1998 (6) TMI 467 - HC - Companies Law

Issues Involved:
1. Petition for winding up under sections 433, 434, and 439 of the Companies Act.
2. Financial transactions and liabilities between the petitioner and respondent.
3. Dishonouring of cheques and subsequent legal actions.
4. Admission of liability by the respondent and proposed repayment schedule.
5. Suspension of proceedings due to submission to BIFR under Sick Industrial Companies (Special Provisions) Act, 1985.
6. Court's discretion and equitable considerations in granting time for repayment.
7. Bona fides of the respondent's actions and intentions.
8. Admission of the winding-up petition.

Detailed Analysis:

1. Petition for Winding Up:
Bharti Telecom Limited filed a petition under sections 433, 434, and 439 of the Companies Act, seeking the winding up of Altos India Limited. The petition was based on the respondent-company's inability to pay its debts.

2. Financial Transactions and Liabilities:
The respondent-company, incorporated on September 25, 1982, initially as Altos India Pvt. Limited, later changed to Altos India Limited, approached the petitioner for an intercorporate deposit of Rs. 1 crore for 90 days at an interest rate of 27% per annum. Subsequently, the respondent requested the conversion of this deposit into a subscription for 10 lakh, 20% redeemable non-convertible preferential shares, leading to an additional Rs. 1 crore transaction. Thus, the respondent-company accepted financial benefits totaling Rs. 2 crores.

3. Dishonouring of Cheques and Legal Actions:
The respondent issued post-dated cheques for repayment, including one for Rs. 2 crores and another for Rs. 18,70,578, which were dishonoured upon presentation. Consequently, the petitioner initiated proceedings under section 138 of the Negotiable Instruments Act, 1881, and issued a notice under section 433 of the Companies Act, claiming Rs. 2,18,17,578. The respondent did not reply, leading to the filing of Company Petition No. 103 of 1997, which was later withdrawn with liberty to file afresh.

4. Admission of Liability and Proposed Repayment Schedule:
The respondent admitted its liability and proposed a repayment schedule in 16 quarterly instalments starting from July-September 1998 to April-June 2002, with simple interest at 12% on the diminishing principal. Despite this, the petitioner did not accept the proposal, leading to further adjournments.

5. Suspension of Proceedings Due to BIFR Submission:
The respondent-company submitted a reference to the Board for Industrial and Financial Reconstruction (BIFR) under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The court considered whether this submission required suspending the winding-up proceedings. The court referred to the Supreme Court's ruling in Real Value Appliances Ltd. v. Canara Bank, which clarified that mere submission and acknowledgment by BIFR do not automatically stay other legal proceedings.

6. Court's Discretion and Equitable Considerations:
The court showed indulgence by granting time for the respondent to demonstrate its bona fides and settle the debt amicably. Despite multiple adjournments, the respondent failed to make any payments or provide credible evidence of arranging funds, indicating a lack of bona fides.

7. Bona Fides of the Respondent's Actions:
The court found the respondent's actions lacking in bona fides, as they failed to adhere to their commitments and used delays to frustrate the proceedings. The respondent's conduct was seen as an abuse of the process of law, undermining the administration of justice.

8. Admission of the Winding-Up Petition:
Given the admitted liability, inability to pay debts, and lack of bona fides in the respondent's defence, the court directed the admission of the winding-up petition. The court ordered the publication of the notice of admission in specified newspapers and the Haryana Gazette, with a clear 14 days' notice before the next hearing date.

Conclusion:
The court rejected the respondent's contention to suspend proceedings based on the BIFR submission and admitted the winding-up petition, scheduling further proceedings and directions for July 24, 1998.

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