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2013 (7) TMI 1117 - HC - Companies LawMaintainability of application for winding up the company on default of paying debts - applicability of limitation act - the petition is for winding up the Company on the ground that the Company is unable to pay its debts. The agreement was signed by the lenders, the Company as well as two personal guarantors, a Director of the Company, was one. The loan was for a period of three months. By orders of this Court Sarla Fabrics Pvt. Ltd. was amalgamated with Shahi Exports Pvt. Ltd., one of the present petitioners. On 28.11.2011, the petition for winding up the company was filed in this Court. HELD THAT - The Company Petition is held maintainable. As, the orders of this Court under which the amalgamation was sanctioned were filed by the petitioners, accompanied by an affidavit of the authorised signatory of petitioner no. 1. The Registrar of Companies was also duly intimated about the amalgamation in the prescribed form which was acknowledged and the merger was approved by him. The present petition was filed on 28.11.2011 after the amalgamation. the amount borrowed from Surabhi Sindhu, the Company had repaid and the balance of was transferred to the share application money account . The shares, however, have not been allotted. The balance sheet was signed by the Directors as well as the Chartered Accountants on 1.9.2010 and if this date is taken as the date of acknowledgment of the debt, as it ought to be in the light of the settled legal position in this behalf, the period of limitation gets extended up to 31.08.2013. Petitioners are entitled to costs of ₹ 25,000/- from the respondent-company.
Issues Involved:
1. Maintainability of the company petition by Shahi Exports Pvt. Ltd. 2. Whether the debt is barred by limitation. 3. Status of the amount shown as "share application money." 4. Interim reliefs sought by the petitioners. Issue-wise Detailed Analysis: 1. Maintainability of the company petition by Shahi Exports Pvt. Ltd.: The petitioners, Shahi Exports Pvt. Ltd. and Ms. Surabhi Sindhu, filed for winding up CMD Buildtech Pvt. Ltd. under section 433(e) read with sections 434 and 439 of the Companies Act, 1956, claiming the Company is unable to pay its debts amounting to Rs. 17,05,13,764/-. The Company objected, arguing that Shahi Exports Pvt. Ltd. was not competent to file the petition since the loan was given by Sarla Fabrics Pvt. Ltd. The Court rejected this objection, noting that Sarla Fabrics Pvt. Ltd. was amalgamated with Shahi Exports Pvt. Ltd. in March 2011, transferring all assets and liabilities to the latter. The petition was filed after this amalgamation, making Shahi Exports Pvt. Ltd. competent to file the petition. 2. Whether the debt is barred by limitation: The Company contended that the debt was barred by limitation. The Court examined the timeline: the loan was advanced on 27.11.2007, and the Company paid interest until 30.06.2009. A cheque dated 10.08.2009 extended the limitation period to 09.08.2012 under Section 18 of the Limitation Act. Additionally, the Company's balance sheet as of 31.03.2010 acknowledged the debt, extending the limitation to 31.08.2013. A letter dated 19.05.2011 further extended the limitation to 18.05.2014. The petition filed on 28.11.2011 was within the limitation period. The Court also noted that the Company acknowledged its debt in Court on 08.11.2012 and proposed settlements on 22.02.2013 and 01.03.2013 without disputing the debt's validity. Therefore, the plea of limitation was deemed frivolous and an attempt to delay proceedings. 3. Status of the amount shown as "share application money": The Company argued that the Rs. 2 crores shown as "share application money" in favor of Surabhi Sindhu could not be considered a debt. The Court rejected this, stating that until shares are allotted, the money remains a debt due to the applicant. The provisions of section 73 of the Companies Act, which require deposit of share application monies in a separate bank account, do not apply to private limited companies. Thus, the amount remains a debt until shares are allotted. 4. Interim reliefs sought by the petitioners: The petitioners sought an order restraining the Company and its agents from disposing of or alienating any of its properties, including lands in Kondli (Sonepat) and Yamunanagar, and restraining Mrs. Sunita Narula from disposing of her Kundli property. The Court accepted these prayers, restraining the respondent-company and Mrs. Sunita Narula accordingly. Conclusion: The preliminary objections of the Company were overruled, and Company Petition No. 468/2011 was held maintainable. The petitioners were awarded costs of Rs. 25,000/-. The Court granted the interim reliefs sought, restraining the Company and Mrs. Sunita Narula from disposing of or alienating the specified properties. The matter was re-notified for hearing on 9th September 2013.
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