2009 (10) TMI 533 - HC - Companies Law

Winding up - company petition was presented on the premise that in respect of certain commission due to the petitioner-company - learned Company Judge had ordered the parties to appear before the Bangalore Mediation Centre on 15-10-2009 Held that - Reference to the manner in which shareholding pattern was changed, the manner in which the shareholding in the company was transferred to other companies and several subsidiaries and also acquired substantial shareholding in the appellant-company as to how one outsider was controlling the whole thing while not having the name of the appellant-company and on such circumstances what was noticed by the learned Company Judge being prima facie material of evasive method being resorted to by the company was satisfied about the transactions being not bona fide and therefore the learned Company Judge thought it fit to admit the petition. No perversity nor any illegality in the impugned order passed by the learned Company Judge, more so, when the company petitioner had approached the Court for seeking an order to wind up the affairs of the appellant-company on the twin grounds as noticed earlier, we do not find any material in this appeal even for admission and it is accordingly dismissed at the admission stage.

Summary

Issues:
Admission of company petition under sections 433(e) and (f) read with section 434 of the Companies Act, 1956 based on alleged breach of compromise agreement leading to evasion of payment. Evaluation of prima facie material supporting winding up of the respondent-company. Referral of the matter to Mediation Centre for conciliation.

Analysis:
1. The appeal concerns a company petition filed under sections 433(e) and (f) read with section 434 of the Companies Act, 1956 by a petitioner company against the respondent company, seeking winding up due to alleged evasion of payment obligations. The petitioner claimed that despite a compromise agreement, the respondent failed to make payments as stipulated, indicating a deliberate attempt to avoid financial obligations.

2. The learned Company Judge admitted the company petition after finding prima facie evidence supporting the petitioner's claims. The judge observed that the respondent's defense lacked substantial proof and that the petitioner presented strong materials justifying the winding up petition. The judge noted the respondent's obligation to make future payments to the petitioner as per the settlement deed and highlighted discrepancies in the respondent's assertions regarding business transactions post-merger.

3. Despite the admission of the company petition, the matter was referred to the Mediation Centre for potential conciliation, considering the prior settlement between the parties. The appellant appealed the decision, arguing that the documents cited by the petitioner, particularly annexures J1 to J9, were irrelevant to the transactions in question and did not implicate the appellant in any wrongdoing.

4. The appellant contended that the admission of the company petition without substantial evidence was unjustified and could have serious consequences on the company. However, the High Court upheld the decision of the learned Company Judge, noting that there was no evidence of perversity or illegality in the order. The Court emphasized the importance of honoring financial obligations and dismissed the appeal at the admission stage, affirming the admission of the company petition for further examination.

This detailed analysis encapsulates the legal judgment's core issues, arguments presented by the parties, the rationale behind the decision, and the subsequent appeal outcome.