Karnataka High Court
Kla India Public Limited vs Stcl Limited on 28 May, 2012
Bench: D.V.Shylendra Kumar, B.Sreenivase Gowda
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IN THE HIGH COURT OF KARNATAKA
AT BANGALORE
Dated this the 28t day of May, 2012
PRESENT
THE HONBLE MR JUSTICE D V SHYLENDRA KUMAR
AND
THE HON'BLE MR JUSTICE B SREENIVASE GOWDA
OSANO. l3of 2012
BETWEEN:
KLA INDIA PUBLIC LIMITED
A COMPANY WIThIN THE MEANING OF
THE COMPANIES ACT, 1956 AND HAVING
ITS REG. OFFICE AT 21/3,
GEETA MANDIR MARG,
NEW RAJINDER NAGAR,
NEW DELHI 110060 AND
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ALSO HAVING ITS HEAD OFFICE
AT 2ND MILESTONE, KICHHA ROAD,
RUDRAPUR 263 153,
DIST, UDHAM SINGH NAGAR
U'ITARAKHAND
REP. BY ITS MANAGING DIRECTOR
MR. ARUN AGARWAL. .. APPELLANT
[By Smt Gayathri Balu, Adv. for
M/s Khaitan and Co. LLP, Advs.1
AND:
STCL LIMITED
SUBSIDIARY OF THE STC
OF INDIA LTD.,
A COMPANY WITHIN THE
MEANING OF THE
COMPANIES ACT, 1956
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& HAVING ITS REG OFFICE
AT NO. 7A. STC TRADE CENTRU'.
3i FLO(.)R. NAN[)INI LAYOUT.
BANGALORE 560 096
-
REP BY ITS GENERAL MANAGER
MARKETING. MR. K L ANAND SAl ... RESPONDENTS
THIS APPEAL IS FILED UNDER SECTION 483 OF THE
COMPANIES ACT. 1956, PRAYING TO SET-ASIDE ORDER DATED
02.03.2012 (ANNEXURE-A) PASSED BY THE LEARNED COMPANY
JUDGE IN CO,P, NO.235/2010 AND ETC.,
THIS APPEAL IS COMING ON FOR ADMISSION THIS DAY,
SIIYLENDRA KUMAR J., DELIVERED THE FOLLOWING:
JUDGMENT
Petitioner in Company Petition No 235 of 2010 is the appellant in this appeal under Section 483 of the Companies Act. 1956 [Ibr short the Acti.
2. In terms of the order dated 2-3-2012 passed in the Company Petition No 235 of 2010, the learned company judge has dismissed the petition presented under Section 433(e) and (1] read with. Sections 434(1) and 439 of the Act.
3. Company petition has been presented on the premise that the appellant-company had supplied some 3 iron ore fines to the respondent-company as per its purchase order and has raised bifis for the ore supplied through Its Invoices, but the respondent-company has not made payment In terms of the invoices nor has complied wIth the requirement of furnishing form No H declaration in favour of the appellant-company, which could have enabled the appellant company to claim sales tax exemption in respect of the goods supplied by the appellant-company to the respondent-company, as a sale preceded export sale etc.
4. Learned company judge had occasion to look into the petition and heard the learned counsel for the appeflant-petitloner and the respondent, as the respondent had been put on notice, but nevertheless, after referring to the material placed before the court by the appellant-company and in the wake of the material placed by the respondent-company, particularly in the wake of form No 6. found that the subject transaction involves 4 more parties than the company petitioner and the respondent company and the nature of dispute even for the purpose of holding that the amount which was due constitutes a 'debt' within the meaning of this expression for the purpose of the Act, Is not one apparent on the face of It, but calls for a detailed Investigation of facts and evidence etc., and In this view of the matter, did not feel enthusiastic to exercise Jurisdiction under Section 433(e) and (fl of the Act and dismissed the petition. It Is challenging this order, the present appeal.
5. AppearIng on behalf of the appeflant-company, submission of Ms Gayathrl Balu, learned counsel, Is that learned company judge has erred In recording a finding that there were more parties to the transaction than merely the appellant and the respondent; that they were not third parties and moreover the names of other parties being mentioned In some documents placed by the 5 respondent-company before the court should not have been given much Importance etc.
6. It Is also submitted that the appellant-company had caused Issue of a statutory notice and the respondent- company has not properly responded to that and therefore Is deemed to be a debtor admitting the debt and Is a fit case for exercise of jurisdiction for winding up of the respondent-company.
7. It Is also submitted that from the material placed before the court, It Is obvious that the respondent- company was In red; that Its financial position was In the negative and It was continuously incurring loss and therefore also It was a fit case for exercise of jurisdiction for ordering winding up within the meaning of Section 433(e) and (1) of the Act, and therefore submits that the Impugned order warrants Interference In this appeal.
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8. We have perused the grounds urged in the memorandum of appeal, order passed by the learned company judge and the materials placed before the court, as also the contents of the company petition and the annexures thereto.
9. While it is true that not responding to a statutory notice can give rise to a presumption that the company in question is unable to pay its debts, in the instant case, the cause of non-response is submitted to be a situation attracting and coming within the scope of Section 434(1(a) of the Act and the learned company judge found that the nature of transaction and the manner in which things have developed definitely warrants further investigation even to ascertain as to whether the respondent-company was actually due the amount mentioned in the company petition and the notice etc, and therefore did not feel confident to exercise jurisdiction for winding up of the respondent-company, but reserving liberty to the 7 petitioner to workout its rights and remedies before any other forum and observing that examination of the company petition and the order and the observations made therein are only for the limited purpose of company petition being disposed of and dismissed the petition.
10. In our view, learned company judge has consciously exercised his discretion not to entertain the petition, particularly recording a finding that the matter calls for further investigation etc., and reserving liberty to the petitioner to workout its rights and remedied elsewhere in accordance with law.
11. When we find that the learned company judge has exercised his discretion on relevant consideration, we are of the opinion that it does not call for interference in the appellate jurisdiction for setting aside the order in the appeal.
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12. It is also well settled that proceedings under Section 433(e) and (1) of the Act cannot be used as a proceeding for recovery of any amount due, but it must be invoked bona jide and for the benefit of the class of creditors and shareholders and also to protect the interest of gullible third parties.
13. We cannot say that the learned judge of the company court was wrong in the opinion that the company petition did not warrant further examination for passing a winding-up order against the respondent company. In this view of the matter, we are not inclined to entertain this appeal and it is accordingly dismissed.
Sd! JUDGE Sd/a JUDGE 'pjk