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Judgment
F.I. Rebello, J.—On admission, the petition has been advertised as required. Affidavit to that effect has been filed and taken on record.
It is the case of the petitioner that the company is justly indebted to them for a sum of Rs. 2,43,22,000 which includes outstanding" principal and over due interest as on December 31. 1997. The said amount is in respect of the financial assistance in the form of loan granted by the petitioners to the company.
It was the case of the company that the suit had been filed against the company for recovery of the outstanding" dues. Since 1989, the company is not carrying on its business activities and it has become totally impractical for the respondent-company to function smoothly for reasons set out in the petition. On July 20, 1994, both movable and immovable properties of the company were sold by the court receiver. The company approached the BIFR on March 1, 1988. On June 13, 1989, the BIFR passed an order holding that it was not possible to revive the company and consequently the company should be wound up. On May 27, 1991, an appeal was preferred against the said order before the AAIFR. The said appeal was dismissed. A writ petition has been filed before the Madhya Pradesh High Court challenging the order of the BIFR and the AAIFR. The petition has been admitted and is pending. On July 13, 1995, in the said petition, an interim relief was moved by the company for stay of recovery proceedings. The said relief was granted but thereafter at the request of the respondent-company it was vacated. On November 27, 1997, by an order an application to restrain the court receiver from selling the property was rejected.
By order dated November 12, 1998, the learned single judge of this court was pleased to admit the petition after holding that the pendency of the petition before the Madhya Pradesh High Court staying the operation of the order of AAIFR would not stand in the way of admission of the company petition.
The principal contention on behalf of the company is that the petition is pending before the Madhya Pradesh High Court and in that light of the matter this court should not proceed to wind up the company as effect, if any, of the order setting aside the order of the BIFR and the AAIFR would be to reopen the proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985.
I need not deal with the said issue as in my opinion the matter stands concluded by the judgment of the apex court in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [1992] 75 Comp Cas 440. In the said case also the BIFR and the AAIFR had rejected the application of the company. A writ petition came to be filed before the High Court of Delhi. The writ petition was admitted and pending hearing of the interim application, an interim order was granted on February 21, 1991, staying operation of the order of the AAIFR. The company during the pendency of the said order was ordered to be wound up by the single judge of the Karnataka High Court by order dated August 14, 1991. One of the questions that arose before the apex court was as under :
"What is the effect of the order passed by the Delhi High Court dated February 21, 1991, staying the operation of the order dated January 7, 1991, passed by the appellate authority ? Does it mean that, after the passing of the said order by the High Court, the proceedings under the Act should be treated as pending and, if so, before which authority ?"
After considering the provisions of the Act and more specifically Sections 22 and 25 of the Sick Industrial Companies (Special Provisions) Act, 1985, the apex court held that mere order staying the proceedings would have no effect and that the company court had jurisdiction to proceed with the matter. Therefore, the very point which is sought to be argued by the company herein was in issue before the apex court and the apex court has clearly held that in spite of the order of stay, the company court has jurisdiction to proceed with the company petition for winding up.
It is true that at the same time this court will bear in mind the fact that the petition for winding up has been filed and in fact discretion in this matter to proceed or not to proceed will depend on the facts of each case. In the instant case, it is an admitted position that the company''s operation has been discontinued since 1987. The assets both movable and immovable of the company were with the receiver who had ordered sale of both movable and immovable properties. Sale in respect of the movable property has been concluded and the machinery has been sold. In so far as the immovable property is concerned, the sale has not been confirmed and would be again subject to further direction that may be issued. However, what is clear is that the assets of the company are no longer available to the company for carrying on its business in terms of its articles and memorandum of association. In this light of the matter and moreover considering that the business activities of the company has been stopped, I do not think this to be a case where discretion should be exercised in favour of the company and the company court will have jurisdiction to decide the company petition irrespective of the pendency of the writ petition before the Madhya Pradesh High Court.
In the light of the above as the company has no defence and as the petitioner has made out a case that the substratum of the company has disappeared, this would be a fit case for winding up the company. In that light of the matter, the following order :
The petition made absolute in terms of prayer Clauses (a) and (b).
Drawn up order dispensed with.
The official liquidator to act on the ordinary copy of this order duly authenticated by the Company Registrar of this court.