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2016 (8) TMI 1 - HC - Companies LawWinding up petition - Held that - The defense raised by the Respondent Company is neither in good faith nor bonafide. As stated earlier, as far as the debt of the Respondent Company in relation to the Term Loan of ₹ 35 Crores is concerned, there is absolute no dispute and in fact none has been canvassed before me by Mr. Cama. In this view of the fact, on this count alone, and considering the fact that substantial amounts are due and payable by the Respondent Company to the Petitioner in relation to this Term Loan, the Petitioner would be entitled to an order of admission of the Company Petition. Even in relation to the Term Loan of ₹ 20 Crores disbursed to Borrower No.2 (and for which the Respondent Company stood as a Guarantor), find that even if one gives credit of ₹ 9 Crores entirely to the Respondent Company in relation to the said loan, substantial amounts would still be outstanding and payable by the Respondent Company to the Petitioner. In this view of the matter, find no substance in the contention of Mr. Cama that there is a serious dispute with reference to the claim made in the Petition. For all the aforesaid reasons, find that the substantial sum is undisputedly due and payable by the Respondent Company to the Petitioner which would warrant admission of the Company Petition. In this view of the matter, the following order is passed - (i) The Company Petition is admitted and made returnable on 16th August, 2016. (ii) The learned counsel appearing on behalf of the Respondent Company waives service of the Company Petition under rule 28 of the Company (Court) Rules, 1959. (iii) The Company Petition shall be advertised in two local newspapers viz. (i) Free Press Journal (in English) and (ii) Navshakti (in Marathi) as also in (iii) Maharashtra Government Gazette. Any delay in publication of the advertisement in the Maharashtra Government Gazette and any resultant inadequacy of notice shall not invalidate such advertisement or notice and shall not constitute non-compliance with this direction or with the Companies (Court) Rules, 1959. (iv) The Petitioner shall, on or before 8st July, 2016 deposit a sum of ₹ 10,000/- towards publication charges with the Prothonotary and Senior Master, under intimation to the Company Registrar, failing which the Company Petition shall stand dismissed for non-prosecution without further reference to the Court. After the advertisements are issued, the balance, if any, shall be refunded to the Petitioner. It is clarified that the proceedings filed by the Petitioner against the Respondent Company in the DRT for recovery of its dues, shall be decided by the DRT on its own merits and without being influenced by any observations made in this order.
Issues Involved:
1. The Respondent Company's inability to pay its debts. 2. The validity and enforceability of the Deeds of Guarantee. 3. Allegations of suppression by the Petitioner. 4. Adequacy of security provided for the debt. 5. Jurisdiction of the Company Court versus the Debt Recovery Tribunal (DRT). 6. Whether the Respondent Company being a profit-making entity impacts the winding-up petition. Detailed Analysis: 1. The Respondent Company's Inability to Pay Its Debts: The Petitioner filed a Company Petition seeking to wind up the Respondent Company on the grounds of inability to pay debts amounting to ?94.37 Crores as of 31st July 2015. The Respondent Company, acting as a guarantor for loans given to two borrowers, failed to pay the outstanding amounts despite multiple notices and demand letters from the Petitioner. 2. The Validity and Enforceability of the Deeds of Guarantee: The Respondent Company executed Deeds of Guarantee for loans sanctioned to Borrower No.1 and Borrower No.2. The terms of these guarantees were irrevocable, absolute, and independent of any rights and remedies, making the Respondent Company liable as a principal debtor. The Petitioner invoked these guarantees when the borrowers defaulted, but the Respondent Company failed to make the necessary payments. 3. Allegations of Suppression by the Petitioner: The Respondent Company alleged that the Petitioner suppressed material facts, including the non-execution of a guarantee for a ?12 Crores loan and the partial disbursement of a ?25 Crores loan. However, the Court found that the Petitioner had filed a further affidavit disclosing all relevant facts, including the non-guarantee for the ?12 Crores loan and the partial disbursement of the ?25 Crores loan. The Court held that these omissions were not intentional suppressions but genuine mistakes. 4. Adequacy of Security Provided for the Debt: The Respondent Company argued that the Petitioner's claim was fully secured by a mortgaged property valued at ?74 Crores. However, the Court noted that the property was mortgaged by Borrower No.1, not the Respondent Company. Additionally, attempts to sell the property yielded bids significantly lower than the claimed amount, indicating that the security was insufficient to cover the Petitioner's claim. 5. Jurisdiction of the Company Court versus the Debt Recovery Tribunal (DRT): The Respondent Company contended that the DRT had exclusive jurisdiction to adjudicate the claims made by the Petitioner. The Court clarified that the Company Court's role was not to adjudicate the exact amount due but to determine whether the Respondent Company was indebted to the Petitioner in a sum exceeding ?1 lakh. The jurisdiction to wind up a company is not available to the DRT, and the Company Court could proceed with the winding-up petition. 6. Whether the Respondent Company Being a Profit-Making Entity Impacts the Winding-Up Petition: The Respondent Company claimed that it was a profit-making entity and should not be wound up. The Court found that this claim was not substantiated with detailed evidence. Moreover, the Court held that substantial amounts were undisputedly due and payable by the Respondent Company, warranting the admission of the winding-up petition. Conclusion: The Court admitted the Company Petition for winding up the Respondent Company, finding that substantial amounts were due and payable, and the defenses raised by the Respondent Company were neither in good faith nor bona fide. The Court directed the advertisement of the petition and clarified that the proceedings in the DRT would continue on their own merits without being influenced by the observations made in this order.
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