- (1.) The appellant had advanced loans to the respondent Company between 23/2/1976 till 10/7/1986. On 10/7/1986 an application for winding up was filed against the respondent by an unsecured creditor. Subsequent to this on 1/10/1986 and 19/1/1988, the appellant sanctioned two further loans to the Company. In 1990 the Company as well as the appellant made an application under S. 536 (2) of the Companies Act, 1956 for allowing the disposition of the Company's properties "which may have to take place" as a consequence of the loans advanced by the appellant to the Company from 1976. The learned Single Judge allowed the application in part by granting leave to dispositions by the Company of its assets under Section 536 (2) in respect of those loans which were made subsequent to the commencement of the winding up of the respondent Company, namely, 10/7/1986, but refusing such leave in respect of the prior transactions.
(2.) The appeal preferred by the appellant was dismissed by the Division Bench by holding that leave under S. 536 (2) should normally be granted if the dispositions were necessary for the purpose of obtaining funds for the Company or otherwise in the interest of the Company which was being wound up. It was also held that permitting the Company to dispose of all its assets to a particular creditor would affect the claims of all creditors of the Company and that before any such order is passed publicity should be given to the application so that all creditors could file their objections to the application under S. 536 (2) , if they wanted to do. It was also found that the application under S. 536 (2) , was moved only on 30/11/1990. It was noted that no details have been given regarding those transactions which had taken place prior to 10/7/1986. This was sought to be rectified only subsequently by giving details of the earlier loans. The High Court held that what the appellant was in fact seeking to do was to convert itself from an unsecured into a secured creditor in respect of transactions which had taken place "15 to 17 years ago". The Court therefore refused to interfere with the order of the learned Single Judge. However, the Court went further and set aside the decision of the learned Single Judge insofar as it pertained to the post-10/7/1986 loans, although no appeal had been preferred therefrom.
(3.) It is not in dispute that during the pendency of the proceedings the Company was referred to the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) act. The efforts to revive the Company were unsuccessful both before BIFR as well as AAIFR. The Company was accordingly ultimately wound up. Its assets have been sold by the Official Liquidator and the sale proceeds are at present held by the Official Liquidator. These subsequent developments have been noted by this Court by orders passed in this appeal from time to time.;