Case Note & Summary
The Official Liquidator filed a report seeking directions to direct the ex-director of M/s Lifeline Industries Ltd. (in liquidation) to deposit advertisement charges of Rs.25,749/- and to direct Indian Overseas Bank to take physical possession of the factory premises at B-10, MIDC Industrial Area, Akkalkot Road, Solapur, or alternatively allow the Official Liquidator to take possession. The ex-director opposed, arguing that a reference before BIFR under SICA, 1985 was pending, creating a bar under Section 22 of SICA. The court rejected this argument, holding that Section 22 does not bar proceedings under the Companies Act, 1956 for winding up. The court allowed the Official Liquidator to take physical possession of the factory premises and to appoint security guards, and directed the ex-director to deposit the advertisement charges.
Headnote
A) Company Law - Winding Up - Section 22 of SICA, 1985 - Bar on Proceedings - The court considered whether the pendency of a reference before BIFR under SICA, 1985 bars the Official Liquidator from taking possession of the company's assets. Held that Section 22 of SICA does not apply to proceedings under the Companies Act, 1956 for winding up, and the Official Liquidator is entitled to take possession of the factory premises. (Paras 1-2)
B) Company Law - Official Liquidator - Possession of Assets - The court directed the ex-director to deposit advertisement charges of Rs.25,749/- and permitted the Official Liquidator to take physical possession of the factory premises at B-10, MIDC Industrial Area, Akkalkot Road, Solapur, and to appoint security guards. (Para 1)
Issue of Consideration
Whether the Official Liquidator can proceed with taking possession of factory premises and seek directions despite a pending reference before BIFR under Section 22 of SICA, 1985
Final Decision
The court allowed the Official Liquidator to take physical possession of the factory premises at B-10, MIDC Industrial Area, Akkalkot Road, Solapur, and to appoint security guards. The ex-director was directed to deposit advertisement charges of Rs.25,749/- with the Official Liquidator.
Law Points
- Section 22 of SICA
- 1985 does not bar proceedings under Companies Act
- 1956 for winding up
- Official Liquidator can take possession of assets of company in liquidation
- Advertisement charges to be deposited by ex-director
Case Details
OLR NO. 629 OF 2015/LIQN.V IN COMPANY PETITION NO. 103 OF 2011 WITH COMPANY PETITION NO.104 OF 2011 WITH COMPANY PETITION NO.375 OF 2010
Mr Sanjay Verma (Asstt OL), Ms Jane Cox (for Workers), Mr Satish S. Shetye i/b Barsha Parulekar (for Ex-Directors), Ms Kirti Kanakia (Ex-Director present), Ms Nupur Awasti i/b M/s Consulta Juris (for ARCIL)
M/s Lifeline Industries Ltd. (In Liqn.)
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Nature of Litigation
Official Liquidator's Report seeking directions for taking possession of factory premises and deposit of advertisement charges
Remedy Sought
Directions to ex-director to deposit advertisement charges and to Indian Overseas Bank or Official Liquidator to take physical possession of factory premises
Filing Reason
To facilitate winding up of the company in liquidation
Previous Decisions
Company petitions pending; company in liquidation
Issues
Whether Section 22 of SICA, 1985 bars the Official Liquidator from proceeding with the OLR and taking possession of factory premises
Submissions/Arguments
Ex-director argued that pending BIFR reference creates a bar under Section 22 of SICA, 1985
Official Liquidator sought directions to take possession and deposit advertisement charges
Ratio Decidendi
Section 22 of SICA, 1985 does not bar proceedings under the Companies Act, 1956 for winding up, and the Official Liquidator is entitled to take possession of the company's assets.
Judgment Excerpts
By this Official Liquidator’s Report (“OLR”), the following directions are sought: (i) to direct the Ex-Director of the Company (in liqn.) (Mr Nikunj Kanakia) to deposit the advertisement charges of Rs.25,749/- with the Official Liquidator and permit the Official Liquidator to pay the same to the advertising agency; and (ii) to direct Indian Overseas Bank (“IOB”) to take physical possession of the factory premises situated at B-10, MIDC Industrial Area, Akkalkot Road, Solapur (“factory premises”), and to appoint Security Guards in relation thereto.
Mr Shetye, learned counsel appearing on behalf of the Ex-Directors, at the outset submitted that no reliefs in this OLR can be granted in view of the fact that the Company (in Liqn.) [M/s Lifeline Industries Ltd.] has filed a reference before the BIFR and which is pending. He submitted that there is a complete bar by virtue of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (“SICA, 1985”) from proceeding with the present OLR or for that matter, any further.
Procedural History
The company M/s Lifeline Industries Ltd. was in liquidation under Company Petitions No. 103 of 2011, 104 of 2011, and 375 of 2010. The Official Liquidator filed OLR No. 629 of 2015 seeking directions. The ex-director opposed on grounds of pending BIFR reference. The court heard the matter and passed the order on August 11, 2016.
Acts & Sections
- Sick Industrial Companies (Special Provisions) Act, 1985: 22
- Companies Act, 1956:
