Gujarat High Court
Ficom Organics Ltd. vs Laffans Petrochemicals Ltd. on 16 October, 1998
Equivalent citations: [2000]99COMPCAS471(GUJ)
JUDGMENT Shah, J.
1. In this petition under sections 433 and 434 of the Companies Act, 1956 (hereinafter 'the Act'), petitioner-Ficom Organics Ltd. (hereinafter 'the petitioner') has prayed that the respondent-company-Laffans Petrochemicals Ltd. ('the respondent/the respondent-company') be wound up on the ground that the respondent has not paid the petitioner a sum of Rs. 16,27,433.15. Together with further interest thereon at 24 per cent per annum despite statutory notice dated 14th February, 1997 served on the respondent.
2. The learned counsel for the parties have addressed the court at length on questions of fact as well as questions of law. Ordinarily, even pure questions of law are required to be decided in the fact situation of a particular case and, therefore, the court would have proceeded to narrate the facts of the case and the contentions of the rival parties both on questions of fact and questions of law and the court would have thereafter proceeded to deal with the same. However, Mr. A S Vakil for the respondent-company has raised an important question of law which arises in a number of company petitions and, therefore, the court has thought it fit to set out the legal perspective with which the court proposes to examine the questions of fact arising in the present case.
Statutory provisions
3. For winding up petitions on the ground that the company has not paid its debt to the petitioner-creditor, the following statutory provisions are relevant :
"433. Circumstances in which company may be wound up by court.
(e) if the company is unable to pay its debts '434. Company when deemed unable to pay its debts. (1) A company shall be deemed to be unable to pay its debts -
(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor;
(b) if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or
(c) if it is proved to the satisfaction of the court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company."
"Rule 96. (Companies (Court) Rules, 1959) Admission of petition and directions as to advertisement. - Upon the filing of the petition, it shall be posted before the Judge in Chambers for admission of the petition and fixing a date for the hearing thereof and for directions as to the advertisements to be published and the persons, if any, upon whom copies of the petition are to be served. The judge may, if he thinks fit, direct notice to be given to the company before giving directions as to the advertisement of the petition."
Classification of winding up petitions under section 433(e)
4. Depending on the defence pleaded, winding up petitions filed by the creditors under section 433(e) can be divided into following categories :
(1) Where the debt is admitted, but the company pleads temporary inability to pay.
(2) Where the company asserts ability to pay its debts (commercial solvency) but disputes the particular debt of the petitioning creditor.
(3) Where the company disputes the debt and in the alternative may also plead that the inability to pay is only temporary.
In the facts of the present case, we are concerned with the second category and the discussion is accordingly confined to the said category.
Settled legal principles
5. It is well-settled that in a winding up petition filed on the ground that the respondent-company has neglected to pay its debts to the petitioning creditor and, therefore, it is unable to pay its debts, the following principles enunciated by the Apex Court in the case of Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp Cas 125 are required to be applied :
"Two rules are well-settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. ...
Where the debt is undisputed, the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. Where, however, there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely.
The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law, and thirdly, the company adduces prima facie proof of the facts on which the defence depends. Another rule which the court follows is that if there is opposition to the making of the winding up order by the creditors, the court will consider their wishes and may decline to make the winding up order. Under section 337 of the Companies Act, 1956 in all matters relating to the winding up of the company, the court may ascertain the wishes of the creditors. The wishes of the shareholders are also considered, though, perhaps, the court may attach greatest weight to the views of the creditors ...
The wishes of the creditors will, however, be tested by the court on the grounds as to whether the case of the persons opposing the winding up is reasonable; secondly, whether there are matters which should be inquired into and investigated if a winding up order is made. It is also well-settled that a winding up order will not be made on a creditor's petition if it would not benefit him or the company's creditors generally. The grounds furnished by the creditors opposing the winding up will have an important bearing on the reasonableness of the case." [p. 132] Bone of contention
6. Now we may refer to the bone of contention. Mr. Vakil's contention is that even if the court comes to the conclusion on the basis of the material oil record that the debt is not bona fide disputed by the company, the court will not even admit the winding up petition if the company is able to show that it is a running concern, commercially solvent and its assets are more than its liabilities and even its current assets are more than its current liabilities. It is, therefore, vehemently submitted that in facts of the present case where the figures of the company's turnover and profits are as under, the court should not even consider the question whether the defence raised by the company to the petitioner's claim is bona fide or not. (Of course, this is without prejudice to the respondent-company's contention that the company has a bona fide defence to the petitioner's claim and, therefore, the petitioner should be required to take recourse of the ordinary remedy for recovering the debts before the civil court) :
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Year Gross sales Net profit
(Rs. in lakh) (Rs. in lakh)
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1993-94 330.92 18.80 1994-95 1,527.79 135.73 1995-96 3,005.38 162.49 1996-97 4,126.99 177.12
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Mr. Vakil has relied on 19 authorities including Amalgamated Commercial Traders (P.) Ltd. v. ACK Krishnaswami [1965] 35 Comp Cas 456 (SC), Madhusudan Gordhandas & Co. case (supra), Pradesh' a Industrial & Investment Corpn. of UP v. North India Petrochemicals Ltd. [1994] 13 CLA 363/[1994] 3 SCC 348, Diviya Export enterprises v. Producin (P.) Ltd. [1991] '70 Comp Cas 692 (Kar.)/[1991] 5 CLA (Snr.) 74 and the decision of this court in the case of american Express Bank v. Core Healthcare Ltd. [1999] 32 CLA 63 (Guj.).
7. On the other hand, Mr. Soparkar for the petitioner has submitted that once the court holds that the company's defence to the petitioning creditor's claim is not bona fide, the court is required to admit and advertise the petition and the inquiry into the company's commercial insolvency is to be undertaken only after admitting and advertising the petition. Mr. Soparkar has relied on the following authorities : Harinagar Sugar Mills Ltd. v. M W Paradhan AIR 1966 SC 1707, Madhusudan Gordhandas & Co. case (supra), T P Shau & Sons (P.) Ltd., In re. [1982] 52 Comp Cas 182 (Cal.), Reechem (P.) Ltd., In re. [1985] 57 Comp Cas 200 (AP), Unisystems (P.) Ltd. v. Stepall Chemical Ltd. [1986] 60 Comp Cas 753 (P&H), Joti Prasad Bala Prasad v. ACT Developers (P.) Ltd. [1989] 2 CLA 151 [1990] 68 Comp Cas 601 (Delhi), Airwings (P.) Ltd. v. Viktoria Air Cargo Gmbh Langer Kornweg [1995] 17 CLA 114/AIR 1995 Kar. 69, Straw Board Mfg. Co. Ltd. v. Mahalakshmi Sugar Mills Co. Ltd. [1991] 71 Comp Cas 544 (P&H) and 83 Comp Cas 703 (sic).
Brocid principles
8. Having heard the learned counsel for the parties and having considered the various authorities, it appears to the court that the following principles emerge from an analysis of the decided cases where the company asserts that it has the ability to pay its debts, but disputes the particular debts of the petitioner :
I. Summary inquiry - When the petitioning creditor makes out a prima facie case that the company, which is a going concern, owes a determinate sum of money or a substantially ascertained sum of money, which is not paid in spite of service of statutory notice, the court would issue notice to the company to show cause why the petition should not be admitted. If the company disputes the debt, the court is required to hold a summary inquiry. The company has to prima facie prove all the facts on which the defence rests. In such a summary inquiry, the parties may generally file affidavits and produce documents and in exceptional cases the court has the discretion even to permit the parties to lead oral evidence.
II. Issues - At the admission stage, the court is required to give its findings on the following aspects :
(i) Whether the petitioner-creditor is a creditor to whom the company owes an ascertained sum of money or substantially ascertained sum of money ?
(ii) Whether the said debt is within limitation ?
(iii) Whether the defence of the company is valid or bona fide or whether it is mere moonshine ?
In short, it may be said that the court is required to decide in the summary inquiry whether the company is liable to pay the petitioner as ascertained sum of money or substantially ascertained sum of money.
III. What is a bona fide defence - After hearing the parties and considering the material on record, if the court gives findings on issues (i) and (ii) in favour of the petitioner, issue (iii) will have to be considered. The court has to examine the nature of the respective cases pleaded by the parties and if a prima facie case is made out by the petitioner, the company should shoulder the onus of disproving it, by showing that its defence is in good faith and is one of substance and it is likely to succeed in point of law. The defence must be substantial and not mere moonshine. So also where the dispute is a mere after-thought, an adverse inference may have to be drawn against the company that the defence being an after-thought, is a mere cloak to cover up its inability or refusal to pay. Adverse inference may also have to be drawn where the cheque(s) issued by the company for the debt in question or a part thereof is (are) dishonoured. For determining whether a debt is disputed bona fide or not, the conduct of the parties in relation to the transaction in question, the character of the pleas and the circumstances which will be peculiar to each case will have to be considered.
IV. Court's findings on bona fides of company's defence and orders which may be passed upon such findings - (1) After considering the material on record, if the court comes to the conclusion that the defence raised by the company is not only not bona fide, but the defence is reeking with mala fides or the company's conduct leading to the dispute (in respect of which the company's defence is found to be not bona fide) was dishonest, the court would admit. the petition and pass an order for advertisement.
(2) Where the court comes to the conclusion that the defence is not bona fide (as distinguished from the conclusion that the defence is mala fide), the court may give the company an opportunity to pay the debt to the petitioner within the stipulated time limit. If the debt is not paid, the court would ordinarily admit the petition, unless a strong case is made out for not admitting the petition. The court may, in its discretion, even pass a conditional order of admission without an order for advertisement, while giving the finding that the company's defence is not bona fide.
(3) Where the court gives only a prima facie or tentative finding that the company's defence is not bona fide, before admitting and advertising the petition the court must also give a prima facie or tentative fining that the company is commercially insolvent, that is, the company is unable to pay its debts as a going concern.
(4) Where the court gives a finding that the defence raised by the company is a bona fide one, non-payment of such debt cannot amount to neglect to pay debt as contemplated by section 434(1)(a). Hence, the court would dismiss the petition without prejudice to the petitioner's right to file or to continue with a suit against the company for recovery of its debt. In such a case, the company court may give only a prima facie, i.e., tentative finding because the controversy is to be finally decided in the civil suit.
(5) If the case falls in the grey area, that is, the company's defence is neither found to be substantial nor a moonshine and, therefore, the court is not in a position to give a finding one way or the other whether the defence is bona fide or not, even tentatively, the court may require the company to deposit the claim or a part thereof in the court and require the petitioner to prove its claim before the civil court to which the amount deposited will be transferred or the court may require the company to give security for the amount claimed.
Discussion
9. Principles IV (1), (2), (3) and (5) require elucidation in view of Mr. Vakil's contention that even if the company's defence is found to be not bona fide, the court should dismiss the winding up petition if the company can show itself to be commercially solvent. Mr. Vakil had submitted that in the case of Airwings (P.) Ltd. (supra) a Division Bench of the Karnataka High Court has held that the question whether the company is commercially insolvent or not is a question which is required to, be prima facie decided before the winding up petition is admitted because admission of the petition and its advertisement would have serious consequences on a going concern. Mr. Vakil has particularly relied on the following observations in the said judgment :
"It must, therefore, be held that at the stage of summary enquiry which the company court may hold prior to admission and advertisement of the company petition by hearing the petitioner and the respondent-company on notice stage, the court is called upon to satisfy itself that it is a case of admission and advertisement and nothing more. For arriving at that conclusion, the court necessarily will have to be prima facie find out whether any fixed amount of debt or ascertained amount of debt is due by the company to the petitioning creditor, whether the debt is within limitation and whether the defence put forward by company for not paying the debt to the petitioning creditor is a valid one or is a mere moonshine and also to find out whether the company appears to be commercially insolvent. Meaning thereby, it is unable to pay all its debts and not necessarily debts of petitioning creditor alone." [p. 131 of 17 CLA]
10. On the other hand, Mr. Soparkar for the petitioning creditor has submitted that once the court comes to the conclusion that the dispute raised by the company is not bona fide, the court is required to admit the petition and advertise the same and the question whether the company is commercially insolvent or otherwise is a matter to be decided at the final hearing of the winding up petition. It is submitted that accepting the aforesaid contention of Mr. Vakil would mean literally obliterating the principle laid down by the Apex Court in Madhusudan Gordhandas & Co. case (supra) that where the debt is not disputed (where the defence is not found to be bona fide, it must be treated as absence of dispute), the court will not act upon the defence that the company has the ability to pay the debt but the company chooses not to pay the particular debt.
11. Having considered the rival submissions, it appears to the court that decision on the question whether the court should or should not consider the commercial insolvency of the company at the admission stage would be intimately connected with the nature of finding which the court may give on the issue of bona fide or otherwise of the dispute, but the court must first give a finding whether the defence raised by the company is bona fide or not.
Mala fide defence
12. If the defence raised is found to be mala fide, the court should admit the petition and advertise the same in order to give all its creditors, including those creditors whose debts might not have been admitted by the company, an opportunity to show whether such a company should be allowed to be in existence in the broader interests of commercial morality. The petitioning creditor would be well within his rights in arguing that just as the company has raised the mala fide dispute in this particular case, there may be other creditors whose claim might also be similarly mala fide disputed by the company and, therefore, it would not be just and equitable to act on the basis of the balance-sheet maintained by the company and that it would be worthwhile to inform the public at large about admission of the company petition which would enable other creditors and other interested persons to come forward and express their views. Without Lettering the discretion to be exercised in a given case, it may be observed that in this category of cases it would not be necessary for the company court to give the company any opportunity to pay the debt before admitting the petition, because the company's defence is found to be false to the company's knowledge, as that is the essence of the finding that the defence is mala fide. In such a case, the creditor would also be entitled to press into service the reasoning given in paras hereinafter.
13. What consequences should follow if the company's defence is found to be not bona fide.
14. If the court comes to the conclusion that the defence raised by the company is not bona fide (as distinguished from a mala fide defence), it may be unfair to the company to straightaway pass an order of admission and advertisement of winding up petition without giving the company an opportunity to pay up its debt to the petitioning creditor. The court can take judicial notice of the tendency which has grown over the last many years, if not decades, that debtors consider it profitable to raise even untenable defences in civil suits as well as in winding up petitions. They are familiar with the proverbial delay in disposal of civil cases and, therefore, it would be advantageous to the debtors to raise defences which may ultimately be turned down but they would be buying long time before the long drawn out process of adjudication of the creditors claim and the process of execution of decree can bear fruits. The defence raised by the company in a winding up petition (which is found to be not bona fide even at the admission stage) might, therefore, have been pleaded on account of the aforesaid tendency or it may be that the company had bona fide believed that its defence will be found by the company court to be a substantial defence. Instead of embarking upon an inquiry as to what prompted the company to raise such defence (which is found by the company court to be not bona fide), it would be just and equitable to give the company an opportunity to pay its debt to the petitioner within a time-limit to be stipulated by the court. In respect of the category of cases where the company has asserted ability to pay its debts, but disputed the particular debt, the company should not find it difficult to pay the debt to the creditor immediately or within reasonable time. In cases where the company has disputed the particular debt and has also pleaded temporary inability to pay its debts, the court may consider the company's request to grant longer time. This would all depend on the facts and circumstances of each case and may also depend on the stage at which the company had raised the defence in the past and the host of other relevant considerations which would govern the discretion of the court. No further discussion is called for in this regard, since the present discussion is concerned only with the second category of cases as indicated in para 4 above.
15. If the company does not pay the petitioner the debt which the court has given its aforesaid finding, the court may in its discretion admit the petition. In Harinagar Sugar Mills Co. Ltd. case (supra) a Bench of three learned Judges of the Hon'ble Supreme Court quoted with approval the following passage from Palmer's Company Precedents Part II, 1960 edn. :
"A winding up petition is a perfectly proper remedy for enforcing payment of a just debt. It is the mode of execution which the court gives to a creditor against a company unable to pay its debts." [p. 25] and then went on to observe :
'This view is supported by the decision in Bowes v. Hope Life Insurance and Guarantee Co. [1865] 11 HLC 389; General Company for Promotion of Land Credit, In re. [1870] 5 Ch A 363 at 380 and National Permanent Building Society, In re. [1869] 5 Ch A 309. It is true that "a winding up order is not a normal alternative in the case of a company to the ordinary procedure for the realisation of the debts due to it"; but nonetheless it is a form of equitable execution. Propriety does not affect the power but only its exercise.'
16. The provisions of the Companies Act, 1956 were modelled on the basis of the provisions of the Companies Act, 1948 in England. In this Principles of 'Modern Company Law, 5th edn., Prof. Gower has made the following pertinent observations :
"Company legislation has two main functions : (i) enabling and (ii) regulatory. The enabling function empowers people to do what they could not otherwise achieve - namely to create a body with a distinct corporate personality. The regulatory function prescribes the conditions which have to be complied with to obtain incorporation and the rules that thereafter have to be observed to protect members, creditors and the public against the dangers inherent in such a body. In respect of neither function, and particularly the second, is the Company Act, 1985, despite its vast size, complete codification of English company law. It is merely a consolidation of statutory provisions in the former principle Act of 1948 and in four subsequent major Companies Acts and other legislation. Behind it is a residual body of law and equity where some of the fundamental principles are still to be found."
17. The broad principles culled out above are consistent with the statutory provisions, i.e., sections 433(e) and 434, with the aforesaid judicial pronouncements of the Apex Court in Madhusudan Gordhandas & Co. case (supra) and Harinagar Sugar Mills Co. Ltd. case (supra), and also with principles of equity.
18. Mr. Vakil has, however, strenuously relied on the decision of the Apex Court in the case of Pradeshiya Industrial & Investment Corpn. of UP (supra) and particularly the following observations :
'It is beyond dispute that the machinery for winding up will not be allowed to be utilised merely as a means for realising its debts due from a company. In Amalgamated Commercial Traders (P.) Ltd. v. ACK Krishinaswami this court quoted with approval the following passage from Buckley on the Companies Acts [13th edn., p. 451] :
"It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court.".' [pp. 369-70 of 13 CLA]
19. While the decision of the Supreme Court in Harinagar Sugar Mills Co. Ltd.'s case (supra) was rendered by a Bench of three learned Judges', the decision in Pradeshiya Industrial & Investment Corpn. of UP case (supra) was rendered by a Bench of two learned Judges. It appears that the aforesaid three-Judge Bench decision in Harinagar Sugar Mills Co. Ltd. case (supra) was not brought to the notice of the two Judge bench which decided Pradeshiya Industrial & Investment Corpn. of UP case (supra).
20. However, there does not appear to be any conflict between the said two decisions because the winding up petition has never been held to be a legitimate means of seeking to enforce payment of a debt which is bona fide disputed is not bona fide, the observations in Pradeshiya Industrial & Investment Corpn. of UP case (supra) do not take away the power of the court to admit the winding up petition. It is also pertinent to note that in the facts of Pradeshiya Industrial & Investment Corpn. of UP case (supra), the court found that the defence raised by the company (PIICUP), a Government undertaking, was a substantial one and not mere moonshine and that the sum claimed was the subject-matter of arbitration which was pending adjudication. PIICUP as a financial institution had merely agreed to subscribe to shares of a particular amount in a public issue and, therefore, the PIICUP had a substantial defence that such promoters' agreement did not create a debt and that even if it was a debt, in the facts and circumstances of the case, PIICUP cannot be said to have either neglected or failed to pay the same. There was, therefore, a substantial bona fide dispute whether there was a debt for a determinate or a definite sum of money. The Supreme Court accepted the contention of the learned solicitor general that no winding up petition can be admitted unless the court comes to the conclusion that the defence put up is moonshine.
20.1 It may not be out of place to state here that the learned counsel for the company was not in a position to cite a single authority laying down that even if the court finds that the company's defence is not bona fide, the court must dismiss the petition at the admission stage if the company can show that it is commercially solvent. On the contrary, in the case of Madhusudan Gordhandas & Co. case (supra), the Apex Court has already held that where the debt is undisputed, the court will not act upon a defence that the company has the ability to pay the debt, but the company chooses not to pay that particular debt. In Pradeshiya Industrial & Investment Corpn. of UP case (supra) also the Apex Court quoted and relied upon the principles enunciated by it in Madhusudan Gordhandas & Co. case (supra) dealing with the scope of section 433(e), including the above principle.
21. It is, thus, clear that there is nothing in principle or precedent which would prevent the court from admitting the winding up petition for enforcing payment of a just debt. Merely because the winding up order is not a normal alternative in the case of a company to the ordinary procedure for realisation of the debts, it does not dilute the power of the court to admit a winding up petition Where the facts and circumstances of the case show that it would be a form of equitable execution. In such cases, the court would, therefore, ordinarily admit the petition after the company fails to avail of the opportunity given to it to pay up the debt in respect of which the company court had already given a finding that the dispute raised by the company was not bona fide, or the court may even conditionally admit the petition while granting the company opportunity to pay the debt to the petitioner. It would, however, be for the court to consider while exercising its judicial discretion as to whether in the facts and circumstances of a given case, the court would simply grant time to the company to pay the amount to the petitioner or whether the court should conditionally admit the petition and defer the order for advertisement or whether the court should not admit the petition because even though the defence may not be substantial the debt is also not found to be a just one.
22, Mr. Vakil's reliance on the decision of this court in American Express Bank case (supra) on the question of discretion of the court not to admit a winding up petition is misconceived. That was a case where the company admitted the dues of the Bank, but pleaded temporary inability to pay its debts. As against the petitioning creditor's dues of Rs. 15 crore, the secured creditor-ICICI Ltd., whose dues were Rs. 850 crore, was supporting the company and opposing the prayer for winding up and, therefore, this court dismissed the petition. As already indicated earlier, the present discussion is confined to only that category of winding up petition where the company asserts that it is able to pay its debts, but disputes the particular debt of the petitioner.
Karnataka decision in Airwings (P.) Ltd. case
23. As regards the decision of the Division Bench of the Karnataka High Court in Airwings (P.) Ltd.'s case (supra) relied on by Mr. Vakil, the following conclusion indicates that the court may be justified in admitting a winding up petition even without considering the question about the company's commercial insolvency at the admission stage :
"...... Even in case of a company which is a going concern, if the court finds if the hearing the petitioning creditor and the evidence led by it that there is an ascertained amount of debt which is due by the company to the petitioning creditor and such a debt is not time barred and that presumption arises under section 434(1)(a)/(b) that the company is unable to pay its debts, then in such case, the court may admit the petition ex parte without issuing notice to the company. However, as a company is a going concern, before ordering advertisement, a notice has to be issued to such a company for deciding or not even after admission order is passed ex parte against the company in the aforesaid circumstances." [p. 135 of 17 CLA]
24. Further in para 22 of the judgment in Airwings (P.) Ltd. case (supra) the Division Bench has made the following observations :
"..... But in case where no such presumption is available under section 434(1)(a)/(b) as no such evidence is before the court, then of necessity, the court has to consider any such presumption under section 434(1)(c) and at that stage, if the court is satisfied, of course, prima facie that the company is unable to pay its debts because its assets are not shown to be sufficient to meet all its liabilities actual and contingent, then a presumption would arise which can be rebutted at the stage of trial by the company, even when the company is not able to prima facie rebut such presumption. Therefore, this question also can fall within the scope of enquiry by the company court at pre-admission and advertisement stage ......" [p. 131 of 17 CLA] and then the Division Bench expressed its opinion on question No. 1 (what is the scope of the inquiry under section 433(e) and section 434 of the Act) in para 23 of the judgment as under :
"..... Consequently, our answer to the question is to be effect that before admitting and advertising the winding up petition under section 433(e) of the Companies Act against a company which is a going concern, the company court in a summary enquiry after hearing the petitioning creditor and the company on notice will have to arrive at prima facie findings on the following aspects :
(i) whether the petitioning creditor is a creditor to whom the company owes an ascertained sum of money or substantially ascertained sum of money;
(ii) whether the said debt is within limitation;
(iii) whether the defence of the company is valid or bona fide or whether it is mere moonshine (The aforesaid three points will have direct bearing on the competence of the petitioning creditor to maintain such a petition)
(iv) whether from the material on record at this stage, a presumption arises that company is unable to pay its debts as contemplated under section 434(1)(a) or (b) as the case may be; or
(v) whether from the material on record the court is prima facie satisfied that the company is commercially insolvent as contemplated under section 434(1)(c)." [pp. 132-33 of 17 CLA]
25. The emphasis on the expression 'or' in section 434(1) quoted hereinabove and also in the above quoted para 23 in the Karnataka High Court judgment in Airwings (P.) Ltd. case (supra) is to show that once the petitioning creditor is able to persuade the court to raise the deeming fiction under section 434(1)(a) or 434(1)(b) conclusively (and not merely tentatively) at the admission stage itself, it is not necessary for the court to examine at the admission stage the question of the company's insolvency under section 434(1)(c). Really speaking, once the court conclusively finds at the admission stage itself that the presumption under section 434(1)(a) or 434(1)(b) applies, what the court would then consider at the final hearing stage would be, inter alia, wishes of the creditors under section 337 of the Act, as explained in the case of Madhusudan Gordhandas & Co. (supra) and in the process the court would examine the various aspects including the question whether the company's assets are sufficient to meet all its liabilities - actual and contingent. It is, therefore, only where the court gives prima facie findings on the above first three aspects in favour of the petitioning creditor, that the court would still be required to examine the question of the company's insolvency at the admission stage. It is only on the basis that the final conclusion II(a)(iii) in the Karnataka High Court's case would be consistent with the above quoted reasoning in that case.
26. This court would, therefore, like to follow the above quoted view of the Division Bench of the Karnataka High Court with the following qualification :
Looking to the serious consequences which advertisement of a winding up petition would have on a going concern, it appears to this court that the questions whether the company owes the petitioner a determinate or substantially ascertained sum of money, whether the debt is within the period of limitation and whether the company's defence to the petitioning creditors claim is bona fide or not should preferably be decided conclusively at the admission stage before the court requires the respondent-company to pay the petitioner its debt or before passing an order admitting and,for advertising the winding up petition so as to invite all the other creditors of the company and all other affected parties to express their views in support of or opposition to the prayer for winding up or to examine the company's solvency or otherwise. It is only if, at the admission stage the court is not in a position to give a definite finding but only gives a prima facie or tentative finding that the company's defence to the petitioner's claim is not bona fide that the court would also be required to consider at the admission stage the issue whether prima facie the company is commercially insolvent.
Principle IV(5) - Grey area cases
27. What order the court should pass in its discretion would naturally depend upon the facts and circumstances of each such case and particularly as to in which shade of grey the case falls-closer to black or closer to white and also the assessment which the court may venture to make about the commercial solvency of the company in future, i.e., the period within which the subordinate civil courts are known to decide the suits.
28. Mr. Vakil's objection to the company court undertaking this exercise which the civil court may very well undertake at the hearing of the summons for judgment in the summary suit overlooks the fact that the company court having already invested the time and energy for deciding whether the company's defence is bona fide or not would only be unnecessarily adding to the burden on the over-burdened civil court without any corresponding advantage, since the material to be considered in the two different proceedings is normally the same (affidavits and documents) and the test to be applied in the winding up proceedings and at the hearing of summons for judgment in a summary suit is held to be the same - Divya Export Enterprises case (supra). Hence, this court sees no reason not to exercise the discretionary equitable jurisdiction which inheres in this court as indicated in Prof. Gover's Principles of Modern Company Law para 13.2 hereinabove. This would certainly help in eliminating one round of litigation in the civil suit just as the company court's tentative finding that the company's defence is a bona fide one would also eliminate for all practical purposes the stage of summons for judgment in a summary suit and make it a long cause suit.
29. One contention of Mr. Vakil is required to be considered at this stage. Mr. Vakil has relied on the two decisions of this court in 1992 GLH(UJ) 7 and 1985 GLH(UJ) 2 for contending that if there is no agreement for interest and interest is claimed on the basis of custom or trade, the defendant would be granted unconditional leave to defend a summary suit as a suit for a claim inclusive of interest without any contract for such interest or without any such legal liability would not be maintainable as a summary suit.
30. The aforesaid decisions are based on the decision of Chief Justice Chagla in Civil Revision Application No. 259 of 1954 which was rendered on t e basis of provisions of order 37, rule 1, of the Code of Civil Procedure, 1908 before its amendment. However, after amendment, order 37, rule 1, specifically provides that the summary suit is maintainable, inter alia, where "the plaintiff seeks only to recover a debt or a liquidity demand in money payable by the defendant, with or without interest, arising on a written contract .......".
31. The italicised words were not to be found in rule 1 of order 37 when Chief Justice Chagla took the view that such a suit would not be maintainable as a summary suit. Hence, the aforesaid decisions rendered without considering the amended provisions of order 37, rule 1 have to be treated as per incuriam. In any case they cannot be relied upon to oust the jurisdiction of the company court in admitting the winding up petition when the company's defence to a substantial portion of the petitioner's claim is found to be not bona fide.
32. A Division Bench of the Punjab and Haryana High Court in the case of Unisystems (P.) Ltd. (supra) has held that the company court ought to decide the question whether the petitioning creditor was entitled to interest. The parties should not be relegated to yet another litigation. It is held that the question of entitlement of the petitioning creditor to payment of interest should not be considered to be such a disputed question as could not fall within the ambit of adjudication of a winding up petition under section 434(1)(a).
33. This court is of the view that in appropriate cases the court may consider the petitioner's claim for interest and the rate of interest after the court gives a finding that the company's defence to the principal amount of the debt was mala fide. Without laying down any hard and fast rule, it may also be said that the question could also be considered in an appropriate case if the company's defence is found to be not substantial (as distinguished from mala fide).
Factual controversy
34. In light of the aforesaid legal perspective, the court now proceeds to deal with the controversy between the parties as to whether the respondent-company's defence to the petitioning creditor's claim for a sum of Rs. 16,27,422.15 is bona fide or not. Before giving a finding on this question, the principle is required to be borne in mind that where there is no doubt that the company owes the creditor a debt entitling him to a winding up order, but the exact amount of the debt is disputed the court can make a winding up order without requiring the creditor to quantify the debt precisely. Hence, even if the company has a bona fide dispute about the interest claimed by the petitioner or the rate of interest or a part of the petitioner's claim, the court can proceed to examine whether the company's defence to a substantial portion of the petitioner's claim is bona fide or not. In the instant case, there is admittedly no dispute on the score of limitation.
35. The facts giving rise to the present petition, as averred by the petitioner in the petition and subsequent affidavits, are as under. Pursuant to the purchase orders placed by the respondent, the petitioner had sold, supplied and delivered to the respondent from time to time various quantities of nonyl phenol aggregating to 27.3 metric tonnes for the total sum of Rs. 17,36,280 under the following eight invoices :
------------------------------------------------------------------------
Sr. No. |Invoice| Date | *Amount (Rs.) | Final amount |Due date of
|No. | | | | payment
--------|-------|------------|---------------|--------------|-----------
1 | 374 | 22.5.1996 | 1,86,030 | 1,75,178 | 21.07.1996 2 | 392 | 28.5.1996 | 1,86,030 | 1,75,178 | 25.08.1996 3 | 416 | 04.6.1996 | 1,24,020 | 1,16,785 | 01.09.1996 4 | 452 | 15.6.1996 | 2,48,040 | 2,33,571 | 12.09.1996 5 | 517 | 11.7.1996 | 2,48,040 | 2,33,571 | 08.10.1996 6 | 647 | 23.8.1996 | 2,48,040 | 2,33,571 | 05.11.1996 7 | 652 | 23.8.1996 | 2,48,040 | 2,33,571 | 05.11.1996 8 | 799 | 28.9.1996 | 2,48,040 | 2,33,571 | 10.12.1996
--------|-------|------------|---------------|--------------|-----------
| | | 17,36,280 | 16,34,997 |--------|-------|------------|---------------|--------------|-----------
Less excess paid under invoice No. 582/583 : Rs. 9,558 * after rebate at Rs. 3.50 per kg.
36. As and by way of full and final payment against invoice Nos. 647, 652 and 799, the respondent issued to the petitioner three post-dated cheques as under :
------------------------------------------------------------------------
Invoice No. | Date | Cheque | Date | Bank | Amount
| | No. | | | (Rs.)
------------|------------|---------|------------|-------------|---------
647 | 23.8.1996 | 717049 | 14.11.1996 | Indian | 2,33,571
| | | |Overseas Bank|
652 | 23.8.1996 | 717050 | 14.11.1996 | -do- | 2,33,571
799 | 28.9.1996 | 590821 | 11.12.1996 | Punjab | 2,33,571 |National Bank|
------------|------------|---------|------------|-------------|---------
Relying on the above post-dated cheques, the petitioner agreed to supply the material to the respondent in spite of the fact that its earlier bills were still outstanding.
37. However, by its letter dated 11th September, 1996, the respondent requested the petitioner not to deposit, inter alia, the aforesaid first two cheques without giving any reason therefor. By its letter dated 5th October, 1996, the respondent requested the petitioner to deposit cheque No. 590821 also. Thereupon, the petitioner strongly protested against the respondent's aforesaid conduct and called upon the respondent to honour its commitment on the due dates of the aforesaid cheques. The respondent promised to petitioner that the cheques will be duly honoured on the respective due dates. However, all the aforesaid three cheques, when deposited by the petitioner with its bankers, were dishonoured on the ground that the respondent had issued stop payment instructions to its bankers. The petitioner, therefore, served notice dated 2nd December, 1996 (annexure 'E') upon the respondent under section 138 of the Negotiable Instruments Act, 1881. In reply to the said notice, the respondent served its reply dated 9th December, 1996 (annexure 'F') alleging that since the petitioner had failed to settle certain disputes as to the quality, delivery schedule and the price, the respondent had requested the petitioner not to deposit the said cheques and that the respondent was, therefore, not responsible for non-payment of the said cheques. The petitioner thereupon sent its rejoinder dated 27th December, 1996 (annexure 'G') refuting the allegation made by the respondent in the aforesaid letter dated 9th December, 1996 which were reiterated by the respondent in its letter dated 4th January, 1997 (annexure 'H').
38. The respondent had been irregular in making payment of the dues. As on 1st April, 1996 the dues were to the tune of Rs. 30 lakh. The respondent made certain payments to the petitioner in April and May 1996. The covering letter dated 17th May, 1996 (annexure 'A' to the affidavit) alongwith three cheques issued by the respondent did not refer to any dispute. On 11th June, 1996 the petitioner sent a fax message to the respondent (annexure 'B' to the affidavit) informing that an amount of Rs. 19,84,000 was overdue, i.e., due beyond the credit period of 90 days. On 17th June, 1996 the respondent sent a fax message to the petitioner (annexure 'C' to the affidavit) requesting the petitioner to reduce the rate by a price of Rs. 5 per kg. The petitioner did not agree to do so. On 18th June, 1996 the respondent sent another fax message (annexure 'D' to the affidavit) wherein the respondent insisted for supply of goods by the petitioner, but no dispute was raised as regards quantity, quality or rate.
39. On 13th July, 1996 a meeting took place between the petitioner's General Manager (Finance) - Mr. A. K. Chaturvedi and the executive director of the respondent. The respondent requested the petitioner to continue to supply the goods as expeditiously as possible. The petitioner showed its unwillingness to supply the goods unless the respondent clears an amount of Rs. 16,40,000 which was then overdue. The respondent agreed to clear the same. Thereupon, the respondent issued two cheques dated 2nd August, 1996 and 21st August, 1996 respectively in the sum of Rs. 8,20,000 and Rs. 8,22,589 in the total sum of Rs. 16,42,589. A copy of the minutes of the said meeting drawn up by the petitioner, though not signed by the representative of the respondent is produced at annexure 'E' to the affidavit. This brings out the agreement between the parties. It was under these circumstances that when the petitioner supplied the goods on 3rd August, 1996 under Invoice Nos. 582 and 583, the petitioner had insisted for and received cheques for Rs. 4,77,000 payable on 14th October, 1996. Thereupon, the respondent wanted further supply which was effected on 23rd August, 1996 against which two cheques bearing Nos. 717049 and 717050 both drawn on Indian Overseas Bank payable on 14th November, 1996, were issued to the petitioner. Even the last supply effect on 28th September, 1996 was against the cheque bearing No. 590821.
40. After receiving letter dated 11th September, 1996, the petitioner had taken up the matter with the respondent and on 1st October, 1996 a cheque For Rs. 3,50,180 issued by the respondent in favour of the petitioner for other bills which are not subject-matter of controversy had also been cleared. The cheque for Rs. 4,77,000 against invoice Nos. 582 and 589 was also cleared on 14th October, 1996. Even at this stage, the respondent had not made any grievance in respect of the goods supplied by the petitioner. When the petitioner insisted for payment, the respondent had agreed that it had to recover a sum of Rs. 3,50,000 from one Sun Star Chemicals to which the petitioner was liable to pay Rs. 3,50,000. On 2nd January, 1997 the respondent addressed a fax message (annexure 'F' to the affidavit) to the petitioner authorising the petitioner to debit the account of Sun Star Chemicals against the amount was not payable by the respondent. If, as on that date, amount was not payable by the respondent, question of any such authorisation would not have arisen. On 20th February, 1997, when the representative of the petitioner approached the respondent for recovery of the amount, the respondent had given statement of accounts (though unsigned) of the petitioner as appearing in its books of account where even after taking credit for Rs. 3,50,000 being adjustment against Sun Star Chemicals, the respondent was shown to be owing to the petitioner a sum of Rs. 12,89,608.
41. In view of the above, the petitioner served notice dated 14th February, 1997 (annexure 'I') on the respondent-company calling upon the respondent to pay the sum of Rs. 16,27,428.15 together with further interest thereon at 24 per cent per annum. Although the said notice was duly received by the respondent, the respondent neither replied to the same nor paid the amount due. The respondent has, thus, failed and neglected to pay its debts. The respondent is, therefore, unable to pay its debts and is, therefore, liable to be wound up.
42. Without prejudice to the above submissions, the petitioner has submitted that the respondent is unable to pay its debts and is commercially insolvent and, therefore, the respondent is liable to be wound up under the Act.
43. In response to the notice issued on the petition, affidavit in reply dated 20th November, 1997 has been filed by Sandeep Seth, a director of the respondent-company. The defence of the company in the said affidavit and Further affidavit is that the company was dealing with the petitioner between 1993 and 1996. The company had purchased the goods worth Rs. 2.85 crore. The company had also paid the amounts of all the invoices except the invoices which are the subject-matter of the present petition and beat the non-payment of the invoices in question is only on account of the disputes about the delay in delivery, quantity and quality of the material supplied by the petitioner. It is further stated that the cheques which were Dishonoured, were issued as post-dated cheques towards the material supplied under two invoices dated 23rd August, 1996 and the third invoice hated 28th June, 1996. Since the material supplied was a sub-standard quality, the company had written letters dated 11th September, 1996 and 5th October, 1996 not to present the three cheques against the aforesaid invoices. If the company were acting mala fide, the company would have written such letters November 1996 and not in September 1996 after receiving the material. It is further submitted that an account of delay in delivery of the goods supplied under invoices dated 20th May, 1996, 28th May, 1996, 4th June, 1996 and 15th June, 1996, the company had to purchase the material from Sunshield Chemicals Ltd. which has already been paid price for the material.
44. As regards the reliance placed by the petitioner on the statement of accounts, it is submitted on behalf of the respondent-company that the statement of accounts being unsigned did not carry any weight and that in any case it was subject to the finalisation of the disputes to the satisfaction of the petitioner and the respondent with respect to the invoices which are the subject-matter of the present petition.
45. On behalf of the petitioner, its secretary A. K. Rai has filed affidavit in rejoinder dated 6th April, 1998 and additional affidavit dated 17th July, 1998 denying the allegations made in the reply affidavit about the alleged disputes as to delivery schedule, quantity and quality of goods supplied. No negotiations were ever held by the respondent-company with the petitioner as regards any failure on the part of the petitioner as to delivery schedule, quality or quantity. All the invoices were issued at the same rate and the respondent had also made payments of two invoices (Nos. 582 and 583 dated 3rd August, 1996) at the same rate. It is asserted that the respondent had issued post-dated cheques mala fide. It is also denied that there was any dispute as regards quantity, quality or time schedule and that the said alleged dispute is nothing but an afterthought.
46. It is further submitted that the sale under the three invoices (Nos. 517, 647 and 642) was already made in the month of July and August 1996 and, therefore, there was no question of the petitioner being satisfied about the respondent's capacity to make payment because the advance cheques given earlier were not deposited by the petitioner till 13th September, 1996 as will be clear from the table at annexure 'B' to the petition showing the due dates of payment.
47. On behalf of the respondent, affidavit dated 28th July, 1998 is filed to meet with the case pleaded in the affidavit dated 17th July, 1998 on behalf of the petitioner. The said affidavit dated 28th July, 1998, inter alia, states at under :
"(i) Out of the amounts claimed by the petitioner in the present petition, the first amount became due only on 21st July, 1998 as per the statement of claim. The meeting dated 13th July related mainly to the disputes which are not the subject-matter of the petition .... I call upon the petitioner to spell out the "agreement" between the parties referred to in para 1(d) of the additional affidavit. Agreement, if any, which may have been arrived at between the petitioner and LPL (respondent) (and which is admittedly not reduced in writing) is a subject-matter of evidence.
(ii) The disputes between the parties with respect to the invoices in question were constantly being negotiated. The business relations between the parties are very old. The total business transacted between the parties since 1993 is almost Rs. 2.50 crore. The respondent did not, therefore, want to adopt a very rigid stand and permitted the petitioner to debit the account of Sun Star Chemicals against the amount that may ultimately and if at all be found payable by the respondent to the petitioner and also subject to finalisation of disputes to the satisfaction of the petitioner and the respondent. It may, therefore, be noted that Rs. 3,50,000 is not adjusted against any particular invoice/invoices. However, the respondent denies that by permitting such adjustment, the respondent had admitted any liability/dues under the disputed invoice.
(iii) The statement of account being unsigned does not carry any weight. However, the same was always subject to finalisation of the disputes to the satisfaction of the petitioner and the respondent with respect to the invoices which are the subject-matter of the present petition. It may also be noted that the petitioner has not approached the court with clean hands. In the petition it has been stated on oath that an amount of Rs. 16,27,422.15 is due and payable by the respondent to the petitioner. The petition is filed on or around June 1997. No credit has been given by the petitioner towards the payment/adjustment of Rs. 3,50,000 towards the alleged dues. According to the petitioner in the additional affidavit dated 17th July, 1998, the amount due to the petitioner is Rs. 12,89,608. This itself shows that the defences raised by the respondent are bona fide and that the disputes raised by the respondent are genuine and this court would not exercise its discretionary power under the provisions of the Companies Act, in favour of the petitioner.
(iv) The petitioner and the respondent had business transactions as under :
------------------------------------------------------------------------ Year | Total purchases | (Rs. in lakh) ------------------------------------|----------------------------------- 1993-94 | 30.72 1994-95 | 104.37 1995-96 | 102.90 1996-97 | 47.14 ------------------------------------|-----------------------------------
Except the disputed amounts which are subject-matter of the present petition, other amounts have been paid by the respondent to the petitioner. Hence, this court, may not exercise its discretionary power to wind up the respondent-company and the petition may be dismissed."
Findings on factual controversy
48. Having heard the learned counsel for the parties, for the reasons recorded hereunder, it is clear that the defence raised by the respondent-company about the delay in delivery and about quantity, quality and price of the material supplied by the petitioner is not bona fide.
49. In the first place, as far as the dispute about the delay in delivery is concerned, from the material on record it is clear that although the respondent-company had purchased material from another company called Sunshield Chemicals Ltd., the company was not required to pay any higher price as the said party has supplied the material to the respondent-company at a lower price. From the material on record, it is also clear that the delay, if any, on the part of the petitioner in supplying the material was on account of the outstanding dues of the petitioner which the respondent-company had not cleared within the stipulated period of credit. Moreover, this ground was never mentioned by the respondent-company in any of its previous letters prior to its reply to the statutory notice under section 138 of the Negotiable Instruments Act, which the petitioner was constrained to give after dishonour of cheques.
50. As far as the dispute about the quantity is concerned, apart from the fact that such a defence was never pleaded earlier prior to the reply to the statutory notice under section 138, the company has not produced any material even to prima facie show that the quantity of the material supplied by the petitioner was less than the quantity mentioned in the invoices. Except a bare assertion, even figures of the alleged shortfall in the quantity delivered are not given in the affidavit filed on behalf of the respondent-company.
51. As far as the disputes about the quality is concerned, here also apart from the fact that the respondent had not made any such complaint to the petitioner prior to the reply to the statutory notice under section 138 of the Negotiable Instrument Act, the company has not produced any material to show even prima facie that the company had made any complaint to the petitioner about the quality of the material or any other material in support of its defence.
52. The defence of the company that the company's representatives were making complaints to the petitioner's representatives orally cannot be accepted because even while writing letters dated 11th September, 1996 and 5th October, 1996, the respondent-company did not give any reason for requesting the company not to deposit the three cheques in question. There is considerable force in the contention of Mr. Soparkar for the petitioner that far from making complaint to the petitioner, the respondent-company was the one hand insisting for supply of the goods and was also requesting the on petitioner to reduce the price. Letters and fax messages are produced on record by the petitioner in support of the aforesaid averments and the respondent-company has not only not disputed the said documents but has admitted that it was on account of the market situation that the respondent-company was requesting the petitioner to reduce the prices. Hence, there is no substance in the complaint regarding price also.
53. The averment made on behalf of the petitioner-company in the affidavit dated 13th July, 1996 that a meeting took place between the petitioner's General Manager (Finance) and the executive director of the respondent-company, wherein the respondent requested the petitioner to continue to supply the goods and the petitioner was showing its unwillingness to supply the goods unless the respondent cleared an amount of Rs. 16,40,000 which was then overdue, is not denied in the affidavit dated 28th July, 1998 filed on behalf of the respondent-company, but it is merely stated that the minutes of the meeting dated 13th July, 1996 were not signed and that it would be a matter of evidence.
54. Even the statement made on behalf of the petitioner-company in the affidavit dated 17th July, 1998 that the respondent-company had furnished the statement of accounts showing that an amount of Rs. 12,89,608 was due from the respondent-company to the petitioner after adjustment of Rs. 3,50,000 towards the dues of the petitioner to Sunshield Chemicals Ltd. is not disputed by the respondent-company in the affidavit dated 28th July, 1998. The mere statement in the said affidavit that the unsigned statement of accounts was subject to the finalisation of the disputes cannot be accepted because after the petitioner served notice dated 2nd December, 1996 upon the respondent-company under section 138 of the Negotiable Instruments Act, the respondent-company had replied on 9th December, 1996 raising for the first time disputes as to the quality, delivery schedule and the price of the material and thereafter the aforesaid statement of accounts was given by the respondent-company to the petitioner on 20th February, 1997. The said statement of accounts refers to the credit for Rs. 3,50,000 being adjustment against the dues payable by the petitioner to Sun Star Chemicals, which is even borne out by the fax message dated 2nd January, 1997 from the respondent-company to the petitioner authorising the petitioner to debit the account of Sun Star Chemicals against the amount payable by the respondent. If as on that date, the amount was not payable by the respondent, question of the respondent giving any such authorisation to the petitioner would not arise.
55. In view of the aforesaid facts and circumstances which clearly stare in the face of the respondent-company, it must be held that the dispute raised by the respondent-company to the petitioner's claim is not bona fide. Even if the respondent-company has any defence in respect of the sum of Rs. 3,50,000 which, according to the respondent-company, is payable by the petitioner to Sun Star Chemicals and for which the respondent-company had wanted the petitioner to adjust the same against dues payable by the respondent-company to the petitioner, there is no defence to the petitioner's claim for the balance amount of Rs. 12,89,608 which is even the amount mentioned in the statement of accounts which the respondent-company had given to the petitioner on 20th February, 1997 as stated above.
56. In the result, the court grants time to the respondent-company to pay the petitioner a sum of Rs. 16,27,422.15 by demand draft on or before 30th November, 1998. However, if within one month from today, the respondent-company gives the petitioner an original letter from Sun Star Chemicals agreeing to the petitioner adjusting the sum of Rs. 3,50,000 payable by the petitioner to Sun Star Chemicals against the amount payable by the respondent-company to the petitioner, the respondent-company shall pay the petitioner a sum of Rs. 12,89,608 instead of the aforesaid sum of Rs. 16,27,422.15.
57. It is clarified that the payment of the amount by the respondent company to the petitioner as aforesaid shall not come in the way of the petitioner enforcing its claim for interest on the aforesaid amount in appropriate proceedings. In case the respondent-company fails to pay the petitioner the aforesaid sum by 30th November, 1998, the matter shall be placed before the court for passing appropriate orders regarding admission of the petition and for advertisement of the notice of the petition. Hence, SO 3rd December, 1998.
58. At this stage, Mr. Vakil, learned counsel for the respondent-company prays for stay of operation of this order in order to enable the respondent-company to have further recourse in accordance with law. In view of the fact that the court has already granted the respondent-company time upto 30th November, 1998 to make payment, the respondent-company will have sufficient time to have further recourse in the meantime. Hence, the request is rejected. At this stare, the learned counsel for the petitioner as well as the learned counsel for the respondent requested that in view of the time invested by this court in dealing with the factual controversy between the parties, the matter may be treated as part heard for further orders, if required, on 3rd December, 1998.