KEN ELECTRICALS LIMITED Vs. RAM SWARUP ELECTRICALS LIMITED

JUDGEMENT

(1.) THIS Company Appeal has been filed against the order dated 18.4.03, by means of which the application for impleadment moved by U.P. Power Corporation Limited, Electricity Store Division, Kasturba Nagar Colony, Sigra, Varanasi has been rejected. The relevant facts for the purpose are that one application for impleadment by U.P. Power Corporation Limited, Electricity Transmission Division, Sitapur was moved in Company Petition No. 56 of 1999 and another application was moved by U.P. Power Corporation Limited, Electricity Store Division, Kasturba Nagar Colony, Sigra, Varanasi. Learned counsel for the parties say that so far the application moved by U.P. Power Corporation Limited, Electricity Transmission Division, Sitapur is concerned, it is not the subject matter of consideration in this Company Appeal. It appears that the present appellant M/s Ken Electricals Limited moved an application for winding up of one Company, namely, M/s Ram Swaroop Electrical Limited, in which an official liquidator i.e. provisional liquidator was appointed and during the pendency of winding up proceedings, before this Court, a writ petition was filed by U.P. Power Corporation Limited, namely, Writ Petition No. 1226 (MB) of 2003 with a prayer not to auction the transformers belonging to Power Corporation treating the same to be the asset/property of M/s Ram Swaroop Electrical Limited. THIS plea was raised as the U.P. Power Corporation Limited came forward with a case that these transformers belonged to Power Corporation and not to M/s Ram Swaroop Electrical Limited as they required repairs being defective, which were purchased from M/s Ram Swaroop Electrical Limited and, therefore, they were not the property of the Company, which was sought to be wound up. On 6.3.03 a Division Bench of this Court ordered that the said petition be treated as an application in Company Petition No. 12 of 2001. On 14.4.03 an application for stay was moved with a prayer to restrain the opposite parties from auctioning the transformers. The learned Company Judge had considered that there was no need to implead the U.P. Power Corporation Limited at that stage but at the same time directed that if the transformers did not belong to the Company, they cannot be the subject matter of sale, they not being the asset of the said Company. Under the circumstances, the Company Judge directed that since the details of the assets of the Company cannot be gone into by this Court, the same can be suitably dealt with by the Official Liquidator who for identifying and analyzing the claim of the Corporation will summon and take the help of the Directors of M/s Ram Swaroop Electrical Limited. The Company Judge, while rejecting the application for impleadment, ordered that until such time claims of the Corporation is decided by the Official Liquidator, the transformers lying in the Company shall not be auctioned and that the bids received by the Official Liquidator may be returned to the respective bidders. Sri Navneet Agarwal, who represents the Official Liquidator, says that in terms of the order passed by the Company Judge, the transformers have already been identified, which belong to U.P. Power Corporation and the identification report has also been submitted to the Company Judge, which he says relate to three Companies. Learned counsel for the appellant, Sri Vivek Raj Singh assails the aforesaid order on two grounds, namely, (i) if there was any claim of U.P. Power Corporation in respect of the transformers, they ought to have approached the Official Liquidator and should not have approached the Company Judge; and (ii) the Company Judge could not have stayed the auction proceedings of the transformers nor a direction could have been issued for return of the bid amount. In regard to the first plea, suffice would be to mention that U.P. Power Corporation though could have straightaway gone to the Official Liquidator and lodged a claim there but even if they filed the writ petition, which writ petition was disposed of/decided with a direction that the Corporation should approach the Company Judge and under the circumstances they moved the application for impleadment, it cannot be said that any procedural irregularity has been committed so as to upset the order passed by the learned Company Judge. So far the said argument of the learned counsel for the appellant is concerned, it misses the fact, that the property which does not belong to the Company under winding up, cannot be auctioned and if such auction has taken place, the bids have necessarily to be refunded as they cannot be finalised. The question that only the assets belonging to the Company can be auctioned and the assets which do not belong to the Company under winding up, cannot be auctioned, does not require any debate. The learned Company Judge took note of the fact that the Official Liquidator is seized with the matter who had prepared the inventory of the entire assets of the company and further published auction notice inviting the tenders for sale of the assets of the Company. The Company Judge, therefore, directed that the Official Liquidator shall first identify and analyze the claim of the Corporation with the help of the Directors of M/s Ram Swaroop Electrical Limited and of course, the Power Corporation and other authorities. It does not require any discussion that once the identity of the transformers is established, auction can be done. That being so, we do not find any merit in the Company Appeal, which is hereby dismissed. Before parting we would like to observe that during the course of hearing of appeal, it was brought to the notice of the Court that during the pendency of the Company Petition and after the orders were passed appointing the Provisional Liquidator, the Bankers had proceeded under the Securitisation & Reconstruction of Financial Assets & Enforcement of the Security Interest Act, 2002 and have auctioned the property, the official purchaser being M/s P.N. International. Sri Vinay Shankar, who is representing Allahabad Bank who is not a party, though application has been moved for impleadment on its behalf, says that there is also a decree of the Debts Recovery Tribunal with the Bank. The effect of the sale/auction made by the Bank, if at all can be looked into, can be looked into in the Company Petition and not in this appeal. It will also be open to the parties to arrive to an amicable settlement and place it before the Company Judge, as suggested by the parties' counsel. List this matter before the Company Judge on 21.5.09.