Bombay High Court
Sbi Commercial & International Bank ... vs Badridass Gauridatt (P.) Ltd. on 2 August, 2001
Equivalent citations: (2002)3BOMLR655, 2002(2)MHLJ749
Author: R.J. Kochar
Bench: R.J. Kochar
ORDER
1. The respondents have taken out the above Judge's summons for the following reliefs :
"(a) delay, if any, in taking out the present application be condoned;
(b) the dates of payment set out in Clauses 2 and 8 of the consent terms dated 22-3-2001 be modified and extended to commence from 3140-2001;
(c) it be declared that petition No. 159 of 2000 does not stand admitted and the official liquidator. High Court, Bombay not to stand appointed as Provisional Liquidator as contemplated in the consent terms dated 22-3-2001;
(d) it be declared that the official liquidator. High Court, Bombay not to act pursuant to Clause 3 of the consent terms dated 22-3-2001 until the expiry of the extended period, that is 31-10-2001.
2. It would be relevant to note certain salient events to appreciate the present Judge's summons and the controversy therein.
3. On 2-2-2000 the petitioner bank filed a petition under Sections 433, 434 and 439 of the Companies Act, 1956 ('the Act') seeking orders from the company court to wind up the respondent-company alleging failure on its part to pay off the debt. During the pendency of the petition, it appears that on 25-6-2000 both the parties executed Memorandum of Understanding (MOU) to which Avenue 'Supermarks' (P.) Ltd; the then purchasers for the sale of the secured property for Rs. 10,61,00,000 was also a party. On the basis of the aforesaid MOU the parties filed a consent terms before the court on 25-6-2000. According to the respondents, the aforesaid purchaser did not purchase the landed property as in the meanwhile, certain persons had trespassed the property and the respondents had requested the police to remove the trespasser's. According to the respondents, in view of the sale of the said property having failed the respondent-company could not clear the petitioners claim. It further appears that in the second round of negotiations, the parties again filed fresh consent terms on 22-3-2001. The respondent-company having succeeded to get the trespassers removed it succeeded in procuring new purchaser for the secured property. The respondent-company, thereafter, appears to have sought permission of the petitioner by its letter dated 7-6-2001 for sale of the property and the petitioner, bank agreed by its letter dated 13-6-2001 for the same. Such consent given by the petitioner-bank was confirmed mutually between the Advocates on 26-6-2001. It further appears that the purchasers of the property by their letter dated 11-7-2001, addressed to the petitioners, confirmed their interest in the property., Under the second consent terms it was agreed and confirmed that a sum of Rs. 3,43,29,051.99 with interest thereon at the rate of 18 per cent per annum compounded quarterly from 1-1-2000 till payment would be due and payable by the respondent-company to the, petitioner. It was further agreed that the respondents shall pay the aforesaid amount in 12 equal monthly instalments. First of such instalment was to begin on or before 10-5-2001 and each subsequent instalment on or before 10th day of each succeeding month. It was further provided in the consent terms that in default of payment of any two instalments or two last instalments, the liquidator would stand appointed as provisions liquidator of the respondent-company as prayed for in the company application No. 170 of 2000 and that the company petition shall stand admitted. It was also provided that in "case of full payment by the respondents, the petition shall stand with-drawn and the order of injunction dated 14-5-2000 would stand vacated; it was also a part of the consent terms that if the respondent-company Were to pay the whole amount on or before 10-7-2001, the sum of Rs. 3,12,50,000 with interest thereon at 18 per cent per annum from 15-11-2000 till payment, the petitioner had agreed to accept such payment in full satisfaction of its dues as set out in Clause 1 of the consent terms. In case, however, the respondent-company failed to abide by the afore-Said term the concession given in the date would stand withdrawn and the liability as provided in Clause 1 of the consent terms read with other clauses would operate and be effective to the full extent.
4. Even the second consent term had not materialised as the respondents have failed to honour any of the terms agreed upon by the parties in the same. According to the respondents, they could not generate the funds and, therefore, they could not make payment to honour their commitment in the second consent terms. They have, therefore, approached this court by way of present application for the reliefs prayed for.
5. The petitioners have very strongly and vehemently opposed any reliefs being granted to the respondents in the present application, as according to them, the respondents have flouted even the second consent terms and, therefore they are unable to discharge their liability of the debt towards the petitioner and, therefore, the respondent-company deserves to be ordered to be wound up in accordance with the provisions of law and as provided in the consent terms. The petitioners do not agree to any of the terms proposed on behalf of the respondents. According to the petitioners they have no faith and trust in the respondent-company. The respondents have filed affidavit in support of the judge's summoris. It appears from the affidavit that the respondent-company has been taking all the efforts to sell the secured properties to clear the claim of the petitioners. This fact is reflected in the very conduct of the respondent-company that they have entered into two consent terms without raising any technical pleas. It has also narrated in the affidavit the difficulties faced by it and obstructions arisen in their way to sell the property. It is further stated in the affidavit that after the encroachers were removed they have secured a purchaser to purchase the property. It has been their desire to fulfil its obligatibns.
They have also mentioned the sluggish market conditions which make it difficult to conclude the real estate deals easily and more so when the stakes involved are very high. It is also stated in the affidavit that it is a running company with employees and its winding up will be highly prejudicial to its interest and Would adversely affect its business and will undermine its secured property.
6. I have heard both the learned Counsel for the respective parties at quite a length as the petitioners were not in a, mood to accept the revised schedule of payment. According to me, the petitioners ought to have adopted a reasonable attitude and pragmatic, approach in the matter. I am rather surprised by the stubborn opposition to accept the reasonably fair revised schedule of payment by instalments. There is no dispute or doubt that the respondents have committed, defaults in complying with the first consent terms. There, is also no running away from the fact of failure on the part of the respondents to honour the second consent terms also. In my opinion, they have, however, made out a good case for condonation of delay in making the payment by instalments. In the city of Mumbai it is not unusual that open lands run extremely high risk of encroachment by encroachers who are in search of a piece of open land: It is also well known how difficult it becomes to remove the encroachers. The first deal appears to have failed on account of encroachments. The second deal is on the verge of success provided the respondents succeed in getting an order of condonation of delay from this court and an order allowing them to make payment in accordance with the revised Schedule. All such events, difficulties and obstructions do take place often and they are to be solved and removed patiently and tactfully. According to me, the petitioners should be more interested and more keen in getting their loan amount back with interest as the winding up order of the respondent-company would not be in the interest of anybody. I am equally anxious that the petitioners must get their amounts of debt back from the respondents. In my anxiety to do so. I Have called upon the learned counsel for the respondents to file a solemn undertaking to this court undertaking to honour the revised commitment proposed by them. The respondents have filed a solemn undertaking in the form of an affidavit which reads as under :
"We, Badridass Gauridatt Limited, the respondent-company abovenamed through Mr. Ajay Gupta, Director do hereby agree and undertake to this Honourable Court to pay and do pay to the petitioner bank amount of Rs. 3,43,29,051.99 with interest as set out in Clause 1 of the consent terms dated 22nd March, 2001 in two equal instalments, the first instalment being on or before 31st October, 2001 and the 2nd instalment being on or before 31st December, 2001. We further agree and undertaken to this Hpn'ble Court that any single default in the aforesaid payments shall make applicable the provisions of Clause 3 of the order dated 23-3-2001 read with the consent terms dated 22-3-2001. Same as aforesaid the rest of the provisions of the order dated 23-3-2001 read with the consent terms dated 22-3-2001 shall continue to be operated and effective."
7. I am satisfied with the said undertaking filed by the respondent-company, it shows their bona fides. They want to make full payment of the debt to the petitioner as rescheduled. The respondents have given up the original concession in the loan amount to a very great extent. In the second consent terms, if they were to make payment of Rs. 3,12,50,000 by 10-7-2001 they would have saved an amount of difference between this amount and the amount which they have accepted to pay i.e., Rs. 3,43,29,051.99 with interest at the rate of 18 per cent per annum compounded quarterly from 1-1-2000 as provided in Clause 1 of the consent terms. The respondents are suffering on account of their defaults which obviously are beyond their control. A party which is accepting the burden to the tune of Rs. 31 lakhs must be presumed to under real difficulties. The approach and the attitude expressed by the respondents has to be commended. Besides there is another aspect in this matter. In the second consent terms dated, 22-3-2001 the ampunt of Rs. 3,12,50,000 was to be paid in 12 monthly instalments upto 12-5-2002. In the undertaking and in the revised, schedule of payment the respondents have offered to make payment of the said amount in two instalments. The first of which would fall on 31-10-2001 and the second and final instalment would fall on 31-12-2001. Besides saving the aforesaid amount of Rs. 31, lakhs, the petitioners would be getting their amount four months early. In accordance with the second consent terms, they were to get this amount by 10-5-2002 whereas the respondents have undertaken to pay the amount by 31-12-2001, According to me, this is substantial gain for the petitioners and substantial sacrifice made by, the respondents which can be called as atonment for their faults. Originally the respondents were to make payment of the whole amount in 12 instalments while in the revised scheme they are paying off the entire amount in two instalments. The petitioners would thus get a lump sum amount, by 31-10-2001 and 31-12-2001 instead of getting in monthly instalments. In addition to the practical difficulties for the sale of the land the respondents also have to comply with the provisions of Section 269 to get no-objection certificate [Form No. 37(I)] and the concerned authority would take its own time in issuing such no-objection to enable the respondents to pass clear title to the purchaser.
8. I am fortified in my view to grant extension of time to the resppndents in payment of the instalments and to condone the delay in the aforesaid circumstances by the following observations of the Supreme Court in the case of Bhagwan Swaroop v. Mool Chand . I am not modifying any decree but I am extending the time in making payment of the instalment in the consent terms. As observed by the Supreme Court, it is for the court to exercise its jurisdiction under Section 148 of the Code of Civil Procedure, i 908, to extend such time if it is in the interest of justice. The consent terms filed by the parties have merged in the order of the court as such this court can very well extend the time in making payment of the instalment. Shri Khambatta for the respondents has also pointed out Rule 9 of the Company Court Rules which confers inherent powers Pn this court to pass any order in the interest of justice. He has also rightly pointed out the provisions of Section 442 in that respect. Following the aforesaid decision of the Supreme Court, according to me, it is not necessary to take consent from the decree holder. The consent terms having been filed, they have became order of court and the court is in charge of the matter and not the decree holder.
9. Shri Khambatta for the respondents has also relied upon a judgment of the Division Bench of this Court in Marketing & Advertising Associates (P.) Ltd. v. Telerad (P.) Ltd. [1969] 39 Comp. Cas. 436, The ratio of the said judgment is that under Rule 7 of the company Court Rules, the company court has discretion to grant extension of time. It is significant to note that even in that matter the parties had filed consent terms to make payment on a particular date. The respondents, however, failed to make payment in accordance. With the consent terms and that there was delay in doing so. The Division Bench an such circumstances has observed as under :
"Held, under Rule 7 the company court has the discretion" to grant extension of time. The consent border showed that orders of the court would be solicited in the event of non-fulfilment of the conditions specified in it. It was evident from the facts of the case, that the company had tried to rectify its error as a result of which there had been delay in payment by only, five days." (p. 436)
10. Shri Tulzapurkar the learned Counsel for the petitioners has relied upon a judgment of a Single Judge, in the case of Durga Mohan Hoshi v. International Metal Industries . There is no quarrel with the proposition of law laid down by the Single Judge. The facts in the present case, however, are different. The facts in the present case are squarely covered by the ratio of the Supreme Court in the case of Bhagwan Swaroop (supra).
11. Both the learned Counsel have also sought support from the judgment of appeal court in Appeal No. 758 of 1999 in Application No. N-15/99. The emphasis of the learned counsel appears to be on the observations made by the appeal court in para 36 that an order for payment of money when passed, will have the same force as a decree of a court passed in a suit and shall be executable as such and in accordance with the provisions of the Code of Civil Procedure. There is absolutely no dispute about the afore-said ratio of the judgment and though both the learned counsel have also agreed to the said proposition of law. Shri Tulzapurkar has strenuously submitted that the second consent terms entered into between the parties had a force of decree as the respondents were required to make payment in accordance with the consent terms. The said consent terms, therefore, could not be modified by this court as it had acquired the status of a decree. Shri Tulzapurkar has further relied upon a judgment of the Supreme Court in the case of Dhanajaya Reddy v. State of Karnataka with Vanaja v. State of Karmataka reported in AIR 2000 (4) SCC (sic). The ratio of this judgment is that the power must be exercised in the manner provided by the statute. On this aspect also there is absolutely no dispute or doubt in my min that if the law requires exercise of power in the prescribed manner it must be done in that manner alone. With respect to the learned counsel in the present case I am at all departing from the well established law. The observations made by case of Bhagwan, Swaroop (supra) are very, clear Pursuant to the said authority I have acted in the interest of justice, to modify the consent terms and accept the, rescheduling or the payment or the debt by the respondents to the petitioners as undertaken by the respondents.
12. In the circumstances the judge's summons is made absolute in terms of prayer Clauses (a), (b), (c) and (d) which read as follows:
(a) delay, if any in taking put the present application be condoned;
(b) the dates of payment set out in Clauses 2 and 8 of the consent terms dated 22-3-2001 be modified and extended to commence from 31-10-2001;
(c) it be declared that petition No. 159 of 2000 does not stand admitted and the Official Liquidator, High Court Bombay not to stand appointed as Provisional liquidator as contemplated in the consent terms dated 22-3-2001;
(d) it be declared that the Official Liquidator, High Court, Bombay not to act pursuant to Clause 3 of the consent terms dated 22-3-2001 until the expiry of the extended period, that is, 31-10-2001".