SHYAM B. GHIA Vs. FUTURA POLYESTERS LTD.
LAWS(BOM)-2022-9-47
HIGH COURT OF BOMBAY
Decided on September 12,2022

Shyam B. Ghia Appellant
VERSUS
Futura Polyesters Ltd. Respondents




JUDGEMENT

N.J.JAMADAR,J. - (1.)The Applicant who is a former Managing Director of Futura Polyesters Limited, a company in liquidation - Respondent No.1, has preferred this Application under the provisions of Sec. 434 of the Companies Act, 2013 (the Act, 2013) for transfer of the Company Petition to the National Company Law Tribunal (NCLT) for being heard and decided in accordance with the provisions contained in Insolvency and Bankruptcy Code, 2016 (IBC), purportedly with a view to explore the revival of Respondent No.1 Company.
(2.)The background facts leading to this Application can be stated as under : 2.1 Futura Polyester Ltd. (Futura) - Respondent No.1 was incorporated under the provisions of Companies Act, 1956 (the Act, 1956). Futura was engaged in the business of manufacture of specialty fine chemicals and polyesters. Daewoo International Corporation Ltd. (Daewoo) - Respondent No.2 is a company incorporated under the law of South Korea. Daewoo is engaged in the business of supply of purified Terephthalic Acid. Korea Trade Insurance Corporation (KTIC) - Respondent No.3, is an insurance Company.
2.2 Futura had a manufacturing unit / factory at Survey No.38/2, 39/2 and 42 of Chinnasekkadu Village, Thiruvottiyur Taluka, Thiruvallur District, Manali, Chennai, Tamil Nadu, admeasuring 211 acres (the Company premises). To secure the financial assistance availed by Futura, the Company premises has been mortgaged to a Consortium of 8 Banks led by Bank of India.

2.3 During the course of its business, Futura entered into several contracts with Daewoo for purchase of purified terephthalic acid. Those contracts were insured by Daewoo with KTIC. An amount of USD 5,437,699.20 was due and payable by Futura to Daewoo towards the price of the goods. However, Futura could only pay USD 108,000 and an amount of USD 5,329,699.20 remained outstanding. Thus, Daewoo lodged a claim with KTIC. The latter paid the said amount of USD 5,329,699.20 to Daewoo on 13/10/2011 under the terms of the insurance policy.

Eventually, the debt owed by Futura to Daewoo came to be assigned to KTIC. 2.4 On 27/5/2013, Daewoo and KTIC jointly filed the Company Petition against Futura in this Court in respect of the aforesaid debt under the provisions of Ss. 434(e) and 439 of the Act, 1956. A spate of negotiations and settlements followed. Parties entered into settlement and consent terms. Part payments were made. Futura found it difficult to honour the settlements arrived at post negotiations, on multiple occasions. Ultimately, Futura was constrained to resort to sale of company premises by sub-dividing it into plots to pay the secured creditors and others.

2.5 On 11/10/2014 Futura gifted land admeasuring 56.49 acres under a Gift Deed to the Commissioner, Corporation of Chennai. Post approval, balance company premises was initially sub-divided into 176 plots of diverse sizes and, subsequently, into 356 plots in the month of August, 2018. 2.6 As indicated above, after a series of settlement and consent terms, resulting in disposal of the winding up petition, conditional upon the payment agreed to be made under the consent terms, and revival of the Petition, in the event of default in compliance with the condition, eventually by an order dated 22 nd June, 2018, after recapitulating various orders passed from time to time in the Company Petition, including several extensions granted to Futura, this Court was persuaded to allow the Company Petition and direct the winding up of Futura and appoint the Official Liquidator to liquidate Futura if the entire outstanding amount of the Respondent Nos.2 and 3 was not paid within four weeks thereof.

2.7 Futura preferred an Appeal, being Appeal No.81 of 2019, against the winding up order dtd. 22/6/2018. By an order dated 20 th July, 2018 the Appeal Bench directed the Official Liquidator not to take any further steps till the next date and the said order came to be continued from time to time.

2.8 On 1/4/2019 Consent Terms were filed before the Appeal Bench. On 2/4/2019 the Appeal Bench, on the basis of the Consent Terms (X), set aside the order dtd. 22/6/2018 so as to enable the banks (consortium of lenders) to issue NOC for the sale of the company premises and went on to dispose off the Appeal in accordance with the Consent Terms (X).

2.9 Under the Consent Terms, the first installment of USD 50,000 was to be paid on or before 31/5/2019. Futura could pay the first installment of USD 50,000 to KTIC - Respondent No.3 on 22/7/2019. Futura could not pay the balance five installments in accordance with the schedule provided in the consent terms. Under Clause 9 of the consent terms, the parties had agreed that in the event of default or any deviation from the payment as per schedule, the order dated 22 nd June, 2018 would stand revived and the Official Liquidator appointed. It was further provided that the Advocate for the Respondents shall inform to the Official Liquidator that the Appellant Company (Futura) had committed default and, thereupon, the Official Liquidator immediately take charge of the records as well as movable and immovable assets of Futura.

2.10 Eventually, on account of the default on the part of Futura, on 7 th September, 2020, a Notification was issued by the Company Registrar intimating the Official Liquidator about the order dated 22 nd June, 2018 winding up Futura. Thereupon, the Official Liquidator entered into liquidation. In the process, on 14 th October, 2020, the Official Liquidator took symbolic possession of the office premises of Futura.

2.11 In the intervening period, especially in between 1 st April, 2019 to 30/9/2020 the Applicant asserts, Futura entered into bonafide transactions of sale of the plots. It is averred, 80% of the proceeds received from the sale of plots were deposited in the escrow account of the consortium of the banks and the balance was utilized towards payment of other creditors, workmen, statutory dues and to meet day to day expenses of Futura.

2.12 Futura filed Interim Application (L) No.5697 of 2020 seeking extension of the time stipulated in the consent terms (X), recorded by the Appeal Bench on 2 nd April, 2019, and, in the interregnum, sought stay to any further action in liquidation. By an order dtd. 5/11/2020, the Appeal Bench rejected the ad-interim relief and directed the ex-directors of Futura to (i) handover physical possession of the office premises and records of the Appellant Company to the Official Liquidator and (ii) file an additional affidavit explaining how the money realised from the sales have been expended and whether the leave of the Company court or the Official Liquidator was sought.

2.13 On 8/12/2020 the Appeal Bench directed the consortium to maintain status quo in respect of the escrow account of Futura. The Applicant and other ex-directors were directed to maintain status quo in respect of the account of Futura.

2.14 On 20/2/2021, the Official Liquidator filed a complaint with Central Bureau of Investigation (CBI), pursuant to which an FIR dated 20 th February, 2021 came to be registered against the Applicant and other ex-directors of Futura.

(3.)In the backdrop of the aforesaid developments, the Applicant has taken out this Application seeking transfer of the Company Petition to NCLT with the assertion that though the Official Liquidator has taken certain steps, like, taking over symbolic possession of the office of Futura on 14 th October, 2020, followed by physical possession on 20/11/2020, taking over the records of Futura, initiating action for disclosure against the ex-directors, and lodged a complaint against the ex-directors with CBI, resulting in registration of FIR, none of the aforesaid steps tantamount to irreversible action in winding up.


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