2018 (12) TMI 1302 - HC - Indian Laws

Dishonor of Cheque - Winding up of Companies - company winded up on the ground that the Respondent companies are unable to pay its debts as and when they arise in the usual course of its business - Held that - The learned Company Judge has found the Appellants claim to be based on manipulated accounts. The claim being for sums due at the foot of the ledger account and not for dishonour of cheques. The learned Judge has considered the cheques issued by the Respondent Companies, to be blank or given as security. The Appellants, despite these cheques being given in good faith, deposited these cheques which were dishonoured - The learned Company Judge has observed that neither any complaint nor a Suit is filed under the Negotiable Instruments Act, for the dishonour of these cheques. Thus showing the falsity of the Appellants claim. There is no perversity in the findings on facts by the learned Company Judge to conclude that no liability of the Appellants could be said to have been admitted so as to warrant admission of these Company Petitions - petition dismissed.

Summary

Issues:
Challenge to orders dismissing Company Petitions for winding up based on inability to pay debts as they arise.

Analysis:
The appeals challenged the orders dated 23rd August, 2016, and 22nd August, 2016, dismissing the Company Petitions for winding up the companies due to their inability to pay debts as they arise. The appellants, engaged in the sale of glass, claimed that the respondent companies failed to make payments for the glass supplied, resulting in dishonored cheques. The company judge found discrepancies in the appellants' case, stating that the claims were based on manipulated accounts rather than the dishonored cheques. The judge noted that no complaint or suit was filed under the Negotiable Instrument Act for the dishonored cheques, leading to the dismissal of the Company Petitions.

Appellants' Arguments:
The appellants contended that the respondent companies failed to pay the dues reflected in the ledger account, despite issuing dishonored cheques. They argued that the company judge erred in finding discrepancies in the material on record and dismissing the petitions for not filing a complaint under the Negotiable Instrument Act. The appellants maintained that the failure to file a complaint under the Act does not render the proceedings under the Companies Act, 1956, invalid. They also claimed that the respondent companies did not provide evidence of full payment to justify the dismissal of the Company Petitions.

Court's Decision:
Upon reviewing the submissions, the court found no issues with the company judge's orders. The judge's findings of discrepancies in the appellants' case and the reliance on manipulated accounts were upheld. The court noted that the claims were based on ledger accounts rather than the dishonored cheques, which were considered blank or provided as security. The failure to file a complaint or suit under the Negotiable Instruments Act for the dishonored cheques weakened the appellants' case. The court concluded that the company judge's decision was based on factual findings and did not warrant interference. Therefore, the appeals were dismissed as lacking merit.