1998 (8) TMI 448 - HC - Companies Law

Issues Involved:

1. Liability of the respondent-companies to pay the claimed amounts.
2. Whether the respondent-companies are unable to pay their debts.
3. Whether the respondent-companies are liable to be wound up due to their indebtedness.

Detailed Analysis:

1. Liability of the Respondent-Companies to Pay the Claimed Amounts:

The petitioner, a public limited company, sought compulsory winding up of the respondent-companies under sections 433(e) and (f) and 439 of the Companies Act, 1956, due to unpaid bridge loans. The loans were sanctioned against the disbursement of capital incentives receivable under the Maharashtra Government's incentive scheme. The respondent-companies executed agreements and promissory notes for the loans, agreeing to pay interest and additional interest in case of default. Despite multiple demand notices, the respondent-companies failed to repay the loans, leading the petitioner to claim the amounts due.

The respondent-companies argued that the loans were intended as incentives and should be adjusted against the subsidies sanctioned by the Maharashtra Government, which were delayed. They claimed that the petitioner, as the implementing agency, was responsible for the delay and that the agreements were signed under duress. They also contended that the interest charges were arbitrary and unreasonable.

The court found that the respondent-companies had indeed received the bridge loans and had agreed to the terms of repayment, including interest. The petitioner had adjusted part of the subsidies received from the Maharashtra Government against the loan amounts, but substantial amounts remained unpaid. The court held that the respondent-companies were liable to pay the claimed amounts as per the agreements.

2. Whether the Respondent-Companies are Unable to Pay Their Debts:

The court examined whether the respondent-companies were unable to pay their debts, which is a ground for winding up under section 433(e) of the Companies Act. The petitioner provided evidence of multiple demand notices sent to the respondent-companies, which were either not replied to or contained requests for more time without denying the debt. The respondent-companies admitted their financial difficulties and the inability to repay the loans due to the delayed subsidies.

The court referred to the Supreme Court's observation in Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami, which stated that a winding-up petition is not a legitimate means of enforcing payment of a debt that is bona fide disputed. However, the court found no bona fide dispute regarding the debt in this case. The respondent-companies failed to provide substantial grounds for the dispute or evidence of financial capability to repay the debts.

3. Whether the Respondent-Companies are Liable to be Wound Up Due to Their Indebtedness:

The court considered whether it would be just and equitable to wind up the respondent-companies under section 433(f) of the Companies Act. The financial condition of the respondent-companies was found to be poor, with no material evidence suggesting a chance of resurrection. The court noted that the respondent-companies had neglected to pay the loan amounts despite statutory notices and had failed to pay interest as per the agreements.

The court concluded that the respondent-companies had become commercially insolvent and that winding up was in the interest of justice. The petitions were allowed, and the respondent-companies were directed to be wound up. The Official Liquidator was instructed to take charge of the companies' properties and effects, and the petitioner was ordered to advertise the notice in specified newspapers and serve a certified copy of the order on the Registrar of Companies.

Conclusion:

The court found the respondent-companies liable to pay the claimed amounts, unable to pay their debts, and commercially insolvent. Consequently, the respondent-companies were ordered to be wound up, with the Official Liquidator taking charge of their assets. The petitioner was directed to advertise the winding-up notice and serve the order on the Registrar of Companies.

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