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2013 (7) TMI 106 - HC - Companies LawWinding up petition - dishonoring of cheques - KRIL has questioned the power attorney ( POA ) issued in favour of the deponent of the affidavit in support of the present petition by stating that there is no specific authorization to file a winding petition - Held that - There is an admission of liability by KRIL in the sum of Rs. 1,80,21,139 together with interest and that KRIL is unable to pay the said sum to IFL. The defence of KRIL for not paying IFL the admitted liability is not bona fide. The petition is accordingly admitted and the OL attached to this Court is appointed as a PL of KRIL. A complete set of the paper book be served on the OL. The OL is directed to take over all the assets, books of accounts and records of the Respondent from the date this order is made effective as indicated hereafter. The OL shall also prepare a complete inventory of all the assets of the Respondent before sealing the premises in which they are kept. He may also seek the assistance of a valuer to value the assets. He is permitted to take the assistance of the local police authorities, if required. Publication of the citation of the petition be effected in the Official Gazette, The Times of India (English) and Jansatta (Hindi). The cost of publication shall be borne by IFL. The Directors of KRIL are directed to strictly comply with the requirements of Section 454 and Rule 130 and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit within a period of 21 days from the date of order. However, this order is kept in abeyance for eight weeks to enable KRIL to make payment to IFL of the sum of Rs. 1,80,21,139 together with up-to date interest, failing which this order will be made operational and further steps will be taken by the OL in terms of this order. The right of IFL to seek other available remedies to recover the balance sum owed to it by KRIL is reserved.
Issues Involved:
1. Validity of the factoring agreement and KRIL's liability. 2. Dishonour of post-dated cheques (PDCs) issued by KRIL. 3. Adequacy and service of legal notice for winding up under the Companies Act. 4. Admission of debt by KRIL. 5. Validity of the power of attorney (POA) for filing the winding-up petition. 6. Appointment of a Provisional Liquidator (PL) and subsequent steps. Issue-wise Detailed Analysis: 1. Validity of the factoring agreement and KRIL's liability: The Court examined the factoring agreement executed on 18th February 2010 between IFL and KIPL, which was acknowledged by KRIL through a letter dated 17th February 2010. KRIL's contention that it was not bound by the factoring agreement was rejected. The Court found that KRIL had acknowledged the factoring agreement and the notice of assignment of debt, thus establishing its liability. 2. Dishonour of post-dated cheques (PDCs) issued by KRIL: KRIL issued PDCs to IFL, which were dishonoured due to insufficient funds. The dishonoured cheques amounted to Rs. 1.80 crores. The Court noted that the issuance of these PDCs constituted an acknowledgment of liability by KRIL and demonstrated its inability to pay the amount. 3. Adequacy and service of legal notice for winding up under the Companies Act: KRIL argued that the notice dated 30th November 2010 was under Section 138 of the Negotiable Instruments Act, 1881, and not under Sections 433 and 434 of the Companies Act. The Court, however, held that even if the legal notice was not served at KRIL's registered office, the winding-up petition was still maintainable under Sections 433(e) read with Section 434(1)(c) of the Act. The Court emphasized that the commercial solvency of the company was the primary consideration. 4. Admission of debt by KRIL: The Court found that KRIL had admitted its liability to pay Rs. 1,80,21,139 to IFL, as evidenced by the dishonoured PDCs and the acknowledgment of the factoring agreement. The Court rejected KRIL's defence that it was not aware of the factoring agreement, noting that the letter dated 16th February 2010 clearly acknowledged the agreement. 5. Validity of the power of attorney (POA) for filing the winding-up petition: KRIL questioned the validity of the POA issued in favour of the deponent of the affidavit supporting the petition. The Court found that the POA was widely worded and included authorization for filing a winding-up petition. The decision in Shantilal Khusaldas and Bros. Pvt. Ltd. v. Chandan Bala Sughir Shah was distinguished on facts. 6. Appointment of a Provisional Liquidator (PL) and subsequent steps: The Court appointed the Official Liquidator (OL) attached to the Court as the PL of KRIL. The OL was directed to take over all assets, books of accounts, and records of KRIL, prepare an inventory, and seek assistance from a valuer and local police if required. The Court ordered the publication of the citation of the petition and directed KRIL's directors to comply with Section 454 of the Act and Rule 130 of the Rules. Conclusion: The Court admitted the petition for winding up KRIL and appointed the OL as the PL. The order was kept in abeyance for eight weeks to allow KRIL to pay the admitted sum of Rs. 1,80,21,139 with interest to IFL. If the payment was not made within the stipulated time, the OL was directed to take further steps as per the order. The right of IFL to seek other remedies for recovering the balance sum was reserved. The case was listed for further hearing on 25th September 2013.
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