UNION OF INDIA Vs. KRISHNA MILLS LTD

JUDGEMENT

(1.) THIS petition was filed before this court under Section 439(b) of the Companies Act, 1956, on September 15, 1990, with a prayer for winding up the non -petitioner company under Section 433(c) and 433(f) of the 1956 Act and with a further prayer for appointment of the official liquidator as liquidator of the company. Other ancillary prayers have also been made.

(2.) NOTICE of the petition was ordered to be issued on April 26, 1991. After service of notice none appeared on behalf of the non -petitioner. Therefore, on September 26, 1991, the court ordered advertisement of the petition. On December 20, 1991, it was recorded by the court that in Company Petition No. 6 of 1982, a stay order has been passed by the court in view of the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'the Act of 1985'). The court, therefore, directed that this petition be placed along with Petitions Nos. 6 of 1982 and 8 of 1983. On May 28, 1993, the court recorded that the matter is pending before the Board for Industrial and Financial Reconstruction/the appellate authority and no final order has been passed so far.

(3.) SHRI Kuhad, learned counsel for the non -petitioner, has argued that once the company has filed an application under the 1985 Act, further proceedings cannot be taken in the company petition filed by the petitioner. He submitted that once a company is declared to be a sick undertaking in terms of the provisions of the 1985 Act, jurisdiction of this court to proceed with the company petition ceases and, therefore, the company petition is liable to be declared as having abated. He placed reliance on the decision of the Gujarat High Court in Testeels Ltd. v. Radhaben Ranchhodlal Charitable Trust, AIR 1988 Guj 213 ; [1989] 66 Comp Cas 555, and also on the decision of the Supreme Court in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. [1993] 78 Comp Cas 803 ; [1993] 2 SCC 144. Mrs. Shukla, learned counsel for the petitioners, has on the other hand submitted that proceedings in the winding -up petition cannot be stayed or declared to have abated merely because a petition under the Act of 1985 has been filed. She argued that the provisions of Section 529A of the Act of 1956 have overriding effect qua the provisions of the 1985 Act and, therefore, even though the proceedings might be pending under the Act of 1985, the company petition cannot be treated as having abated.