SARARE AUTOMOBILES LTD Vs. STATE OF ALLAHABAD

JUDGEMENT

(1.) This company application has been registered on receipt of an opinion of Board for Industrial and Financial Reconstruction under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 recorded on 13-11-2001 to wind up the company. The opinion was forwarded on 29-11-2001 and was received by the Court on 13-12-2001.

(2.) On 21-1-2002, the notices were ordered to be issued to the respondent-company and Bank of Baroda to show cause as to why the company may not be wound up under Section 20(1) of the Act, read with Section 443 of the Companies Act, 1956 ('the Act') fixing 18-2-2002. The office has reported that the notices were sent on 28-1-2002 but neither the acknowledgement due nor undelivered cover has been returned back. The notice on the company is deemed to be sufficient under the rules of the Court.

(3.) The company was declared to be a sick company by the Board on 26-4-2000. Bank of Baroda was appointed as the operating agency. On 15-11-2000, the Board found that no revival scheme with fully tied up means of finance was submitted by the company/promoters despite lapse of considerable time. The operating agency was directed to issue advertisement of change of management but no response has been received. The company submitted a compromise offer of Rs. 70 lakhs to Bank of Baroda without any revival scheme. In the circumstances, the Board formed a prima facie opinion to wind up the company and directed for issue of a show-cause notice calling for objections/suggestions from interested parties in this regard. On the next date fixed, the Bank of Baroda informed that there has been no progress and there is no scope of revival of the company and, thus, they have no objection to the wind up of the company. The managing director of the company informed that the factory is lying closed for four years and that all efforts to finalise the settlement of agreement with Bank of Baroda had failed. He further informed that there is no hope for revival of the company and that the company is showing gradual increase in accumulated losses of the company. In the circumstances, the Board formed its opinion that it would be just and equitable in public interest if the company is to be wound up. The Bank of Baroda was granted time to inform whether they would be in a position to take up the sale of the company's assets in terms of Section 20(4). It appears that the bank did not inform their position in this regard.