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TMI Blog2012 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... laintiff's company on October 31, 2008 in order to claim the following reliefs: a) Decree for Rs. 32,53,750/- against the defendant as claimed in paragraph 32 herein; b) Interim interest upon judgment @15% per annum; c) Receiver; d) Injunction; e) Attachment; f) Costs; g) Such other and/or further relief or reliefs as may be deemed fit and proper. The suit (C.S.221 of 2008) has been filed by the plaintiff's company on October 31, 2008 in order to claim the following reliefs: a) Decree for Rs. 2,22,62,500/- against the defendant as claimed in paragraph 32 herein; b) Interim interest upon judgment @15% per annum; c) Receiver; d) Injunction; e) Attachment; f) Costs; g) Such other and/or further relief or reliefs as may be deemed fit and proper. The suit (C.S.222 of 2008) has been filed by the plaintiff's company on October 31, 2008 in order to claim the following reliefs: a) Decree for Rs. 14,40,884/- against the defendant as claimed in paragraph 32 herein; b) Interim interest upon judgment @15% per annum; c) Receiver; d) Injunction; e) Attachment; f) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present name of the defendant being AI Champdany Industries Ltd. having its registered office at 25, Princep Street, Kolkata 700072. According to the plaintiff, at all material times, plaintiff's controlling shareholders and/or promoters have been the Goenkas and their associates. Till or about April, 1994, the promoters of the plaintiffs and/or the persons in the management of the plaintiff were also in control of the management of the defendant. In or about 1987, the defendant had become a sick industrial company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA) and a reference relating to the defendant was made in accordance with the provisions of SICA. A Scheme came to be sanctioned by an order dated March 28, 1989 by the Board for Industrial and Financial Reconstruction (hereinafter referred to as BIFR) for rehabilitation of the defendants. In terms of the said Scheme and as agreed the plaintiff and other associate companies of the plaintiff had advanced various sums of monies as unsecured loans to the defendant by cheques and were shown in the balance sheet of the defendant. The Scheme which had been sanctioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pass a specific order to ensure repayment of a sum of Rs. 90.31 lakh owed by the defendant to the plaintiff in addition to the sum owed by the defendant to the plaintiff on account of unsecured loan that had been frozen upto the year 2003. The plaintiff urged before the BIFR that the plaintiff was entitled to such sum of Rs. 90.31 lakh as a sundry creditor of the defendant that had been duly acknowledged in the balance sheets of the defendant. A copy of such letter had been endorsed to the Monitoring Agency, IFCI Ltd. The said sum of Rs. 90.31 lakh was paid by the plaintiff in the form of advances from time to time to the defendant and the same has been shown under the head "Current Liabilities and Provisions" in the sub head "Sundry Creditors" by a foot note appended thereto in the books of the defendant. By a letter dated September 13, 2002 the BIFR had directed, inter alia, the defendant that the dues of the erstwhile promoters had been frozen upto the year 2003 in terms of the directions given by the AAIFR and advised the defendant that the defendant and/or its present promoters should ensure that payment of all amounts due to the erstwhile promoters of the defendant whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not present at the meeting nor did they make any concession. According to them, the projection of balance sheet is shown but not of any admission as claimed. Further particulars of the alleged schedule of compliance has been set out which does not contain any mention of the alleged loans. It is disputed that the order of BIFR dated October 12, 1993 in support of summons, records an agreement of the existing promoters, and that the Bench rejected the contention of AI Champdany Industries Limited seeking waiver of the dues of the existing promoters. It was further recorded that the representative of AI Champdany Industries Limited did not agree to the freezing of the dues owed by the company to the erstwhile promoters and their associates which amounts to a tentative view and the order further directs final views subsequently. It is further pointed out that BIFR was favourably inclined for waiver of the interest of the dues of the earlier promoters and AI Champdany Industries Limited also claimed that the present promoters would not be entitled to any claim for interest for the past period or for the future. This was not an admission at all and even if it is considered to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, relegate the appellant for the ordinary remedies permissible under the law" and the matter was taken to the Supreme Court and the Special Leave Petition came to be dismissed by observing "we are not inclined to interfere with the impugned orders. However, the time for filing the suit is extended by three weeks beyond the period fixed by the High Court". It is, therefore, submitted that there was no admission on the part of the defendant. In any event, the admission has to be taken either as a whole or not at all. In the instant case, there are counter claims and also reciprocal obligations of the parties and the plaintiff did not hand over possession of the Woodland flat as a result of which suit had to be filed for recovery of possession of the said flat. Unless both parties discharged their respective obligations, the Court would not entertain any claim by any of the parties leaving the other conditions. It is the contention of the appellants/defendants that entries in the balance sheets cannot be considered as admission on the part of the appellant/defendant as it was objected to by the defendants. In case of a debt in respect of which there is a qualifying remark, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s based upon the question whether the defendant has any defence to the claim of the plaintiff. From the factual back ground, it is demonstrated that the defendant/appellant has sought to raise a sham and illusory defence; d) The conclusiveness of the Sanctioned Scheme cannot be questioned by the defendant/appellant by virtue of Section 18(8) of the said Act. It is an admitted fact that in the year 1993 AI Champdany Industries Limited showed interest to take over the management of the sick company. Pursuant to which the BIFR circulated a draft rehabilitation scheme and invited comments/suggestion thereon from AI Champdany Industries Limited. On February 4, 1994, by the consent of all parties including CIL a Rehabilitation Scheme being SS-94 of 1994 was formulated. It is the case of the plaintiffs/respondents that one of the conditions of such Sanctioned Scheme was that a sum of Rs. 386 lakh was to be paid by CIL to the plaintiffs and the amount of Rs.386 lakh (subsequently reduced to Rs. 319 lakh) was to remain frozen till 2003 and only thereupon CIL (the new promoters) was to pay this amount to the plaintiffs which fact has been disputed by the appellant/defendant. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various decisions held in Sm. Kiranmoyee Dassi vs. Dr. J. Chatterjee, reported in (1945) 49 CWN 246, M/s. Mechalec Engineers & Manufacturers vs. M/s. Basic Equipment Corporation, reported in AIR 1977 SC 577, Santosh Kumar vs. Bhai Mool Singh, reported in AIR 1958 SC 321 and referring to the decision in Neebha Kapoor vs. Jayantilal Khandwala, reported in AIR 2008 SC 1117 and two judgments of this Court in SRC Steel (p) Ltd. vs. Bharat Industrial Corporation Ltd. reported in 2005 (4) CHN 343 and also Coal India vs. Apeejay Private Ltd. reported in 2009 (4) CHN 192 and other judgments arrived at a finding that there is no dispute that sums of money were lent and advanced by the plaintiffs to the predecessor in interest of the defendant. There may be some dispute regarding exact principal amount but in the proceedings through BIFR and AAIFR it had been determined that the predecessor-in-interest had received loans and advances of RS. 386 lakh from the plaintiffs and a company which is now a subsidiary of the defendant. The said loan and advance from such subsidiary was determined as Rs.66,98,420/- and according to the said tribunal the defendant was liable to pay the "old promoters an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a winding up application is not a debt collecting court. It is not for this Court to adjudicate the disputed claims. All that this Court is required to see is whether the claim is bonafide disputed, this Court would outright reject the winding up application and relegate the case to a suit, if the court found that the defence sought to be used was ex facie, not bonafide this Court would direct that the company be wound up. In the instant case, the claim of the petitioning creditors has been disputed by the company by reasoning of serious questions of law. The power of the BIFR to determine disputed dues is in issue. The authority of BIFR to waive limitation is questioned. It is true as argued by Mr. Banerjee that CIL, the new promoters took over the company on condition of payment of Rs. 380 lacs to its erstwhile promoters or its associates. However, if the liability by the BIFR is seriously disputed, this Court would not proceed to direct that the company be wound up............... .............There is some substance in Mr. Mookerjee's submission that there was never any adjudication of the claim. The claim had to be reflected in the Balance Sheets of the company by reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing-up petitions. In view of the above statement, it is not necessary for this Court to express any observation on the merits of the case. We, therefore, relegate the appellants to their ordinary remedies permissible under the law. The respondents shall furnish the bank guarantees (six in number) equivalent to the amount claimed in the respective winding-up petitions within a period of eight weeks from date in favour of the Registrar, Original Side of this Court. The appellants shall file civil suits within four weeks thereafter. In default of filing the suits within the time specified, the bank guarantees furnished shall be further dealt with on the basis of any order that may be passed by a competent Court of jurisdiction. The appeals and the applications are, accordingly, disposed of. Xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities". The matter was carried further by preferring a Special Leave Petition which came to be dismissed by the Supreme Court by observing as follows: "We are not inclined to interfere with the impugned orders. However, the time for filing the suit is extended by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression "unable to pay its debts" 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. 19. The respondent is not a creditor and the appellant is not a debtor insofar as US $ 11,000 is concerned. The defence raised by the appellant is a substantial one and not mere moonshine which is to be finally adjudicated upon on merits before the appropriate forum. 20. Section 433 of the Companies Act says: "433. A company may be wound up by the court,- (a)-(d) * * * (e) if the company is unable to pay its debts; (f) * * *" From the above it follows: (1) there must be a debt; and (2) the company must be unable to pay the same. An order under clause (e) is discretionary. 21. The debt under Section 433 of the Companies Act must be a determined or a definite sum of money payable immediately or at a future date. We are informed that the financial position of the appellant is sound. 22. This apart, both, the learned Single Judge and the Judges of the Division Bench have granted interim relief which can be granted only in aid of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the principal, it is open to the creditor to resort to both the remedies of filing a civil suit as well as filing a petition for winding up of the company. 25. The rules as regards the disposal of winding-up petition based on disputed claims are thus stated by this Court in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P) Ltd. This Court has held that if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The principles on which the court acts are: (i) that the defence of the company is in good faith and one of substance; (ii) the defence is likely to succeed in point of law; and (iii) the company adduces prima facie proof of the facts on which the defence depends." The learned Company Judge arrived at a finding that the claims of the petitioner had been disputed by the Company by raising serious questions of law, the power of the BIFR to determine disputed dues is in issue. The authority of the BIFR to waive limitation is questioned. The learned Company Judge also held that the claim could not said to be admitted and that the company had no defence at all to the claim of the petitioning creditors on that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order that the discretion may be properly exercised. Taken by and large, the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and commerce. In general, therefore, the test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts." This has been affirmed in Milkhiram vs. Chamanlal (AIR 1965 SC 1698). The learned Single Judge has himself referred to the decision in Sm. Kiranmoyee Dassi vs. Dr. J. Chatterji (AIR 1949 Cal 479) and Mechalec Engineering and Manufacturers Ltd. Vs. M/s. Equipment Corporation (AIR 1977 SC 577). Supreme Court in Mechalec Engineering (supra) placed reliance on the proposition formulated by the Calcutta High Court in Sm. Kiranmoyee Dassi (supra) : "8. In Sm. Kiranmoyee Dassi v. Dr. J. Chatterjee (1945) 49 Cal WN 246 at p.253, Das, J., after a comprehensive review of authorities on the subject, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he change of management of the Goenka Group to M/s. AI Champdany Industries Limited (CIL) and in the said scheme, a figure of Rs.386 lac is shown as 'unsecured loans/deposits, frozen upto the year 2003, from the corporate bodies' (including subsidiary and interest accrued and due). This amount was finally reduced to Rs. 319.02 lac and was shown as disputed in their annual accounts in the financial year 31.3.1996 by the appellant/defendant. The said dispute was finally settled by an order passed by AAIFR on 4.6.1999 it held as under : "11. We have examined the contentions of the senior advocates for AIJML and respondents and our conclusions are:- a) AIJML's self-seeking claims against old promoters and associates cannot be treated as 'dues' payable by the old promoters and associates. The claims or any part thereof will become 'dues' only if finally adjudicated by competent courts in favour of AIJML or admitted by the old promoters/associates. Therefore, on the basis of these claims, AIJML cannot show the dues of Rs. 319 lakhs payable to six corporate bodies (No.1 to 6 in para 5 (c) above) as disputed in their annual accounts. These dues have to be acknowledged without being shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady done by BIFR, it is not necessary for BIFR/O.A. to make any further inquiry into AIJML's claims referred to in the impugned order and this appeal. 12. In conclusion, in the Annual Accounts prepared for any financial year hereinafter, the unsecured loans/deposits of Rs.319 lakhs (rounded off) have to be acknowledged by AIJML as the undisputed, unsecured interest-free/deposits, frozen upto the year 2003, from the following corporate bodies: 1. Haldia Investments Limited 8269273 2. Duncans International (India) Limited 5486389 3. Discipline Investments Limited 841391 4. Globe Tea and Industries Limited 2404189 5. Arindum Investments Limited 1900000 6. Cosmopolitan Investments Limited 13000000 Rs.31901242 The appeal stands disposed of " Therefore, considering the nature of the scheme for rehabilitation the liability to discharge arises for failure to fulfil the commitment in the scheme which gave cause of action to the plaintiffs/respondents to initially take resort to filing of six winding up petitions which they lost in the Company Court, and were directed to file suits to recover their claims. The appellant/defendant set up a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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