Allowed

Dynacraft Machine Company Ltd. v. the Official Liquidator of Dynacraft Machine Company Ltd. ( in Liqn.) and 7 Ors.

Bombay HC20 Aug 2013CA/274/2013

Case brief

AI extract

What is this about?

The High Court allowed an application to modify a previous winding-up order, permitting the company to set up operations at a new site in Nagpur and extending the restart deadline by 24 months. The modification was granted as the Mumbai properties were unsuitable due to zoning restrictions and there was no opposition from creditors or the workers' union.

What did the court decide?

Directions to modify order dated 3rd May 2012 allowing setup at new location and extending restart period by 24 months.

Dynacraft Machine Company Ltd. Vs the Official… — Company and Corporate | Bombay HC (2013)

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17CA274-13CP197-10.doc

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JP CHAVAN

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY APPLICATION NO. 274 OF 2013 IN

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COMPANY APLICATION NO. 197 OF 2010 IN

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COMPANY PETITION NO. 613 OF 1984

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Dynacraft Machine Company Limited ... Applicant In the matter between: Jessica Lukmani ... Original Applicant And: M/s Kay Kay Trading Company ... Petitioner

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Versus

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Official Liquidator, High Court, Bombay ... Respondents and others

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Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Cyrus Ardheshir i/by Wadia Gandhy & Co. for the applicant

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Mr. N. M. Ganguli for Respondent No.3

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Ms. Rupa Sutar, Assistant Official Liquidator present.

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CORAM : N. M. JAMDAR, J. DATE : 20 AUGUST 2013

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P.C.

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By this application the applicant prays for following reliefs:

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(a) That this Hon'ble Court be pleased to direct that the order dated 3rd May 2012 stands modified, only to the extant that the manufacturing unit of the Company shall be set up at the property bearing Gat No.408(part)admeasuring approximately

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17CA274-13CP197-10.doc

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one Acre situate at Village Padalideshmukh, Taluka Igatpuri, District Nashik;

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(b) That the time period for re-starting the operation of the company shall be extended for at-least 24 months from the date on which the company was originally required to restart its operation.

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On 11 March, 1993, an order was passed for winding up of the applicant company. On an application filed by one of the creditors of the company, the Official Liquidator was appointed as liquidator of the company. The company had two immovable properties, one at Majas Village, Jogeshwari (West) and another at Barfiwala Lane, Andheri (W), Mumbai.

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Company Application bearing No. 197 of 2010 was filed by the ex-director of the company seeking the recall of the order dated 11 March, 1993 winding up the company. Further directions were sought for permanent stay of the order. In the application, the company set out the details regarding properties of the company and the attempts made to revive the company. The particulars of the status of the creditors of the company was placed on record. The company set out its plan to revive the company as under.

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"In the meantime, Kotak Mahindra Bank Limited, an assignee of ICICI Bank Limited, filed an application before the Debt Recovery Tribunal. By an order dated 1st September, 2005, Respondent No. 8, IL&FS was appointed as a Receiver with respect to the properties of the Company. It may be mentioned here that by and under an Order dated 1st October, 2011, the Debt Recovery Tribunal, provided that after the directions provided in the aforesaid Order are complied with, IL&FS is discharged as the Receiver and

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17CA274-13CP197-10.doc

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was directed to hand over possession of the properties to the Official Liquidator, which process has been already completed."

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Company Application 197 of 2010 came up for hearing on 3 May 2012, when the applicant, official liquidator and representative of the workers union were present. The learned Company Judge (Coram: S. J. Kathawalla, J) enumerated the facts leading to the application and disposed of the application by following directions:

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"(1) That the Company Application be allowed in terms of prayer clauses (a) to (c) and (e) to (h) on the following conditions:

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A. the Official Liquidator, High Court, Bombay shall hold in trust for and on behalf of the Applicant/ Investors and the Company, the balance amount from and out of the Rs.25,90,44,384/- ( Rupees Twenty Five Crore Ninety Lac Forty Four Thousand Three Hundred Eighty Four Only) already deposited on 18th Feb, 2011 by the Applicant/Investors on behalf of the Company, until such time that all the claims in respect of the workers and/ or creditors of the Company are fully adjudicated/ settled and/or paid off;

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B. that on the Company filing its affidavit within 4 weeks of this Order becoming operative, the Company shall make all endeavors to restart its operations within 24 months from the date hereof in the manner set out in the Company Application;

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C. that the Official Liquidator shall hand over all the immovable and movable properties of the Company to the Applicant and/or the Company within a period of 4 (four) weeks from the date hereof [hereinafter referred to as ‘the Handover Date’]; D. that the Company shall be entitled to all its properties and claims as existing on that date and shall also be liable for all its obligations and liabilities as existing on the Handover Date;

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E. That the Official Liquidator has been and shall continue to

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17CA274-13CP197-10.doc

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discharge the workers dues in the following manner:

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(i) All workmen employed (i.e. whose names appear on the rolls) with the Company as on the date of closure, i.e. 11th March, 1993, have and shall receive all legal/ statutory dues including unpaid wages, gratuity, retrenchment and exgratia compensation (as applicable in accordance with the revival scheme), up to the date of closure; and

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(ii)Interest, as applicable, on their legal dues comprising of unpaid wages, gratuity and retrenchment compensation from 11th March, 1993 to 18th February, 2011.

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The aforesaid payments/benefits are being made to all workers of any dispensation, who were with the Company (i.e. whose names appear on the Rolls) as on the date of closure, i.e. 11th March, 1993.

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(iii) In the event of there being any workers who were not employed with the Company as on the date of closure, such workmen shall lodge their claims for all legal/statutory dues and the Official Liquidator shall adjudicate their status as on the date of winding up and pay only their legal and/or statutory pending dues; and

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(iv) In the event, a worker/s (of any dispensation) whose name does not appear on the Rolls of Company, provides sufficient documentary proof and establishes that his services were not terminated on the date of closure, i.e. 11th March, 1993, then such worker/s will also be considered eligible to receive the benefits as more particularly specified in clause (E)(i)&(ii) above.

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(2) The Official Liquidator has filed a Report dated 3rd May, 2012, wherein the Official Liquidator has inter alia stated that sufficient funds are lying with the Official Liquidator to discharge the debts of the Company as on date hereof. The aforesaid Report further states that the Applicant may be directed to file an undertaking to the effect that in the event that further funds are required to discharge the liabilities of the Company, the same shall be deposited with the Official Liquidator High Court Bombay within a period of 2 weeks form

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17CA274-13CP197-10.doc

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the date of receipt of such demand from the Official Liquidator. (3) In light of the aforesaid Report, the Applicant/Investors shall within a period of 2 weeks from the date hereof file the aforesaid undertaking with the Official Liquidator to bring in further funds to discharge the debts of the Company, if called upon to do so.

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(4) Cost of the Official Liquidator, High Court Bombay is quantified as Rs.1,00,000/[ Rupees One Lac only].

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(5) The Company Application is therefore disposed of in the aforesaid terms. Certified Copy of the Order is expedited.

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The present application is taken out by the company seeking to modify the order 3 May 2012 to the extent that the company may be permitted to set up its manufacturing units at Gat No.408 (part) admeasuring approximately one Acre situate at Village Padalideshmukh, Taluka Igatpuri, District Nashik and the period for re-starting be extended by 24 months. The applicant has stated in the application that both the properties of the company are situated in Mumbai not suitable to restart the company.

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As far as the property at Andheri is concerned, it is stated that the land is presently under reservation in the Plan for public school and recreation garden. It was also stated that the said land also falls within residential zone. It is stated that in view of the letter issued by the office of the Joint Director, Directorate of Industries dated 13 May 2013 refusing permission to the applicant to restart the factory at Andheri as well as Jogeshwari property, the applicant is unable to restart its function. It is stated in the application that memorandum of understanding dated 14 May 2013 has been arrived at to purchase the non agricultural land at village Igatpuri Nashik, where the company proposes to shift the unit. It is stated that though the company had already initiated the process of acquiring the the property at Igatpuri,

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17CA274-13CP197-10.doc

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the entire process will take some time. Hence extension of 24 months is sought.

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The official Liquidator, Workers Union and creditors have been joined as party respondent in this application. As far as creditors i.e. respondent nos 3 to 18 are concerned, the learned Senior counsel for the applicant states that the creditors have already been paid off and therefore, they will not be affected by the reliefs prayed for in the application. The learned counsel submits that in any case notice has been given of the application to the respondents 3 to 8. None appears for the creditors. The Workers' Union as well as the Official Liquidator have filed affidavit in reply.

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Perusal of the application indicates that the company is unable to restart its operation at the properties of the company situated in Mumbai. The letter issued by the Joint Director of Industries has been placed on record. The said letter dated 14 May, 2013 makes it clear that the operation of the company cannot be restarted in Jogeshwari as only those industries which are pollution free can be conducted in that area. The letter dated 14 May, 2013 specifically refuses the permission. It is stated that the said position will apply even to the plot at Andheri. The policy of the Government regarding industrial regulations has been placed on record. The fact that the operation of the Company cannot be restarted at the properties in Mumbai has been accepted by the official liquidator in its status report dated 9 July 2013. The workers union has also accepted the position that it it will not be possible for the company to restart its operation in Mumbai and that Workers' Union has placed its no objection on record for restarting the operation at a new location at Igatpuri. Thus, both, the Official Liquidator as well as

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17CA274-13CP197-10.doc

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Workers' Union have have given their no objection to restart the operation at Igatpuri. The Official Liquidator has also stated that the applicant has complied with the orders in respect of the payment of amount due to all creditors including the workers and has also filed undertaking to that effect that the company is required to discharge further liabilities and will deposit necessary funds. Thus there appears to be no opposition to the request made by the applicant for re-start of the operation of the company at Igatpuri.

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While disposing of the Company Application No. 197 of 2010, the Court has not given any specific directions that the operation must restarted at Mumbai alone. The order refers that the operation of the company should be restarted in the manner set out in the application. The company application also does not specify that the operations will be restarted at Mumbai alone. From the perusal of the order, the restarting its operation at Mumbai does not appear to have been the fundamental consideration for grant of the company application. Neither the workers Union nor the Official Liquidator has stated so.

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The workers' union however, has placed on record certain terms for its no objection. It is stated by the workers' union that the preference should be given to the ex-employees of the company and an amount of Rs.5000/- as shifting allowance be given. Further amount of Rs.1000/- per month if the employee is not able to secure an accommodation is also sought. The learned counsel for the applicant states that preference will be given to the ex-employees those who are not superannuated. As far as the demands raised by workers union is concerned the learned counsel for the applicant states that the applicant is agreeable for the same. This assurance is accepted. The

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17CA274-13CP197-10.doc

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learned counsel for the workmen is satisfied with this assurance.

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Considering the fact that the factory will have to be set up at a new place which was not in contemplation at the time when initial order was passed, the request made for 24 months' extension is reasonable.

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In view of the above facts and circumstances and that the Official Liquidator and the Workers' Union have no objection, the application is allowed in terms of prayer clauses (a) and (b).

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(N. M. JAMDAR, J.)

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Dynacraft Machine Company Ltd. v. the Official Liquidator of Dynacraft Machine Company Ltd. ( in Liqn.) and 7 Ors.

Case brief

What is this about?

What did the court decide?

Dynacraft Machine Company Ltd. v. the Official Liquidator of Dynacraft Machine Company Ltd. ( in Liqn.) and 7 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

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