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2017 (5) TMI 316 - HC - Companies LawWinding up petition - Held that - Indian Overseas Bank has already filed 52 original applications before Debt Recovery Tribunal, Bombay against the respondent for recovery of over ₹ 1123,19,62,542/-. This court also noticed that the account of the respondent has been declared as fraudulent by the secured creditors in the CDR meetings and all the lenders have already exited and have decided to file the recovery proceedings against the respondent. The respondent though had applied before BIFR for revival, could not succeed. This court has held that there are not even remotest possibility of revival of the respondent company. Before the remaining assets of the respondent are friterred away, appointment of the Official Liquidator as Provisional Liquidator is absolutely warranted. As in case of Sublime Agro Limited vs. Indage Vinters Limited in Company 2010 (3) TMI 1180 - BOMBAY HIGH COURT held that CDR scheme is admittedly a voluntary scheme and not binding on the unsecured creditors of the company. It is held that the provisions pertaining to winding up proceedings under the Companies Act are more particularly meant for protecting the interest of the unsecured creditors of the company who are most affected lot when a company becomes commercially insolvent. The secured creditors of the company can always pursue their claim by keeping themselves out of the winding up proceedings. By the said judgment this court admitted the said Company Petition No.136 of 2014 and has also appointed the Official Liquidator as the provisional liquidator. At the request of the learned counsel for the respondent, this court has directed not to advertise the petition for a period of two weeks from the date of the said order. In my view the said judgment delivered by this court in Company Petition No.136 of 2014 applies to the facts of this case. I am respectfully bound by the said judgment. Thus Company Petition admitted.
Issues Involved:
1. Whether the petitions for winding up of the respondent company are maintainable under the Companies Act, 1956. 2. Whether the transactions between the petitioner and the respondent fall under the definition of money lending under the Bombay Money Lenders Act, 1946. 3. Whether the statutory notice was properly served at the registered office of the respondent. 4. The impact of the Corporate Debt Restructuring (CDR) scheme on the winding-up proceedings. 5. The validity of the cheques issued by the respondent as collateral security. Issue-wise Detailed Analysis: 1. Maintainability of Winding Up Petitions: The petitioner filed three company petitions seeking the winding up of the respondent on the grounds of inability to pay debts. The petitions were based on dishonoured cheques issued by the respondent. The court held that the winding-up petitions are not for the recovery of any amount but for seeking the winding up of the respondent under sections 433 and 434 of the Companies Act, 1956. The court noted that the respondent is heavily indebted and unable to pay its debts, thus admitting the petitions. 2. Applicability of Bombay Money Lenders Act, 1946: The respondent argued that the transactions were money lending and the petitioner did not hold a valid money lending license, making the debt unrecoverable under section 10 of the Bombay Money Lenders Act, 1946. The court referred to previous judgments, including the one in Summons for Judgment No.21 of 2013, where it was held that loans advanced against negotiable instruments are excepted from the application of the Bombay Money Lenders Act, 1946. The court concluded that the provisions of the Bombay Money Lenders Act do not apply to the transactions in question, and the defence raised by the respondent was frivolous and moonshine. 3. Service of Statutory Notice: The respondent contended that the statutory notice was not served at the registered office address, thus questioning the maintainability of the petitions. The court found that the petitioner had issued statutory notices to both the registered and administrative office addresses of the respondent, and the respondent had responded to one of the notices without raising any issue about the service. The court dismissed this defence as contrary to the admitted facts on record. 4. Impact of CDR Scheme: The respondent mentioned a CDR scheme for restructuring its debts. However, the court noted that the CDR scheme had already failed, as observed in the order dated 11th April 2017 in Company Petition No.136 of 2014. The court held that the failure of the CDR scheme and the respondent's inability to revive itself over the past three years justified the winding-up proceedings. 5. Validity of Cheques as Collateral Security: The respondent claimed that the cheques were issued as collateral security and not for repayment of the loan. The court referred to previous judgments rejecting similar defences, stating that if a cheque is issued as security for repayment, it implies that the cheque can be deposited and honoured in the event of non-payment. The court found this defence to be merely illusory and bogus. Conclusion: The court admitted the winding-up petitions, allowing the petitioners to intervene and directing the petitions to be heard along with Company Petition No.136 of 2014. The court also ordered the petitioner to advertise the petitions in local newspapers and the Maharashtra Government Gazette. The appointment of the Official Liquidator as the provisional liquidator was not considered at this stage, but the petitioner was given liberty to apply for such an appointment if the relevant order in Company Petition No.136 of 2014 is set aside or vacated. Order: The court admitted Company Petition Nos. 496, 497, and 498 of 2014, directed advertisements of the petitions, and allowed the intervenors to participate. The court deferred the advertisement of the petitions for six weeks at the request of the respondent’s counsel.
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