2013 (8) TMI 1048 - HC - Companies Law

Summary

Issues Involved:
1. Whether the petitioner is a money lender under the Bombay Money Lenders Act, 1946.
2. Whether the transaction in question is a money lending transaction.
3. Whether the agreement is insufficiently stamped.
4. Whether the respondent company is commercially solvent.

Summary:

1. Money Lender Status:
The respondent contended that the petitioner is a money lender and the transaction falls within the scope of the Bombay Money Lenders Act, 1946. The court examined Section 2(9) and Section 2(10) of the Act, which define 'loan' and 'money lender' respectively. The court referred to previous judgments, including M/s. Marine Container Services (I) Pvt. Ltd. vs. M/s. Rushabh Precisioin Bearings Ltd., which held that a winding-up petition must be based on a legally recoverable debt. The court concluded that if the petitioner is engaged in the business of money lending without a license, the recovery of the amount would be barred, and thus, the winding-up petition would not be maintainable.

2. Money Lending Transaction:
The court analyzed whether the transaction in question can be considered a money lending transaction. The court noted that the petitioner described itself as being in the business of finance and investments, and the agreement referred to the transaction as a 'loan'. The court examined the petitioner's bank statements and balance sheets, which showed substantial loans and interest income. The court concluded that the petitioner is engaged in systematic money lending activities, and this issue requires detailed evidence, which cannot be resolved in a summary jurisdiction.

3. Insufficiently Stamped Agreement:
The respondent argued that the agreement was insufficiently stamped under the Bombay Stamp Act, 1950. The court noted that the petition is not based on the agreement but on the fact of money advanced and non-return thereof. The agreement is placed on record to show the admissions of the respondent. Thus, prima facie, the bar of Section 35 of the Bombay Stamp Act does not apply. However, this point was not discussed in detail due to the findings on the first two issues.

4. Commercial Solvency:
The respondent claimed that the company is financially sound, with significant investments and current assets. The petitioner disputed this but did not provide substantial evidence to show that the respondent is commercially or financially insolvent. The court concluded that the respondent's financial viability does not necessitate winding up.

Conclusion:
The court found that the respondent raised arguable questions regarding the petitioner's status as a money lender and the nature of the transaction, which require detailed evidence. The petition was rejected, with the court clarifying that the observations made are only to ascertain whether the respondent has a bona fide defense. If the petitioner files a civil suit, those proceedings will be decided on their own merits.