2014 (9) TMI 1117 - HC - Companies Law

Winding up petition - Held that - The dispute raised in the affidavit-in-reply to the effect that the respondent was not responsible for all the recoveries from the foreign buyers is clearly an after-thought. It was never raised in the course of the correspondence. The learned Judge has merely referred to the respondent s contention that the post dated cheques ought not to have been presented for recovery of part-payment of 3 crores. No reasons have been furnished as to why the learned Judge found that this defence cannot be dismissed out of hand. Considering the facts that we have referred to there is no defence even to these cheques. In the result though the pleading about the manner in which the funding took place can be said to be inaccurate it ought not to result in the appellant s just and admitted claim being defeated. In the circumstances there is no defence to the appellant s claim. The impugned judgment and order is set aside. The appeal is allowed. The petition is admitted and shall be advertised in Free Press Journal Maharashtra Times and Maharashtra Government Gazette. The petitioner to deposit an amount of 10, 000/- with the Prothonotary and Senior Master of this Court by 15th November 2014.

Summary

Issues Involved:
1. Whether the respondent company is unable to pay its debts.
2. Whether the petition was improperly pleaded.
3. Whether the respondent admitted its liability.
4. Validity of the Corporate Guarantees and dishonoured cheques.
5. The effect of inaccurate pleadings on the petition.

Detailed Analysis:

1. Whether the respondent company is unable to pay its debts:
The respondent company virtually admitted its debt. It was established beyond any doubt that the respondent was indebted to the appellant in the sum of about Rs. 500 crores. The learned company Judge did not dispute the amounts due but dismissed the petition on the grounds of improper pleading.

2. Whether the petition was improperly pleaded:
The learned Judge dismissed the petition on the basis that the claim was not properly pleaded. However, the High Court found this to be an error, likely due to the Judge's attention not being drawn to the true nature of the transaction. The petition, although containing some inaccurate averments, was not fatally flawed. The inaccuracies were related to the description of the agreement and did not undermine the established facts and admissions of liability by the respondent.

3. Whether the respondent admitted its liability:
The respondent admitted receiving about Rs. 350 crores from the appellant and acknowledged not repaying it. Several letters from the respondent contained unequivocal admissions of liability and requests for time to repay the balance. The correspondence and the respondent's actions, such as issuing post-dated cheques, further confirmed their acknowledgment of the debt.

4. Validity of the Corporate Guarantees and dishonoured cheques:
Under the agreement, the respondent furnished Corporate Guarantees of Rs. 100 crores and Rs. 250 crores. Additionally, the respondent issued 30 post-dated cheques totaling Rs. 163 crores, most of which were dishonoured. The appellant filed proceedings under section 138 of the Negotiable Instruments Act due to the dishonoured cheques. The respondent's liability was also supported by these guarantees and cheques, which were part of the petition.

5. The effect of inaccurate pleadings on the petition:
The High Court found that the inaccuracies in the pleadings were not fatal to the petition. The respondent admitted receiving funds directly from the appellant, not from the appellant's bank, as inaccurately stated in the petition. Despite the inaccurate wording, the substance of the claim remained valid and just. The petition was also based on the Corporate Guarantees, dishonoured cheques, and unequivocal admissions in the correspondence, providing a robust basis for the appellant's claim.

Conclusion:
The High Court set aside the impugned judgment and order, admitting the petition and directing it to be advertised. The inaccurate pleadings did not justify defeating the appellant's just and admitted claim. The appeal was allowed, and the petition was admitted for further proceedings.