Karnataka High Court
M/S L And T Finance Limited vs Unified Metals And Minerals Private ... on 9 April, 2013
Author: Ram Mohan Reddy
Bench: Ram Mohan Reddy
1
COP.7/13
IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 9TH DAY OF APRIL, 2013
BEFORE
THE HON'BLE MR.JUSTICE RAM MOHAN REDDY
COMPANY PETITION NO. 7 OF 2013
BETWEEN:
M/s. L & T FINANCE LIMITED
MONARCH RAMANI, No. 3/E
7TH C MAIN, 3RD CROSS
3RD INDUSTRIAL BLOCK
KORAMANGALA
BANGALORE - 560 034.
REP.BY Mr. BHARTH BALAWALLI
BRANCH MANAGER AUTHORITY HOLDER.
... PETITIONER
(BY SRI. MAHABALESHWARA G C, ADVOCATE)
AND :
UNIFIED METALS AND MINERALS PRIVATE LIMITED
REP.BY ITS MANAGING DIRECTOR
REGISTERED OFFICE AT
No.1, STEERWELL CHAMBERS
101, 1ST FLOOR, RAILWAY PARALLEL ROAD
KUMARPARK EAST
BANGALORE - 560 001.
... RESPONDENT
THIS PETITION IS FILED UNDER SECTIONS 433 (e) & (f)
R/W SECTION 434 OF THE COMPANIES ACT, 1956 PRAYING TO
WIND UP THE RESPONDENT - COMPANY - UNIFIED METALS
AND MINERALS PRIVATE LIMITED., REGISTERED OFFICE AT
No.1, STEERWELL CHAMBERS, 101, 1ST FLOOR, RAILWAY
PARALLEL ROAD, KUMARPARK EAST, BANGLAORE - 560 001,
IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES
ACT, 1956; AND ETC.
2
COP.7/13
THIS PETITION COMING ON FOR ADMISSION THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
Petitioner, a Non Banking Financial Institution states that the respondent - Company incorporated on 29.11.2007 under the Companies Act, 1956 (for short, "the Act") in the State of Karnataka, having its registered office at the address shown in the cause title with an authorized share capital of `.12,80,00,000/- i.e., Rupees Twelve Crore Eighty Lakhs divided into 12,80,000 equity shares of `.100/- each with the objects as mentioned in the Memorandum and Articles of Association Annexures 'C' and 'D' respectively was extended unsecured loan of `.3,15,00,000/- on 22.09.2011, following which, the respondent executed a loan agreement and all other documents. According to the petitioner, `.3,15,00,000/- was disbursed pursuant to a sanction letter dated 22.09.2011 Annexure 'H', after due diligence over the financial credibility of the respondent, subject to the condition that it be repaid in 15 monthly installments of `.23,13,000/- inclusive of 3 COP.7/13 interest at the rate of 7.80% per annum commencing from 15.10.2011 to 15.12.2012. It is asserted that the respondent - Company executed an on demand promissory note dated 22.09.2011 promising to pay the amount together with interest Annexure 'K'. It is alleged that the Respondent - Company, failed to repay `.3,11,29,177/- with interest as on 24.05.2012 as per Statement of Account Annexure 'L'. Failure to repay the said sum together with interest led to the statutory notice dated 25.11.2012 under Section 434 of the Act issued under registered post acknowledgement due Annexures 'M', 'N' and 'O' respectively, which when not responded, it is submitted that the respondent is deemed to be unable to pay its dues within the meaning of Section 431(1)(a) of the Act. Hence this petition to wind up the respondent - Company invoking Section 433(e) and (f) of the Act.
2. Court Notice issued to the respondent led to the order dated 22.03.2013 holding service of notice on respondent sufficient.
4COP.7/13
3. Having heard the learned counsel for the petitioner and perused the averments in the petition as also the Annexures, the question for decision making is:-
Whether the petitioner has made out a case of debt, which is determined, ascertained, definite and undisputed, which the respondent - Company has failed to pay, in order to invoke the extraordinary jurisdiction of this court for winding up the respondent - Company?
4. The resolution of the Board of Directors of the respondent - Company dated 05.08.2011 Annexure 'E' authorized the Company to avail a loan facility up to Rs.3,15,00,000/- offered by the petitioner and the Managing Director of the Company to sign, finalize, settle and execute the loan agreement and other documents. The application form Annexure 'F' and letter dated 22.09.2011 Annexure 'G' discloses the request of the respondent - Company for sanction of loan indicating various work orders received from certain institutions, the value of which is 16.01 Crores. 5 COP.7/13 The letter dated 22.09.2011 Annexure 'H' of the petitioner is the sanction while Annexure 'J' is the loan agreement allegedly signed by the respondent. Annexure 'K' is said to be the Demand Promissory Note executed by the General Manager of the respondent while Annexure 'M' is the statutory notice, Annexure 'N', the receipt for having mailed the notice to the respondent through registered post and Annexure 'O', the acknowledgement for having served the notice on the respondent.
5. Petitioner, having elaborately stated facts as regard the alleged transaction between itself and the respondent, and documents alleged to have been executed by the respondent followed by a statutory notice calling upon the respondent - Company to pay the amount, in my opinion, by itself and nothing more do not constitute prima facie evidence of a commercial transaction. The loan agreement relied upon by the petitioner in support of its case does not disclose determination of an undisputed debt. If the respondent 6 COP.7/13 had in fact received the payment, there ought to have been no difficulty for the petitioner to place before the Court that relevant material relating to disbursement of the loan to the respondent. Merely on the basis of the loan agreement and on demand promissory note, it cannot be said that consideration had passed on the disbursement of the loan amount to the respondent. In the absence of relevant material constituting substantial legal evidence of a determination asserting undisputed debt by the respondent - Company, it would be too premature for this Court at this stage to assume that the respondent is due to the petitioner the sum of money claimed.
6. The balance sheet of the respondent - Company is not forthcoming in support of the allegation that the respondent is commercially insolvent and is incapable of paying its debt. It is not the case of the petitioner that the respondent has abandoned its objects of business or that the substratum of the Company is no more available since there is neither 7 COP.7/13 allegation nor proof of the same. In these circumstances, it cannot but be held that the respondent - Company is unable to meet its outstanding dues.
7. In Divya Export Enterprises Vs. Producin Private Ltd.1 a learned Single Judge of this Court held that the discretion exercisable under the Act is like any other judicial discretion and that a mere assertion of a debt payable is not sufficient to attract the discretion of this court. The principle laid down therein is that a prima facie case must be made out by the petitioner by which the respondent company should shoulder the onus of disproving it, by showing that its defence is in good faith and one of substance. In the facts and circumstances supra, the petitioner has only asserted a debt payable by the respondent which is insufficient to attract the exercise of discretion under the Act. 1 ILR 1990 KAR 1610 8 COP.7/13
8. The observations of the Apex Court in the case of PICUP .Vs. North India Petro Chemicals Ltd.2, in the circumstances is apposite, and reads thus:
"An order under section 433(e) is discretionary. There must be a debt due and the Company must be unable to pay the same. A debt under the Section must be a determined or a definite sum of money payable immediately or at a future date. The inability referred to in the expression "unable to pay its dues", in Section 433(e) should be taken in the commercial sense. In that, it is unable to meet current demands. It is plainly and commercially insolvent - i.e., to say, that its assets are such, and its existing liabilities are such, as to make it reasonably certain - as to make the court feel satisfied - that the existing and probable assets would be insufficient to meet its existing liabilities".
It is elsewhere said that the machinery for winding up will not be allowed to be utilized merely as a means for realizing debts due from a Company.
2 (1994) 3 SCC 348 9 COP.7/13
9. On an examination of the contentions of the petitioner, I find the whole edifice of its case to be built upon non-existing foundation and all arguments stem from fallacious assumptions. Petitioner having not placed relevant material before the Court, which might throw light upon the matter in question seeks to obtain a decision in the absence of material and information which an appropriately informed decision requires, in short, to obtain a decision on improper knowledge.
Petition is accordingly rejected.
Sd/-
JUDGE sma