Atlantic Bridge Aviation Ltd., Lydd Airport, Rent TN 29 9QL, United Kingdom .. Respondent in O.S.A.123/2009 These appeals have been preferred under Order XXXVI Rule 1 of O.S. Rules r/w Section 483 of Companies Act and Clause 15 of Letters Patent against the orders dated 22.4.2009 and 21.4.2009 passed by the learned Single Judge in C.P.Nos.232/1998 and 186/1997 respectively.
This judgment shall govern these two appeals which have arisen from the order of the learned Single Judge in Company Petition Nos. 232 of 1998 and 186 of 1997 whereby the learned Single Judge has made an order appointing the Official Liquidator, High Court, Chennai as the Provisional Liquidator directing him to take charge of the assets of the respondents Company.
2. The Court heard the learned counsel on either side and looked into the materials available, in particular, the orders under challenge.
3. Admittedly, those two Company Petition Nos. 232 of 1998 and 186 of 1997 were filed seeking winding up of the respondent company and for appointment of Official Liquidator under the provisions of the Companies Act.
4. In those two company petitions, the learned single Judge made an order, ordering for publication since it found that there was a prima facie case for liquidation. As against the said order dated 25.10.2002, the two appeals were preferred in O.S.A.No.397 of 2002 and O.S.A.No.440 of 2002. The Division Bench of this Court by elaborate order dated 7.8.2008 found that there was a prima facie case made out and it was a fit case for ordering for publication, hence, confirmed the order. Not satisfied with the same, the debtor company took it on appeal before the Apex Court on Special Leave Petitions. Insofar as the Company Petition No.232/1998 is concerned and the appeal therefrom, the Apex Court made an order of dismissal. Insofar as the other Company Petition No.233 of 1998 is concerned, though the Apex Court took a view that it was not a fit case where the Apex Court could interfere in exercise of jurisdiction and made an order of dismissal, however, it was observed that, it was made clear that Winding Up Petition pending before the High Court should be decided on its own merits uninfluenced by any observations made by the High Court in its order dated 21.9.2007 or the dismissal of the Special Leave Petition by the Apex Court. After passing of those orders, the matters, both the Company Petitions came up before the learned Single Judge and the learned Single Judge in exercise of powers under
section 450 of the Company Act made an order appointing the Official Liquidator, High Court, Madras as the Provisional Liquidator. Aggrieved over that part of the order, these two appeals have arisen.
5. Advancing the arguments on behalf of the appellants, the learned Senior Counsel Mr.P.S.Raman, would submit that originally, the order that was passed by the learned single Judge in the Company Petition as to the publication was challenged before this Court before the Division Bench and also before the Apex Court and both the appeals were dismissed. Under such circumstances, it would not mean that the Company Court can directly exercise its power under
section 456 of the Companies Act and appoint the provisional liquidator to take up the assets of the Company. The matter is pending from the year 1998. The Company has been running and apart from that, it has shifted its business to the business of solar energy and it originally had number of debtors, out of whom, all have been settled except these two respondents. Under such circumstances, there is no need for appointment of the provisional liquidator and even the order does not speak about any reason whether the circumstances prevail for appointment of official liquidator immediately. The learned counsel in support of his contention that relied on the decision reported in (1948) XVIII Company Cases 8 (Andhra Paper Mills Company Limited., Inre). Under such circumstances, the orders have got to be set aside.
6. Contrary to the above contentions, the learned counsel for the respondents in their sincere attempt to sustain the orders of the learned single Judge would submit that, in the instant case, when the Company Petitions were filed and the publication were also effected, the Company Court considering the reasons found that there was a prima facie case made out for publication and accordingly, has made an order for publication. Though, it was challenged before the Division Bench and before the Apex Court, the order of the learned single Judge was sustained and thus, it would indicate that a prima facie case was made out for invoking
section 450 of the Companies Act for appointment of the provisions liquidator and no other reasons need be assigned. Even a reading of the order under challenge would clearly indicate that all the earlier orders made by the Court were taken into consideration and in exercise of the judicial powers, the orders have been passed. Under such circumstances, there is nothing to interfere with the orders and the appeals have got to be dismissed.
7. The Court paid its anxious consideration on the submissions made and also made thorough scrutiny of the available materials.
8. It is not in controversy that in these two Company Petitions, pending before the Company Court, the learned Single Judge thought that it was a fit case where publication has got to be ordered and accordingly, ordered so. It is also true that those orders were challenged before the Division Bench and also the Division Bench by an elaborate order, has pointed out the reasons that a prima facie case was made out and it was a fit case where the publication orders have to be sustained. Thereafter not satisfied, the debtors took it on Special Leave Petition.
9. It is also true that both the Special Leave Petitions have been dismissed but at this juncture it has to be pointed out that while dismissing the Special Leave Petitions observing that the Apex Court did not find any reason to interfere with the orders of this Court has pointed out that the High Court must consider the winding up application uninfluenced by the observations made by this High Court in its order dated 21.9.2007 or the dismissal of the Special Leave Petitions by the Apex Court. It would be quite clear that in the earlier orders of the Division Bench sustaining the orders of the learned single Judge there were warranting circumstances for making publication for the winding up proceedings but it cannot now be taken as a reason for passing an order for appointment of Provisional Liquidator.
10. Further, regarding the question whether circumstances prevailing or warranting for appointment of Provisional Liquidator, the Court is of the considered opinion that where there was indication made by the Apex Court that the Court in proceeding with the Company Petitions should proceed with uninfluenced by the earlier orders made by this Court and the Apex Court. Hence, it is quite clear that the Company Court, before making the order of e appointment of provisional liquidator, should have taken into consideration, the circumstances and also in short, it can be stated that the Court should see that it is a speaking order. Paragraph 4 of the order under challenge reads as follows: "The Official Liquidator High Court Madras, is appointed as the Provisional Liquidator and has directed to take charge of the assets of the respondent Company. The Ex-Directors of the Company is directed to file their statment of affairs before the Official Liquidator within a period of 21 days..." Thus, so long as the order, appointing the Provisional Liquidator does not speak about the circumstances or reasons which impel the Court, the Court is of the considered opinion that the orders cannot be sustained.
11. It is true
Section 450 of the Company Act empowers the Company Court to appointment the Provisional Liqudateor in the initial stage of the proceedings, even then the Court, before appointing the Provisional Liquidator must be satisfied that the circumstances warrant for making such appointment, because, when the Provisional Liquidator is appointed in the initial stage and he is directed to take charge of the assets of the company, it would naturally interfere with the administration and management of the Company.
12. Before invoking the powers of the Company Court under
section 450 of the Companies Act for appointment of Provisional Liquidator, the reasons and circumstances which warrant for making such appointment is a must. Under such circumstances, the Court is of the opinion that the orders cannot be sustained. Therefore, the appeals are allowed and the orders passed in C.P.No.232 of 1998 dated 22.4.2009 and C.P.No.186 of 1997 dated 21.4.2009 are set aside. The matters are remitted back to the Company Court to consider the same on merits of the matters individually. No costs. Consequently, connected M.P.No.1 of 2009 and M.P.Nos. 1 & 2 of 1009 respectively are closed.
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