TMI Blog2022 (8) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... CA 191 of 2002 and CA 186 of 2001 are pending. Proof to the satisfaction of the Court as required by Section 466 is yet to be recorded by the Company Judge. It is worth noting that Section 466(1) does not use the phrase permanent stay but the expression order staying the proceedings altogether has the effect of permanent stay of proceedings. So far as the effect of order of permanent stay of winding up proceedings is concerned, in the case of SUDARSAN CHITS (I.) LTD. VERSUS O. SUKUMARAN PILLAI [ 1984 (8) TMI 242 - SUPREME COURT], Hon ble Supreme Court has held in para 14 that when winding up order is kept in abeyance it is in the state of suspended animation meaning thereby it was effectively subsisting but inoperative for the time being. This court cannot lose sight of the settled legal position that winding up should be resorted to as the last resort after exhausting all remedies. In the facts of this case and especially considering the fact that the Company is operating as a going concern, it is not in the interest of justice to direct winding up of the company. It is worth noting that a large sum of Rs. 170 crores is lying in deposit with the Registrar of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Yash Singhi, Advocate for Namokar Vinimay Pvt. Ltd. (appellant in APO 143 of 2020) Mr. Jishnu Chowdhury, Advocate Mr. Balaji Chakraborty, Advocate for Baranagore Jute Mills Employees Union (INTUC) (applicant in ACO/15/2022 in APOT/74/2021 and (appellant in APOT/74/2021 Mr. Surajit Nath Mitra, Sr. Advocate Mr. Sankarsan Sarkar, Advocate Mr. Subhrangsu Ganguly, Advocate for Yashdeep Trexim Pvt. Ltd. (appellant in APOT 76/2021 and APOT 80/2021) Mr. Kishore Dutta, Sr. Advocate Ms. Susmita Shaw, Advocate Mr. Rajib Mullick, Advocate Mr. Rakesh Sarkar, Advocate for Lakshmi Singh and INTUC Mr. Jishnu Saha, Senior Advocate Mr. Deepak Jain, Advocate Mr. Ishan Saha, Advocate Mr. Lal Pratap Singh, Advocate Mr. Umesh Pratap Singh, Advocate for Chaitan Choudhury Ridh Karan Rakecha. Ms. Manju Bhuteria, Advocate. Mr. Arun Kumar Mishra, Advocate Ms. Arundhati Barman Roy, Advocate Ms. Tanvi Luhariwala, Advocate for Official Liquidator. Ms. Manju Agarwal, Advocate Mr. Bajrang Manot, Advocate for Radheshyam Ajitsaria other unsecured creditors Mr. Pradeep Aggarwal, Advocate Mr. Arjun Aggarwal, Advocate Mr. Sourav Kumar Mukherjee, Advocate Ms. Anj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 22 July 1872 under the Companies Act 1862 for the purpose of carrying on the business of jute manufacturers at Barnagore, near Calcutta, in what is now the Republic of India. That remains the sole business of the Company. It is common ground that the Company has, now, no connection with England; save that it was incorporated here, maintains its registered office in London and is required to make annual returns to Companies House. 5. C.P. No. 2 of 1987 was filed at the instance of a Partnership Firm being the creditor for winding up of the Baranagore Jute Factory PLC (for short, BJF ) on the ground that BJF had failed to repay its debt. 6. The Company Judge by order dated 11th of February, 1987 had admitted the company petition subject to the scrutiny and had given directions for publication of advertisements. By the same order the Company Court had stayed its order for one week. The order dated 11th February, 1987 reads as under: Under these circumstances, this court admits this petition, subject to scrutiny, for the principal sum of Rs. 13,13,751.51 together with interest and cost of this application assessed at 80 Gms. This court gives necessary direction for publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the Jute Mill to paid by Mr. Mitra s client in the first instance. 9. The order of the learned Company Judge dated 15th September, 1988 was the subject matter of challenge in the Company Appeal wherein the Hon ble Division Bench by order dated 22nd September, 1988 had stayed the winding up proceedings for six months for the time being, by directing as under:- (cc) The winding up proceedings shall remain stayed for six months for the time being. 10. In addition to staying the winding up proceedings the Division Bench had issued various directions including the following: (i) Mr. Nirmal Mitra, Barrister was appointed as Joint Special Officer. (ii) The Committee of Management consisting of one representative each of the three groups and one representative from State Bank of India, one from I.C.I.C.I. and two representatives of the workmen one Jute Technologist and a Chartered Accountant to be nominated by the six Unions, was directed to run the Mill under the Joint Special officer. (iii) The three groups who had submitted scheme for revival were directed to deposit the sum of Rs. 25 lakhs each to the Joint Special Officer for making payment to the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Raj Kumar Nemani praying for stay of the winding-up proceedings of the Company and for revival of the Company as per a Scheme submitted and for appointment of an ad hoc Committee of Management to run the affairs of the said Company. The six Unions agreed to the Scheme as it was to the benefit of the workers. The learned Company Judge stayed the winding up by order dated 15.9.1988 and appointed an ad-hoc Committee of Management to re-open the mills, but however maintained the assets of the Company under the Official Liquidator. One of the creditors filed an appeal against the order dated 15.09.1998. An interim order was passed by the Division Bench of the High Court appointing Joint Special Officers under whose supervision the Committee of Management was to be constituted on an ad-hoc basis with other directions. 5. Mr. Raj Kumar Nemani being aggrieved by the order dated 27.09.1988 passed by the Division Bench filed a special leave petition before this Court on 07.10.1988 and this Court, by an order dated 30.11.1988 directed that the scheme proposed by Raj Kumar Nemani supported by the workers and unsecured creditors be accepted with a direction for implementation of detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.12.1991, the Division Bench of the High Court made an interim order dated 18.12.1981, reiterated on 24.3.1992 directing payment of 1% of the respective claims to all creditors on or before 7.1.1992. The Bench also stayed the order passed by the learned Company Judge dated 16.12.1991 ordering cancellation of the Scheme. A special leave petition was filed against the order dated 24.03.1992 by one of the creditors. This Court directed the appeal pending before the Division Bench of the High Court to be disposed of expeditiously, while also directing payment to the unsecured creditors to be made @ 2% per month from 01.03.1993. The said order dated 22.03.1993 in S.L.P.(C) No. 6505 of 1992 reads as follows: Acumen Trading Corporation Anr. .. Petitioners -Versus- Committee of Management of Baranagore Jute Factory Ors. ..Respondents ORDER 1. We have heard counsel for all the parties. 2. By an order dated 16th December 1991, the learned Company Judge of the Calcutta High Court cancelled the scheme earlier sanctioned on the ground that the terms of the scheme particularly in the matter of the schedule of payments to the creditors had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y subsequent orders, this Court directed the Committee of Management to deposit Rs. 40 lacs in two instalments which was to be deposited in the Registry of this Court. The said amount was kept in term deposits. On 11.03.1994, this Court set aside the order of the Division Bench of the Calcutta High Court passed on 24.03.1992 reducing rate of payment from 2% to 1%. This Court also directed the Committee of Management to deposit from the month of April, 1994 onwards a sum of Rs. 8 lacs per month with the Registry of Calcutta High Court. Further directions were also issued while remanding the matter back to the learned Company Judge for distribution of Rs. 40 lacs amongst the creditors. The above order reads as follows:- Acumen Trading Corporation Anr. .. Petitioners Versus Committee of Management of Baranagore Jute Factory Ors. .. Respondents ORDER 1. We have heard counsel on both sides, originally the learned Company Judge in the High Court directed the Committee of Management to deposit sums equivalent to 2 per cent per month calculated on the basis of the extent of unsecured indebtedness of the company. Subsequently, there was a modification of this order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. The Company Judge also directed certain lump sum payments to six substantial creditors, except Nemani Group on the basis of the list approved in the Court's Scheme prior to cut- off dates in October, 1987 before issuing advertisement inviting claims from creditors, while directing payments to be made to certain parties. 12. In appeal against the said order dated 13.12.1994, the Division Bench allowed the Jain-Jalan group to continue and carry on with the process of the Scheme, but set aside the direction for preferential payment to six named unsecured creditors. 13. The learned Company Judge by order dated 23.12.1996 also directed all unsecured creditors to lodge their claims with the Registrar of the High Court. The learned Company Judge, on the note of the Registrar, directed, inter alia, the Registrar of the High Court to confine to the claims of those unsecured creditors as on 28.10.1987 i.e. the date of winding-up order and the amounts quantified against their names in the list of unsecured creditors appended to the Company Application No.63 of 1987 affirmed on 27.4.1997. Pre-scheme unsecured creditors including the appellants lodged their respective claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Registrar of the High Court upon furnishing the requisite Bank Guarantee. Learned single Judge of the High Court passed an order on 19.12.2002, inter alia, holding that the possession of the Company by the alleged Board of Directors was wrongful, while directing the Official Liquidator to take possession of the Company (in liquidation). Several appeals were preferred from the order. The Division Bench, while staying the operation of the order dated 19.12.2002, directed the Joint Special Officers to take possession. 16. The Division Bench in appeals filed against the order dated 08.03.2001 made an order dated 3.3.2004 directing re- adjudication of the claims of the appellants which had already been adjudicated. According to the appellant, the Division Bench without appreciating that the appeal itself was not maintainable having been filed by 9 outsiders having no locus standi is not correct in directing re-adjudication of the claims of the petitioner. The Bench also dis-allowed the appellant's rights to claim the said amount as a member approved in the list of unsecured creditors distinct from the Nemani group. Being aggrieved by the impugned judgment dated 3.3.2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any event, it has been clearly recorded in the order dated 18-11- 2004 whereby the said Chetan Choudhary Group has been allowed to continue in management, that the said Chetan Choudhary Group is being allowed to be continued on the same terms and conditions as under the original sanctioned scheme, thus making them liable to make payments of all dues, past or present. (d) Therefore, the Company being a running concern, the alleged dues of the workers cannot be claimed against any specific member of the Management Committee. The dues, if any, are against the Company and not against any individual members of the Committee of Management. There is no question therefore of holding up payment due to the unsecured creditors on the ground that workers' dues are alleged to be outstanding. (e) Further, since the Company still continues to function, Section 529-A of the Companies Act cannot be pressed into service by the workers. The protection of Section 529-A is available only when a company has been wound up, the Official Liquidator has taken over the assets and disbursements are being made by the Official Liquidator in the course of winding up of the company. There is no ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management is being replaced by another Committee of Management on the same terms and conditions with an object to implement the same scheme. Thus the dues of the creditors including the workers and other statutory dues are to be paid by the Committee of Management. Even at present the Company is being run by a Committee of Management and is now supported by the workers as would appear from the order dated 18-11-2004. 18. In paragraph 59 of the above judgment, it was very clearly found by the Hon ble Supreme Court that the Company was not wound up but allowed to continue as a going concern by holding as under: 59. It is important to note that by orders of the Court, the Company (in liquidation) was not in fact wound up but was allowed to continue as a going concern. This was undoubtedly in the interest of the workers. So long as the Company continued as a going concern, the workers not only continued to get their wages and other benefits and also retained their rights to be reimbursed out of the assets of the Company in the event that the assets have to be sold in winding up. In fact, the fixed assets of the Company are enormously valuable. It has land in excess of 50 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 2008 and this scheme was sanctioned by the BIFR with some modification on 4th of November, 2009. It is worth noting that Section 22 of SICA, 1985 relating to suspension of legal proceedings, contracts, etc. provides that pending any enquiry under Section 16 or scheme referred to under Section 17, no proceedings for winding up of the industrial company or for execution, distress, etc, shall lie or be proceeded with further except with the consent of the Board or by the Appellate Authority. 21. At this stage, it would not be out of place to note that in Madura Coats Limited vs. Modi Rubber Limited and Another reported in (2016) 7 SCC 603 the Hon ble Supreme Court, in a case wherein a company directed to be wound up but the winding up proceedings were stayed, has held that when proceedings are pending both before BIFR and the Company Court but no order of winding up has been passed against the company, in such a situation the provisions of SICA would prevail over the provisions of the Companies Act. It has been held that the reference can also be made to the BIFR and then SICA will over-ride the Companies Act. 22. Three separate writ petitions bearing No. 12377, 12406 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the company would be left with surplus of nearly Rs. 50,00,00,000/- and would not be a sick company anymore. The observations of the Hon ble Supreme Court in the matter of Yash Deep Trexim (P) Ltd. (supra) in this regard are as under: 14. Having noted the broad features of the grievances raised in each of these appeals we may now take note of certain connected facts on the basis of which we will be required to decide the necessity and expediency to adjudicate the core question arising in these appeals and the other issues that have been sought to be agitated before us. It has already been stated in the earlier part of this order that the respondent Company is the owner of vast tracts of immovable property in and around Kolkata which has, with the passage of time, appreciated in value. Way back in the year 1988 an area of about 24 acres of land owned by the Company was acquired for the purpose of building, maintenance, management and operation of the second Vivekananda Bridge across River Hoogly. In the year 2003 provisional compensation was assessed at Rs 21,28,21,000 and on deposit of the said amount possession of the land was taken over. The acquisition of the land came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the present financial health of the respondent Company it is clear that the Company can no longer fall within the ambit of the expression sick industrial company as defined in Section 3(1)(o) of the Act. Further applicability of SICA to the respondent Company, therefore, does not arise. 20. I f the respondent Company no longer falls within the ambit of a sick industrial company as defined by Section 3(1)(o) of the Act and the Act has ceased to apply to the Company and the rehabilitation package worked out by the Board has not yet been implemented, the question(s) arising in the present appeals have surely become academic and redundant. If that be so, we do not see why we should answer the said question(s) in the present group of appeals. Instead, in the fitness of things, we should leave the said question(s) open for determination in an appropriate case and as and when the occasion would arise. 25. In respect of the issue of management of the company, in Yash Deep Trexim (P) Ltd. (supra) it was directed that for the present, the management of the company as on date would continue until further order, by holding as under: 21. Insofar as the other issues, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up proceeding has been permanently stayed or not is still an alive issue which is required to be resolved by the Company Court. Contradictory stand, taken by the parties against each other on the issue of permanent stay of the winding up proceeding, leads us to investigate deep into the matter to find out the present stage of the said winding up proceeding. In this regard, it is worth mentioning here that apart from mentioning that the Company is a going concern and the winding up proceeding against the said company has been permanently stayed under Section 466 of the Companies Act, 1956, by the Hon ble Supreme Court in the said judgment dated 24th May, 2006 passed in the Civil Appeals No.4101-4103 of 2004, the order passed by the Company Court and/or any other competent Court staying the winding up proceeding against the said company permanently under Section 466 of the Companies Act, 1956, could not be produced before this Court by the appellant/petitioner in spite of repeated insistence of this Court. An order of permanent stay of the winding up proceeding is a judicial order to be passed by the Company Court under Section 466 of the Companies Act, 1956, which the appellant/pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this stage, the aggrieved party will lose a forum of appeal for challenging our order on this issue. Considering the amount of deposit which the appellants want to withdraw, and the company s indebtness to its various creditors and the quantum of its liability, coupled with the facts that even the workers have not been paid their dues, we do not feel it safe to allow a particular group of shareholders, who are described as interloper by the creditors, to withdraw the money deposited with the Registrar, Original Side of this Court without deciding the said issue finally, particularly when we find that the appellant/applicant themselves have filed an application being C.A.No. 957 of 2010 praying for permanent stay of the company petition No.2 of 1987 which is yet to be decided finally. In the aforesaid context, we do not find any illegality in the impugned order passed by the Learned Company Court proposing to dispose of all the pending applications simultaneously. 27. The Hon ble Division Bench with the aforesaid observation had affirmed the order of the learned Single Judge. 28. Against this order, SLP (C) No. 2814-2815 of 2015 was preferred wherein, Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the status of a going concern which will be left with a cash surplus after pending debts/obligations are met from out of the funds pumped in by NHAI. (vi) Sum of Rs. 8 lacs only directed to be periodically deposited by the Company to the Registry of this Court towards satisfaction of part of the Company s dues, has remained largely unpaid till date. (vii) About cut-off date the Company Judge found the argument to be more deserving that the status of the creditors and/or other claimants to the dues has acquired a representative character. (viii) The creditors, workers, bankers, financial institutions, then and now can be considered to be in queue for their dues up to the stage of their proximate transactions with the Company at the time the Company was referred to the BIFR. (ix) The Company s Books of Accounts remain a mystery wrapped in an enigma. 31. The Company Judge in the impugned order has recorded further findings and has issued following directions: (a) The Company Court continues to be in the position of custodia legis of the Company/BJF. (b) Ipso facto there is no permanent stay of winding up. (c) The Company Judge appointed a three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the learned Single Judge would warrant interference in appeal, based on well settled principle of law that the court in the exercise of its jurisdiction under Clause 15 of the Letters Patent would not interfere with an order of the learned Single Judge even if the learned Single Judge has taken a possible view. The judgment of the learned Single Judge is, in our view, not merely a possible view to take but the only correct view based on the facts and circumstances of the case. 35. The moot question in these appeals is if there is a permanent stay of winding up proceedings. Rival submissions have been advanced by the learned counsel for the parties on the observation of the Hon ble Supreme Court about permanent stay in the matter of Radheshyam Ajitsaria Anr. (supra). Submission of Mr. Mitra, learned Senior Counsel for the appellant, placing reliance upon the judgment of the Hon ble Supreme Court in the matter of S. Nagaraj (Dead) by LRs. And Others vs. B.R. Vasudeva Murthy and Others [(2010) 3 SCC 353] is to the effect that even if the judgment of the Hon ble Supreme Court is per incuriam, bar of res judicata operates and that once the Hon ble Supreme Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in this regard. 37. Section 466 of the Act deals with power of tribunal to stay winding up and provides as under: 466. Power of Court to stay winding up. ( 1) The Court may at any time after making a winding up order, on the application either of the Official Liquidator or of any creditor or contributory, and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the Court thinks fit. (2) On any application under this section, the Court may, before making an order, require the Official Liquidator to furnish to the Court a report with respect to any facts or matters which are in his opinion relevant to the application. (3) A copy of every order made under this section shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the company. 38. A bare reading of the said Section reveals that following two conditions are required to be satisfied for bringing an order of permanent stay of wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory requirement is that there must be proof which is brought before the court on the basis of which it is satisfied that the proceedings ought to be stayed. 12. The language of Section 466 of the Companies Act, 1956 has been interpreted, as we shall indicate, by courts in India having due regard to the corresponding principles under the provisions of the English Companies Act. An early decision on the subject in the UK was a judgment of Lord Esher, M.R. speaking for the Court of Appeal in Re Flatau 2. The judgment of the Court of Appeal followed an earlier decision in re Hester 3 which had laid down the rules for a rescission of a receiving order in bankruptcy. In that context, Lord Esher had held as follows: 18-A. In the Court of Appeal, Lord Esher, M.R., stated (p.639): Although the consent of all the creditors has been obtained, the Court will still consider whether what they have agreed to is for the benefit of the creditors as a whole. The Court has gone still further, and, I think rightly so, and has said that under the present Bankruptcy Act it will consider not only whether what is proposed is for the benefit of the creditors, but also whether it is condusive or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Justice S.R. Das (as the learned Judge then was adverted to the position in English law as summarised in Halsburry's Law of England, thus : In the exercise of its jurisdiction to stay, the Court, so far as possible, acts upon the principles applicable in exercising jurisdiction to rescind a receiving order or annul an adjudication in bankruptcy against an individual. The Court refuses, therefore, to act upon the mere assent of the creditors in the matter, and considers not only whether what is proposed is for the benefit of the creditors, but also whether the stay will be conducive or detrimental to commercial morality and to the interests of the public at large. In particular, the Court will have regard to the following facts; That directors have not complied with their statutory duties as to giving information to the official receiver or furnishing a statement of the affairs; that there has been an undisclosed agreement between the promoter and the vendor to the company as to the participation by the former in fully paid up shares forming the consideration for the purchase of property by the company on its formation; that the promoter has made gifts of fully paid up sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial morality and not merely the wishes of the creditors and contributories, (6) Court will refuse an order if there is evidence of misfeasance or of irregularity demanding investigation, (7) a firm and accepted proposal for satisfying all the creditors must be before the Court with material particulars, (8) the jurisdiction for stay can be used only to allow in proper circumstances a resumption of the business of the company, (9) the Court is to consider whether the proposal for revival of the company is for benefit of the creditor but also whether the stay will be conducive or detrimental to the commercial morality and to the interest of the public at large, (10) before making any order Court must see whether the Ex-directors have complied with their statutory duties as to giving information to the Official Liquidator by furnishing the statement of affairs, (11) and any other relevant fact for granting or not granting the stay having regard to the peculiar facts of a particular case. 44. The above judgment has been duly noted by the Division Bench of Calcutta High Court in the matter of Bank of India vs. Official Liquidator and Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsisting the court which made that order or the court which kept it in abeyance will have jurisdiction to give necessary directions to the Provisional Liquidator to take recourse to Section 446(2). 46. The Division Bench of this Court in the case of Asset Reconstruction Company (India) Ltd. vs. Bengal Shelter Housing Development Limited, 2017(3) CHN (CAL) 192 has held that Company petitions even when dismissed on merits are traditionally not recorded or disposed of but permanently stayed. 11. A note by way of a post-script: Company petitions, even when dismissed on merits are traditionally not recorded as dismissed or disposed of; but are permanently stayed. Dismissal is recorded only when the petition is not maintainable or is barred by law. The effect may not be any different from recording a disposal, but there is a history of more than a century that goes behind such recording, which must be respected. 47. Calcutta High Court in the matter of In Re: Prudential Capital Markets Ltd., (2008) 1 CompLJ 314 (Cal) has held that even if there is an order of stay, it is not a permanent stay without effect of completely obliterating the order of winding up, so t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings are concerned, they are at the same stage in which they were on the date of passing of the winding up order, about 35 years back as on 28th of October, 1987. 50. The fact that Official Liquidator is not in possession of the assets of the company in liquidation, is clearly mentioned in the affidavit of the Official Liquidator dated 26th of February, 2015 filed before the Hon ble Supreme Court, relevant part of which is quoted as under: ...4. That in terms of the orders passed by the Hon ble High Court at Calcutta from time to time on 26.12.1994 the Official Liquidator handed over all the assets and properties of the company to the then Committee of Management appointed by the Hon ble High Court at Calcutta. A godown space which was given on rent to the Central Warehousing Corporation was kept in possession under the office of the Official Liquidator and the Official Liquidator continued to receive the rent from the Central Warehousing Corporation. A copy of the minutes of handing over the properties dated 26.12.1994 is annexed hereto and marked as A . 5. It is stated that after the stay of the winding up order by the Hon ble Court, the company was running a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that presently the Official Liquidator is in no way concerned with the Baranagar Jute Factory PLC, which is now running and operating independently as a going concern. This office has no other Books, Accounts and documents which is left to be handed over to the Respondent No. 1 company. 51. In the present case, it is also worth noting that the Hon ble Supreme Court in the order dated 30th of November, 1988 had opined that the scheme supported by the workers and unsecured creditors of Raj Kumar Nemani, be accepted and a detailed scheme on that basis be formulated and be implemented as soon as possible, therefore, the Company Judge was directed to work out the scheme. The Record further reflects that the Company Judge had approved the scheme dated 16.06.1989. Though the Company Judge by order dated 16.12.1991 had cancelled the scheme observing that the scheme had totally failed but the Division Bench in appeal had passed the interim order dated 18.12.1981 staying the order of the Company Judge dated 16.12.1991. In S.L.P.(C) No. 6505 of 1992 by the order dated 22.3.1993, Hon ble Supreme Court had directed the Division Bench to dispose of the appeal by observing that the stay o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Shree Niwas Girni K.K. Samiti and Others [(2007) 7 SCC 753] the Hon ble Supreme Court has considered the scope of Sections 391 and 466 of the Act and has held that there is no difficulty in reconciling the need to satisfy the requirement of both Sections 391 to 394-A and Section 466 of the Companies Act. There is no incongruity in looking aspects of public interest, commercial morality and the bona fide intention to revive a company while considering whether a compromise or arrangement put forward in terms of Section 391 of the Companies Act should be accepted or not. The Judgment in the matter of Meghal Homes (P) Ltd. (supra) has been noted with approval by the Hon ble Supreme Court in the matter of Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Another [(2021) 7 SCC 474]. Hon ble Supreme Court in the matter of M/s. J.K. (Bombay) Private Ltd. vs. M/s. New Kaiser-I-Hind Spinning and Weaving Co. Ltd. [AIR 1970 SC 1041] has held that the scheme of payment to creditors has statutory force and is binding on creditors and share holders. So long as company is carrying out the scheme no winding up order can be passed. The Hon ble Supreme Court in this regard h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors or members as the case may be. 55. This court cannot lose sight of the settled legal position that winding up should be resorted to as the last resort after exhausting all remedies. In the facts of this case and especially considering the fact that the Company is operating as a going concern, it is not in the interest of justice to direct winding up of the company. It is worth noting that a large sum of Rs. 170 crores is lying in deposit with the Registrar of this Court and possibility of some of the contesting parties having an eye on it cannot be ruled out. Hence, every effort is required to be made to ensure the amount is utilized for rightful purposes. 56. Thus, on the basis of the aforesaid analysis and after perusal of the record, we find that: a. The winding up order passed by the Company Judge on 28th of October, 1987 was stayed by the Division Bench by order dated 22nd of September, 1988 for a period of 6 months. Thereafter, there is no material available on record indicating that the order of stay was extended by the Division Bench any further. b. On staying the winding up order for six months by order dated 22nd of September, 1988, the Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ep Trexim Private Limited (supra). It has also been noted by the Hon ble Supreme Court in the case of Yash Deep Trexim Private Limited (supra) that even after meeting its statutory and contractual obligations and liabilities the company would be left with a surplus of nearly 50 crores. 57. The aforesaid fact situation clearly indicates that for all practical purposes there is permanent stay of the winding up proceedings and only a formal order of permanent stay is required to be passed by Company Judge after obtaining audit report and recording a finding relating to satisfaction of settled conditions for such order. 58. The Company Judge is right in observing that the Company/BJF continues to be monitored by the Court at various stages through its CoMs, Joint Officers etc. In the facts of the case, we also find no error in the conclusion of the learned Company Judge about the transformation of BJF into an entity custodia legis. However, we are unable to concur with the conclusion of the learned Company Judge about the cut-off date for creditors, workers, financial institutions and bankers as the period when the company was referred to BIFR for rehabilitation scheme. Rule 154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is already kept in deposit before the Registrar of this Court as also the observation of the Hon ble Supreme Court in the judgments noted above as also of this Court in this order about the circumstances relating to permanent stay, the Company Judge will settle the claims upto the cut-off date and pass appropriate order for permanent stay of winding up proceedings in accordance with law. iv. All other claimants, including the PF authorities, having their claims after the cut-off date will be at liberty to approach the competent Forum/take action in accordance with law. v. On passing the order of permanent stay of winding up proceedings, the parties will be at liberty to approach NCLT or any other appropriate forum for settling their dispute relating to right of management and issue of mismanagement, oppression, etc. in accordance with law. vi. This Court has the responsibility to ensure that the amount in deposit with the Registrar of this Court does not go to the wrong hands, therefore, it is directed that on passing the order of permanent stay by the Company Judge, the amount in deposit with the Registrar will not be released to any of the parties for six mon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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