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TMI Blog2001 (11) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... ject as contained in its memorandum of articles of association was as under : ( a )To carry on the business of manufacturers, processors, refiners, smellers, makers, converters, finishers, importers, exporters, agents, merchants, buyers, sellers and dealers in all kinds and forms of steels including tool and alloy steels, stainless and all other special steels, cold roll strips and hot rolled strips, iron and other metals and alloys; all kinds of goods, products, articles or merchandise whatsoever manufactured wholly or partly from steels and other metals and alloys; and also the business of iron masters, steel and metal convert- ers, colliery proprietors, coke manufacturers, ferro-alloy manufacturers, miners, smelters and engineers in all their respective branches, and to search for, get work, raise, make merchantable, manufacture, process, buy, sell and otherwise deal in iron, steel and other metals, coal, coke, brick-earth, fire-clay, bricks, ores, minerals and mineral substances, alloys, metal scrap, chemicals and chemical substances of all kinds. ( b )To carry on the business of the manufacturers of and dealers in all kinds of alloys, ferrous and non-ferrous, metallic and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for poking; and all kinds of valves and fittings. The further case of the petitioner is that it has been supplying hot rolled strips to the respondent-company from time to time by way of credit sales from its stockyards situate at Delhi, Ludhiana and Chandigarh. Besides this, supplies were also made from the petitioner s plant in Jamshedpur on credit. Since payments were not forthcoming therefor correspondence according to the petitioner was exchanged between both the companies. 3. A total sum of Rs. 510.15 lakhs together with interest calculated at 24.5 per cent was due and, outstanding payable. As such notice dated 9-4-1996, annexure F was issued. Notice was duly replied to though without prejudice by the respondent-company. 4. In this background, the petitioner has prayed for winding up of the respondent-company. When a reference is made to the reply filed in opposition to this winding up petition on behalf of Him Ispat Ltd., it is vague and cryptic to most of the pleadings. Though transactions between the parties were admitted from time to time. Similarly correspondence exchanged between them was also not disputed. However, liability qua the claim was denied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals were taken together by the appellate authority and vide its order dated 14-5-2001, those were dismissed. The operative portion of the order is as under: "Neither HIL/promoters (appellants in Appeal No. 90 of 2001) nor HIMS (Appellant in Appeal No. 59 of 2001) have come up with any workable rehabilitation scheme. Sri R.D. Makheeja, learned counsel for HIMS, stated before us on 27-4-2001, that Appeal No. 59 of 2001 might be taken up along with Appeal No. 90 of 2001 on 9-5-2001. That request was accepted. Sri Makheeja did not appear on 9-5-2001. Sri G.K. Ahuja, counsel appearing for Sri R.D. Makheeja, requested for adjournment at 12.00 hrs. on 9-5-2001, on the ground that Sri R.D. Makheeja was busy in another matter. Request was declined. Request for adjournment was again made at 3 p.m. when Appeal No. 59 of 2001 was taken up after conclusion of arguments in Appeal No. 90 of 2001. Request was again declined. Opportunity was given to Sri G.K. Ahuja to argue but he expressed inability to do so. In the prayer clause in Appeal No. 59 of 2001, HIMS has supported the appeal of HIL/promoter and has not come up with any workable proposal of its own. The proposal of HIL/promoter was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 22 of the SICA, because the reference made by his client stood registered prior to the filing of the said petition; and ( c )material averments in the petition having not been admitted therefore, unless it was prima facie established that his client is commercially insolvent, the petition was liable to be dismissed. He also urged on facts and stated that claim as in Company Petition No. 1 of 1998 has not been admitted, so this is a further ground for its dismissal. Company Petition No. 7 of 2001 was examined on the basis of materials on record and what was urged on behalf of the parties. 9. As per requirement of section 434(1)( a ), a company shall be deemed to be unable to pay its debts if after delivery or service of notice at its registered office, by registered post or otherwise it fails to pay the amount within the prescribed period. For ready reference section 434(1)( a ) is extracted hereinbelow : "Company when deemed unable to pay its debts - (1) A company shall be deemed to be unable to pay its debts ( a )if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y notice served on a company under section 434 of the Companies Act is in conformity with the mandatory requirements of section 434(1)( a ) of the Act, the presumption under the section as to the company s inability to pay its debts cannot be raised. Where the notice is not served on the company at its registered office, but on its managing director, the notice does not conform to the mandatory requirements of section 434(1)( a ) of the Act." (p. 136) This is exactly the position in Company Petition No. 1 of 1998. In Gangadhar Narsinghdas Agrawal v. Timble (P.) Ltd. [1992] 74 Comp. Cas. 846 (Bom.) while dealing with almost an identical situation, a similar view was taken by the Bombay High Court. 13. In Vysya Bank Ltd. v. Randhir Steel Alloys (P.) Ltd. [1993] 76 Comp. Cas. 244 (Bom.), while dealing with sections 433(1)( e ) and 434(1)( a ), the petition was dismissed and it was observed as under : "Held, dismissing the petition ( i ) that under section 434(1)( a ), the demand has to be served on the company by causing it to be delivered at its registered office . Admittedly, the demand was not delivered at the registered office of the company; ( ii )that secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof (and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company) shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority." [Emphasis supplied] 17. A bare perusal of this provision indicates that two situations are envisaged under this section. Firstly, where a proceeding was pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on being that the petitioner had pleaded specific facts. However those were required in accordance with law of pleadings either to be admitted or denied specifically. That having not been done, the contents of Company Petition No. 1 of 1998 shall be taken to have been admitted. The reason being that vague or evasive denial of facts can be taken to be an admission on the part of the party. I may hasten to add that technicalities of the code of Civil Procedure, 1908 may not apply to the proceedings under the Act, but still the principles can be considered while examining the pleadings of the parties. 21. At this stage another submission urged by the learned senior counsel needs to be noted. That both the orders of the AAIFR and the BIFR are the subject-matter of Civil Writ Petition No. 604 of 2001. It was not disputed that prayer for stay of operation of both these orders was made, but no orders have been passed yet. Only notices have been issued. In this behalf suffice it to observe that mere filing of appeal or any other lis does not operate as stay unless directed otherwise by the court concerned. Since Company Petition No. 7 of 2001 and Company Petition No. 1 of 1998, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BIFR would become the basis for a proceeding to be continued against the sick industrial company for winding up in accordance with the provisions of the Companies Act, dispensing with the requirements under section 439 or 440 of the Companies Act for initiating winding up. Even though the opinion submitted by the BIFR forms the basis for ordering winding up of the sick industrial company by the High Court, it is nevertheless open to the High Court to go into the correctness of the opinion so submitted by the BIFR and decide as to whether it should proceed with the winding up of the sick industrial company, in accordance with the provisions of the Companies Act. This is clear by the use of the words, and may proceed and cause to proceed in sub-section (2) of section 20 of the Sick Industrial Companies (Special Provisions) Act. Therefore, it cannot be held that it is obligatory on the High Court to order winding up of the sick industrial company once it receives an opinion from the BIFR in this regard without examining the correctness of such opinion, on hearing the concerned parties. Even if it were held that section 20, to a certain extent, mutilates the jurisdiction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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