2001 (12) TMI 818 - HC - Companies Law

Issues Involved:
1. Application for winding up under sections 433, 434, and 439 of the Companies Act, 1956.
2. Non-allotment of shares despite payment.
3. Alleged unauthorized account and fraudulent withdrawal.
4. Part payment and settlement claims.
5. Statutory notice and refusal of payment.
6. Affidavit-in-opposition by the company.
7. Commercial insolvency of the company.
8. Limitation period for filing the claim.
9. Secured creditor's opposition and commercial insolvency.

Issue-wise Detailed Analysis:

1. Application for Winding Up:
The petitioners filed an application under sections 433, 434, and 439 of the Companies Act, 1956, seeking the winding up of Eastern Mining and Allied Industries Limited on the grounds that the company was unable to pay its debts.

2. Non-allotment of Shares:
The petitioners claimed they applied for "rights issues" in 1993, depositing Rs. 4,87,200, but the company did not allot the shares. Despite multiple communications and visits, the shares were not allotted, and only a partial settlement of Rs. 1,90,400 was made in 1996.

3. Unauthorized Account and Fraudulent Withdrawal:
The company, in its affidavit-in-opposition, stated that the payments were made to an unauthorized current account No. 63, opened fraudulently by sub-brokers and bank officials. The company claimed it did not receive the amounts deposited in this account, which was a subject of a pending civil suit in the Bombay High Court.

4. Part Payment and Settlement Claims:
The petitioners argued that the company's officers had assured full settlement within two months after making a part payment of Rs. 1,90,400. However, the balance amount was not refunded, leading to the filing of the winding-up petition.

5. Statutory Notice and Refusal of Payment:
The petitioners issued a statutory notice under sections 433 and 434, demanding the balance amount with interest. The company denied any outstanding dues in response, leading to the filing of the winding-up petition.

6. Affidavit-in-Opposition by the Company:
The company's managing director denied any liability, stating that the unauthorized account No. 63 was opened without the company's consent and the amounts deposited there were fraudulently withdrawn. The company also argued that the part payments made were from the personal account of the chairman, not the company's funds.

7. Commercial Insolvency of the Company:
The petitioners argued that the company was commercially insolvent, unable to pay its debts, including a substantial amount owed to the State Bank of India. The company countered this claim by presenting its balance sheet, showing sufficient assets to meet its liabilities.

8. Limitation Period for Filing the Claim:
The court considered whether the claim was barred by the law of limitation. The payment was made in 1993, and the period for filing a suit expired in 1996. The part payment in 1996 did not extend the limitation period under sections 18 and 19 of the Limitation Act, 1963. No written promise to pay the time-barred debt was provided under section 25(3) of the Contract Act.

9. Secured Creditor's Opposition and Commercial Insolvency:
The State Bank of India, a secured creditor, opposed the winding-up petition, arguing that the proper forum for the petitioners was a civil court. The bank had secured its loans through mortgages and had filed a recovery suit in the Debt Recovery Tribunal, asserting that the company was not commercially insolvent.

Judgment:
The court concluded that the petitioners' claim was barred by the law of limitation and declined to order the winding up of the company. The court also found no substantial evidence to declare the company commercially insolvent. The petition for winding up was dismissed, leaving the petitioners to pursue other legal remedies.

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