Madhya Pradesh High Court
Chief Manager Punjab National Bank vs Chairman/Managing Director M/S Laxmi ... on 28 September, 2015
1
HIGH COURT OF MADHYA PRADESH
BENCH AT INDORE
(SB: HON. SHRI JUSTICE PRAKASH SHRIVASTAVA)
Company Petition No.30/2013
In the matter of Companies Act, 1956;
AND
In the matter of petition for winding up of
M/s. Laxmi Pipes & Fittings Private Ltd.,
AND
in the matter of
Punjab National Bank ..... Petitioner
Versus
M/s. Laxmi Pipes & Fittings Pvt. Ltd. .... Respondent
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Shri R.C. Sinhal with Shri D.S. Panwar, learned counsel
for the petitioner.
Shri K. Upadhyay, learned counsel for the respondent.
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Whether approved for reporting :
ORDER
(Passed on 28/09/2015) Heard on the question of admission and on I.A. No.5678/2013 which is an application for appointment of the Provisional Liquidator.
1/ This company petition has been filed under Section 433(e) and 434 of the Companies Act, 1956 for winding up of the respondent-Company.
2/ The case of the petitioner is that the petitioner being a commercial Bank had extended financial assistance and credit facilities to the respondent-Company through its Manoramaganj Branch, Indore. The last renewal-cum-
2enhancement sanctioned by the petitioner Bank was, vide sanction letter dated 25.2.2010, by which the respondent- Company was sanctioned the loan and credit facilities aggregating to Rs.2562.75 Lacs. On 10.4.2010 the respondent-Company had executed various security documents. The petitioner has filed documents in support of the plea that the loan and credit facility was extended to the respondent. The plea of the petitioner is that the respondent- Company had failed to repay the dues of the loan availed from the petitioner-Bank and was indebted to the tune of Rs.29,79,75,448.89 as on 26.6.2013. The petitioner has classified the account of the respondent-Company as NPA and has also initiated proceedings under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and under the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The petitioner had sent the statutory notice dated 26.6.2013 under Section 434 of the Act to repay the loan amount of Rs. 29,79,75,448.89 together with future interest but the said notice had returned undelivered with the postal remark 'refused'. The statutory notice sent by registered post at the corporate office of the respondent- Company was delivered and was replied, vide letter dated 12.7.2013 disputing the liability. Thereafter the present company petition has been filed.
[3] Reply has been filed by the respondent taking the stand that the last sanction letter dated 25.2.2010 was having the validity of 12 months which expired on 24.2.2011. The sanction letter was issued by Manoramaganj Branch, security documents etc. were also executed with Manoramaganj Branch 3 whereas the notice under Section 433(e) and 434 were issued by the Asset Recovery Management, a different entity. Further plea is raised that the petitioner's earlier W.P. No.9283/2012 against the Commissioner of Sales Tax was dismissed, hence the petitioner is not a secured creditor. The respondent has also raised an objection that the petitioner has already approached the DRT, therefore, the winding up petition is not maintainable and that no mortgage was created with the petitioner and the last renewal sanction letter dated 25.2.2010 had the validity of one year, therefore, the contract has expired on 24.2.2011. A plea has been raised that the respondent does not owe any money to the petitioner Bank and the petitioner is not entitled to recovery any amount from the respondent. [4] The petitioner-Bank has filed the rejoinder stating that even after expiry of 12 months, respondent was liable to repay the amount of loan and advances and that when the said 12 months period of sanction letter dated 25.2.2010 had expired on 24.2.2011, there was debit balance of Rs.12,44,09,842.97 in the cash credit loan account of the respondent, and the respondent was allowed to use cash credit loan limit even after 24.2.2011. The other contentions which are raised in the reply are also clarified in the rejoinder.
[5] The respondent by filing sub-reply to the rejoinder has reiterated the plea of the contract being over on expiry of 12 months from the sanction letter dated 25.2.2010 and that new contract had come into the existence by the sanction letter dated 17.10.2011, and that the contract has now become unenforceable.
[6] Learned counsel appearing for the petitioner submits that since the loan and cash credit facility was availed by the 4 respondent through the Manoramaganj Branch of the petitioner- Bank and the amount has not been repaid and the debt due is more than the statutory amount provided under Section 434 of the Act, therefore, the respondent-Company is liable to be wound up.
[7] Learned counsel for the respondent has submitted that the amount was taken from the different branch of the petitioner-Bank and that there is no liability to the tune of Rs.29 Crores and odd and the liability is only limited to the extent of Rs.12 Crores and that the matter is already pending before the DRT in this regard, hence, the company petition should be dismissed.
[8] I have heard the learned counsel for the parties and perused the record.
[9] The record reflects that the respondent-Company had availed financial assistance and credit facilities from the Manoramaganj Branch of the petitioner-Bank. The letter dated 25.2.2010 by which the facilities to the tune of Rs.2562.75 Lacs was sanctioned to the respondent-Company, is not in dispute. Hypothecation deed dated 10.4.2010 was executed by the respondent in favour of the petitioner. The hypothecation of the current assets was also done by a separate deed even dated. The Board of Directors of the respondent-Company in its meeting held on 2.3.2010 vide Annexure P/3, had accepted the sanction letter dated 25.2.2010 as also the enhanced facilities extended by the petitioner-Bank. In terms of the sanction letter the undertaking was also submitted by the respondent on 3.3.2010 (Annexure P/4) and the certificate of registration of modification of mortgage etc. under Section 132 read with Section 135 of the Companies Act, 1956 (Annexure P/5) has 5 also been issued disclosing the loan and credit facilities extended to the respondent. The respondent-Company had also signed the balance and security confirmation letter dated 6.4.2009 and 22.11.2010 filed as Annexure P/6. In the balance sheet of the respondent-Company showing position as on 31.3.2009, the liability has been reflected and in the financial statement for the period ending on 31.12.2010 (Annexure P/8) also the Working Capital Loan and Term Loan from the petitioner-Bank has been shown. In the audited financial statement for the period 31.3.2011, the schedule of the secured loans itself was omitted which supports the petitioner's contention that the liability has deliberately not disclosed in the financial statement. But the petitioner has obtained the search report about the respondent-Company on 16.3.2012 and in that search report, the liability of the respondent-Company to the Bank as also the details of hypothecation of the assets as modified from time to time, is clearly reflected. Along with the rejoinder the petitioner has filed the statement of cash credit loan account which reflects that the respondent had continued to enjoy the sanctioned cash credit loan limit much beyond the period of 12 months. Hence the contention that the contract had terminated on expiry of 12 months, cannot be accepted. The Annexure P/16 filed with the rejoinder reflects that the petitioner-Bank had also sanctioned ad hoc NFB limit of Rs.200 Lacs on 8.6.2011. The letter of continuity dated 14.6.2011 was issued by the respondent-Company mentioning the limits which were sanctioned to the respondent-Company and permitting the petitioner-Bank to keep the title deeds of the immovable property deposited earlier as additional security for the further liability. The above documents clearly show that the 6 respondent-Company was extended the loan and credit facilities by the petitioner-Bank and the security documents were also executed by the respondent-Company. The said facility was extended by the petitioner through its Manoramaganj Branch, Indore. Hence the contention of the respondent that the facility was not extended by the petitioner- Bank cannot be accepted.
[10] In the statutory notice dated 26.6.2013, the petitioner had claimed the outstanding loan amount of Rs. 29,79,75,448.89. The statement of loan account of the respondent-Company has been filed as Annexure P/12 reflecting the said amount. The respondent has not filed any document in respect of discharge of the liability. On the contrary the liability itself has been denied taking the plea that the contract has come to an end after expiry of one year w.e.f. 25.2.2010, but counsel for the respondent has failed to point out that after expiry of one year from 25.2.2010 the respondent-Company was not liable to repay the loan amount and the credit facilities extended to it by the petitioner-Bank and utilized by it. The defence which the respondent has taken to deny the liability, is a mere moonshine. Thus, I am of the opinion that though the respondent-Company is disputing the liability and the extent of the liability, but the record reflects that the respondent Company was extended the loan and credit facilities to the tune of Rs.2562.76 Lacs by letter dated 25.2.2010 and it had utilized the same. Counsel for the respondent during the course of argument has also admitted the existing liability to the tune of Rs.12 Crores. Hence it is established that the respondent-Company has the liability to pay more than the statutory amount mentioned in Section 434 of the Act, which inspite of the service of statutory notice, the 7 respondent has failed to repay. Hence, it is a case where it is established that the respondent is unable to pay the debt. [11] The record also reflects that the respondent-Company is no longer a running concern and it has subleased the unit on 4.1.2013. It has further been submitted that even that sub- lessee is not running the unit and the unit is lying closed. This also supports the petitioner's plea about the inability of the respondent to repay the debt.
[12] It is the settled position in law that when exact amount of liability is in dispute but debt more than the requisite amount in terms of Section 434 of the Act is established, then winding up order is to be passed (See: 1971(3) SCC 632 M/s. Madhusudan Gordhandas & Co. Vs. Madhu Woollen Industries Pvt. Ltd., (1962) 32 Comp. Cases 795 In re Tweeds Garages Ltd. and 2009(3) SCC 527 Vijay Industries Vs. NATL Technologies Ltd.
[13] So far as the defence of the respondent in respect of filing of earlier writ petition being W.P. No.9283/2012 is concerned, as per the respondent's own showing the writ petition was filed since the Sales Tax Authorities in order to recover the dues, had issued Sale Proclamation for auction of the respondent's properties mortgaged with the petitioner. Hence on account of filing of the said writ petition, the right of the petitioner to file the present winding up petition will not be forfeited. [14] The respondent has also raised an objection that the petitioner has taken action under the SARFAESI Act by filing an application before the DRT, therefore, the present winding up petition is not maintainable. It has been pointed out that the proceedings before the DRT are presently at the initial stage of notice and reply. This issue has already been decided by this 8 Court by order dated 20.11.2014 passed in Company Petition No.9/2011 in the matter of winding up of M/s. Zoom Developers (Pvt.) Ltd. and UCO Bank, wherein this Court after considering the judgment of the Hon'ble Supreme Court in the matter of Allahabad Bank Vs. Canara Bank and another, reported in AIR 2000 SC 1535 as also the other judgments on the point, has held that the Bank is entitled to file petition before the Court for winding up of the Company under Section 433 of the Act, even after approaching the DRT for recovery of debts. Though such a winding up petition is held to be maintainable but while conducting the proceedings of winding up, this Court is required to exercise the power keeping in view the provisions of the RDBI Act which have overriding effect in terms of the judgment of the Supreme Court in the matter of Allahabad Bank (supra). [15] In view of the above, I am of the view that it is a fit case for passing an order of winding up of the respondent-company [16] Accordingly it is directed that :-
(1) Company Petition is admitted. Let the petition be advertised in accordance with the Rules. (2) Considering the above circumstances, it is found that the petition has been presented on the ground that is just and equitable for passing an appropriate order of winding up. Accordingly I order winding up of the respondent-Company in accordance with the provisions of the Act read with the Company Court Rules, 1949.
(3) Accordingly and with a view to enable this Court to pass a final winding up order as contemplated under Rule 282 of the Rules, Official Liquidator of this Court who becomes a Liquidator of the 9 Company by virtue of Section 449 of the Act, is appointed as Liquidator of the Company. The Registrar of this Court to take steps as provided under Rule 109 of the Rules so that necessary orders as required under Rule 112 onwards can be passed by this Court, on the next date of hearing.
List on 14/12/2015.
(PRAKASH SHRIVASTAVA) Company Judge Trilok.