Company Petition No. 03 of 2006 In the Matter of Companies Act & Ors. v. U.P. Finance Corporation Regional Office through Regional Manager 76, Rajpur Road, Dehradun

At Arora Market, Vehalna Chowk Meerut Road, Muzaffarnagar through Its Proprietor Shri Shashank Jain

M/s Jai Mateshwari Steels Pvt. Ltd. Industrial Area, Jasodharpur, Kotdwar Pauri Garhwal through Sri Anurag Goel ..Respondents Sri R.P. Singh, learned counsel for the petitioners Sri Naresh Pant, learned counsel for the respondents Hon(cid:146)ble B.C. Kandpal, J. This petition is moved by M/s Maharishi Steels Pvt. Ltd. (hereinafter referred as petitioner company) under Sections 433 (a), (e) and (f) of the Companies Act, 1956 with a prayer that the company be moved up under the directions of this Court. The company was engaged in manufacturing of M.S. Ingots by induction furnace its unit situated at Jashodarpur Industrial Area, Kotdwar, District Pauri Garhwal. Bhim Singh Group of Directors run the unit of the Company upto 31.03.1998 and during that financial year the company suffered heavy loss and for paying off its dues to U.P. State Electricity Board and other financial institution, the unit of the company was leased out to Sri Sharat Goyal & others who operated the unit upto 20.08.1998 and thereafter due to loss they left the unit and Sri Rakesh Kumar was inducted as a Director of the company and by that time the electricity connection was disconnected due to non payment of dues. Thereafter, a fresh agreement was executed between U.P. State Electricity Board and the company for supply of the electricity but the company could not function well and suffered heavy loss. In the month of March 2003 the company was closed due to financial loss and difficulties. The respondent No. 2 disconnected the power supply to the company and issued illegal and exorbitant recovery citation for Rs. 6,42,19,263/- against the Directors of the company and therefore Civil (Misc.) Writ Petition No. 910 (M/B) 2003 was filed before this Court. The company borrowed Rs. 87,42,000/- from the respondent No. 1 (cid:150) U.P. Finance Corporation and O.T.S. for Rs. 1,15,00,000/- were settled as due against the company with the respondent No. 1. Now, the respondent No. 1 is threatening the Directors of the company to issue personal recovery certificate against them for payment of exorbitant amount of Rs. 1,33,88,273.94 although the company has paid about Rs. 50 lacs after the settlement of the OTS. The respondent No. 3 (cid:150) Deputy Commissioner of Income Tax also issued notice under Section 179(1) of the Income Tax Act, 1961 and claimed exorbitant amount of Rs.

32.85 lacs. The respondent No. 4 (cid:150) Central Excise Range, Kotdwar also claimed outstanding dues and threatened that action will be initiated against the Directors of the company for recovery of dues under Central Excise Law. The respondent No. 6 (cid:150) M/s Tanya Enterprises also demanded payment of outstanding amount of Rs. 1,95,081/- from the Directors of the company through the letter dated

03.05.2003 and also filed Company Petition No. 13 of 2003 for winding the company in this Court. Therefore the Company filed petition for wounding up of the company. The respondent U.P. Financial Corporation has filed short counter affidavit and alleged that the petitioner has no authority to file the present company petition through its Director Bhim Singh. The petitioner has not annexed the resolution of the Board of Directors as required U/S 291 of the Companies Act. It was also alleged that the petitioner before filing the petition has not obtained the permission for drawing winding up proceedings of the Company as required U/S 32 of the State Financial Corporation Act. It is also alleged that when the petitioner failed to comply with the terms and conditions of the agreement executed between the secured creditor/U.P.S.F.C. Ltd. and him the Corporation took physical possession of the petitioner(cid:146)s unit and thereafter sold the mortgaged assets of the company by registered sale deed dated 19-3-2004 to respondent No.6 U/S 29 of the State Financial Corporation Act.

It is also alleged by Corporation that it has sold the property which was mortgaged/hypothecated favour after notices and observance of complete procedure as required U/S 29 of the State Financial Corporation Act was complied with and the sale of the property was confirmed in favour of the purchaser- respondent No.6. The assets of the guarantor is a private property which cannot be identified with the property of the company and therefore it can be said that in order to protect themselves from the further recovery proceedings in respect of the balance dues of U.P.F.C. the guarantors have filed the instant Company Petition which is misconceived. The liabilities of the guarantor are co-extensive U/S 128 of the Contract Act and the UPFC has each and every right to recover the balance amount from the personal assets of the guarantors. Heard Sri R.P. Singh, learned counsel for the petitioners, Sri Naresh Pant, learned counsel respondents and perused the record.