Punjab-Haryana High Court
M/S Aar Kay Concast Ltd vs M/S Reliance Capital Ltd on 16 February, 2011
Author: Adarsh Kumar Goel
Bench: Adarsh Kumar Goel, Ajay Kumar Mittal
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
CAPP No.21 of 2010 (O&M)
Date of decision: 16.2.2011
M/s Aar Kay Concast Ltd.
-----Appellant.
Vs.
M/s Reliance Capital Ltd.
-----Respondent
CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
Present:- Mr. I.S. Ratta, Advocate
for the appellant.
Mr. Manish Jain, Advocate
for the respondent.
---
ADARSH KUMAR GOEL, J.
1. This appeal has been preferred against order of learned Single Judge admitting the petition under Sections 433/434 of the Companies Act, 1956 for the deemed inability of the appellant company to pay its debts.
2. Case of the respondent-original petitioner before the learned Company Judge is that it is an assignee of the State Bank of India who had granted various loans to the appellant. The loans were assigned to the respondent vide assignment agreement dated 30.3.2007. The appellant was in arrears of more than Rs.2.66 crores as on 1.10.1998. The respondent CAPP No.21 of 2010 2 issued legal notice to the appellant on 31.12.1998 followed by another notice dated 15.3.2000. The State Bank of India filed application for recovery before the Debt Recovery Tribunal (DRT) on 5.2.2001 which was still pending. Proceedings have also been initiated under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the Securitisation Act"). The respondent also issued notice dated 12.9.2007 under Section 434 of the Companies Act claiming that sum of more than Rs.13.30 crores was due as on 31.8.2007. The appellant gave reply, disputing assignment of the debt in favour of the respondent. According to the respondent, the Company was unable to pay its debts and was, thus, liable to be wound up.
3. The appellant contested the company petition on the ground that since recovery proceedings were pending before the DRT, the jurisdiction of the Company Court could not be invoked. The appellant did not deny advancement of loans by the State Bank of India. The admitted debt of the appellant was more than Rs.500/-.
4. Learned Company Judge after going through the pleadings and documents and considering the rival contentions held that the company petition was maintainable, as the issue therein was not of recovery but of inability of the company to pay its debts and its liability for being wound up.
5. We have heard learned counsel for the parties. CAPP No.21 of 2010 3
6. Learned counsel for the appellant submitted that the company was not liable to pay anything to the respondent as the respondent had no privity of contrart with the appellant. It claimed right under an assignment deed to which the appellant was not a party and which was not valid being not in accordance with the provisions of the Transfer of Property Act, 1882 and Registration Act, 1908. The issues raised in the company petition were complicated questions and the petition was merely a device to recover the amount. The debt sought to be recovered was barred by limitation and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, "the RDB Act") was a special Act. Learned counsel relies upon following judgments:-
1. Allahabad Bank v. To submit that RDB Act overrides the Canara Bank & provisions of the Companies Act and another AIR 2000 SC leave of the Company Court was not 1535 necessary for continuing proceedings under the said Act.
2. Mediquip Systems To submit that debt recovered under Pvt. Ltd. v. Proxima Section 433 of the Companies Act Medical System must be a definite sum of money.
G.M.B.H. 2005(7)
SCC 42
CAPP No.21 of 2010 4
3. Shri Sham Lal To submit that the company petition
Gupta v. Hamco cannot be filed under Section 433 of
Industries (Pvt.) the Companies Act if the debt was
Limited Vol.CVII barred by limitation.
(1994-2) PLR 685
(P&H)
7. Learned counsel for the respondent opposed the above submissions and supported the impugned order by submitting that the RDB Act did not debar a petition for winding up. The assignment deed could not be held to be illegal as the same was permissible as per Banking Regulations Act, 1949.
Company Petition did not relate to time barred debt. Reliance has been placed on following:-
1. ICICI Bank Limited v. To submit that the Banking Official Liquidator of Regulation Act, 1949 will govern APS Star Industries the assignment of debt as per RBI Ltd. & ors. 2010 (10) guidelines.
SCC 1.
2. Maxlux Glass Private To submit that proceedings for Ltd. v. ICICI Limited winding up under the Companies Company 2001-Callt-2- Act are not barred under the RDB 539 (Cal) Act.CAPP No.21 of 2010 5
3. Central Bank of India v. To submit that mere pendency of Sukhani Mining and suit was not a bar to filing of a Engineering Industries company petition.
Pvt. Ltd. And others (1977) 47 Com Cases 1 (Pat) and Modern Gears Pvt. Ltd. v. IL & FS Investment Ltd. (2006) 129 Comp Cas 337 (Cal)
8. Having considered the rival submissions, we are of the view that no interference is called for with the view taken by learned Company Judge. There is no bar to proceedings for winding up being initiated merely on account of pendency of proceedings before the DRT. The judgment relied upon on behalf of the appellant in Allahabad Bank does not advance its case. Therein question was whether permission of the Company Court was required to continue a proceeding before the DRT and not whether company petition for winding up was maintainable. As regards the amount being ascertainable, admittedly, the appellant took loan from the bank which has been assigned in favour of the respondent and the amount due is more than Rs.500/-. Thus, the judgment in Mediqup Systems Pvt. Ltd. is distinguishable. The bank has already filed a suit and the debt is not shown to be barred by limitation. The judgment in Shri Sham Lal Gupta is CAPP No.21 of 2010 6 distinguishable. The judgment of the Hon'ble Supreme Court in ICICI Bank is to the effect that assignment of debt is an activity covered by the Banking Regulation Act.
9. Apart from the above, we asked learned counsel for the appellant whether the appellant was willing to pay the admitted principal amount, to enable us to consider whether discretionary jurisdiction for winding up should be invoked or not. Learned counsel for the appellant states that he had no instructions to state that the appellant is prepared to pay even the principal debt within reasonable time. In view of such unreasonable attitude, we do not find any ground whatsoever to interfere with the impugned order.
10. The appeal is dismissed. It is made clear that if the appellant moves learned Company Judge with any reasonable proposal to pay the debt, this order will not debar the learned Single Judge from considering any such proposal in accordance with law.
(ADARSH KUMAR GOEL)
JUDGE
February 16, 2011 (AJAY KUMAR MITTAL)
ashwani JUDGE