Rajesh Agrawal As Karta For Rajesh ... vs Premier Proteins Limited

Rajesh Agrawal As Karta For Rajesh Agrawal HUF S/o Late Shri Girdharilal Agrawal Member/Contributory of M/s Premier Proteins Ltd 7-A Shrinagar, annex, Indore 452018 (MP) ...Appellant

Versus

Premier Proteins Ltd. Regd Off: 45/47, Industrial Area No.1 AB Road, Dewas 455001 ...Respondent

Present:

For Appellant : Mr. Vijayesh Atre, Advocate.

For Respondent : None

JUDGEMENT

(27th FEBRUARY, 2023)

JUSTICE RAKESH KUMAR, MEMBER (JUDICIAL)

The present appeal has been preferred under Section 421 of the

Companies Act, 2013 against an order datged 12.08.2022 passed by

Company Appeal (AT) No. 184/2022 2

the National Company Law Tribunal, Indore Bench (hereinafter

referred to as NCLT). By the said order the learned NCLT has rejected

the TP No.224/2019 (CP No.63/2019) which was filed under Section

271 (e) and 272(1)(b) of the Companies Act, 2013.

2. Before proceeding it is necessary to incorporate certain facts

which has been taken from the Memo of Appeal itself. The appellant

has claimed to be promoter of Respondent, Premier Proteins Ltd,

(hereinafter referred as the Company).

3. The company was incorporated at Gwalior in the year 1986

under Companies Act, 1956 and subsequently its shares were issued

to public and it was listed on the Bombay Stock Exchange. The main

object of the company as per Memorandum of Association of the

Company succinctly was as follows:

"1. To acquire, promote, establish and carry on business of

manufacturers, importers, exporters, traders, dealers and

processors of high protein foods, Soyaflour, Soyamilk,

Textured proteins, concentrates, protein-isolates, lecithin

Glycerne, Emulsiflers, Oils, De oiled cakes, Refind Oil,

Hydrogenated Oils (Vanaspati) Margarine, Peanut Butter,

Company Appeal (AT) No. 184/2022 3

Peanut Milk, Refind Oil form or out of cottonseeds, castor,

linseeds, sunflower, soyabean ricebran, groundnut and

other types of Edible and Non-Edible essential and non

essential, oil-seed and vegetable seeds of all kinds by any

type of processing viz Ordinary crushing Solvent

Extraction, Chemical or any other process and to utilize the

oils and cakes and proteins to be produced therefrom.

2. To carry on the business of manufacture and processing

of nutrition foods, cattle-feeds manure, fatty acids soaps

perfumes, chemicals and other products in which such oils

seeds, oils, oil cakes, and protein are utilized and of

making preparing and processing of formulation and by-

products of oilseeds oils, proteins, from the products

aforesaid.

3. To act as dealers, whole sellers, retailers, stockists,

commission agents, representatives, selling agents,

purchasing agents, distributers and broker, exporter,

importers, manufacturers, cultivator farmers, processors,

refines, of soyabean, groundnut, sesame seed, all other oil

Company Appeal (AT) No. 184/2022 4

seeds edible and non-edible oil, Vanaspati oil cakes,

proteins and protein foods, substances or residue or by-

products of all goods aforesaid."

4. As on 31st March, 2019 the share capital of the Company was

9,93,44.485. It is the case of the appellant that the company was

declared as sick company by order dated 21.12.2005 by Board of

Industrial and Financial Reconstruction (BIFR). Finally in the month

of August, 2016 the Bombay Stock Exchange delisted the company

under the Securities Exchange Board of India (Delisting of Equity

Shares) Regulation 2009. It has been further claimed that the

turnover of the company during the financial year 2017-18 from the

business operation had come to only 3,72,583 and the total

accumulated accounted loss was amounted to Rs.24,14,94,040/-.

Since there was no possibility of the revival of the company the

appellant being promoter of the company namely Premier Proteins

Ltd filed an application under Section 271(e) and 272(1)(b) of the

Companies Act, 2013. However, it was submitted by the learned

counsel for the appellant that the learned NCLT in mechanical

manner has rejected the same. Mr. Vijayesh Atre, learned counsel

Company Appeal (AT) No. 184/2022 5

for the appellant has drawn out attention to balance sheet of the

company as on 31st March, 2019 to show that short term borrowing

liabilities of the company was in several crores, however, the assets

were about much lesser. He has also drawn our attention to order

dated 30.09.2015 passed by BIFR, Branch Office III in case No.449

of 2002. He highlighted that company was initially declared as sick

industries/company and finally in the year 2016 it was delisted by

the Bombay Stock Exchange and in such situation since there was

no possibility of revival of the company the applicant being promoter

filed the petition which was not required to be rejected by the NCLT.

He submits that the word used "may" in Section 273(2) of the

Companies Act, 2013 may not be inferred as "shall" and as such the

Learned NCLT while dismissing the application was required to

record just and equitable reason for dismissing the same. He further

submits that there may be alternative remedy available to the

appellant but fact remains that option was available to appellant to

avail remedy which he opted in the present appeal. On this very point

he has placed reliance on a judgement of Hon'ble Supreme Court

reported in (1992) 4 SCC 196 Bihar State Cooperative Marketing

Union Ltd Vs Uma Shankar Sharan and other. Learned counsel for

Company Appeal (AT) No. 184/2022 6

the appellant has specifically drawn our attention to para 6 of the

judgement and submits that it was choice of the applicant to prefer

remedy under Section 271 and 272 of the Companies Act, 2013 and

in any event on the ground of other alternative remedy there was no

reason to dismiss the application.

5. On the aforesaid ground the order impugned has been assailed

by the appellant. Before proceeding to record finding it is appropriate

to note that it is the case of the appellant that Respondent company

was declared as 'sick' company under the provisions of SICA. It is

also not in dispute that long back in the year 2005 itself the

respondent company was declared as sick company. The company

when was declared sick at the relevant time the Companies Act, 1956

was operative (hereinafter referred to as Old Act). Under the Old Act

there was specific provision for winding up of a sick

company/industry under Section 424(G). However, to the reasons

best known to the appellant no such step was taken. The appellant

after lapse of several years from the date when company/industry

was declared sick to the reasons best known to it claiming to be

contributory under Section 272(1)(b) of the Companies Act, 2013

Company Appeal (AT) No. 184/2022 7

(hereinafter referred to as New Act) preferred application for winding

up of company. The said petition was filed under Section 271 (e) of

the New Act. However, learned NCLT in view of the provisions

contained in sub-section (2) of Section 273 of the New Act considering

the fact that the appellant was having other remedy that too under

IBC 2016 did not interfere with the matter and rejected the

application as disposed off. It would be profitable to incorporate

Section 271, 272(1) and 273.

"271. Circumstances in which company may be

wound up by Tribunal.-- A company may, on a petition

under section 272, be wound up by the Tribunal,--

(a) if the company has, by special resolution, resolved that

the company be wound up by the Tribunal:

(b) if the company has acted against the interests of the

sovereignty and integrity of India, the security of the State,

friendly relations with foreign States, public order, decency

or morality;

Company Appeal (AT) No. 184/2022 8

(c) if on an application made by the Registrar or any other

person authorised by the Central Government by

notification under this Act, the Tribunal is of the opinion

that the affairs of the company have been conducted in a

fraudulent manner or the company was formed for

fraudulent and unlawful purpose or the persons concerned

in the formation or management of its affairs have been

guilty of fraud, misfeasance or misconduct in connection

therewith and that it is proper that the company be wound

up;

(d) if the company has made a default in filing with the

Registrar its financial statements or annual returns for

immediately preceding five consecutive financial years; or

(e) if the Tribunal is of the opinion that it is just and

equitable that the company should be wound up.

272. Petition for winding up.-- (1) Subject to the

provisions of this section, a petition to the Tribunal for the

winding up of a company shall be presented by--

Company Appeal (AT) No. 184/2022 9

(a) the company;

(b) any contributory or contributories;

(c) all or any of the persons specified in clauses (a) and (b)

(d) the Registrar;

(e) any person authorised by the Central Government in

that behalf; or

(f) in a case falling under clause (b) of section 271, by the

Central Government or a State Government.

(2) A contributory shall be entitled to present a petition for

the winding up of a company, notwithstanding that he may

be the holder of fully paid-up shares, or that the company

may have no assets at all or may have no surplus assets

left for distribution among the shareholders after the

satisfaction of its liabilities, and shares in respect of which

he is a contributory or some of them were either originally

allotted to him or have been held by him, and registered in

his name, for at least six months during the eighteen

months immediately before the commencement of the

Company Appeal (AT) No. 184/2022 10

winding up or have devolved on him through the death of

a former holder.

(3) The Registrar shall be entitled to present a petition for

winding up under section 271 except on the grounds

specified in clause (a) of that section.

Provided that the Registrar shall obtain the previous

sanction of the Central Government to the presentation of

a petition;

Provided further that the Central Government shall not

accord its sanction unless the company has been given a

reasonable opportunity of making representations.

(4) A petition presented by the company for winding up

before the Tribunal shall be admitted only if accompanied

by a statement of affairs in such form and in such manner

as may be prescribed. 166 (5) A copy of the petition made

under this section shall also be filed with the Registrar and

the Registrar shall, without prejudice to any other

Company Appeal (AT) No. 184/2022 11

provisions, submit his views to the Tribunal within sixty

days of receipt of such petition.

273. Powers of Tribunal.-- (1) The Tribunal may, on

receipt of a petition for winding up under section 272 pass

any of the following orders, namely:--

(a) dismiss it, with or without costs;

(b) make any interim order as it thinks fit.

(c) appoint a provisional liquidator of the company till the

making of a winding up order;

(d) make an order for the winding up of the company with

or without costs; or

(e) any other order as it thinks fit:

Provided that an order under this sub-section shall be

made within ninety days from the date of presentation of

the petition:

Provided further that before appointing a provisional

liquidator under clause (c), the Tribunal shall give notice to

Company Appeal (AT) No. 184/2022 12

the company and afford a reasonable opportunity to it to

make its representations, if any, unless for special reasons

to be recorded in writing, the Tribunal thinks fit to dispense

with such notice:

Provided also that the Tribunal shall not refuse to make a

winding up order on the ground only that the assets of the

company have been mortgaged for an amount equal to or

in excess of those assets, or that the company has no

assets.

(2) Where a petition is presented on the ground that it is

just and equitable that the company should be wound up,

the Tribunal may refuse to make an order of winding up, if

it is of the opinion that some other remedy is available to

the petitioners and that they are acting unreasonably in

seeking to have the company wound up instead of

pursuing the other remedy."

6. Admittedly the appellant before the NCLT had claimed to be

contributory under Section 272(1) (b) and invoked the jurisdiction of

the NCLT under Section 271(e). On examination of Section 271(e) it

Company Appeal (AT) No. 184/2022 13

is evident that under this provision the Tribunal was having

discretionary jurisdiction. Had the Tribunal was of the opinion that

it was just and equitable to pass order of winding up of the company,

this jurisdiction would have been exercised by the Tribunal. This

power is not similar to the power given to the Tribunal under Section

271(a)(b)(c) and (d). Similarly sub-section (2) of Section 273 clearly

indicates that if such petition is filed i.e. petition filed under Section

271(e) read with Section 272 (1)(b) of the New Act, onus is on the

applicant to satisfy that there is just and equitable ground for

winding up of a company. Meaning thereby that if an applicant is

not in a position to satisfy on the point of just and equitable ground,

the tribunal may refuse to make an order for winding up. Moreover

in a situation the Tribunal is of the opinion that some other remedy

is available to the applicant and applicant are acting unreasonably

in seeking the company to be wound up instead of pursuing other

remedy, the Tribunal may refuse to exercise its discretion in favour

of such applicant. On perusal of the impugned order it is difficult to

infer that the appellant herein was in a position to satisfy the Learned

Tribunal that there was just and equitable ground for passing

winding up order. Moreover, the appellant may not deny that other

Company Appeal (AT) No. 184/2022 14

remedies were also available to the appellant. Besides this on

examination of the order impugned it is evident that one of the

secured creditor namely Cargil India Pvt Ltd had filed an objection

petition against the application filed by the appellants. However, a

submission was made by learned counsel for the appellant before the

NCLT that during proceeding said creditor had raised no objection.

In normal course it was mandatorily required on the part of the

appellant to implead such creditor/objector as party in the present

appeal. However, to the reasons best known to the appellant the said

objector/creditor was not impleaded as party in the present appeal.

We are of the opinion that besides lack of merit in the appeal the

appeal also deserves to be rejected on the ground of non-joinder of

parties. The order further reflects that the applicant before the NCLT

had also filed a petition i.e. CA No.29/2021 dated 30.11.2021 seeking

withdrawal of the main application i.e. CP No.224/2019, however,

subsequently the said application was withdrawn.

7. So far as judgement relied upon by the learned counsel for the

appellant on Bihar State Cooperative Marketing Ltd case (Supra) is

concerned in view of the facts and circumstances as noticed by the

Company Appeal (AT) No. 184/2022 15

Hon'ble Supreme Court we do not find that the appellant can get any

assistance from the said judgement. The present case is entirely on

different footings.

8. We are of opinion that Learned NCLT has committed no error in

passing the impugned order. However, we may clarify that the

appellant only by rejection of the present appeal may not be

prevented to avail other remedies in accordance with law.

9. With the above observations/directions the appeal stands

dismissed.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical) Bm

Company Appeal (AT) No. 184/2022