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TMI Blog2016 (4) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1956 are:- (a) That M/S JUD Cement Ltd., the Respondent-Company be wound up by the order of the Court under the provisions of Section 433 (e) read with Section 433 (f) of the Companies Act, 1956. (b) Official Liquidator attached to this Hon ble High Court, be appointed as Liquidator of the Company with all powers under the provisions of the Companies Act, 1956, with powers to take charge and possession of the assets, properties, books and records of the company and to manage its affairs forthwith. (c) Cost of this petition be provided for. (d) Such further and other orders be made and direction be given as this Hon ble High Court may deem fit and proper in the facts and under the circumstances of the matter. And for which act of kindness the humble petitioner is as duty bound shall every pray. 3. The respondent-company namely, M/s JUD Cement Limited was incorporated on 04.07.2005 under the provisions of the Companies Act, 1956 as a Private Company Limited. The respondent-company was earlier known as JUD Cements Private Limited. The registered office of the respondent-company is situated at GS Road, Hanumanbux Umadut, Shillong, Meghalaya, India-793001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- (Rupees fifty lakhs only) each in favour of the petitioner. It is stated that the said three cheques were issued by the respondent-company towards part payment of total legally enforceable debt and liability of ₹ 3,83,98,224/- (Rupees three crores eighty three lakhs, ninety eight thousand two hundred twenty four only), which the respondent-company admitted an acknowledged at the time of signing of Reconciliation statement. Against one of the said cheques of ₹ 50,00,000/- (Rupees fifty lakhs only), the petitioner received an amount of ₹ 25,00,000/- (Rupees twenty five lakhs only) on 01.10.2009 and ₹ 25,00,000/- (Rupees twenty five lakhs only) on 31.10.2009 from the respondent-company. However, the said two cheques of ₹ 50,00,000/- (Rupees fifty lakhs only) were dishonoured. Thus, the petitioner filed a case under Section 138 of the Negotiable Instruments Act, 1881 in respect of the said two cheques and the proceedings thereof are pending before the court. 6. The petitioner had approached the respondent-company as well as the Chairman and Managing Director from time to time for obtaining its due and legally enforceable liability of remaining amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 (1)(a) of the Companies Act, 1956. The said notice was sent by registered post with AD at the registered office of the respondent-company and the same was duly delivered at and received by the respondent-company. However, the respondent-company did not respond to the same. However, through bona fide mistake, the petitioner through its General Manager Legal and Finance issued the said notice in the form of Advocate notice. But the fact remains that the demand was made and the respondent-company duly received the said notice. The said notice dated 31.05.2012 (Annexure-4 to the petition) reads as follows:- WALCHANDNAGAR INDUSTRIES LIMITED (AN ISO 9001 COMPANY) Date:31-05-2012 M/s JUD Cements Ltd. (Earlier JUD Cements Pvt.Ltd.) having its registered office at Anil Plaza, 4th Floor (B-1), Near ABC, Bhangagarh, G.S. Road, Guwahati 781 005 Dear Sirs, Under the instructions of my client M/s Walchandnagar industries Limited having its Registered Office at 3 Walchand Terraces, Tardeo Road, Mumbai 400 034 and Chief place of business at Walchand House 167A, 2/8 + 2/9 Karve Road, Kothrud, Pune-411 038, I have to give you this notice unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that you are unable to pay the above stated settled and undisputed debt of ₹ 1,54,11,576/- to my client and hence have rendered yourself for an action against you under section 433 and 434 of the Companies Act, 1956. In the circumstances, my client, hereby calls upon you to pay a sum of Rs. ₹ 1,54,11,576/- (Rupees One crore Fifty Four Lakhs Eleven Thousand Five Hundred Seventy Six only) along with a sum of ₹ 79,25,213.56 as interest @12%, calculated up to 31-05-2012 and a sum of ₹ 10,000/- (Rupees Ten Thousand Only) towards legal cost, all totaling to ₹ 2,33,46,789.56 (Rupees Two Crores, Thirty Three Lacs, Forty Six Thousand Seven Hundred Eighty Nine and Paise Fifty six only) within three weeks as per section 434(1) (a) of the Companies Act, 1956, failing which my Client will have no alternative but to file a winding up Company Petition before the relevant High Court, and/or any other appropriate Court/s, seeking winding up of the Company, entirely at your risks as to cost and consequences, which please note. Yours faithfully, For Walchandnagar Industries Limited Sd/- General Manager (Legal Finance) Copy to:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to pay its debts- (a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding [one lakh rupee] then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor; (b) if execution or other process issued on a decree or order of [any Court or Tribunal] in favour of a creditor of the company is returned unsatisfied in whole or in part; or (c) if it is proved to the satisfaction of the [Tribunal] that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the [Tribunal] shall take into account the contingent and prospective liabilities of the company. (2) The demand referred to in clause (a) of sub- section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf, or in the case of a firm, if it is signed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound specified in clause (e) aforesaid, unless it appears to him either from the financial condition of the company as disclosed in its balance- sheet or from the report of [a special auditor appointed under section 233A or an inspector] appointed under section 235 or 237, that the company is unable to pay its debts: Provided further that the Registrar shall obtain the previous sanction of the Central Government to the presentation of the petition on any of the grounds aforesaid. (6) The Central Government shall not accord its sanction in pursuance of the foregoing proviso, unless the company has first been afforded an opportunity of making its representations, if any. (7) A petition for winding up a company on the ground specified in clause (b) of section 433 shall not be presented (a) except by the Registrar or by a contributory; or (b) before the expiration of fourteen days after the last day on which the statutory meeting referred to in clause (b) aforesaid ought to have been held. (8) Before a petition for winding up a company presented by a contingent or prospective creditor is admitted, the leave of the [Tribunal] shall be obtained for the admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 138 proceeding with an ulterior motive to gain undue advantage and/or hide its lacuna tantamount to playing fraud on Court and as such the instant petition is liable to be dismissed outright. c) That the petitioner in their own admission has admitted to the fact of pending proceeding U/s 138 of the Negotiable Instruments Act, 1881 and as the relief claimed in the said proceeding is for realization of debts and if the petitioner succeed in the proceeding then there would be no occasion for the petitioner to file the winding up petition as the relief claimed in the instant case and under 138 proceeding is the same and in equity, the petitioner cannot file two cases seeking the same relief before the two different Courts as the same would amount to abuse of process of law. As such the instant petition is liable to be dismissed being bad in law. d) That the instant petition is not maintainable for non-joinder of necessary parties in as much as the other creditors/Banks/shareholders who also have stake in the Company and whose participation and views in the matter is essential, have not been arrayed as parties in the case and as it is settled that if there is opposition to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up process cannot be resorted to whenever a company faces financial problem and machinery for winding up cannot be allowed to utilize merely as a means for realizing debts due from the company. It is also further stated that the respondent-company is not commercially insolvent as alleged by the petitioner as its assets still exceeds its liabilities and recourse of winding up petition for payment of debt is nothing but a pressure tactics resorted to by the petitioner for realization of its debts for which appropriate proceedings before the competent court is pending. Paras 13 and 17 of the affidavit-in-opposition filed by the respondent-company read as follows:- 13. That the averments made in paragraph 12 of the Company petition is denied by the Answering Respondent and the petitioner is put to the strictest proof thereof. On the contrary it is stated that every Company faces financial hardships in the course of business and faces situation of delayed payment of its due and debts. But facing a situation financial problem cannot be equated with Company s inability to pay especially when the Respondents have already made partial payments of debts to the petitioner and rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of hearing of the present application, learned counsel for the respondent-company strenuously contended that there is absolutely no admitted dues and debts arising out of the said contract dated 15.10.2006 and the respondent-company had neglected to pay the admitted dues and debts. Learned counsel further contended that all the dues and debts arising out of the first contract dated 15.10.2006 had already been cleared by the respondent-company. This Court passed an order dated 07.05.2015 allowing the respondent-company to file additional affidavit clearly mentioning the facts and circumstances which show that the respondent-company had already paid the due amount. Accordingly, the respondent-company filed the additional affidavit dated 18.05.2015. Paras 3, 4, 5, 6, 7 8 of the additional affidavit dated 18.05.2015 of the respondent-company read as follows:- 3.That the petitioner company had moved this Hon ble Court by way of a Company Petition under section 433, 434 and 439 of the Companies Act, 1956 for winding up of the Respondent Company and the same was registered as Company Petition No.7 of 2013. The Respondent Company upon receipt of notices has filed its obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chased vide contract dated 09.08.2007 (not the subject matter of this instant company petition) and is presently pending adjudication in arbitration before Hon ble Mr. Justice P.K. Musharay (Retd) vide Arbitration application No.1/2014, Walchandnagar Industries Ltd. Vs. JUD Cements Ltd. 15. Learned senior counsel appearing for the petitioner contended that the respondent company is trying to confuse the Hon ble Court by coalescing the accounts of the project which is subject matter of the present winding up petition with the accounts of the second unit which is not the subject matter of the present petition but admittedly the subject matter of the pending adjudication before arbitrator Justice Musahary (Retd). The affidavit clarified that in the second reconciliation statement dated 13.04.2011, the outstanding amount of ₹ 1,54,11,576/- was found to be due and payable by the respondent company to the petitioner company in respect of the contract dated 15.10.2006 which is the subject matter of the instant petition and the said amount was arrived at by excluding the amount of ₹ 2,03,60,000/- paid by the respondent company towards the second unit in respect of which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2010 : 1,20,07,777 D. PAYMENTS MADE FROM 28.10.10 10.03.11 (MINUS FROM A) : 1,80,07,277 E. TOTAL -60,00,000 F. SPARES (DEDUCT FROM E) : 10,51,576 TOTAL -49,48,424 As per books of account of JUD as on 31.3.2011 an amount of ₹ 49,48,424/- has been overpaid to Walchandnagar Industries Ltd. 17. The Apex Court in Mediquip Systems (P) Ltd. v. Proxima Medical System GMBH: (2005) 7 SCC 42 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 the inability referred to in the expression unable to pay its debts in Section 433(e) of the Companies Act should be taken in the commercial sense. The machinery for winding up will not be allowed to be utilized merely as a means for realizing debts due from a company. If the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. Paras 18, 19, 20, 21, 22, 23, 24, 25, 26, 27 of the SCC in Mediquip Systems (P) Ltd case (Supra) read as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p 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 consideration 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: (1990) 3 Comp LJ 322, 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 necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly and commercially insolvent that is to say, that its assets are such, and its existing liabilities are such, as to make it reasonably certain as to make the Court feel satisfied that the existing and probable assets would be insufficient to meet the existing liabilities. (In European Life Assurance Society, Re: LR 1869) 9 Eq 122; V.V. Krishna Iyer Sons v. New Era Mfg. Co. Ltd.: (1965) 35 Comp Cas 410: (1965) 1 Comp LJ 179 (Ker). 29. It is beyond dispute that the machinery for winding-up will not be allowed to be utilized merely as a means for realizing its debts due from a company. In Amalgamated Commercial Traders (P) Ltd. v. A.C.K. Krishnaswami: (1965) 35 Comp Cas 456 (SC) this Court quoted with approval the following passage from Buckley on the Companies Act, (13th Edn., p.451) It is well-settled that a winding-up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding-up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a scandalous abuse of the process of the court . 19. Keeping in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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