2006 (7) TMI 330 - HC - Companies Law

Issues Involved:
1. Winding up petitions under Section 433(e) and 433(f) of the Companies Act, 1956.
2. Liability of the principal borrower and guarantors under the agreement dated 17-2-2000.
3. Validity and implications of the arbitration award dated 3-12-2003.
4. Requirement of notice under Section 434 of the Companies Act, 1956.
5. Contingent creditor status and the need for leave of the court under Section 439(1)(b) and 439(8) of the Companies Act, 1956.

Detailed Analysis:

1. Winding up petitions under Section 433(e) and 433(f) of the Companies Act, 1956:
The petitioner filed petitions for the winding up of the respondents, M/s. Sahajanand Investment (P.) Ltd. (principal borrower) and M/s. Pinto Trade Commerce (P.) Ltd. (guarantor), under Section 433(e) on the ground of indebtedness amounting to Rs. 82,36,027 and under Section 433(f) on the ground that it is just and equitable as the respondent-companies are running into losses.

2. Liability of the principal borrower and guarantors under the agreement dated 17-2-2000:
The agreement stipulated that M/s. Sahajanand would repay Rs. 50,00,000 with financing charges at 2% per month by 17-2-2001. In case of default, compensation at 4% per month on the outstanding amount was agreed upon. M/s. Pinto Trade Commerce and Mr. Rui Pinto stood as guarantors. Upon default by M/s. Sahajanand, the petitioner was entitled to demand payment from the guarantors. The respondents failed to fulfill their obligations, leading to the issuance of a notice demanding payment.

3. Validity and implications of the arbitration award dated 3-12-2003:
The parties went for arbitration, resulting in a settlement where the liability of Rs. 50,00,000 was met by delivering built-up premises and agreeing to pay Rs. 85,00,000 in installments. Despite partial payments, defaults occurred, leading to a claim of Rs. 2,43,22,153 as per clause 7 of the award. The court observed that the earlier liabilities were replaced under the award, and the respondents failed to discharge their obligations as per the award.

4. Requirement of notice under Section 434 of the Companies Act, 1956:
The petitioner issued notices to the respondents, but only M/s. Sahajanand replied without specifically denying liability. The court discussed whether a fresh notice was required after the arbitration award. It concluded that the award could be seen as a subsequent event, and the petitions should be decided based on the respondents' indebtedness under the award. The court noted that the respondents were aware of the defaults and the ongoing proceedings, making a formal notice unnecessary.

5. Contingent creditor status and the need for leave of the court under Section 439(1)(b) and 439(8) of the Companies Act, 1956:
The court rejected the argument that the petitioner was a contingent creditor requiring leave of the court. It held that the petitioner had an existing obligation to pay, and there was no contingency to be met. The liability of the guarantors was co-extensive with that of the principal debtor, allowing the petitioner to proceed against both.

Conclusion:
The court admitted the petitions and ordered them to be advertised with interim relief, recognizing the respondents' prima facie liability to pay Rs. 2,43,22,153 with interest as per clause 7 of the arbitration award. The ground under Section 433(f) would be considered at the final disposal of the petitions.

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