ORDER D.V. Shylendra Kumar, J.--Order on Company Application No. 1589/2003 1. This is an application filed under Rules 6, 7 and 9 of Company Rules read with Section 151 of C.P.C. by a person, who claims to have had certain agreement with the respondent-company, seeking direction to be issued by this court to the respondent-company to execute a sale deed in favour of the applicant-company pursuant to the agreement of sale dated 17-1-2002, purported to have been executed by the respondent-company. 2. The application is supported by an affidavit by one Bijay Kumar Agarwal, Director of Applicant-company, inter alia stating that an agreement of sale of certain properties, belonging to the respondent-company was entered into on 17-1-2002; that pursuant to the said agreement of sale, certain amounts have been paid by way of an advance; that the respondent-company has not completed the sale transaction within the stipulated time, in spite of several requests made by the applicant. The respondent-company having not executed the sale documents and on coining to know that the reason for not so executing the sale document was that the company petition No. 154/2002 was pending before this court, and the applicant is required permission of this court in this petition. Hence, the application has been filed. 3. The application is opposed by the counsel for the respondent. The respondent counsel has entered his appearance and also filed his objections, inter alia stated in objections that the applicant has failed to pay the balance sale consideration in terms of the contract of sale agreement etc.; that the applicant has lost all rights on agreement of sale; that the property value in question has been increased substantially for the last 16 months subsequent to the date of agreement; that the Board for Industrial Finance and Reconstruction has already made a recommendation to this court for passing an order to wind up the affairs of the respondent-company, and in such circumstances, the company will also be not in a position to execute the sale deed and on such premise, prayed for rejecting the application. 4. Many secured creditors of the company, who have intervened the matter in paper publication that, had been carried out in this regard. 4. Many secured creditors of the company, who have intervened the matter in paper publication that, had been carried out in this regard. They have also filed their statement of objections opposing the application, inter alia contended that the State Bank of Mysore and other Banks formed a consortium, who had financed the respondent-company; that the subject-matter of property in question has been mortgaged in their favour by way of security to secure the loan that the Banks have advanced to the company; that the so-called agreement of sale between the applicant and the respondent-company is neither to their knowledge nor with their consent; that it is not binding on them; that a direction of this nature cannot be sought on the basis of said agreement of sale; that it is virtually adopted by the applicant to pass proceedings, though it was required before the civil court for their specific enforcement of the agreement that caused in his favour; that the companies' court has no jurisdiction in the matter to act; an execution court for giving effect to agreement of sale, based on which the directions arc sought for; that the respondent-company having been declared a sick company by the Board for Industrial Finance and Reconstruction, and further Board having already recommended the company to be wound up in terms of provisions of Section 20(1) of the Sick Industrial Companies (Special) Provisions Act, 1985, any properties belonging to the company cannot be ordered to be sold, without there being an order for winding up the affairs of the respondent-company and in the circumstances, the application is liable to be dismissed. The consortium of Banks have also raised other objections regarding the enforceability of the agreement; that the subject-matter has not been properly valued; that in fact, the applicant has not made out any ground or cause for the relief sought for in the application and the application is liable to be dismissed. 5. I have heard Smt. Vidya, learned counsel for the applicant, Sri Subramanyam, learned counsel appearing for the respondent-company and Sri Varadaraj R. Havaldar, learned counsel appearing for the consortium of Banks, who are secured the creditors of the company. 6. 5. I have heard Smt. Vidya, learned counsel for the applicant, Sri Subramanyam, learned counsel appearing for the respondent-company and Sri Varadaraj R. Havaldar, learned counsel appearing for the consortium of Banks, who are secured the creditors of the company. 6. Submission of Smt. Vidya, learned counsel for the applicant is that the respondent-company in fact has entered into an agreement with the applicant and on that premise the Board while considering the companies' application before it for rehabilitation etc., and while passing orders on the same, had reserved a right to the company to sell some of its property, if in need, after taking permission of the companies' court, who is in charge of winding up proceedings and the applicant-company having paid part of the sale consideration, being keen to see the sale transaction is concluded and the respondent not being very enthusiastic in doing so, is compelled to approach this Court praying for special relief. 7. The learned counsel also submits that in fact in respect of the very company, similar applications had come up before this court for consideration and in identical circumstances that such application have been entertained by this court and allowed also, and as such, in terms of one such order dated 8-10-2003 passed in CO. A.771/2003, there is no impediment for this court to consider the present application and pass orders on merits. 8. Learned counsel for applicant seeks time to place further material particularly after looking into the contents of the order passed by the Board as on 2-8-2002, to make good the stand of the applicant that this order, which is in the form of opinion of the Board enables the applicant to seek for orders from the Company Judge with an application of this nature. 9. This application is pending before this court for the past more than 9 to 10 months and had come up for orders on several occasions. If the applicant had not chosen such additional material before this court all these days, then, I do not find any need or justification to postpone the hearing on this application. 10. I have heard the learned counsels for representing parties supporting and opposing the application and proceed to pass order on it. 11. The application is purported to have been filed in CO. P. 154/2002. 10. I have heard the learned counsels for representing parties supporting and opposing the application and proceed to pass order on it. 11. The application is purported to have been filed in CO. P. 154/2002. The respondent-company incorporated under the provisions of Companies' Act had approached the Board for Industrial Finance and Reconstruction, with a proposal for rehabilitation of the company, as the company was incurring loss continuously and was in financial distress. Proceedings were pending before the Board almost for a period of 8 years. The Board found that no feasible rehabilitation scheme was forthcoming. There was no possibility of making the networth of the company positive after satisfying the secured creditors. The Board also noticed the contents of the representation given on behalf of the employees that a scheme that had been sanctioned by the Board earlier was thwarted only because of the mala fide intention on the part of the management of the company. That the other proposal for rehabilitation of the company also did not materialize, that in the circumstances all efforts for reviving and rehabilitating the company having failed and the company being not in a position to make its networth positive, it was necessary in public interest to recommend for the winding up of the company in terms of Section 20(1) of the Act. 12. This opinion of the Board was received by the Registry of this Court on 24-8-2002. Not much progress is seen ever since, as in the meanwhile it had been represented before this court that the workmen had preferred appeal to the Appellate Board as against the recommendation of the Board and it is now submitted by the learned counsels of the parties, that such appeal filed by the workmen is also dismissed. Thereafter, in terms of the order dated 17-1-2003, this Court directed issue of paper advertisement. Sri Varadaraj R. Havaldar, learned counsel for the creditors, and Sri Subramanyam, learned counsel for the respondent-company submit that such a paper publication had been taken up in the daily newspapers 'Deccan Herald' (English Newspaper) published on 31-1-2003 and in 'Kannada Prabha' (Kannada Newspaper) published on 31-1-2003. 13. Sri Varadaraj R. Havaldar, learned counsel for the creditors, and Sri Subramanyam, learned counsel for the respondent-company submit that such a paper publication had been taken up in the daily newspapers 'Deccan Herald' (English Newspaper) published on 31-1-2003 and in 'Kannada Prabha' (Kannada Newspaper) published on 31-1-2003. 13. At this stage, several applications came to be filed before this Court by many persons seeking for different reliefs and company application in CO.A.771/2003 seeking similar relief was filed and it came to be ordered on 8-10-2003 and CO.A.768/2003 came to be filed, since the prayer in this application was not tenable and subsequently several applications have been filed praying for similar direction to the respondent-company to execute sale deeds on the strength of certain agreements in favour of the applicants. 14. Though this court had directed paper publication to be taken out for the purpose of hearing all concerned with regard to the recommendation received from the Board and for the purpose of passing a winding up order, the petition herein has not been admitted. It is shown before this court that such publication had been carried and all concerned have been duly notified. 15. In a situation of this nature, the companies court essentially step into ensure that where the company is unable to function for the purposes for which it had been brought into existence or that the company is unable to discharge its debts to the creditors or even that the company has incurred significant losses and is unable to carry on its activities. The company court on finding such a situation orders for winding up the operations of the company in terms of the provisions under the Companies Act and the Official Liquidator is put in charge of the winding up operations. The winding up proceedings are essential in the nature of insolvency proceedings meant for realization of the assets of the company to discharge the debts of the company in the order of preference provided for under the Act itself and after so meeting all liabilities of the company, further amounts if any are left to be distributed amongst the other stake holders in the company such as the debenture holders, shareholders etc. 16. 16. Though the purpose for winding up proceedings is to ensure that the limited available assets of the company are so distributed in an equitable manner, no preferential permission is given to any person entitled to receive payment. The company is divested of the right to manage the affairs of the company as also the option to arrange its own affairs. It is done in the larger public interest and for public good under the provisions of the Companies Act, a company is ordered to be wound up and on passing of a winding up order liquidation proceedings are set in motion. Even transaction effected earlier by the company during the period provided under the Act arc set at naught. It is only to ensure that the company if it had acted in any preferential manner in favour of any of the creditors it is not allowed to get away with the same and some creditors are not put to disadvantage for the benefit of some favoured creditors. 17. In the instant case, the company petition is not formally admitted so far. In such circumstances, jurisdiction if any, has to be exercised by this Court to ensure that the assets of the company, which is to be wound up, are not dissipilated. If the transaction even prior to the date of passing of order of winding up by this Court arc hit by the provisions of the Act and are to be voided and such is the purport provisions of the Act, it is rather doing violence to this object, if this court permits the company to sell some of its assets on the premise that there were some prior agreements between the parties. 18. I am of the clear opinion that a direction of such nature cannot be granted by the companies' Court and at this stage, when it is not for the benefit of all the creditors and the shareholders, but it is a private transaction between the company and the applicant and if at all it could be for the benefit of one creditor/agreement holder of the Company. 19. 19. Moreover the enforceability of the agreement is disputed not only by the company on the ground of breach of agreement, but also by the secured creditors, who have raised an objection that an agreement of this nature is not enforceable and not binding on them and the direction of such nature cannot be given by this court and at this stage that if at all that can be done, only before the civil court. 20. It is not necessary to examine other legal contentions in greater detail as I find, a direction as sought for cannot be granted by this court in terms of the application, particularly as the applicant has no right for the same, nor this court exercising jurisdiction for the purpose of determining the rights or enforcing the rights to a person like the applicant in the present proceedings and at this stage, the applicant is before this court and the application filed before this Court is misconceived, not tenable in law, and not a merited one. Accordingly, the application is rejected. 21. I must before parting deal with the other submissions of the learned counsel for the applicant as similar application had been entertained by this court and one such application had been ordered. It is submitted by learned counsel appearing for the parties that this court in CO.A.771/ 2003, which had been ordered, is now pending adjudication before the Supreme Court as per the submission of the learned counsel Varadaraj R. Havaldar appearing for the creditors. 22. In fact even to pass order on the application of this nature, as it will be necessary to go into the merits of the application by resolving the dispute between the parties. Particularly if it has been objected to and then give a finding and consequential direction which are all not the functions of this court and at this stage, I am of the view that the submission does not support for passing any similar order in favour of the applicant to allow this application also. 23. This application is rejected. Order on the Company Petition No. 154/2002 24. The Company Petition is admitted. 25. 23. This application is rejected. Order on the Company Petition No. 154/2002 24. The Company Petition is admitted. 25. The company in question having been recommended to he wound up by the Board of Industrial, Financial and Reconstruction, which had found that it is not possible for the Board to make the networth of the company possibly and it was desirable to wind up the company in public interest and the secured creditors, who are the main stake holders in the company having in fact requested to wind up the affairs of the Company and Sri Varadaraj R. Havaldar, learned counsel appearing on behalf of the consortium of Banks of secured creditors supporting passing of winding up order, while it is now opposed by the learned counsel who was appearing for the applicant in CO.A. No. 771/2003. This application having been ordered and not pending before this Court any more, the submission of learned counsel appearing for the applicant in Company Application No. 771/2003 docs not really constitute a tenable objection to an order to admit the Company Petition and to further wind up the company in terms of the recommendation of the Board. 26. The application itself was one for issue of direction to the company to execute a sale deed. The application had been ordered and is not pending before this court any more. It is not necessary that objections on behalf of such an applicant should he taken note of. The objections are not supported by any reasons. The objection is not justified on any legal ground in the circumstances. 27. The respondent-company is ordered to be wound up, on a perusal of the recommendation of the Board under Section 20(1) of the Companies Act, in exercise of the powers under Section 433-E of the Companies Act read with Sub-section (2) of Section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985. 28. The Official Liquidator is directed to act as Liquidator during the winding up proceedings. Official Liquidator to take charge of the affairs of the company, its property and effects forthwith. (a) The Official Liquidator shall cause a sealed copy of this order to be served on the company by pre-paid registered post. The Official Liquidator to submit a report to this court about the action taken. Official Liquidator to take charge of the affairs of the company, its property and effects forthwith. (a) The Official Liquidator shall cause a sealed copy of this order to be served on the company by pre-paid registered post. The Official Liquidator to submit a report to this court about the action taken. (b) The secured creditor namely M/s. State Bank of Mysore to advertise within six weeks from this date a notice in Form No. 33 of the making of this order in one issue of Hindu news daily and one issue of Vijaya Karnataka news daily both published at Bangalore; (c) The secured creditor M/s. State Bank of Mysore also to ensure serving of a certified copy of the order on the Registrar of Companies not later than one month from this date; and (d) That the costs of the said petition be taxed and paid out of the assets of the company, 29. The consortium of secured creditor is directed to pay Rs.25,000 within six weeks from today before the Official Liquidator to meet the initial expenses during the winding up proceedings.