JUDGMENT Sunil Ambwani, J.
1. Heard Shri N. K. Srivastava, learned Counsel for the respondent-company and Shri Raj Nath N. Shukla appearing for the official liquidator, U.P. at Allahabad. Shri S. K. Saxena, official liquidator is present in the court.
2. On the recommendation of the Board for Industrial and Financial Reconstruction the respondent-company M/s. Shree Dhruve Flour and Food Products Ltd., was wound up by this court on August 22, 2005. The respondent-company filed an application to recall the winding up order on the ground that it has settled the entire dues to be paid to the secured creditors namely State Bank of India and PICUP from the financial resources generated by the ex-directors, who have filed their affidavit stating that they will not claim this amount from the company. Sri Srivastava further submits that the respondent-company has no further liabilities towards any other secured or unsecured creditors and thus the winding up order deserves to be recalled.
3. In the official liquidator's report No. 14 of 2006, filed through Shri Rajnath N. Shukla, advocate it is stated that in pursuance of the orders passed by this court winding up by the respondent-company notices were issued to the ex-directors under Sections 454 and 456 of the Companies Act, 1956, to hand over the charge of the assets and record and to file statement of affairs. Shri R. P. Pandey, the director of the company gave a letter addressed to the official liquidator dated December 23, 2005, stating that the company has liquidated the entire dues of State Bank of India and PICUP and that the recall application is pending and in the circumstances they prayed for certain time to comply with the direction.
4. The Board for Industrial and Financial Reconstruction, had received a reference under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, by the company itself on the basis of its audited balance-sheet as on March 31, 1993, with paid up capital of Rs. 39.20 lakhs. The company had accumulated losses of Rs. 155.79 lakhs. It employed less than 50 workers. IDBI was appointed as operating agency and efforts for rehabilitation were undertaken. After a number of hearings the Board for Industrial and Financial Reconstruction was of the opinion that the promoters were admittedly not serious/resourceful to revive the company. The company's reliability was also under doubt and there was no rehabilitation process of the finance on fully tied up by the Board.
5. After issuing notice to the company on July 12, 2000, as well as secured creditors on August 11, 2000, and thereafter rejecting the application for sale of assets to pay the dues of State Bank of India and PICUP vide order dated November 22, 2001, the recommendation of the Board for Industrial and Financial Reconstruction was accepted and the company was finally wound up on August 22, 2005.
6. In the recall application it is stated that the entire dues of State Bank of India were settled as per the OTS settlement dated February 25, 2003. The bank issued certificate dated March 29, 2003, certifying that Shree Dhruve Flour and Food Products Ltd., had liquidated entire outstanding and interest as per the OTS settlement dated February 25, 2003. The PICUP has also certified that the entire dues towards PICUP have been settled and that legal division may release the security document of the title deeds. It has acknowledged settlement of Rs. 67,10,000 towards its dues. The company has thereafter got its accounts audited and has filed balance-sheet dated September 2, 2004, disclosing share capital of Rs. 39,20,000 reserve and surplus of Rs. 21,25,000 and unsecured loan of Rs. 2,11,43,335.63. The balance-sheet does not show any liability towards secured creditors.
7. The company was required to explain the source of funds, which are now shown as unsecured debts. The supplementary affidavit of Lala Hemant Pat Singhania son of late Lala Radha Kishan Singhania, resident of "Radha Kunj", 84/43, Kalpi Road, Kanpur, has been placed on record stating in paragraph 9 that the payments were made from the proceeds of sale of personal property of the deponent and also from the rental income of M/s. Meenakshi Synthetics Pvt. Ltd. The deponent had been the director of the respondent-company and its guarantor also and is also a director of the Meenakshi Synthetics Pvt. Ltd. He has liquidated fully and finally the dues of two creditors without creating any liability on M/s. Shree Dhruve Flour and Food Products Ltd. Paragraph 9 of the affidavit is quoted as below:
That the deponent further states that the payments made to State Bank of India, Bindki Road, Chaudagara, District Fatehpur, and the Pradeshiya Industrial and Investment Corporation of U.P. Ltd., Gomti Nagar, Lucknow, did not create any liability whatsoever on Shree Dhruve Flour and Food Products Ltd., as the payment detailed above were made from the proceeds of sale of personal property of deponent, and also from the rental income of M/s. Meenakshi Synthetics Pvt. Ltd. At the cost of repetition it is further stated that deponent had been the director of Shree Dhruve Flour and Food Products Ltd., and its guarantor also and is a director of M/s. Meenakshi Synthetics Pvt. Ltd., and he liquidated fully and finally the dues of aforementioned two creditors without creating any liability on M/s. Shree Dhruve Flour and Food Products Ltd.
8 With these development, the matter requires a fresh look by the Board for Industrial and Financial Reconstruction. In Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. [2000] 101 Comp Cas 284 : [2000] 5 SCC 515, the Supreme Court held that the ex-directors continue to retain powers for rehabilitation even after winding up of the company to protect and preserve the assets. Where the promoters, directors have taken interest and have liquidated the secured debts and have further made statement that the amounts brought by them for liquidation of secured debts not be treated as charge over the property, the expert bodies may be required to give a fresh look to the matter.
9 The company, however, has not carried out any business for last many years and may be required to furnish a rehabilitation proposal. Now since secured debts have been paid off, the rehabilitation proposals may require just and effective consideration by the Board for Industrial and Financial Reconstruction.
10. In view of the aforesaid facts and circumstances the winding up order dated August 22, 2005, is recalled. In view of subsequent developments the reference is rejected and the matter is remitted to the Board for Industrial and Financial Reconstruction, to consider rehabilitation of the company upon the company submitting fresh proposal in this regard. The Board for Industrial and Financial Reconstruction may also consider whether after payment of secured debts, the company has the financial capacity to survive on its own. It shall decide the matter very expeditiously and preferably within two months of receipt of this order.
11. No order as to costs.