Goodlass Nerolac Paints Ltd. vs Pal Peugeot Ltd.

S.S. Nijjar, J.—Heard counsel at length. Earlier today Company Petition No. 928 of 1999 and 19 other petitions have been admitted.

The Industrial Credit and Investment Corporation of India (ICICI) had filed Suit No. 3636 of 1999. In that suit notice of motion was taken out for appointment of a receiver. It was mentioned therein that the ICICI are the debenture trustees of the company. The amount due under the debenture trusteeship is in the sum of Rs. 160 crores. Even at that stage it was submitted by Mr. Thakkar, appearing for the company, that the financial crisis faced by the company was due to sudden withdrawal of Peugeot from the joint venture. He had also submitted that the defendant company had no funds whatsoever to make any payment. It was submitted that the company employs about 800 workers. Their dues were said to be paid on a deferred basis. It was also submitted that if the receiver is appointed, it would amount to shutting down the plant as the company would not be able to afford the agency. These submissions of Mr. Thakkar were rejected with the observation that it is a matter of common knowledge that financial institutions such as the present one (ICICI) are unable to recover the gigantic amounts of money which had been disbursed to various industries in the country. It was also observed that the suit filed by the ICICI was one of those instances. The receiver was appointed. No appeal has been preferred against the aforesaid order.

The petition in which this application is filed has been admitted this morning. It is submitted by Mr. Kapadia, counsel appearing for ICICI, that the liquidator ought not to be appointed as it would serve no useful purpose. In view of the fact that the receiver has already been appointed on June 30, 1999, the company will not be able to dispose of any of its assets. He has also submitted that the ICICI has made a number of proposals for revival of the company. On behalf of the company it is submitted by Mr. Sen that the appointment of the official liquidator as the provisional liquidator of the company would virtually put an end to the proposals for the revival of the company. If these proposals are not permitted to be put into action, there will be no chance whatsoever of the company for revival. It is submitted that the company has a separate unit which can be sold or given to a third party for manufacturing activities. He also submits that the company also has immovable properties which can be sold off to reduce some of the credits. He further submits that the company will give undertaking not to register a reference before the BIFR.

I have considered the submissions made by learned counsel. I find that the ICICI is taking totally contrary stands. When it came to protecting their interest they filed Civil Suit No. 3636 of 1999 and moved the court for appointment of receiver. This has doubly secured the secured interest which the ICICI may have against the company. On the other hand, it is strenuously pleaded that no security should be given to the unsecured creditors on whose behalf these petitions have been filed. I find no justification in the aforesaid stand taken by the ICICI. In fact, the submission made by learned counsel amounts to seeking an implied permission from this court for selling the assets of the company which are already in the custody of the receiver. The sale of these assets is not likely to reduce the liability of the company towards the petitioners in the present as also the connected petitions.

In view of the above, judges'' summons made absolute in terms of prayer Clauses (a) and (b). Injunction to continue till the liquidator takes possession.

Drawn up order is dispensed with.

The official liquidator to act on an ordinary copy of this order duly authenticated by the company Registrar of this court.

At this stage, Mr. Sen, learned counsel for the company prays for stay of the operation of this order. I find no justification for the same. Rejected.

Certified copy expedited.