9911796707
TMI Blog1987 (11) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 1956, sought voluntary winding up and having obtained an order for winding up, further obtained an order for staying the criminal proceedings and the civil suit pending in the courts elsewhere and that the two orders made in Company Petition No. 4S of 1986 and the appointment of the official liquidator come in their way and, therefore, they presently pray that they be kept out of the liquidation proceedings and further be allowed to continue the civil proceedings and the criminal case against the directors. Having regard to the controversy involved, the factual matrix for recording the background of the present petition may be advantageously done. Shri Kartar Singh Sidhu, Shri Parvinder Singh Sidhu and Smt. Jas-bir Sidhu, wife of the latter, constituted themselves into a partnership firm under the name and style of M/s. Sidhu Tyres and Rubber Products Mfg. Co. and obtained a loan from the petitioners in the sum of Rs. 9,40,000 on the representation that they are starting a unit for scooter tubes at Sheds D-2, 9 and 10 at Bicholim Industrial Estate, an industrial estate owned by the Goa, Daman and Diu Industrial Development Corporation. The loan rendered by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, this Criminal Case No. 184 of 1985 and the Civil Suit No. 46 of 1985 by an order of the District Court, were transferred from the court of the Civil Judge, Senior Division-cum-Magistrate, First Class, Bicholim, to the Court of Civil Judge, Senior Division-cum-Magistrate, First Class, Mapusa, where presently they are pending and stayed. With an ulterior motive which now transpires, the company approached this court in Company Petition No. 4S of 1986 for voluntarily winding up the company on averments that the company could not proceed with the manufacturing and other activities on account of various teething troubles and having no prospect in the immediate future nor any likelihood of commencing the business; that they are unable to pay the debts to the various creditors and, therefore, the company be wound up. Despite the disclosure in the petition that the company is indebted to Maharashtra State Financial Corporation and the reference to the suit and also to another creditor namely the Economic Development Corporation of Goa, Daman and Diu, by an order dated October 24, 1986, the learned single judge of this court made the following order: "Heard Mr. Kolwarkar, learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced on record along with order dated March 29, 1985. In the first instance, it may be recorded that counsel for the petitioners was trying to be on the fence in urging that in the absence of evidence, there is no conversion of the partnership into a company and, therefore, no action taken by the debtor company or any orders obtained in that behalf can be said to affect the original partnership firm and that way the rights of the petitioners are intact vis-a-vis the original firm. In so many words, the petitioners have also claimed relief on the footing that the original partnership firm has undergone a conversion and got itself incorporated as a private limited company. I am, therefore, not enamoured by the several arguments taken by learned counsel for the petitioners that the assets hypothecated on August 18, 1981, do not belong to the company under liquidation or that the charge having been created originally by the partnership firm could not be binding once it has gone into a transformation merely because certain events have taken place subsequently. It is equally not possible to hold that the partnership firm still subsists and, therefore, there is no transfer of assets to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the letter of hypothecation money was duly paid back and contract fulfilled. It is not in dispute that as on the date the order under section 29 of the Maharashtra State Financial Corporation Act was made, i.e., on March 29, 1985, a sum as high as over Rs. 16 lakhs was due and payable by M/s. Sidhu Tyres P. Ltd. This petition is being opposed by the assistant official liquidator and he has placed on record an affidavit duly instructed, dated June 9, 1987. While opposing the grant of prayer sought for by the petitioners, the contention raised by the official liquidator is that once the firm, M/s. Sidhu Tyres P. Ltd. has become a company on October 1, 1982, and so long as the charge in favour of the petitioners is not duly registered as required by the provisions of the Companies Act, the same is not binding on the official liquidator and, therefore, the question of the petitioners securing their debt from the defunct company cannot arise and that, on the contrary, by virtue of the requirement of section 456(1) of the Companies Act and pursuant to the order of the learned single judge, the liquidator is required to take over possession of all assets, property, etc., of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This unlimited power given to financial corporations is apart from proceeding in a judicial manner under section 31 thereof. Section 31 requires a sort of an execution to be preferred before the District Court for attachment and sale of the properties. At any rate, action under section 29 of the State Financial Corporations Act, 1951, was undeniably taken on March 29, 1985, and, what is more, the petitioner had not only attached the equipment and machinery lying in sheds Nos. 9 and 10 of D-2 of the Industrial Estate at Bicholim but had even taken possession of the sheds and put a lock of their own. Mr. Tamba, learned counsel for the petitioners, rightly places reliance on the decision in Kerala Financial Corporation v. C. K. Sivasankara Panicker [1978] 8 TLR 1850 (Ker). The question there arose with regard to the width of section 46B as to whether it has overriding effect over section 125 of the Companies Act. Section 125 of the Companies Act speaks of every charge created on or after April 1, 1914, by a company as void against the liquidator or any creditor of the company unless the charge was filed with the Registrar for registration in the manner required for that purpose. On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same had never started functioning even on a trial basis and the whole project failed like a still-born baby and, therefore, the question of any claim by the employees would not arise. The question whether it would arise or whether it would not arise cannot be determined by this court and if such an eventuality does arise in future it is needless to mention that the claim of the workers insofar as the unpaid salaries are concerned, must stand on par with secured creditors. Mr. Tamba, however, brings to my notice that in so far as Special Civil Suit No. 46 of 1986 is concerned, the same need not be prosecuted by the petitioners because what was sought therein was the relief of permanent injunction and since the directors have now disappeared, there is hardly any apprehension that the company or its directors would interfere or that they would interfere with the sheds or whatever items that are lying in those sheds. Mr. Tamba, therefore, says that he will not prosecute that suit but however the petitioners are interested in prosecuting their criminal case with a view to bringing the ex-directors to book. By the time the said Special Civil Suit No. 46 of 1986, is withdrawn, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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