Karnataka High Court
Dr Sanjay M Patel S/O Mr Maganbhai P Patel vs M/S Vibgyor Promoters And Resorts Pvt ... on 21 June, 2013
Author: Aravind Kumar
Bench: Aravind Kumar
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IN THE HIGH COURT OF KARNATAKA
AT BANGALORE
DATED THIS THE 21ST DAY OF JUNE, 2013
BEFORE
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
CO.P No.12/2009
BETWEEN:
Dr. Sanjay M.Patel
S/o Mr. Maganbhai P. Patel
Aged 37 Years,
4330 North Sawyer Avenue,
Chicago, Illinois -60618, USA
Represented by his
Power of Attorney
Mr. Sudhir Krishnaswamy
No.50/6, Palace Road,
Bangalore. ...Petitioner
(By Sri Jayna Kothari & C.K.Nanda Kumar, Advs.)
AND:
M/s. Vibgyor Promoters and
Resorts Pvt. Ltd.
56-A, 2nd Main Road, Vyalikaval,
Bangalore
Represented by its Directors,
Mr. P. Sarvotham and
Mr. P. Kishore
Also having office at:
Lovedale Junction, Thalayattimund,
Coonoor Road,
Ootacamund - 643001 ...Respondent
(Service of notice on respondent held sufficient)
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This company petition is filed under Section 433(e)
and (f) of the Companies Act, 1956, praying to wind up
the company viz., Vibgyor Promoters and Resorts Pvt.
Ltd., under the orders and directions of this Hon'ble
Court and etc.,
This company petition coming on for Orders this
day, the Court made the following:
ORDER
None appears. Perused the petition averments.
2. Petitioner is seeking for winding up of respondent-company under Section 433 (e) and f) of the Companies Act, 1956, contending that it is unable to pay the admitted debts due to petitioner-company. It is contended that petitioner was earlier Director and subscriber of respondent-company, which was incorporated in the year 1997 and during the time petitioner was a Director, he had advanced an amount of ` 17,14,765/- as a loan to the respondent-company in the year 1997, which was required by the company for acquiring lands in and around Bangalore for setting up resorts and other company projects. It is stated that 3 petitioner was assured that within a short span of time his loans would be repaid with interest @ 24% p.a. by the respondent-company. The balance sheets for the year ending 31.03.1997, 31.03.1998 and 31.03.1999 are produced at Annexure-B, C and D respectively, which indicates that said loans borrowed by the respondent-company from the petitioner is reflected. Petitioner has further contended that respondent- company entered into an agreement on 24.03.1997 for purchase of 80 acres of land in Chikkaballapur to set up a resort and paid a sum of `76,00,000/- to the land- owners and for acquiring this land, petitioner had lent a sum of ` 17.14,765/- to the respondent-company.
3. It is further contended that petitioner had to leave Bangalore to pursue his Post Graduation in medical studies at United States and he was all along requesting the Director of respondent-company Sri P. Sarvotham for information on the land transactions and repayment of the loan for which no concrete reply was received. All efforts made by petitioner did not yield any 4 result and loan was not repaid, as such, it is contended that respondent-company is unable to pay its debts on the loan borrowed from the petitioner and hence petitioner seeks for winding up of respondent-company.
4. It is also contended in the petition that respondent-company failed to give any proper accounts of the loan borrowed from petitioner and it had also failed to submit its accounts to the Registrar of Companies (hereinafter referred to as 'ROC' for short) and only in the year 1999 it was submitted. It is contended that ROC had issued a notice of default against respondent-company for having not filed the accounts on 01.03.2001 as per Annexure-F. Petitioner contends that he was removed from the Directorship of the respondent-company on 22.07.2005 and in his place one Sri P. Kishore was appointed as a Director. It is contended that Form No.32 filed by the respondent- company did not contain his signature and it has been forged and he has been illegally removed from the Directorship of respondent-company.
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5. Petitioner further contends that on 25.01.2008 a notice (Annexure-H) came to be issued to the respondent-company demanding repayment of loan of `17,14,765/- with interest at 24% p.a., which was duly received by the respondent-company and in reply to the said notice on 15.03.2008 a vague reply came to be issued which is at Annexure-J, whereunder it is stated that detailed reply would be sent and subsequently no reply has been sent thereafter. As such, it is contended that respondent-company is unable to repay the debt due to petitioner and hence petitioner seeks for winding up of respondent-company under Section 433 (e) and (f) of the Companies Act, 1956.
6. At this stage, Smt.Jayna Kothari, learned Advocate appearing for petitioner sought leave of the Court to address her arguments and she was granted permission.
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7. The contention of learned Advocate appearing for petitioner is that respondent-company has become completely defunct and sub-stratum of the company is lost and it has not been filing returns from the year 1999-2000 onwards and as such, respondent- company is liable to be wound up under Section 433(g) of the Companies Act. Elaborating her submission, she contends that though prayer is not made in the petition for winding up under Section 433(g) a ground has been raised at ground No.D in the petition and as such, it is just and necessary for this Court to take notice of the said fact and order for winding up of respondent- company. She also contends that when the respondent- company has failed to do business for which it was incorporated and when the respondent has failed to appear before this Court and rebut the contentions raised by petitioner, the one and only conclusion that is to be drawn by this Court is that it is just and equitable to wind-up respondent-company and as such, she prays for winding up of respondent-company.
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8. Learned Advocate appearing for petitioner would also draw the attention of the Court to the balance sheets filed along with petition which is at Annexures-B,C & D relating to the period 1996-97, 1997-98 & 1998-99 which would indicate that respondent-company has admitted the debt under the head 'Loans from Directors' and as such, when there is acknowledgment of debt in the balance sheet, liability of respondent-company to the petitioner is to be accepted and it has to be inferred that respondent-company is unable to pay admitted debt and as such, it is liable to be wound up. She would also draw the attention of the Court to balance sheets of respondent-company to contend that there is no activity of respondent-company and as such, it is just and equitable for the respondent- company to be wound up under Section 433(f) of the Companies Act, 1956.
9. In support of her submissions, she has relied upon the following judgments:
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(1) (2001) 104 Company Cases 353
(Gujarat) - MISHRIMAL ANANDKUMAR
& OTHERS vs POLYCOT CABLES
PVT.LTD
(2) NAINA D KAMANI vs JANSON
ENGINEERING & TRADING PVT. LTD -
SUIT NO.2429/1997 DD 18.08.2011
(3) (1993) 76 COMPANY CASES 38
(MADRAS) - S SUNDARESAN vs
PLAST-O-FIBRE INDUSTRIES PVT
LTD.
10. Having heard the learned Advocate
appearing for petitioner and on perusal of averments made in the petition as also annexures appended thereto and having bestowed my attention to the case law relied on by the counsel for petitioner, it would emerge that undisputedly, petitioner was one of the Directors of the company when it was promoted. Petitioner himself admits at paragraph 7 that he became the Director of petitioner-company when he was 9 studying MBBS course and he was unable to keep track of the day-to-day business of the company. He also admits that he had to leave Bangalore to pursue his post graduate in medical studies at United States of America. Undisputedly, alleged loan by the petitioner to the company was in the year 1997. Company petition has been filed in the year 2009 i.e., on 16.01.2009. There is unexplained delay of 12 years in filing the company petition. No material whatsoever has been placed on record to demonstrate as to what transpired between 1997 till date of filing of petition in the year 2009. Suddenly, after waking up from his slumber, petitioner has filed this petition in year 2009 by invoking extraordinary jurisdiction of this Court seeking for winding up of respondent-company. A perusal of the petition averments would indicate that what has been urged is that respondent-company should be wound up under Sections433(e) & (f) of Companies Act. Under Section 433(e) of Companies Act, company will be ordered to be wound up by this Court on petitioner 10 satisfying this Court that respondent-company has been unable to pay the debts. It has been consistently held by this Court and Hon'ble Apex Court that debt should be admitted unequivocally by the respondent and defence if any raised by respondent should not be false defence to stave off the creditor. Balance sheets of the years 1997, 1998 & 1999 have been produced. It no doubt indicates that said company has admitted in its balance sheets that it owes the petitioner a sum of `17,14,765/- as per the last balance sheet as on 31.03.1999 which is produced at Annexure-D.
11. Learned Advocate appearing for petitioner has relied upon the judgment of Gujarat High Court in the case of MISHRIMAL ANANDKUMAR & OTHERS vs POLYCOT CABLES PVT. LTD reported in (2001)104 Company Cases 353 to contend that when there is admission in the balance sheet, there is heavy burden on the respondent-company to prove that such admission is otherwise. At this juncture counsel for petitioner would also contend that when the respondent 11 has not appeared before this Court and contested the matter and denied averments made in the petition, it amounts to admission. There cannot be any doubt with regard to said proposition of law. Acknowledgment of debt in any form by the debtor is sufficient to fasten the liability on such debtor. In the instant case, debt is of 1997, which was sought to be recovered by issuing statutory notice in the year 2008 i.e., 21.05.2008 on which date neither there is admission of the debt and even if such admission is demonstrated, admission of time barred debt is no acknowledgement in the eye of law, vide Section 18 of Limitation Act, 1963.
12. In the case of MISHRIMAL ANANDKUMAR cited supra, it can be noticed that petition was filed in the year 1997 and the balance sheet of the respondent- company made up to 31.03.1995 reflected that there was acknowledgment of debt. In other words, debt which was acknowledged in the balance sheet at the time of presenting company petition was well within time. Whereas, in the instant case, admission of debt is 12 found in the balance sheets of 1998-99 and from the said date till the filing of this petition on 16.01.2009, no admission is found. Hence, said judgment would not come to the rescue of the petitioner.
13. As already noticed herein above, petitioner has not been able to demonstrate before this Court by producing either any of the correspondence or any other material to establish that from the year 2000 onwards, respondent has acknowledged the debt. In that view of the matter, I am not inclined to accept the contention raised by learned Advocate appearing for petitioner.
14. Learned Advocate appearing for the petitioner has also contended that under clause (g) of Section 433 of Companies Act, 1956 if the respondent- company has made a default in filing the balance sheet for five consecutive years it would enable this Court to order winding up of respondent -company requires to be considered with utmost circumspection in view of the statutory provisions available under Companies Act 13 namely, Section 560 of the Companies Act whereunder Registrar of Companies Act in such cases, would be entitled to strike off defunct companies from the Register maintained in this regard. As such, that itself would not be a ground until and unless petitioner is able to establish that very substratum of the company is lost and it is just and equitable in the interest of creditors to wind up the respondent - company. She has also relied upon the judgment of S SUNDARESAN's case referred to supra to buttress her argument that under identical circumstances, High Court of Madras accepted the plea that substratum of the company had disappeared because the object for which the company incorporated had completely failed and respondent - company had not been able to manufacture and sell such products and relying upon the principles enunciated therein and by referring to the balance sheet of the present respondent - company relating to the year 1999-2000 she has contended that respondent- company has not done any business and as such, 14 substratum of the respondent-company is deemed to have been lost.
15. It is no doubt true that in the instant case, petitioner has filed a memo enclosing the search report relating to respondent-company which indicate at Sl.No.9 of the said report that respondent - company was in default of filing audited financial statements and annual returns since the year 1999-2000. As to what transpired between this period 1999-2000 to till the date of filing of the petition, namely as to whether respondent-company itself is not running or not, no material is placed. Mere non filing of returns cannot be a ground to draw inference that company is not working and when extraordinary jurisdiction of this Court is invoked seeking for winding up of such company, evidence has to be clear, cogent and acceptable.
16. In the judgment relied upon by learned Advocate appearing for petitioner in SUNDARESAN's case cited supra, it was a case where petitioners had 15 approached the Court were also shareholders who had invested amount. Petitioner along with his father, brother and wife had invested `1.05 lakhs and they had been able to establish before Company Court that said company had not continued with the business and on facts, Court came to conclusion that substratum of the company has been lost.
17. In the instant case, as already noticed herein above, no material has been placed by petitioner before this Court to establish that respondent-company has become defunct company. Even otherwise, respondent- company in the instant case, having a remedy under Section 560 of the Companies Act to revive the company, this Court, in the absence of any material evidence available on record to establish that it had become defunct or was not running for the purpose it was established during the period 1999 to 2009, extraordinary jurisdiction will be exercised by this Court for ordering winding up of respondent-company. 16
18. For the reasons aforestated, I am of the view that petitioner has not been able to establish before this Court that respondent-company has not continued with the business after the year 1999.
19. In that view of the matter, I do not find any ground to entertain this petition. Accordingly, petition stands dismissed.
Sd/-
JUDGE *sp/DR