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TMI Blog2004 (4) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of 24% and fixed monthly commission of Rs. 1,500. The respondent-company was not in default in repayment till 1996. By the letter dated 23-12-1997, the Company admitted their liability for repayment of Rs. 7,21,127.73 and promised to clear the same on or before 23-12-1997. Subsequent thereto, the respondent-company also issued six pay orders. Thereafter it defaulted and made no payment. The outstanding amount as on 30-4-2000 was Rs. 11,95,586. The petitioner-firm issued legal notice demanding payment of the outstanding amount within a period of three months. The Company failed to discharge their liability. 3. The Company in their affidavit-in-opposition categorically denied its liability and challenged the maintainability of the petition. It has been submitted that the petitioner-firm is engaged in the business of money-lending without registration under the provisions of the Money-Lenders Act, 1934. Besides, allegations have been levelled that certain cheques issued by the respondent-company were not encashed and the petitioner-firm misused the said cheques. It is further submitted that the respondent-company agreed to pay an amount of Rupees 7,21,000 on threat of crim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m under the provisions of the Money Lenders Act, 1934? ( ii )Whether the liabilities and claim made by M/s. Jain Hardware Stores are disputed? ( iii )Whether the claim of the Assam Co-operative Apex Bank could be taken up in winding up proceeding since it is a secured creditor and a Bakijai case has been instituted by it against the Company for realization of the debts? ( iv )Whether the Company is commercially insolvent and, therefore, liable to be wound up? 8. Mrs. Millie Hazarika, learned counsel assisted by Ms. Aparna Ajitsaria, learned counsel appeared for the petitioner-firm and submitted that the outstanding amount due as on 30-4-2000 was around Rs. 12 lakhs and the demand for payment has been raised by the petitioner by a legal notice. The Company failed to liquidate the debt within three weeks and, as such, the Company is liable to be wound up as the requirement of section 434 of the Companies Act have been duly fulfilled. It is further contended that the Company is not in a position to pay its debts because of misman- agement and there is also no sign of improvement of the business of the Company. 9. Mr. B.M. Sharma, learned counsel representing the Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahewalla submitted that the loan advanced by the Bank is secured by hypothecation/mortgage of movable and immovable property of the Tea Estate, and the Bakijai proceeding initiated at the instance of the Creditor Bank has also been stayed by this Court in W.P. (C) No. 5230 of 1999. According to Mr. Sahewalla, the dispute raised in the aforesaid money suit and the writ petition are awaiting adjudication by competent legal Forum. Besides, Mr. Sahewalla further pointed out that the Company has submitted the balance sheet for the years 1999 to 2002 and the same would show that the Company is in a position to run the business properly and it has also earned profit despite change of the ownership because of transfer and sale of shares. Winding up of the Company at this stage will have devastating effect not only on the management but also on a large number of employees employed in the business who are receiving their pay and allowances regularly. 12. In the context of the above argument, I would first like to deal with the claim of the petitioner-firm M/s. Ramdeo Ranglal. Section 7D of the Assam Money Lenders Act, 1934 reads as follows: "7D Suits to proceed without registration c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., lending money. The business of banking cannot be undertaken by any person in any manner whatsoever without permission from the appropriate authority. The word "banking" indicate money-lending in usual course and, therefore, the claim of the petitioner-firm is hit by the provisions of section 7D of the Assam Money Lenders Act, 1934. However, this observation is made for the purpose of this Company Petition and shall not in any way be binding on any legal Forum if a lis is instituted in future. 15. The outstanding amount of Rs. 11,95,586 as claimed by the petitioner has been disputed by the respondent-company. As already stated hereinbefore, the Company has taken the plea that it has delivered 9,120 Kgs. of black tea worth Rs. 6 lakhs against the outstanding amount. A winding-up proceeding cannot be legally maintained where the amount claimed is in controversy. In the instant proceeding, the claim of the petitioner-company stands controverted in so far the outstanding amount is concerned. In Hindustan Ciba Geigy Ltd. v. Bharat Wood Works (P.) Ltd. 1990 (2) Gau. LR 164, a learned single Judge of this Court held that a winding up petition is not a legitimate means to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said proceeding has been stayed by this Court in W.P. (C) No. 5230 of 1999. The Bank is a secured creditor against movable and immovable property of the respondent-company. The legality and validity of the said Bakijai proceeding has been challenged in W.P. (C) No. 5230 of 1999 and the Court also granted a stay. In such a situation, it will be premature to conclude that the Company is unable to pay or has neglected to pay the debt of the Creditor Bank. This observation appears to be relevant particularly when the loan amount is secured by hypothecation/mortgage of movable and immovable properties of the respondent-Company. 19. In a case for winding up of a Company, it has to be satisfied that there is an undisputed debt, the respondent-company is financially insolvent to pay the debt or that it is solvent but neglecting to pay the debt. The situation emerging out of the circumstances discussed above apparently run contra to the claim of the creditors that the Company be wound up. The requirements of section 434 of the Companies Act, in my opinion, are absent in the instant proceeding. 20. While dealing with a winding up proceeding, the Court is required to take care o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be declared insolvent only when it is found that its liability exceeds the assets and there is no chance of revival of the Company. The situation at hand is, however, completely different. The ratio available in Ram Bahadur Thakur Co. v. Sabu Jain Ltd. [1981] 51 Comp. Cas. 301 (Delhi); Kesoram Industries Cotton Mills Ltd. v. CWT AIR 1966 SC 1370 and in Harinagar Sugar Mills Co. Ltd., v. M. W. Pradhan (Now G.V. Dalvi) Court Receiver, High Court, Bombay AIR 1966 SC 1707, are also in the same footing. 22. I have also taken care of the decisions in Seth Mohan Lal v. Grain Chambers Ltd. AIR 1968 SC 772 and in Madhusudan Gordhandas Co. v. Madhu Woolen Industries (P.) Ltd. AIR 1971 SC 2600, relied upon by Mr. G.N. Sahewalla, learned Senior Counsel for the respondent-company. In the aforesaid judgments, the law for winding up a Company has been interpreted with reference to the provisions in sections 433 and 434 of the Indian Companies Act, 1951. There is no dispute with regard to the provisions of law of winding up. It is the factual matrix on which the said provisions are required to be examined and applied. In the fact situation of the case, as narrated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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