A.K.Banerji, J. - (1.) Indian Maize and Chemicals Limited ("respondent No. 2" in short), which was incorporated as a public limited company suffered huge losses, as a result of which it was declared as a "sick industrial company" under the provisions of the Sick Industrial Companies (Special Provisions) Act. The Board for Industrial and Financial Reconstruction (i.e., "the BIFR") explored various possibilities for its rehabilitation but the process having failed, ultimately recommended its winding up. The appeal filed against the recommendation of the BIFR dated February 26, 1997, was also dismissed, vide order dated August 8, 1997. The matter is placed for consideration before this court.
(2.) An application (A-9) has now been filed by the applicant, Bengani Food Products Private Limited of Calcutta, stating that they have entered into a lease agreement with respondent No. 2 and has prayed that the same may be approved by this court under Section 536(2) of the Companies Act, 1956, and appropriate directions as made in the prayer be issued. In the said application, the applicant has impleaded the official liquidator as respondent No. 1, Indian Maize and Chemicals Limited as respondent No, 2, the Karamchari Sangh as respondent No. 3, ICICI, IDBI, IFCI as respondents Nos. 4, 5 and 6, the Punjab National Bank, Central Bank of India as respondents Nos. 7 and 8, U. P. State Electricity Board as respondent No. 9 and Infrastructure Leasing and Finance Limited as respondent No. 10.
(3.) The official liquidator has filed a counter-affidavit in which it has been stated that the proposal given by the applicant may be beneficial and in the interest of the company and the same can be considered by this court. However, a condition can be imposed that the applicant will execute an undertaking and will not dispose of any of the assets of the company. Respondent No. 2 has also supported the proposal given by the applicant in the counter-affidavit filed by them. The proposal has, however, been opposed by respondent No. 4, who have stated in their counter-affidavit (A-18) that the said respondent was a secured creditor and under the terms and conditions of the agreement between the said creditor and respondent No. 2, the latter was under a legal/contractual obligation to obtain prior approval of the secured creditor before entering into any agreement or understanding with any third party. However, no such consent or approval has been taken by respondent No. 2 while entering into an agreement with the applicant. It has also been denied that the lease agreement was not in public interest. On the contrary, it was asserted that respondent No. 2 owes substantial dues to the said respondent as well as to respondent No. 9, which they have not paid and the proposal submitted by the applicant will not benefit the creditors in any manner. A counter-affidavit has been filed on behalf of respondent No. 9, in which it has been stated that respondent No. 2 owes the said respondent an amount of Rs. 516.31 lakhs and the electricity supply is lying disconnected since 1996, on account of non-payment of electricity dues and the same cannot be restored under the rules unless the entire outstanding dues are cleared and, therefore, there was no question of reconnection of electricity even if it was run by a third party unless the entire outstandings were cleared. Respondent No, 10 has filed an objection to the application in which it has been stated that the said respondent had leased out plant and machinery valued at Rs. 60 lakhs for a period of five years with a renewal option. Respondent No. 2 not only defaulted in making payment of the lease rentals to the said respondent but they have also defaulted in paying the financial institutions and banks. Consequently, the BIFR had recommended the winding up of the company after considering all the aspects of the matter and had concluded that it was not possible to rehabilitate respondent No. 2 on account of the huge losses and dues which remained to be paid. It has been further stated that even before the AAIFR a similar sort of proposal was given by the applicant-company but the Appellate Authority on a consideration of the matter concurred with the opinion of the BIFR. The total outstanding against respondent No. 2 was about Rs. 47 crores and the proposal given by the applicant was a collusive one to circumvent the winding up proceedings and to siphon off the assets. The total electricity dues was about Rs. 50 lakhs and the application of respondent No, 2 for restoration of the electricity connection was rejected by respondent No. 9 and, even the Hon'ble Supreme Court refused to stay the recovery instituted by respondent No. 9. Consequently, it was prayed that the application be rejected. The applicant has filed rejoinder affidavits to the aforesaid counter-affidavits filed by the respondents.;