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TMI Blog2012 (6) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... - I.P. MUKERJI, J. Bimal Kumar Chatterjee, Arindam Sinha and Sabyasachi Sen for the Petitioner. Ratnanko Banerjee, Ms. Lopita Banerjee, David Mantosh, Ms. Smruti Rekha Das for the Respondent and Ahin Choudhuri for the Intervener. JUDGMENT 1. Four winding up applications were heard by me for three days, on each day, for sometime. I will deal with the facts of C. P. No. 295 of 2006, one of the four winding up applications where the petitioning creditor is Exhibitors' Syndicate Ltd., and the company of which winding up is sought, Dalhousie Properties Ltd. The basic facts in all the four winding up applications are identical. Therefore, the judgment in this application will also be the judgment in the other three, as well. Facts 2. The facts are most unusual. I wonder if such unusual facts were ever the subject-matter of another winding up application, in the history of this court. At one point of time there was a famous cinema house by the name of "Uttara Cinema", in north Calcutta. This Uttara Cinema was run from properties which were numbered as Premises No. 138/2, Bidhan Sarani and 3, Gurucharan Lane, Calcutta. It is quite sometime now that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p sum consideration of Rs. 43 lakhs was paid by the company to the petitioning creditor. Furthermore, it was stipulated that if conveyance could not be executed within three months from the date of signing of the agreement, this amount of Rs. 43 lakhs would be increased by 5 lakhs. 6. Such grant was paid up to December, 2004. Thereafter the respondent-company stopped paying rent. Dispute arose. 7. At this stage, Round Up Properties P. Ltd., on January 14, 2005, entered into an agreement with the owners for sale of the said properties. Round Up Properties had the power to take steps against any occupants. By a plaint verified on June 10, 2005, Round Up Properties instituted a suit in the learned City Civil Court (Title Suit No. 881 of 2005) against Cultural Enterprise Corporation, the petitioning creditor and Dilip Chand Kankaria. The legal owners of the properties were made pro forma defendants. It claimed, inter alia, a decree of eviction, from the above properties, against the above parties. In or about September, 2005 the company instituted a suit in the same court (Title Suit No. 1389 of 2005) against the petitioning creditor and Dilip Chand Kankaria where the legal own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Round Up Properties from June, 2005 institution of proceedings before the learned City Civil Court and so on. The following cases were cited on behalf of them : Mediqup Systems P. Ltd. v. Proxima Medical System GmbH [2005] 124 Comp Cas 473 (SC) and IBA Health (I) P. Ltd. v. Info-Drive Systems Sdn. Bhd. [2010] 159 Comp Cas 369 / 104 SCL 367/8 taxmann.com 1 (SC) (paragraphs 20 and 33). Discussion and conclusions 15. I have little doubt in my mind that the owners and the head lessee of the properties had full knowledge of and concurred in its alleged letting out by the petitioning creditor but, since the lease and the sub-lease had expired in 1997 and there being no evidence whatsoever of any rent being accepted from the petitioning creditor, I do not think that they could be called lessee or sub-lessee holding over. On the available evidence the position of the petitioning creditor was that of a sub-lessee whose lease had expired and who could only be evicted by due process of law. Therefore, the petitioning creditor did not have the title to enter into the agreement dated September 22, 2004, with the company. The agreement could have had some legal sanctity had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . . . The Bombay High Court has laid down the following principles in Softsule (P.) Ltd., In re [1977] 47 Comp Cas 438 (page 443) : 'Firstly, it is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. If the debt is not disputed on some substantial ground, the court may decide it on the petition and make the order. Secondly, 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 winding up on the ground that the company is unable to pay its debts is not substantiated. Thirdly, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the judgment now passed, the appellant will be entitled for refund of the sum of Rs. 2 lakhs deposited by them in compliance with the direction given by the High Court when the matter was pending before it. The High Court is directed to refund the same to the appellant on production of a certified copy of this judgment. In view of all these, there is no prima facie dispute as to the debt. Thus we find no justification whatsoever for admitting the winding up petition. Accordingly, the judgment passed by the learned single judge and of the Division Bench are set aside. The civil appeal stands allowed. No costs." 20. It has also said the following in the case of IBA Health (I) P. Ltd. 's case ( supra ) (page 381 of 159 Comp Cas) : "The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability ? In such a situation, is there not a duty on the company court to examine whether the company has a genuine dispute to the claimed debt ? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional leave to defend. ( c ) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security. ( d ) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. ( e ) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into court or otherwise secured and give leave to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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