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M/S ASSOCIATES INDIA FINANCIAL SERVICES(P) LTD versus M/S SHAMKEN SPINEERS LTD & OTHERS

High Court of Judicature at Allahabad

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M/S Associates India Financial Services(P) Ltd v. M/S Shamken Spineers Ltd & Others - COMPANY PETITION No. 7 of 2004 [2005] RD-AH 728 (14 March 2005)

 

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

Company Petition No. 7 of 2004

In the matter of

Section 433 & 434 of the Companies Act, 1956

Ms Associates India Financial Services (Pvt.) Ltd., 3, LSC, Arcon Plaza, Pushp Vihar, New Delhi-110062, through its Director ............ Petitioner

Vs.

Ms Shamken Multifab Ltd. and others........................... Respondents

Hon. S.P. Mehrotra, J.

Order on

Civil Misc. Application No. 188851 of 2004

List has been revised. Learned counsel for the petitioner is not present. Shri Slesh Gautam holding brief for Shri Piyush Agrawal, learned counsel for the Respondent-Company is present.

It appears that an application being Civil Misc. Application No. 188851 of 2004 has been filed on behalf of the Respondent-Company. The said application is supported by a Supplementary Affidavit sworn by Awadhesh Chaturvedi, stated to be the Authorised Signatory of the Respondent-Company.

Copy of the said application was served on the learned counsel for the petitioner on 12.10.2004.

It is, interalia, stated in the Supplementary Affidavit filed alongwith the said application that during the pendency of the present Company Petition before this Court, the Respondent-Company became Sick Industrial Company within the meeting of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short "SICA"); and that a reference was made under Section 15(1) of the SICA on 7.4.2004 before the Board for Industrial and Financial Reconstruction (in short "BIFR"); and that on the reference being made by the Respondent-Company, after verification, the case has been registered as Case No. 186 of 2004; and that the Registrar of the BIFR by his  letter dated 20.4.2004 has informed the Respondent-Company that the reference has been registered as Case No. 186 of 2004.

Copy of the said letter of the Registrar of BIFR dated 20.4.2004 has been filed as Annexure-SA-1 to the said Supplementary Affidavit.

It is, interalia, stated in the said Supplementary Affidavit that the hearing of the present Company Petition be deferred in view of the facts stated in the said Supplementary Affidavit.

Reference is also made in the Supplementary Affidavit to the decision of the Supreme Court in the case of Rishabh Agro Indusries Vs. PNB Capital Services Ltd., 2000 (5) SCC 515.

Shri Slesh Gautam submits that in view of the facts stated in the Supplementary Affidavit accompanying the aforesaid Civil Misc. Application No. 188851 of 2004, the proceedings in the present Company Petition be deferred.

I have considered the submissions made by Shri Slesh Gautam holding brief for Shri Piyush Agrawal, learned counsel for the Respondent-Company, and perused the record.

Sections 15,16 and 22 of the SICA, in so far as relevant for the present case, provide as under:

"Section 15 -  Reference to Board. (1)  Where an industrial company has become a sick industrial company, the Board of Directors of the company, shall within sixty days from the date of finalization of the duly audited accounts of the company for the financial year as at the end of which the company has become a sick industrial company, make a reference  to the Board for determination of the measures which shall be adopted with respect to the company:

Provided that if the Board of Directors had sufficient reasons even before such finalization to form the opinion that the company had become a sick industrial company, the Board of Directors shall, within sixty days after it has informed such opinion, make a reference to the Board for the determination of the measures which shall be adopted with respect to the company:

........................................................................

(2).........................."

"Section 16.  Inquiry into working of sick industrial companies. (1)  The Board may make such inquiry as it may deem fit for determining whether any industrial company has become  a sick industrial company-

(a) upon receipt of a reference with respect to such company under section 15; or

(b) upon information received with respect to such company or upon its own knowledge as to the financial condition of the company.

(2) The Board may, if it deems necessary or expedient so to do for the expeditious disposal of an inquiry under sub-section (1), require by order any operating agency to enquire into and make a report with respect to such matters as may be specified in the order.

(3) The Board or, as the case may be, the operating agency shall complete its inquiry as expeditiously as possible and endeavour shall be made to complete the inquiry within sixty days from the commencement of the inquiry.

Explanation.-   For the purposes of this sub-section, an inquiry shall be deemed to have commenced upon the receipt by the Board of any reference or information or upon its own knowledge reduced to writing by the Board.

(4) to (6)....................................."

"Section 22. Suspension of legal proceedings, contracts, etc.

(1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 to 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.

(2) to (5)............................"

Section 15 of the SICA provides for reference to be made by the Board of Directors of an Industrial Company.

Section 16 of the SICA contemplates an enquiry by the BIFR upon receipt of a reference with respect to an Industrial Company under Section 15 of the SICA.

Sub-section (3) of Section 16, interalia, provides that the BIFR or the Operating Agency, as the case may be, shall complete its enquiry as expeditiously as possible and endeavour shall be made to complete the enquiry within sixty days from the commencement of the enquiry.

Explanation to Sub-section (3) of Section 16 provides that for the purposes of the said sub-section (3) of Section 16, an enquiry shall be deemed to have commenced upon receipt by the BIFR of any reference or information or upon its own knowledge  reduced to writing by the BIFR.

Thus, in view of the said Explanation to sub-section (3) of Section 16, an enquiry by the BIFR shall be deemed to have commenced upon the receipt of reference by the BIFR.

Sub-section (1) of Section 22 of the SICA, interalia, provides that where in respect of an Industrial Company, an enquiry under Section 16 is pending, no proceedings for the winding-up of the Industrial Company shall lie or be proceeded with further, except with the consent of BIFR or the Appellate Authority for Industrial and Financial Reconstruction (in short "AAIFR"), as the case may be.

In view of the averments made in the Supplementary Affidavit, it appears that the reference made by the Respondent-Company has been registered by the BIFR. Therefore, in view of the Explanation to sub-section (3) of Section 16, the enquiry by the BIFR shall be deemed to have commenced, and as such, in view of Section 22(1) of the SICA, the proceedings in the present Company Petition cannot be proceeded with, except with the consent of the BIFR or the AAIFR.

In the circumstances this case is directed to be listed after four months when the learned counsel for the Respondent-Company will inform this Court regarding the proceedings before the BIFR.

Dt. 14.3.2005

Safi


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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