High Court
Case Details
Co.Pet. 14/2012 BEFORE THE HON’BLE MR. JUSTICE HRISHIKESH ROY Heard the learned Counsel appearing for the petitioner. Also heard Mr. M. Choudh ury, the learned Counsel appearing for the respondents. 2.
Legal Reasoning
Present petition has been moved by the petitioner under Section 433, 434 and 439 of the Companies Act, 1956 (for short ’Act’) for winding up of M/s Sree Ganapati Ispat Private Limited (Respondent No. 1), a company duly incorporated under the provisions of the Companies Act, 1956 and represented by its Director, Sri Rajendra Mishra (Respondent No. 2) and for appointment of Provisional Liqui dator with all the powers for liquidation of the company in terms of the Act. 3. The case of the petitioner as averred in the instant petition is that, o n 5th January, 2010, the respondent company placed an order with the petitioner for purchase of 10,120 Kgs. of M. S. Scrap. Pursuant to confirmed order that fol lowed, the Petitioner agreed to sell 10,120 Kgs. of M. S. Scrap valued at Rs.2,1 2,520/- (Rupees Two Lakhs Twelve Thousand Five Hundred Twenty) only to the respo ndent company upon the condition that the company would pay the billed amount wi thin 30 days of receipt of the M. S. Scrap i.e. on or before 6th February, 2010. It was also agreed that in the event the purchaser defaulted in payment of the said billed amount, they shall be liable to forthwith pay the entire billed amou nt along with 18% interest to the petitioner. As no payment was made within the stipulated time, the petitioner requested the respondent company to make payment of the bill, which however was not heeded to. As such, the company became liabl e to pay the billed amount of Rs.2,12,520/- (Rupees Two Lakhs Twelve Thousand Fi ve Hundred Twenty) only along with interest (upto April 2012), which at the time of giving the loan stood at 18% thus aggregating an amount of Rs. 2,97,742/- ow ed to your petitioner. 4. The further case of the petitioner is that there has been none on behalf of the company to respond to the repeated requests of bill clearance by the pet itioner. According to the petitioner, the company is dysfunctional for the last 1‰ years. For the aforestated reasons, on 11th April, 2012, the petitioner, thro ugh his Advocate, served upon the company, a notice (Annexure-D) under section 4 34 of the Companies Act, 1956 calling upon the company to make payment of their outstanding dues. As contended by the petitioner, even after a lapse of 21 days from the date of receipt of the said notice, the company failed to pay the dues. The petitioner has relied upon the Auditor’s Report dated 31.08.2010 with the a ttached Balance Sheet of the Respondent Company and the Profit and Loss Account of the Company for the financial year, 2010 as well as the Director’s Report dat ed 02.09.2010, annexed to this Petition, which show the poor financial condition of the company. 5. Under the above facts and circumstances, the petitioner has filed the in stant petition submitting that the Company may be deemed to be unable to pay its outstanding dues and as such is liable to be wound up by this Court as the comp any is admittedly not in a position to meet it’s current liabilities and is unab le to pay its debts. 6. The respondent company has filed its counter affidavit through its Direc tor wherein, the company has averred that there was no due date fixed for paymen t for purchase of 10,120 Kgs. of M. S. Scrape and neither was there any agreemen t between the company and the petitioner which would make the company liable to pay interest on the billed amount if the payment was not made within the stipula ted time as mentioned in the petition. It has been further contended by the comp any that it is not a correct position that the Directors of the company remained out of station more often than its liabilities and therefore it is submitted t hat it will not be just and equitable to wound up the company. The respondent co mpany has also averred that the petitioner can very well approach the Civil Cour t for realization of the due amount and winding up of the company cannot be a su bstitute for the same. Lastly, it has been contended by the respondent company t hat the existence of the company is very much required in the interest of the cr editors and no loss or injury would be suffered by the petitioner in the event t he company is not wound up. 7. I have heard the rival contentions of both the sides. It appears that th e petitioner’s claim for the due amount of Rs.2,97.742/- has not been denied by the company at any stage. The respondent company has also not been able to show any cogent reason for non-payment of the said amount till date. The petitioner h as affirmed his stand as regards the poor business condition of the company by a nnexing the Auditor’s Report dated 31.08.2010 with the attached Balance Sheet of the Respondent Company and the Profit and Loss Account of the Company for the f inancial year, 2010 as well as the Director’s Report dated 02.09.2010. The respo ndent company has only evasively denied such stand of the petitioner without ann exing any document in support of the bona fide of the defence. Rather, from a pe rusal of paragraph 12 of the counter affidavit itself, it is understood that the factory of the company is closed due to poor financial condition. Moreover the company has also not come up with any reason for not paying the due amount withi n a period of three weeks from the date of receipt of the Notice dated 11.04.201 2 as stipulated under Section 434 of the Companies Act, 1956. 8. In the case of IBA Health (India) Private Limited-vs- Info-Drive Systems SDN BHD reported in (2010) 10 SCC 553, the Supreme Court, while adjudicating on a similar claim of the creditor as to the company’s inability to pay debt, in p aragraph 20 thereof, has held as under:- (cid:28) & & & & & &The Company Court is not expected to hold a full trial of the mat ter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle & & & & & & & . (cid:29) 9. Therefore, considering the averments in the petition and the above rulin g of the Apex Court, I am of the view that there is substance in the contention of the petitioner. Consequently, the present petition needs to be allowed on mer it and the reliefs sought therein, deserves to be granted and it is a fit case f or passing an Order for winding up of the respondent company under Section 434 o f the Act. 10. Consequently, the Official Liquidator attached to this Court is directed to take charge of the assets and liabilities of the respondent company and perf orm such necessary functions enshrined under the Act, as would be required to ar rive at an adequate dissolution of the company. A copy of this Order shall be communicated to the Registrar of Companies within thirty days by the Official Liquidator.
Decision
Accordingly, this petition under Section 434 of the Act is disposed of.