2019 (7) TMI 64 - HC - Indian Laws

Winding up of petition - dishonor of cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act - HELD THAT - What is argued before the learned Single Judge and what Mr. Sawant in substance attempts to argue before us, though with no success, is that in winding up Petition it matters not that there are disputed questions of facts or that the Court will have to engage in a complex enquiry requiring evidence. This is not even a stateable principle in this branch of law. As the learned Single Judge correctly observed, summary suit and winding up petition share a broadly similar approach. In both, the Respondent or Defendant must be shown to have no tenable or plausible defence. Unless that defence is moonshine, an order could not be passed. A conditional order may be possible, but it is not inevitable. In the present case no conditional order was possible either. There is no manner of doubt that there is indeed an invocation of a pledge. Whether or not there is a realization pursuant to that pledge invocation is entirely immaterial. The Petitioner cannot possibly attempt to realize security, and then claim the whole of the amount and not just the shortfall is the debt due. If there was indeed a shortfall, then it will have to be examined whether Wazir Financial ever called upon Birla Cotsyn to furnish additional security. All these are disputed questions of fact arising from a bona fide defence. We cannot conclude that the Petitioner has shown unequivocally or unambiguously that there is an ascertained liquidated debt due to it from the Respondent - Appeal is entirely without substance - Appeal dismissed.

Summary

Issues Involved:
Winding up petition based on unpaid debt, failure to reply to statutory notice, invocation of pledge, disputed debt amount, substantial grounds of defense in winding up petition.

Analysis:

1. Unpaid Debt and Failure to Reply to Statutory Notice:
The appellant sought the winding up of the respondent company based on an ascertained and liquidated debt that was due and payable. The appellant alleged that the respondent failed to pay the amount and did not respond to the statutory notice issued by the appellant. The learned Single Judge passed the order under challenge after hearing both sides, considering the debt and non-payment issues.

2. Invocation of Pledge and Disputed Debt Amount:
The appellant claimed that the debt was secured by various instruments, including promissory notes, post-dated cheques, and shares held by the respondent. The appellant invoked a pledge of the shares as security, alleging that the respondent failed to repay the debt. However, the respondent argued that the debt was fully satisfied and even claimed that the appellant had recovered amounts in excess. The dispute centered around the actual amount of debt due and payable.

3. Substantial Grounds of Defense in Winding Up Petition:
The learned Single Judge analyzed the rival contentions and held that it was not possible to ascertain the actual amount recovered by the appellant. The judge emphasized the need for a clear demonstration of an ascertained and liquidated debt for a winding up petition to succeed. The court highlighted that the company court operates on principles of discretion and equity, requiring substantial grounds of defense that are not dishonest or speculative.

4. Summary Suit and Winding Up Petition Approach:
The judgment emphasized the similarity in approach between summary suits and winding up petitions. Both require the absence of a tenable defense for a favorable order. The court rejected the argument that disputed facts or complex inquiries should not be considered in winding up petitions. It stressed the importance of a bona fide defense and the need to balance rival contentions before concluding on the existence of an ascertained debt.

5. Final Decision and Dismissal of Appeal:
After a thorough analysis of the arguments presented, the court dismissed the appeal, stating that there was no unequivocal demonstration of an ascertained liquidated debt due to the appellant from the respondent. The judgment concluded that the appeal lacked substance and was dismissed without any order as to costs, affirming the decision of the learned Single Judge.