9911796707
TMI Blog1990 (9) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... 100 each, and 10,00,000 unclassified shares of Rs. 10 each. The issued and subscribed capital consists of 38,74,500 equity shares of Rs. 10 each, and 20,000 9.5 per cent, redeemable cumulative preference shares of Rs. 100 each. The petitioners in Company Petitions Nos. 4, 6, 9, 12 and 15 are partnership firms dealing in supply of goods, and the petitioner in Company Petition No. 7 is carrying on a business in transport of goods. In Company Petition No. 4 of 1989, the petitioner, Smt. Manjulabai, claims to carry on business in the name and style of R. Samrathmal at 74, Chandni Chowk, Ratlam. In Company Petition No. 6 of 1989, the petitioner is Sardarmal Bordia, karta of Sardarmal Sagarmal Bordia (HUF) carrying on the business in the name and style of Shree Catalyst at 68, Industrial Area, Ratlam. In Company Petition No. 9 of 1989, Smt. Sadhana Devi, resident of Chandni Chowk, Ratlam, is the petitioner who is carrying on a business in the name and style of Nanalal Samarthmal at 74, Chandni Chowk, Ratlam. In Company Petition No. 12 of 1989, Smt. Manjulabai is the petitioner who carries on a business in the name and style of I.S. Paints (India) at 50, Chandni Chowk, Ratlam. In Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner informing them that the vice president, Shri Sinha, has been sent on leave by the company (annexure 286). On this letter, the petitioner did not suspect anything, but the petitioner was shocked to receive a letter dated June 13, 1988, from the company making a false allegation that the rates charged by the petitioner were higher and that the goods had not been delivered or diverted. The letter is marked as annexure 287. According to the petitioner, the contents of the aforesaid letter were totally false and unfounded. As the company was unable to meet its financial obligations, it took a dishonest stand as above. The company has issued similar letters to other suppliers also. The goods were supplied at the stipulated rates on the order of the company and the delivery challans were duly acknowledged showing the receipt of the goods. Therefore, the orders and the delivery acknowledgments clearly show that the stand of the company was dishonest. Thereafter, the company, instead of making payments, asked the petitioner to send a copy of the deed of the petitioner's partnership firm and extracts of registration on the pretext that they were required for audit formalities. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also been filed on identical grounds as those in Company Petition No. 4 of 1989, except that the petitioner carries on a business in manufacture and sale of nickel alluminium alloy, nickel sulphate, etc. The last supply by this firm to the company was made on May 10, 1988, and the last payment to this firm was made by the company on the same day. Since then, no payment was received from the company although the goods were supplied to the company on credit. As per the annexed statement, enclosure 1, the petitioner has to recover a sum of Rs. 33,26,657.71 from the company on account of balance of the price of goods ordered by the company and supplied by the petitioner to the company. The orders made by the company to the firm and the delivery challans with acknowledgments have been filed by the petitioner as annexures. The petitioner has also claimed interest at the rate of Rs. 18 per cent, per annum on the amount which remains unpaid. The company, in part payment of the amount due from the company to the petitioner, issued two cheques on May 15, 1988, for Rs. 50,000 each bearing Nos. 892309 and 892310. On May 20, 1988, two cheques were again issued bearing Nos. 892311 and 892312 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness in supply of pipe-fittings, pipes, lime, RCC pipes, hardware materials, ropes and other goods which were supplied to the company. The last supply of the goods by this firm to the company was on May 23, 1988, and the last payment received from the company by the firm was on May 31, 1988. According to the statement, this firm has to recover a sum of Rs. 4,57,398.31 from the company on account of the balance of the price of goods ordered by the company and supplied by the petitioner to the company. In this petition also, the petitioner has claimed interest at the rate of 18 per cent, per annum on the unpaid amount. The company had also issued a cheque No. 888635, dated June 5, 1988, for Rs. 30,000 to this firm but the payment of this cheque was withheld by the company and thereafter a letter was issued by the company dated June 13, 1988, to this firm of the same text as has been issued to the petitioner in Company Petition No. 4 of 1989, which is annexure 595. The letter was replied to by the petitioner on June 9, 1988, mentioning therein that the contents of the letter sent by the company were false and baseless. This firm was also asked by the company on June 21, 1988, to send ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the pretext that they were required for audit formalities. Thereafter, the company, instead of making payment, issued letter dated July 21, 1988, with enclosures to the firm claiming an amount of Rs. 1,34,849.07 from the petitioner. According to the petitioner, this counter-claim of the company is totally false and baseless. Thereafter, the petitioner also wanted to send a statutory notice in the month of August, 1988, to the company but, on the assurance of the general manager of the company, she did not send it and instead the notice was served on the company on December 5, 1988. The company sent a false reply on December 28, 1988. The reply is false and baseless. Therefore, on similar grounds as has been averred in the other petitions, this petitioner has also made a prayer for winding up of the company. In Company Petition No. 15 of 1989, the petitioner is Ramesh Chordia, who carries on the business in the name and style of Ramesh Chordia and Co., Ratlam. He has filed the petition for winding up of the company on the same grounds as the petitioners in the other aforementioned company petitions. The only difference, in fact, in the present petition is that the petitioner fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest thereon at the rate of 18 per cent, per annum, as stipulated in the company's transport contracts. The interest amount is quantified at Rs. 1,30,588.20 for the period from June 1, 1988 to January 31, 1989. According to the petitioner, the petitioner is associated with the company as the company's accredited transporter since December, 1984, under transport rate contracts entered into and executed between the company and the petitioner as per the schedule given in para 7 of the petition. The copies of the contracts have also been annexed to the petition as exhibits A to M. In accordance with the aforesaid transport contract, the petitioner rendered transportation services in carrying and delivering the company's materials from one place to another to the entire satisfaction of the company. Earlier, the bills which were submitted to the company were being paid by the company regularly. However, according to the statement of accounts, exhibit-N, the company owes a sum of Rs. 11,63,234.80 to the petitioner as on May 31, 1988. The company had already checked the accounts up to March 31, 1988, and the accounts department of the company has confirmed the aforesaid accounts which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the company, wherein the names and designations of the officers with whom the petitioner dealt during the course of his business were given. They also specified that the contracts were given by the senior executives and, therefore, the stand taken by the company is baseless. The company, thereafter, sent another letter through their advocate which was received by the petitioner's advocate on December 30, 1988, wherein general denials without any substance or merits had been made. In the letter, the company took a stand that the names of the officers shown in the rejoinder were only formal signatories. According to the petitioner, the company is liable to pay the amount claimed by the petitioner and the company is unable to pay its debts within the meaning of section 433( a ) read with section 434(1)( a ) of the Companies Act, 1956. The financial position of the company is not good and the share value of the company has gone down by 35 per cent, by December 3, 1988. According to the petitioner, the company is commercially insolvent and, therefore, it is just and convenient that the company be wound up and an official liquidator be appointed. After hearing learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, in particular, the aforesaid firm of Rameshchandra Chordia and S. Bordia. On a thorough investigation, it was found that the aforesaid firms have made huge profits and have perpetrated a fraud upon the company to the tune of Rs. 56,03,333. Therefore in July, 1988, the company forwarded details in a tabular form containing all particulars of overcharges and illegal gains by all the said firms and called upon them to refund to the company the illegal profits made by them. The company also, by its letter dated July 24, 1988, jointly addressed to a few of the said firms, put the said facts on record and informed the said various firms which raised false claims against the company that, as a matter of fact, it is the company which has to recover a huge amount of over Rs. 56 lakhs from the said firms. It has also been stated that the statutory notices by the aforesaid petitioners were given at the same time through a common advocate and the petitions have also been collectively filed by the same common advocate. As such, it is manifest that the petitions are filed as an abuse of the process of court and collusively with the sole object, namely, to hurt the company and somehow or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with current assets were Rs. 36 crores against the obligations of the company to the tune of Rs. 23 crores. The company is also implementing a scheme of automation, modernisation, technology upgradation and even the various public sectors, financial institutions and banks have come forward and have agreed to finance the said schemes of the company by subscribing to the convertible debenture issue for which the company has already received sanction from the Controller of Capital Issues, Government of India. The decision by the Government of India to sanction and the financial institutions to contribute to the implementation of the scheme have been taken after thoroughly checking the affairs and accounts and economics of the company. If the company would have been in an insolvent state of circumstances, the financial institutions would not have extended their help to the schemes of the company by investing such huge funds in convertible debentures and sanction would not have been granted by the Government of India as mentioned above. As such, in the face of the aforesaid facts and circumstances, there is no case for winding up. It has also been stated that the share price of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners, the averments made by the company have been denied. Thereafter, the company filed another affidavit of Shri Shrivastava wherein some details have been mentioned showing that the petitioners are in league with Shri R.P. Sinha and, in collusion with Shri R.P. Sinha, have earned huge illegal profits from the company. The company has also filed a detailed affidavit of Shri K.K. Ravindranath, son of Shri M.V. Menon, an officer of Jayant Vitamins Ltd. (company), who has explained the various dealings of the petitioners with the company with the connivance of Shri R.P. Sinha and has also shown some facts to show that the petitioners were in league with Shri R.P. Sinha and, as a result of the aforesaid unholy alliance, they had perpetrated fraud on the company and had made illegal profits for which a claim has already been made against the petitioners. Actually, the petitioners have filed these petitions to wriggle out of their liabilities and to save Shri R.P. Sinha. Along with the affidavit, various documents have been filed to support the averments made in the affidavit. In reply to Company Petition No. 7 of 1989 filed by a transporter, the company has filed its reply throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the company, the first question which falls for consideration is whether the counter claim set up by the company is bona fide or whether it has been set up to defeat the undisputed claims of the petitioners. Learned counsel for the petitioner in Company Petition No. 7 of 1989, Shri G.M. Chaphekar, has strenuously argued that the petitioner had transported the goods of the company in compliance of the orders given by the Senior Executives of the company and the officers were all through in the know of the contracts which the petitioner had entered into with the company pertaining to transport of goods. The accounts were also practically settled. Shri Chaphekar has drawn my attention to the various documents filed by the petitioner in support of his argument that the plea raised by the company is untenable, lacking in bona fides and has been raised only to avoid the consequences because of the neglect in payment of the debt even after the statutory notice. On the other hand, learned counsel for the company, Shri Parikh, assisted by Shri Joshi, has strenuously argued that the counter-claim of the company is bona fide as it is prepared from the documents filed by the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioners, then a presumption under the law should be drawn against the company that it is not in a position to pay its debts. From the clear wording of the law and the principle enunciated by the different High Courts in this respect, it is practically a settled decision of law that when a creditor comes forward with a prayer for winding up of the company on the ground of the nonpayment of dues, then the creditor has to establish that the debt owed by the company is clear, valid in law, unimpeachable and cannot be disputed. However, if there is a dispute about the debt, the court has to consider all the facts placed before it and arrive at a decision on whether the dispute is genuine and has been raised bona fide. If the court arrives at a conclusion that disputes have been raised only for avoiding payment or raising a controversy on flimsy grounds, then the company court can reject the contention of the company holding that the dispute has been raised only with a purpose to create a defence on flimsy grounds against the prayer of winding up. The Supreme Court of India, in the case of Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. [1972] 42 Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that the accounts which have been filed by the company after the investigation do not present a correct picture inasmuch as there are many mistakes in the accounts submitted by the company. In this regard, it is sufficient to say that only because of certain discrepancies in the counter-claim submitted by the company supported by the details of the counter-claims, the counter-claims of the company cannot be thrown out as mala fide or baseless. The company, before the statutory notice was given to it, had informed the petitioners that they had obtained much higher prices in collusion with the company's officers and the company claimed amounts mentioned in those notices and as detailed in the statement of accounts sent along with the notices. Learned counsel for the parties have placed reliance on their respective documents to show that their respective cases are strong. However, this court cannot go into the accuracy of accounts or the details given in the accounts. The only point which has to be seen in these petitions by this court is whether the counterclaims which have been raised by the company are bona fide and can be held to be substantial or are such on which the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The fact that the share price of the company has also gone up from Rs. 22 to Rs. 50 within a period of one year also goes to show that the company is financially stable. It is also manufacturing some drugs which are import substitutes. The company has also given details of its dealings with other big companies and has averred that the company is paying regularly to all other creditors, including the said big companies. Therefore, it cannot be held that the company is financially unstable and is not in a position to make payments to its creditors. As such, prima facie, it appears that the company is in such a financial state wherein it cannot be held that the substratum of the company has been destroyed and it has no reasonable prospect of making a profit in the future. The petitions have also been opposed by the workers' union of the company and the employees' association of the company on the ground that the company has given employment to 700 persons and it is in a good financial state. The workers have also supported the plea of the company that one Shri R. P. Sinha was responsible for causing huge losses to the company and through Shri Sinha and some other officers, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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