2018 (3) TMI 869 - HC - Companies Law

Winding up petition - non reply to statutory notice - commercial insolvency - Held that - The submissions that the claim under petition was not a debt and petitioner is not a creditor of the company but the claim is for damages and there was no ascertained liability which can be proved only in a Civil Court, is not tenable and requires to be rejected. There is no question of the claim being in respect of damages or being un ascertained in any manner whatsoever. On the contrary, the amount claimed, as satisfied, are admittedly ascertained and due and payable by the company to petitioner. There is no dispute in respect of the admitted outstanding of ₹ 6,07,00,000/ payable by respondent. Respondent company did not reply to the statutory notice that was sent by petitioner to respondent company. It is settled law that where no response to a statutory notice has been made, the court may pass a winding up order on the basis that amount claimed has not been denied by the company and there is a presumption of inability to pay by the company. Where no response has been made to the statutory notice, the respondent -company runs a risk of winding up petition being allowed. By virtue of Section 434 of the Companies Act 1956 a presumption of the indebtedness can be legitimately drawn by the court where no reply to the statutory notice is forthcoming. It should also be noted that in the affidavit in reply, there is not even a mention that the company is commercially solvent. On the contrary, there is an email dated 30th July 2014 (Exh. B ) from respondent -company to petitioner and also to Abhishek Aggrawal of Ksure that the company has been declared as non performing Asset and its bank account has also been frozen. Thus as each of the companies are unable to discharge their debts, are commercially insolvent and require to be wound up. Company petitions allowed

Summary

Issues Involved:
1. Winding up of companies due to inability to discharge debts and commercial insolvency.
2. Clubbing of petitions due to commonality of facts and consent order.
3. Default in payment as per consent order and subsequent legal proceedings.
4. Defenses raised by the respondent regarding insurance claim and creditor status.
5. Legal principles on subrogation and entitlement to proceed against third parties.
6. Respondent's false statements and non-response to statutory notice.
7. Commercial insolvency and inability to discharge debts.

Detailed Analysis:

1. Winding up of companies due to inability to discharge debts and commercial insolvency:
The petitions sought the winding up of four companies on the grounds that they were unable to discharge their debts and were commercially insolvent. The companies owed substantial amounts to the petitioner, who provided steel products, and failed to pay despite repeated demands and a statutory notice.

2. Clubbing of petitions due to commonality of facts and consent order:
The four petitions were clubbed together as the companies belonged to the same group and had similar facts, differing only in the amounts owed. A common consent order was passed on 25th June 2014, where the respondent company agreed to pay ?6.07 Crores in 18 installments.

3. Default in payment as per consent order and subsequent legal proceedings:
The respondent company defaulted on the agreed payment schedule, paying only ?12 lakhs out of the ?6.07 Crores. Consequently, the petition was admitted and advertised as per the self-operative order, and the Official Liquidator was appointed as Provisional Liquidator.

4. Defenses raised by the respondent regarding insurance claim and creditor status:
The respondent raised several defenses, including:
- Suppression of the fact that the petitioner received an insurance claim.
- No longer a debt outstanding, making the petitioner not a creditor.
- Petitioner not being a creditor within the meaning of Sections 433 and 434 of the Companies Act.
- The insurance payment went unnoticed when the petitions were filed.
- The respondent should be released from the consent terms.

5. Legal principles on subrogation and entitlement to proceed against third parties:
The court referred to previous judgments, including Morley Vs. Moore and Yorkshire Insurance Vs. Nisbet Shipping Co. Ltd., to establish that receiving payments from an insurance company does not preclude the petitioner from proceeding against the third party. The assured is entitled to recover from the third party, and the insurer may seek recovery from the assured if overpaid.

6. Respondent's false statements and non-response to statutory notice:
The respondent falsely claimed to have learned about the insurance payment only in July/August 2015, despite having knowledge since 2012. The respondent also failed to reply to the statutory notice, leading to a presumption of inability to pay under Section 434 of the Companies Act.

7. Commercial insolvency and inability to discharge debts:
The respondent company did not assert commercial solvency in its affidavit. Evidence showed that the company was declared a non-performing asset and had its bank account frozen. The court concluded that the companies were unable to discharge their debts and were commercially insolvent, warranting winding up.

Judgment:
The court ordered the winding up of the four companies and appointed the Official Liquidator with all powers under the Companies Act, 1956. The petitions were disposed of accordingly, with instructions for immediate action by the Official Liquidator.