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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 ..... ng the claim of the plaintiffs/respondents which was found by the learned Company Judge to be a bonafide dispute. The finding of the learned Company Judge and the offer of the defendant company to secure the claims of the plaintiffs/respondents which has been finally accepted and acted upon by the defendant sufficiently protect and secure the claims of the plaintiffs/respondents and, therefore, the learned Single Judge ought to have exercised the discretion by granting leave to the defendant. We, therefore, quash and set aside the judgment and order in all the six suits and grant leave to the appellants/defendants to defend as a result of which now they will be at liberty to file their written statement before the learned Single Judge. - A.P.D. No. 406 to 411 of 2010 C.S. No.220 to 225 of 2008 - - - Dated:- 16-2-2012 - J.N. PATEL, AND DR. SAMBUDDHA CHAKRABARTI JJ. For the Appellant : Mr. S.B. Mookherjee, Senior Advocate Mr. Jishnu Saha, Advocate Mr. Sabyasachi Chowdhury, Advocate Mr. D. Basak, Advocate Mr. Abhijit Guha Roy, Advocate Mr. S. Singhvi, Advocate For the Respondents: Mr. Ranjan Deb, Advocate Ms. Manju Bhutoria, Advocate Judgment J.N. Pate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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.225 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. 41,17,172/- 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. It was the case of the plaintiff that the claims made in all suits fell within the term of Rule 1 Chapter XIIIA of the Original Side Rules of the High Court at Calcutta and there was no defence to the claim of the plaintiff and, therefore, final judgment for the one claimed together with interest and cost might be passed. It was contended that the amounts claimed in the suits virtually stood admitted by the defendants and they were stopped from denying the claim of the plaintiff and, therefore, the plaintiff was entitled to claim made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme it was specified that unsecured loans frozen till the year 2003 would be Rs. 386 lac. It is such sum of Rs. 386 lac which was then the sum payable to the erstwhile promoters of the defendant and their associates meaning thereby the Goenkas and their associate concerns including the plaintiff and while sanctioning the scheme BIFR rejected the contention of CIL (Champdany Industries Limited) seeking waiver of dues of the existing promoters. According to the plaintiffs, new management accepted the sanctioned scheme and participated in implementation thereof including taking over the shares in the defendant company. By an order dated September 14, 1994 the BIFR, inter alia, held that the liability to the extent of Rs. 386 lac to the erstwhile promoters cannot be disputed by the new promoters namely the defendant. Against such an order of the BIFR of September 14, 1998 the defendant through its new management preferred an appeal before the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred to as AAIFR). The said appeal was disposed of by the AAIFR by a judgment and order dated June 4, 1999 wherein the AAIFR reduced the sum payable by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 90.31 lakh due to the plaintiff from the defendant as an unsecured creditor along with interest from January, 2004. It is the case of the petitioners that they are entitled to interest @ 15% per annum on the said claim. In response to the summons for judgment the appellants/defendants submitted that the plaintiffs/respondents could not take resort to Chapter XIIIA of the Original Side Rules for summary judgment for want of any pleading as there was no mention of any contract. It is contended that the amount alleged to have been advanced pursuant to the Scheme dated March 28, 1989 admittedly had failed and a fresh scheme of rehabilitation was propounded later and sanctioned on February 4, 1994 and, therefore, the case of the plaintiff that the defendant was and is under an obligation to repay the sums alleged to have been given as loan to the defendant by the plaintiff pursuant to the scheme which had been sanctioned by BIFR in 1989 are absolutely vague and without any particulars whatsoever. It is disputed on behalf of the appellants/defendants that the order of BIFR dated February 4, 1994 sanctioning a rehabilitation scheme does not contain any admission of liability t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter and that by letter dated May 29, 2002 the plaintiff requested the BIFR to pass necessary orders to ensure payment of Rs. 90.31 lakh by the defendant and the letter was replied to by the BIFR by a letter dated July 16, 2002 but no such order was passed. It is disputed that no contract has been pleaded in regard to the extra claim of Rs. 90.31 lakh set up in these proceedings and, therefore, cannot be covered under the present application under Chapter XIIIA of the Original Side Rules. It is disputed that reliance was placed by letter dated September 13, 2002 by Section Officer cannot be construed to be an order of BIFR. According to the appellants/defendants BIFR has no jurisdiction to adjudicate on the quantum of disputed claims or direct a sick company to acknowledge any liability in its balance sheet as has been done in the instant case and there has been no admission of the alleged claims of the plaintiff by the defendants. On the other hand, the proceedings initiated by the plaintiffs for winding up of the defendants company came to be dismissed by a judgment and order dated 18th January, 2006 wherein the company Judge has held that it cannot be said that the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against the order of dismissal by the plaintiff and other five appeals of the associate company petitions also came to disposed of by judgment and order dated July 2, 2008 the appeal Court, inter alia, accepted the offer of the defendant to secure the claim of the plaintiff and directed the defendant to furnish separate six bank guarantees in favour of the Registrar, Original Side, High Court, Calcutta within eight weeks and the claim of the plaintiff was relegated to civil suit. The Court of Appeal granted four weeks time to the plaintiff to file a civil Suit. On July 16, 2008 the order dated July, 2008 was modified to the extent that a default clause was provided and the defendant was permitted to furnish bank guarantee either of a nationalized bank or a scheduled bank. Pursuant to which on September 26, 2008 the defendant duly furnished the bank guarantee and the Registrar, Original Side duly accepted the pay order. On being served with and received a copy of a Master s Summons the defendant (appellants/original defendants) sought leave to defend. We have heard learned counsel for the parties and with their able assistance gone through the records and proceedings. The on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no particulars of cheques were given; no rate of interest was mentioned and no the repayment amount was mentioned and therefore even if the defendant was not there to defend the claim, the plaintiff would have to prove this allegation regarding advancing of various sums of money as unsecured loan, either by documentary evidence or by calling witnesses. In course of hearing of this appeal, the defendants/appellants advocate on record wrote a letter dated November 25, 2004 come to produce for inspection the cheques and other particulars as referred to in paragraph 4 of plaint and paragraph 5 of the XIIIA of the Original Side Rules application which have been replied to by the plaintiff s learned Advocate by November 11, 2004 stating that the documents referred to on the ground is unwarranted in the facts and circumstances of the case and the same stand sought for only to delay the hearing of the application and, therefore, this Court should draw an adverse inference against the plaintiff. In the impugned judgment, the learned Judge held that the Chapter XIIIA application is maintainable as the claim was based on an implied contract and that in the proceedings before BIFR and AAIFR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al India vs. Apeejay Private Ltd. reported in 2009 (4) CHN 192 had the unambiguous admission contained in the letter dated 1st November, 1993 of the predecessor in interest of the defendant, CIL admitting Rs.344 lakh after deducting Rs. 42 lakh on account of interest was not made and arrived at finding that even if this disputed interest is deducted, then Rs. 277 lakh is an amount which is due and payable by the defendants to the plaintiffs in a summary manner. In the latter part of the judgment, the learned Single Judge held that the plaintiffs were entitled to a decree for Rs. 277 lakh only and so far as claim of interest is concerned granted leave to the defendant to file written statement by six weeks from the date of judgment and order. The learned Single Judge has expressed his displeasure by referring to the conduct of the plaintiffs in prosecuting six winding up applications which came to be filed in the year 2000. The plaintiffs/respondents having taken a decision to recover the suit claim (as claimed in six suits) first elected to approach the Company Judge by initiating a proceedings under Sections 433, 434 and 439 of the Companies Act, inter alia, praying for windin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable on the date on which the application was filed. The reference of a sick company to the BIFR and/or pendency of a reference before the BIFR is not an absolute bar to the institution or continuance of a winding up proceedings. Winding up proceedings might be instituted or continued with the permission and/or leave of BIFR. Such leave need not be prior leave. Leave might be granted at any stage before the winding up application is actually taken up for consideration. Even assuming for the sake of argument that the declaration of the Company as a relief undertaking does not suspend the operation of the order of BIFR in terms whereof the petitioning creditors have raised their claims, this Court would still be reluctant to exercise its discretionary jurisdiction to pass the coercive order of directing the winding up a company that has been declared a relief undertaking in the greater public interest of its rehabilitation. The winding up applications are, therefore, dismissed. The dismissal of the winding up proceedings will not prevent the petitioning creditors from instituting civil proceedings for realization of their dues, if any, in accordance with law. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Company Judge and relegated the appellant to their ordinary remedies permissible under the law and directed the appellants to file civil suits within four weeks thereafter which led to the filing of the suits i.e. six applications under Chapter XIIIA of the Original Side Rules, High Court, Calcutta. Therefore, it is quite clear that the findings of the learned Company Judge of this Court while dismissing the six applications for winding up of the companies were not disturbed after considering the case of the plaintiffs who has sought winding up petitions on similar ground on the basis of which they are seeking a judgment by adopting a summary proceeding by filing an application under Section XIIIA of the Original Side Rules. The learned Single Judge could not have denied to the appellant/defendant leave to defend the six applications under Rule XIIIA by rejecting the prayer of the defendant for leave to defend on entering appearance as the appellants/defendants had already furnished security as directed by the appellate Court by way of bank guarantee. In Mediquip System (P) Ltd. Vs. Proxima Medical System, GMBH [(2005) 7 SCC 42] the Supreme Court considered pre-requisites ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into play and the winding up on the ground that the company is unable to pay its debts is not substantiated. Thirdly, a debt about the liability to pay which at the time of the service of the insolvency notice, there is a bona fide dispute, is not due within the meaning of Section 434(1)(a) and non-payment of the amount of such a bona fide disputed debt cannot be termed as neglect to pay the same so as to incur the liability under Section 433(e) read with Section 434(1)(a) of the Companies Act, 1956. Fourthly, one of the considerations in order to determine whether the company is able to pay its debts or not is whether the company is able to meet its liabilities as and when they accrue due. Whether it is commercially solvent means that the company should be in a position to meet its liabilities as and when they arise. 24. The Madras High Court in Tube Investments of India Ltd. v. Rim and Accessories (P) Ltd., Comp LJ at p. 326 has evolved the following principles relating to bona fide disputes: (i) if there is a dispute as regards the payment of the sum towards the principal, however small that sum may be, a petition for winding up is not maintainable and the necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the nature of a qualifying admission. In the present case, the appellants/defendants have rather questioned the liability to pay the amount as well as interest to the six companies as they have expressed doubt about the transactions. Even before us during the hearing of the appeal advocate for the appellant issued notices to the respondents to give them inspection as regards lending of such funds to the sick industry by cheque or otherwise which was declined as unwarranted. In the aforesaid background and particularly when the claim of the respondents has been sufficiently secured by directing the appellants to furnish security, the Court in its discretion ought to have given leave to defend. In Santosh Kumar vs. Bhai Mool Singh (supra) it was held: The discretionary power entrusted upon the court must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that form foundations of our laws. Whenever the defence raises triable issue leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory. If the court is of opinion that the defence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 interference 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 the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence . In the present case, the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the non obstante clause in section 32 (1) of the Act, the provisions of SS-94 over-ride such provisions of the Companies Act, 1956 as may be inconsistent with the provisions of SS-94; clause 3.L(iv)(c) binds the new promoters (CIL) to bring in interest free funds of their own to meet any contingent or other liability not known or not disclosed at the time of sanction of SS-94; additional liabilities coming to the notice of the new promoters after the transfer of management in their favour in April 1994 are, therefore, to be met by them by bringing in additional interest free funds on their own; the expenditure on such additional liabilities, incurred by AIJML, is required to be reflected in the annual accounts and, therefore, the question of the annual accounts not giving a true and fair picture of the financial position does not arise; even otherwise, incorporation of notes in the annual accounts in pursuance of the provisions of SS-94, as reviewed/modified by BIFR from time to time, will over-ride the provisions of section 211 of the Companies Act, 1956, if any provisions in section 211 of that Act is inconsistent with the provisions of SS-94 as reviewed/modified by BIFR fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute. Further emore, the AAIFR while considering the dispute as regards the claim has also observed in clause (a) of paragraph 11. Similarly, if AIJML approaches the competent court(s) and finally gets any of its claim or part thereof adjudicated in its favour against of the aforesaid corporate bodies, then also it can adjust such adjudicated amount against the dues payable by it to such corporate body . Therefore, what is made clear is that the appellant/defendants right to dispute the claim of the plaintiffs/respondent so as to seek its adjudication and insist for performance of reciprocal arrangements apart from raising the issue of limitation is not taken away by the scheme. In Sm. Kiranmoyee Dassi (supra), clause (e) of the proposition provides as under : (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 the defendant on such condition and thereby show mercy to the defendant by enabling ..... X X X X Extracts X X X X X X X X Extracts X X X X
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