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IN THE MATTER OF K.H.S.L. INDUSTRIES LTD.

High Court of Judicature at Allahabad

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In The Matter Of K.H.S.L. Industries Ltd. - COMPANY APPEAL No. 2 of 1999 [2006] RD-AH 2798 (7 February 2006)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

Court No. 9

COMPANY APPEAL NO. 2 OF 1999

Bank of Madura Ltd.

versus

KHSL Industries Limited and another

Hon'ble Sunil Ambwani, J.

Heard Shri Yashwant Verma for the appellant.

This Company Appeal of the Bank of Madura Ltd., which has merged with ICCI Bank Ltd. and  has not  sought necessary correction in the array of parties,  has been filed  under Section 10-F of the Companies Act 1956  against  the order of Company Law Board dated 30.3.1999 dismissing the application filed by the appellant-Bank under Section 237 (b) of the Companies Act 1956 (in short the Act).

Section 237 of the Act provides that where it appears to the Company Law Board that the business of the Company has been conducted with an intention to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose,  or in a manner oppressive to any of its members,  or that the Company was formed for any fraudulent or unlawful purpose,  or that the members concerned in the formation of the Company or the management of its affairs have in  connection therewith been guilty of fraud, misfeasance or other misconduct, it may record an opinion for initiating an investigation into the affairs of the Company by the Central Government.

The Appellant-bank alleged before the Company Law Board that  it had sanctioned the issue of bridge loan for Rs. 450 lacs with a condition of  pledge of  45, 01,940 of the Company equity shares. The respondent company failed to register the transfer. It was further alleged that thereafter in order to defraud its creditors the respondent company filed an scheme of merger between Khaitan Oversees and Finance Ltd.;  Khaitan Dairy and Allied Industries Limited;  KHSL Industries Limited;  and Khaitan Supermag Limited. The High Court  allowed the amalgamation on 27.5.1997.

The Company Law Board found that during the pendency of the proceedings, on a direction issued by it,  duplicates shares were issued  and

2

were registered under Section 111 of the Act. It further found that the Bank has filed a Special Appeal against the order of High Court of Allahabad sanctioning the Scheme of Amalgamation dated 27.5.1997. The petition was as such dismissed.

Shri Yashwant Verma, learned counsel for the appellant-Bank submits that though the Bank had apparently received the relief of transfer of duplicate shares under Section 111 of the Companies Act 1956  from the Company Law Board itself, however, the fact that the Company has defrauded its creditor  was not considered by the Company Law Board. He submits that the scope of an enquiry under section 237 (b) of the Act is not confined only to the allegations made or grievances of the petitioner but covers all other acts  by the respondent company to enquire by the Central Government. He has relied upon grounds (b) (c ), (d) and (k) which constitute facts of defrauding other creditors.

The company petition  filed before the Company Law Board has not been brought on record. There is nothing in the order of the Company Law Board to suggest that the grounds taken in  Appeal were actually placed or pressed before the Board,  and its attention was drawn towards other acts of respondent company to defraud its creditors.

The Bank of Madura Limited  which has merged with ICCI Bank Ltd. has not taken any  plea that it had  brought sufficient facts and had pressed the issue of fraud with other creditors before the Company Law Board. In the circumstances, I do not find any error of law or facts in the order of the Company Law Board to  interfere, in the Appeal.

Shri S.K. Saxena, Official Liquidator informs that M/s Khaitan Oversees and Finance Ltd. has been wound up by this Court vide order dated 15.10.2003,  and that no appeal has been filed against the order. On these facts, this Appeal even otherwise has become infructuous.

This Company Appeal is as such dismissed.

Dt. 7.2.2006

RKP/-


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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