TMI Blog2001 (7) TMI 1303X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as Property) made. In favor of the appellant company by the Delhi Financial Corporation (referred to as DFC). 2. The learned Company Judge has given a finding in the impugned order that the sale effected by DFC was for inadequate consideration and contrary to the subsisting injunction order of the court and the order appointing provisional liquidator in respect of M/s.Disco). M/s.Disco created a mortgage in favor of DFC on 20th January, 1986 for availing of certain loan facilities. There were defaults by Disco in complying with its financial obligations as a result whereof DFC recalled the loan in December, 1990 and advertised for sale of the property in October, 1991. The appellant company responded t o the said notice for sale. DF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DFC by a registered deed. 4. There were certain developments which took place during this process of the DFC taking necessary action in respect of the assets of Disco and transferring to the appellant company. These developments took place in the proceedings initiated by the creditors of Disco. On 4th August, 1992 an order was passed by the learned Company Judge restraining Disco from disposing of any assets or making any payment to the creditors and on 29th September, 1992 the winding up petition was admitted and official liquidator was appointed as a provisional liquidator to take possession of the assets and machinery of Disco. On 19th October, 1992 the order of status quo as to possession was passed by the learned Company Judge and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or right to Disco to sell it to the appellant company. 7. Mr.Sandeep Sethi, learned counsel for the appellant has strongly relied on the provision of section 29 and section 32E of the Act. This is in line with the submission made before the learned Company Judge on behalf of DFC and naturally so as the interests of the DFC and the appellant company are common to that extent as the transfer in favor of the appellant company was by the DFC. 8. It is necessary to analyze the effect of section 32E of the Act to determine the controversy in question. To appreciate the ambit of the section reference may be made to section 29 of the Act. In terms of section 29 sub-section 5 of the Act where an action has been taken against an industrial conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object, purpose and role of the Financial Corporation. In respect of this submission it is contended that the business of a Financial Corporation under the Act is to grant and recover loans and not to manage the business. The role of revival and rehabilitation is under the Sick Industrial Companies (Special Provisions) Act, 1985 and not under the Act. In support of his submission Mr. Sethi relied upon a Division Bench judgment of the Patna High Court in the case of Bihar State Financial Corporation Vs. Jute Mill Mazdoor Sabha 1995(1) PLJR 186. The Division Bench of the Patna High Court while considering the scope and ambit of section 29 of the Act was of the view that the purpose behind taking over of management or possession or both of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged the entire loan of DFC. This application also contained a prayer of early hearing and so the application was no allowed. Purpose of r referring to this application is only for the limited purpose of taking into consideration the fact of the appellant company being in possession and having no liability to DFC at present. 13. We have considered the submissions advanced by Mr.Sandeep Sethi, learned counsel for the appellant and have gone through the record of the case. Mr.Sethi has taken us through the impugned judgment. In our view the appellant is entitled to succeed in the current appeal in view of the fact that winding up petition itself would not be maintainable without the sanction of the Financial Corporation in view of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 32E sub-section 1 of the Act no proceedings could lie in any court without the consent of the Financial Corporation. The DFC took over the property on 23rd February, 1992 while the petition by the creditors was filed on 3rd March, 1992. In fact the restraint order was passed only on 4th August, 1992 and the winding up petition was admitted on 29th September, 1992. In view of the sequence of these dates and the fact that the DFC had taken over possession of the property prior to these proceedings on 23rd February, 1992 and in respect thereof possession and management being synonymous as the company was lying closed, the proceedings could not have been initiated without the permission of the DFC. 16. We may also add that cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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