M/s. NEPC India Limited,(formerly known as M/s. NEPC MICON Limited) v. M/s. Indian Oil Corporation Ltd. & Ors

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 11.08.2009CORAMTHE HONOURABLE MR.JUSTICE M.CHOCKALINGAMANDTHE HONOURABLE MR.JUSTICE R.SUBBIAHO.S.A.Nos.122 & 123 of 2009M/s. NEPC India Limited,(formerly known asM/s. NEPC MICON Limited)Rep. By its Director,Tirupathi Kumar Khemka,having its registered office atNo.36, Wallajah Road,Chennai – 600 002... Appellant in both the O.S.As.Vs.M/s. Indian Oil Corporation Ltd.,Rep. By its Manager (Law),T.Dhandapani,No.139, Nungambakkam high Court,Madras – 34... Respondent in O.S.A.122/2009Atlantic Bridge Aviation Ltd.,Lydd Airport,Rent TN 29 9QL,United Kingdom.. Respondent in O.S.A.123/2009 These appeals have been preferred under Order XXXVI Rule 1 ofO.S. Rules r/w Section 483 of Companies Act and Clause 15 ofLetters Patent against the orders dated 22.4.2009 and 21.4.2009passed by the learned Single Judge in C.P.Nos.232/1998 and 186/1997respectively.For Appellant : Mr.P.S.Raman, Senior Counsel for Mr.P.ElangoFor Respondent : Mr.Ananth Padmanabhan in OSA 123/2009For Respondent in OSA 122/09: Mr.R.Subramaniam, Senior Counsel for Mr.P.S.Sivasubramaniam https://hcservices.ecourts.gov.in/hcservices/ COMMON JUDGMENT(The judgment of the Court was delivered by M.CHOCKALINGAM, J.)This judgment shall govern these two appeals which have arisenfrom the order of the learned Single Judge in Company Petition Nos.232 of 1998 and 186 of 1997 whereby the learned Single Judge hasmade an order appointing the Official Liquidator, High Court,Chennai as the Provisional Liquidator directing him to take chargeof the assets of the respondents Company.2. The Court heard the learned counsel on either side andlooked into the materials available, in particular, the orders underchallenge.3. Admittedly, those two Company Petition Nos. 232 of 1998 and186 of 1997 were filed seeking winding up of the respondent companyand for appointment of Official Liquidator under the provisions ofthe Companies Act.4. In those two company petitions, the learned single Judgemade an order, ordering for publication since it found that therewas a prima facie case for liquidation. As against the said orderdated 25.10.2002, the two appeals were preferred in O.S.A.No.397 of2002 and O.S.A.No.440 of 2002. The Division Bench of this Court byelaborate order dated 7.8.2008 found that there was a prima faciecase made out and it was a fit case for ordering for publication,hence, confirmed the order. Not satisfied with the same, the debtorcompany took it on appeal before the Apex Court on Special LeavePetitions. Insofar as the Company Petition No.232/1998 is concernedand the appeal therefrom, the Apex Court made an order of dismissal.Insofar as the other Company Petition No.233 of 1998 is concerned,though the Apex Court took a view that it was not a fit case wherethe Apex Court could interfere in exercise of jurisdiction andmade an order of dismissal, however, it was observed that, it wasmade clear that Winding Up Petition pending before the High Courtshould be decided on its own merits uninfluenced by any observationsmade by the High Court in its order dated 21.9.2007 or the dismissalof the Special Leave Petition by the Apex Court. After passing ofthose orders, the matters, both the Company Petitions came up beforethe learned Single Judge and the learned Single Judge in exercise ofpowers under section 450 of the Company Act made an orderappointing the Official Liquidator, High Court, Madras as theProvisional Liquidator. Aggrieved over that part of the order, thesetwo appeals have arisen.5. Advancing the arguments on behalf of the appellants, thelearned Senior Counsel Mr.P.S.Raman, would submit that originally,the order that was passed by the learned single Judge in the CompanyPetition as to the publication was challenged before this Courtbefore the Division Bench and also before the Apex Court and boththe appeals were dismissed. Under such circumstances, it would not https://hcservices.ecourts.gov.in/hcservices/ mean that the Company Court can directly exercise its power undersection 456 of the Companies Act and appoint the provisionalliquidator to take up the assets of the Company. The matter ispending from the year 1998. The Company has been running and apartfrom that, it has shifted its business to the business of solarenergy and it originally had number of debtors, out of whom, allhave been settled except these two respondents. Under suchcircumstances, there is no need for appointment of the provisionalliquidator and even the order does not speak about any reasonwhether the circumstances prevail for appointment of officialliquidator immediately. The learned counsel in support of hiscontention that relied on the decision reported in (1948) XVIIICompany Cases 8 (Andhra Paper Mills Company Limited., Inre). Undersuch circumstances, the orders have got to be set aside.6. Contrary to the above contentions, the learned counsel forthe respondents in their sincere attempt to sustain the orders ofthe learned single Judge would submit that, in the instant case,when the Company Petitions were filed and the publication were alsoeffected, the Company Court considering the reasons found that therewas a prima facie case made out for publication and accordingly,has made an order for publication. Though, it was challenged beforethe Division Bench and before the Apex Court, the order of thelearned single Judge was sustained and thus, it would indicatethat a prima facie case was made out for invoking section 450 ofthe Companies Act for appointment of the provisions liquidator andno other reasons need be assigned. Even a reading of the order underchallenge would clearly indicate that all the earlier orders made bythe Court were taken into consideration and in exercise of thejudicial powers, the orders have been passed. Under suchcircumstances, there is nothing to interfere with the orders and theappeals have got to be dismissed.7. The Court paid its anxious consideration on the submissionsmade and also made thorough scrutiny of the available materials.8. It is not in controversy that in these two CompanyPetitions, pending before the Company Court, the learned SingleJudge thought that it was a fit case where publication has got to beordered and accordingly, ordered so. It is also true that thoseorders were challenged before the Division Bench and also theDivision Bench by an elaborate order, has pointed out the reasonsthat a prima facie case was made out and it was a fit case wherethe publication orders have to be sustained. Thereafter notsatisfied, the debtors took it on Special Leave Petition. 9. It is also true that both the Special Leave Petitions havebeen dismissed but at this juncture it has to be pointed out thatwhile dismissing the Special Leave Petitions observing that the ApexCourt did not find any reason to interfere with the orders of thisCourt has pointed out that the High Court must consider the windingup application uninfluenced by the observations made by this HighCourt in its order dated 21.9.2007 or the dismissal of the Special https://hcservices.ecourts.gov.in/hcservices/ Leave Petitions by the Apex Court. It would be quite clear that inthe earlier orders of the Division Bench sustaining the orders ofthe learned single Judge there were warranting circumstances formaking publication for the winding up proceedings but it cannot nowbe taken as a reason for passing an order for appointment ofProvisional Liquidator. 10. Further, regarding the question whether circumstancesprevailing or warranting for appointment of Provisional Liquidator,the Court is of the considered opinion that where there wasindication made by the Apex Court that the Court in proceeding withthe Company Petitions should proceed with uninfluenced by theearlier orders made by this Court and the Apex Court. Hence, it isquite clear that the Company Court, before making the order of eappointment of provisional liquidator, should have taken intoconsideration, the circumstances and also in short, it can be statedthat the Court should see that it is a speaking order. Paragraph 4of the order under challenge reads as follows: "The OfficialLiquidator High Court Madras, is appointed as the ProvisionalLiquidator and has directed to take charge of the assets of therespondent Company. The Ex-Directors of the Company is directed tofile their statment of affairs before the Official Liquidator withina period of 21 days..." Thus, so long as the order, appointing theProvisional Liquidator does not speak about the circumstances orreasons which impel the Court, the Court is of the consideredopinion that the orders cannot be sustained. 11. It is true Section 450 of the Company Act empowers theCompany Court to appointment the Provisional Liqudateor in theinitial stage of the proceedings, even then the Court, beforeappointing the Provisional Liquidator must be satisfied that thecircumstances warrant for making such appointment, because, when theProvisional Liquidator is appointed in the initial stage and he isdirected to take charge of the assets of the company, it wouldnaturally interfere with the administration and management of theCompany. 12. Before invoking the powers of the Company Court undersection 450 of the Companies Act for appointment of ProvisionalLiquidator, the reasons and circumstances which warrant for makingsuch appointment is a must. Under such circumstances, the Court isof the opinion that the orders cannot be sustained. Therefore, theappeals are allowed and the orders passed in C.P.No.232 of 1998dated 22.4.2009 and C.P.No.186 of 1997 dated 21.4.2009 are setaside. The matters are remitted back to the Company Court toconsider the same on merits of the matters individually. No costs.Consequently, connected M.P.No.1 of 2009 and M.P.Nos. 1 & 2 of 1009respectively are closed.Sd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ vsiToThe Sub Assistant Registrar,Original Side, High Court,Madras.+2ccs to Mr.P.Elango, Advocate Sr 37779 & 37780+1cc to M/s.Chitra Narayan, Advocate Sr 37697+1cc to Mr.P.S.Sivasubramaniam, Advocate Sr 37533KA(CO)km/25.8.OSA.Nos.122 & 123 of 2009