STATE OF WEST BENGAL Vs. PRONAB KR SUR

JUDGEMENT

(1.) Aggrieved by the common order dated August 5, 1998 passed by the Division Bench of High Court at Calcutta in A.P.O. No. 21 of 1994 (related to Company Petition No. 90 of 1992) and G.A. No. 811 of 1997 (arising out of Writ Petition No. 383 of 1997), the present appeals have been preferred by the State of West Bengal after obtaining special leave. The order in question has been purportedly passed in exercise of two jurisdictions one under the Companies Act and the other under writ jurisdiction. In sum and substance, the High Court set aside the order of the State Government rejecting the 2nd respondent-companys application for exemption under S. 20 of the Urban Land (Ceiling and Regulation) Act (hereinafter referred to as the ULC Act), directed the Special Officer, appointed by the Court to transfer and hand over the vacant possession of 300 cottahs of land declared surplus under the ULC Act to the 6th respondent on receipt of Rs. 3.90 crores and laid down the modalities of utilization of the said amount for the revival of the 2nd respondent-Company.

(2.) The case has a long history. Certain essential facts need narration to come to the grips of the issue involved. In the year 1976, the 2nd respondent by name Sur Enamel and Stamping Works (Private) Ltd. (hereafter referred to as Company), filed a declaration under the ULC Act. In the year 1991, the Company totally suspended its operations on account of financial and marketing problems. It may be stated that the assets of the Company viz. the factory building, plant and machinery, contiguous land etc. were mortgaged to United Bank of India through equitable mortgage and the Bank filed a suit in the year 1992 for recovery of money by enforcing the mortgage. The Company filed an application under S. 20 of ULC Act on 18-6-1991 seeking exemption of excess vacant land held by it on the ground that part of the vacant land had to be necessarily sold for discharging the dues and for revival of the Company. As the things stood thus, a creditor of the Company by name Eastern Coal Agency, filed Company Petition No. 90 of 1992 in the High Court of Calcutta for winding up the Company on the ground of its inability to discharge the debts. The said petition was admitted on 16th March, 1992. However, further proceedings including advertisement were stayed subject to the condition of the Company paying the amount due to the creditor in instalments. The instalments could not be paid by the Company as directed. While so, the Company came forward with a scheme application purportedly under Ss. 391(1) and 391(6) of the Companies Act. The scheme envisaged payment being made to the creditors by sale of a portion of the Companys land measuring 20 bighas. The learned Judge dealing with the Company petition rejected the application by an order dated 22-12-1993 on the ground that the property was mortgaged to the Bank and the scheme was not feasible. Simultaneously, directions were given for advertisement of the winding up petition. At this stage, we may mention that this order of the learned Company Judge has been wrongly referred to in the pleadings of both the parties as an order directing winding up of the Company. Moreover, in the judgment under appeal, the learned Judges wrongly assumed that the order dated 22-12-1993 was passed on the application of one of the creditors to sell the property. We would like to clarify that the question of sale did not arise at that stage because the winding up petition was still under adjudication. We have already indicated the nature of application filed before the Company Judge, on a perusal of the original record of the High Court.

(3.) Against the order dated 22-12-1993 passed in the company application, an appeal was preferred before the Division Bench, which is A.P.O. No. 21 of 1994. The Company placed before the Division Bench an offer from the 6th respondent, namely, Chatterjee Management Services (P) Ltd. (hereinafter referred to as the CMS Ltd.) to purchase 15 bighas of vacant land at the consolidated price of Rs. 3.90 crores provided it was transferred free from all charges and encumbrances and necessary permissions/approvals from the Court, secured creditors and the Urban Ceiling authorities were obtained. The Company prayed for confirmation of proposed sale of approximately 20,000 square metres to C.M.S. Ltd. The Division Bench of the High Court noted that according to the proposal of C.M.S. Ltd., the dues to the bank and other creditors will be cleared and arrears of salaries to workmen will be paid and the balance of about one crore could be utilized by the Company for revival of industry. The said proposals of the Company and C.M.S. Ltd. were accepted by the Division Bench by an order dated 16-1-1996. The learned Judges observed :