2012 (6) TMI 497 - HC - Companies Law

Winding up petition - denial - respondent Company set up a case of adjustment and stated that M/s RMP Fabrics, being a sister concern of the appellant owed monies to M/s Indian Handicrafts, a sister concern of the respondent Company - appellant contended said defence to be highly improbable, unbelievable and a sham - Held that - It is found that RMP Fabrics has filed petition against Indian Handicrafts for recovery of money and in which the respondent Company has also been impleaded as a defendant, for recovery of the amounts. RMP Fabrics also argued that the said defence was sham and amounted to an admission. It is undisputed that said application was dismissed and which order has attained finality. Hence, once the Suit Court has negatived the plea of the sister concern of the appellant, of the defence of Indian Handicrafts and the respondent Company being sham and amounting to admission, and which order had attained finality, no contrary view could be taken in the company petition - Petition dismissed.

Summary

Issues:
- Appeal under Section 483 of the Companies Act, 1956 challenging the order for winding up of the respondent company.
- Dispute over the debt owed by the respondent company to the appellant for fabric supplied.
- Allegation of adjustment in response to the winding-up petition.
- Interpretation of the doctrine of single economic entity in the context of transactions between sister concerns.
- Consideration of the Suit filed by the appellant for recovery of the debt.
- Application of Order 12 Rule 6 of the CPC in determining admissions and liabilities.
- Evaluation of the defense of the respondent company and the bona fide nature of the dispute.
- Applicability of the test for admissions in winding-up petitions.
- Error in the application of the doctrine of single economic entity.

Analysis:
1. The appellant filed an appeal under Section 483 of the Companies Act, 1956 challenging the dismissal of the winding-up petition against the respondent company for a debt of Rs. 17,26,952/- owed for fabric supplied. The respondent company claimed an adjustment based on alleged debts between sister concerns, which the appellant disputed as improbable and a sham.

2. The learned Company Judge found that the defense of the respondent company was bona fide and dismissed the winding-up petition, emphasizing the need for adjudication through evidence. The judge considered the Suit already filed by the appellant for recovery of the debt, following the precedent set in previous cases like IBA Health (I) (P.) Ltd. v. Info-Drive Systems SDN Bhd.

3. The appellant argued that the application of Order 12 Rule 6 of the CPC in the Suit filed by another party was different from the test to be applied in the winding-up petition. However, the court disagreed, citing precedents that admissions could be constructive and inferred from circumstances, similar to the assessment in winding-up petitions.

4. The judgment also discussed the doctrine of single economic entity in transactions between sister concerns, relying on previous cases like Pankaj Aluminium Industries (P.) Ltd. v. Bharat Aluminium Co. Ltd. The court found no error in the application of this doctrine by the learned Company Judge.

5. Ultimately, the High Court dismissed the appeal, stating that no error was found in the judgment. The court clarified that its observations would not influence the pending Suits related to the dispute. No costs were awarded in the matter.