Case: Allahabad Bank Vs. Arc Holding Ltd. &amp; Ors

as a going concern with a rider to absorb all the employees would not only bring low sale price but would negate the execution of the decree. 9. On the other hand the submission on behalf the judgment-debtor and on behalf of the workmen is such an order is just and proper as it brings back workers to earn their livelihood and simultaneously it would satisfy the decree. 10. It is not in dispute that the appellant- bank is the only secured creditor as against the said judgment-debtor company in liquidation. The total decree along with interest till 31st August, 1999 recorded is Rs. 8,29,48,725.72p. It is true, the court must find that method of sale of the assets or of the company, which brings maximum price to satisfy its creditors. This may, in a given case, include recovery through installments out of the production of the company. This would depend on the potentiality, viability and health of a company. Sometimes when company is taken over under Section 29 of the Financial Corporation Act, corporation may run or get the factory run to recover the loan. In another set of cases, where company has become nonfunctional, sick, due to its heavy debt, lack of production, mismanagement etc. then possibility of its revival is examined through expert statutory body the BIFR, It is only after scrutiny a decision is made to help in revival. It may order if no revival is possible. If company agrees with conditions imposed under any scheme framed by BIFR, if revival is possible such company may be brought back as running concern, with hope of its revival. But, if a company has reached a skeleton stage, where its revival is not possible, its assets are sold, to pay back the creditors. In the present case, undisputedly an order of winding up was passed as far back as on 4th June, 1990. There is nothing on the record to show even any attempt was made by the judgment-debtor respondent-company for its revival nor there is any thing on the record, to show that there exist possibility of its revival. Submission for the appellant-bank in support of sale being as going concern is made under the garb and in the name if workers to resist the present execution. 11. Learned Counsel for the appellant-bank strongly relies on Union Bank of India v. Official Liquidator H.C. of Calcutta and Ors. 2000 (5) SCC 274 . This was a case where a company was closed for about 17 years. The relevant portion is quoted hereunder: "It also appears that the Division Bench was persuaded by the so-called sympathy for the workers, without verification of the fact that the Company was closed before 17 years of sale. The Court has noted in the beginning while narrating the submission of the learned Counsel who appeared for the benefit of the employees that more than 100 employees were starving to death and in the later para stated that the Court was informed by the learned advocate appearing for the employees union that more than 100 employees have already died. Without there being any application on record and without there being proper verification of the facts from the parties concerned, it is not just and proper to make such observations. It is not impossible that because of the lapse of 17 years, out of 1200 workers who might have worked in the said factory 100 employees might have died a natural death. But in any circumstances it was unjustified to make a case over it and to accept oral submissions and to dispose of the valuable properties of a Company by stating that the sale of the Company as a going concern was for the benefit of the so-called employees who were not in employment." 12. Submission is, applying this decision and in the absence of any credible material the direction to sale the company as a going concern is not sustainable. 13. Learned Counsel for the company in liquidation and for the employees union, representing workers submits, for a compassionate consideration, in the interest of workers; as a last resort, attempt be made, if possible, to get a buyer who many take over the company as a going concern and be ready to pay the price to satisfy the decree and pay the rest of the liability in a phased manner after the production starts. 14. When indisputably the order of winding up made on 4-6-1990 had become final and company has become non functional for long, even BIFR could not come to its rescue and the attempt of the workers union of resuscitate the company by getting a committee constituted for management was repelled by a Division Bench of the High Court and this Court when the SLP filed by the workers Union came to be dismissed on 5-12-1997, it would no doubt be ironical and unjust to get order for the sale of the assets of the company as a going concern. But, at the same time to give a last try to the fond hopes expressed on behalf of the erstwhile workers, we consider giving one more chance to have it so done within a strict frame of time limit. 15. After considering submission of the learned Counsel for the parties, we are granting this indulgence, by permitting the sale of the company as a going concern with certain conditions only. 16. The Official Liquidator for this purpose shall advertise the sale of the company in liquidation-judgment debtor as a going concern as ordered by the High Court. Such publication shall indicate that the reserve price, shall be the amount equal to the total decree including interest which has accrued upto 31th December, 1999 in favour of the appellant-bank, and shall also has to pay the balance interest which accrues, till full payment is made. The publication shall also indicate that purchaser has also to pay the liabilities of other claimants in the proceeding for the liquidation of the company.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. When indisputably the order of winding up made onhad become final and company has becomefor long, even BIFR could not come to its rescue and the attempt of the workers unionresuscitate the company by getting a committee constituted for management was repelled by a Division Bench of the High Court and this Court when the SLP filed by the workers Union came to be dismissed onit would no doubt be ironical and unjust to get order for the sale of the assets of the company as a going concern. But, at the same time to give a last try to the fond hopes expressed on behalf of the erstwhile workers, we consider giving one more chance to have it so done within a strict frame of timel indicate that the reserve price, shall be the amount equal to the total decree including interest which has accrued uptoDecember, 1999 in favour of theand shall also has to pay the balance interest which accrues, till full payment is made. The publication shall also indicate that purchaser has also to pay the liabilities of other claimants in the proceeding for the liquidation of the company.