1994 (9) TMI 272 - HC - Companies Law

Issues Involved:
1. Rejection of the appellants' prayer for winding up the respondent-company.
2. Goodwill valuation of Rs. 1 crore.
3. Undisputed amount owed to appellants.
4. Respondent-company's insolvency and asset disposal.
5. Appointment of a private receiver and sale of assets.
6. Application under rule 9 of the Companies (Court) Rules by Syndicate Bank.
7. Application under section 531 of the Companies Act.

Issue-wise Detailed Analysis:

1. Rejection of the appellants' prayer for winding up the respondent-company:
The appellants' prayer for winding up the respondent-company was rejected by the learned single judge. The appellants contended that the judgment was against law and facts, particularly the finding that the goodwill amount of Rs. 1 crore was bogus. The appellants argued that the learned single judge did not consider the undisputed amount owed to them as creditors, including amounts owed to minors exceeding Rs. 40,000 plus interest.

2. Goodwill valuation of Rs. 1 crore:
The learned single judge held that the goodwill amount of Rs. 1 crore was bogus. The appellants claimed that this finding was against the basic concept of goodwill in law, which is a valuable asset. The judgment cited Supreme Court rulings to support the view that goodwill is an advantage acquired in business beyond mere capital value. However, the judge found that the goodwill in this case was imaginary and without basis, as the partnership existed for only fifteen days and could not have acquired significant goodwill.

3. Undisputed amount owed to appellants:
The appellants argued that the respondents owed them an undisputed amount over and above the goodwill. The learned single judge did not take note of the balance-sheet showing the amount credited to the appellants' accounts. The judge found that the debt claimed by the appellants was not admitted and was based on an imaginary figure of goodwill, thus not sufficient to wind up a running company.

4. Respondent-company's insolvency and asset disposal:
The appellants alleged that the company was insolvent and was selling assets to pay dues to Syndicate Bank. They claimed that the respondents were colluding to dispose of property and pocket proceeds to the appellants' detriment. The learned single judge found that the company was a running concern and that the appellants' conduct during the interim period was not relevant to the decision.

5. Appointment of a private receiver and sale of assets:
The respondent filed a suit and got a private receiver appointed to sell the property to pay Syndicate Bank. The receiver sold assets worth Rs. 30 lakhs. The appellants argued that the assets left would not fetch more than Rs. 38 lakhs, while their actual value was over Rs. 1 crore. The learned single judge did not place an embargo on the respondents, which the appellants claimed was prejudicial.

6. Application under rule 9 of the Companies (Court) Rules by Syndicate Bank:
Syndicate Bank, a secured creditor, moved an application under rule 9 of the Companies (Court) Rules to protect its interests. The learned single judge did not specifically address this application in the judgment.

7. Application under section 531 of the Companies Act:
An application under section 531 of the Companies Act and rule 9 of the Companies (Court) Rules was filed to appoint the official liquidator as a provisional receiver and restrain the respondents from disposing of assets. The learned single judge did not grant this application, finding that the appellants' claim was based on an imaginary goodwill figure and not an admitted debt.

Conclusion:
The learned single judge dismissed the winding up petition, finding that the appellants' claim was not based on an admitted debt and that the goodwill amount was imaginary. The court held that the petition was not bona fide and was an attempt to use coercive methods to extract money from the respondents. The appeal was dismissed with costs, and all other petitions were disposed of. Cheques for specific amounts were handed over to the appellants' counsel.

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