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TMI Blog1980 (11) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... order was that the winding-up petition as to the part of the claim to the extent of ₹ 1,50,000 was directed to be permanently stayed. 2. The petitioning-creditor's claim in the petition is for about ₹ 10 lakhs as money lent and advanced to the company at its request for the purr pose of its business on the terms and conditions, inter alia, that the said amount would be repayable by the company to the petitioning-creditor on demand with interest at the rate of 2% per mensem. Such interest 'was to be paid by the company to the petitioning-creditor every month and month by month and in the event of non-payment of interest as aforesaid the same would form part of the principal and would carry further interest at the same rate. In other words, the compound interest as aforesaid would be payable. There is no writing in respect of the said agreement except that the petitioning-creditor has referred to four cheques, the first three of which were drawn in favour of Martin Burn Ltd. and the last one was in favour of one Sagar Lines (India) Private Ltd. having its registered office at the same address where the registered office of Martin Burn Ltd, is situate. It is sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng interest of 2% per month (i. e., 24% yearly). You have failed to pay this money together with interest on due date. Please make money together with interest available to us as early as possible, failing which we will have to take proper action. Thanking you, Yours faithfully, Bhagirath Murarka. Receiver's signature (Sd.) 4-5-77 5. We have been told that the date 31st May, 1977, as mentioned in the first paragraph of the letter should be read as 31st March, 1977. This letter would show that the agreement contained another term, viz., that the money was repayable by 31st March, 1977, and not on demand as pleaded in the petition. Secondly, the amount of interest payable was simple interest and not compoundable month by month. This letter was not replied to and the learned judge has made a lot of comments for such silence. The next letter was dated July 20, 1977, written by Mr. R. L. Gaggar, advocate of Murarka, to the company to the following effect: Dear Sir, Clients: Messrs. Bhagirath Murarka of No. 7, Lyons Range, Calcutta-1. I have been instructed by my clients aforesaid to write to you as follows: My clients at your request had lent and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir own risk as to the consequences thereof. Yours faithfully, S. K. Mullick. 7. There was no explanation in this letter as to why the previous letter was not replied to but at the hearing of the application before the court below after inspecting the said letter the company admitted the receipt thereof but stated that the same was not traceable in their records and that was why the same could not be replied to. On August 16, 1977, Mr. R. L. Gaggar in reply to the said letter dated August 10, 1977, wrote as follows : Dear Sir, Your clients : Messrs. Martin Burn Ltd. My clients : Messrs. Bhagirath Murarka. With reference to your letter dated 10th August, 1977, I have since received instructions from my clients to reply thereto as follows: There was nothing in my letter dated July 20, 1977, that should have surprised your clients. It is no use denying that my clients never lent and advanced or that your clients had never requested for lending and advancing the said sum of ₹ 10 (ten) lakhs as alleged or at all. No amount of denial on the part of your client would absolve them of their liability. However, in view of the attitude adopted by your client ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the company. One of the definite terms of the agreement was that it was repayable on demand but that was not the case made out in the said letter. The letter says that the said sum of ₹ 10 lakhs would be paid back by 31st March, 1977, i. e., it was not payable on demand but was payable on the expiry of a particular date. In the next place, another very vital term of the agreement was that the interest to be accrued would be paid by the company month by month and every month and in case such interest would not be paid, the same would form part of the principal and would carry further interest thereon at the same rate, i. e., it would be compoundable every month if month by interest would not be paid. This is yet another vital clause in the agreement which is silent in the said letter. The company court should be cautious enough to consider that such a huge sum was being lent and advanced to a limited company without being backed by any correspondence or any document evidencing the same. Accordingly, it should be the duty of the company court to take into consideration those very vital facts concerning the discrepancies before taking into account the fact that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt before considering the question whether the defence raised by the company was a bona fide one or not or disclosed highly dishonest intention of the company. 11. Now, coming to the defence raised on behalf of the company, the court below ought to have accepted the same in the light of the background which has been stated on behalf of the company that on or about January 14, 1977, Bhagirath Murarka became a shareholder of the said Sagar Lines (India) Private Ltd. by taking 100 equity shares of that company. The same was approved by the board of directors of that company at a meeting held on that date. At a further meeting of the said Sagar Lines (India) Private Ltd. held on January 28, 1977, the managing director thereof reported to the board of directors that the said Bhagirath Murarka had agreed to advance a loan of ₹ 10 lakhs to the aforesaid company for acquisition of the vessel, TAMIL ANNA, by Sagar Lines (India) Private Ltd. It was also resolved that the offer of loan was to be accepted and that interest on such loan at the rate of 18% per annum was to be payable to the said petitioning-creditor, Bhagirath Murarka, from the date of receipt of the amount by Sagar Lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Lines (India) Private Ltd. but it could not at the same time be denied that the two were separate and distinct legal entities and, accordingly, that by itself would not be enough to conclude that the agreement was entered into not with Sagar Lines (India) Private Ltd. but with the appellant-company. If the learned judge of the court below had been patient enough to consider both the versions carefully it could not have been difficult for the learned judge to come to the finding that the company's defence was a bona fide one and the petitioning-creditor's petition was an abuse of the process of this court. The learned judge not only admitted the petition but gave direction for payment of the entire sum of ₹ 8,50,000 with interest thereon at the rate of 18% per annum from February 1, 1977, until payment and the assessed cost of 60 G.M. before May 31, 1978, and in default of such payment the winding-up petition was directed to be advertised as aforesaid. The learned judge, it appears, has not allowed 24% interest with compound rate as claimed in the petition. The learned judge did not think of directing security to be furnished for the said amount so that there remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been available at that time. Had that been produced that would have clinched the issue and the order of the court below might have been different from what was made by it. In any event, the nature of the document is such that it is considered by the appeal court itself that this should be made available to it to enable it to pronounce the judgment herein and, accordingly, the appeal court in this case should allow this document in the interests of justice to be produced before it. On this ground also this document becomes admissible in evidence by the appeal court. 14. On behalf of the petitioning-creditor the books of account and the balance-sheets were sought to be produced by the company. That was so done and the appeal court is, accordingly, entitled to look into the same as well as an additional piece of evidence before it. Neither the books of account nor the balance-sheets would show that Bhagirath Murarka, was a creditor of Martin Burn Ltd. The cheque received and encashed were kept in the suspense account and the proceeds thereof were made available to Sagar Lines (India) Private Ltd. 15. We, accordingly, have no hesitation to admit the said letter dated Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned judge of the court below in admitting ,the petition and directing advertisements has taken a very strong view of the conduct of the company as he found that the said Romen Mukherjee and the secretary were functioning in both the companies as common director and common secretary, respectively. But it is to be noted that besides them there are other directors of the said company, who are not directors of Martin Burn Ltd. Regarding meeting the liabilities, the two concerns are distinct and separate legal entities and the liability of one could not be foisted on the other because they have common directors and officers as mentioned above. It is true that at the correspondence stage Martin Burn Ltd. could have come out with the definite and correct position instead of making a general denial in respect of the transaction but in considering the petition for winding up for the purpose of admission and advertisements the court dealing with such matters has to take into account the nature, of the transaction and particularly the agreement which is the foundation of the claim in the petition for winding up. If the learned judge of the court below would have exercised a little more patien ..... X X X X Extracts X X X X X X X X Extracts X X X X
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