1980 (11) TMI 169 - HC - Indian Laws

Summary

Issues Involved:
1. Admission and advertisement of the winding-up petition.
2. Discrepancies in the terms and conditions of the loan agreement.
3. Bona fide dispute regarding the loan amount.
4. Admissibility of additional evidence.
5. Determination of the company's liability.

Issue-wise Detailed Analysis:

1. Admission and Advertisement of the Winding-up Petition:
The judgment arises from an order dated March 30, 1978, admitting a winding-up petition against the appellant-company. The court directed the issuance of advertisements and ordered that the petition would remain permanently stayed if the company paid Rs. 8,50,000 with 18% interest per annum from February 1, 1977, and assessed costs before May 31, 1978. The remaining claim of Rs. 1,50,000 was considered bona fide disputed by the company, and the petitioning-creditor was allowed to take appropriate steps regarding it.

2. Discrepancies in the Terms and Conditions of the Loan Agreement:
The petitioning-creditor claimed Rs. 10 lakhs as money lent and advanced to the company, repayable on demand with 2% interest per month, compounded monthly. However, the correspondence revealed discrepancies. A letter dated May 4, 1977, indicated the loan was repayable by March 31, 1977, with simple interest. The court noted that such a significant loan was given without any written agreement, raising questions about the consistency of the petitioning-creditor's claims.

3. Bona Fide Dispute Regarding the Loan Amount:
The company denied the liability, stating that the amount was not lent to it but to another company, Sagar Lines (India) Private Ltd. The court found that the last cheque of Rs. 1,50,000 was indeed paid to Sagar Lines, not the appellant-company, indicating a bona fide dispute. The court emphasized that the winding-up court should proceed cautiously and verify the contract's establishment before admitting the petition.

4. Admissibility of Additional Evidence:
After the appeal was preferred, a letter dated June 7, 1977, from the petitioning-creditor to Sagar Lines came to light, which the appellant-company sought to introduce as additional evidence. The court allowed this under Order 41, Rule 27 of the CPC, noting that the document was not available during the initial hearing and was crucial for pronouncing the judgment.

5. Determination of the Company's Liability:
The court examined the company's defense, which included the fact that the funds were intended for Sagar Lines, as evidenced by board resolutions and the transfer of funds. The court noted that both companies had common directors but were distinct legal entities. The court found that the company's defense was bona fide and that the petitioning-creditor's claim was an abuse of the court's process. The court concluded that the winding-up petition should not have been admitted.

Conclusion:
The appeal was allowed, the winding-up petition was dismissed as an abuse of the court's process, and the security furnished by the appeal court was discharged. The petitioning-creditor was ordered to pay the costs of the appellant-company.