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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY PETITION NO.961 OF 2014
WITH
COMPANY APPLICATION NO. 294 OF 2015
Tata Capital Financial Services Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.976 OF 2014
R.B.Financial Services Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ig ...Respondent
WITH
COMPANY PETITION NO.776 OF 2014
Silver Quest (India) Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.990 OF 2014
Sunchan Finance Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.16 OF 2015
S.P.Shah, HUF ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.19 OF 2015
Fairtex International ...Petitioner
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Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.20 OF 2015
Ground Control Properties Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.21 OF 2015
Kiran Properties LLP ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ig ...Respondent
WITH
COMPANY PETITION NO.23 OF 2015
Pioneer Enterprises ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.24 OF 2015
Rakesh Singh ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.25 OF 2015
Jyoti Sodhani ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.26 OF 2015
Jagruti K. Bavishi ...Petitioner
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Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.39 OF 2015
F.C.Properties & Developers Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.42 OF 2015
Kaveri Impex Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ig ...Respondent
WITH
COMPANY PETITION NO.47 OF 2015
Sumit Resorts & Farms Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.112 OF 2015
Western Logistics Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.136 OF 2015
Mak Ampqules Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.177 OF 2015
M/s Rajgarhia Leasing & Financial Services Pvt. Ltd. ...Petitioner
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Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.178 OF 2015
M/s APM Industries Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.235 OF 2015
Neviele Maneck Gyara & Anr. ...Petitioners
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
ig WITH
COMPANY PETITION NO.312 OF 2015
Excelsior Business Link Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.378 OF 2015
MAK Polyplast Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.417 OF 2015
MAK Polyplast Pvt. Ltd. ...Petitioner
Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
WITH
COMPANY PETITION NO.768 OF 2015
WITH
COMPANY APPLICATION NO. 626 OF 2015
Kamal Supers Ltd. ...Petitioner
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Vs
M/s Elder Pharmaceuticals Ltd. ...Respondent
.....
Mr.Aziz Khan with Mr.Swarup Patil i/b. M/s.Divya Shah Associates for Petitioners
in CP 976/14, 16/15, 19/15, 20/15, 21/15, 23/15, 24/15, 25/15, 26/15.
Ms.Stuti Murarka with Ms.Maithili Vagal i/b. Crawford Bayley & Co. for Petitioner
in CP 776/14, 47/15.
Ms.S.U. Kamdar, Senior Advocate i/b. M/s.MDP & Partners for Petitioner in CP
961/14.
Ms.Namrata Shah i/b. M/s.Mansukhlal Hiralal & Co. for Petitioner in CP 990/14.
Mr.Abhishek Bharti i/b. M/s.MZD Legal Consultancy for Petitioner in CP 39/15,
42/15.
Ms.Deepti Panda with Ms.Annapurna i/b. M/s.Narayanan & Narayanan for
Petitioner in CP 8915, 136/15, 378/15 and 417/15.
Ms.Tejashree Gawde i/b. Mr.Zohair Zaidy for Petitioner in CP 112/2015.
Mr.Jeetendra Ranawat i/b. Mr.Suresh Jain for Petitioner in CP 177/15 & 178/15.
Ms.Bhavna Singh with Mr.Vaibhav Sharma i/b. M/s.Mulla & Mulla & CBC for
Petitioner in CP 235/15.
Mr.Dharmapal Dave i/b. M/s.Mansukhlal Hiralal & Co. for Petitioner in CP 312/15
& 768/15.
Mr.Ali Abbas Delhiwala with Ms.Nidhi Singh i/b. Joy Legal Consultants for
Respondent.
.....
CORAM : S.C. GUPTE, J.
Order reserved on : JUNE 24, 2015
Order pronounced on : OCTOBER 01, 2015
ORDER :
These twenty four petitions seek winding up of the Respondent Company on the ground of inability to pay its debts under Sections 433 and 434 of the Companies Act, 1956 ("the Act"). A brief statement of the respective claims in the petitions, which are not contested seriously on merits, may be noted as follows, before we consider the common defence to these petitions.
2. The debts of the respective Petitioners:
2.1. Company Petition No. 961 of 2014:
2.1.1. The Petitioners - Tata Capital Financial Services Ltd., a non - banking ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:38 ::: dik 6/38 C.P. 961 of 2014 & Others.doc financial company, were subscribers to 150 Non - Convertible Debentures ('NCDs') issued by the Respondent in pursuance of a private placement offer for secured redeemable non - convertible debentures of the face value of Rs. 10 Lacs each. The Petitioners made a total payment of Rs. 15 Crores towards these NCDs. The tenure of the NCDs was 5 years from the deemed date of allotment, i.e. 23 December 2010. The NCDs were to be redeemed in 12 quarterly installments commencing from the 9th quarter of the deemed date of allotment.
Accordingly, the Respondent was obliged to pay a sum of Rs. 2.02 Crores by way of the first installment on the NCDs as on 23 June 2013. The Respondent committed a default in payment of the installment, paying merely a sum of Rs.
20 Lacs and leaving balance of Rs. 1.82 Crores. The Respondent also defaulted in payment to other debenture holders. A joint meeting was thereupon held on 16 August 2013 between the Respondent, M/s. Axix Trustees Services Ltd. (the Debenture Trustees) and the debenture holders. It was agreed in this meeting that the Respondent would pay the outstanding principal amount due on the NCDs on 24 August 2013 and 30 September 2013 and the interest amount due on 31 August 2013. The Respondent, however, defaulted in meeting these commitments. By their Advocates' letter dated 3 December 2013, the Petitioners served a statutory demand notice under Sections 433 and 434 of the Act. The Respondent failed to comply with this notice. As of 30 September 2014, the Respondent was indebted to the Petitioner for a sum of Rs. 10.89 Crores towards the dues in the respect of the NCDs, when the petition was filed.
2.1.2 Though the Respondent has in its reply to the petition generally
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denied the dues and put the Petitioners to the proof of the dues, there is no real contest on the dues under the NCDs. The Petitioners' investment of Rs. 15 Crores in the NCDs is admitted. So also are the terms of the NCDs. All that the Respondent submits is that the Respondent has made payment of about Rs.
9.76 Crores to the Petitioners towards principal and interest before the date of the statutory demand notice and a further sum of Rs. 5.05 Crores towards overdue amounts after the filing of the company petition. These payments only take care of a part of the liability owed by the Respondent to the Petitioners. As of 20 January 2015, a large liability of over Rs. 9.80 Crores is owed by the Respondent to the Petitioners on the Respondent's own showing.
2.1.3 There are dues owed by the Respondent to other debenture holders as well in respect of the NCDs. In its affidavit dated 20 January 2015, the Respondent has indicated a total claim of the NCD holders including the Petitioners herein of over Rs. 263 Crores.
2.2 Company Petition No. 976 of 2014:
2.2.1 The Petitioners - R. B. Financial Services Ltd. - have lent a total
sum of Rs. 50 Lacs by way of business loans to the Respondent on 2 May 2013 (Rs. 25 Lacs) and 3 June 2013 (Rs. 25 Lacs). It is the case of the Petitioners that a sum of about Rs. 55.53 Lacs is due and payable by the Respondent towards these loans as of 30 November 2014. The Petitioners' statutory demand notice of 20 September 2014 is cryptically replied to by the Respondent by a bare denial of liability in a holding reply of their advocates, awaiting further ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 8/38 C.P. 961 of 2014 & Others.doc instructions and documents.
2.2.2 In its reply to the petition, there is no contest to the claim on merits. What is submitted is that the company is going through a financial crisis, but that it has every intention to repay legitimate dues and its new management is trying its best to get the company back on track. That was on 18 February 2015.
2.3 Company Petition No. 990 of 2014:
2.3.1 The debt owed by the Respondent to the Petitioner - Sunchan Finance Ltd. - is on account of an Inter Corporate Deposit (ICD) of Rs. 25 Lacs. The aggregate amount due on the ICD as of 31 October 2014 is about Rs. 28.33 Lacs.
2.3.2 There is no contest on this debt in the Respondent's reply, except to say that the correctness of the dues claimed by the Petitioners has to be verified;
that there was a major reshuffle in the various departments of the Respondent and the new employees are not yet aware of the past transactions. That was the stand taken on 3 March 2015. There has since been no change in the stand.
2.4 Company Petition No. 16 of 2015:
2.4.1 The Petitioners' claim here is in the sum of about Rs. 39.33 Lacs on account of multiple business loans. There is no contest to the claim on merits in the Respondent's reply. The reply pleads a case of temporary financial crisis.
2.5 Company Petition No. 19 of 2015:
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2.5.1 The claim here is of a sum of about Rs. 11.48 Lacs on account of a business loan. There is no contest on merits. The plea is of financial difficulties.
2.6 Company Petition No. 20 of 2015:
2.6.1 The claim is of about Rs. 17.25 Lacs on account of a business loan. There is no contest on merits.
2.7 Company Petition No. 776 of 2014:
2.7.1 The claim of about Rs. 67.58 Lacs on account of an inter corporate deposit as of 31 May 2014 has been contested by a bare denial in the Respondent's reply, without any particulars.
2.8 Company Petition No. 21 of 2015:
2.8.1 There is an uncontested claim of about Rs. 47.10 Lacs on account of a business loan extended by the Petitioner to the Respondent.
2.9 Company Petition No. 23 of 2015:
2.9.1. The Petitioner's debt in the sum of about Rs. 11.66 Lacs is not disputed by the Respondent.
2.10 Company Petition No. 24 of 2015:
2.10.1 The Petitioner's debt of about Rs. 22.90 Lacs in not disputed.
2.11 Company Petition No. 25 of 2015:
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2.11.1 The Petitioner's debt of about Rs. 5.89 Lacs is uncontested.
2.12 Company Petition No. 26 of 2015:
2.12.1 The Petitioner's debt of about Rs. 6.01 Lacs is not contested in the reply (of 15 February 2015) except to say that it needs to be verified. The position remains the same as of date.
2.13 Company Petition No. 39 of 2015:
2.13.1 The claim of about Rs. 56.81 Lacs is not disputed in the reply, which pleads financial difficulties.
2.14 Company Petition No. 42 of 2015:
2.14.1 The claims of about Rs. 1.19 Crores on account of an Inter Corporate Deposit of Rs. 1 Crore is not contested on merits.
2.15 Company Petition No. 47 of 2015:
2.15.1 The claim of about Rs. 56.86 Lacs is on account of an Inter Corporate Deposit and is contested in the reply by a bare denial.
2.16 Company Petition No. 112 of 2015:
2.16.1 The Petitioner's claim of about Rs. 59.13 Lacs on account of an Inter Corporate Deposit is not contested in the reply except to say that till such time as the representatives of both the Petitioner and the Respondent sit together and reconcile the account, there is no way of knowing whether the accounts ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 11/38 C.P. 961 of 2014 & Others.doc referred to in the petition are correct or not. That was as of 12 March 2015. The position remains the same as of date.
2.17 Company Petition No. 136 of 2015:
2.17.1 The Petitioner's claim is for a sum of about Rs. 82.20 Lacs on account of goods sold and delivered. The claim is contested by a bare denial, with a further statement that in any event the Respondent will have to verify the figures as demanded by the Petitioner and the Respondent is willing to pay legitimate dues, if any. This is as of 28 July 2015. The position remains the same till date.
2.18 Company Petition No. 177 of 2015:
2.18.1 There is no contest to the Petitioner's claim of about Rs. 1.11 Crores except to say that the account of the Petitioner needs to be verified. This has been the position since the date of the Respondent's reply, i.e. 11 March 2015.
2.19 Company Petition No. 178 of 2015:
2.19.1The claim of about Rs. 66.65 Lacs on account of an Inter Corporate Deposit is not contested beyond stating that accounts need to be verified.
2.20 Company Petition No. 235 of 2015:
2.20.1 The claim of about Rs. 34 Lacs with accrued interest is not contested beyond stating that accounts need to be verified.
2.21 Company Petition No. 312 of 2015:
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2.21.1 The Petitioner's claim is for a sum of about Rs. 79.69 Lacs on account of an Inter Corporate Deposit. There appears to be no contest on the merits of the debt.
2.22 Company Petition No. 378 of 2015:
2.22.1 The Petitioner's claim of about Rs. 3.71 Lacs is on account of goods sold and delivered. There appears to be no contest on the merits of the debt.
2.23 Company Petition No. 417 of 2015:
2.23.1There is no contest to the Petitioner's claim of about Rs. 6.94 Lacs on account of goods sold and delivered beyond stating that the employees of the company are not aware of past transactions and till such time as inspection is offered by the Petitioner, the Respondent is not in a position to deal with the merits of the debt. The reply is of 6 July 2015. The position remains the same till date.
2.24 Company Petition No. 768 of 2015:
2.24.1 There is no contest to the Petitioner's claim of about Rs. 42.18 Lacs on account of an Inter Corporate Deposit except a general denial.
3. Common defence of the Respondent to all these Petitions:
3.1 As noted above there is no serious defence to the individual debts forming the basis of these petitions. The Respondent in fact has used two or three templates for replying the petitions. All affidavits run along the lines of one ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 13/38 C.P. 961 of 2014 & Others.doc or the other of these templates. The debts are mostly denied generally; it is submitted that there is some reshuffling in the management, some employees have left and the company has yet to verify the records and reconcile accounts.
All replies plead temporary financial crisis. There is no change in this position over the last many months during which the petitions have been pending and adjourned from time to time.
3.2 At the hearing of these petitions for admission, learned Counsel for the Respondent did not even attempt to contest any of the debts of the petitioning creditors. He instead relied on a few common affidavits which deal with the financial circumstances of the Respondent Company and its attempts to get over the financial crisis. These shall now be dealt with in the following paragraphs.
3.3 Before we do so, it would be appropriate to note briefly how the petitions have progressed before this Court, particularly since it has a vital bearing on the merits of this common defence.
3.4 Company Petition No. 961 of 2014 appeared on board on 28 October 2014. (The Petitioner's debt, as noted above, was over Rs. 9.50 Crores as of that date.) An undertaking was furnished on that day by the Managing Director of the Respondent Company, in order to prove its bona fides, to pay an amount of Rs. 1 Crores to the Petitioners - Tata Capital Financial Services Ltd. - in two installments of Rs. 50 Lacs each payable respectively on or before 7.11.2014 and 18.11.2014. It was provided in the order of this Court that in the event of the ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 14/38 C.P. 961 of 2014 & Others.doc company failing to pay the installments, the petition shall stand admitted and made returnable within six weeks of the date of default. In the event the amount was paid, the petition was directed to be placed for further hearing on 17 November 2014 along with a pending Chamber Summons in Summary Suit No. 450 of 2014. (Several Summary Suits were pending before this Court against the Respondent Company, including twenty Suits by debenture holders of similar NCDs as held by the Petitioners - Tata Capital, where the Debenture Trustees in respect of the NCDs had taken out Chamber Summonses for appropriate reliefs.) When the Company Petition appeared on board on the next occasion, the advocates of the Respondent sought to withdraw their appearance and the matter was adjourned. On 7 January 2015, learned Senior Counsel appearing for the Respondent, on instructions, stated that the Respondent was willing to sell its immovable property known as Elder House at Andheri (West) in Mumbai, which was mortgaged to the debenture trustees and valued at Rs. 170 Crpores for the purpose of making payment to the creditors including the Petitioners -
Tata Capital. The Petition was thereupon adjourned by directing the Petitioners to give notice to the debenture trustees. On the next occasion, i.e. on 3 February 2015, in the presence of the debenture trustees, by consent of parties, M/s Yardi Prabhu Consultants and Valuers Pvt. Ltd. were appointed as valuers to value the property, namely, Elder House. The valuers submitted their report estimating the fair value of the property at Rs. 113.24 Crores. When the petition was thereafter taken up for hearing, learned Senior Counsel of the Respondent submitted that instead of Elder House, other properties of the Company, namely, its plots at (i) MIDC, Thane - Belapur Road, (ii) Village Charba in Dehradun, should be sold ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 15/38 C.P. 961 of 2014 & Others.doc first. This was opposed by the Petitioners and other creditors. The learned Single Judge was of the view that the opposition was justified. The learned Judge nonetheless directed the valuation of the other properties without prejudice to the rights and contentions of the parties. The learned Judge, in his order dated 24 February 2015, directed sale of Elder House in Court through a private receiver. This order was carried in appeal by the Respondent before a Division Bench of this Court. The Appeal Court, whilst directing a notice, granted an ad-interim stay against sale of Elder House, clarifying that there would be no stay against steps being taken for sale of other properties. By its detailed order dated 30 March 2015, the Appeal Court directed the creditors of the Respondent to first sell the other properties of the Company, namely, two plots at MIDC, Thane - Belapur Road, Thane and land at Charba in Dehradun within three months from 30 March 2015. The Appeal Court observed that if upon sale of these properties, sufficient funds were not generated to pay off the dues of the Petitioner - Tata Capital and the dues of the secured debenture trustees / debenture holders, the question of sale of Elder House could be considered. The Appeal Court also directed a sum of Rs. 1 crore to be paid by the Respondent to the Petitioners - Tata Capital within three weeks and another sum of Rs. 1 crore within six weeks from 30 March 2015. The appeal of the Respondent thereafter came up on 24 April 2015 before the Appeal Court. On that day, Counsel for the Company asked for extension of time to make the aforesaid payments. Learned Counsel placed before the Appeal Court an indicative term sheet in respect of a financial facility to be provided to the Appellant (i.e. the Company) by a certain lender, which indicated that the Company was trying to arrange for funds to the ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 16/38 C.P. 961 of 2014 & Others.doc tune of Rs. 350 Crores. The Appeal Court granted extension of time to pay the sum of Rs. 2 Crores in view of the term sheet. The indicative term sheet was directed to be kept in a sealed cover, not to be disclosed to any party, on the statement of the Company that it was confidential pending agreement with the proposed lender, which was likely to be entered into within ten days. By way of ad-interim relief, the creditors were directed not to take any steps for sale of the Company's immovable properties. The appeal was thereupon stood over till 6 May 2015. The appeal next came up before a Special Bench sitting in the May Vaccation on 14 May 2015. A request was made by the Company for continuation of ad-interim reliefs till 31 July 2015 once again on the basis of the same confidential indicative term sheet, which was not disclosed to the other parties. The Division Bench (of which I was a member) observed that it was not possible to act on an un-signed term sheet without disclosing the same to the creditors of the Company and grant a long stay. The Division Bench, however, continued the ad-interim stay for a limited period till the reopening of the Courts after the vacation. The appeal thereafter appeared before the regular Court on 10 June 2015, when the Court granted extension of time upto 31 July 2015 for the purpose of entering into agreement with the financial institution, but directed the parties to make submissions on 29 June 2015 for considering extension of time to make payment of Rs. 2 Crores (i.e. Rs. 1.60 Crores being still to be paid). The ad-interim relief concerning the sale of properties of the Company was continued upto 3 August 2015. On 3 August 2015, the Appeal Court noted that the Company had again prayed for extension upto 30 September 2015. The Appeal Court held that having regard to the extensions granted in the past, the ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 17/38 C.P. 961 of 2014 & Others.doc Court was not satisfied about the bona fides of the present request. The Court gave one final opportunity upto 13 August 2015 and listed the matter on 14 August 2015. The Court observed that if by that date the agreement between the Company and the financial institution was not placed on record, all ad-interim orders passed earlier would be vacated.
3.5 That is where the matter of Tata Capital had stood when I heard all these petitions. There is still no payment of Rs. 1.60 Crores to Tata Capital. No agreement between the Company and its supposed lender is placed on record. I am asked not to admit the petitions on the strength of the same confidential term sheet, which is even till date not disclosed to the creditors, who are pressing for the admission of winding up petitions. As I have discussed below, it is not possible, in the face of the facts recounted above, to dismiss the winding up petitions or even postpone the hearing for admission on the basis of a mere indicative term sheet or even a so called final term sheet (which is not even disclosed to me), which is said to be confidential and therefore, not to be disclosed to the Petitioners before this Court.
3.6 Let me now take up the common defence of the Respondent to all these petitions. This defence is contained in an additional affidavit dated 6 August 2015. (A common template is used for separate additional affidavits filed in all these petitions.) The affidavit refers to the following:
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3.7 It is claimed that the Respondent, established in 1987, developed a
successful brand. It developed new products like 'Shelcal'. The Respondent grew in time and made several investments in India and abroad, which resulted into short term fund issues. This led the Company to sell 'Shelcal' and 29 of its other brands to Torrent Pharma in 2014 for Rs. 2004 Crores for India and Nepal, though international rights in 'Shelcal' and other brands were retained by the Company. Currently, its brands like 'Shelcal' and 'Chyonoral' are under registration in a lot of African and South Asian Countries. "These brands will grow and contribute to the business turnover." The Respondent has commenced exports of 'Shelcal' to more than 25 Countries and "targets to receive Rs. 100 Crores from globle sales. For financial year 2015-16, the Company is likely to notch up sale of over Rs. 25 Crores .....". The Company is "looking at a strong prescription base in over 70 Countries by March 2017." The Company has Launched several products. "A logical and major part of Respondent Company's further growth strategy is to develop other products as successful as Shelcal and export the geographical reach of the Respondent Company." The liabilities, though need to be cleared off, are more than sufficiently covered by assets and brands. The Company has "entered into Term Sheet with a Financial Institution.
The Respondent Company believes that with the cash inflow from the Financial Institution the Respondent Company will be able to solve its problems." The Company expects a turnaround in Financial Year 2015-16. "By FY 2017 Elder Group (domestic and international) is expecting a turnover of Rs. 1000 Crores on consolidated basis." These are the statements of the company in support of its profile. These are nothing but platitudes and at best, indulgences in wishful ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 19/38 C.P. 961 of 2014 & Others.doc thinking. They mean nothing to the creditors, who have been waiting for years for recovery their lawful dues. They do not in the least constitute any defence to the Company Petitions for winding up. As I have indicated below, this is not merely a temporary inability to pay, but prima facie a hopelessly poised commercial insolvency staring all the creditors.
(b) The Respondent is in the process of entering into an agreement with a Financial Institution and therefore the Company Petition be adjourned:
3.8 The Respondent once again relies on the ubiquitous "term sheet" with "a Financial Institution" and an "agreement", which is 'likely to be executed' between the Company and the Financial Institution 'on or about 30 September 2015'. The Respondent says that ICD holders and other creditors 'would be paid on or about 31 December 2015' in accordance with this term sheet. The term sheet, it is said, contains that proverbial "confidentiality Clause", due to which neither the name of the Financial Institution nor the details of the term sheet can be disclosed to any third party 'at this moment'.
3.9 The plea seems to be nothing but a dishonest attempt to hoodwink the Court. It would be a travesty of justice to accept such a plea. As I have noted above, an indicative 'term sheet' was produced before this Court for the first time on 24 April 2015. On that day the Court was told that a definitive agreement based on this term sheet was being executed within about ten days. Thereafter as many as four applications for extension of time were made by telling the Court each time that the agreement was likely to be executed. Finally, a Division ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 20/38 C.P. 961 of 2014 & Others.doc Bench of this Court, by its order dated 3 August 2015, listed the matter on 14 August 2015 and observed that if by that date the agreement was not placed on record, all interim orders granted earlier would be vacated. Even when I heard the matter on 10 August, there was no agreement; what I was told was that an agreement would be in place by 30 September 2015. Today when that date is already past, before I passed this order, I enquired of the Respondent about the agreement. I am told the matter has progressed beyond the indicative term sheet presented on 24 April 2015 and there is a final term sheet (which has not resulted into any agreement as yet). Today at the time of passing of the order, learned Counsel for the Respondent Company, produces an order of the Appeal Court dated 8 September 2015 by which a final term sheet dated 31 August 2015 is taken on record in a sealed envelope. The order notes the Respondent's submission that the financial institution would be able to provide upto Rs.170 Crores by 31 October 2015, 'subject to execution of mutually acceptable documents and deeds'. The Appeal Court also accepted a statement of the Respondent Company's Counsel that an affidavit would be filed by its Managing Director indicating when M/s Tata Capital Financial Services Ltd.
would be paid their principal amount. It was clarified that the order being passed by the Appeal Court was without prejudice to the rights and contentions of M/s Tata Capital. I inquired with Counsel for the Respondent, if this statement was complied with and the affidavit of the Managing Director was filed. Learned Counsel answered in the negative.
3.10 This Court, as I have recounted above, was first told on 7 January
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2015 that the Respondent was willing to sell Elder House, the main asset of the Company, and pay its creditors; After Elder House was valued with consent of creditors, the Respondent, on 24 February 2015, claimed that its other properties be sold first before Elder House was put up for sale; The Appeal Court accepted this suggestion on 30 March 2015 and directed the creditors to first sell these other properties of the Company within three months, i.e. on or before 30 June 2015; On 24 April 2015, the Respondent came up with this term sheet and got an ad-interim stay on sale of properties; All this while, this Court from time to time extended the period for payment of Rs. 2 Crores to Tata Capital, finally extending it upto 13 August 2015 for the balance of Rs. 1.60 Crores; That payment has not been made as yet; And there is no agreement in place as yet with the so called lender. All this reflects poorly on the bona fides of the Company. The Appeal Court, in its order of 3 August 2015, in fact observed that it was not satisfied about the bona fides of the Company's last request for extension. That situation continues even till the date of this order. Even in the face of a so called final term sheet, there is as yet no concrete proposal placed on record for payment of the Petitioners' dues. We are still told that the agreement with the lender is yet to be made and we must even now make do with the confidential 'term sheet' and either reject the petitions or at any rate, adjourn them on the basis of a term sheet which is not even disclosed to the Petitioners. The Petitioners still do not even know the name of the so called lender or the terms of his engagement. It is a primary requirement of our justice system that a document cannot be used against an opponent, without giving an opportunity to him to deal with that document. It may be understandable if some ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 22/38 C.P. 961 of 2014 & Others.doc short time is sought on the basis of an undisclosed document shared only with the Court with a view to stem over a commercial tangle resulting from the disclosure of a confidential document with a third party, who is trying to help resolve the matter. That may in an appropriate case eventually advance the cause of justice. But to consistently have the hearing of winding up petitions adjourned for months on end on the strength of an undisclosed document, is simply unacceptable. It is an anathema to the due judicial process which is the hallmark of our legal system.
3.11 Besides the so called 'term sheet', which contains several basic conditions precedent (at least insofar as the term sheet disclosed to me is concerned, since I do not even have the benefit of the so called final term sheet) before a definitive agreement is reached, is nothing but a document, which merely holds out a remote possibility of financial help, which may or may not come by. The so called lender is not even before this Court and in fact ducks the hearing behind a shroud of confidentiality. The term sheet does not inspire any confidence, in the facts noted above. The Petitions cannot be simply adjourned because there is some as yet undisclosed term sheet. The final term sheet of 31 August 2015, whereby the financer would be able to provide upto Rs.170 crores by 31 October 2015, is said to be subject to execution of mutually acceptable documents and deeds. That means two things. Even now there is no definitive agreement, but a term sheet containing an offer to provide Rs.170 crores 'subject to execution of mutually acceptable documents': and even if this entire finance comes by the stipulated date, even the claims of debenture holders, for ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 23/38 C.P. 961 of 2014 & Others.doc whose benefit this term sheet is said to be executed, are not likely to be satisfied. (The claims of debenture holders are admittedly over Rs.263 Crores.).
(c) The Respondent Company is a fundamentally strong Company:
3.12 The Respondent is said to have fixed assets worth over Rs. 667 Crores. That is a mere say so. There are unilateral valuations obtained by the Respondent. The truth of the matter may be different. For example, Elder House, which is said to be worth over Rs. 170 Crores on a report of 10 May 2014 produced by the Respondent, was valued at merely Rs. 113 Crores as of 5 February 2015 by a valuer appointed by the Court. There is no authentic valuation of a recent date (all reports are of more than a year back) placed before this Court in support of the alleged value of over Rs. 667 Crores.
3.13 Besides these fixed assets, all that the Respondent has is the so called brand value. On a report relied on by the Respondent, that value for a particular brand is not over Rs. 9.80 Crores. (On an estimate of reputed valuers, Deloitte, the value of the brand works out to Rs. 8.7 Crores as of 30 April 2015.) The valuation of remaining 70 brands is said to be Rs. 568 Crores. Again this is nothing but the Respondent's own guesstimate.
3.14 Based on these unilateral figures, the total assets of the Company are said to be worth approximately Rs. 1935.77 crores ( in the stand alone balance ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 24/38 C.P. 961 of 2014 & Others.doc sheet) as of 30 June 2014. As against these assets, the total liability of the Company is said to be Rs. 1150.18 Crores ( in the stand alone balance sheet) as on 30 June 2014. Unaudited 'stand alone' financial results for the quarter ended 31 March 2015 is the latest financial document relied upon by the Respondent.
That document puts the operating loss of nine months ended 31 March 2015 at Rs. 103.76 Crores. Total income from operations (net sales/income from operations net of excise duty) for the nine months ending 31 March 2015 is Rs.
144.09 Crores, as against the total expenses of Rs. 247.86 Crores. Net loss, after taking into account other income as also finance costs, for nine months works out Rs. 171.11 crores; Earning per share of Rs. 10/- each works out to Rs.
83.32 in the negative.
3.15 The last available audited balance sheet (consolidated), i.e. for the year ended 30 June 2014, presents the following picture:
As against the total liabilities (non-current and current ) of 1514.84 Crores, these are fixed assets of Rs.1012.37 Crores. The other assets are long term loans and advances of Rs. 305.38 Crores, intangible assets of Rs.219.70 Crores and current assets (including current investment, trade receivables, short term advances, etc.) of Rs. 923.99 Crores.
3.16 The independent auditors have given a qualified opinion on the basis of the following:
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(i) On fixed assets, the Company has not provided for impairment loss. Management has neither provided a technical evaluation report nor a valuation report to arrive at the fair value and, consequently, quantification of the possible impairment loss on these assets could not be arrived at;
(ii) The Company has written off in the financial year trade advances of Rs. 176.24 Crores and other advances of Rs.855.32 Crores made to various parties on Current account either during the year or in earlier financial years, the reasons of which including details regarding financial capability of these parties and confirmation/details of their accounts were not made available to the auditors;
(iii) As for capital advances of Rs. 30.41 Crores, trade advances of Rs.
36.25 Crores and other advances for brand building payments of Rs.78.50 Crores, documentation/confirmation as also reconciliation, if any, were not made available to the auditors;
(iv) The Company has written off during the year trade receivables aggregating to Rs.322.70 Crores, for which no confirmation to verify the balance of such accounts or information about actions initiated by the Company for recovery of such trade receivables was provided to the auditors;
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(v) The outcomes of various pending suits against the Company and their impact on the affairs of the Company were not provided to the auditors.
The independent auditors have, in their report, emphasised the following:
"Without qualifying our report, we draw attention to the following points:
1. We draw attention to Note No.40 of the Notes annexed to and forming part of the financial statements stating that the financial statements are being prepared on a going concern basis, notwithstanding the fact that the Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. There are major liabilities outstanding towards vendors, statutory dues and payment to fixed deposit holders and non-convertible debenture holders. These events cast significant doubt on the ability of the Company to continue as a going concern. The appropriateness of the said basis is interalia dependent on the Company's ability to streamline its operations as well as infusing requisite finance to meet its short term and long term financial obligations and other statutory liabilities.
The Company mentions that the proceeds of such sale and transfer were used to repay financial obligations of banks/ institutions. Further, for details of exceptional items and working thereof, refer Note No.29.
2 We draw your attention to Note No.29 of the Notes annexed to and forming part of the financial statements. With a view to reducing the debts of the Company, the Board of Directors of the Company had approved the proposal to restructure the Company's business involving either raising of capital, hiving off of assets or other strategic options and had appointed advisors for the purpose. The Company had ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 27/38 C.P. 961 of 2014 & Others.doc offered for sale on slump sale basis its business of sale, marketing and distribution of the products of Team A-2 and Team B- Gynae through sales force or otherwise, in India and Nepal (excluding exports from India and Nepal) which included amongst others, intellectual property, current assets, specified liabilities, employees, data and records, third party manufacturing contracts, C & F agreements, etc. as a going concern and a definitive Business Transfer Agreement was signed with Torrent Pharmaceuticals Limited, Ahmedabad, on 13 December 2013 for a total consideration of Rs.200,400.00 lacs. The said slump sale transaction was consummated and closed on 29 June 2014.
3. Balances under Trade Receivables, inter-division balances, Loans & Advances in several cases as also in case of a few Bank Accounts have not been reconciled / confirmed and consequently reconciliation / adjustments, if any, required upon such confirmation are not ascertainable. (Refer Note No. 33).
4. The company provides gratuity benefit to its employees as per AS 15 (Employee Benefits". Based on actuarial valuation as at March 31, 2014, the Company was having plan assets of Rs.965.58 lacs against the actuarial liability of Rs.1,293.94 lacs (Refer to Note No.37)."
Far from presenting a picture of a fundamentally strong Company, these financials present a rather poor prospect of the Company's viability. The auditors have in terms observed that the various events noted by them "cast significant doubt on the ability of the company to continue as a going concern."
4 Based on the foregoing discussion, the emerging picture of the financial standing of the Company may be outlined as follows:
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(i) The Company is clearly unable to pay its debts. The debts of the petitioning creditors before the Court in this group of petitions alone are to the tune of about Rs.21.21 Crores as of the respective dates of the petitions. The audited balance sheet at the end of 30 June 2014 puts the total liability of the Company (consolidated) at Rs.1514.84 crores.
Despite seeking numerous extensions from this Court for payment of a meagre sum of Rs. 2 crores to the Petitioners in Company Petition No. 691 of 2014 (Tata Capital), which the Company was directed to pay by 1 November 2014 under the order of the Company Law Board dated 21 August 2014 and which the Company was given time by the Appeal Court in its order dated 30 March 2015 to pay by 11 May 2015 as a condition for grant of ad-interim relief in respect of sale of its assets, the Company has till date defaulted in payment (having paid only Rs.40 Lacs so far).
(ii) The inability to pay does not appear to be a temporary phenomenon, due to transient liquidity problems. Even as of this date, there is no concrete plan for payment of these liabilities (owed to these petitioning creditors since over 2 to 3 years on an average). All that the Company has been able to rely upon in support of its proposal of repayment is a confidential term sheet between a so called lender, whose name and particulars of whose offer cannot be disclosed to the creditors. The term sheet, which has conditions precedent before a ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 29/38 C.P. 961 of 2014 & Others.doc definitive agreement can be reached with the lender, has, despite the Company informing the Appeal Court that such agreement would be reached within 10 days of 24 April 2015, has not produced till date any definitive agreement, leave aside the actual availability of the promised finance. The Respondent also cannot take any advantage of the fact that the Appeal Court has, in the winding up petition of Tata Capital, taken the final term sheet on record in a sealed cover. That was expressly said to be without prejudice to the rights of the petitioning creditors Tata-Capital before the Appeal Court in that case. It cannot even be suggested that, that would prejudice third party creditors, who have separate claims against the Company and in altogether different proceedings.
(iii) The financial circumstances as of 30 June 2014, as noted above, take into account the restructuring proposal through slump sale to Torrent Pharmaceuticals Ltd. of the Company's business of sale, marketing and distribution in India and Nepal (excluding exports from India and Nepal), which included amongst others intellectual property, current assets, specified liabilities, employees, data and records, third party manufacturing contracts, c&f agreements, etc. as a going concern.
In other words, the dire financial circumstances that are reflected in the audited balance sheet as of 30 June 2014 are after the Company recovered, and employed towards its dues, a sum of Rs.2004 Crores after the slump sale of its most major asset.
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(iv) There is nothing on record to show the viability of the balance undertaking or business left with the Company after the slump sale mentioned above. The last affidavit of the Company (dated 6 August 2015) merely mouths various platitudes concerning its future prospects, which are, as particularly noted above, mere indulgences in wishful thinking.
(vi) There is no explanation till date for a huge amount of trade advances of Rs.1031.56 crores and trade receivables of Rs.322.70 crores having been written off in a single financial year, i.e. 2013-14, during which a slump sale of its substantial business as a going concern was accomplished. No particulars concerning this write - off were provided to the independent auditors, who have opined so in their report, qualifying their report on that ground.
5 In the premises, the Petitioners have clearly made out a case for admission of the company petitions.
6 Learned Counsel for the Company relies upon the judgments of In Re. M./s. Rishi Enterprises, Bombay 1, American Express Bank Ltd. Vs. Core Health Care Ltd.2, Tata Iron & Steel Co. Vs. Micro Forge (India) Ltd. 3, and Sudarshan Chits (India) Ltd. Vs. Sukumaran Pillai & Ors 4. and submits 1 1991(2) Vol.XXXII(2) Gujarat Law Reporter 1213 2 1999 Vol.96 Company Cases 841 3 2001 Vol.104 Company Cases 533 4 1985 Vol.57 Company Cases 85 ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 31/38 C.P. 961 of 2014 & Others.doc that a winding up petition against a company, which is in temporary financial difficulties, but which is otherwise solvent and is in the process of restructuring itself, ought not to be admitted.
7 All these decisions refer to the discretion that a Company Court has in the matter of ordering of winding up. They proceed on the footing that merely because there is a case for winding up on the ground of inability to pay its debts, the creditors have no absolute right to insist on a winding up. In a given case, the Court may not wind up a company by exercising its discretion under Section 433 of the Act, but instead give time to the company to come out of the momentary financial crisis. The Court would in that case assess the overall financial status, strength and substratum of the company and also consider its status as an ongoing concern having regular business and employment of workmen and consider larger public interest, and then grant more time to the company to come out of its financial crisis. This discretion, it is trite to say, must be exercised in a sound manner and in the light of facts and circumstances of each individual case.
8 In Rishi Enterprises (supra), the Company was temporarily unable to pay the creditors, since a large part of its dues were withheld by its purchasers; there were ongoing disputes with these parties; the Company had nevertheless paid 15% of the creditors' dues as ordered by the Court; there were workmen, who opposed the winding up petition; and in the light of all these circumstances the Court was of the view that it would be in the interest of justice ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 32/38 C.P. 961 of 2014 & Others.doc to give time to the Company to come out of its momentary financial crisis.
9 This decision was followed by another Single Judge of Gujarat High Court in American Express Bank's Case (supra). In that case, majority of lenders of the Company had faith in the strength and capability of the Company to survive the crisis and were agreeable to restructure their debts; and the Company, which employed 3500 people, had an intrinsic proven potentiality. On these facts, the Court held that the Petitioner, who was a secured creditor to a very small extent, and who could even remain outside winding up and realize his security, should not be allowed to insist on winding up. On this footing, the Court refused to admit his winding up petition.
10 In Micro Forge (india) Ltd., a Division Bench of Gujarat High Court analysed the financial position of the Company and found as an irresistible conclusion that the profitability of the Company, in substance, was very good.
Bearing in mind the overall picture emerging from such financial analysis, the profitability, the turnover, the reserves, the surpluses and the soundness of entrepreneurship were noted by the Court and found to be unquestionable.
Besides, the Court also found a bona fide dispute as to the petitioning creditor's liability in that case. In the light of all these circumstances, the Court refused to admit the petition.
11 In Sudarshan Chits (India) Ltd. (supra), the Kerala High Court found circumstances which would sufficiently warrant winding up. But the holding ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 33/38 C.P. 961 of 2014 & Others.doc company, which was in good financial shape, was prepared to offer its helping hand and the Court felt that if the holding company were to bring in funds (stated to be Rs. 10.44 crores) as a measure of backing up the Company, that may go a long way to bring back the Company to life. In the premises, putting the Company and its holding company to several terms and conditions, the Court decided to give the Company a chance to resurrect itself. What the Court observed in this context is instructive to note. The Court held:
"A company which is unable to pay its debts is liable to be wound up under the provisions of the Indian Companies Act. But there is a discretion vested in the court which calls for exercise before the court passes a winding-
up order. There may be instances where winding-up may be a more effective way of settlement realising for the creditors and even the shareholders whatever could be salvaged from the assets of the company. That will really be so in the case of companies whose continuance would not be commercially viable and may result only in incurring further commitments by way of avoidable overheads. It may be that the line of business adopted by the company may no longer be feasible or economical and, therefore, it may be in the interests of the company that it disbands its establishment, conserves whatever assets it has and, then, functions only to effectively distribute such assets to its creditors and if there is something left over, pay that equitably to its shareholders. In such a case, there would be no purpose in trying to keep alive the company and allow it to continue its uneconomic functioning. That may only result in further liabilities being created against the company necessarily causing corresponding reduction in the distributable assets. But it may be possible that a company which at the moment is in adversity and is passing through evil days could not successfully revived by reason of change of circumstances and on account of factors which may make it possible for the company to function economically once it is revived. No doubt at the moment it may be that it is unable to meet its liabilities. But if there is reasonable, if not certain, prospect of its revival and effective and commercially successful functioning, then a short wait by the creditors may be worthwhile. They may then get better returns.::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 :::
dik 34/38 C.P. 961 of 2014 & Others.doc It should be the policy of the court to promote revival of a company which at the moment may not be solvent and may not be able to meet its obligations to its creditors, if it is shown that there is reasonable prospect of resurrection and survival. It is easy for a court merely on finding that a company is unable to pay its debts to bury it deep and distribute its assets, whatsoever is available, to the creditors standing in the queue, but it will not only be more equitable, fair and just, but indeed the court's duty to make an earnest study of the prospect of the company being brought back to life, put on its feet again and provided with congenial circumstances in which it could begin once again to throb with life. We must observe that it is not in any and every case that the court should direct continuance of the functioning of the company even subject to terms and conditions. The predominant test would be whether it would be in the best interests of the creditors primarily and the company secondarily to attempt the revival and resuscitation of the company.
That would be the case where taking into account circumstances such as the degree of solvency, the likelihood of confidence of the customers in the company in view of its history and the resources at its command or at the command of those who may come to its rescue, the court is satisfied that its continued functioning would not result in reducing the realisable assets, but would enable the company to function normally and economically."
12 I have given my anxious thought to whether there is any prospect, which is reasonably borne out by the record of the case placed before me, of revival or restructuring of the Company. There is no specific proposal showing any possibility of bringing the Company back on rails. There is nothing in the financial status, strength or substratum of the Company, as I have discussed in detail above, which suggests that I should exercise my discretion not to admit these winding up petitions, for which there is an overwhelming case. I do not see how delaying the admission of these petitions would serve the interest of any of the stakeholders, or indeed, the public interest.
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13 It is not in the interest of anyone including the workmen to allow the
Company to slide precipitously as indicated in its balance sheets over the last few years without further scrutiny. This Court must, at any rate, ensure that the workmen's dues are provided for and protected. This is particularly so, since the independent auditors, in their qualifying remarks, have noted that there is an inadequate provision of gratuity benefit to workmen. The auditors have opined that based on the actuarial valuation as at 31 March 2014, the Company was having plan assets of only Rs.9.65 Crores against the actuarial liability of Rs.12.93 Crores owed to workmen. If the petitions are admitted and advertised, all stakeholders may be in a position to come before the Company Court and be heard in the matter before a final decision on winding up of the Respondent is taken. Even workmen would be heard in that case. After hearing all stakeholders, a final decision could be taken on whether or not to wind up the Company and at what stage. I am conscious of the fact that admission of winding up petitions puts the Company at a serious disadvantage in terms of its credibility, but on an overall view of the matter, I must say that the resultant prospect of not acting in a timely manner in the face of serious doubts as to commercial viability of the Company and several critical unexplained financial matters (particularly, the huge write - offs in the immediately preceding years to the detriment of the Company) clearly outweighs the disadvantage of an admission order. Besides, some protective order needs to be passed, in the facts and circumstances of the case noted above, in respect of the assets and properties of the Company.
14 In the premises, the following order is passed :
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(i) The company petitions are admitted and made returnable on 23
November 2015;
(ii) Company Petition No.961 of 2014 shall be advertised as a lead
petition in two local newspapers, viz. "Free Press Journal" (in English) and "Nav-Shakti" (in Marathi), and also in Maharashtra Government Gazette. Any delay in publication of the advertisement in the Maharashtra Government Gazette, and any resultant inadequacy of the notice shall not invalidate such advertisement or notice and shall not constitute non-compliance with this direction or with the Companies (Court) Rules, 1959. The Petitioner shall deposit an amount of Rs.10,000/- with the Prothonotary and Senior Master of this Court towards the publication charges, within a period of two weeks from today, with intimation to the Company Registrar. After the advertisements are issued, the balance, if any, shall be refunded to the Petitioners.
(iii) Notice under Rule 28 of the Companies (Court) Rules, 1959 shall stand waived on behalf of the Company.
(iv) Pending the hearing and final disposal of the petitions, the Respondent is restrained by a temporary order and injunction from disposing of any of its assets and properties or creating any third party rights otherwise than in due course of its business without leave of this Court. It is clarified that this injunction order shall not come in the way of either the Respondent or the debenture holders/ trustees of NCDs issued by the Respondent seeking an order for sale of the immovable properties of the Respondent for satisfaction of the claims under the NCDs. The Respondent shall also be entitled to seek appropriate orders of the Court for sale of assets for payment to the depositors of the Respondent, who hold FDRs ::: Uploaded on - 06/10/2015 ::: Downloaded on - 06/10/2015 23:59:39 ::: dik 37/38 C.P. 961 of 2014 & Others.doc issued by the Respondent;
(v) Company Applications for appointment of Provisional Liquidator of the Respondent and Company Application No.626 of 2015 in Company Petition No.768 of 2015 for appointment of an Investigating Agency to come up for hearing on 21 October 2015. The Respondent Company is directed to place on record the latest financials of the Company in these applications;
(vi) On the application of learned Counsel for the Respondent, which is opposed by the Petitioning Creditors, after hearing the parties, it is ordered that the advertisement of the admission order shall not be issued for a period of three weeks from today. The injunction order passed today shall, however, continue.
( S. C. Gupte J )
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CERTIFICATE
Certified to be true and correct copy of the original signed Judgment/Order :
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