2018 (4) TMI 164 - HC - Companies Law

Winding up petition - whether company petitions were not maintainable, for the reason that the respondent had received the amounts due and payable by the company from its insurers KSure- Korea ? - Held that - If there is subrogation in favour of the insurer, the insurer as subrogee can file a complaint under the Consumer Protection Act either in the name of the assured as his attorney holder or in the joint names of the assured and the insurer, for recovery of the amount due from the service provider. It was held that the insurer cannot in its own name maintain a complaint before a Consumer Forum under the Act, even if its right is traced to the terms of a letter of subrogation- cum -assignment executed by the assured. Even assuming that there was a subrogation applying the principles of law as laid down by the Constitution Bench in Economic Transport Organization, Delhi Vs. Charan Spinning Mills Pvt. Ltd. & Anr. (2010 (2) TMI 1264 - SUPREME COURT) needs to be held that the company petitions at the behest of the respondent were nevertheless maintainable.

Summary

Issues Involved:
1. Winding up of the appellant-companies.
2. Payment default by the appellant-companies.
3. Maintainability of the company petitions.
4. Alleged suppression of facts by the respondent.
5. Legal implications of subrogation and assignment of debt.

Issue-wise Detailed Analysis:

1. Winding up of the appellant-companies:
The appeals arise from a common order dated 11 January 2018, where the learned Single Judge ordered the winding up of the appellant-companies and appointed the Official Liquidator, High Court, Bombay as the Liquidator with all powers under the Companies Act, 1956. The order was based on the companies' failure to pay outstanding debts to the respondent.

2. Payment default by the appellant-companies:
The respondent, engaged in the supply of steel products, entered into multiple sales contracts with the appellant-companies, resulting in outstanding dues. The companies made partial payments but defaulted on the remaining amounts. A statutory notice dated 26 April 2013 was served but not replied to, leading to the filing of company petitions under Sections 433(3), 434, and 439 of the Companies Act. A consent order dated 25 June 2014 was passed, where the companies agreed to pay ?6.07 Crores in installments but defaulted, leading to the revival and advertisement of the company petitions.

3. Maintainability of the company petitions:
The company argued that the petitions were not maintainable as the respondent had received payments from its insurer, Ksure-Korea. The learned Company Judge rejected this defense, stating that the company, being a third party, could not claim that the debt was settled by the insurer. The respondent was still entitled to proceed against the company despite receiving insurance payments.

4. Alleged suppression of facts by the respondent:
The company contended that the respondent suppressed the fact of receiving payments from the insurer and attempted to unjustly enrich itself. The learned Company Judge found this defense unacceptable, noting that the company was aware of the insurance payment as early as June 2012, contradicting their claim of recent discovery.

5. Legal implications of subrogation and assignment of debt:
The company's argument that the insurance payment extinguished its debt to the respondent was rejected. The court held that the insurance contract between the respondent and its insurer did not affect the company's liability. The principle of subrogation allows the insurer to recover from the debtor, but the debtor cannot benefit from the insurance payment. The court referenced decisions in "Morley Vs. Moore" and "Yorkshire Insurance Vs. Nisbet Shipping Co. Ltd." to support this view.

Conclusion:
The court found no merit in the appeals and upheld the winding-up order. The company petitions were deemed maintainable despite the insurance payment, and the company's liability to the respondent remained intact. The appeals were rejected with no costs.