R.G. Softdrinks P. Limited vs Official Liquidator And Ors.
2007 Latest Caselaw 1821 Del

JUDGMENT

Mukundakam Sharma, C.J.

1. The present appeal is filed against the order dated 14th January, 2003 passed by the learned Company Judge whereby the Company Application filed by the respondent No. 2 herein was allowed to the extent indicated in the said order. The said application was filed by the respondent No.2 herein under Rule 9 of the Company Court Rules seeking that the land covered under plot Nos. 7,8,13,14 and 15, UPSIDC Industrial Area No. 1, Sultanpur Road, Rai Bareli, Uttar Pradesh be released from attachment. On consideration of the said application and on perusal of records, the learned Single Judge allowed the same by giving detailed reasons with a direction that the Official Liquidator would release the aforesaid land in favor of the applicant- respondent No. 2 effective from 25th February, 2003.

2. The appellant company is represented by its ex-President who has appeared in person and challenged the legality of the aforesaid order on the ground that respondent No. 2 had no locus standi to file the aforesaid application in the aforesaid winding up proceeding. It was also argued before us that the learned Company Judge acted illegally and without jurisdiction in passing the impugned order directing for release of the property.

3. In the light of the submission made before us, we heard the learned Counsel for the respondents and also perused the entire records placed before us.

4. M/s R.G. Soft Drinks Private Limited ('company' for short), took loans from various quarters for its business. One of such loans was the advance granted by Pradeshiya Industrial and Investment Corporation of UP ('PICUP' for short). There was default on the part of the company in making repayment of the Installments towards the said loan amount. Consequent thereto, on 6th August, 1983 PICUP attached the property of the company under the UP Public Moneys (Recovery of Dues) Act, 1972.

5. Some of the creditors, on the other hand, filed a winding up petition claiming that the company is indebted to the said unpaid creditors and was unable to pay its dues. The said petition was filed before the learned Company Judge in September, 1983. On 10th October, 1984 an order was passed by the learned Company Judge admitting the petition. However the said Company Petition was dismissed by the learned Company Judge under order dated 19th February, 1986 in default and for non-prosecution.

6. During the pendency of the Company Petition in this Court, an order was passed by the Collector, Raebareli, directing for public auction of the property of the appellant company under the provisions of the UP Public Moneys (Recovery of Dues) Act, 1972. In the aforesaid auction, the property was purchased by PICUP. On 19th January, 1990, PICUP sold/transferred the land to respondent No. 2 herein consequent upon which on 18th May, 1992 UPSIDC, the Lesser, cancelled the lease deed of the property executed earlier in favor of the company and issued a fresh lease deed in favor of respondent No. 2.

7. On 2nd May, 1995 the Company Court allowed the restoration application and the Company Petition was restored but effective only from 2nd May, 1995. The restoration application was not filed by any creditor but by Mr. G.P. Srivastava on behalf of the appellant company.

8. Some time in the month of August, 1996 and after the restoration of the aforesaid petition, the Official Liquidator sealed the property in question.

9. On 18th March, 1997 CA No. 270/1997 was filed by respondent No. 2 seeking desealing of the property. The aforesaid application was disposed of by the learned Company Judge under the impugned judgment and order, which is under challenge in this appeal.

10. Incidentally, we may point out at this stage that the respondent No. 2 also ran into financial difficulties. Proceedings were filed before the Debt Recovery Tribunal, Lucknow which sold the property for payment of dues of the respondent No. 2. Against this, objections were filed by the Official Liquidator, but the said objections were dismissed by the Tribunal under order dated 23rd January, 2003. Pursuant thereto, physical possession of the property was handed over to the auction purchaser by the Tribunal.

11. C.P. No. 95/1983 was filed on 3rd September, 1983 for winding up of RG Soft Drinks Private Limited. The said petition was filed by one Mr. A.K. Verma claiming himself to be creditor. The petition remained pending till 10th October, 1984 when it was admitted with a direction for publication of notice in the newspaper and Delhi Gazette. Liberty was also granted to the appellant company to move an application under Section 391 of the Companies Act, 1956 with prior concurrence of the secured creditor PICUP. By a detailed order dated 19th February, 1986 the petition was dismissed after recording that the creditors are not interested in pursuing the petition and publication of citations. In the meanwhile, as noticed above, PICUP, as secured creditor, purchased the property and further transferred to respondent No. 2. No objection or application was filed before the Company Court against the transfer. PICUP had already filed an affidavit before the Company Court stating that they have already initiated proceeding under the UP Public Moneys (Recovery of Dues) Act, 1972 and that it had first charge over the assets, both moveable and immoveable, present and future, plant and machinery of the appellant company. After dismissal of the petition, the appellant kept quite from 19th February, 1986 till 28th September, 1994 when an application for revival of the Company Petition was filed by none other than a Director of the respondent company before the Company Court. Thus, the respondent company sought revival of the winding up proceedings against itself. The said application was allowed by order dated 2nd May, 1995. The Company Judge while allowing the application noticed that there was substantial delay in filing the application and it may therefore look improper to recall the earlier order dated 19th February, 1986 dismissing the Company Petition and held that the application for revival of the Company Petition filed under the signatures of the Managing Director of the company itself will be treated as a Company Petition, which was admitted on 2nd May, 1995.

12. The appellant now want to take advantage of Sections 446 and 537 of the Companies Act, 1956 and pleads that sales made under the UP Public Moneys (Recovery of Dues) Act, 1972 and further transfer by the PICUP and DRT are illegal as these have taken place without permission of the Company Court, after filing of the Company Petition on 3rd September, 1983. We do not agree. In the present case the original Company Petition No. 95/1983 was dismissed on 19th February, 1986. Subsequently, vide order dated 2nd May, 1995 the Court specifically recorded that the application filed under the signatures of the Managing Director of the appellant will be treated as a Company Petition for winding up. The said application was filed on 28th September, 1994. Therefore, for the purpose of Sections 446 and 537 of the Companies Act, 1956, the date on which the application for revival of the Company Petition, namely CA No.979/1994, was filed i.e. 28th September, 1994 is relevant. By the said date the property of the appellant company had already been sold under UP Public Moneys (Recovery of Dues) Act, 1972, first to PICUP and thereafter by PICUP to respondent No. 2. Sale certificate in favor of PICUP, being the highest bidder, was issued on 15th November, 1984. We may also state that PICUP was a secured creditor. Other creditors have not come forward and objected to the sale under the UP Public Moneys (Recovery of Dues) Act, 1972. The only objection raised against the transfer and sale made is by an ex-Director of the appellant company who claims to be representing the company.

13. In our considered opinion sealing of the property by Official Liquidator in the month of August, 1996 was not in accordance with law inasmuch as the property was attached and sold even prior to that date. The same was purchased by PICUP and thereafter the property was re-sold in favor of respondent No. 2 pursuant to which a fresh lease deed was executed in favor of respondent No. 2. Official Liquidator would have power and jurisdiction to attach the property and take the said property in his custody and possession only if the same was and continued to be the asset of the company, which is under liquidation. On the date when sealing of the property was done by the official liquidator, it was not the property of the appellant company, which was under the process of liquidation.

14. At one stage, Mr. G.P. Srivastava tried to contend that the lease deed filed in the case is invalid and fabricated by respondent No. 2. We are, however, unable to accept the aforesaid proposition which in our considered opinion is a baseless allegation and there is no ground for the same. No material worth the name is placed on record to substantiate the said allegations.

15. Records placed before us also disclose that the appellant had challenged before the Board of Revenue the legality of the sale of the property held in 1984 by the revenue authorities of UP. The said appeal filed by the appellant was dismissed on 21st February, 1998. We are informed and so disclosed from the records that the writ petition filed before the Lucknow Bench of Allahabad High Court challenging the aforesaid sale was also dismissed. These facts also conclusively prove and establish that all judicial remedies available to the appellant to challenge the said sale of property were availed of and the prayers were rejected. As the aforesaid legal remedies were availed of and the sale of the property was upheld, the aforesaid proceeding resulting in sale of the property became final and binding.

16. There was default on the part of the appellant company in repayment of the debt to PICUP pursuant to which attachment order of the property was passed which is valid in the eye of law. The property was sold in public auction in terms of the provisions of UP Public Monies (Recovery of Debts) Act, 1972 which has become final and binding and, therefore, the learned Company Judge was justified in holding that public auction held in 1984 in favor of PICUP cannot be challenged collaterally before the Company Court inasmuch as the said auction was taken in a different proceeding altogether which has also become final and binding. The learned Company Judge rightly came to the conclusion that the challenge to the validity of the auction cannot be sustained or even entertained in a proceeding pending before the Company Judge. Remedy, if any, that the appellant had was to take up the matter under the relevant provisions and may be under the provisions of UP Zamindari Abolition and Land Reforms Act, 1950 but not under the proceeding of this nature. Remedies availed of by the appellant did not go in its favor In this view of the matter, we are of the considered opinion that the judgment and order passed by the learned Company Judge is legal and valid.

17. In view of the aforesaid position, we find no merit in this appeal and the same is dismissed.