1990 (9) TMI 263 - HC - Companies Law

Summary

Issues Involved:
1. Petition for winding up of the respondent-company.
2. Indebtedness of the company to the petitioners.
3. Legitimacy of the petition and the locus standi of Pushpinder Singh.
4. Allegations of collusion and abuse of process.
5. Compromise between shareholders.

Issue-wise Detailed Analysis:

1. Petition for Winding Up of the Respondent-Company:
The petitioners, owning 169 out of 280 shares, sought the winding up of the respondent-company, claiming that the company was indebted to them. The petitioners argued that the company was unable to pay its debts, substantiated by a notice under Section 434 of the Companies Act, 1956, which was ignored by the company.

2. Indebtedness of the Company to the Petitioners:
The petitioners claimed the company owed them a total of Rs. 3,61,051.77, including interest at 18% per annum. They provided evidence such as audited balance sheets and letters exchanged between the petitioners and the company's managing director. Despite the company's poor financial condition, the petitioners delayed their demand for repayment until 1987, when they formally requested it.

3. Legitimacy of the Petition and the Locus Standi of Pushpinder Singh:
Pushpinder Singh, claiming to be the managing director, opposed the petition, arguing it was not supported by a duly sworn affidavit as required by Rule 21 of the Companies (Court) Rules, 1959. He alleged that the petitioners, particularly Hari Dhan Singh, had manipulated the company's accounts and created fictitious entries. The court examined whether Pushpinder Singh had the locus standi to oppose the petition and concluded that, as a shareholder, he had a right to be heard at the admission stage.

4. Allegations of Collusion and Abuse of Process:
Pushpinder Singh contended that the petition was collusive, aimed at regaining control of the company by Hari Dhan Singh and his family. He highlighted instances such as the alleged self-serving entries in the account books and the attempt by Hari Dhan Singh to get himself appointed as a receiver in a related suit. The court found these allegations credible, noting that the petitioners' actions appeared to be an abuse of the court's process.

5. Compromise Between Shareholders:
A compromise was reached on April 6, 1989, between the two sets of shareholders, where Hari Dhan Singh's group agreed to accept 50% of their claimed deposits in full and final settlement. This agreement cast doubt on the genuineness of the petitioners' loan claims, as it was unlikely they would settle for half if the debts were legitimate.

Conclusion:
The court dismissed the petition, finding it lacked bona fides and amounted to an attempt to misuse the court's process to exert pressure on the company. The petitioners were advised to seek relief through a civil court of competent jurisdiction. The court emphasized that Pushpinder Singh and other shareholders had the right to be heard at the admission stage, reinforcing the principle that the court has discretion to hear interested parties in winding up proceedings.