COMP/181/2007 1/12 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION No. 181 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ==================================== B.I.F.R. - Petitioner Versus KAY PACKAGINGS PVT. LTD. & 12 - Respondents ==================================== Appearance : None for Petitioner. NOTICE NOT RECD BACK for Respondent : 1. NOTICE UNSERVED for Respondents : 2, 6. MR CZ SANKHLA for Respondent : 3. COMP/181/2007 2/12 JUDGMENT NOTICE SERVED for Respondents : 4, 8, 10, 13. MR RD DAVE for Respondent : 5. MS ASMITA PATEL, AGP for Respondent No. 7. SERVED BY AFFIX.(N) for Respondents : 9, 11. MR BD KARIA for Respondent : 12. ==================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ Date : 24/11/2008 ORAL JUDGMENT 1. This petition has been registered on the basis of the order passed by the Bombay High Court on 17.08.2007 in Company Petition No.401 of 1990 holding that the registered office of the Company is at Plot No.1806, Vapi Industrial Estate, GIDC, Vapi and hence, the proceedings are transferred to the Gujarat High Court, as it falls within the jurisdiction of the Gujarat High Court. The proceedings of the said Company Petition No.401 of 1990 were transferred to this Court accordingly. 2. Company Petition No. 401 of 1990 was registered by the Bombay High Court on the basis of the opinion of Board for Industrial & Financial Reconstruction ('BIFR' for short) received by the Registrar, Bombay High Court stating therein that having conducted the COMP/181/2007 3/12 JUDGMENT inquiry under Section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 in accordance with the procedure laid down in the said Act, the Bench of BIFR has recorded the opinion under Section 20 (1) of the said Act that it is just and equitable that Kay Packagings Private Limited should be wound up and had directed the Registrar to forward the aforesaid opinion of the BIFR to the High Court of Judicature at Bombay for further action under the law. 3. During the pendency of the said petition before the Bombay High Court, the Company had preferred an appeal before the Appellate Authority for Industrial and Financial Reconstruction ('AAIFR' for short) being Appeal No. 33 of 1990 and AAIFR vide its order dated 13.07.1990 admitted the said appeal and operation of the order passed by BIFR dated 25.04.1990 holding that it was just and equitable that the sick industrial Unit, Kay Packagings Private Limited be wound up and directing that the said opinion be forwarded to the High Court for further necessary action according to law, was stayed till further orders. However, the said COMP/181/2007 4/12 JUDGMENT appeal came to be dismissed by AAIFR vide its order dated 28.07.1993. 4. Before the Bombay High Court, the petition remained pending for more than 17 years and it was later on transferred to this Court on 17.08.2007. 5. This Court registered the said transferred petition as Company Petition No.181 of 2007 and notice was issued for the first time on 19.09.2007. This Court has admitted the said petition on 10.12.2007 and passed an order of advertisement on the same day. The Official Liquidator attached to this Court was appointed as the Provisional Liquidator of the Company and he was directed to take charge of the assets of the Company. He was further directed to issue public advertisement in two newspapers, namely, 'Indian Express' and 'Divya Bhaskar' covering the area where the registered office of the Company is situated and fixing the date of final hearing of the petition on 11.01.2008. The Court has dispensed with the publication of advertisement in the official Gazette. COMP/181/2007 5/12 JUDGMENT 6. Pursuant to the order passed by this Court on 10.12.2007, the Official Liquidator has filed his report dated 09.01.2008 wherein he has stated that consequent upon the order dated 10.12.2007, he had issued the advertisements in the newspapers on 21.12.2007 and copies of the newspaper clippings of advertisements dated 21.12.2007 were attached along with the said report. He has further stated in his report that he has deputed his representative to inspect the records of the Registrar of Companies, Gujarat, Ahmedabad of the Company to find out the assets and properties, liabilities, address/addresses of the registered office of the Company and Secured Creditors etc. While taking such inspection, it was observed that the Company was having two properties (1) Registered office :- Plot No.1806, Vapi Industrial Estate, GIDC, Vapi and (2) Other assets :- Plot No.A- 28/1, Patalganga Industries Area, Village Daire, Tal. Khalapur, Dist. Raigarh (Maharashtra). Thereafter, the Official Liquidator after giving intimation vide letter dated 22.12.2007 to the Ex-Directors as well as COMP/181/2007 6/12 JUDGMENT Secured Creditors of the Company, deputed his official, namely, Shri Nareshchandra on 27.12.2007 for taking possession of the registered office of the Company at Vapi. On reaching at the site, it was observed by the said official that the representative of GSFC, Valsad was present at the site and no one was present from Ex-Directors of the Company. It was further observed that the said premises was occupied and running in the name of M/s. Pidilite Industries Limited and the official of the Official Liquidator met one Shri A. W. Chavan, General Manager of M/s. Pidilite Industries Limited and explained the purpose of his visit. During discussion, Shri A. W. Chavan informed that at present, the said premises is not belonging to Company and the said premises was sold by GSFC, Ahmedabad by way of public advertisement issued on 17.09.1993 to Mark Lubricants, Sola Road, Ahmedabad in terms of the direction of High Court of Mumbai in Civil Suit No.1075/1991 and in accordance with the powers conferred under Section 29 of State Financial Corporation's Act, 1951. During discussion, Shri Ashok M. Patel, representative of GSFC, Valsad COMP/181/2007 7/12 JUDGMENT explained that Mark Lubricants had changed its name from Mark Lubricants to M/s. Plastometachem (India) Private Limited and Plastometachem (India) Private Limited had paid the full sale consideration of the assets to GSFC. Thereafter, Shri A. W. Chavan stated that the premises in question subsequently was sold and transferred the balance lease hold right of Plastometachem (India) Private Limited to Pidilite Industries Limited vide sale deed date 12.04.2001 and MOU dated 19.01.2001. In this connection, Shri A. W. Chavan and Shri Ashok M. Patel handed over related documents of the properties to the representative of the Official Liquidator on the spot. These documents are the copies of sale deed dated 12.04.2001, advertisement dated 17.09.1993, letter dated 13.05.1997 and 06.02.1995. The Official Liquidator in his report has, therefore, stated that the possession of the registered office could not be taken by the official of the Official Liquidator. 7. Thereafter, the official of the Official Liquidator had reached at the premises situated at Plot No.A-28/1, COMP/181/2007 8/12 JUDGMENT Patalganga Industries Area, Village Daire, Tal. Khalapur, Dist. Raigad (Maharashtra) for taking possession on 28.12.2007 and observed that no Secured Creditors were present at the site. The official of the Official Liquidator further found that there was no entrance gate, only one empty structure of broken shed without door and window and no machineries and records is found on the above plot. On inquiry from neighborhood of the above plot, it was observed that the Company was closed since 1986. For further inquiry, the representative of the Official Liquidator had gone to the office of the MIDC, Patalganga and found that the said premises is owned by the Company. Therefore, the possession of the said premises has been taken by the Official Liquidator by pasting legal notice on the wall of the shed. The seal and lock could not be applied because there was no gate in the plot. After taking possession of the plot, one security guard in one shift, total three guards in three shifts of M/s. Blockade Defence Services, Ahmedabad were appointed at the premises. COMP/181/2007 9/12 JUDGMENT 8. In the above view of the matter, the Official Liquidator has prayed for ratification of his action regarding possession of the properties and appointment of Security Guards and also the payment to the Advertising Agency. 9. Pursuant to the advertisements appeared in the newspaper, an affidavit-in-reply was filed on behalf of Union Bank of India on 11.01.2008 wherein it is stated that Union Bank of India had sanctioned credit facilities of Bill Discounting Facility, Term Loan and bank Guarantee to the Company and the said Company failed to pay the dues of the Bank and hence, the Bank preferred suit being Suit No.1075 of 1991 which was subsequently transferred before the Debts Recovery Tribunal at Mumbai being O.A. No.2661 of 2000. The Debts Recovery Tribunal at Mumbai passed an order on 15.01.2007 and issued amended recovery certificate dated 16.02.2007 for an amount of Rs.84,05,671.65 with future interest @ 16.5% from 24.12.1990 is still payable and due from the Company. COMP/181/2007 10/12 JUDGMENT 10.In the above view of the matter, this petition is taken up for final hearing. Nobody is present to oppose the winding up petition. The Company is closed since long. The registered office of the Company is already sold way back in 1993. When the Official Liquidator has visited the factory, neither any plant, machinery or any stock was found. Only the open plot without any gate was there and the Official Liquidator has taken the possession of the said open plot. BIFR has already forwarded its opinion way back in 1990 for winding up of the Company. Even appeal preferred there against was also dismissed. Since BIFR has forwarded its opinion before the Bombay High Court which in fact had no jurisdiction, the matter was pending for more than 17 years. During the pendency of the winding up petition before the Bombay High Court, it appears that the property was sold. The said winding up proceedings were transferred to this Court on 17.08.2007 and considering the facts of the case as well as the recommendation of the BIFR, this Court has admitted the petition and order of advertisement was passed. Pursuant to the said advertisement, no COMP/181/2007 11/12 JUDGMENT one has come forward to oppose the winding up petition. On the contrary, Union Bank of India has filed affidavit-in-reply stating that they have to recover more than Rs.83 Lacs from the Company. Thus, it clearly appears that the Company has failed to discharge its liabilities and its assets are totally evaporated. The Company is required to be wound up and accordingly, the Company is hereby ordered to be wound up. The Official Liquidator who was initially appointed as the Provisional Liquidator is now appointed as the Liquidator of the Company. He has already taken possession of one of the properties of the Company and with regard to the second property, litigation is pending before this Court. Pursuant to the order dated 10.12.2007, the Official Liquidator has taken certain steps as a Provisional Liquidator and all these steps taken by him are hereby ratified. The Official Liquidator is hereby directed to issue notices to the Ex-Directors of the Company to file the statement of affairs and is further directed to record their statements about the affairs of the Company. COMP/181/2007 12/12 JUDGMENT 11.Subject to the aforesaid direction and observation, this petition is accordingly allowed without any order as to costs. [K. A. PUJ, J.] Savariya