CENTRAL BANK OF INDIA Vs. ROOFIT INDUSTRIES LIMITED

JUDGEMENT

(1.) This application has been moved by the Central bank of India with a prayer that the Court vacate an ex parte order dated 15th October, 2003 passed on an application for the grant of a stay under section 391 (6) of the Companies Act, 1956. On 15th October, 2003 on an application made by Roofit Industries Limited, the respondent herein stating that the company was proposing a scheme of compromise/arrangement with its secured and unsecured creditors, an order was passed in terms of minutes. The minutes which were tendered before the Court, inter alia, provided that six months thereafter the company would hold a meeting of the secured and unsecured creditors for considering the scheme of compromise or arrangement. On the same date an order was prayed in terms of prayer Clause (a) and (c) of Company Application (Ldg.) No. 880 of 2003 which was in the following terms: (a) That till the sanction of the scheme/arrangement this Hon'ble Court be pleased to pass an order staying, all legal proceedings including proceedings under the Securitisation of Financial Assets and Enforcement of security Interest, the commencement or continuation of suits, (including the suits before the Debt Recovery Tribunal or the Consumer Courts, arbitration Suits,) and/or any interim proceedings therein, Arbitration proceedings winding up proceedings, criminal proceedings under section 138 of the Negotiable Instruments Act, and other criminal cases relating to the non-payment of the dues to the various creditors and classes of creditors, (and/or actions taken by the Economic Offence wing of the Criminal Branch of Greater Bombay Police Department) : (c) That this Hon'ble Court be pleased to direct the Economic Offences Wing of the Criminal Branch of Greater Bombay Police Department to invest in a fixed deposit with any Nationalised Bank the monies that have been paid and the monies that will be paid to them from time to time by the said company. (Bracketed portion excluded)

(2.) The application was moved exporte without notice either to the secured creditors or to the bankers of the Company. Rule 71 of the Companies Court rules, 1989 expressly postulates that though an application under section 391 (6) for the stay of the commencement or continuation of proceedings against the company may be moved by Judge's summons exparte, notice of the application shall be given to the petitioner where a petition for winding up of the company is pending. In the present case, the admitted position is that such a petition was, in fact pending before this Court. Despite this no notice was given.

(3.) The order dated 15th October, 2003 records that Counsel appearing on behalf of the applicant (the respondent herein) stated that the company was depositing Rs. 20 lakh every month towards liability with regard to "various creditors" with the Economic Offences Wing of the Crime Branch of Greater bombay Police department and the Company would continue to do so. It was on the basis of the aforesaid statement that an order came to be passed in terms of prayer Clauses (a) and (c) of the company application. The grant of relief in terms of prayer Clause (c) is not in contest because it requires investment of the monies deposited with the Police department in a nationalised bank. However, as a result of the relief sought and granted in terms of prayer clause (a) all proceedings under the Securitisation Act, those before the Debt recovery Tribunal under the Recovery of Debts Due to Banks and Financial institutions Act, before the Consumer Courts, arbitration proceedings, winding up proceedings and proceedings under section 138 of the Negotiable Instruments act all over the country have been stayed.