9911796707
TMI Blog1998 (4) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... s/loans/advances from the petitioner aggregating in all to Rs. 1,30,50,000 on which a sum of Rs. 12,37,892.94 was due towards interest. Pursuant to certain disputes and differences having arisen among the directors, Company Petition No. 36 of 1995 was filed before the Company Law Board, in which a compromise was arrived at on December 21, 1995. In the said agreement the directors of the respondent-company namely, Sri B. N. Bhargava and Dilip Bhargava agreed to repay the inter corporate deposit along with interest at the rate being charged by the State Bank of India, Kanpur, by April 30, 1996. In terms of the said compromise the respondent-company issued a cheque dated May 1, 1996, drawn on the State Bank of India for Rs. 1,30,50,000 towards the repayment of the inter corporate deposit. However, on April 26, 1996, the respondent-company requested the petitioner that the cheque for payment should be presented after three weeks and again on April 29,1996, informed the petitioner that the same can be presented on May 21, 1996. On May 18, 1996, another request was made that the cheque may not be presented as arrangements were being made to make payment by means of a demand draft which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was therefore only an arm twisting tactic. So far as the compromise filed in Company Petition No. 36 of 1995 before the Company Law Board was concerned, it was pleaded that the respondent-company was not a party in the said petition. The directors who had signed the compromise had done so in their individual capacity and not as nominees of the respondent. Moreover, the said compromise has not been fully acted upon by the petitioner. It was further pleaded that none of the contingencies as contemplated under section 433 of the Act have arisen. On the contrary the net worth of the company was of Rs. 3,896 lakhs whereas, its liability was about Rs. 2,705 lakhs, hence, the respondent-company is financially sound and it cannot be deemed that it is unable to pay its debts. On the contrary the greater Hindu undivided family owes approximately a sum of Rs. 45 lakhs to the two directors which shall come to the respondent-company as promoters' contribution. Consequently, also it cannot be said that the company is unable to pay its debts or that it should be wound up. A rejoinder affidavit has been filed to the said counter affidavit in which the defence taken in the counter has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enying the receipt of the inter corporate deposit and the fact that it has also not denied the issuing of a cheque for the said amount immediately after the compromise was entered into between the parties before the Company Law Board and, further as the amount was not paid despite the promise and the service of the statutory notice, the petitioner has substantially proved that the company is unable to pay its debts on account of its financial condition, consequently, a prima facie case of admitting this petition and for advertising the same is made out. It has also been contended that the defence sought to be taken by the respondent-company is not bona fide and the same is also without substance. Consequently also this petition deserves to be allowed. In support of his submission learned counsel has relied upon the decision of the Supreme Court in the case of Madhusudan Gordhandas and Co. v. Madhu Woollen Industries ( P. ) Ltd., AIR 1971 SC 2600 ;' [1972] 42 Comp Cas 125 and in the case of Sree Shanmugar Mills Ltd. v. Dharmaraja Nadar ( S. K. ) [1969] 39 Comp Cas 297 ; AIR 1970 Mad 203. He has also relied upon an unreported decision of this court in Company Petition N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate deposit, the same will not be binding on the respondent-company. In support of his submission, learned counsel has placed reliance upon an unreported decision of this court in Company Petition No. 13 of 1994 in the matter of Punjab National Bank v. Modi Rubber Limited (Company Petition No. 13 of 1994, decided on August 8, 1997) and on another decision of this court in Cawmpore Dyeing and Cloth Printing Company Ltd., In re (Company Petition No. 8 of 1995, decided on December 4, 1995). I have carefully considered the respective submissions made by learned counsel for the parties for the purpose of deciding that whether a prima facie case for admitting this petition and for advertising the same is made out. In the case of Madhusudan Gordhandas and Co. v. Madhu Woollen Industries ( P. ) Ltd., AIR 1971 SC 2600 ; [1972] 42 Comp Cas 125 , the Supreme Court has held that in the case of a petition for winding up of a company on the ground of indebtedness two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. Where the exact amount of debt is disputed the court will make a winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legal entity. As already noticed above, the said agreement has been signed by the joint managing director and the director of the respondent-company and they clearly acknowledged the liability of the respondent-company and agreed to make the payment by April 30,1996. Prima facie, I am of the view that it cannot be said that the said agreement was not binding on the respondent-company. That apart, the said agreement had been acted upon inasmuch as in terms thereof the respondent had issued a cheque dated May 1, 1996, for Rs. 1,30,50,000 towards repayment of the intercorporate deposit under the cover of their letter dated December 29, 1995. This cheque was encashable by April 30, 1996. On April 26, 1996, a request was made by the respondent to present this cheque after three weeks and, subsequently vide letter dated April 27, 1996, it was affirmed that the cheque could be presented on May 21, 1996, for repayment. Again three days prior to the date fixed on May 18,1996, the respondent requested the petitioner not to present the cheque as a demand draft will be issued by June 7, 1996. The petitioner vide its letter dated June 1,1996, had clearly stated that in case the demand draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Punjab National Bank v. Modi Rubber Limited (Company Petition No. 13 of 1994, decided on August 8,1997) and has contended that in a similar situation where this court was prima facie satisfied that the defence raised by M/s. Modi Rubber Limited to the winding up petition was not bona fide and was bereft of substantial grounds even then it had dismissed the winding up petition on the ground that the respondent-company was a running concern employing a large work force, generating profits, and paying, heavy taxes and excise duties. Learned counsel contends that similar is the situation in the present case. Consequently, following the decision in the case of Punjab National Bank v. Modi Rubber Limited (Company Petition No. 13 of 1994, decided on August 8, 1997), this petition should be dismissed. So far as this submission is concerned, it is well-settled that it is a matter of discretion for the court whether in the circumstances of the case it would be in the interest of justice to wind up the company. It is equally true that a winding up order is not granted mechanically as a matter of course on proof of certain facts. The discretion has to be judicially exercised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay but it shall not pay or pay the amount' when it so desires. Prima facie, therefore, I am not inclined to agree with the submissions made by learned counsel for the petitioner at this stage. In view of the aforesaid discussions, this court is prima facie of the view that a case for admitting this petition and for advertising the same is made out. However, as the respondent-company is a running concern employing a large number of employees and having extensive business commitments including export orders as submitted and as advertisement for winding up entails serious consequences, I consider it appropriate in the interests of justice that this petition shall not be advertised provided that the respondent-company deposits a sum of Rs. 75 lakhs in three equal instalments before this court by means of a bank draft in the name of the petitioner. The first instalment of Rs. 25 lakhs shall be deposited by May 22, 1998, the second instalment of Rs. 25 lakhs by July 10, 1998, and the third instalment of Rs. 25 lakhs by August 20, 1998. This order is being passed to test the bona fides of the respondent-company without prejudice to the rights and contentions of the parties to be adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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