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Judgment
The Court : The appeal is directed against an order of June 21, 2018 by which an order winding up Jai Balaji Industries Limited has been recalled.
The appellant claims to be a creditor of the relevant company and instituted winding-up proceedings in such status. The petition was admitted by an
order dated August 17, 2015. In terms of such order of admission, the petition was advertised on or about September 14, 2015, but, according to
principal respondent State Bank of India, the company petition did not appear in the list on the returnable date as indicated in the advertisements.
Sometime in the year 2015, the company made a reference to the Board for Industrial and Financial Reconstruction under the provisions of the Sick
Industrial Companies (Special Provisions) Act, 1985. Such fact was brought to the notice of the company Court and, by an order dated October 13,
2015, the creditor’s winding-up petition was adjourned till March, 2016 and, subsequently, it was adjourned sine die. In view of the embargo under
Section 22(1) of the said Act of 1985, the creditor’s windingup petition could not be pursued, though its institution could not be questioned as the
institution was prior to the reference made to the BIFR.
As a consequence of the reference before the BIFR and the inordinate time it took before such body, the company petition did not appear in the list at
the postadvertisement stage within any reasonable time of the returnable date as indicated in the advertisements. In fact, the matter remained
adjourned sine die till such time that the Act of 1985 stood repealed, whereupon the petitioning-creditor chose to revive the winding-up petition. It also
transpires that even at the post-advertisement stage, the petitioning-creditor and the company agreed that the debt would be discharged in a particular
manner. Since no other creditor appeared to support or oppose the windingup, the company Court permitted the agreement between the petitioning-
creditor and the company regarding further payment to be worked out; but the company ultimately failed to discharge its debt and the petitioning-
creditor pressed and obtained an order for the company to be wound up.
The State Bank as secured creditor of the company complained to the company Court that in the light of the company petition having been adjourned
sine die, which deprived the other creditors of the company to have their say at the postadvertisement stage, the company Court ought to have issued
some form of notice or advertisement before hearing the matter again. At any rate, the State Bank contended before the company Court, the
company could not be wound up without reference to its other creditors merely because an advertisement may have been published some two or three
years prior to the company being wound-up. In short, it was the allegation of the State Bank that a friendly creditor had been propped up to ensure
the winding-up of the company by Court.
By the order impugned, the company Court perceived that in the peculiar circumstances that the petition did not appear on the returnable date
indicated in the advertisements and the matter remained adjourned for a substantial period of time, a fresh advertisement should have been directed to
be published before the matter was considered at the post-advertisement stage. The company Judge cannot be faulted for such perception, since
creditors of a company have a say at the post-advertisement stage and the company Judge has the discretion to not wind up the company despite its
proven indebtedness to the petitioning-creditor if other creditors demonstrate that the company should not be wound up. On the point of principle, the
order impugned cannot be questioned.
However, instead of the company Judge issuing fresh directions for advertisements immediately, a future date was indicated when directions for such
advertisements were to be issued. In the meantime, the appellant herein preferred the present appeal. The date July 9, 2018 indicated in the order
impugned by the company Court for fresh directions to be issued as to the advertisements could not adhered to, primarily, on account of the pendency
of this appeal.
The order impugned does not call for any interference. However, since the date for directing fresh advertisements to be published has passed, such
directions are issued hereby. The petitioning-creditor will cause advertisements to be published in the same newspapers in which the original
advertisements had been published, indicating that the company petition will appear before the company Court on the first available working day two
weeks after the date of the publication. The publication of the advertisements has to be simultaneous in the newspapers on a date within two weeks
from today.
The department is directed to ensure that the company petition appears in the list on the returnable date.
APO No.186 of 2018 and ACO No.22 of 2018 are disposed of.
There will be no order as to costs.