1992 (12) TMI 229 - HC - Companies Law

Summary

Issues Involved:
1. Whether the petitioner is a creditor of the company within the meaning of section 439(b) of the Indian Companies Act?
2. Whether the petitioner is a debtor of the company?
3. Whether it is just and equitable to order winding up of the company?
4. Whether the company petition is maintainable in view of the various suits pending in the civil courts wherein the parties were agitating their respective rights?
5. Whether the company petition is maintainable in view of O.S. No. 616/83 on the file of the Court of the I Addl. Judge, City Civil Court, Hyderabad, a suit for dissolution and rendition of accounts of the firm, Progressive Engineering Company?
6. Whether on the facts and circumstances of the case the company petition is liable to be dismissed without enquiry?
7. Whether the petitioner has any locus standi to file the company petition and the same is bona fide?
8. To what relief?

Detailed Analysis:

Issue Nos. 1, 2, and 7 in C.P. No. 6 of 1983:
The petitioner contends that he is a creditor of the company due to his capital investment of Rs. 4,00,000 in PEC. The respondent claims that the petitioner is a debtor owing Rs. 2,65,477.30. The court found substantial evidence, including letters and promissory notes, supporting the petitioner's claim of his capital investment. The court also found the debiting of Rs. 3,84,630.07 to the petitioner's account unauthorized. Therefore, the petitioner is a creditor, not a debtor, and has the locus standi to file the petition.

Issue No. 3 in C.P. No. 6 of 1983:
The petitioner alleges that the conversion of PEC into PCPL was a fraudulent act to exclude him. The court found that notices for meetings regarding the conversion were not properly served to the petitioner, and the transfer deed dated 9.1.82 was not genuine. The court concluded that the conversion was a make-believe affair and that the partnership firm continued its business in the guise of a private limited company. The court held that it is just and equitable to dissolve the firm PEC and direct settlement of accounts among its partners.

Issue Nos. 4 and 5 in C.P. No. 6 of 1983:
The respondent argued that the company petition is not maintainable due to pending civil suits. The court found that the civil court does not have jurisdiction to wind up the company or take into consideration the accounts of the company. The court held that the company petition is maintainable despite the pending suits.

Issue No. 6 in C.P. No. 6 of 1983:
This issue became redundant as an elaborate inquiry was conducted, and both parties provided voluminous evidence. The court did not need to consider this issue further.

Issue No. 3 in C.P. No. 11 of 1983:
The petitioners alleged that the respondent-company is unable to pay its debts. The court found that the statutory notice was not served on the company at its registered office, which is a mandatory requirement under section 434(1)(a) of the Companies Act. Consequently, the court held that the company petition is liable to be dismissed in limine.

Issues Nos. 10 and 13 in C.P. No. 11 of 1983:
The court found that the company petition is maintainable despite the pendency of O.S. No. 1065 of 1984 and other legal proceedings in lower courts.

Issue No. 8 in C.P. No. 6 of 1983:
The court allowed Company Petition No. 6 of 1983, passing a preliminary decree for the dissolution of the partnership and settlement of accounts among the partners of PEC as per the shares in the partnership deed.

Issue No. 15 in C.P. No. 11 of 1983:
In view of the finding on issue No. 3, the court dismissed Company Petition No. 11 of 1983 as not maintainable and directed each party to bear its costs.

Conclusion:
The court dissolved the partnership firm PEC and directed the settlement of accounts among its partners. The petition for winding up the respondent-company PCPL was dismissed due to non-compliance with statutory notice requirements.