Case Note & Summary
The matter pertains to Company Application No.328 of 1990 arising out of Company Petition No.128 of 1985, filed before the High Court of Judicature at Bombay. The applicants, Sanghi Oxygen (Bombay) Pvt. Ltd. and R.K. Sanghi, sought enforcement of a scheme formulated by the court on 6th July 1989 in the company petition. The scheme was framed under Sections 397 and 398 of the Companies Act, 1956, dealing with the reconstruction of Sanghi Motors (Bombay) Limited, a company in the nature of a glorified partnership. The court had applied principles of dissolution of firms and recorded the consent of the parties to the scheme. Under the scheme, the undertaking of Sanghi Oxygen, along with its assets, was to vest in the applicant company. Specifically, movable and immovable assets including a liquid oxygen tank, cylinders, and documents were to be transferred. The applicants alleged that the respondents had failed to hand over the LOX tank, cylinder hire agreements, challans, various batches of gas cylinders, and had not taken steps to recover 4472 cylinders from third parties or pay compensation of Rs.97,04,000 at Rs.1800 per cylinder with interest. The application sought directions for handing over assets, appointment of a receiver, and an injunction restraining dealing with cylinders. The background reveals the family-run business was managed by different members at different times, leading to disputes and the filing of the company petition in 1985. A receiver was appointed and conducted the business through an agent until the scheme came into effect. The court's judgment in this application was to determine compliance with the scheme and grant appropriate relief. However, the provided judgment text is incomplete and does not contain the final decision or reasoning of the court.
Issue of Consideration
Whether the respondents have failed to discharge their obligations under the scheme formulated by the Court in Company Petition No.128 of 1985, and whether the applicants are entitled to the reliefs sought including handing over of assets, documents, and cylinders, and payment of compensation.
Law Points
- Enforcement of scheme under Sections 397
- 398
- 402
- 403 and 633 of Companies Act
- 1956
- Compliance of court-approved consent scheme
- Direction for handing over assets and cylinders
- Obligation to recover and return cylinders or pay compensation
Case Details
2006 LawText (BOM) (02) 27
Company Application No.328 of 1990 in Company Petition No.128 of 1985
Shri J.P. Sen with Shri Jayesh Vyas i/b Bilawala & Co. for applicants. Shri Milind Sathe with Shri Janak Dwarkadas and Shri Pratik Sakseria i/b B. Munim & Co. for respondents.
1. Sanghi Oxygen (Bombay) Pvt. Ltd., 2. R.K. Sanghi
1. M/s. Sanghi Motors (Bombay) P. Ltd., 2. Messrs Vitesse Trading Pvt. Ltd., 3. Mr. Mahendra Kumar Sanghi, 4. Mrs. Manju Sanghi, 5. Mr. Vaibhav Sanghi, 6. Mr. Ashwin Sanghi
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Nature of Litigation
Application for enforcement of obligations under a scheme formulated by the court in a company petition under Sections 397 and 398 of Companies Act, 1956.
Remedy Sought
Applicants seeking direction for respondents to handover assets (LOX tank, documents, gas cylinders) and to recover and return cylinders or pay compensation.
Filing Reason
Respondents allegedly failed to discharge obligations under the scheme regarding transfer of undertaking assets and cylinders.
Previous Decisions
Company Petition No.128 of 1985 disposed of on 6th July 1989 with a scheme of reconstruction, whereunder certain assets were to vest in the applicant company.
Issues
Whether the respondents have complied with the scheme formulated on 6th July 1989 in Company Petition No.128 of 1985
Whether the applicants are entitled to the specific reliefs claimed including handing over of assets, documents, cylinders, and payment of compensation.
Judgment Excerpts
This application is essentially for the purpose of directing the respondents to give effect to the undischarged obligations in terms of the scheme formulated by this Court in Company Petition No.128 of 1985.
It has been observed that the company was in the nature of a glorified partnership. While formulating the scheme, therefore, the court applied the principles of dissolution of firms.
The court has also recorded the agreement reached between the parties before the Court that they have accepted the order passed by the Court and were consenting to the same.
Procedural History
Motilal Sanghi died in 1961. Sanghi Oxygen set up in 1964 as undertaking of Sanghi Motors. From 1964 to July 1983, applicant No.2 managed it; from July 1983 to 10th September 1987, respondent No.3 managed. In February 1985, Respondent No.3 filed Company Petition No.128 of 1985 under Sections 397, 398. Receiver appointed; took possession on 3rd October 1987. On 5th October 1987, auction for agent; respondent No.5 won; respondent No.2 nominated as agent to conduct business. On 6th October 1987, conducting agreement executed. Respondent No.2 conducted business as agent of Receiver till 10th July 1989. On 6th July 1989, Company Petition disposed of; scheme formulated; court directed receiver to hand over possession of assets of Sanghi Oxygen to applicant No.2 as per scheme. Present application filed in 1990 for enforcement of scheme.
Acts & Sections
- Companies Act, 1956: 397, 398, 402, 403, 633
