9911796707
TMI Blog2013 (8) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... for repayment was 6th February 2002. On 9th August 1999, a third ICD in the sum of Rs. 1,00,000 was sanctioned and disbursed by MPSIDC in favour of SDBL, for which SDBL executed a DPN and corporate guarantee. The date of repayment was 13th August 2002. On 11th January 2000, a fourth ICD in the sum of Rs. 3,00,000 was disbursed to SDBL for which SDBL executed a DPN and corporate guarantee. The date of repayment was 30th October 2004. 3. On 28th March 2003, SDBL cited financial difficulties and requested MPSIDC not to pursue the recovery proceedings against it. On 16th June 2003, MPSIDC issued a legal notice calling upon SDBL to make payments under the ICDs. On 24th April 2005, SDBL submitted a proposal for a one time settlement ('OTS'). According to MPSIDC, since the proposal was not in terms of the policy/guidelines of the Government of Madhya Pradesh, it was not accepted. It is stated that on 2nd December 2005 and 27th February 2006, SDBL informed MPSIDC that it had appointed Kotak Mahindra Bank ('KBM') for negotiating a settlement on its behalf. According to MPSIDC, nothing came of this and it was simply a ruse to gain time. MPSIDC sent a statutory notice on 30th November 2007 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of Rs. 25.00 lacs paid by you vide cheque no. 642219 dt. 07.02.2011 along with your referred letter currently kept by MPSIDC in miscellaneous account may be adjusted against the Down payment and Company is then required to make balance Down payment of Rs.116.55 lacs as per the prevailing OTS Policy. As per prevailing OTS Policy, any settlement would be subject to following terms and conditions: 1. In case of settlement of account the Company will be required to submit post dated cheques for the remaining settlement amount towards monthly payment of installments including interest. In case of dishonour of any cheque the Corporation reserves the right to cancel the settlement. 2. Besides agreed interest, the Company/Borrower will be required to make additional 3% penal interest on defaulted amount for defaulted period. 3. In order to secure the payment of settled amount Promoters of the Company Shri J.K. Arora and Shri A.K. Arora will have to provide Personal Guarantee containing details of property in their name on an Affidavit. 4. Besides, Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavit, it was pointed out that in its balance sheet for the year 2007-2008, SDBL has admitted the liability owing to MPSIDC. SDBL had repeatedly sought time to repay the debts. It was further stated that the statutory notice was duly served on SDBL at its registered office and the allegations to the contrary in the reply were false. It was further stated that as on 30th June 2010, a sum of Rs. 43.44 crores was due from SDBL apart from interest. It was stated that SDBL did not choose to avail of the opportunity of OTS which envisaged payment of a reduced principal amount with simple interest ranging from 1 to 8%, in the event that the outstanding amount was paid by the debtor within fifteen days. The proposal by SDBL for swapping the principal amount with the equivalent amount of one of its alleged creditors was rejected by MPSIDC as such settlement was not permissible under the policy of the State Government. It was stated that SDBL got the disputes referred to mediation despite having no intention of settling the dispute. It was pointed out that in the balance sheet of SDBL for the year ending 31st March 2010 a sum of Rs. 10,97,70,329 was shown as an unsecured loan repayable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he calculation, it was stated by MPSIDC that SDBL should make payment of the OTS amount of Rs. 774.08 lacs (Principal Rs. 7,00,00,000+ Interest Rs. 74.08 lakhs) along with recoverable expenses of Rs. 17.12 lakhs "immediately." 12. The calculation of the OTS amount enclosed with the above letter clearly spelt out that the amount of Rs. 75,00,000 "paid prior to proposed settlement as per OTS Policy 2007, has already been adjusted against the interest dues hence this amount cannot be considered as part of the One Time Settlement amount." It was also mentioned that the cheque for the sum of Rs. 2,70,000 enclosed with SDBL's letter dated 12th April 2012 had not been deposited by MPSIDC in its account. Accordingly, the OTS proposal made by SDBL was considered to be submitted without down payment of 10% of the settlement amount. The break-up was given as under: "Summary of details of settlement amount Rs. in lakhs (a) Principal due and outstanding as on 30.04.2012: 700.00 (b) Interest at documented rate up to date of default: (30.09.2001) 123.04 (c) Interest @ 1% from date of default to cut off date: (30.04.2012) 74.08 (d) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... micable settlement. Learned senior counsel appearing on behalf of the Respondent states that as per his instructions and in terms of the communications exchanged between the parties dated 10.05.2012 as also the reply of the Respondent dated 18.05.2012 as on date the amount payable by him to the petitioner is Rs.6,92,87,036/- which is inclusive of interest. Attention has been drawn to the first communication dated 10.05.2012 wherein the petitioner had accepted one time settlement of Rs.774.08 lacs (principal Rs.700.00 lacs plus interest Rs.74.08 lacs) as One Time Settlement Policy, 2007 along with recoverable expenses of Rs.17.12 lacs. Learned counsel for the Respondent states that the amount of Rs.75 lacs which the petitioner has adjusted against the interest amount has to be adjusted against the principal amount and not against the interest amount. The parties will take fresh instructions from their respective clients. The learned counsel for the Respondent states that he will bring the amount of Rs.6,92,87,036/- on the next date. Renotify on 08.10.2012." 16. Pursuant to the above order a cheque in the sum of Rs. 6,92,87,036 was brought to the Court by S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as already had, it is directed that in the event the Respondent fails to make the payment to the Petitioner in the sum of Rs. 7,52,66,667 by way of demand draft on or before the next date, i.e., 3rd May 2013 the matter will proceed 5. List on 3rd May 2013. Order be given dasti." 19. Mr. Ravi Gupta, learned Senior counsel for SDBL, stated that SDBL was not willing to make the payment of Rs. 7,52,66,667, since according to it no sum higher than the cheque amount already deposited in the Court was due to MPSIDC. After taking the Court through the entire correspondence referred to above, Mr. Gupta submitted that the two main considerations as far as the present petition is concerned were the nature of the claim and the inability of SDBL to pay the admitted liability. He submitted that the present proceedings were merely in the nature of proceedings for the recovery of a money claim which was disputed. He submitted that the winding up proceedings should not be used merely for recovering moneys due. Secondly, he submitted that there was no admission of liability by SDBL. He submitted that SDBL had demonstrated its willingness to make payment of the OTS amount b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to settle for an OTS sum of Rs. 774.08 lacs (Principal Rs. 7,00,00,000+ Interest Rs. 74.08 lakhs) along with recoverable expenses of Rs. 17.12 lakhs. It was made clear to SDBL that the sum of Rs. 75,00,000 paid by it was already adjusted against the outstanding amount prior to the date of the OTS and would not be adjusted against the OTS amount. It was also made clear that the said payment would be adjusted first against the interest due. It was not open to SDBL to insist to the contrary. He submitted that valuable taxpayers' money had been advanced to SDBL by MPSIDC which was accountable for it to the public. He submitted that in as much as SDBL had clearly demonstrated its inability to pay even the admitted sum in its balance sheet, this was an open and shut case for invoking the jurisdiction of this Court under Section 433 read with Section 434 of the Act. 22. Before proceeding to examine the above submissions, the Court would like to recapitulate the scope of its powers under Sections 433 and 434 of the Act as explained in several decisions. The Court has to examine if the debt is bona fide disputed and whether the company has the ability to and is willing to pay the debt. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the delivery of the notices at the New Delhi address. Consequently, even this objection is without merit. Merely because SDBL is a profit making company will not preclude the Court from examining if the defence of SDBL to the petition for winding up is a bona fide one and whether SDBL is choosing not to pay an admitted liability despite having the means to do so. 24. SDBL overlooks the fact that the determination of the OTS sum is at the discretion of MPSIDC. As far as the Court is concerned, it cannot possibly dictate to MPSIDC what its OTS policy should be. If MPSIDC has after studying the offer made by SDBL determined the OTS sum, the Court cannot at the instance of SDBL insist that MPSIDC must accept a lesser sum as OTS. The scope of the proceedings under Section 433 of the Act does not permit the Company Court to examine the reasonableness of an OTS offer. It is also not open to the Company Judge to direct that any payment made by SDBL towards the OTS should be first adjusted towards the principal sum and not the interest. The OTS sum determined by MPSIDC was itself a large concession to SDBL, given that the total outstanding as on 31st December 2010 was in excess of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts earlier OTS offer only because MPSIDC encashed Rs. 75,00,000 is not tenable. MPSIDC made it clear by its letter dated 10th May 2012 that the sum of Rs. 75 lakhs already stood adjusted and would not be adjusted against the OTS sum. Even while SDBL deposited in this Court a cheque in the sum of Rs. 6,92,87,036, MPSIDC had protested showing that it was not in full and final settlement of the OTS amount. That protest was justified since SDBL had in calculating the said sum unilaterally adjusted Rs. 75 lakhs against the OTS amount, which clearly it could not. 27. The position that emerges from the above discussion is that in the balance sheet of SDBL as on 31st March 2010 there is an admitted liability of Rs. 10,97,70,329. The OTS amount payable by SDBL was far less than the said amount. Despite numerous opportunities, SDBL has not made payment of the OTS amount to MPSIDC till date. The order passed by this Court on 30th March 2012 noted that "While this Court was in the midst of dictating the order" for provisionally winding up SDBL, its representative stated that SDBL "shall immediately meet the officers of the Petitioner corporation and repay the entire amount that is due and pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e operative as indicated in para 32 below. They will also file affidavits in this Court, with advance copies to the OL, within four weeks thereafter setting out the details of all the assets, both movable and immovable, of the SDBL company and enclose therewith the balance sheets, profit and loss accounts and copies of the statements of all the bank accounts for the last three years. 32. Given the history of this litigation, and the fact that SDBL claims that it is a profit making company that has the capacity to pay the admitted liability, the Court considers it appropriate to grant one more opportunity to SDBL to pay to MPSDIC the admitted liability as shown in its balance sheet as on 31st March 2010, minus the payments made by SDBL to MPSIDC thereafter, together with interest up-to-date with in a period of six weeks from today. Accordingly this order is kept in abeyance for a period of six weeks from today. If the payment as directed above is made by SDBL to MPSIDC within six weeks, then the present petition will be disposed of leaving it open to MPSIDC to institute other appropriate proceedings in accordance with law to recover the balance amount claimed by it. If such payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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