M/S Thermopack Industries vs M/S Ajay Electrical Industries ...
2009 Latest Caselaw 5351 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI


+                 Co. Appln. No. 1309/09 in CP No. 269/2002


                                               Reserved on : November 18, 2009
                                            Date of Decision : December 22, 2009


M/S THERMOPACK INDUSTRIES
                                                              ........Petitioner/applicant

                                 Through Mr.       L.B.Rai,       Advocates        for    the
                                 applicant.


                                          Versus


M/S AJAY ELECTRICAL INDUSTRIES LTD.
                                                               ......Respondents
                       Through :      Mr. N.K.Kaul, Sr. Advocate with Ms. Anu
                                      Bagai, Advocate for ex-Management.
                                      Mr. Mayank Goel, Advocate for Official
                                      Liquidator.

CORAM :
HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA

1.     Whether Reporters of local papers may be allowed to see the
       judgment?

2.     To be referred to the Reporter or not ?

3.     Whether the judgment should be reported in the Digest ?

SUDERSHAN KUMAR MISRA, J.

1. The applicant was a promoter, as well as an Ex-Director, of

the company - M/s Ajay Electrical Industries Ltd. In 1994, after it had

incurred heavy losses, the company filed a reference to the Board of

Industrial and Financial Reconstruction (BIFR) under Section 15(1),

SICA. The BIFR ordered the winding up of the company on 25 th

September, 2000. In appeal, the AAIFR affirmed that order.

Consequently, on 9th March, 2004, this Court ordered the winding up of

the company and appointed the Official Liquidator attached to this

Court, as the provisional liquidator to take over its assets. Pursuant to

this order, the factory of the company at Mohali is lying sealed under

the custody of the provisional liquidator. The ex-management of the

company has also filed Co. Appln. No. 1310/09, proposing a scheme for

revival of the company, which is pending consideration in this Court.

2. By the instant application, the applicant prays for de-

sealing of the factory premises of the company at Mohali, since the

company has taken various steps towards settling the claims of its

secured and preferential creditors and all the unsecured claims

admitted by the provisional liquidator, details whereof have been given

in the instant application. It is stated that the ex-management has

already settled claims to the tune of Rs.1163.18 lakhs, and that the

only remaining claim that is yet to be settled is that of the Provident

Fund Commissioner, Chandigarh, of Rs.47,59,197/-. It is also alleged

that the instant application has been necessitated so that the ex-

management may be given an opportunity to also repair the premises

that have become dilapidated and run down. It is also averred that in

this way, if the scheme for revival is sanctioned by this Court, the same

may be in working condition without any further delay.

3. In reply, the Official Liquidator states that apart from the

bill of the security agency for the period up to 31st December, 2009,

amounting to Rs. 10,11,191/- and the aforesaid claim of the Provident

Fund Commissioner, Chandigarh, which has been admitted as a

preferential claim, no other claims are pending adjudication in respect

of the respondent company.

4. In addition, on 4th December, 2009 in Co. A.(SB) No. 41 of

2009, this Court has directed the Official Liquidator to examine the

claims of certain workers, who had instituted that appeal through the

Secretary of their Union, namely, M/s Ajay Electrical Industries Workers

Union (Regd.), afresh on merits. This claim is stated to be for an

amount of Rs. 4,19,02,477/-. It may be noted that these workers have

also moved Co. Appln. No. 1391/09, praying for impleadment in this

application, as well as for leave to file their objections to the proposed

scheme of revival. That application is still pending. However, since Mr.

Rai has been heard extensively on behalf of those workers over a

number of days, and the directions that follow have also been made,

inter alia, with his consent, the prayer for impleadment in this

application is rendered infructuous and does not survive.

5. Counsel for the applicant states, on instructions, that

notwithstanding the provisions for labour dues, as set down in the

estimated fund outlay and means of financing dated 7th October, 2009

in Annexure „A‟ to the proposed Scheme of revival that is detailed in

Co. Appln. No. 1310/09, and as a condition of the grant of orders

sought by the applicant, the applicant undertakes to pay all further

dues of all workmen who are found entitled to the same in law at any

later stage.

6. Counsel for the applicant has undertaken to pay the full

amount payable to the Provident Fund Commissioner, Chandigarh, to

the Official Liquidator within two days of the date of this order. He also

undertakes that the charges of the security agency shall be paid as

soon as the same are certified as payable by the Official Liquidator

after scrutinizing that claim.

7. In Wearwell Cycle Co. (I) Ltd. (in liquidation) (1998)

94 Company Cases 723 (Delhi), this Court has held in para 31 thereof

as follows:

"Whenever a choice is available to the court between the revival of the company and its winding up, the court must as far as possible lean in favour of the revival of the company for that will have the prospect of generating jobs and putting the assets of the company to productive use as against auction of assets and distribution of the proceedings by the Official Liquidator to various parties."

8. Here, apart from the need to ensure payment of unpaid

dues that stand admitted by the Official Liquidator, and to secure the

premises and machinery, the chief cause for concern was the need to

safeguard the dues of any workers who may be found entitled to relief

later on. On this aspect also, Mr. L.B.Rai was heard extensively and

these directions are being given with his consent. In my view, looking

to the circumstances of the case, since the interests of the workers are

reasonably safeguarded, and the fact that the ex-Management has

undertaken to pay all current dues immediately, and keeping in mind

the ratio in Wearwell Cycle Co. (supra), there can be no impediment

in permitting the factory premises to be de-sealed and handed over to

the ex-Management, subject to the following conditions that have been

not only suggested but also agreed to by all the parties present.

9. Consequently, the factory premises shall be de-sealed and

handed over to the ex-Management subject to the following

conditions:-

i) The possession of the plant and machinery shall be handed over

to the ex-management of the company (in liquidation) to enable

the ex-management to run the factory. The ex-management

shall be responsible for the repair, maintenance and upkeep of

the factory premises, as well as that of the machinery, at its own

expense. Furthermore, since the scheme of revival propounded

by the ex-management is sub judice, therefore, it is made clear

that all expenses incurred, including any capital expenses, shall

be solely at the risk of the ex-management, who shall not be

entitled to any reimbursement in case the scheme, or any part

thereof, as propounded, either fails or is not accepted by this

Court.

ii) The ex-management shall hand over the full amount payable to

the Provident Fund Commissioner, Chandigarh, in Court, within

two days of the date of this order.

iii) The ex-management shall also undertake to pay the charges of

the security agency, which may be certified by the Official

Liquidator, who is currently in the process of scrutinizing that

claim.

iv) The ex-management shall not sell, alienate, part with possession

or otherwise encumber the plant and machinery, which may be

handed over by the Official Liquidator to the ex-management.

v) The ex-management shall maintain and file a monthly statement

of accounts, reflecting the production, nature of business and

every other relevant aspect, to the Official Liquidator, by the 7th

of each calendar month for the previous month.

vi) As regards the bank accounts, for the time being, instead of

being permitted to operate any existing bank account, the ex-

management shall be permitted to open a fresh bank account.

The account statements, showing up-to-date transactions, shall

be furnished to the Official Liquidator by the 7th of every calendar

month.

vii) A proper, up-to-date inventory of the material lying at the

premises, or acquired during the course of business, shall be

maintained and a copy of this up-to-date stock statement shall

be furnished to the Official Liquidator by the 7th of every calendar

month.

viii) Before handing over possession to the ex-management, an

inventory is to be made of the plant and machinery available at

the site, one week from today. A representative of the ex-

management shall be associated with the preparation of this

inventory, which is to be made by the Official Liquidator. It is also

open to the Official Liquidator to take photographs and video

recording of the premises, as well as of the plant and machinery,

for better identification of whatever is found at the site, at the

expense of the ex-management.

ix) Possession, in terms of this order, shall be handed over to

Mrs. Shyama Aggarwal, ex-Managing Director of the company (in

liquidation).

x) It is open to the Official Liquidator to apply for taking over the

premises with all assets, if any of these directions are violated, or

if he is otherwise of the opinion that it is necessary.

8. The application stands disposed of.

SUDERSHAN KUMAR MISRA, J.

December 22, 2009 sl