1. This appeal under section 483 of the Companies Act, 1956, read with rule 9 of the Companies (Court) Rules, 1959, has been preferred against the order dated May 29, 1997, passed by the learned company judge dismissing the Company Application No. 182 of 1997, filed by the appellant for recall of the order of winding up passed on May 8, 1997.
2. Briefly stated, the facts of the case are that on the basis of an application filed by the appellant under the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, "the Act of 1985"), the Board for Industrial and Financial Reconstruction (hereinafter described as "the BIFR"), took cognizance and after examining the request made by the appellant it passed an order dated March 19, 1997, for winding up of the company and forwarded its opinion to the High Court vide communication dated April 22, 1997.
3. On receipt of this communication, the learned company judge passed the following order on May 8, 1997 :
"The Board for Industrial and Financial Reconstruction has recorded its opinion under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, recommending the winding up of D. H. Woodhead Ltd. and has forwarded copy of the orders dated March 19, 1997, for further necessary action according to law.
Thus in view of the opinion given by the Board the company is ordered to be wound up. The official liquidator attached to this court is appointed as its liquidator. He is directed to take over the books and assets of the company in his possession forthwith in terms of rule 114 of the Companies (Court) Rules, 1959. Notice of the orders of winding up be advertised in terms of rule 113 of the Rules in The Tribune (English edition) and Jan Satta as well as in the Haryana Government Gazette. The publication charges shall be borne by the official liquidator. Let a formal order be drawn in accordance with law."
4. In compliance with the order of the High Court, the official liquidator took appropriate steps for securing possession of the property of the company.
5. On May 20, 1997, the appellant-company approached the Appellate Authority for Industrial and Financial Reconstruction (hereinafter described as "AAIFR") for setting aside of the order dated March 19, 1997. Soon thereafter the appellant filed an application in this court for recall of the order dated May 8, 1997. That application came to be rejected by the learned company judge on the ground that on the date of passing of the order of winding up no appeal was pending against the order dated March 19, 1997. Aggrieved by this order the appellant filed the present appeal along with C.A. No. 30 of 1997, for stay of the orders dated May 8, 1997 and May 29, 1997.
6. On June 11, 1997, the Division Bench ordered issuance of notice of motion for June 13, 1997, and on June 13, 1997, the proceedings pursuant to the order dated May 29, 1997, were stayed. Simultaneously the official liquidator was directed to remove the lock on the residence of the managing director. On July 10, 1997, the Division Bench stayed the operation of the order passed by the learned single judge and directed that possession of the factory be handed over to the appellant-company. During the pendency of the company appeal, the AAIFR dismissed the appeal filed by the appellant under section 25 of the 1985 Act. A copy of this order dated December 17, 1997, passed by the AAIFR was placed on record along with C.M. No. 1 of 1998, filed by the official liquidator in which he prayed for dismissal of the appeal in view of the rejection of the company appeal filed by the company under the Act of 1985.
7. Arguments in this appeal were heard on March 6, 1998, and the order was reserved. Learned counsel for the appellant was fair enough to admit that the only ground on which the appellant-company had challenged the order dated May 29, 1997, passed by the learned company judge was that during the pendency of the appeal filed against the order dated March 19, 1997, passed by the BIFR, no proceedings for winding up could lie and that in view of the dismissal of the appeal filed by the company that ground is no longer available to it. He, however, pleaded for grant of further time to the appellant to arrange its affairs so that the company can be revived. Shri Mutneja submitted that efforts are being made by the directors of the company to involve fresh promoters. He submitted that if new promoters agree to pump money into the business of the appellant-company, it may not be necessary to wind it up. Shri Anand Chhibber countered the submission of Shri Mutneja by arguing that in terms of section 20(2) of the 1985 Act, the High Court is duty bound to order winding up of the sick industrial company on the basis of the opinion of the Board and to take necessary steps for winding up. Shri Chhibber submitted that the only provision under which the appellant-company, if it so chooses, can seek revival is by making application under section 391 read with section 394 of the Companies Act, 1956, but the order of 'winding up passed under section 20(2) cannot be invalidated.
8. We have thoughtfully considered the respective contentions and find force in Shri Chhibber's argument that with the rejection of the appeal filed by the appellant-company against the order dated March 19, 1997, passed by the BIFR, the challenge to order dated May 29, 1997, passed by the learned company judge cannot survive. Admittedly, the appellant company questioned the correctness of the said order by citing the factum of pendency of the appeal filed by it under section 25 of the 1985 Act, and the provisions of section 22 of the said Act. Since that appeal stands dismissed, the order of the learned company judge cannot be set aside. We also agree with Shri Chhibber that the provisions of section 20(2) are mandatory and the High Court is, on receipt of opinion of the Board, bound to order winding up of the company. Therefore, we do not find any reason to upset the order passed by the learned company judge. If at all the appellant finds some promoter who is prepared to invest money for the revival of the company then it can make appropriate application under section 391 read with section 394 of the Companies Act, 1956.
9. Subject to the observation made above, the appeal is dismissed.