Karnataka High Court
Sri Am Sudhakar vs M/S Magnus Health Care & Research on 2 July, 2012
Author: Ravi Malimath
Bench: Ravi Malimath
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
ON THE 2ND DAY OF JULY, 2012
BEFORE
THE HON'BLE MR. JUSTICE RAVI MALIMATH
Company Petition No. 219/2010 a/w Company
Application Nos. 977/2010 and 533/2012
BETWEEN:
Sri A.M. Sudhakar,
S/o late A.L. Muni Reddy,
Aged about 42 years,
Residing at Flat No. T-4,
Imperial Residency,
No. 444/3/2, 24th 'A' Main,
Agara, 1st Sector,
H.S.R. Layout,
Bangalore-560 102. ...PETITIONER/APPLICANT
COMMON
(By Sri Sagi P. John for SPJ Legal, Adv.)
AND:
M/s. Magnus Health Care &
Research Centre Private Limited,
No. 81, S.T. Bed Entrance,
Off 80 feet Road,
Opp. Hotel Maharaja,
4th Block, Koramangala, ... RESPONDENT
Bangalore-560 034. (COMMON)
(By Sri Perikal K. Arjun, Adv. for R-1 &
Sri. U. Abdul Khader, Adv. for SBI)
This Company Petition is filed under Section
433(e) and (f) r/w 439 of the Companies Act, 1956
praying to wind up the respondent company, Magnus
Health Care & Research Centre Private Limited having
its registered office at No. 81, S.T. Bed Entrance, Off 80
feet Road, Opposite to Hotel Maharaja, 4th Block,
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Koramangala, Bangalore-560 034 under Sections 433(e)
and (f) of the Companies Act, 1956 and etc.
Company Application No. 977/2010 is filed under
Order XXXIX Rules 1 and 2 r/w 151 CPC and Rules 6
and 9 of the Companies (Courts) Rules 1959 praying to
issue an Ad-interim order of temporary injunction
directing the respondent, its Directors, Officers,
Henchmen or any persons claiming through or under
the respondent not alienate, transfer, encumber or to
dispose off in whatsoever manner the application
schedule immovable property pending disposal of the
Company petition filed by the petitioner for winding up
of the respondent.
Company Application No. 533/2012 is filed under
Section 441 and 537 of the Companies Act, 1956 r/w
Rules 6 and 9 of the Companies (Courts) Rules 1959
praying to declare the sale deed dated 15.10.2011
executed by the respondent Company in favour of M/s.
Park Square Infratec which is registered as BMH-1-
08278-2011-12 in C.D.No. BMHD 532 dated
27.12.2011 in the office of the Sub-Registrar,
Bommanahalli vide Annexure-F as null and void.
This Company Petition coming on for Admission
along with Company Application Nos. 977/2010 &
533/2012 this day, the Court made the following:
ORDER
This Company Petition is filed under Section 433(e) and (f) along with 439 of the Companies Act, 1956 seeking winding up of the respondent Company and the other consequential reliefs.
2. The case of the petitioner is that he is one of the Promoters and Directors of the respondent 3 Company and he resigned from the Board of Directors of the respondent Company with effect from 1.2.2010. A copy of the resignation dated 1.2.2010 along with the postal receipts and acknowledgements are produced as Annexures-C, D and E.
3. The contention of the petitioner is that an amount of ` 1,58,01,468/- is still lying to his credit in the Share Application Money Account in the respondent Company and a request was made by him not to issue or allot any shares in his name. In addition to this, he had also given ` 3,77,861/- to the respondent Company as an unsecured loan. The said amount is still continuing to be shown in the books of accounts. That the respondent Company was incorporated on 7th day of May, 2007. The Memorandum of Articles is produced as Annexure-A to the petition. The share capital of the Company in terms of the audited balance sheet for the year ending 31.3.2009 is ` 50 lakhs divided into 50,000 equity shares of ` 100/- each. The issued, subscribed and paid up capital of the respondent Company is ` 2,10,000/- divided into 2,100 equity share of ` 100/- each. A copy of the balance sheet is produced at 4 Annexure-B. Inspite of repeated requests, the share application money was not refunded nor any reply was given to the petitioner by the respondent Company. Hence, the petitioner issued a legal notice, dated 1.3.2010 to the respondent Company demanding a sum of ` 1,61,79,239/- as detailed therein. Though the respondent Company received the said notice, has not replied to the same. A copy of the legal notice, postal receipt and postal acknowledgements are produced as Annexures-J, K and L. Since there was no reply to the legal notice, the present petition is filed.
5. On notice being served, the respondent Company has filed its statement of objections.
6. The learned Counsel for the respondent Company submits that the petition is not maintainable in law and is an abuse of the process of this Court. That the petitioner was one of the Promoters and Directors of the respondent Company along with 19 other share holders. Only to wriggle out of his obligations as a Promoter and Director, the present petition is filed on frivolous and untenable grounds. That the petition has been filed to withdraw his investments from the project 5 of the respondent Company. That based on the credibility of the respondent Company, the financial institutions have sanctioned a loan of ` 25 crores to them. That in terms of the loan sanction letter, which the petitioner is very well aware of, all the monies infused by the Promoters and Directors are subordinate to the loan availed from the State Bank of India. Hence, on this ground itself, the demand made by the petitioner is unsustainable. It is his further case that the petitioner has represented to the Bank that he would be investing a further sum of ` 1.5 crores as his contribution to the respondent Company, but he has failed to do so and on his failure to do so, the present petition has been filed in view of his inability and his desire to withdraw the money. That shares have been allotted against the share application money to the petitioner as well to the other Promoters on 20.9.2010 and hence, the request for refunding the share application money does not arise for consideration. It is further contended that the share application money constitutes a part of the paid up capital of the Company and it cannot be returned without following the procedure as contemplated under Sections 100 to 104 6 of the Companies Act, 1956 viz., the same could be done only with the approval of the shareholders by means of a special resolution and its confirmation by this Court. It is the further case of the respondent Company that the petitioner by his letter, dated 4th September 2008, addressed to the HDFC Bank has undertaken that he will be fully involved in the day to day business of the respondent Company and that there will be no dereliction of duties on his part and in order to cover the same, the present petition is filed. Hence, it is pleaded that the petition be dismissed.
7. An affidavit has also been filed by the Secured Creditor, State Bank of India, stating that a sum of ` 25 Crores was sanctioned out of which a sum of ` 10,39,58,274/- has been disbursed. That on 4.3.2011, the respondent sought permission to advertise to sell the mortgaged property. The Creditor viz., State Bank of India has given 'No Objection' for sale subject to payment of dues.
8. Heard the learned Counsel for the petitioner. 7
9. No submissions are forthcoming on behalf of the respondent.
10. The plea of the petitioner is that the share application money paid by him to an extent of ` 1,58,01,468/- has not been repaid by the respondent and hence, it is a debt due. Secondly, that a sum of ` 3,77,861/- has been paid to the respondent as unsecured loans. The same is reflected in the balance sheet and the same has remained unpaid. On a legal notice being issued, the debts have not been cleared and hence, the respondent Company requires to be wound up.
11. In support of the first submission, the learned Counsel for the petitioner relies on a judgment of the Delhi High Court in the case of BHAJAN SINGH SAMRA
-vs- WIMPY INTERNATIONAL LTD. [Company Petition No. 26/2006 and Controlling Authority 1206/2006 D.D. 21.11.2011] at para 21 of the order to contend that all monies received by a public limited company towards 8 allotment of shares have to be deposited in a separate bank account and if the allotment is not made within the prescribed period, the said monies shall be refunded forthwith to the applicants. That the Scheme of the Act itself obligates the company crediting the money as Share Application Money to either forthwith issue shares or refund the monies at the earliest. Hence, it is pleaded that the said judgment is applicable to the case on hand.
12. Reliance is also place on para-23 of the judgment supra wherein it is held that even after the petitioner issued a winding up notice, the respondent Company did not issue any shares. In the reply affidavit, it was also not stated that the respondent company is willing to issue shares to the petitioner. It is only for the first time in the written submissions recently filed by the respondent company that the respondent has stated that it is now willing to issue shares. But, in the opinion of the Court, once a winding up notice is issued, it is not open to the respondent to state that it is now willing to issue shares. 9
13. In the judgment relied upon, the petitioner gave a loan for a period of 2 years along with interest at 22% per annum. Upon the petitioner's request for redemption of his loan with interest, the respondent Company instead of redeeming the loan, offered to convert it into equity shares in the petitioner's favour and also agreed to appoint the petitioner as an Executive Director. That inspite of repeated requests neither the shares were issued by the respondent Company nor the petitioner was made a Director. Criminal proceedings were also initiated against the respondent Company. Under these circumstances, the petitioner filed for winding up of the respondent Company. In this background, the Court was of the view, that in terms of the written statement, there is a willingness to issue the shares but no shares had actually been allotted in terms of para 23 of the judgment. In para 21 of the judgment as relied upon by the petitioner, what the Court had to say was that when the allotment of shares is not made within the 10 prescribed period, money has to be refunded to the applicants.
14. In the instant case, the specific plea of the respondent is that the shares were allotted to the petitioner on 20.9.2010 and that it is not just the petitioner but all the other Promoters and Directors were also issued shares. Hence, the said judgment would not be applicable to the case on hand.
15. It is not the case here that the share application was not refunded or shares were not allotted. The shares were allotted on 20.9.2010. The present petition has been filed on 29th September, 2010 much after the issuance of the shares. Hence, the said judgment is not applicable to the case on hand.
16. The case of the petitioner is that he demanded the return of the share application money with a request not to allot the shares. He contends that, it therefore, amounts to a debt, which he is entitled to claim. However, the facts are different. The case of the respondent is that only because a return of the share 11 application money has been made, it cannot be returned. The return has to be in terms of the procedure contemplated under Sections 100 to 104 of the Companies Act and on an approval by this Court. Merely because a refund has been asked, neither is it a debt nor is the Company liable to pay the same. That the shares were allotted on 20th September, 2010 and hence, even that plea is not available to the petitioner. That the present petition has been filed only on 29th September, 2010. Therefore, even before the petition was filed, the shares have been allotted.
17. The second contention is that a sum of ` 3,77,861/- has been paid as an unsecured loan to the Company in respect of which it is pleaded that even in the statement of objections, there is no denial about the said amount and that the respondent has only stated that the said amount is not due for payment. Reliance is placed on the balance sheet to show that under the heading 'Unsecured Loans' from Directors and Relatives an extent of ` 24,70,167/- is shown as on 31.3.2009. It is, therefore, contended that this amount includes the amount paid by the petitioner to the 12 respondent. The contention of the petitioner is solely based on para-11 of the statement of objections, which reads as follows:
"11. The Respondent Company states that the loan amount of ` 3,77,861/- claimed by the Petitioner issued to the Respondent is not due for payment."
Hence, it is pleaded that since the respondent does not deny that the amount is due, the debt is admitted. As could be seen from para-11 of the statement of objections, they have stated that the amount claimed by the petitioner is not due for payment. They have not stated that the amount is due now. Hence, the date of repayment is not established. There is no material to show as to when the amount actually becomes due. It is not a debt at present. It may be a debt in future. Under these circumstances, to place reliance on para-11 in support of the petitioner's case, is unacceptable. Hence, the said contention of the petitioners cannot be accepted.
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18. That even if the Statement of Objections is to be accepted, the same would not be a debt due as on the date of filing of the petition. This Court in the case of P.K.VARGHESE VS. J.T.V.METAL FINISHERS (P) LTD. reported in 1988 VOL. 63 COMP CASES 644 while placing reliance on the judgment of the Hon'ble Supreme Court in the case of MADHUSUDHAN GORDHANDAS AND CO. VS. MADHU WOLLEN INDUSTRIES (P) LTD. [[1972] 42 COMP CAS 125 (SC)] held at Para 4 as follows:-
"4. xxxxxx The tenability of the defence depends on the evidence led by the parties. If in this regard, no evidence is led to support the assertion that there was no agreement reached on June 4, 1986, in regard to the repayment in the manner indicated, then, it is likely that the respondent company would succeed in postponing its liability even if a suit was filed having regard to the fact that the present petition must be construed by this court as a petition filed to coerce 14 the repayment of the amount which is not immediately due to be paid to the petitioner, as laid down by the Supreme Court in the case of M/S. MADHUSUDHAN GORDHANDAS AND CO. V. MADHU WOOLLEN INDUSTRIES P. LTD. (1972) 42 COMP CAS 125 (SC). Section 433 cannot be made use of to coerce a company to make payments (not immediately due) even though the liability is admitted. This is the position in England as well. xxxxxx"
19. Therefore, even though the liability has been admitted, the petitioner cannot coerce the company to make the said payment especially in view of the fact that the payments are not immediately due. Hence, the contention of the petitioner based on Para 11 of the Statement of Objections is misconceived.
20. It is the further contention of the respondent that the balance sheet discloses loans and credits from the Directors and Promoters and that part of the amount shown therein is the amount, which has been 15 given as a loan by the petitioner to the respondent. I' am unable to accept the said contention. Undoubtedly, the loans and credits from the Directors and Promoters have been shown. It has been shown as a whole. There is no break up as to who has paid the amount and to what extent. Therefore, the reference to the category of loans and credits from the Directors and Promoters to include the amount paid by the petitioners to the respondent can neither be inferred nor can such a contention be accepted.
21. For the aforesaid reasons, the petitioner has failed to make out a case. The petition being devoid of merits is dismissed. All the pending applications are consequently rejected.
Sd/-
JUDGE Nsu/-