9911796707
TMI Blog2004 (5) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... -2002. Therefore, the present winding up company has been filed on 18-10-2002. As the Company neglected and has inability to pay the debt, and therefore, as the Company is insolvent it is just and equitable to pass winding up orders as prayed. In or about 12-9-1998, Company has availed the bill discount facility and cash credit facility and executed various documents in favour of the petitioner bank and an English Mortgage in favour of the petitioner bank of Companys land and building and in respect of movable property under the mortgage deed was executed, dated 19-3-1999 towards the security. The Company have also executed demand promissory note, deed of hypothecation of immovable property as well as agreement and other security documents, dated 19-3-1999. In addition to this, the company have also hypothecated its stock book debts. The aforesaid transaction has been guaranteed by Snowcem India Ltd. and one Mr. Tejkumar Ruia. The Bank had discounted the bills from time to time drawn on the Company by Snowcem India Ltd. 2. Because of irregularity in making repayment and as Company were in financial difficulties (one time settlement) OTS proposal was approved in favour of the K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of their liability in respect of the credit facilities. The ultimate beneficiary of the amount advanced by the petitioner bank was G.K. Group and not respondent company. Therefore, the demand and/or statutory notice against the petitioner company was not correct. The reference is also made of Misc. Application No. 440 of 2002 pending before the Hon ble Special Court, Bombay. In which lastly, order dated 5-4-2004 was passed in respect of mortgaged land property. It is also contended that the company is running concern and there are more than 620 employees working with the respondent company and accordingly submitted the details of number of executives staff and sells staff and workers of the respondent company. It is also mentioned that the monthly income approximately is one crore. The details of other factories are also placed on record. All in all, the basic contentions is that no order of winding up can be passed in the matter like this. He further read and referred the 3/4th Annual reports of account of 2001 to 2002. But nothing was placed on record a report and account of years 2002 to 2003 in spite of opportunity, granted to the respondent company. Mr. Shetye on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 Comp. Cas. 174 (Bom.) ( iv ) Custodian v. Grey Steel Casting Finishing Co. (P.) Ltd. [Misc. Application No. 131 of 2003 and Execution Application No. 98 of 2002 and Misc. Petition No. 189 of 1995]. ( v ) Madhusudan Gordhandas Co. v. Madhu Woolen Industries (P.) Ltd. AIR 1971 SC 2600. 8. Mr. Shah appearing for the petitioner bank, basically relied on Madhusudan Gordhandas Co. s case ( supra ); "20. 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...." (p. 2604) "Where the debt is 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 that particular debt ( See Re. A Company 94 SJ 369). 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 ( See Re. Tweeds Garages Ltd. 1962 Ch. 406) The principles on which the Court acts are first that the defence of the company is in good fait ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made by the respondent-company was in 1997 after which on 1-4-1998 it has acknowledged that there are outstanding dues of Rs. 4.42 crores to the petitioner. Thereafter, various amounts have been paid by the company in pursuance of the ad interim order which passed by this Court. The fact that the company has offered additional security to the petitioner is one indicator of the fact that the security which has been made available to the petitioner is inadequate to meet the dues. This question, however, need not detain the court any further since in my view the acknowledgement of the liability in the present case shows that there are substantial dues owing to the petitioner at least to the extent of Rs. 4.42 crores as on 1-4-1998. In these circumstances, the company petition is required to be admitted. The company petition is accordingly admitted and made returnable on 4-7-2001. Respondent waives service." (p. 63) 9. Mr. Shetye relied on the following Judgments: ( i ) Jose J. Kadavil v. Malabar Industrial Co. Ltd. [1986] 59 Comp. Cas. 969 (Ker.) ( ii ) Rajasthan Spg. Wvg. Mills Ltd. v. Textool Co. Ltd. [1971] 41 Comp. Cas. 66 (Mad.) ( iii ) Steel Equipmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide or not depends upon the circumstances of each case. The test is whether the dispute is raised only to avoid payment of the debt and not based on a substantial ground. Bona fide dispute means that the dispute is based on a substantial ground and if such a dispute is raised, the court should refuse to make an order of winding up even if only a part of the debt is disputed on a substantial ground vide O.P. Mohta v. Steel Equipment Construction Co. [1968] 38 Comp. Cas. 82 (Cal.)" (p. 69) He further, relied on the judgment in Steel Equipment Construction Co. (P.) Ltd. s case ( supra ) : "In England, the Courts have refused to make order for winding up when a part of the debt is disputed although admitted to exceed fifty pounds; Brighton Club and Norfolk Hotel Co., In re. [1865] 35 Beav 204, London Paris Banking Corpn., In re. [1875] 19 Eq. 444 and Gold Hill Mines, In re. [1883] 23 Ch. D. 210. In the case of Cardiff Preserved Coal Coke Co. [1867] 2 Ch. App. 405, however, Lord Chermsfort expressed a contrary view, which in my opinion is not only consistent with the relative sections but also reason. In the case of Company v. Sir Rameswar Singh [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power now found in section 433 of the Act, to wind up a company: It would thus appear that the company is unable to pay its debts. This fact, however, does not necessarily entitle the petitioner to an order for the winding up of the company, as the discretion to pass such an order, even, in the case of the inability of a company to pay its debts, is by section 162 vested in the Court. I am unable to take a different view of the power contained in provisions of section 433 of the Act. I, therefore, respectfully dissent from some of the views expressed recently by Vimadalal J. of the Bombay High Court in Advent Corpn. (P.) Ltd. In re [1969] 39 Comp. Cas. 463 when admitting a winding up petition. Moreover, on facts, the position of the petitioners appeared equitably strong there. Although the power to wind up is discretionary, it has to be exercised judicially. This means that it is only where the balance of equities is shown by a petitioner to tilt appreciably in favour of a winding up order that it will be made ex debito justitiae It is in this special sense that a petitioner relying on grounds contained in section 433 can get a winding up order as a matter of right. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same amount is pending, and that application is also still pending for hearing. There is no bar to file winding up petition even if there is application filed or pending before DRT for recoverable for the said amount by the petitioner-bank against the respondent-company. If, the respondent-company has the capacity and wants to deposit or make the payment as prayed, the company should have shown its bona fide by making the deposit by this time, as admittedly, there is no dispute so far as liability part is concerned. The defence raised by the respondent-company at this stage through its affidavit, is not bona fide and genuine. The parties are making the statement that they have the capacity and/or petitioner-bank is secured in view of the security already available of the mortgaged property or such other property, then there is no reason to oppose the same and should have in fact conceded for further sell or disposal of the said property, so that the petitioner bank in given case would have recovered the debts or amount, as recoverable. The petitioner-company here is at one stroke resisting the winding up petition, as well as, application before DRT on merit. However, at the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay the debt. The securities are not sufficient and are not available to release the debt of the petitioner bank. Assumed for a moment and as contended by the respondent-company s counsel, that those securities are sufficient, but the conduct and the defence raised, shows that respondent-company is not ready and willing to make the payment and/or consenting for the sell or such other steps, so far that the debt of the company as prayed can be released. The respondent-company if have intention to make the payment, and have capacity to pay the particular debt, in that case, in spite of statutory notice and demand, till this date, neglected to make the payment . Such neglect is clear on the facts of this case. One way or the other, respondent-company objecting and/or raising objections to the sell of the mortgaged property or such other properties. The petitioner company or such other person, in such case cannot wait for settlement of dispute of such properties, specially when such disputes have been created for the purpose of creating such defences to postpone the liability for payment of the debt and was pending since long. On facts as per the balance sheet and material on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
