2000 (12) TMI 864 - HC - Companies Law

Summary

Issues Involved:
1. Acknowledgment of Debt
2. Payment and Settlement Attempts
3. Bona Fides of the Respondent-Company
4. Trustee Agreement and Locus Standi
5. Public Interest and Revival Prospects
6. Legal Discretion in Winding Up

Issue-wise Detailed Analysis:

1. Acknowledgment of Debt:
The petitioners, including Canara Bank, filed a winding up petition under sections 433 and 434 of the Companies Act, 1956, claiming that the respondent-company owed approximately Rs. 8 crores. The respondent-company acknowledged this liability.

2. Payment and Settlement Attempts:
The petitioners issued a statutory notice on 12-2-1997, and the respondent-company paid Rs. 30 lakhs towards interest. Despite further payments totaling Rs. 65 lakhs, the petitioners argued these were insufficient and merely delaying tactics. Negotiations and court-directed meetings failed to yield a final settlement.

3. Bona Fides of the Respondent-Company:
The respondent-company's efforts to settle included offering to sell two units at Sikandrabad and Baddi, which were claimed to be profitable. However, the petitioners questioned the bona fides, suggesting these offers were deceptive, especially since one unit was encumbered by a Debt Recovery Tribunal order.

4. Trustee Agreement and Locus Standi:
The respondent's counsel argued that only the debenture trustee (IFCI) could initiate action against the company, as per the trustee agreement dated 20-12-1995. However, the court held that the statutory right under section 439 of the Companies Act, 1956, allows debenture holders to file a winding up petition, and this right cannot be abrogated by the trustee agreement.

5. Public Interest and Revival Prospects:
The respondent-company claimed it was reviving, with 1,456 regular employees and substantial tax payments. The court noted the significant public interest, including employees, shareholders, and dealers, and the company's efforts towards revival, which were undisputed by the petitioners.

6. Legal Discretion in Winding Up:
The court emphasized the discretionary nature of winding up under section 433, which should be exercised judiciously. Given the company's revival prospects, ongoing tax contributions, and the livelihood of thousands of employees, the court found the respondent's claim weightier than the petitioners'.

Conclusion:
The court declined to admit the winding up petition, emphasizing the broader public interest and the company's revival efforts. The petition was dismissed without costs.