agreed to by way of a phased programme by the workers, and in that eventuality, occasion for sale of surplus land would arise and for that purpose, two years' period has been provided. It is, therefore, obvious that it is a long-term programme and there is no question of sale of any surplus land by the company at present before getting the advances in question. As and when that eventuality happens, the procedure laid down by clause 7 will obviously have to be followed. Mr. Oza next submitted that an agreement with the Textile Labour Association had to be entered into by the company as mentioned in para 9 of the petition. A copy of such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present order towards the satisfation of past dues of any one or more of other creditors of the applicant company. Hence, disposal of any property or assets which may be effected by the company pending final hearing and disposal of the winding-up petition as aforesaid to or in favour of IDBI or SBI, IRCI, IFCI and ICICI, pursuant to the present order shall be voided if the winding-up order is made, if at all, against the company in such petition. It is clarified that the amount of Rs. 20,00,000 which was permitted to be advanced by SBI pursuant to my earlier order dated November 23, 1984, in Company Application No. 210 of 1984 shall be treated to be part and parcel of the advances which are being sanctioned pursuant to the present order which is the final order. Mr. Oza at this stage requested me to stay the operation of my present order for one week. In my view, looking to the facts and circumstances which are discussed in detail above, it is not necessary to grant any stay as requested by Mr. Oza. No prejudice is going to be caused to the petitioning creditors who are unsecured creditors if more finance is made available to the company which will make the mill company which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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