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TMI Blog2013 (6) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... BIFR. Admission was made in the draft rehabilitation scheme proposed and filed by the appellant company before the BIFR. In spite of such admission followed by repeated demand made by Madura, the appellant company failed and neglected to pay and/or secure above principal amount together with interest accrued thereon. The said winding up petition is seriously contested by the appellant herein contending that this claim is also part of the claim made in the civil suit filed in this Hon'ble Court in ordinary original civil jurisdiction wherein decree for an aggregate sum of Rs.9 crores and odd together with interest has been claimed. In the said civil suit an application for summary judgment under Chapter XIIIA of the Original Side Rules of this Court was taken out and necessary order for payment of Rs. 3 crores and odd was passed by the learned First Court in Civil jurisdiction followed by affirmation of the Appellate Court in the same jurisdiction however subsequently Supreme Court has reduced on modification, to the amount of security of Rupees 1 crores. As the claim was seriously disputed leave to defend has been granted by this Court on furnishing security as modified by the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for Industrial and Financial Reconstruction (BIFR) and orders under Section 22A of the SICA lawfully passed were valid and subsisting. No permission of the BIFR was obtained to sell any of the assets. Entire exercise of sale and/or transfer of the assets by the company was conducted by-passing the process of the Assets Sale Committee. There was no advertisement published nor was there any reserve price fixed. In short the present management of the Committee in violation of the order of the restriction under Section 22A of SICA and in scant disregard for the law, sold and transferred aforesaid four immovable properties of company leaving the company's creditors, employees and workmen in the lurch. All these facts are recorded in the order of BIFR dated 23rd July, 2007 and order of AAIFR dated 7th March, 2002. The aforesaid application was contested by filing affidavit by the appellant company. The learned Trial Judge having found strong prima facie case which is described to be almost unimpeachable one in favour of the respondent and having found that assets and properties have been transferred in a clandestine manner felt that it would be totally unsafe in the interest of compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons were allowed to appear and advanced argument before the learned Trial Judge, We also allowed them to appear before us. One of the creditors Suryamani Financing Company Limited has preferred separate appeal. This creditor while pressing its appeal through their learned lawyer has supported the argument of Mr. Bandopadhyay. Learned counsel contends that his client is secured creditor of the appellant company and has lent and advanced a sum of Rs.41 crores and odd. It is submitted that there is no need to wind up the company nor any situation has arisen for which appointment either provisional or otherwise is warranted as the company has not lost its substratum. The company might be facing temporary financial crisis, however, it can be managed effectively. Learned counsel for the appellant of this appeal submits further that learned Single Judge exceeded his authority and jurisdiction in passing impugned judgment and order. The observation of the learned Trial Judge about transfer being fraudulent, is totally misplaced as this observation is possibly based with reference to Section 531 of the Companies Act. According to him Section 531 in the facts and circumstances has no manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court declared it to be so. The above legal submission is made by Mr. Chatterjee to call upon this Court to declare all the transfers which had taken place in total disregard to the order of the BIFR being null and void and non est which should have been done by the learned Trial Judge and this task is remaining incomplete and should be made complete by this Court. One of the creditors namely SBI Global Factor Limited came in this appeal to make submission through their learned counsel. Learned Trial Judge as it appears from the impugned judgment and order permitted this creditor to make submission so we did. The learned counsel for this creditor contends that the appellant company is indebted to a sum of Rs.37,84,48,340.79 together with interest which is an amount due and payable to this appellant under the trade finance facility availed of by the appellant - company. It is the successor in interest of one M/s. Global Trade Finance Limited which was amalgamated by an order of the Bombay High Court with SBI Factors and Commercial Services Private Limited and then name of this company has been changed to SBI Global Factors Limited. In view of nonpayment and further failure to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was passed at the instance of Madura. To examine the legality and validity of the impugned judgment and order, reading of the prima facie case made out by the respondent and answer to the same by the appellant would have been usual mode of dealing with the matter and then to pass order which would have warranted on the merit of the case. But in this appeal this Court has to adopt different method as the impugned judgment and order has been passed while dealing with not only the application of Madura but considered cases of other creditor also, Madura's application is yet to be admitted. One of the creditors namely SBI Global Finance Limited has intervened in the matter, and informed that its application for winding up being C.P. No.159 of 2011 has already been admitted and order of advertisement has been issued, hence, the issue of winding up of the appellant company has assumed representative character. Of course another creditor namely Suryamani Financing Company Limited who has filed a separate appeal against the said judgment and order supported the case of the appellant and opposes the prayer for appointment of provisional Liquidator at this stage. Mr. Abhrajit Mitra, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be adjudged by the Courts and lastly whether the learned trial Judge indeed has undertaken such judicial exercise or not. In addition thereto the Court has to see the special circumstances as to whether company has lost its substratum or situation of apparent insolvency or not. In an old decision of Kerala High Court cited by Mr. Chatterjee, in case of Canara Bank vs. Brunton and Company Engineers Limited reported in 63 Company Cases 299 learned Single Judge has held what are the consideration to be borne in mind for appointing provisional Liquidator. In that case on factual finding it was felt by the Court that there exist special circumstances pointing to the danger to the assets of the company and also patent insolvency. Such measure is absolutely necessary to preserve the assets of the company. The learned Single Judge has also accepted that stopping of business activity is one of the factors for appointment of provisional Liquidator. It appears from Bombay High Court decision in case of Darshan Anilkumar Patel vs. Gitaneel Hotels Pvt. Ltd reported in 81 Company Cases 805 the learned Single Judge had taken view that for appointment of provisional liquidator a strong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es formed very recently by the same group of management. We do not find any challenge to this findings, rather factum of transfer is admitted. Learned Trial Judge also found that no monetary consideration was received only the shareholding of all those subsidiary transferee companies have been transferred as and by way of consideration for sale of the two properties. Apparent consideration for sale of these two properties is deliberately undervalued. After receipt of the shares of those transferee companies the company has transferred the entire shareholding of those transferee companies to a Mauritius based company. Thus in real sense the ownership and control as far as those subsidiary companies are concerned have been given in favour of the foreign company. The learned Trial Judge thereafter found basing on disclosure of information stated in the affidavits that immediately after sale the said two of transferee companies created mortgage in favour of ICICI Bank Limited for granting credit facilities to their Singapore based companies and the ICICI Bank has agreed to accept those properties as security for granting credit facilities of Rs.575 crores. This fact finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dding process through the ASC." Therefore, it is clear that management of the company has no regard for the order of the statutory authority and the learned Trial Judge has correctly recorded this prejudicial act and conduct of the management of the appellant. The learned Trial Judge of course recorded strongly that the aforesaid transfer is said to be fraudulent and the same is void. In our considered opinion such prompt findings in this proceedings was not called for. In the application of this nature the Court is to see whether the properties whatever is the worth, of the company are properly preserved or act and conduct of the management is such that they are genuinely interested to preserve the assets and properties of the company. The aforesaid act and conduct of the management and company though anterior to the presentation of the winding up petition, is such that it does not inspire confidence of the Court. The learned Trial Judge however has strong suspicion against the act and conduct of the present management. It is an admitted position that the company is not in business and in past just maintenance activities of the machinery was undertaken and there has been no pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out from the clutch of the BIFR conveniently. The claim made in the suit has nothing to do with the amount of outstanding dues which was agreed to be paid by the rehabilitation scheme, and it is left out from the scheme and for such purpose leave was granted to file a suit. In fact the suit was filed leaving the amount of the dues covered by the draft rehabilitation scheme but by mistake this amount was added to the prayer in the plaint initially but subsequently by an order of amendment this outstanding claim covered by the draft rehabilitation scheme was excluded. Therefore, we are of the view prima facie that strong case for indebtedness has been made out. Equally strong case has been made out about the act of waste of the present management. They are not trustworthy nor do they inspire any confidence in the mind of the Court to keep the properties with them with free hands. But when we take note of argument of Learned Advocate General, we find State Government is keen to lend support for putting back the company in running. Hence judgment and order of the learned Trial Judge appointing Official Liquidator as Provisional Liquidator for taking full control and management of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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