2013 (8) TMI 615 - HC - Companies Law

Winding up Petition u/s 439 r.w. 433(e) and 434 of the Companies Act, 1956 - The Court had to examine if the debt is bona fide disputed and whether the company had the ability to and was willing to pay the debt Held that - The Directors were directed to strictly comply with the requirements of Section 454 of the Act and Rule 130 of the Rules and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit - After considering the history of the litigation, and the fact that they claimed that it was a profit making company that had the capacity to pay the admitted liability the Court considers it appropriate to grant - one more opportunity to pay the admitted liability was granted. In Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. 1971 (10) TMI 49 - SUPREME COURT OF INDIA - The principles on which the court acts are first that the defence of the company was in good faith and one of substance, secondly, the defence was likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends - No bona fide defence in the winding up petition and was unwilling and therefore unable to pay the admitted liability - the defence as to why it will not pay the admitted debt was neither one of substance nor in good faith they had also not been able to satisfy the Court that it was willing to make payment of the admitted debt prima facie case had been made out for admitting the petition and appointing a provisional liquidator - the order to be kept in abeyance for a period of six weeks - If such payment was not made then the order will become immediately operational.

1971 (10) TMI 49 - SC

Issues Involved:
1. Financial assistance and Inter Corporate Deposits (ICDs) between MPSIDC and SDBL.
2. Repayment and settlement negotiations.
3. Statutory notice and winding up petition.
4. Admitted liability and dispute over the outstanding amount.
5. One Time Settlement (OTS) policy and its interpretation.
6. Jurisdiction and service of statutory notice.
7. Appointment of Provisional Liquidator and compliance requirements.

Detailed Analysis:

1. Financial Assistance and Inter Corporate Deposits (ICDs) between MPSIDC and SDBL:
MPSIDC provided financial assistance to SDBL in the form of multiple Inter Corporate Deposits (ICDs) totaling Rs. 7,00,00,000. SDBL executed demand promissory notes (DPNs) and corporate guarantees for these amounts, with specific repayment dates ranging from 2001 to 2004. SDBL, citing financial difficulties, requested MPSIDC not to pursue recovery proceedings in 2003.

2. Repayment and Settlement Negotiations:
SDBL proposed a one-time settlement (OTS) in 2005, which MPSIDC did not accept. Further negotiations involved Kotak Mahindra Bank, but no settlement was reached. MPSIDC issued a statutory notice in 2007 demanding payment. Subsequent communications in 2011 and 2012 involved various proposals and counter-proposals regarding the OTS amount, but no agreement was reached.

3. Statutory Notice and Winding Up Petition:
MPSIDC filed a winding up petition under Sections 433(e) and 434 of the Companies Act, 1956, citing SDBL's inability to pay its debts. SDBL contended that the dues were time-barred and disputed the statutory notice's service at its registered office. The court found that the statutory notice was duly served.

4. Admitted Liability and Dispute Over the Outstanding Amount:
SDBL admitted liability in its balance sheet for the year ending 31st March 2010, showing Rs. 10,97,70,329 as due to MPSIDC. Despite this, SDBL disputed the amount and claimed that the dues were time-barred. The court found SDBL's objections baseless and noted that SDBL had repeatedly sought time to repay the debts.

5. One Time Settlement (OTS) Policy and Its Interpretation:
The court emphasized that the determination of the OTS amount was at MPSIDC's discretion. SDBL's proposal of Rs. 7.77 crores was rejected by MPSIDC, which determined the OTS amount to be Rs. 791.20 lakhs. The court noted that SDBL could not insist on a lesser amount and that the OTS amount was a concession given the total outstanding amount.

6. Jurisdiction and Service of Statutory Notice:
The court found that the registered office of SDBL was in New Delhi, and the statutory notice was served by registered post, confirmed by the Senior Superintendent, Post Office. Therefore, the objections regarding jurisdiction and service of notice were without merit.

7. Appointment of Provisional Liquidator and Compliance Requirements:
The court admitted the petition and appointed the Official Liquidator (OL) as the Provisional Liquidator (PL) of SDBL. The OL was directed to take over all assets, books of account, and records of SDBL immediately upon the order becoming effective. The Directors of SDBL were directed to comply with Section 454 of the Act and Rule 130 of the Companies (Court) Rules, 1959, by furnishing a statement of affairs within 21 days and filing affidavits detailing all assets within four weeks.

Conclusion:
The court concluded that SDBL had no bona fide defense against the winding up petition and was unwilling and unable to pay the admitted liability. The petition was admitted, and the OL was appointed as the PL. The court granted SDBL one more opportunity to pay the admitted liability within six weeks, failing which the order for winding up would become immediately operational. The matter was listed for further hearing on 5th August 2013.

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