IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Co. Appeal No. 4 of 2005 and CWP No.: 557 of 2004 Reserved on: 28.8.2008 Date of decision: 03.9.2008 Co. Appeal No. 4 of 2005 M/s Himachal Advance Circuits Limited and another Appellants. Versus Board for Industrial & Financial Reconstruction & others respondents. --------------------------------------------------------------------------------------------------- CWP No. 557 of 2004 M/s Himachal Advance Circuits Limited and another petitioners. Versus Union of India and others respondents. --------------------------------------------------------------------------------------------------- Coram The Hon’ble Mr.Justice Deepak Gupta, J. The Hon’ble Mr. Justice V.K.Ahuja, J. Whether approved for reporting?1. No. In Co. Appeal No. 4 of 2005 For the appellants: Mr. Dushyant Dadwal, Advocate. For the respondents No. 2 & 3 Mr. N.K.Sood, Advocate. For the respondent No. 6 Mr. Baldev Singh, Advocate. For the respondent No. 7 Ms. Shilpa Sood, Central Govt. counsel. For the respondent No. 8 Mr. Rajesh Mandhotra, Dy. Advocate General In CWP No. 557 of 2004. For the petitioners Mr. Dushyant Dadwal, Advocate. For the respondents No. 1 & 8 Ms. Shilpa Sood, Central Govt. Counsel. For the respondents No. 3 & 4 Mr. N.K.Sood, Advocate. For the respondent No. 7 Mr. Baldev Singh, Advocate. For the respondent No. 9. Mr. Rajesh Mandhotra, Dy. Advocate General. Per Deepak Gupta, J. The aforesaid Company Appeal No. 4 of 2005 and CWP No. 557 of 2004 are being disposed of by this common judgement since they arise out of the same order. Briefly stated, the facts of the case are that M/s Himachal Advance Circuits Limited (here-in-after referred to as the Company) 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes. 2 is a company registered under the Companies Act, 1956, having its registered office at 8-Industrial Area, Phase-II, Baddi, District-Solan, H.P. The company filed a petition before the Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985, here-in-after referred to as the SICA. This reference was registered as Case No. 16 of 1998. At the first hearing held by the BIFR on 18.3.1998, the IFCI was appointed as the operating agency. The company was directed to submit a comprehensive proposal to the operating agency within six weeks so that the operating agency could evaluate the same. The company did not give any detailed submissions in terms of the order of the BIFR and only a rough and sketchy submission was made which according to the operating agency could not be termed as a proposal. Thereafter, the BIFR directed the operating agency to prepare a proposal on its own on the material available on record. Himachal Consultancy Organisation (HIMCON) was appointed by the operating agency to carry out a techno-economic viability study of the project. This report was submitted. The operating agency held a meeting on 1.7.1999 but found that the company could not be revived. This meeting was not attended by the company but the financial institutions found that the company was no longer viable and recommended the winding of the company to the BIFR. On the basis of the report of the operating agency, the BIFR formed a prima-facie opinion under Section 20(1) of the SICA to wind up the company and a detailed order was issued. Show cause notice was issued to the company calling for its objections/suggestions. In the said show cause notice an 3 opportunity was given to the promoters to submit a fresh revival proposal also. Admittedly, the company did not submit any fresh revival proposal to the operating agency, as ordered by the BIFR but when the case was listed for hearing on 13.1.2000, the Managing Director of the company appeared and stated that he may be permitted to place on record the written submissions. According to him, the company had not received the show cause notice but he had read some notice in the newspaper and thereafter contacted the BIFR and obtained copy of the show cause notice on 16.12.1999. The BIFR came to the conclusion that the company and the Managing Director were not interested in reviving the company. The case of the company was that it had not been given adequate opportunity to present its case before the operating agency. This plea was not accepted and the BIFR recommended the winding up of the company vide order dated 13.1.2000. A learned Single Judge of this Court accepted the recommendations of the BIFR vide order dated 4.7.2001. Thereafter, an application was filed before the learned Company Judge, wherein it was submitted that in fact the order passed by the BIFR had been challenged before the appellate authority in terms of the SICA and therefore, the report of the BIFR should not have been accepted. This averment made by the petitioner-company was accepted by the learned Single Judge who recalled his earlier order and further directed that since an appeal had been preferred to the appellate authority the reference made by the BIFR was bad and the same was rejected. 4 The company alongwith this appeal has placed on record the copy of the grounds of appeal filed before the BIFR. Alongwith his grounds of appeal, there is an affidavit which has been attested on 4th July, 2001. It is thus obvious that appeal could only have been filed either on 4th July or thereafter. The appellate authority dismissed the appeal filed by the company and thereafter the BIFR has made the fresh recommendations for the winding up of the company on 27th November, 2003 on the same grounds. The learned Company Judge after considering the entire facts and circumstances of the case has accepted the report of the BIFR and ordered the company to be wound up. Company Appeal No. 4 of 2005 has been filed against the said order. The company has also filed CWP No. 557 of 2004 in which challenge is to the orders passed by the BIFR. We have heard Shri Dushayant Dadwal, learned counsel for the company and Shri N.K.Sood, learned counsel for respondents IFCI and IDBI. The main thrust of Shri Dushayant Dadwal is that no proper opportunity was given to the company to put forward his case. He submits that the Managing Director of the company had informed the operating agency, BIFR and all other concerned that the company is lying closed. Despite this, all communications were sent to the registered office of the company and not to the Managing Director. This argument is totally without any merit. A Company is a juristic person having its own identity. Directors may come and go but the company lives on. The requirement of law is that all 5 communications addressed to a company should be sent to its registered office. In the present case, it is not disputed that the operating agency as well as BIFR were sending the communications/orders to the registered office of the company. It was duty of the Managing Director to having ensured the collection of all communications sent to the registered office of the Company. We also find that the stand taken by the company does not appear to be factually correct. The Managing Director of the Company attended some meetings and absented from others. Once the reference petition of a sick company is registered, all proceedings against it are automatically stayed. In such a situation, the company may choose not to appear since the stay operates in its favour. The company cannot be allowed to take advantage of this stay, by absenting itself from the meetings. It is the duty of the company and its officers to ensure that once the petition is filed under the BIFR the same is also followed with due diligence. The learned Single Judge has rightly held that as a result of the registration of the case with the BIFR all proceedings against the company came to a grinding halt under Section 16 of SICA. The company as a prudent authority was expected, in fact, it was incumbent upon it to have not only approached and enquired not only from the BIFR but also from the operating agency as to what is happening in its case. The company was totally negligent in pursuing the matter and it appears that in fact it was only interested in getting the stay and not in reviving the company. In the present case, even as per the averments of the company, on 16.12.2000 it had obtained the copy of the show cause 6 notice from the BIFR. There is no explanation as to why the company did not make any attempt to furnish the proposal immediately thereafter. From the material on record, we are convinced that once the stay was operating in its favour the company was only interested in delaying the matter and no real proposal was submitted by the company either to the operating agency or to the BIFR. It is also interesting to note that earlier the Company Judge had disposed of the matter on 4th July, 2001. The appeal is also dated the same date. It is not clear whether the appeal was actually filed on this date or thereafter. Be that as it may, it appears that the company tried to mislead this Court by claiming that the appeal had been filed much before the matter was disposed of by the learned Single Judge. It is not disputed that the said appeal was dismissed by the appellate authority on 11.9.2001. This appellate order was not challenged at any time. The subsequent reference made on 16.4.2003 is only a formal order in view of the dismissal of the appeal against the earlier order which automatically revived. We find no merit in the appeal or in the petition. Both the appeal and the petition are dismissed with no order as to costs. ( Deepak Gupta ), J. 3rd September, 2008 ( V.K.Ahuja ), J. ™