JUDGMENT 1. - The petitioner Company, namely; Rajasthan State Agro Industries Corporation Ltd., (hereinafter referred to as the company) is a Government Company within the meaning of Section 617 of the Companies Act. This petition for winding up is by the Company itself on the ground set out in clauses (a), (e) and (f) of S. 433 of the Companies Act, i.e. on the footing that: (i) The Company has by its special resolution, resolved that Company may be wound up by the Court; (ii) The Company is unable to pay its debt; (iii) That it is just and equitable that the Company should he wound up. 2. For deciding whether the Company may be ordered to be wound up and also to resolve the controversies raised in the petition, it is necessary to set out the factual background relating to the Company and the circumstances leading to this petition, which are thus: (i) The Company was incorporated under the provisions of the Companies Act, 1956 on 1st August, 1969. The objects main or incidental and ancillary are described in para 3 of the petition, which are as under: "(1) To aid, assist, promote or establish, develop or execute agro-industries, projects or enterprises or programmes for manufacture or production of plant, machinery, implements, accessories, tools, materials, substances, goods or things of any description which in the opinion of the Company is likely to promote or advance the agro-industrial development of Rajasthan. (2) To organise, conduct or manage engineering or repair shops or workshops of all description and to manufacture, import, export, buy, sell or otherwise deal in workshops, machinery, agricultural machinery, implements, machine tools, accessories and metals of all kinds." (ii) The Company came to be established under Central Government scheme to promote establishment of State Agro Industries Corporations with the object of making available in-puts and services required by a rapidly modernising agriculture and for promoting agro based industries. The National Commission on Agriculture in its report had also recognised dispersal of agro processing activities to inaccessible areas as the responsibility of the State Agro Industries Corporations and recommended that they should make arrangements for the disposal of industrial products manufactured in small and medium sectors under their patronage. The authorised share capital of the Company as on the date of incorporation was Rs. The authorised share capital of the Company as on the date of incorporation was Rs. 5 Crores which was increased to 10 Crores divided into 5 Lacs equity shares of Rs. 100/- each. The increase in the authorised share capital was done vide amendment adopted in the adjourned 22nd Annual General Meeting of the share-holders held on 6.4.1992. The issued and subscribed capital of the Company as on 31.3.1992 was as under: (i) Share capital of the Central Govt. Rs. 1,87,77,600/- (ii) Share capital of the State Govt. (Governor of Raj.) Rs. 3,80,95,800/- Total Rs. 5,68,73,400/- (iii) As per the petition, since its establishment from 1.8.1969, the Company had been incurring losses year after year except marginal profits during four years, i.e. 1971- 72, 1974-75, 1975-76 and 1979-80. The huge losses suffered by the Company year after year were met out by obtaining short and long term loans from the State Government as the Central Government expressed its unwillingness either to increase its share capital or allow any future financial assistance to the Agro Industries Corporations. The Ministry of Agriculture, Government of India, vide its letter dated March 31,1994 proposed to dis-invest Central Government share holdings in the State Agro Industries Corporations as per decision of the National Development Council. The Government of India, therefore, agreed in principle for dis-investment in favour of the respective State Governments and in the case of the petitioner company, whose net worth had become negative, the Government of India expressed its willingness to pass on its share holding for a token consideration of Rs. 1,000/- for the value of shares. The above proposal was examined by the State Government and it was agreed that the Central Government may transfer certain number of shares to the Secretary, Agriculture of State and remaining shares Governor of Rajasthan and a letter to that effect was sent by the Government of Rajasthan on 12.9.1995 seeking approval of the Government of India. The Ministry of Agriculture vide its letter dated 12th December, 1995 conveyed its consent and it was agreed to transfer (i) 1,86,776 shares of Rs. 100/- each with a total face value of Rs. 1,86,77,600/- (Rupees one crore eighty six lacs seventy seven thousand and six hundred only) to the Governor of Rajasthan; (ii) One thousand shares of face value of Rs. 100/- each with a total face value of Rs. 1,86,77,600/- (Rupees one crore eighty six lacs seventy seven thousand and six hundred only) to the Governor of Rajasthan; (ii) One thousand shares of face value of Rs. 1.0 lacs (Rupees one Lacs only) in favour of Secretary, Department of Agriculture, Government of Rajasthan.) The transfer was in token consideration of Rs. 1,000/- in view of the fact that as per annual report of the Company for the year 1992-93 its net worth was negative to the extent of Rs. 8.5 Crores. Accordingly, a meeting of the Board of Directors was convened to be held on 6.3.1996 to give effect the above proposals. In the meeting necessary resolutions were passed and it was also resolved that the amount of Rs. 32 Lacs lying as application money of the State Government for allotment of 32,000 preference shares be accepted and shares to that effect be issued to the State Government. After passing of the aforesaid resolution by the Board of Directors on 6.3.1996 position of share holding as on 31.3.1996 was as under: (a) Equity share holding No. of Shares Amount Percentage (i) State Govt. (Governor of Rajasthan). 499999 4,99,00,000 99.8% (ii) Secretary, Deptt. of Agriculture Govt. of Raj. Jaipur. 1000 1,00,000 00.2% (b) Preference share holding State Govt. (Governor of Raj.) Total 100734 1,00,73,400 ____________ 6,00,73,400 ____________ 100% (iv) As per audited Balance Sheet for the year 1994-95, the financial position of the Company was as under: (a) Authorised capital Rs. 10 Crores. (b) Paid up capital Rs. 6 Crores (Proximate) (c) Accumulated losses Rs. 16.17 Crs. (d) Loans and interest payable thereon Rs. 19.07 Crs. (e) Current liabilities. Rs. 9.99 Crs. (f) Fixed Assets Rs. 1.17 Crs. (g) Current Assets Rs. 15.67 Crs. (h) Loans and Advances Rs. 2.20 Crs. The details of the loans taken from the State Government of Rajasthan and the interest payable thereon is as under: (a) Short term loan Rs. 12.30 Crs. 1988-89 6.30 Crs. 1990-91 4.00 Crs. 1991-92 1.00 Crs. 1992-93 1.00 Crs. __________ 12.30 Crs. __________ (b) Long term loan: Rs. 0.334 Rs. 1974-76 0.23 Crs. 1980-85 0.104 Crs. __________ 0.334 Crs. __________ (c) Interest on short to loan Rs. 6.04 Crs. (d) Interest on long terms loan Rs. 0.40 Crs. TOTAL : Rs. 12.30 Crs. 1988-89 6.30 Crs. 1990-91 4.00 Crs. 1991-92 1.00 Crs. 1992-93 1.00 Crs. __________ 12.30 Crs. __________ (b) Long term loan: Rs. 0.334 Rs. 1974-76 0.23 Crs. 1980-85 0.104 Crs. __________ 0.334 Crs. __________ (c) Interest on short to loan Rs. 6.04 Crs. (d) Interest on long terms loan Rs. 0.40 Crs. TOTAL : Rs. 19.074 Crores (v) It was stated in the petition that the Company was una ble to pay its debt as it was running in losses continuously for years together. There were repeated reminders on behalf of the State Government for making repayment of the outstanding amounts. Some of them have been placed on record which pertain to the period from 21.2.1992 to 29.5.1995. In response, the Company informed to the Chief Accounts Officer of the Directorate of Agriculture Department vide its letters dated 22/23.7.1992 and 10.7.1995 that it was not in a position to repay the loan and interest accrued thereon due to its adverse financial position. It was also intimated that the State Government had taken a decision for winding up the Company and the resources which may be generated during the winding up proceedings alongwith any assistance received from the State Renewal Fund were to he utilised to meet the winding up labilities .s in accordance with law. (vi) In paragraph 16 of the petition, details of the assistance/relief/ concession extended by the State Government to the Company from time to time, in order to improve financial condition of the Company have been described. Inspite of all these, the Company could not improve its position and quantum of losses went on increasing and in the year 1994-95 the accumulated losses reached to the tune of Rs. 1616.83 Lacs. (vii) On 23rd July, 1992, meeting of a high power committee was convened under Chairmanship of the State Chief Minister to discuss steps and measures and the alternatives available. In the meeting, besides the Chief Minister, State Ministers for Medical and Health; for Agriculture; Development Commissioner Rajasthan; Principal Secretary Finance, Principal-cum-Managing Director of the Company; Chief Engineer, EW.D. Rajasthan, Chief Engineer, P.H.E.D. and the Deputy Secretary of the Government Agriculture Department participated. In the meeting, besides the Chief Minister, State Ministers for Medical and Health; for Agriculture; Development Commissioner Rajasthan; Principal Secretary Finance, Principal-cum-Managing Director of the Company; Chief Engineer, EW.D. Rajasthan, Chief Engineer, P.H.E.D. and the Deputy Secretary of the Government Agriculture Department participated. After due deliberations and taking into consideration all relevant information's relating to the Company, including its profit and loss position over years, nature of operation, capital structure, employees strength and future prospects and finding no way to run it in profit, it was decided that the Company needed to be wound up. The Chairman-cum-Managing Director of the Company was directed to work out legal modalities for closing the Company. It was also decided to form a committee under Chairmanship of Shri Rajendra Jain, Development Commissioner to work out for absorption/re-employment of surplus employees in public enterprises. The minutes of the committee have been placed on record as Annexure 29. (viii) Subsequently, a meeting was again convened on 4.1.0.1993 under Chairmanship of Principal Secretary, Agriculture, which was attended by Chairman-cum-Managing Director of the Company; Special Secretary Industries; Director of Agriculture; Deputy Secretary Finance Department; Secretary-cum-Financial Advisor, Rajasthan State Agro Industries Corporation Ltd., Deputy Secretary Agriculture (Gr. I). In the meeting option for revival of the Company was also considered but it was not found feasible. Hence, decision to winding up the Company was reiterated and firm line of action regarding retrenchment or absorption of the employees was felt necessary at the earliest. Thereafter, the Council of Ministers in its meeting held on 21.2.1995, after considering the exercise made so far in the matter, took a decision vide Cabinet Memo 13/95 No. D-5/5/MM/95 to wind up the Company. For employees of the Company it was decided that option of availing voluntary retirement under the Voluntary Retirement Scheme (VR.S.) be extended to all eligible employees and retrenchment provisions under Industrial Disputes Act, 1947 (for short 'I.D. Act') or the relevant service rules be invoked in cases of those employees who did not upto for voluntary retirement. The Managing Director of the Company was authorised to initiate all legal steps for winding up of the Company and implementation -of decisions taken in the meeting of the Council of Ministers. The Managing Director of the Company was authorised to initiate all legal steps for winding up of the Company and implementation -of decisions taken in the meeting of the Council of Ministers. The approval of the Governor of Rajasthan to wind up the Company, in accordance with Article 77(2) of the Memorandum and Articles of Association of the Company, was also obtained vide letter No. F. 3(5) Agri/Inputs/92 dated 10.5.1995. That, an extraordinary general meeting of share-holders in accordance with provisions of the Companies Act was convened after special notice of the 5 meeting and resolution proposed to be taken in the meeting. The extraordinary general meeting was held on 30th May, 1.996 wherein it was resolved to wind up the Company and to file an application for winding up before the High Court of Rajasthan at Jaipur. The Managing Director of the Corporation was authorised to take all necessary steps and action and to file pleadings and papers required for this purpose. A copy of this resolution has been placed on record as Annexure 2. (ix) With regard to the employees of the Company it has been averred in the petition that 169 employees had opted and sought retirement under V.R.S. They voluntarily retired and were paid in the tune of Rs. 4,98.23.731.35 as per the statement in Schedule 'A filed alongwith the petition. In addition to them, 55 employees were absorbed on suitable posts in various other public undertakings and autonomous bodies as per Schedule 'B'. 28 other employees as per Schedule 'C' submitted applications seeking voluntary retirement till the date of filing the petition. Thus, according to the petition, out of 495 total employees of the p Company, 252 employees either accepted/opted voluntary retirement under V.R.S. or were absorbed in other public undertakings and autonomous bodies of the State. After filing of the petition, as stated by Shri U.N. Bhandari, 4 more employees hive opted voluntary retirement under the V.R.S. and 42 employees have been absorbed in other public undertakings. Thus, 197 employees have s remained, out of them two have attained the age of superannuation. For the remaining 195 employees, Mr. Bhandari made a statement on behalf of the State Government to be agreeable to give benefit under V.R.S. it they so desire even now though cut off date had already expired. Thus, 197 employees have s remained, out of them two have attained the age of superannuation. For the remaining 195 employees, Mr. Bhandari made a statement on behalf of the State Government to be agreeable to give benefit under V.R.S. it they so desire even now though cut off date had already expired. (x) The latest audited-Balance Sheet of the Company for the year 1994-95 - (Annexure 43) and an un-audited provisional Balance-Sheet as on 31.3.1996 (Annexure 44) have been filed alongwith the petition to give latest financial position of the Company. The provisional Balance-Sheet shows that total paid-up share capital of the Company was about 6 Crores rupees, its accumulated losses had gone to the extent of Rs. 18,74,80,990/- and liability towards out standing loans as on 31.3.1996 was to the tune of Rs. 20,20,91,929/-. On the basis of these facts the petition for winding up was filed on 19.8.1996. 3. On 20.8.1996 this Court ordered winding up petition to be advertised in newspapers 'Rajasthan Patrika' (Jaipur Edition), and Indian Express (English) Delhi Edition fixing the date of hearing. Pursuant to that Krishi Udyog Nigam Karamchari Union Rajasthan, Rajasthan Agro Employees Union and some employees of the Company have intervened and filed application for being impleaded as parties. They also filed objections in opposition to the winding up.They disputed that the Company was running in losses. According to them. the Profit and Loss Accounts and the Balance-Sheets of the Company did not disclose a true and correct picture of financial position of the Company. In any case, according to them, the losses incurred by the Company were due to mis-management and huge establishment expenses incurred by the Company, Shri Paras Kuhad and Shri Suresh Kashyap, learned counsel appearing for the unions and employees, contended in this connection that the Company has a large piece of land which can fetch good amount if sold to improve financial condition of the Company. They submitted that the State Government is owner of the Company having 99.8% share holdings and also the principal creditor. The Company being of vital importance as it manufactures agricultural implements and goods of alike nature, as such, even the Company is running in loss, the State Government professing to be a welfare State, should not be allowed to wind up the Company. The Company being of vital importance as it manufactures agricultural implements and goods of alike nature, as such, even the Company is running in loss, the State Government professing to be a welfare State, should not be allowed to wind up the Company. The winding up of the Company shall not be in national interest or in the interest of the farmers, workmen and employees of the Company. Other objections relate to non- maintainability of the winding up petition under the Companies Act on account of over-riding effect of the provisions of I.D. Act in general and Section 25-(o) in particular and also for the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (shortly called ' the Act of 1985') in relation to a sick industrial Company, According to learned counsel the I.D. Act and the Act of 1985 are special and beneficial piece of legislation and they should be given full effect rather to allow their breach. 4. Shri B.P. Agrawal, learned Advocate General for the State and Shri U.N. Bhandari, appearing for the Company, vehemently refuted the above objections and submissions. According to them, there is no basis and material on record to challenge correctness of Profit and Loss Accounts and Balance-Sheets of the Company which are duly audited by Chartered Accountants or that they did not disclose correct financial position of the Company. They submitted that the Company is a separate and distinct legal entity and it is the financial position of the Company which is relevant for its winding up. It is irrelevant for maintaining a winding up petition that State Government is the principal share-holder or creditor. That the Company by a special resolution in extraordinary general meeting of its share-holders has resolved to wind up through the Court and the resolution was passed in accordance with the procedure laid down under the Companies Act. It is irrelevant for maintaining a winding up petition that State Government is the principal share-holder or creditor. That the Company by a special resolution in extraordinary general meeting of its share-holders has resolved to wind up through the Court and the resolution was passed in accordance with the procedure laid down under the Companies Act. That the Company can itself present a petition for winding up on the grounds mentioned in Clauses (a) to (f) of Section 433 of the Companies Act; while special resolution enables a Company to present petition under Clause (a), no such resolution is necessary where it bases the winding up petition on other grounds mentioned in Clauses (b) to (f).It was further submitted by the learned Advocate General and Shri Bhandari that if the Company is unable to pay its debts or its substratum is gone, a winding up petition will he even if presented by the Company and it was wholly irrelevant that the Company has gone into strained financial position due to its own misdeeds or mis-management. Once a case for winding up of the Company is made out under any of the Clauses of Section 433, and material is placed before the Court that the Company is not in a position to pay its debt,, or it,, substratum has gone, it is entitled to resort winding up proceedings and winding up order cannot he refused by the Court merely on the ground that the Company is owned by the State Government or the principal creditor is the State. They also submitted that the Companies Act, The I.D. Act and the Act of 1985 are special statues in their fields and each have a different and distance object. Neither the provisions of the I.D. Act in general of Section 25(0) in particular, nor, the provisions of the Act of 1985 are attracted in the present case and they will not come in way in passing a winding up order by the Court. They asserted that the present petition for winding up has been filed after having deeply considered the matter at different levels and being satisfied that the Company could not be brought in profit. That the Company was running in loss right from its inception except for 3-4 years with marginal profits and it would not he in public interest to run it. That the Company was running in loss right from its inception except for 3-4 years with marginal profits and it would not he in public interest to run it. They also contended that all efforts have been made to safeguard interest of the workmen and other employees of the Company and for this purpose Voluntary Retirement Scheme was introduced for their benefit while they were knowing well that the Company was running in loss and it might be wound up. 5. After having considered the respective submissions made by the learned counsel on both sides and taking into consideration all other aspects, I am of the opinion that this petition for winding up of the Company deserves to be allowed.It is true that the Company is a Government Company within the meaning of Section 617 of the Companies Act in the sense that more or less 100%7x, of its paid up share capital is held by the State Government. still, the Company has it separate existence and entity. The Company having formed and registered under the Companies Act may itself present a petition for winding up on any of the grounds mentioned in Clauses (a) to (f) of Section 433 of the Companies Act. The mere fact that entire share capital of the Company has been contributed by the State Government or all its shares are held by the Government does not make any difference to the right of the Company in maintaining the petition for winding up. 6. Three modes of winding up are provided under Section 425 and the winding up of a Company may be either (a) by. the Court; or (h) voluntary; and (c) subject to supervision of the Court Section 433 States the circumstances in which a Company may be wound up by the Court. 6. Three modes of winding up are provided under Section 425 and the winding up of a Company may be either (a) by. the Court; or (h) voluntary; and (c) subject to supervision of the Court Section 433 States the circumstances in which a Company may be wound up by the Court. It reads as under: "S-433 Circumstances in which Company may be wound up by the Court - A Company may be wound by the Court - (a) if the Company has, by special resolution, resolved that the Company may be wound-up by the Court ; (b) if default is made in delivering the statutory report to the Register or in holding the statutory meeting; (c) if the Company does not commence its business within a year from the incorporation, or suspends its business for a whole year; (d) if the number of members is reduced, in the case of it public Company. below seven, and in the case of a private Company, below two, (e) if the Company is unable to pay its debt; (f) if the Court is of opinion that it is just and equitable that Company should be wound up." In the present case winding up is being sought by the Company on grounds enumerated in Clauses (a), (e) and (f). It may be stated here that a Company may be wound up by the Court it' any of the grounds exits. A Company can maintain a winding up petition under clause (a) by passing a special resolution, resolving that the Company be wound up by the Court. Such special resolution is not necessary where winding up petition is based on other grounds mentioned in Clauses (b) to (I). If a Company is unable to pay its debt or its substratum has gone, a winding up petition will lie even if presented by the said Company. In the instant case, after due notice to the share holders a special resolution to wind up the Company by the Court has been passed in extraordinary general meeting held on May 30, 1996. Neither there is anything on the record nor any challenge has been made before me that the special resolution has not been passed in accordance with law after completing procedural requirement. Once a proper resolution is passed as required under Section 433(a) of the Companies Act, the Company becomes entitled to a winding up order. Neither there is anything on the record nor any challenge has been made before me that the special resolution has not been passed in accordance with law after completing procedural requirement. Once a proper resolution is passed as required under Section 433(a) of the Companies Act, the Company becomes entitled to a winding up order. 7. Other grounds to winding up the Company relate to Clauses (e) and (f) of Section 433. I minutely examined the material placed on record to arrive at a conclusion as to whether the Company is unable to pay its debt or the substratum of the Company has been lost. The Company has filed the audited Balance-Sheet for the year 1994-95 which is marked an Annexure 43. A perusal of the same would show that against the paid-up share capital which is in the tune of Rs. 6,00,73,400/-, accumulated losses of the Company have gone to the extent of Rs. 16.17 Crores, while loans and interest payable thereon was in the tune of Rs. 19.074 Crores. The aggregate losses of the Company have gone to the extent of Rs. 18,74,80,990/- by 31.3.1996 and the liability towards loan and interest thereon have increased to the extent of Rs. 20,20,91,929/-. These figures are on the basis of account books of the Company and I have no reason to disbelieve them. After having a comparative study of the existing and probable assets of the Company, current liabilities of the Company and the liability of the Company to pay loans and interest thereof, I am satisfied without any doubt in my mind that the assets of the Company are totally insufficient to meet the existing liability. 8. From the averments made in the petition and documents filed in support, it is also evident that the Company has been running in loss continuously for years together. Since its existence from 1969, during its life tenure of 27 years or so, except for four years with marginal profits, the Company has suffered losses in all the years. There is enough material on the record that inspite of repeated reminders right from the year 1983 till last, the company has failed to pay any amount towards loan and interest. On the contrary, the Company has informed to the Chief Accounts Officer-Directorate of Agriculture Department its inability to pay any amount on account of its adverse financial position. There is enough material on the record that inspite of repeated reminders right from the year 1983 till last, the company has failed to pay any amount towards loan and interest. On the contrary, the Company has informed to the Chief Accounts Officer-Directorate of Agriculture Department its inability to pay any amount on account of its adverse financial position. To improve company's financial position and to make it viable, several steps were taken by the State Government extending all possible assistance/reliefs/concessions to the Company as described in para 16 of the petition, but still it could not improve its financial condition. The decision to wind up the Company was taken at the highest level in the meeting held on 23rd July, 1992 as the Company was continuously running in loss and there was no way out to run it in profit. The meeting was attended by the Chief Minister of the State, Ministers for Medical and Health and Agriculture, high officers of the State. The Governor has also given its approval for winding up of the Company vide its communication dated i May 10,1995 conveyed to the Managing Director of the Company. 9. It is, thus, patent that in the circumstances, the Company is not in a position to pay its debts. The Company has been running in loss with no way out to make it viable and run profitably. In fact, the Company has reached at a stage to be called as 'commercially insolvent'. The aggregate loses and the liabilities of the company have surpassed the paid up share capital and other assets of the Company. The substratum of the Company is lost and it is no longer advisable to keep alive such inefficient and uneconomic industry by injecting public funds. The State and Central Governments, having shut their doors to provide further advance or grant, the Company can expect no funds from them, No financial institution can, reasonably, be expected to provide the Company any financial assistance in such a condition. The best course, therefore, is that this Court should order to wind up the Company. If a public sector enterprise even becomes a black hole, the money guzzler, it is in public interest to close it instead of loosing and wasting public funds. 10. The best course, therefore, is that this Court should order to wind up the Company. If a public sector enterprise even becomes a black hole, the money guzzler, it is in public interest to close it instead of loosing and wasting public funds. 10. The objection of the employees that the Company being wholly owned by the State Government and the State Government being the principal creditor, it could not be termed as insolvent or unable to pay its debt, has no merit. As stated earlier, the Company is a separate legal entity. It is a limited liability Company. The financial position of the company alone is relevant to the winding up petition and not the financial position of the State. Similarly, the argument that the Company has been put in the present strained financial position on account of mis-management or extravagant expenses, has also no force. Neither such inquiry is needed in a winding up petition nor these facts are relevant. Once a case for winding up of the Company is made out and material is placed before the Court to its satisfaction that substratum of the Company has gone and the Company is unable to pay its debt, it is difficult to understand that these considerations are relevant to refuse winding up order. In such a situation winding up order is in the public interest and the best course to he adopted by the Court. 11. It is true that the objects for which the Company came to he established in the present case arc highly laudable and they intend to boost agricultural farming and its development. The operation of the company might be in the public interest in the sense that, it is an agro-based industry which is vitally needed for a country like India. But this is one side of the picture. The other side is equally important and cannot be lost sight of that the Company has become commercially insolvent and uneconomic which cannot be made viable and profitable. After all, how long a money swallowing industry can be allowed to operate in the name of public utility? The State Government is no more interested in running the company or to advance further loan to keep it functioning. No other scheme is available before this Court to keep the Company in operation and running. After all, how long a money swallowing industry can be allowed to operate in the name of public utility? The State Government is no more interested in running the company or to advance further loan to keep it functioning. No other scheme is available before this Court to keep the Company in operation and running. Hence, judging from all angles, I am convinced and satisfied fully that it is also just and equitable that the Company should be wound up. 12. Before concluding, it would be fair that I deal with the preliminary objections seriously agitated and stressed on behalf of workmen which are jurisdictional in nature and relate to the maintainability of the winding up petition. They are formulated as under: (i) Is there any conflict between the provisions of the Companies Act and the ID Act in so far as the winding up of a company which is an industrial establishment is concerned. If so, whether the winding up petition is not maintainable without compliance of the requirement of Section 22(0) of the I.D. Act? (ii) The Company being a sick industrial company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, the present petition for winding up is not maintainable unless the Board after making inquiry under Section 16 and considering all the relevant facts and circumstances is of the opinion and records a finding that the company is not likely to become viable in future and it is just and equitable that the company should be wound up. Objection No. 1 13. In support of this preliminary objection, contention of S/Shri Kuhad and Kashyap was that I.D. Act, being a beneficial and special legislation regulating the relationship between the employer and the employee, would prevail over the Companies Act in the matter of winding up of an industrial company/ establishment and a winding up petition in relation to an industrial company/ establishment shall not be maintainable without compliance of mandatory requirements of Section 25(o) of the I.D. Act. Elaborating their contention, it was submitted that when closure of an industrial company is effected either directly by the employer or indirectly by the winding up of the company, the employer is not relieved of its obligation to comply with the labour laws which are for the benefit of the workmen. Elaborating their contention, it was submitted that when closure of an industrial company is effected either directly by the employer or indirectly by the winding up of the company, the employer is not relieved of its obligation to comply with the labour laws which are for the benefit of the workmen. They argued that Section 25(o) of the I.D. Act requires prior permission of the Government before closure of an industrial Company is made by giving 90 days notice to the Government with a copy to the Union in the prescribed manner. Then, clause further requires payment of compensation to every workman equivalent to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months. The employer is further required to discharge its obligation of payment of gratuity amount under the Payment of Gratuity Act, 1972, bonus under the Payment of Bonus Act, 1965 and wages under the Payment of Wages Act till the date of termination of the employees. It was further contended that winding up of a company results in a closure of the company and under Section 445(3) of the Companies Act, services of the officers and employees of the company are deemed to have been discharged on passing of a winding up order thus, according to them, there is a conflict between the provisions of the Companies Act and Section 25-0 of the I.D. Act and in that situation the provisions of I.D. Act will prevail. Strong reliance is placed on a decision of a learned Single Judge of Bombay High Court in Bombay Metropolitan Transport Corporation Ltd. v. Employees of Bombay Metropolitan Transport Corporation Ltd., 1987-1I L.L.N. 57 : (1990) Vol. 69 Company Cases 465 . 14. The above contentions on their face appear to be attractive and convincing. But, on deep probing of relevant provisions of the two Acts I am unable to subscribe them for more than one reason. 15. No doubt, an employer does not enjoy an absolute or fundamental right to close down an industry unreasonable or for reasons which are malafide. It is also true where an employer intends to close down an undertaking of his industrial establishment he would be required -to make compliance of the requirements contained in Section 25-0 of the I.D. Act which are mandatory in nature and for benefit of the workmen. It is also true where an employer intends to close down an undertaking of his industrial establishment he would be required -to make compliance of the requirements contained in Section 25-0 of the I.D. Act which are mandatory in nature and for benefit of the workmen. Without making compliance of the requirements and without seeking permission of an appropriate Government an industrial establishment cannot be closed down by the owner. The appropriate Government also cannot grant permission of closure in a routine manner but it is required to give a reasonable opportunity of being heard to the employer, the workmen and person interested in such closure and is further required to take into consideration the genuineness and adequacy of the reasons stated by the employer, the interest of the general public and all other relevant factors. An employer is also required to discharge the obligation of certain payments to every workman as provided in the Section. these safeguards, undoubtedly, are intended for the benefit of the workmen. But, I am of the opinion that the considerations which are taken into account for the purpose of winding up petition are different. The provisions relating to winding up of Company deal with different situation and requirement than that of permission under Section 25-0 of the I.D. Act of close down an undertaking of an industrial establishment. Their respective fields of operation are different and distance. Section 25-t) applies when the industrial establishment, except the undertaking which is sought to be closed down, is intended to be continued and operated by the employer. ,It contemplates continuity and existence of the employer and of the industrial establishment, while winding up of a company operates to dissolve the company itself. Where the company is an industrial establishment, that establishment ceases to function upon passing of the winding up order. Learned Advocate General and Shri U.N. Bhandari, who are supporting the winding up petition, are right in submitting that there is no conflict in the relevant provisions of two Acts: their considerations, purpose and field of operation are different. In view of the matter, argument of Shri Kuhad and Shri Kashyap cannot be accepted that present winding up petition under the Companies Act is not maintainable or that compliance of the requirements of Section 25-0 of the I.D. Act is necessary for maintaining a winding up petition. 16. In view of the matter, argument of Shri Kuhad and Shri Kashyap cannot be accepted that present winding up petition under the Companies Act is not maintainable or that compliance of the requirements of Section 25-0 of the I.D. Act is necessary for maintaining a winding up petition. 16. The decision of the learned Single Judge of the Bombay High Court referred to above was over-ruled by the Division Bench of the Bombay High Court itself in appeal preferred against the said decision. The decision of the Division Bench is reported in Bombay Metropolitan Transport Corporation Ltd. v. Employees of Bombay Metropolitan Transport Corporation Ltd., and others, (1991) Vol. 71. Company Cases 473 . Over-ruling the decision of the learned Single Judge the Bench observed as under: "It will be seen that permission under Section 25-0 is required to he taken when an employer intends to close down an undertaking of his industrial establishment. The provision therefore, applies when the industrial establishment, excluding the undertaking which is sought to be closed down, is intended to be operated by the employer. It, therefore, contemplates the continued existence of the employer and of the industrial establishment, less the undertaking which is intended to he closed down. On the other hand, an order for winding up a company commences the process of winding it up at the hands of the official liquidator and it operates eventually to dissolve the company. As and from the date of the order, the company ceases to do business. Where the company is an industrial establishment, that establishment ceases to function upon the passing of the winding-up order. The winding-up order is deemed to be a notice of discharge of the officers and employees of the company. The services of the employees, therefore, come to an end by operation of law." Objection No. 2 17. Where the company is an industrial establishment, that establishment ceases to function upon the passing of the winding-up order. The winding-up order is deemed to be a notice of discharge of the officers and employees of the company. The services of the employees, therefore, come to an end by operation of law." Objection No. 2 17. Shri Kuhad stressed this point with full vehemence to his command and contended that the petitioner Company itself is seeking winding up and as per its case its accumulated losses have exceeded to its entire net worth and it has become a sick industrial company, as such, the winding up petition is not maintainable unless the Board for Industrial and Financial Reconstruction (for short the Board or BIFR), after making inquiry under Section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 and consideration of all the facts and circumstances, forms an opinion that the company is not likely to make its net worth exceeding its accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof is not likely to become viable in future and that it is just and equitable that the company should be wound up. Learned counsel submitted that the Act of 1985 is a special Act, and provisions of the Act have an over-riding effect notwithstanding anything inconsistent therewith containing in other law. Attention of this Court towards section 32 was drawn in this connection. It was, therefore, submitted that a sick industrial company is under a statutory obligation under Section 15 to refer the matter to the Board, failure thereto being rendered penal and punishable and it is the Board which is an expert body and not the Company that has to make inquiry as to whether the company has become a sick industrial company or not. 18. In order to appreciate the above contentions it will be convenient and useful to understand the scheme of the Act of 1985. The Central Legislature. 18. In order to appreciate the above contentions it will be convenient and useful to understand the scheme of the Act of 1985. The Central Legislature. considering the imperative need to enact a legislature to provide for the timely detection of sickness in industrial units and for expeditious determination by a body of experts of the preventive, ameliorative, remedial and other measures that would be needed for enforcement of appropriate measures, has enacted the Act on the basis of the report and recommendations of the committee known a, "Tiwari Committee", appointed for this purpose in 1981. The main object of the Act is to establish a Board (BIFR) consisted of persons who are considered experts in various fields to inquire into and determine the incidents of sickness in industrial companies and to device suitable remedial measures through appropriate schemes and for implementation thereof. The above objects are indicated by the preamble to the Act. "The sick industrial Company" has been defined in Section 3(0) as under "Sick industrial Company" means an industrial company (being a company registered for not less than five years) which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. Explanation - For the removal of doubts, it is hereby declared that an industrial company existing immediately before the commencement of the Sick Industrial Companies (Special Provisions) Amendment Act. 1.993. registered for not less than five years and having at the end of any financial year accumulated losses equal to or exceeding its entire net worth, shall he deemed to be a sick industrial company." Chapter II of the Act deals with Reference, Inquiries and Schemes. Section 15 thereof provides making of a reference to the Board (BIFR) by the Board of Directors of the Company for determination of the measures which shall be adopted with respect to the industrial company which has become sick. Section 16 authorises the Board to make such inquiries as it may deem fit for determining whether any industrial company has become a sick industrial company. In case, the Board, after making an inquiry under Section 16, is satisfied that a company has become a sick industrial company, then it shall, after considering all the facts and circumstances of the case, decide whether it is practicable to make its net worth positive within a reasonable time. If the Board decides in negative. In case, the Board, after making an inquiry under Section 16, is satisfied that a company has become a sick industrial company, then it shall, after considering all the facts and circumstances of the case, decide whether it is practicable to make its net worth positive within a reasonable time. If the Board decides in negative. Sections 17(3) steps in authorising the Board to direct any operating agency to prepare a scheme providing for such measures in relation to such company Section 18 requires the operating agency to prepare a scheme providing for anyone or more of the measures stated in sub-section (1). Other provisions of Section 18 deal with the procedure for modification, if any, of the draft scheme and its finalisation and sanction by the Board. Provision is also provided for reviewing a sanctioned scheme and making modifications therein if the exigencies of administration so require. Where the scheme relates to preventive, ameliorating, remedial or other measures with respect to any sick industrial company, the scheme may provide for financial assistance by way of loans, advances, guarantees, reliefs, concessions or sacrifices from the Central Government, State Government any Schedule Bank or other Bank, a Public Financial Institution or State Level Institutions or any institution or other authority to the sick industrial company vide Section 19(1). Section 20 and Section 22(1) are relevant for the purpose of deciding the question and they may be extracted as underSection 20 "Winding-up of Sick Industrial Company - (1) Where the Board, after making inquiry under Section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof' is not likely to become viable in future and that it is just and equitable that the company should be wound up, it may record and forward its opinion to the concerned High Court. (2) The High Court shall, on the basis of the opinion of the Board, order winding-up of the sick industrial company and may proceed and cause to proceed with the winding-up of the sick industrial company in accordance with the provisions of the Companies Act, 1956 (1 of 1956). (2) The High Court shall, on the basis of the opinion of the Board, order winding-up of the sick industrial company and may proceed and cause to proceed with the winding-up of the sick industrial company in accordance with the provisions of the Companies Act, 1956 (1 of 1956). (3) For the purpose of winding-up of the Sick Industrial Company, the High Court may appoint any officer of the operating agency, if the operating agency gives its consent, as the liquidator of the sick industrial company and the officer so appointed shall for the purpose of the winding-up of the sick industrial company be deemed to be, and have all the powers of, the official liquidator under the Companies Act, 1956(1 of 1956). (4) Notwithstanding anything contained in sub-section (2) or sub-section (3) the Board may cause to be sold the assets of the sick industrial company in such manner as it may deem fit and forward the sale proceeds to the High Court for orders for distribution in accordance with the provisions of Section 529-A, and other provisions of the Companies Act, 1956 (1 of 1956)." Section 22 Suspension of legal proceedings contracts, etc. - (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding-up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof (and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans, or advance granted to the industrial company) shall lie or he proceeded with further, except with the consent of the Board or, as the case may he, the appellate Authority," 19. From a plain reading of sub-section (1) of Section 22 it is patently clear that suspension of proceedings referred to therein is dependent on the following fact situations - (i) an inquiry under Section 10 in pending; (ii) A Scheme under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation; or (iii) an appeal under section 25 is pending. 20. Section 22(1) of the Act of 1985 is a complete answer to the submissions made by Shri Kuhad and Shri Kashyap. Admittedly, in the instant case, neither any reference was made to or pending with the Board nor an inquiry under Section 16 in relation to the petitioner Company was pending. The bar of making a winding up petition by the industrial company or to proceed with a winding up petition contained in Section 22(1) comes into play only after the circumstances mentioned therein exist. Admittedly, none of the circumstances exist in the present case. The purpose and object of suspension of the proceedings etc., as provided under section 22(1) of 1985 Act, is to await the out-come of the reference made to BIFR for the revival of the rehabilitation of the sick industrial company. Moreover, even the making of a reference under Section 15 does not ipso facto attracts restrictions contained under Section 22(1) or on the rights of a sick industrial company. 21. Taking into consideration the entire scheme of the Act, particularly Section 22(1), I am of the view that the petitioner Company is not precluded in making the winding up petition on any of the grounds mentioned in Clauses (a) to (f) of Section 433 of the Companies Act and jurisdiction of the Company Court to entertain such petition or to pass a winding up order is not ousted merely because the Company has accumulated losses equal to or exceeding its entire net worth; in other words, the company has become a sick industrial company without anything more or pendency of the proceedings under Act of 1985. Hence objection No. 2 is also over-ruled. 22. Before passing final order I think it just proper to protect the interest of workmen and employees of the company who are still in its employment. The factual position about the employees of the company is given in paras 26 and 27 of the petition. There were 495 employees in all as on April 1. 1995. 22. Before passing final order I think it just proper to protect the interest of workmen and employees of the company who are still in its employment. The factual position about the employees of the company is given in paras 26 and 27 of the petition. There were 495 employees in all as on April 1. 1995. After excluding the employees who have sought voluntary retirement or absorbed in other State public undertakings etc. Thus, 197 employees have remained with the Company, out of them two have crossed the age of superannuation. Before the winding up order comes into force I think it just and proper to give an opportunity to the remaining employees of the Company to opt for benefit under the VRS, if they so desire. This concession is given to them as Shri Bhandari, appearing for the Company, has agreed to provide the benefit of Voluntary Retirement Scheme if they want to avail of the same. It is, therefore, ordeal that the existing employees of the petitioner Company shall he free to opt for voluntary retirement under Voluntary Retirement Scheme and give their desire in writing within 15 days from today to the Managing Director of the Company. If desire of voluntary retirement under the scheme is made by them or anyone of them, the benefit of voluntary retirement under the scheme shall be given to them by the company and payment shall be made accordingly in next two weeks. 23. Consequently, the winding up petition is allowed. It is ordered that the company, viz; Rajasthan State Agro Industries Corporation having its registered office at D-1, Subhash Nagar, Jhotwara Road, Jaipur, be wound up in accordance with the provisions of the Companies Act, 1956. However, the winding up order shall come into force after five week from today. It is further directed that the petitioner Company shall advertise the winding up order within 14 days from the date of the order of winding up comes into force in the prescribed form in one issue of the 'Times of India' (Delhi Edition) and in one issue of 'Denik Bhaskar' (Jaipur Edition). It shall also be the duty of the petitioner company to file with the Registrar of the Companies a certified copy of this winding up order within the prescribed period. Intimation of this order be also sent to the Official Liquidator. It shall also be the duty of the petitioner company to file with the Registrar of the Companies a certified copy of this winding up order within the prescribed period. Intimation of this order be also sent to the Official Liquidator. The Official Liquidator attached to this court is appointed as a liquidator of the Company and he will discharge his duties in accordance with the provisions of the Companies Act, 1956 and the rules made there under. On coming into force the winding up order, the liquidator shall take into his custody or under his control all the properties, effects and actionable claims to which the company is or appears to be entitled. He will also take in his possession or control all books of account and other documents of the Company inWinding up Petition Allowed. *******