Case: Saroj G. Podar &amp; Others Vs.

but to accept whatever is offered to them. What is important is that during all these 17 years, no attempt was ever made to even consider the revival, may be partially. All the plants, machineries and other equipments necessary for revival were sold out and after everything was sold out and after everyone was exhausted and the only asset which remained was land cleared of all machineries, etc., the scheme was propounded. We are not impressed by the argument of Mr.Manohar that the agreement between Podars and Bhaveshwar Estate Pvt. Ltd. is irrelevant. We think that on the contrary, the entire scheme propounded by Podars is completely dependent and, in facts based on the agreement of Podars with Bhaveshwar Estate Pvt. Ltd. The agreement, read in its true colours, means nothing except that Bhaveshwar Estate Pvt Ltd. is purchasing the entire equity shareholding of Podars. Now that shareholding can be understood in the form of whatever assets the company would have and the only solitary asset which the company has is large land situate at a prima locality at Mumbai. In simple terms, instead of bidding at the auction, Bhaveshwar Estate Pvt. Ltd. want to purchase this land from Podars for Rs.80 crores. The very offer and the very agreement suggests to us that the land, even in the position as it is, is capable of fetching a huge amount. In fairness, we must state here that the valuation report which was kept and sealed in a cover was opened by us and the valuation made by the Valuer is about Rs.20 crores. However, we are of the view that the very fact that Bhaveshwar Estate Pvt. Ltd. is, in substance, offering about Rs.80 crores is indication enough regarding the true value of the land and the report regarding valuation being not reliable. Any semblance of revival of the company, in our opinion, must include the interest and employment of the workmen who have been thrown out of employment 17 year ago. However, the scheme, as we see it, is nothing but selling the land without public auction to a person dealing in real estates and to develop the land at a real estate. It is difficult for us to hold that this is revival on the slender thread of one of those several objects in the Memorandum of Association of the company.28.As we are not impressed by this so-called revival of the corporate existence of the company, similarly, we are also not impressed by the alleged difficulties created by the industrial location policy. Our reading of the resolutions is that no new Mill or expansion of the existing Mills may be permitted. But that would never prohibit existing Mills or the revival thereof. We are of the view that somehow the matters were allowed to drift. All machineries, equipments, plant and everything required for the running of the Mills were allowed to be sold and after 17 years when nothing but the land remains, the scheme has been propounded for the alleged revival of the corporate existence which, in reality, is nothing but a scheme for exploiting the land for commercial purposes. We are aware that this would be the result even if the land is auctioned. However, in that event, there will be bidders and we see no justification why under the guise of the scheme, Bhaveshwar Estate Pvt. Ltd. should get preferential treatment. In this behalf, it is extremely relevant that there is no indication whatsoever as to what alleged employment and revenue would be generated by the aforesaid scheme. Even the exact liabilities of the company are not determined. The claims are not invited and the liabilities are not finalized. The exact entitlement of the workmen is also not finalized and at no stage, the Court had applied its mind as to whether the workmen are being paid their total dues. Even the exact number of workmen was not determined and we find that initially the scheme suggested that there were 77 workmen which number has, ultimately, grown to more than six to seven hundred. Under the circumstances, the fact that no settled list of creditors is prepared and as the exact total entitlement of creditors as well as the workmen is not determined, the scheme cannot be approved on the hypothesis that all lawful claims of everybody concerned would be satisfied.29.The scheme, in our opinion, is nothing but a scheme to sell the land and, as such, we find that the finding of the learned Judge that the scheme is not genuine and not bona fide is clearly sustainable.30.We cannot leave this case without certain observations regarding the manner in which the Liquidator has gone about the matter. We were rather surprised to hear from the learned counsel for the Liquidator that, as per some practice, the Liquidator first realises the amount and, thereafter, he invites the claims. The procedure is not only absolutely improper but inherently dangerous. For seventeen years no claims have been invited. May be there are certain poor workmen who would not survive such a period to stake their claim. What is important is that in such matters, the Liquidator must invite claims with absolute expediency within a reasonable time, must keep the Court informed about all the liabilities and the prepare settled list of all creditors. That is also very necessary for the purpose of determining the reasonableness of any offers that may be made to the Court. We are also shocked to see, the casual manner in which the Liquidator has referred to the offers received by him. It was pointed out to us that there is no offer by Videocon. When we enquired with the learned counsel appearing for the Liquidator, his only explanation was that the Liquidator was unable to give any explanation as to why he stated that Videocon had not given any offer.31.We have found that in this matter, nothing is finalized. We direct that the Liquidator should move in the matter with utmost despatch.

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

Explanation:
0[ds]We do not think it necessary to dwell into the details of the agreement between Bhaveshwar Estate Pvt. Ltd. and Podars as also about the scheme as we have already referred to the required salient features discussed by the learned Judge in the impugned order. Mr.Manohar particularly pointed out that one of the objects as incorporated in the Memorandum of Association of the company is also of dealing in, developing lands and leasing out,do not think it necessary to dwell into the details of the agreement between Bhaveshwar Estate Pvt. Ltd. and Podars as also about the scheme as we have already referred to the required salient features discussed by the learned Judge in the impugned order. Mr.Manohar particularly pointed out that one of the objects as incorporated in the Memorandum of Association of the company is also of dealing in, developing lands and leasing out,is relevant to notice that, admittedly, the company since its inception till the date on which the order of liquidation was passed was exclusively engaged in business of manufacturing and dealing infabrics. Now what is being done, in our opinion, would not amount to genuine revival at all. Revival of the company, Shree Shakti Mills Limited, must mean revival of at least a substantial main business of the company which would include the revival of the business which would give employment to several workmen. The scheme, as we would point out hereafter, in our opinion, is only revival of Podars. It is extremely relevant that the agreement which Podars have entered into with Bhaveshwar Estate Pvt. Ltd. clearly shows that after therevival, Podars go out of the picture totally and Bhaveshwar Estate Pvt. Ltd. would be running therevived company. Bhaveshwar Estate Pvt. Ltd., as the name suggests, would merely develop the land by constructing buildings thereon. We find it difficult to hold that this end result can be called revival of the company. We are in agreement with the learned Judge that therevival of the corporate existence of the company is merely incidental. It is obvious to us that Bhaveshwar Estate Pvt. Ltd. are interested in the company only for the solitary asset which remains, viz., the lands on which constructions can be raised for its commercial or other exploitation. This cannot be a revival in the true sense of the word. What is extremely significant is that although the price of shares may not be directly relevant, in the facts and circumstances of the case, the only asset of the company being the land and that too a huge land at a very prime locality in Mumbai, the fact that Bhaveshwar Estate Pvt. Ltd. are purchasing the shares for an amount of Rs 80 crores is indicative of the price which the land is capable of fetching. We are conscious of the fact that out of the three offers which were referred to by the Liquidator, one of the offers is shown to be nonexistent One is only for Rs.19 crores and the other offer, though for Rs.125 crores, is a conditional offer, the condition being that the Liquidator obtains the renewal of the lease. However, it is extremely relevant to consider that during all these long 17 years, on no occasion there was any serious attempt to call for the offers, much less to consider the same. In our opinion, even the amount of liabilities and dues is not finalised. We are informed that the Liquidator has not bothered during these long 17 years even to invite the claims. We find the manner in which the Liquidator has gone about is rather distressing. It is obvious to us that in such matters, it is extremely essential to invite claims and within a reasonable time to have complete idea and the list of all creditors and the amount which is due to statutory creditors, secured creditors, unsecured creditors, other creditors and especially the workmen That majority of the workmen are supporting the claim does not impress us at all for the simple reason that the workmen in the situation, viz., after being thrown out of employment for the last 17 years have hardly any choice, but to accept whatever is offered to them. What is important is that during all these 17 years, no attempt was ever made to even consider the revival, may be partially. All the plants, machineries and other equipments necessary for revival were sold out and after everything was sold out and after everyone was exhausted and the only asset which remained was land cleared of all machineries, etc., the scheme was propounded. We are not impressed by the argument of Mr.Manohar that the agreement between Podars and Bhaveshwar Estate Pvt. Ltd. is irrelevant. We think that on the contrary, the entire scheme propounded by Podars is completely dependent and, in facts based on the agreement of Podars with Bhaveshwar Estate Pvt. Ltd. The agreement, read in its true colours, means nothing except that Bhaveshwar Estate Pvt Ltd. is purchasing the entire equity shareholding of Podars. Now that shareholding can be understood in the form of whatever assets the company would have and the only solitary asset which the company has is large land situate at a prima locality at Mumbai. In simple terms, instead of bidding at the auction, Bhaveshwar Estate Pvt. Ltd. want to purchase this land from Podars for Rs.80 crores. The very offer and the very agreement suggests to us that the land, even in the position as it is, is capable of fetching a huge amount. In fairness, we must state here that the valuation report which was kept and sealed in a cover was opened by us and the valuation made by the Valuer is about Rs.20 crores. However, we are of the view that the very fact that Bhaveshwar Estate Pvt. Ltd. is, in substance, offering about Rs.80 crores is indication enough regarding the true value of the land and the report regarding valuation being not reliable. Any semblance of revival of the company, in our opinion, must include the interest and employment of the workmen who have been thrown out of employment 17 year ago. However, the scheme, as we see it, is nothing but selling the land without public auction to a person dealing in real estates and to develop the land at a real estate. It is difficult for us to hold that this is revival on the slender thread of one of those several objects in the Memorandum of Association of the company.28.As we are not impressed by thisrevival of the corporate existence of the company, similarly, we are also not impressed by the alleged difficulties created by the industrial location policy. Our reading of the resolutions is that no new Mill or expansion of the existing Mills may be permitted. But that would never prohibit existing Mills or the revival thereof. We are of the view that somehow the matters were allowed to drift. All machineries, equipments, plant and everything required for the running of the Mills were allowed to be sold and after 17 years when nothing but the land remains, the scheme has been propounded for the alleged revival of the corporate existence which, in reality, is nothing but a scheme for exploiting the land for commercial purposes. We are aware that this would be the result even if the land is auctioned. However, in that event, there will be bidders and we see no justification why under the guise of the scheme, Bhaveshwar Estate Pvt. Ltd. should get preferential treatment. In this behalf, it is extremely relevant that there is no indication whatsoever as to what alleged employment and revenue would be generated by the aforesaid scheme. Even the exact liabilities of the company are not determined. The claims are not invited and the liabilities are not finalized. The exact entitlement of the workmen is also not finalized and at no stage, the Court had applied its mind as to whether the workmen are being paid their total dues. Even the exact number of workmen was not determined and we find that initially the scheme suggested that there were 77 workmen which number has, ultimately, grown to more than six to seven hundred. Under the circumstances, the fact that no settled list of creditors is prepared and as the exact total entitlement of creditors as well as the workmen is not determined, the scheme cannot be approved on the hypothesis that all lawful claims of everybody concerned would be satisfied.29.The scheme, in our opinion, is nothing but a scheme to sell the land and, as such, we find that the finding of the learned Judge that the scheme is not genuine and not bona fide is clearly sustainable.30.We cannot leave this case without certain observations regarding the manner in which the Liquidator has gone about the matter. We were rather surprised to hear from the learned counsel for the Liquidator that, as per some practice, the Liquidator first realises the amount and, thereafter, he invites the claims. The procedure is not only absolutely improper but inherently dangerous. For seventeen years no claims have been invited. May be there are certain poor workmen who would not survive such a period to stake their claim. What is important is that in such matters, the Liquidator must invite claims with absolute expediency within a reasonable time, must keep the Court informed about all the liabilities and the prepare settled list of all creditors. That is also very necessary for the purpose of determining the reasonableness of any offers that may be made to the Court. We are also shocked to see, the casual manner in which the Liquidator has referred to the offers received by him. It was pointed out to us that there is no offer by Videocon. When we enquired with the learned counsel appearing for the Liquidator, his only explanation was that the Liquidator was unable to give any explanation as to why he stated that Videocon had not given any offer.31.We have found that in this matter, nothing is finalized. We direct that the Liquidator should move in the matter with utmost despatch.