Calcutta High Court
Asset Reconstruction Company (India) ... vs M/S. Bengal Shelter Housing ... on 12 April, 2017
Equivalent citations: AIRONLINE 2017 CAL 41
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
OD-23
APO No.297 of 2016
CP No.723 of 2016
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
ASSET RECONSTRUCTION COMPANY (INDIA) LTD.
Versus
M/S. BENGAL SHELTER HOUSING DEVELOPMENT LIMITED
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
The Hon'ble JUSTICE SIDDHARTHA CHATTOPADHYAY Date : 12th April, 2017.
Appearance:
Mr. Abhrajit Mitra, Sr. Adv.
Mr. J. Chowdhury, Adv.
Ms. Vidushi Chokhani, Adv.
..for the appellant Mr. Joy Saha, Sr. Adv.
Ms. Jayati Chowdhury, Adv.
Ms. Rima Das, Adv.
Ms. M. Chowdhury, Adv.
Mr. Ishan Saha, Adv.
Ms. Ranjana Seal, Adv.
The Court : The order impugned is somewhat unusual in that a creditor's winding-up petition has been dismissed without reference to the company.
The company Court noticed in the order impugned dated September 26, 2016 that the appellant herein had already instituted proceedings before a Debts Recovery Tribunal in respect of the claim that was made the subject-matter of the petition before the company Court. The Court thereupon proceeded to pass the following order:2
"Although the Court can admit winding up petition if a company is unable to pay its debts but having regard to the fact for the selfsame issue the petitioner has already approached the Debts Recovery Tribunal for adjudication of the debts. This Court is not unmindful of the fact that the remedy in winding up before the Debts Recovery Tribunal are different and a secured creditor can also file an application for winding up on account of inability to pay the debts, but having regard to the fact that the defence to the claim is being considered by the Debts Recovery Tribunal and that is a special forum constituted to adjudicate the debts of like nature, I am not inclined to exercise my discretion in favour of admitting the winding up petition.
It is made clear that this Court has not gone into the merits of the matter. All points are left open to be decided in the pending recovery proceeding.
The application fails."
When a party seeks to enforce a statutory right to approach a Court with a claim, ordinarily, the Court has no authority to refuse to entertain the claim unless such authority is conferred by the same statute or is established by judicial precedents. That does not imply that the claim must be allowed; only that the claim must be entertained for an adjudication on merits.
Though creditors' petitions are carried to a company Court for the realisation of their debts, yet the realisation of the debt of a particular creditor is only incidental to a creditor's petition for winding up a company. Sections 433 and 434 of the Companies Act, 1956 instruct that a company may be wound up upon it being unable to pay its debts. As to what would amount to the inability of a company to pay its debts is made out in Section 434 of such Act. However, as long as a petitioner claims that there is a debt due, demonstrates the service of a statutory notice on the company and asserts that the debt has not been discharged or secured or compounded for within 3 three weeks of the receipt of such notice by the company, an adjudication on merits is called for. There is scarcely any discretion available to the company Court to shoo away a creditor at the receiving stage.
It needs also to be clarified that since a creditor's petition is heard in two stages in this Court in accordance with the practice recognised in 56 CWN 29 (Bharat Vegetables), the receiving stage is the stage upto the admission and the post-admission or post-advertisement stage is the final stage. Traditionally, the debt and the extent of the debt are assessed before a petition is admitted and the desirability of sending the company into liquidation is considered at the final stage.
In this case, the company petition was rejected at the ad interim stage of the receiving stage of the matter.
It is open to a plaintiff who has already filed a suit for realisation of a debt to institute a creditor's petition for winding up the company by citing the inability of the company to pay the same debt. That is because, though for practical purposes the subject-matter of the two sets of proceedings would be the same, the consideration in the suit is only the debt and the quantum thereof and the consideration in the winding- up proceedings is whether the company should be wound up or not. The assessment of the debt or the extent thereof is only a first step to the ultimate assessment necessary in a creditor's petition for winding-up - whether the company should be allowed to continue or should be regarded as a commercial threat and be wound up.
That a bank or financial institution has launched proceedings under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 is not, by itself, a bar to such bank or financial institution filing a creditor's winding-up petition before the company Court on the same debt. Notwithstanding Sections 17 and 18 of the said Act of 1993, the relevant bank or financial institution is not precluded 4 from approaching a company Court with a creditor's winding-up petition, since the prayer before the company Court is always for winding up the company and not for a decree for the amount claimed to be due. If there is any semblance of defence that is put up by the company, the creditor's petition will fail; but that will not affect any previous or subsequent petition under Section 19 of the Act of 1993 in respect of the same claim filed before a Debts Recovery Tribunal. The claim in the two sets of proceedings may be the same, but the adjudication in the company proceedings would not be confined merely to discovering whether the debt was due or the extent thereof, but also whether it would be desirable for the company to be sent into liquidation.
There is no doubt that if a creditor knocking at the doors of the company Court is shown to have sufficient security in respect of the debt claimed to be due, the company Court may not find the company unable to pay its debts. To the extent that the appellant herein may have securities furnished in its favour by the company or by the principal debtor, such aspect of the matter has to be taken into consideration. But such consideration would arise only upon the company taking a stand in its affidavit. As is evident from the order impugned, the petitioning creditor was knocked out of Court before even the company appeared to oppose the petition.
The order impugned cannot be sustained and the same is set aside. CP No.723 of 2016 is restored to the board of the company Court for the matter to be assessed in the appropriate perspective and in accordance with law. Nothing in this order will prejudice the company from raising any objection available to it before the company Court, including that the company petition may be demurrable.
A note by way of a post-script: Company petitions, even when dismissed on merits are traditionally not recorded as dismissed or disposed of; but are permanently stayed. Dismissal is recorded only when the petition is not maintainable or is barred by 5 law. The effect may not be any different from recording a disposal, but there is a history of more than a century that goes behind such recording, which must be respected.
APO No.297 of 2016 is allowed as above.
There will be no order as to costs.
Urgent certified website copies of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(SANJIB BANERJEE, J.) (SIDDHARTHA CHATTOPADHYAY, J.) bp.