ORDER
1. By means of this chamber summons taken out by the plaintiffs it is prayed that the order passed by this Court on 13/3/1995 be implemented by ordering and directing the Court Receiver for its execution.
2. The Plaintiffs Industrial Development Bank of India. The Industrial finance Corporation of India Ltd., and the Industrial’ Credit and Investment Corporation of India Ltd., filed a suit for recovery of amount of over Rs. 10 Crores against the defendants Moradabad Syntex Ltd., and others before this Court on 28-10-1994. In the said suit, notice of motion was taken out by the plaintiffs praying therein inter alia that pending the hearing and final disposal of the suit, the Court Receiver, High Court, Bombay or some other fit and proper person be appointed Receiver of immovable properties described in Exhibit A annexed to the notice of motion and movable properties and current assets described in Exhibit B and C to the notice of motion. On 14-12-1994, this Court passed ad-interim order directing that the defendant No.1 namely Moradabad Syntex Ltd., shall not dispose of suit immovable properties. The order dated 14-12-1994 was challenged in appeal and on 13-3-1995 the order dated 14-12-1994 was modified by the Division Bench on the basis of the minutes of the order tendered by the counsel and the Court Receiver was continued to be appointed ad-interim receiver in terms of the immovable properties described in Exhibit A annexed to the notice of motion and the current assets described in C except movable properties described in Exhibit B.
3. On 23-1-1996 the notice of motion was adjourned sine die and it was ordered by this Court that the ad-interim order of injunction granted on 14-12-1994 shall continue to operate during the pendency of the suit. The grievence of the applicants/plaintiffs is that the efforts of the Court Receiver in executing the order dated 13-3-1995 could not materialise because of the defendants. The applicants state that the Court Receiver fixed 25-4-1995 to execute the order dated 13-3-1995 but it was not able to execute the same. In this fact situation the applicants pray for suitable directions to the Court Receiver for execution of the order dated 13-3-1995.
4. An affidavit in reply has been filed on behalf of the defendants Nos. 1,3 and 4 to the present chamber summons and it is stated that the defendant No. 1 Moradabad Syntex Ltd., an industrial company, on 28-3-1995 made a reference to the Board of Industrial and Financial Reconstruction (BIFR) and an inquiry into the working of the industrial company, defendant No.1 was held. The BIFR on 16-8-1995 reached prima facie conclusion that the company be wound up. The BIFR rejected the application made by Industrial Development Bank of India 1st plaintiff for consent for taking physical possession of the properties by the Court Receiver, High Court, Bombay. Ultimately the BIFR by an order dated 26/6/1996 passed final order recommending winding up of defendant No. 1 company and directed that copy of its opinion be sent to the concerned High Court for action according to law. The order passed by the BIFR on 26/6/1996 was carried in appeal before the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) and the appellate authority by its order dated 25/2/1997 confirmed the order of winding up proposed by BIFR. It is stated in the affidavit in reply that pursuant to the orders passed by BIFR and AAIFR the winding up petition being Petition No. 72 of 1997 has been filed before the Delhi High Court and is pending. In the background of the aforesaid facts the chamber summons is contested principally on four grounds: –
(1) that the present chamber summons was taken out on 31-10-1996 at the time when appeal under Section 25 of SICA relating to the 1st defendant company was pending and in view of embargo put by Section 22(1) of SICA , the filing of the application by was of chamber summons was void ab initio;
(2) that after passing of the order by the BIFR on 26-6-1996 proposing winding up of defendant No. 1 company, the winding up petition has been filed before the Delhi High Court and the said winding up petition is pending and, therefore, under Section 537 read with Section 441 of the Companies Act, 1956, without leave of Delhi High Court, the order dated 13-3-1995 cannot be executed.
(3)that the ad-interim order dated 14-12-1994 passed in notice of motion was challenged in appeal on which the order dated 13-03-1995 came to be passed and thereafter notice of motion is no longer pending and the only order operating is the order passed on 13-03-1995, and
(4) the winding up order having been passed by BIFT on 26-06-1996 and on the basis of the said order, the concerned High Court is bound to pass the order of winding up and, therefore, under Section 446 of the companies Act, the proceedings deserve to be stayed.
5. The learned counsel appearing for defendant Nos. 1,3 and 4 during the course of arguments reiterated the aforesaid objections to the chamber summons and in support of his contentions relied upon the decision of this Court in the matter of C. J.Gelatine Products Ltd. v. Karam Chand Thaper and Bros. Ltd., 1992 Mah LJ 800.
6. Advertising to the contention Nos. 3 and 4 first, it may straightaway be observed that the said contentions raised by the learned counsel for defendant Nos. 1, 3 and 4 are devoid of any substance and have no merit. Section 446 of the Companies Act has no application in the present case, Section 446 reads thus: –
“446. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company except by leave of the Court may impose.
(2) The Court which is winding up the company shall, notwithstanding anything contained inany other law of the time being in force, have jurisdiction to entertain, or dispose of –
(a) any suit or proceeding by or against the company:
(b) any claim made by or against the company (including claims by or against any of its branches in India):
(c) any application made under Section 391 by or in respect of the company:
(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company:
Whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up o f the company, or before or after the commencement of the Companies (Amendment) Act, 1960:
(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.”
7. Condition precedent to applicability of Section 446 is the passing of the winding up order and/or appointment of official liquidator as provisional liquidator by the Court. It says that no suit or any other proceedings shallbe commenced or if pending against the company shall be proceeded except by leave of the Court when a winding up order has been made or official liquidator has been appointed as provisional liquidator. The exceptions contained under Section 446 are not relevant for the present purposes. The expression, “winding uporder has been made” occurring in Section 446 refers to the winding up order passed by the Court hearing winding up petition. Section 443 which deals with the power of Court hearing petition makes it very clear that on hearing of winding up petition the Court may either dismiss it with or without cost or adjourn the hearing conditionally or unconditionally or make any interim order it may think fit or may make an order for winding up of the company with or without costs or any other order that it thinks fit. Upon passing of the winding up order by Court hearing the winding up petition, the consequences provided in Section 446 stands attracted. Any recommendation of winding up made by BIFR under SICA is not covered under the expression “winding up order has been made”. In my view, therefore, the last contention raised by the learned counsel for the defendant Nos. 1, 3 and 4 invoking Section 446 of the Companies Act is negatived having no substance. Similarly, the third contention raised by the learned counsel for the defendant Nos. 1, 3 and 4 that the order dated 14-12-1994 passed by way of an ad-interim measure modified in appeal by the Division Bench by order dated 13-3-1994 are not is existence in view of the disposal of the notice of motion, is misconceived. The notice of Motion No. 2896 of 1994 in which the Court Receiver has been appointed has not been disposed of so far. By the order dated 23-1-1996 the notice of motion has been adjourned sine die since by that time the defendant No. 1 company’s inquiry under Section 16 was under consideration before the BIFR . The order dated 13-3-995 holds the field and it cannot be said that it is no longer in existence in view of the subsequent order passed by this Court on 23-1-996. The third contention raised by the learned counsel for the defendant Nos. 1, 3 and 4 is also rejected.
8. The learned counsel appearing for defendant Nos. 1, 3 and 4 heavily relied upon the judgment of this Court in the matter of C.J.Gelatine Products Ltd. v. Karam Chand Thapar and Bros. Ltd. (1992 Mah LJ 800) (supra) to buttress his argument that the filing of the chamber summons was void ab initio having been taken out at the time when the appeal under Section 25 of SICA was pending before the appellate authority. Paragraph 8 of the said report reads thus: –
“8. In respect of a Company against which an inquiry under Section 16 of the SICA Act has commenced, Section 22(1) provides for suspension of (i) any winding up proceedings (ii) any proceedings for execution, etc., in respect of any properties of such Company and (iii) any proceeding for the appointment of a receiver (of the property or undertaking) of such Company. But BIFR may give consent so that such proceedings can be commenced or continued. However, if an appeal to the Appellate Authority under Section 25 is pending against any order, scheme, etc. made by the BIFR, such consent has to be obtained from the Appellate Authority and not BIFR. The Starting point of suspension is the commencement of the inquiry under Section 16 and the terminal point is the implementation of the scheme or, as the case may be, the disposal of the appeal by the Appellate Authority. The words “shall lie” mean “shall be entertained”. Therefore, in respect of a Company against which an inquiry under Section 16 has commenced, unless prior consent of the BIFR or, as the case may be, the Appellate Authority has been obtained, no proceedings for winding up of such Company shall be entertained. In want of requisite prior consent of the BIFR or, as the case may be, the Appellate Authority, the section imposes absolute embargo on entertainment itself of winding up proceedings by the Court. In the instant case, after the inquiry against the Company under Section 16 had commenced, the petition has been filed without the consent of the BIFR and as such, is not maintainable since the filing itself is void ab initio, the Court having no jurisdiction to entertain the same. The provisions of the said SICA Act have overriding effect over the provisions of the said Act. The inquiry commenced against the Company is still pending and the scheme is under preparation. Since filing of the petition itself is void, the pendency of application of the petitioners with BIFR for its consent at this stage is of no relevance or significance. Similarly, lack of knowledge on the part of the petitioners about the Company being declared as a Sick Unit at the time of filing of the petition as also the Company filing the affidavit to oppose admission of the petition after lapse of some time are also of no relevance or significance. When, in the circumstances of the case, the petition could in law be not entertained the question of the Company being estopped from challenging the maintainability of the petition on the ground of institution thereof itself being void ab initio does not arise”.
9. It is true that the chamber summons was taken out by the plaintiff on 31-10-1996 for the relief aforestated and at that time the matter was pending before the AAIFR in appeal under Section 25 of SICA relating to defendant No. 1. However, there is no dispute that on 25-1-1997 AAIFR has disposed of the appeal and maintained the order passed by BIFR. Presently, therefore, there is no proceeding pending under SICA relating to 1st defendant company. In C.J. Gelatine Products Ltd.(1992 Mash LJ 800) (supra) the learned judge of this Court of course held that the institution of the petition during pendency of inquiry under Section 16 of SICA before BIFR was not maintainable and its filing was void ab initio. In that case however, at the time the order was passed by the learned single Judge, the inquiry under Section 16 of SICA continued to remain pending and it was not disposed of and, therefore, embargo of Section 22(1) of SICA was clearly attracted and in that context the observations were made. In the present case the distinguishing feature is that at the time of disposal of the chamber summons no proceedings are pending before BIFR or AAIFR and therefore embargo of Section 22(1) of SICA is not attracted. The present chamber summons therefore in this circumstances cannot be rejected on the ground that at the time when it was taken out the proceedings before the AAIFR was pending since admittedly today no proceedings under SICA is pending against defendant No. 1 company. The first contention raised by the learned counsel for defendant Nos. 1, 3 and 4 also therefore has no merit and is rejected.
10. The only contention now left is contention 2. According to the learned counsel for defendant Nos. 1, 3 and 4, the provisions of Section 537 read with Section 441 of the Companies Act are clearly attracted and without obtaining leave from Delhi High Court, no order could be passed in this chamber summons.
11. Section 537 and Section 441 of the Companies Act read thus:
“537. (1) Where any company is being wound up by or subject to the supervision of the Court –
(a) any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the company, after the commencement of the winding up; or
(b) any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement;
shall be void.
(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government.”
“441. (1) Where, before the presentation of a petition for the winding up of a company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the Court, on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.
(2) In any other case, the winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up.”
12. The petition for winding up has been presently pending before the Delhi High Court. Though the learned counsel for the defendant Nos. 1, 3 and 4 was not in a position to specify the date on which the winding up petition was presented, according to him, the winding up petition was placed before the Company Judge of the Delhi High Court hearing winding up petitions on 22-2-1997 after it was numbered. The said facts are not disputed by the learned counsel for the plaintiffs. This section read with Section 441(2) fixes the date of the commencement of the winding up as the date of presentation of petition. The question therefore is whether on the commencement of the proceedings for winding up of the defendant No. 1 company, the order passed on 13-3-995 can be executed without leave of the Court where winding up petition is pending. The expression “execution put in force” occurring in Section 537(1)(a) is of wide import and covers execution of any order against the assets or effects of the company after the commencement of the winding up. The word “execution” when used in its proper sense convey the meaning of carrying out some act or course of conduct to its conclusion. In my view therefore the execution of the order passed by this Court on 13-3-1995 is affected in view of the commencement of the winding up against the defendant No. 1 company, by virtue of Section 537(1) read with Section 441 of the Companies Act and he order dated 13-3-995 cannot be executed without obtaining leave from Delhi High Court where winding up petition is pending. The Plaintiffs cannot be granted any relief thus in this chamber summons and the chamber summons is liable to be dismissed.
13. Consequently, the chamber summons is dismissed with no order as to costs.
Order accordingly.