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TMI Blog2009 (4) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... NY PETITION NO. 215 OF 2007 - - - Dated:- 1-4-2009 - K.A. PUJ, J. N.K. Pahwa for the Petitioner. Nirav Majmudar, Ms. K.J. Brahmbhatt and Ms. Varsha Brahmbhatt for the Respondent. JUDGMENT 1. The petitioner has filed this petition under sections 433 and 434 of the Companies Act, 1956, for winding up of the respondent-company on the ground that the respondent-company has failed to discharge its liability to the tune of Rs. 1,24,39,306 due and payable to the petitioner. 2. Heard Mr. N. K. Pahwa, learned advocate appearing for the petitioner and Mr. N. K. Majmudar with Ms. K. J. Brahmbhatt, learned advocates appearing for the respondent-company. 3. Mr. Navin K. Pahwa, learned advocate appearing for the petitioner-company has submitted that the respondent-company has not given any reply to the statutory notice and hence, on this very ground, the company petition deserves to be admitted and advertised. In support of this submission, he relied on the decision of the Bombay High Court in the case of Advent Corpn. (P.) Ltd., In re [1969] 39 Comp. Cas. 463 , wherein it is held that (headnote) : "If a company fails to comply with a notice under section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 as on 31-3-2004, whereas the total liabilities of the company are to the tune of Rs. 6,56,77,217.29. The secured loan of the company is to the tune of Rs. 7,55,63,973.56 whereas its unsecured loan is to the tune of Rs. 7,54,17,035.33. Even in its annual reports for the year ending on 31-3-2004, the petitioner has mentioned that the indebtedness of the company as on the date of the annual general meeting or latest due debts thereof (secured loans including interest outstanding and accrued but not due for payment) are to the tune of Rs. 7,55,63,973.56. These figures as on 31-3-2004, makes it abundantly clear that the respondent-company is heavily indebted to its creditors both secured as well as unsecured. Mr. Pahwa has further submitted that the respondent-company has not filed its accounts with the Registrar of Companies as the petitioner has taken the search and the petitioner could not find the relevant latest annual reports from the records of the companies maintained with the Registrar of Companies. The respondent-company is, therefore, not discharging its statutory functions only with a view to conceal the particulars of its fund position. He has, therefore, submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the due amount. Even though this notice was duly served on the respondent, no payment was made by the respondent to the petitioner. The petitioner thereafter issued another notice under sections 433 and 434 of the Companies Act, 1956, on 31-7-2007, to the respondent-company. The said notice was also duly served on the respondent-company and still the respondent-company has failed and neglected to reply this notice and also to pay any amount to the petitioner. The petitioner, therefore, filed the present petition before this court alleging therein that the respondent-company is unable to pay its dues and the respondent-company has lost its substratum and has become commercially insolvent. 8. This court has issued notice on 30-11-2007. On service of notice, Ms. K.J. Brahmbhatt, learned advocate has filed her appearance on behalf of the respondent-company and an affidavit-in-reply is filed by Shri Ram-charanlal Sunderlal Virmani, the director of the respondent-company on 18-3-2008. The averments made in the petition were denied in the affidavit-in-reply and it was contended on behalf of the respondent-company that the company petition filed by the petitioner is not maintainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner, however, depo-sited the same against the understanding between the parties and hence, the cheques were returned. New campaign was not carried out and, therefore, there was no question of replacing the cheques with the current cheques. In view of all these averments made and contentions raised in the affidavit-in-reply, it was urged before the court that the claim of the petitioner being false and not falling within the provisions of section 434 of the Companies Act, 1956, no prayer as sought for winding up of the company be granted by this court. 9. On behalf of the petitioner, affidavit-in-rejoinder is filed on 7-7-2008, disputing the facts stated and averments made in the affidavit-in-reply. Over and above this denial, it is contended in the affidavit-in-rejoinder that the respondent-company has not made payment of various Government Departments including bank, financial institutions and not even filed regular returns with the Registrar of Companies for the last many years. This fact is very clear from the certificate produced by the petitioner issued by Shri Dhiren R. Dave, Company Secretary confirming that the last balance-sheet filed with the office of Registrar of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordered to be placed on record. In this view of the matter, a submission was made on behalf of the petitioner that the matter may be kept partly heard. Subsequently, after obtaining the order from the Hon ble Chief Justice, matter was placed before this court and on behalf of the petitioner, invoices referred to in the statement of invoices are placed on record. 12. Considering all these invoices, an affidavit is filed on behalf of the respondent-company wherein it is contended that the petitioner could not have placed on record the bunch of documents without seeking any order for production of the same on record. Without there being any affidavit in support of the documents and/or without preferring any application and without seeking any order permitting the petitioner to place on record the bunch of documents, such documents which do not signify whether they are true copies of the original or not, straightaway the same could not be placed on record. Without following any procedure of law, no such documents werever produced along with the main petition filed in the year 2007, they could not have been placed on record and, therefore, such documents are not having any evidentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 433( e ) of the Companies Act is discretionary. This court in catena of decisions held that an order under section 433( e ) of the Companies Act is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under this section must be a determined or a definite sum of money payable immediately or at a future date and that the inability referred to in the expression unable to pay its dues in section 433( e ) of the Companies Act should be taken in the commercial sense and that the machinery for winding-up will not be allowed to be utilised merely as a means for realising debts due from a company. ( v )In American Express Bank Ltd. v. Core Health Care Ltd. [1999] 96 Comp. Cas. 841 2 (Guj.), it is held that the principle is well-settled by a catena of decisions of different High Courts of the country, that the word "may" used in sections 433 and 443 is indicative of the fact that even if one or more grounds mentioned in section 433 is made out and the company is unable to pay its debt, it is still not mandatory, but rests in the discretion of the court whether to make an order of winding up or not. The court must in each case exercise its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deserves to be dismissed at the threshold. There is enough material before the court for the purpose of admission and to arrive at the conclusion that the company has failed to discharge its liabilities towards the petitioners and that the financial crunch suffered or sustained by the company is not of a temporary nature. 16. The court is mindful of the fact that in the case of a running concern and considering the larger interest of the employees and workmen, the court should be very slow in entertaining the winding up petitions. The court should equally be concerned with the interests of banks, financial institutions, creditors, goods suppliers, etc. Once having availed of the credit facilities, taken delivery of goods or received services for valuable consideration, the recipients of such facilities, goods or services start making defaults in payments or fail to discharge their liabilities, then it would be improper on their part to contend that the unit is a running one and future of large number of employees or workers would be at stake if the petition is entertained and winding up order is passed. Banks, financial institutions, supplier of goods or services and trade cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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