SANJIB BANERJEE,J. - (1.) THE wheel appears to have turned full circle for this industrial giant of a company whose name was once synonymous with automobile tyres. Dunlop India Limited today stands on the brink, its two manufacturing facilities not having functioned for years and its workers and employees imploring for their dues to come out of the assets of the company upon the company being wound up. Several other creditors have joined in the fray, particularly upon the facts pertaining to some of the company 's valuable properties coming to light in an order of this court of March 26, 2012. Some of the creditors of the company who had bayed for blood leading up to the official liquidator being appointed as the provisional liquidator of the company by the order of March 26, 2012 are conspicuous either in their absence or in their silence; the two petitioning creditors whose petitions have been advertised have also taken a backseat, but that matters little since the matter has assumed a representative character and even if the original petitioning creditor abandons the claim or the proceedings any other creditor supporting the order of winding-up can be given carriage of the proceedings. The mundane details relating to the several matters that appear in the list need first be recorded before the more meaningful assessment of the only issue as to whether the company should be wound up or not is taken up. CP No. 233 of 2008 appears to be the first of the several creditors ' winding-up petitions filed against this company in the present lot of matters. Such petition was lodged on June 30, 2008. CP No. 295 of 2008 is the second of the petitions in the current crop filed against the company by a creditor. The petition has not been admitted; but the company says the dues of the creditor have been settled. The relevant creditor is not represented. CP No. 297 of 2008 is another, yet unadmitted petition. The company again says that the claim of the creditor has been settled, but the creditor is not represented. CP No. 304 of 2008 has not yet been admitted; the creditor is represented and the company has not settled the claim. CP No. 305 of 2008 is a creditor 's petition where, according to the company, the claim has been settled; but the creditor is not represented. The petitioning creditor in CP No. 437 of 2008 supports the prayer for winding up the company, like the petitioning creditor in CP No. 304 of 2008. The company submits that the claims of the petitioning creditors in CP No. 278 of 2009, CP No. 279 of 2009, CP No. 308 of 2009 and CP No. 159 of 2011 have been settled, but the creditors are not represented. The claims of the creditors in CP No. 13 of 2009, CP No. 438 of 2009 and CP No. 73 of 2010 have not been settled and these creditors support the winding up of the company. CP No. 159 of 2011 is the most recent of the creditors ' winding-up petitions filed against the company. It has been advertised but the company and the creditor say that the matter has been resolved and the creditor no longer seeks to proceed with the petition. In addition to the several petitions which have been taken up together, there are a number of applications in these matters which remain pending. CA No. 198 of 2012 is a creditor 's application seeking intervention in one of the petitions which has been advertised. CA No. 410 of 2009, CA No. 28 of 2011, CA No. 110 of 2011, CA No. 111 of 2011 and CA No. 114 of 2011 are applications by the company that have now become infructuous. These applications were filed when the company enjoyed the protection under the West Bengal Relief Undertakings (Special Provisions) Act, 1972. The company no longer enjoys the immunity under such statute. CA No. 832 of 2011 is also an infructuous application since the company has sought recall therein of the order of admission relating to CP No. 159 of 2011, but the petition has long been advertised. CA No. 852 of 2011 and CA No. 609 of 2012 are applications by supporting creditors which ought only to have been filed by way of affidavits. CA No. 378 of 2012 has been brought by the workers of the company, primarily those employed at its Sahaganj unit. The latest application, CA No. 765 of 2012, is by the company seeking modification of certain subsisting orders to enable the company to pay off the dues of those creditors of the company with whom the company has apparently chosen to settle.
(2.) UPON affidavit directions being issued in CP No. 233 of 2008 on September 11, 2008, the matter went into hibernation following the company having been notified as a relief undertaking within the meaning of the West Bengal Relief Undertakings (Special Provisions) Act, 1972. Nearly three years after CP No. 233 of 2008 was instituted and the company had managed to postpone the inevitable, courtesy the said Act of 1972, the company accepted that pay-up time had arrived and the parties filed terms of settlement in court on May 4, 2011. The order receiving the terms of settlement noticed a clause therein that upon there being default of payment of any two consecutive instalments or the last instalment, the petition would be advertised in such newspapers that the court may direct by an order at the relevant time. Within six months of the order receiving the terms of settlement, the company had defaulted in successive months in making payment and the petitioning creditor was back in court to mention the matter on November 8, 2011. The company chose not to be represented despite notice. The petition was directed to be advertised. A second creditor 's petition, CP No. 159 of 2011, was also advertised and came up before the company Judge at the post-advertisement stage on November 14, 2011. The company was represented and said that it no longer enjoyed the protection under either the Sick Industrial Companies (Special Provisions) Act, 1985 or the said Act of 1972. The order of November 14, 2011 noticed that the matter had assumed a representative character and the company was restrained from dealing with or disposing of or alienating or encumbering any of its assets without the previous leave of court. The order recorded the company 's admission that none of its industrial units was operational. The company, however, represented that it was making every endeavour to pay off its creditors, including its workers. All pending maters pertaining to the company were directed to appear on November 18, 2011. The entire lot of matters was next taken up on December 9, 2011 when it was recorded that two of the petitions, CP No. 233 of 2008 and CP No. 159 of 2011, had been advertised and the other petitioners also sought winding-up of the company. Several affidavits of supporting creditors were also received and more creditors sought time to file their affidavits in support of the prayer for winding-up. The order of December 9, 2011 recorded the company 's submission that the company had entered into tentative settlements with some creditors but payments had not been released to such creditors since at least one of the creditors ' petitions had been advertised. The court perceived that some settlements, and consequent payments, may have been made prior to any petition being advertised but subsequent to the filing of CP No. 233 of 2008 which went on later to be advertised. The court found, prima facie, that some payments made to some creditors ran the risk of later being assailed as fraudulent preference. The company admitted that it was indebted to the petitioner in CP No. 159 of 2011 in the sum of Rs.33.61 crore by way of principal and requested the court to permit the company to make payments in instalments to such petitioner since the other creditors had also to be paid. By the order of December 9, 2011 the court required the company to inform all its secured creditors that the matters would next be taken up on January 6, 2012. The order also observed that though the company court could not force a company to formulate a scheme to pay off its creditors, this company had to chalk out a comprehensive plan to deal with its creditors for the court to be convinced of both the company 's intentions and its ability to muster resources to pay its creditors. In almost goading the company to chart out a road map for payment by the company to its creditors to ward off its imminent liquidation in the face of several creditors clamouring for their dues, the court called upon the company to file a comprehensive affidavit to indicate the details of the company 's creditors and their dues; the source of the company 's funds to pay off such creditors; the value of the company 's assets, particularly the fixed assets; and, the details of the statutory dues of the company based on the demands made by the appropriate authorities.
(3.) ALL of the endeavour of the company court at the immediate postadvertisement stage was to afford the company time to tide over a period of crisis and to nudge the company to organise itself to be able to pay off its debts and remain afloat. At the same time, the court required details of the payments made by the company to its creditors after the institution of CP No. 233 of 2008 to be disclosed. It was a clear message to the company and those in control thereof that the court was willing to grant time for the company to arrange its financial affairs as long as the company conducted itself within the bounds of propriety and did not abuse the court 's generosity in grant of time to pay off a chosen few from whatever funds that were available or could be garnered by the company. But it was only so much that the company court could do; at the end of the day it was for the company to do what was necessary and not merely bank on the proven delay of the legal system to automatically gain time and rely on sheer passage of months or years to coerce the creditors to submit to a reduced payout. The company may even have mistaken the court 's indulgence afforded to it for lack of teeth and it is possible that the company may by now have acted in breach of the statement it volunteered in court on December 9, 2011 "to not make payment to any person other than its statutory creditors and employees without leave of court. " On the next appointed day when the several creditors ' petitions were taken up on January 6, 2012, the court 's perception as to the conduct of the company is reflected in the opening lines of the order made on such date: that on the basis of the affidavit filed on behalf of the company, there was substantial basis to the joint oral prayers made on behalf of the several creditors that the official liquidator should be appointed as provisional liquidator over all assets and properties of the company. The creditors had brandished a news article published in the Mumbai edition of the 'Times of India ' on December 16, 2011 entitled "Dunlop puts Worli property on the block. " And yet the court showed patience and indulgence in bowing to the cardinal principle that it would take no notice of a newspaper article unless there was material before it that substantiated the contents thereof. The order of January 6, 2012 reflected the court 's anguish that no details had been furnished by the company in accordance with the directions contained in the order of December 9, 2011. With considerable diffidence, the court blandly recorded the excuse proffered by the company that it required more time to scrutinise its books and papers at the Ambattur unit and that it had no access to the records lying at its Sahaganj factory. The court made no comment on the accounts that ought to have been available at the company 's seemingly functional registered office. The order only noted the creditors ' failing hope and their apprehension that the company was buying time for alienating its assets or seeking to perfect the alienation thereof. Several creditors alleged that valuable assets of the company had been hived off in favour of its subsidiaries and were in the process of being sold. The court said no more since such allegations were not on affidavit. The order directed that no payments other than those specifically permitted by the order of December 9, 2011 could be incurred by the company. It recorded the company 's assurance that none of the properties had been put up for sale or was being attempted to be sold. It afforded the company a further chance to furnish the details sought earlier by the order of December 9, 2011 and exhorted the company to "disclose the fullest details of all immovable properties owned or controlled by the company that may have been alienated after the initiation of CP No. 233 of 2008. " The court allowed the company several weeks to comply with its directions, adjourning the matters on a number of occasions till the creditors, at the end of their tether, pleaded with the court on March 16, 2012 to not afford the company any further time without indicating a peremptory date. The sentiment of the creditors is reflected in a short order of March 16, 2012 where the court expressed its disappointment at the repeated adjournments sought by the company and recorded its suspicion that the reason why the company did not wish the matter to be taken up would be evident from the series of orders passed on the creditors ' petitions from November 14, 2011. On March 16, 2012 advocates newly engaged by the company claimed not to have the full complement of the papers to appropriately assist the court. This excuse was put forth after a dramatic submission earlier in the proceedings by advocate on record of the company to be given leave to retire on moral grounds one week only to return the following week.;