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TMI Blog1979 (3) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... nding-up petition, It is alleged by the petitioning-creditor that the said amount was payable on demand together with interest at the rate of 18% per annum and the amount of interest from 15th of May, 1976, to 15th of November, 1978, amounted to Rs. 76,500 and the total claim in the winding-up petition was Rs. 2,46,500. The petitioning-creditor annexed a copy of the certificate of the banker, United Commercial Bank, which was to the effect that the said amount has been realised by the company by encashing the said cheque. The petitioning creditor's claim is that on the 6th of September, 1978, a statutory notice was served on the company and the company has not paid the said amount and has replied to the petitioning creditor's notice evasively. The petitioning-creditor has annexed the relevant correspondence to the winding-up petition which is set out hereunder : "A/150/789th Aug., 1978. M/s. John Paterson Co. (I.) Ltd. 96, Garden Reach Road, Calcutta-700023, Registered with A.D. Dear, Sir, My Client: Sri Promod Kumar Jalan of No. 32, Seth Jamunalal Bazar Street, Calcutta. Under instructions from my client abovenamed I address you as follows : On or about 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed Rs. 1,70,000 on interest @ 18% per annum from your client. In order to look into the matter please let us have particulars or the receipt for the said alleged sum and produce the same for our inspection for our doing the needful. Yours faithfully, For John Paterson Co. (India) Ltd. (Sd.) Illegible. (Accountant)" "Registered with A.D. A/314/78.21-9-1978, To John Paterson Co. (India) Ltd., 103/A, Foreshore Road, Shibpore, Howrah. My Client: Sri Promod Kumar Jalan. Dear Sirs, I am in receipt of your letter No. JP/BC/NPM/2235/78, dated September 13, 1978, and I have received instructions to reply thereto as follows: The sum of Rs, 1,70,000 (rupees one lakh and seventy thousand only), was paid to you by my client by account payee cheque being Cheque No. AT/13/8312629, dated 15th May, 1976, for Rs. 1,70,000 (rupees one lakh and seventy thousand only) drawn upon the United Commercial Bank, Burra Bazar, Calcutta, in your favour. The said cheque was duly encashed upon presentation. In the circumstances it is a futile attempt on your part to deny such payment. As you have failed and neglected to make payment of the said sum of Rs. 1,70,000 togethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Inspection of the original bank certificate is offered to you any time during office hours at my office. You are once again requested to pay the due; of my client together with up-to-date interest instead of raising frivolous disputes. Yours faithfully, Enclo : As above.(Sd.) A. P. Agarwalla". The company admitted that the said amount was paid by the petitioning-creditor to the company but alleged that the said amount was paid in respect of 170 debentures of Rs. 1,000 each allotted to the petitioning-creditor pursuant to an application for debenture dated the 15th May, 1976. The company produced before this court the original, in duplicate, of the alleged application of the petitioning creditor, a photostate copy of which is annexed to the affidavit of Anirudha Bose affirmed on the 13th Feb., 1979, being the grounds of the present application. The said alleged application is set out hereunder: "Annexure 'C ' Promod Kumar Jalan Phone: 33-4001/2 Office : 32, Seth Jamunalal Bazar Street, Calcutta-7 Phone: 47-5111/2 Residence : 3/1, Queens' Park, Calcutta-19 15th May, 1976 Application for Debenture The Directors, M/s. John Paterson Co. (India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account payee cheque being the money lent and advanced by the petitioning creditor to the company payable on demand with interest at the rate of 18 per cent, per annum. The petitioning creditor has not produced any document showing the receipt of the amount by the company or the company ever agreed to repay the said amount on demand with interest at the rate of 18 per cent, per annum whereas the company" has produced applications in duplicate made by the petitioning creditor for the issue of 170 debentures of Rs. 1,000 each in his favour dated the 16th of May, 1976. In fact, the company has issued the said debentures to the petitioning creditor on the 29th of June, 1976. Therefore, the petitioning creditor has come before, this court with a false case and the said amount is not the money lent and advanced by the petitioning creditor to the company but paid in respect of 170 debentures which has been duly issued and delivered to the petitioning creditor. Therefore, the company has produced document to show that the petitioning creditor's claim as made out in the winding-up petition is not only incorrect but false. The said amount is not payable on demand but only the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a winding-up petition was dismissed on the ground that the allegation in the petition was either tricky or false and in spite of the court giving an opportunity to the company (petitioner ?) to amen J the petition, that was not done and the petition was held to be an abuse of the process of the court. In that case an order of the court was held to be on a misrepresentation in the winding-up petition and, therefore, the winding-up petition was dismissed. This case again has no application to the facts of the present case where the company itself has admitted receipt of the amount and made out a case of debenture which the petitioning creditor could have made and admittedly there is arrears of interest payable on the alleged debentures of the company to the petitioning creditor which amounts to more than Rs. 44,000. Therefore, the said two English decisions cited by M. Sarkar have no application to the facts of the present case, although the principles laid down therein are so well-known and elementary that no question arises, and if to the facts of a particular case the said principle can be applied the winding-up petition would amount to an abuse of the process of the court. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent per annum. Mr. R. C. Nag, appearing with Mr. S. C. Chowdhary for the petitioning creditor, firstly, submitted that the petitioning creditor's case is that the said amount was money lent and advanced to the company repayable on demand with interest thereon at the rate of 18 per cent, per annum is true and correct. The petitioning creditor did sign blank letters and handed them over to Gajanan Khaitan, who is a de facto director of the company on his (latter's) representation that as the loan may be hit by the Companies (Acceptance of Deposits) Rules, 1975, it may be necessary to convert the said loan into debenture and for that purpose those blank letters would be utilised with the consent of the petitioning creditor. But as no consent was ever taken from the petitioning creditor by the said Gajanan Khaitan, it now appears that the said blank forms signed by the petitioning creditor are now converted into an alleged application for debentures of the company for the purpose of the present winding-up petition. Mr. Nag rightly submitted that, had those documents been there from the very beginning, the company would have produced or referred to the same at the first opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining a petitioning creditor from presenting a winding-up petition against the company where the debt was bona fide disputed and the company was solvent. Relying on the said observation, Mr. Nag submitted that from the company's balance-sheet it appears that the company is not solvent and, therefore, if the debt is disputed the winding-up petition is maintainable and cannot be said to be an abuse of the process of the court. Mr. Nag also cited a Division Bench decision of this court in Davco Products Ltd. v. Rameshwarlal Sodhani [1953] 91 Cal. LJ 98; AIR 1954 Cal 195, where it has been observed that where a winding-up application by a fully paid up shareholder was supported by creditors, the application was in substance a creditors' application and the winding-up order which was made on a defective verification of the winding-up application was not set aside. The said decision was cited by Mr. Nag (for the proposition) that even a defective application cannot be thrown out if there were grounds ultimately made out for maintaining the same on other grounds. Mr. Nag, thereafter, cited the Supreme Court decisions in Sriniwas Ram Kwnar Firm v. Mahabir Prasad, AIR 1951 SC 177, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to make an undisputed claim a disputed one. The company is neither paying the arrears of interest on the debenture nor the said sum as a loan but admittedly the company is indebted to the petitioning creditor and is unable to pay the said debt. Therefore, the winding-up petition cannot be said to be an abuse of the process of the court and should be admitted and direction for advertisement should be given. Considering the matter very carefully I have no hesitation in holding that the winding-up petition is not an abuse of the process of the court. On the other hand, the company's defence is mala fide , highly improbable and inconsistent. The company seems to be a public danger as the manner in which it has conducted the present proceedings before this court is not only deplorable but lacking in commercial morality, probity and honesty. I am inclined to accept the version of the petitioning creditor that the money was originally given to the company from the said Gajanan Khaitan, who appears to be a neighbour of the petitioning creditor, as stated by Mr. S.C Sen, appearing on behalf of the petitioning creditor, and both the families were well known to each other, being nei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vasive reply and hedging the issue from the very beginning and, ultimately, coming out with the case of debenture in the stay application is something which the court will not swallow as an honest and bona fide dispute to the claim of the petitioning creditor. Further, the debenture register, which has been produced before the court, on the face of it, appears to be a document which has been brought into existence recently and sought to be given a look as if it is a document of the company kept in the usual course from the very beginning. Further, the debenture counter-foils or issue books have not been produced and I am inclined to accept the version of the petitioning creditor that no such debenture was ever issued in favour of the petitioning creditor or at least no notice of the same was ever given to the petitioning creditor. The balance-sheet of the company for the year ending 31st March, 1978, which has been produced and kept in the records of these proceedings clearly shows that the company is not at all in a financially sound position. On the other hand, the company appears to be an insolvent company. After carefully examining the case made out by the respective part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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