KALYAN DUTTA, J. - (1.) This is an application filed by the Official Liquidator attached to this court on behalf of Shree Bijay cotton Mills Ltd. (In liquidation), Bijaynagar, under ss. 446(2)(d) and 460(4) of the companies Act, 1956, for obtaining the following directions:- (a) that this Court may be pleased to give necessary directions under s. 446(2)(d) r/w s. 460(4) of the Companies Act, 1956, in regard to the release of the fund presently lying in the account of the Company in liquidation to the non-applicant and the quantum of the fund to be so released; (b) that this Court may be pleased to give necessary direction under the aforementioned sections as to who would represent the income-tax and sales tax proceedings of the Company in liquidation; (c) that necessary directions may be given to the National Textile Corporation for arranging payment of the amount as envisaged in s. 6 of the Sick Textile Undertakings (Taking over of Management) Act, 1972. It was stated in the application that Shree Bijay Cottan Mills Ltd., Bijaynagar, hereinafter referred to as the Mills, in liquidation, was ordered to be wound up by an order of this court dated 23rd April, 1971. The Official Liquidator attached to this Court was appointed as the Liquidator of the Company. After the winding-up order, the President of India Promulgated on 31st Oct., 1971, an Ordinance known as Sick Textile Undertakings (Taking over of management) Ordinance No. 9 of 1972, which came into force on the same day of its promulgation. By virtue of the said Ordinance, management of the Mills specified as a sick textile was taken over by the Central Government and Shri P.C. Gupta was appointed as Custodian of the said Mills under the Ordinance. Shri P.C. Gupta, requested the Official Liquidator vide his telegram dated 5th Nov., 1972, to hand over possession of the said sick textile undertaking to him. Thereupon, an application was filed in this Court by the then Official Liquidator Shri B.L. Pannlgar, for issuing necessary directions in regard to the handing over of the possession of the properties and book of accounts etc. of the sick textile undertaking to Shri P.C. Gupta, Custodian. This Court, vide its order dated 31st Nov., 1972, issued the following direction :- "I have gone through the entire Ordinance. Looking to the provisions of that Ordinance and specially to the various sections and notifications issued under the said Ordinance, referred to above, the Official Liquidator attached to this Court is hereby directed to deliver the said Company or such part thereof as may be with him to Shri P.C. Gupta of Beawar, Custodian appointed by the Custodian General, as with the promulgation of the said Ordinance and inclusion of the name of the said Company in the list attached to Sch. 1 of that Ordinance, the management of the said Company now vests in the Central Government through the said Custodian appointed by the Custodian General. The Official Liquidator may report compliance of this order as early as possible". In compliance with the said order date 13th Nov., 1972, the properties, assets including all books of accounts and other documents and record of the Company in liquidation were handed over to Raj Gopalan, Officer on Special Duty, Shree Bijay Cotton Mills on 18th Nov., 1972 and 2nd to 5th Jan., 1973. The cash in bank and F.D.Rs. were not handed over to the custodian as their audit was not complete. Thereafter, on 21st Sept., 1974, the President of India promulgated other Ordinance known as The Sick Textile Undertaking (Nationalisation) Ordinance, 1974 (No. 12 of 1974). By virtue of this Ordinance, the right, title and interest of the owner in relation to every sick textile underrating stood transferred to and vested absolutely in the Central Government w.e.f. 1st April, 1974. Since then, the non-applicant is exercising the powers of general superintendent, direction, control and management of the affairs and business of Shree Bijay Cotton Mills, Bijaynagar, which was declared as a sick textile undertaking. Even after the promulgation of this Ordinance No. 12 of 1974, the cash balances of the Company in liquidation were not handed over by the Official Liquidator to the non-applicant in the absence of a clear direction as to how much cash belonged to the Company in liquidation and which part of it related to the sick textile undertaking taken over by the non-applicant. Besides it was not shown how the costs and expenses of liquidation such as payment of fees to the auditors, to the Central Government, to the counsel, to the Registrar of companies etc. would be met if the entire cash balances were handed over to the non-applicant. Some disputes were also raised by the non-applicant relating to representation of pre-liquidation taxation cases of the Company in liquidation. The stand of the Company in liquidation has all along been that the non-applicant is responsible for representing the cases before the authorities concerned, as all books of accounts, registers and other documents of the Company in liquidation have been handed over to the possession of the non-applicant. The Official Liquidator, therefore, referred the matter to the Regional Director, Company Law Board, Northern Region, Kanpur, for seeking instructions relating to hand over of cash balances and representation in taxation cases of the Company. The Regional Director, Company Law Board, instructed the Official Liquidator to obtain necessary instructions of this Court in this behalf. The Official Liquidator, therefore, has sought instructions from this Court by way of this application. It was further alleged in the application that the total realisations made by the applicant from the date on which the company was put into liquidation till the filing of this application are Rs. 69,539.19 P., the details of which are given below:- 1. Rent Collected from lease of the go-downs (from 20th April, 1971 to 22nd Nov, 1972). Rs. 36,048-86/- 2. Sale of assets by way of auction Rs. 24,723-00/- 3. Interest on F.D. Rs. Rs. 8,392-67 4. Misc. receipts Rs. 331-66 5. Advance account Rs. 43-00 Rs. 69,539-19 Against the aforesaid realisation of Rs. 69,539-19 a total sum of Rs. 10,172-78 was spent on various heads from the date of liquidation upto the filing of the application, leaving a balance of Rs. 59,366-41 in account of the Company in liquidation.
(2.) In support of the above application, the Official Liquidator has put in his own affidavit Notice of this application was given to non-applicant. H.P. Gupta appeared on behalf of the non-applicant and filed an objection to the admission of the application. The objections are: (1) that the application filed by the Official Liquidator is not maintainable because it does not relate to any matter concerning the winding-up of the Company or any process in the course of the winding-up of the Company; (2) that the application is mala fide and has been filed in this Court for unlawfully keeping the money which could long back been paid to the non-applicant; (3) that under the Sick Textile Under Undertaking (Taking over Management) Act, 1972, the entire assets of the company vested in the central Government from 31st Oct., 1972. and the Official Liquidator was duty-bound under sub-s. (6) to deliver the possession of the undertaking which includes cash balances, reserve funds to the non-applicant. As the Official Liquidator is negligent in this behalf, he is liable to be prosecuted under s. 15 of the said Act.; (4) that the pleas taken by the Official Liquidator from time to time are self-contradictory and there is no such provision in the aforesaid Act which could empower the Official Liquidator to retain the amount which has become payable to the non-applicant on 31st Oct., 1972.
(3.) In support of the aforesaid objections K.N. Kaul, General Manager, Shree Bijay Cotton Mills, Bijaynagar, has filed his affidavit.;