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Judgment
Justice Rakesh Kumar, Member
The present appeal has been preferred under Section 421 of the Companies Act, 2013 against an order datged 12.08.2022 passed by the National Company Law Tribunal, Indore Bench (hereinafter referred to as NCLT). By the said order the learned NCLT has rejected the TP No.224/2019 (CP No.63/2019) which was filed under Section 271 (e) and 272(1)(b) of the Companies Act, 2013.
Before proceeding it is necessary to incorporate certain facts which has been taken from the Memo of Appeal itself. The appellant has claimed to be promoter of Respondent, Premier Proteins Ltd, (hereinafter referred as the Company).
The company was incorporated at Gwalior in the year 1986 under Companies Act, 1956 and subsequently its shares were issued to public and it was listed on the Bombay Stock Exchange. The main object of the company as per Memorandum of Association of the Company succinctly was as follows:
“1. To acquire, promote, establish and carry on business of manufacturers, importers, exporters, traders, dealers and processors of high protein foods, Soyaflour, Soyamilk, Textured proteins, concentrates, protein-isolates, lecithin Glycerne, Emulsiflers, Oils, De oiled cakes, Refind Oil, Hydrogenated Oils (Vanaspati) Margarine, Peanut Butter, Peanut Milk, Refind Oil form or out of cottonseeds, castor, linseeds, sunflower, soyabean ricebran, groundnut and other types of Edible and Non-Edible essential and non essential, oil-seed and vegetable seeds of all kinds by any type of processing viz Ordinary crushing Solvent Extraction, Chemical or any other process and to utilize the oils and cakes and proteins to be produced therefrom.
To carry on the business of manufacture and processing of nutrition foods, cattle-feeds manure, fatty acids soaps perfumes, chemicals and other products in which such oils seeds, oils, oil cakes, and protein are utilized and of making preparing and processing of formulation and by-products of oilseeds oils, proteins, from the products aforesaid.
To act as dealers, whole sellers, retailers, stockists, commission agents, representatives, selling agents, purchasing agents, distributers and broker, exporter, importers, manufacturers, cultivator farmers, processors, refines, of soyabean, groundnut, sesame seed, all other oil seeds edible and non-edible oil, Vanaspati oil cakes, proteins and protein foods, substances or residue or by-products of all goods aforesaid.”
As on 31st March, 2019 the share capital of the Company was 9,93,44.485. It is the case of the appellant that the company was declared as sick company by order dated 21.12.2005 by Board of Industrial and Financial Reconstruction (BIFR). Finally in the month of August, 2016 the Bombay Stock Exchange delisted the company under the Securities Exchange Board of India (Delisting of Equity Shares) Regulation 2009. It has been further claimed that the turnover of the company during the financial year 2017-18 from the business operation had come to only 3,72,583 and the total accumulated accounted loss was amounted to Rs.24,14,94,040/-. Since there was no possibility of the revival of the company the appellant being promoter of the company namely Premier Proteins Ltd filed an application under Section 271(e) and 272(1)(b) of the Companies Act, 2013. However, it was submitted by the learned counsel for the appellant that the learned NCLT in mechanical manner has rejected the same. Mr. Vijayesh Atre, learned counsel for the appellant has drawn out attention to balance sheet of the company as on 31st March, 2019 to show that short term borrowing liabilities of the company was in several crores, however, the assets were about much lesser. He has also drawn our attention to order dated 30.09.2015 passed by BIFR, Branch Office III in case No.449 of 2002. He highlighted that company was initially declared as sick industries/company and finally in the year 2016 it was delisted by the Bombay Stock Exchange and in such situation since there was no possibility of revival of the company the applicant being promoter filed the petition which was not required to be rejected by the NCLT. He submits that the word used “may” in Section 273(2) of the Companies Act, 2013 may not be inferred as “shall” and as such the Learned NCLT while dismissing the application was required to record just and equitable reason for dismissing the same. He further submits that there may be alternative remedy available to the appellant but fact remains that option was available to appellant to avail remedy which he opted in the present appeal. On this very point he has placed reliance on a judgement of Hon’ble Supreme Court reported in (1992) 4 SCC 196 Bihar State Cooperative Marketing Union Ltd Vs Uma Shankar Sharan and other. Learned counsel for the appellant has specifically drawn our attention to para 6 of the judgement and submits that it was choice of the applicant to prefer remedy under Section 271 and 272 of the Companies Act, 2013 and in any event on the ground of other alternative remedy there was no reason to dismiss the application.
On the aforesaid ground the order impugned has been assailed by the appellant. Before proceeding to record finding it is appropriate to note that it is the case of the appellant that Respondent company was declared as ‘sick’ company under the provisions of SICA. It is also not in dispute that long back in the year 2005 itself the respondent company was declared as sick company. The company when was declared sick at the relevant time the Companies Act, 1956 was operative (hereinafter referred to as Old Act). Under the Old Act there was specific provision for winding up of a sick company/industry under Section 424(G). However, to the reasons best known to the appellant no such step was taken. The appellant after lapse of several years from the date when company/industry was declared sick to the reasons best known to it claiming to be contributory under Section 272(1)(b) of the Companies Act, 2013 (hereinafter referred to as New Act) preferred application for winding up of company. The said petition was filed under Section 271 (e) of the New Act. However, learned NCLT in view of the provisions contained in sub-section (2) of Section 273 of the New Act considering the fact that the appellant was having other remedy that too under IBC 2016 did not interfere with the matter and rejected the application as disposed off. It would be profitable to incorporate Section 271, 272(1) and 273.
“271. Circumstances in which company may be wound up by Tribunal.— A company may, on a petition under section 272, be wound up by the Tribunal,—
(a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal:
(b) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;
(c) if on an application made by the Registrar or any other person authorised by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up;
(d) if the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years; or
(e) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.
Petition for winding up.— (1) Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by—
(a) the company;
(b) any contributory or contributories;
(c) all or any of the persons specified in clauses (a) and (b)
(d) the Registrar;
(e) any person authorised by the Central Government in that behalf; or
(f) in a case falling under clause (b) of section 271, by the Central Government or a State Government.
(2) A contributory shall be entitled to present a petition for the winding up of a company, notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities, and shares in respect of which he is a contributory or some of them were either originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up or have devolved on him through the death of a former holder.
(3) The Registrar shall be entitled to present a petition for winding up under section 271 except on the grounds specified in clause (a) of that section.
Provided that the Registrar shall obtain the previous sanction of the Central Government to the presentation of a petition;
Provided further that the Central Government shall not accord its sanction unless the company has been given a reasonable opportunity of making representations.
(4) A petition presented by the company for winding up before the Tribunal shall be admitted only if accompanied by a statement of affairs in such form and in such manner as may be prescribed. 166 (5) A copy of the petition made under this section shall also be filed with the Registrar and the Registrar shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt of such petition.
Powers of Tribunal.— (1) The Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely:—
(a) dismiss it, with or without costs;
(b) make any interim order as it thinks fit.
(c) appoint a provisional liquidator of the company till the making of a winding up order;
(d) make an order for the winding up of the company with or without costs; or
(e) any other order as it thinks fit:
Provided that an order under this sub-section shall be made within ninety days from the date of presentation of the petition:
Provided further that before appointing a provisional liquidator under clause (c), the Tribunal shall give notice to
the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice:
Provided also that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets.
(2) Where a petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing the other remedy.”
Admittedly the appellant before the NCLT had claimed to be contributory under Section 272(1) (b) and invoked the jurisdiction of the NCLT under Section 271(e). On examination of Section 271(e) it is evident that under this provision the Tribunal was having discretionary jurisdiction. Had the Tribunal was of the opinion that it was just and equitable to pass order of winding up of the company, this jurisdiction would have been exercised by the Tribunal. This power is not similar to the power given to the Tribunal under Section 271(a)(b)(c) and (d). Similarly sub-section (2) of Section 273 clearly indicates that if such petition is filed i.e. petition filed under Section 271(e) read with Section 272 (1)(b) of the New Act, onus is on the applicant to satisfy that there is just and equitable ground for winding up of a company. Meaning thereby that if an applicant is not in a position to satisfy on the point of just and equitable ground, the tribunal may refuse to make an order for winding up. Moreover in a situation the Tribunal is of the opinion that some other remedy is available to the applicant and applicant are acting unreasonably in seeking the company to be wound up instead of pursuing other remedy, the Tribunal may refuse to exercise its discretion in favour of such applicant. On perusal of the impugned order it is difficult to infer that the appellant herein was in a position to satisfy the Learned Tribunal that there was just and equitable ground for passing winding up order. Moreover, the appellant may not deny that other remedies were also available to the appellant. Besides this on examination of the order impugned it is evident that one of the secured creditor namely Cargil India Pvt Ltd had filed an objection petition against the application filed by the appellants. However, a submission was made by learned counsel for the appellant before the NCLT that during proceeding said creditor had raised no objection. In normal course it was mandatorily required on the part of the appellant to implead such creditor/objector as party in the present appeal. However, to the reasons best known to the appellant the said objector/creditor was not impleaded as party in the present appeal. We are of the opinion that besides lack of merit in the appeal the appeal also deserves to be rejected on the ground of non-joinder of parties. The order further reflects that the applicant before the NCLT had also filed a petition i.e. CA No.29/2021 dated 30.11.2021 seeking withdrawal of the main application i.e. CP No.224/2019, however, subsequently the said application was withdrawn.
So far as judgement relied upon by the learned counsel for the appellant on Bihar State Cooperative Marketing Ltd case (Supra) is concerned in view of the facts and circumstances as noticed by the Hon’ble Supreme Court we do not find that the appellant can get any assistance from the said judgement. The present case is entirely on different footings.
We are of opinion that Learned NCLT has committed no error in passing the impugned order. However, we may clarify that the appellant only by rejection of the present appeal may not be prevented to avail other remedies in accordance with law.
With the above observations/directions the appeal stands dismissed.