NAVJIVAN MILLS LTD. Vs. STATE

JUDGEMENT

(1.) THE applicant company has taken out this summons for directions by this court under section 536(2) of the Companies Act, 1956, in the matter of financial arrangement between the applicant company on the one hand and the Industrial Development Bank of india, the Industrial Credit and Investment Corporation of India Ltd., the Industrial Finance Corporation of India, the Industrial Reconstruction Corporation of India Ltd. and the Bank of India on the other, so as to ensure the said financing agencies that the dispositions of the proper ties in the favour may not be avoided in future also for the direction that not payment of any moneys which may be effects by the company at any time between the presenting of winding up petitions which have been stayed and the date of the order of winding up, if at all made on one or more of such of the petitions and no disposition of any property or assets which may be effected by the company during the aforesaid period in favour of any person in the ordinary course of business may not be a voided in future in case the applicant -company is ordered to be wound up on the foresaid petition for winding up. The copies of this summons have been served upon the creditors who have filed the winding -up petition against the applicant -company and have also been published in two news papers, namely , 'Sandesh' dated June 23, 1984, and ' The Times of India' dated June 24, 1984, in pursuance of the direction issued by this court, vide its order dated June 21, 1984. Except one creditor, no other shareholder or creditor interested in opposing or supporting the directions as prayed for by the applicant -company, has filed appearance in this court in response to the aforesaid notice. M/s. Bharat Textile Traders of Ahmedabad has filed an affidavit of its partner, Shri Nalinbhai Babubhai Parikh, supporting the direction which have been sought for by the applicant company. As stated above, no other person has filed any appearance opposing the directions sought for. It should be recalled that the applicant -company has sought the amendment of the original direction prior to the order of this court directing the public notice as aforesaid.

(2.) WE have heard the learned Advocate General at length, who has pointed out the legal position in this behalf and cited a number of Indian as well as English decisions and the present trend in the matter of granting permissions to the companies to enter into transaction for disposition of the properties of the company pending disposal of winding -up petitions which might have been filed by the creditors.

(3.) BY our order dated July 3, 1984, we have, for reasons to be recorded and pronounced subsequently - which are now recorded here under - granted the directions as prayed for by the applicant company in exercise of our power under section 536 of the Companies Act, 1956, in the matter of financial arrangement between the applicant company on the one hand and the Industrial Development Bank of India, the Indian Credit and Investment Corporation of India Ltd., Industrial Finance Corporation of India, the Industrial Reconstruction Corporation of India Ltd. and the Bank of India on the other , so as to ensure the said institution that the dispositions of the properties in the favour by the applicant company as a security for the advance granted to it may not be avoided in future and no payment of monies made by the company at any time between the presentation of the winding -up petitions which have been stayed and they date of the order of winding -up, it at all made on one or more of such petitions, shall be avoided under the aforesaid section. the reason which weighed with us far granting the direction aforesaid are as under: At the outset, it should be recalled that the Division Bench of this court consisting of myself and bother, R.J. Shah,J., allowed O.J.Appeals Nos. 3 and 4 1984 setting aside for admission and usual advertisement as well as the order appointing provisional liquidator for S.L.Talti J) for the reasons which we have separately recorded in our order of June 19, 1984. A few relevant facts extracted from the said order of June 19, 1984, would indicate the background as to how the present company application was moved before us. The applicant company was incorporated as a public limited company by shares and is governed by the companies Act, 1956, having its registered office at Kalol, North Gujarat. The objects for which the company was incorporated are, interalia , for carrying on business of spinning and weaving or manufacturing and dealing in cotton and other fibrous substance and for dyeing and colouring the said fabrics and the sale of yarn, cloth or other manufactured products.