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TMI Blog1998 (8) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... de its resolution No. IDL 1088/(6693)/IND-8, dated 30-9-1988, issued a publication entitled Maharashtra s Package Scheme of Incentives, 1988 and through this, declared various incentives to several industries covered under the said incentive scheme including poultry and agro-industries. It classified the State into four categories, namely A, B, C and D. D category would be entitled to maximum incentives in which South Sholapur area fell. The respondent-companies set up poultry units in this D category zone and were entitled to the incentives to the extent of 35 per cent of their fixed assets and had applied for grant of incentives. C.P. No. 38 of 1996 4. The case of the petitioner is that the respondent-company had applied for short-term bridge loan of Rs. 21 lakhs which was sanctioned and an agreement was executed in writing on 17-6-1993. This loan was sanc- tioned against the disbursement of the capital incentives receivable by the respondent-company under the scheme of Incentives of Maharashtra Government ( special scheme ). The respondent-company had executed a demand promissory note for Rs. 21 lakhs with interest at the rate of 22.5 per cent per annum. Vemuri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner had suggested that the question of payment of interest would be resolved later and the amount of loan shall be repayable by adjustment against the subsidy and the balance would be paid to the respondent. The petitioner is the implementing agency of the State of Maharashtra and the delay in disbursement of the funds has been caused due to the inaction of the petitioner. The respondent-company is not liable to pay the bridge loan amount. The agreement to pay interest is arbitrary and unreasonable and contrary to the understanding and assurance given to the respondent-company. The bridge loan had to be adjusted only against the subsidy which the respondent was entitled to obtain in the year 1993. The petitioner and the Maharashtra State are jointly and severally responsible for the losses to the respondent-company. It is further plead- ed that the respondent-company was running a poultry farm unit and is able to meet its expenditure. It is offering employment to about 103 persons. It is alleged that the dispute raised by the respondent-company is genuine and bona fide and the petition has been filed only to pressurize the respondent to make the repayment. The respondent-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remaining allegations are almost the same have been made against the respondent-company in C.P. No. 38 of 1996. 12. The respondent-company in its counter has stated that a subsidy of Rs. 27,88,200 was sanctioned vide letter dated 16-4-1993, but this amount had not been paid till today. It has taken similar defence as has been taken by the respondent-company in C.P. 38 of 1996 and has requested for dismissal of the petition. C.P. No. 42 of 1996 13. The petitioner has alleged that on 17-6-1993, the respondent-company has taken a bridge loan of Rs. 20,76,000 and as on 31-1-1995, it was to pay Rs. 20,76,000 against the loan amount and Rs. 7,92,203 against interest, totalling to Rs. 28,68,203. It is alleged that A. Ramamohana Rao and E. Damodara Rao stood as guarantors for repayment of the loan. The remaining allegations are almost the same as have been made in C.P. No. 38 of 1996. 14. The respondent-company has denied all allegations through its counter. It is alleged that a subsidy of Rs. 29,66,100 was sanctioned vide letter dated 16-4-1993, but this amount was not paid till today. It has taken almost the same defence as has been taken by the respondent-company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the Court. If the debt is bona fide disputed, there cannot be neglect to pay within the meaning of section 434(1)( a ) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play, and the ground of winding up, namely, that the company is unable to pay its debts, is not substantiated." (p. 456) 18. It is settled law that, where there is a bona fide dispute put forward by the company, it would be a valid excuse for non-payment and inability to pay will not be inferred. Where the company produces prima facie proof of facts on which the defence depends and there is likelihood to succeed in point of law, it cannot be said that the company has neglected to pay within the meaning of section 434(1)( a ) of the Act. Bona fide dispute implies the existence of a substantial ground for the dispute raised. 19. Issue Nos. 1 and 2: These two issues are interconnected and, therefore, they have been grouped together for the sake of convenience. 20. Atul C. Waichal, P.W. 1, has stated on oath that at the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, it sanc- tions loan to such companies which approach it for loan and this loan is called bridge loan. He was unable to state as to why the Government of Maharashtra had delayed in releasing the incentives. He has also stated that the respondent-company is not entitled to interest for the delay in disbursement of the amount. He has denied that the respondent-com- pany was forced to sign on the agreements and pronotes which are at Ex. Al and Ex. A2 respectively. He has further denied that the petitioner had exploited the alleged weak position of the respondent-company. 22. From the above discussion of the evidence, it appears that the respondent-company was granted incentive in pursuance of the special scheme for starting poultry business in Sholapur, but the State of Maharashtra did not release the amount of the incentive to the petitioner on or before 17-6-1993. Therefore, at the request of the respondent- company, a loan of Rs. 21 lakhs was sanctioned by it as per the terms of the loan agreement, Ex. Al. The respondent-company had executed a pronote, Ex. A2, in favour of petitioner in the sum of Rs. 21 lakhs. As per the terms and conditions of the agreement, the loan was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Mantralaya. He has admitted to have received the notices issued by the petitioner-company. He has also admitted that his company has not stated about the understanding regarding interest in the letters written by its company to the petitioner. He has admitted that the Director of his company has written the contents marked A to A in the reply, Ex. All. Similar is the situation in respect of other companies as is found from similar correspondence between them and the petition- er. 25. In the reply letter, Ex. All, Karshak Poultries (P.) Ltd. (respondent-company in C.P. No. 40 of 1996), has stated that Maharashtra Cabinet in its meeting held at Aurangabad in August/September 1995, had decided to release the funds to the implementing agencies for effecting the disbursement in all the pending cases from D and D+ zones by Decem-ber 1995. The remaining companies have also sent similar replies through Ex. All. 26. A look at the agreement, Ex. Al, and the reply notices sent by the respondent-companies show that funds under the special scheme were to be supplied by the State of Maharashtra and not by the petitioner though it was the implementing agency of the State of Mahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31-1-1995 including interest and by the date of filing of the petition, this amount has enhanced to Rs. 33,58,931 including interest. From his evidence, it also appears that as on 31-1-1995, Shree Astalakshmi Poultries (P.) Ltd. (respondent-company in C.P. No. 42 of 1996) was liable to pay Rs. 28,68,203 including interest and by the time of filing the petition, the respondent-company was liable to pay Rs. 35,72,310 including interest. In cross-examination he has admitted that part of the amount of the subsidy has been disbursed to this respondent-company. Timmayya, R.W.1, has stated that part of the subsidy amount, i.e., Rs. 7 lakhs has been disbursed to the petitioner and this amount has been adjusted by the petitioner against the bridge loan. Thus, the total amount according to the petitioner by the date of filing the petition comes to Rs. 28,72,310. It is noteworthy that the respondent-companies have taken a plea that their financial condition was not good at the time of executing the agreement, Ex. A1, and pronote, Ex. A2. In the correspondence also, they have stated that they have suffered heavy financial losses and they may take loan from the Indian Bank. 29. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter, Ex. B2, to no person other than the respondent-company, namely, Panduranga Poultries and, therefore, it cannot be said that this fact has been purposely sup-pressed by the petitioner, particularly when, as noted above, Rs. 28,59,914 was the outstanding balance in spite of the said adjustment. 31. The case of Ultimate Advertising Marketingv. G.B. Laboratories Ltd. [1989] 66 Comp. Cas. 232 (All.) is of no help to the respondent-companies, because, in that case it was held that the petitioner had failed to establish that the amount claimed was either agreed upon or admitted or decreed by the competent court, particularly the claim for interest at a particular rate. Such is not the case here. 32. The case of Paramjit Lal Badhwar ( supra ) is distinguishable on facts, because, in that case it was found that the company had not lost its substratum. 33. Under the aforementioned circumstances of the case, I hold that the respondent-companies have become commercially insolvent. The issue No. 3 is answered accordingly in the affirmative. 34. In the result, the petitions are allowed. I, therefore, direct the respon-dent-companies to be wound up under the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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