9911796707
TMI Blog1997 (3) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... . The company is stated to have won export awards for many years till 1992-93 from the Leather Exports Promotion Council, established by the Government of India. In or about 1994-95, it decided to diversify its operations and enter into new projects including that of integrated hotel project. In order to raise funds for the diversified programme, the company decided to enter the capital market in February, 1995, and published a prospectus for the issue of 1,75,84,800 "zero" interest unsecured fully convertible debentures of Rs. 199 each for cash at par aggregating to Rs. 349,93,75,200. It appears that for various reasons, which are not relevant for deciding this petition, the company was not able to get the minimum subscription stipulated in the prospectus. Around the same time, in or about January, 1995, at the request of the company, the petitioner, Ranbaxy Laboratories Limited, granted a loan of Rs. 2,00,00,000 to the company by way of intercorporate deposit. The amount was paid by way of two short-term loans of Rs. 1,00,00,000 each on interest at the rate of 22 per cent. per annum for 90 days and 91 days respectively. Payment of this amount of Rs. 2,00,00,000 was made by two c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and Investment Ltd. 1,40,00,000.00 23.5% 1,00,00,000.00 21% 50,00,000.00 22% 117/96 Escorts Limited 60,00,000.00 23% 3/96 Milestone Finance and Leasing Pvt. Ltd. 50,00,000.00 20.5% 93/96 Bajaj Auto Ltd. 50,00,000.00 20% 237/95 Parle Exports 1,00,00,000.00 20% 214/96 Concept Communication Ltd. 2,78,18,272.00 16% 237/96 Sundaram Finance 2,00,00,000.00 277/96 Neeru Arts 47,63,815.80 146/95 SRF Finance 50,00,000.00 On receipt of notice from this court to show cause as to why the petition be not admitted, the company has filed its reply. While the company has not denied its liability to pay the amount for non-payment of which the present petitions have been filed, the stand taken by the respondent-company is that it is commercially solvent and is able to pay its debts. According to the company, the existing realisable assets of the company are sufficient to meet all liabilities. The respondent is alleged to have assets, the market value of which is alleged to be about Rs. 200 crores. It is stated in the reply that the loan was taken by the company for its working capital requirements in the usua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proposal made by the petitioner itself, the company would start making payment from July 31, 1996, onwards and would continue to make the payment till June 30, 1997. According to the proposal submitted by the petitioner and agreed to by the company, the total payment of the principal and interest was to be made within a period of 14 months and the first instalment of l/14th of the amount of the principal plus total interest up to that date was to be paid by April 30, 1996. Subsequent instalments of l/14th of the principal amount plus interest on reducing balance was to be paid on the last day of every subsequent month. Ms. Sadhna Sachdeva, the whole-time director of the company and wife of Mr. Pavan Sachdeva, managing director of the company, also filed an affidavit undertaking to pay to the petitioner the payment in terms of the schedule filed in court by the petitioner. This undertaking was, however, not honoured by the company and not a single penny is stated to have been paid till date to the petitioner. The petitioner has, therefore, filed a contempt petition against Ms. Sadhna Sachdeva for her having deliberately and wilfully violated the undertaking given to the court. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions which have been filed against the company, the company has already settled with three petitioners, namely, Concept Communication Limited; Sundaram Finance and Neeru Arts and these three petitioners are, therefore, not pressing their petition. Besides the three petitioners before the court, the company is also stated to have settled its disputes with Onlooker Press and Reliance Agency. While the total principal amount due to all the petitioners from the company was more than Rs. 17 crores, the company is stated to have settled its disputes with the creditors to whom the company owed a sum of about Rs. 5.88 crores. The contention of the company is that the public issue of the company was entirely underwritten by the underwriters through the Delhi Stock Exchange and the Securities and Exchange Board of India (SEBI) and on the failure of the public issue the company is entitled to receive approximately a sum of Rs. 350 crores from the underwriters for which arbitration proceedings have already been filed before the Delhi Stock Exchange. It is also the contention of the company that on account of the failure of SBI Caps, the lead manager to the public issue, to fulfil its obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a debt owing by the company and the court is satisfied that there is no bona fide dispute in regard to the petitioners debt, the creditor is entitled to a winding up order ex debito justitiae and the court will not listen to a defence on the part of the company that it was not commercially insolvent or that its financial position is not such as to be unable to pay its debts. The right to a winding up order, however, is qualified by another rule, namely, that the court will regard the wishes of the majority in value of the creditors, and, if, for some good reason, they object to a winding up order, the court in its discretion may refuse the order. It is, therefore, the submission that once there is a compliance with section 434(1)(a) and the company in spite of notice having been received by it, has failed to pay the amount due from it to the creditor, the court must pass the winding up order. In any case, it is the contention of the petitioners that at this stage the court is only forming a prima facie view whether the company is unable to pay its debts and the question of winding up of the company will come only after the citation is published. This, according to the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Co. v. Madhu Woollen Industries Pvt. Ltd. [1972] 42 Comp Cas 125 (SC), Dhootpapeshwar Sales Corporation Pvt. Ltd., In re [1972] 42 Comp Cas 139 (Bom.), Tube Investment of India Ltd. v. Everest Cycles Ltd. [1984] 56 Comp Cas 165 (Gauhati) and Sree Shanmugar Mills Ltd. v. S.K. Dharmaraja Nadar [1969] 39 Comp Cas 297 ; AIR 1970 Mad. 203. In Pradeshiya Industrial and Investment Corporation of U.P. v. North India Petro Chemical Ltd. [1994] 79 Comp Cas 835 (SC), it was held by the Supreme Court that an order under clause (e) of section 433 of the Act is discretionary. It was also held that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court. The judgment is relied upon by Mr. Rohtagi in support of his contention that the present petition has really been filed to exercise pressure and the same should, therefore, be held to be an abuse of the process of the court inasmuch as the company is stated to be comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the final order of winding up is to be passed. In Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd., AIR 1971 SC 2600; [1972] 42 Comp. Cas. 125 (SC), it was held that where the debt was undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay. Where, however, there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed, the court will make a winding up order without requiring the creditor to quantify the debt precisely. The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law, and, thirdly, the company adduces prima facie proof of the facts on which the defence depends. Another rule which the court follows is that if there is opposition to the making of the winding up order by the creditors, the court will consider their wishes and decline to make the winding up order. Though, this is not the stage for me to consider this aspect of the matter, however, even the creditors are not opposing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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