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2014 (6) TMI 613 - HC - Companies LawWinding up of the respondent company - Failure and neglection to pay a sum alongwith interest - whether the respondent company is liable to be wound up on account of its inability to pay its debts - Held that - petitioner, contend that the debt owed by the respondent was much larger than the sum of Rs.250 lacs, however, he was not permitted to urge the same in view of the order of this Court. Accordingly, the inability of the respondent to pay its debts has considered in reference to the admitted debt of a sum of Rs.250 lacs and interest thereon. The respondent was directed to deposit the said sum with this court and the said direction was complied with by the respondent without prejudice to its rights and contentions. The respondent contended that no interest was payable as the offer for settlement of debt for Rs.250 lacs had never been communicated to the respondent and it is only during the present proceedings that the respondent had indicated that it was willing to settle the disputes for a sum of Rs.250 lacs. In these circumstances, according to the respondent, the interest, if any, could only run from the 24.05.2012 i.e. the date of the order and not prior to the said date. In my view, this contention is wholly erroneous. The respondent had approached IDBI and had offered a sum of Rs.225 lacs as full and final settlement of its dues. This offer was considered by a Committee of IDBI in its meeting held on 21.03.2006 and the same was not accepted. Although, there was no binding agreement between the respondent and IDBI, the respondent had been contending that it was only liable to pay Rs.250 lacs as had been approved by the committee members. Thus, according to the respondent own showing, the respondent would be liable for interest on the said amount from 27.03.2006 i.e. the date of approval of the counter offer by the concerned committee of IDBI. The respondent cannot on one hand insist that it settle its dues on the terms as considered by IDBI on 21.03.2006/27.03.2006 and on the other hand plead that interest should run from 24.05.2012. Respondent could be called upon to pay a reasonable interest on the sum of Rs.250 lacs provided the petitioner was willing to accept the same as full and final settlement of its dues. While the learned counsel for the respondent indicated that respondent would be willing to pay simple interest @12% per annum from 27.03.2006, the same was not acceptable to the petitioner. The petitioner contended that the respondent would be liable to pay 21% compounded interest, which was stated to be the contractual rate of interest in terms of the agreement between IDBI and the respondent. This was seriously disputed by the respondent. The aforesaid narrative clearly indicates that no settlement could be arrived at between the parties. Pleadings filed by the petitioner does mention that the respondent has not commenced its business, the focus of the petition is not that the respondent is liable to be wound up on account of noncommencement/ suspension of business. The petitioner had confined the petition only to a claim of debt, at the time of issuance of notice. This by itself would be reason enough for not permitting the petitioner to urge that the respondent has lost its substratum and should be wound up on account of its failure to commence business. Company is pursuing its counter claim against IDBI and the question whether the company would be able to revive or not can only be considered after that controversy has concluded. Concededly, the jurisdiction to wind up a company under section 433(e) and 433(f) of the Act is discretionary. In my view, this is not a case where this court should exercise its discretion to wind up of the company. Further, no prejudice has been caused to the petitioner by the existence of the respondent company. - Registry is directed to refund a sum of Rs.250 lacs along with interest, if any, to the respondent - Decided against Petitioner.
Issues Involved:
1. Petition for winding up of the respondent company under Sections 433(e) & (f) and 434 read with section 439 of the Companies Act, 1956. 2. Claim of debt due from the respondent company to the petitioner. 3. Failure of the respondent company to commence its business within one year from incorporation. 4. Admissibility of the petitioner as a party before the Debts Recovery Tribunal (DRT). 5. Interest payable on the debt amount. 6. Counterclaims by the respondent company against IDBI. Issue-Wise Detailed Analysis: 1. Petition for Winding Up: The petitioner company filed the petition under Sections 433(e) & (f) and 434 read with section 439 of the Companies Act, 1956, seeking the winding up of the respondent company on the grounds of failure to pay a sum of Rs.28,99,00,000/- along with interest. The petitioner also argued that it was just and equitable to wind up the respondent company as it had failed to commence business within a year from its incorporation. 2. Claim of Debt: The petitioner, as an assignee of the debt from Kotak Mahindra Bank Ltd. (KMBL), claimed the respondent company owed Rs.28,99,00,000/- along with interest. The debt originated from financial facilities granted by IDBI to the respondent company. The respondent company defaulted on the repayment, leading to a series of legal actions and assignments of the debt. The petitioner confined its debt claim to Rs.250 lakhs based on a One Time Settlement (OTS) offer. 3. Failure to Commence Business: The petitioner argued that the respondent company should be wound up under Section 433(c) of the Act for failing to commence its business within one year from incorporation. The respondent company was incorporated to set up a 100% export-oriented unit but did not start commercial production. 4. Admissibility Before DRT: The respondent contested the petitioner's application for substitution as a party before the DRT, arguing that the petitioner was neither a bank nor a financial institution and thus not qualified under section 17(1) read with section 19(1) of the Recovery of Debt due to Banks and Financial Institutions Act, 1993. The DRAT supported this view, ruling that the petitioner could not be substituted in place of a bank. 5. Interest Payable: The court deliberated on the interest payable on the Rs.250 lakhs. The respondent contended that any interest should only be considered from the date of the court order (24.05.2012) when the petitioner confined its claim to Rs.250 lakhs. The petitioner argued for interest from 27.03.2006, the date of the OTS approval by IDBI. The court found the respondent's contention erroneous and considered the interest from 27.03.2006. 6. Counterclaims by Respondent: The respondent claimed that IDBI failed to disburse the sanctioned loan, leading to the cessation of its production activities. The respondent filed a counterclaim against IDBI for Rs.7838 lakhs for losses due to non-disbursement of working capital. This counterclaim was still pending adjudication before the DRT. Judgment: The court held that the respondent's failure to pay the disputed debt did not indicate an inability to pay its debts under Section 433(e) of the Act. The court also found that the respondent's failure to commence business was due to IDBI's non-disbursement of the loan, and the company was pursuing a counterclaim against IDBI. Given the pending counterclaim and the potential for the company's revival, the court exercised its discretion not to wind up the company under Sections 433(c) and 433(f) of the Act. The petition was dismissed, and the court directed the refund of Rs.250 lakhs to the respondent along with any interest accrued. The title documents deposited by the petitioner were also ordered to be returned. Conclusion: The petition for winding up the respondent company was dismissed. The court emphasized that the petitioner's claim was confined to Rs.250 lakhs and interest thereon, and the respondent's counterclaims against IDBI remained unaffected by this order.
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