Rajasthan High Court - Jaipur
Russell Credit Limited vs Sand Plast (India) Ltd on 9 August, 2019
Author: Mohammad Rafiq
Bench: Mohammad Rafiq, Narendra Singh Dhaddha
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Special Appeal (Civil) No. 14/2019
With
D.B. Civil Misc. Stay Application No.2538/2019
Russell Credit Limited, Having Its Registered Office At Virginia
House, 37, Jawahar Lal Nehru Road, Kolkata, West Bengal.
----Appellant
Versus
Sand Plast (India) Ltd., A Company Registered Under The
Companies Act. 1956 And Having Its Registered Office At B-77,
Raman Marg, Tilak Nagar, Jaipur 302004 And Its Head Office At
1020-23, Ansal Towers, 38 Nehru Place, New Delhi-110019
----Respondent
For Appellant(s) : Mr. A.K. Sharma, Senior Advocate, with Mr. Rachit Sharma For Respondent(s) : Mr. Prateek Kasliwal HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE NARENDRA SINGH DHADDHA Judgment Per Hon'ble Mr. Justice Mohammad Rafiq:
09/08/2019 This appeal is directed against order of learned Company Judge dated 16.04.2019.
Appellant Russel Credit Limited filed the company petition seeking liquidation of respondent Sand Plast (India) Limited. A miscellaneous application under Rule 9 of the Company Court Rules was filed by M/s. ITC Bhadrachalam Finance and Investment Limited to place subsequent events of its amalgamation on record. Appellant-company took over all the assets and liabilities of the original petitioner-company and the orders of approval of its amalgamation by the Calcutta High Court and Bombay High Court (Downloaded on 29/08/2019 at 11:25:18 PM) (2 of 6) [SAC-14/2019] were also placed on record. The learned Company Judge, vide order dated 16.08.2018 allowed the application under Rule 9 of the Company Court Rules and name of the petitioner-company was allowed to be changed to Russell Credit Limited. The respondent moved an application for recalling of the order dated 16.08.2018 before learned Company Judge, which was dismissed by order dated 20.09.2018.
Challenging the aforesaid two orders, the respondent filed D.B. Special Appeal (Civil) No.27/2018 before this Court. The Division Bench, vide order dated 14.11.2018, disposed of the appeal without interfering with the said orders, however, with certain observations, which are as follows:-
"Having regard to the fact that after the amalgamation of BFIL Finance Limited, which is the changed name of original applicant ITC Bhadrachalam Finance and Investment Limited, with Russell Credit Limited, the Company Judge has merely permitted interest of the original petitioner to be pursued by the said company, no interference is called for. However, such substitution should not in any manner prejudice the interest of the appellant, who is non-petitioner in company petition, if the appellant is able to show that settlement was arrived at between the original petitioner company and the appellant herein. It goes without saying that newly impleaded company would in any case be required to show from its balance sheet whether at the time of merger any loan amount was shown due towards the appellant (non-petitioner in the company petition)."
In view of the above, the respondent sought a direction from the learned Company Judge to the petitioner-company to show its balance-sheets at the time of merger to prove that any loan amount was shown due towards the respondent-company. The learned Company Judge vide impugned order dated 16.04.2019, directed the petitioner-company to file an affidavit showing its balance-sheet whether at the time of merger any loan amount (Downloaded on 29/08/2019 at 11:25:18 PM) (3 of 6) [SAC-14/2019] was due towards the respondent and thus has acted upon the observations of the Division Bench made vide order dated 14.11.2018. Hence this appeal.
Mr. A.K. Sharma, learned Senior Counsel for the appellant, submitted that the respondent even filed an application for recall of the order dated 16.08.2018 but the learned Company Judge dismissed that application by order dated 20.09.2018. Both the aforesaid orders were challenged in the appeal by the respondent. This Court, by order dated 14.11.2018, declined to interfere with the aforesaid orders, however, observed that ...."However, such substitution should not in any manner prejudice the interest of the appellant, who is non-petitioner in company petition, if the appellant is able to show that settlement was arrive dat between the original petitioner company and the appellant herein. It goes without saying that newly impleaded company would in any case be required to show from its balance sheet whether at the time of merger any loan amount was shown due towards the appellant (non-petitioner in the company petition)."
Learned Senior Counsel submitted that out of court settlement was arrived at between the parties, namely, M/s. Sand Plast (India) Limited as first party, Mr. Ved Prakash, Managing Director of Sand Plast (India) Limited as second party and M/s. BFIL Finance Limited (formerly known as ITC Bhadrachalam Finance & Investments Limited), as third party. It was pursuant to the aforesaid agreement dated 07.08.2006 that the respondent agreed to pay a total sum of Rs.95.69 lakhs as full and final settlement to the appellant herein. Mr. Ved Prakash, Managing Director of M/s. Sand Plast (India) Limited, acknowledged his personal liability to pay a sum of Rs.54,84,132/-. On receipt of (Downloaded on 29/08/2019 at 11:25:18 PM) (4 of 6) [SAC-14/2019] that amount, the appellant has compounded and withdrawn the criminal proceedings launched against him under Section 138 of the Negotiable Instruments Act, 1881. The aforesaid amount of Rs.95.69 lakhs, referred to in the tripartite agreement dated 07.08.2006, was inclusive of the aforesaid amount of 54,84,132/-. Out of which, the amount of Rs.40,84,868/- was never paid by the respondent. The order passed by the Division Bench dated 14.11.2018 has been understood by the learned Company Judge to mean that the appellant has to discharge the burden of proving the aforementioned payment. It is argued that the respondent cannot be absolved of its burden of proof to prove the payment of the amount of Rs.40,84,868/-.
Mr. Prateek Kasliwal, learned counsel for the respondent, has submitted that the liability of aforesaid amount of Rs.40,84,868/-, arising out of the tripartite agreement, could not be fastened on the respondent Sand Plast (India) Ltd. In fact, the amount of Rs.54,84,121/- was also paid by the company for Mr. Ved Prakash, the then Managing Director. It has been determined as to who is liable to pay the amount of Rs.40,84,868/-. Therefore, the appellant was rightly required to show from its balance-sheet whether at the time of merger any loan was shown due towards the respondent-company.
Mr. A.K. Sharma, learned Senior Counsel for appellant, rejoined and submitted that the argument of the respondent that the liability of paying the amount of Rs.40,84,868/- could even be of Mr. Ved Prakash, the then Managing Director, and not of the respondent-company alone, is preposterous and wholly unfounded. Learned Senior Counsel in this behalf referred to Clause 5 of the tripartite agreement dated 07.08.2006. (Downloaded on 29/08/2019 at 11:25:18 PM)
(5 of 6) [SAC-14/2019] Clause 5 of the aforementioned tripartite agreement reads thus:-
"5. That the First Party agrees to pay the balance sum of Rs.40,84,868/- (Rupees forty lakhs eighty four thousand eight hundred and sixty eight only) as and by way of installments in the following manner:
4A 1,65,868/- 15/01/2007
5. Rs.5,00,000/- 28/02/2007
6. Rs.5,00,000 15/04/2007
7. Rs.5,00,000/- 30/05/2007
8. Rs.5,00,000/- 15/07/2007
9. Rs.5,00,000/- 30/08/2007
10. Rs.5,00,000/- 15/10/2007
11. Rs.5,00,000/- 30/11/2007
12. Rs.4,19,000/- 15/01/2008
Perusal of Clause 5 of the aforesaid agreement bears it out that it was the liability of the first party, i.e., the respondent- company, to the amount of Rs.40,84,868/- and the respondent indeed cannot seek to shift that burden on to its then Managing Director Mr. Ved Prakash. Despite being repeatedly asked whether the respondent has any proof of payment of Rs.40,84,868/-, to the appellant, the learned counsel for the respondent was not in a position to categorically state whether the respondent-company could produce any proof. He rather submitted that the accounts of the company have been destroyed by the erstwhile Managing Director Mr. Ved Prakash.
Be that as it may, we are only deciding this appeal with a view to clarify the earlier Division Bench order dated 14.11.2018. We make it clear that the learned Company Judge would be entitled to take an independent view of the fact what the respondent-company is now seeking to shift the burden of (Downloaded on 29/08/2019 at 11:25:18 PM) (6 of 6) [SAC-14/2019] payment of the amount of Rs.40,84,868/- to its erstwhile Managing Director Mr. Ved Prakash, despite the specific Clause 5, extracted above, of the tripartite agreement and also decide whether it could be allowed to take such a plea. The observations made by this Court in the order dated 14.11.2018 requiring the appellant-company to show from its balance-sheet may not be construed to mean that the appellant-company is required to prove the burden of proof of the respondent-company. We may however hasten to add that what inference the learned Single Judge would draw by failure of the appellant to prove the balance- sheet is a matter for appreciation by the learned Company Judge.
With the aforesaid clarification, the appeal is disposed of. This also disposes of the stay application. (NARENDRA SINGH DHADDHA),J (MOHAMMAD RAFIQ),J //Jaiman//62 (Downloaded on 29/08/2019 at 11:25:18 PM) Powered by TCPDF (www.tcpdf.org)