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2017 DIGILAW 365 (GAU)

Jahnu Barua v. Aideopukhuri Tea Estate Pvt. Ltd.

2017-03-22

UJJAL BHUYAN

body2017
JUDGMENT & ORDER : Ujjal Bhuyan, J. Heard Mr. S. Bharali, learned counsel for the applicant, Ms. N. Goswami, learned counsel for respondent No. 2 and Mr. D. Borah, learned counsel appearing for the Registrar of Companies, i.e., the Official Liquidator. 2. This application has been filed under Section 466 of the Companies Act, 1956, for stay of winding up proceedings of Aideopukhuri Tea Estate Private Limited (respondent/ Company). 3. Without delving into details, all that is necessary to be stated at this stage to arrive at a fair decision on this application is that respondent No. 2 had filed an application under Sections 433/434 of the Companies Act, 1956, for winding up of the respondent/ Company on account of inability of the respondent/Company to repay its debts. The said application was registered as Company Petition No. 12 of 2002. According to respondent No. 2, respondent/Company owed a sum of Rs. 1,95,733/- to him. Though a cheque for an amount of Rs. 78,680.00 was issued by the respondent/Company to the respondent No. 2, the same was dishonoured. Request made by respondent No. 2 to the respondent/ Company for payment of the dues was not responded to, which led to institution of the related company petition. 4. When advertisement of the Company Petition was issued, United Bank of India appeared before the Company Court and stated that the respondent/Company had availed credit facilities from it to the extent of Rs. 3,20.62,967/-, but defaulted in repayment of the same, leading to institution of recovery proceedings by the United Bank of India against the respondent/Company before the Debt Recovery Tribunal at Guwahati, which was registered as OA No. 62 of 2003. The Company Court was informed that proceedings before the Debt Recovery Tribunal was pending at that point of time. Taking the view that inability of the respondent/Company to pay its dues was a reflection of its precarious financial conditions, which in turn indicated that it was no longer a going concern, order for winding up was passed by the Company Court by judgment and order dated 5.5.20 While passing the winding up order, the Company Court observed that it was open to the United Bank of India to realise its tines through the liquidation proceeding or outside liquidation proceedings. Official Liquidator was directed to take over charge of the matter and to proceed in accordance with the provision of the Companies Act. Official Liquidator was directed to take over charge of the matter and to proceed in accordance with the provision of the Companies Act. 1956. 5. This was in the year 2005. 8 (eight) years' thereafter, the present application came to be filed seeking the relief as indicated above Applicant has stated that he is one of the contributories of the respondent Company. In fact, the other contributories, namely. Smt. Gayatri Barua, Smt Neeti Borooah, Smt Rukmini Barooah, Sri Jayanta Kumar Barooah, Smti Lakhimi Barooah, Smt Jahnabi Phukan, Smt Khiroda Kumari Barooah, Smti Anita Barooah, Smti Bijoy Laxmi Bose, Smt Subha lakshmi Khan, Smti Minaxi Barooah, Smt Priyalaxmi Choudhury, Lt. Col. Bhaskar Kumar Barooah and Sri Partha Sarathi Barooah, authorised him to move this application before the Court. It is staled amongst the creditors as above they out 100% share of the respondent/Company, which constitutes the total paid-up share capital. It is also stated that within the tea-estate owned by the respondent/Company, there is a tea-factory which was given on lease to B & A Limited, a public limited company, following a lease agreement entered into between the parties on 07.10.2001. On the basis of such lease agreement, respondent/Company receives annual rental, besides royalty on tea production. It is also stated that tea industry in the State of Assam had overcome the lean phase through which it was passing and resultantly, price of tea has shown an increasing trend bringing in profitability back into the tea industry. It is further stated that United Bank of India obtained a certificate of recovery from the Debts Recovery' Tribunal, Guwahati, on 27.05.2005, for an amount of Rs. 321 lacs. When recovery proceedings were initiated, settlement was entered into between United Bank of India and B & A Limited, where after, the dues of the United Bank of India recoverable from the respondent/Company was settled. Consequently, the loan account standing in the name of the respondent/Company in the United Bank of India, Sivasagar Branch w as closed on 27.07.2006. It is also stated that applicant has entered into a settlement with respondent No. 2 and as per settlement, respondent No. 2 had agreed to accept payment from the respondent/Company for the outstanding dues provided there is stay of the winding up proceedings. It is further stated that no other creditor of the respondent/Company has come forward to claim any dues from the respondent/Company. It is further stated that no other creditor of the respondent/Company has come forward to claim any dues from the respondent/Company. On the other hand. Official Liquidator has also not sold any asset or property of the respondent/Company. It is in these circumstances that the present application has been filed. 6. Ms M Goswami, learned counsel appearing for respondent No. 2, submits that she has no objection to the prayer for stay of winding up proceedings, having regard to the agreement entered into between the parties. 7. In the course of hearing, the following order was passed by this Court on 26.11.15:- "This petition has been filed in representative capacity by the contributories of Aidau-pukhuri Tea Estate Private Limited for staying the winding up proceeding of the Company. On a petition filed by a creditor, respondent No. 2 herein, for winding up of the Company for inability to pay debt to the said respondent, which was registered as Company Petition No. 12 of 2002, this Court passed order dated 5.5.05, directing winding up of the Company and ordering the Official Liquidator to oversee the winding up. Without entering into specific details mentioned in the application at this stage, Court is of the view that having regard to the provisions contained in Sub-Section (2) of Section 466 of the Companies Act, 1956, Official Liquidator (respondent No. 1) should furnish to the Court the present status of the Tea Estate. The report should indicate the assets and liabilities of the Company, total number of work force and how wages of the work force are being paid. The report should also indicate as to whether any manufacturing of tea is taking place in the Tea Estate. The Official Liquidator shall indicate in his report as to whether there is any prospect of revival of the Company. Let the said report be submitted within a period of 8 (eight) weeks from today. In the meanwhile, Mr. Bharali shall submit a complete synopsis of the case since the initial winding up petition was filed way back in the year 2002." 8. When the case was called upon on 15.02.2017, learned counsel appearing for the Official Liquidator submitted that the report called for from the Official Liquidator was available. Today, the said report has been placed before the Court. In his report, the Official Liquidator has objected to the prayer made by the applicant. When the case was called upon on 15.02.2017, learned counsel appearing for the Official Liquidator submitted that the report called for from the Official Liquidator was available. Today, the said report has been placed before the Court. In his report, the Official Liquidator has objected to the prayer made by the applicant. It is stated that books of account of the respondent/Company not being in the possession of the Official Liquidator, he is not in a position to certify about the present financial health of the respondent/Company. It is also stated that Ex-Directors of the respondent/Company in collusion with the Garden Management Society of the respondent/Company (respondent No. 4) are managing the tea-estate and factory with the help of B & A Limited. Unless the accounts of the respondent/Company are made available to the Official Liquidator, it may not be possible to make a fair assessment regarding chance of revival of the respondent/Company. Further stand taken is that there are huge statutory dues to be paid by the respondent/Company and, therefore, at this stage, it would not be just and proper to stay the liquidation process. 9. Submissions made by learned counsel for the parties are on pleaded lines. Therefore, it may not be necessary to refer to in details the submissions so made. However, it may be noted that Mr. Bharali, learned counsel appearing for the applicant has placed reliance in paragraphs-36 and 47 of the judgment of the Supreme Court in Meghal Homes (P) Limited v. Shree Niwas Girni K.K. Samiti; reported in (2007) 7 SCC 753 . On the other hand, Mr. D. Borah, learned counsel appearing for the Official Liquidator has referred to a decision of the Bombay High Court dated 14.10.2011 in the case of Forbes & Company v. Official Liquidator (Company Application No. 243 of 2011). 10. Submissions made by learned counsel for the parties have received the due consideration of the Court. 11. Section 466 of the Companies Act, 1956 deals with power of the Court to stay winding up. 10. Submissions made by learned counsel for the parties have received the due consideration of the Court. 11. Section 466 of the Companies Act, 1956 deals with power of the Court to stay winding up. Sub-Section (1) says that 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 winding up ought to be stayed, make an order staying such winding up proceedings either for a limited period or altogether on such terms and conditions, as the Court may think fit. As per Sub-Section (2) before such an order is passed, Court may require the Official Liquidator to furnish a report with respect to any fact or matter, which, in its opinion are relevant to the application. 12. Thus, from a careful analysis of the provisions contained in Section 466 of the Companies Act, 1956 it becomes evident that even after a winding up order is passed by the Court, it still has the jurisdiction to stay the winding up proceeding on an application by the Official Liquidator or by any creditor or by any contributory, as in this case. There is as such no condition precedent prescribed for invocation of the power under Section 466. It depends upon the satisfaction of the Court. 13. Dissolution of a company through the process of Court by way of a winding up proceeding is a drastic measure and should be resorted to only as the last option. If the company is able to show signs of revival or if the grounds given for passing the winding up order are removed, if not, wholly, but to a large extent, then Court may revisit the winding up order. This concern finds its manifestation in Section 466 of the Companies Act, 1956. The endeavour must be to ensure revival of a company, including one under an order of winding up, rather than its dissolution. 14. Having regard to the fact that dues of United Bank of India have been settled and also the fact that applicant and respondent No. 2 have arrived at an agreement for settlement of their outstanding dues, the very basis for passing the winding up order no longer survives. 14. Having regard to the fact that dues of United Bank of India have been settled and also the fact that applicant and respondent No. 2 have arrived at an agreement for settlement of their outstanding dues, the very basis for passing the winding up order no longer survives. As it is, the Official Liquidator had come into the picture only after the winding up order was passed by the Court. 15. Having regard to the above and on due consideration, Court is of the view that it would be eminently just and fair if the respondent/Company is given a chance to recover its lost ground. To facilitate the above, it would be appropriate to stay the winding up proceedings pursuant to order dated 5.5.2005, passed in Company Petition No. 12 of 2002, for a period of 1 (one) year. During this period of 1 (one) year, respondent/ Company shall clear the dues of respondent No. 2 as well as make sincere endeavour to settle the outstanding statutory dues. 16. Accordingly and in the light of the above, order dated 05.05.2005 passed in Company Petition No. 12 of 2002 is stayed fora period of 1 (one) year commencing today, subject to the terms and conditions as mentioned above. 17. Company Application No. 3 of 2013 is accordingly disposed of.