2007 (8) TMI 455 - HC - Companies Law

Winding up Circumstances in which company may be wound up by Tribunal - Held that - The petition is admitted for the sum of ₹ 6,05,000 together with interest at the rate of 12 per cent, per annum from September 15, 2003. If the company furnishes security of the entire sum, inclusive of interest, up to the date of furnishing of security, in favour of the Registrar, original side, the petition will remain permanently stayed and the claim of the petitioning- creditors will stand relegated to a suit. In such event, the security will be held to the credit of the suit in the event such suit is instituted within a period of three weeks from the date of intimation by the company to the petitioners that security in terms of this order has been furnished. In default of the security being furnished within the time permitted, the petition will be advertised once in The Statesman and once in the Aajkal. The publication in the official gazette will stand dispensed with. The advertisements will indicate that the matter will be returnable on the next available court day four weeks after the publication. In the event the petitioners fail to file the suit within the time permitted after receipt of information of security having been furnished, the company will have liberty to obtain discharge of the security.

Summary

Issues:
Petition for winding up due to unpaid loans acknowledged by the company but not repaid; Company's defense based on share allotments to petitioners and denial of loan claims; Allegations of fabricated documents by the company; Criminal proceedings initiated by the company against the petitioners; Court's decision to afford the company a chance to pay off the debt at a reduced interest rate.

Analysis:
The petitioners sought winding up of the company for failing to repay loans totaling Rs. 6,05,000 obtained between 1997 and 1999, acknowledged in 2000 and 2003 but not repaid despite a notice under section 434(1)(a) of the Companies Act, 1956. The petitioners claimed to have provided the money for a hospital construction in Siliguri, with the company agreeing to pay 24% interest per annum. The company's acknowledgment letters from October 10, 2000, and September 15, 2003, formed the basis of the petitioners' claim, supported by cheques bearing similar signatures. The company's defense relied on share allotments to the petitioners and denied the loan claims, alleging the petitioners were aware of the allotments and had become shareholders.

The company's defense included challenging the authenticity of the acknowledgment letters, claiming they were fabricated by the petitioners. Criminal proceedings were initiated by the company against the petitioners, primarily focusing on the cheques issued. The court noted the lack of authenticated documents supporting the company's defense and deemed its defense as dishonest and incomprehensible. Despite the criminal proceedings, the court decided to afford the company an opportunity to settle the debt at a reduced interest rate of 12% per annum from September 15, 2003, within three weeks, with the option to furnish security to halt the winding-up process permanently.

The court admitted the petition for the sum owed by the company, providing a timeframe for settlement or security submission. Failure to comply would result in advertisement of the petition, and the claim would be relegated to a suit if not settled within the specified period. The court's decision aimed to balance the petitioners' claim with the company's opportunity to settle the debt and avoid winding up through payment or security submission within the stipulated timeframe.