Calcutta High Court
In The Matter Of: Shaw Wallace & Company ... vs In The Matter Of: Nippon Denro Ispat Ltd. ... on 9 May, 2001
Equivalent citations: (2001)2CALLT367(HC)
ORDER
1. In the Winding up petition filed by the petitioner in C.P. No. 248 of 1996 against Shaw Wallace & Co. Ltd. (hereinafter referred to as the 'Company') for a sum of Rs. 5,09,93,927/- inclusive of interest, by order dated September 30, 1996, it was recorded that the Company "admits the liability for Rs. 4 crores being the principal amount due and payable and also agrees to pay interest at the rate of 20% from 2nd August 1995 till the date of the winding up petition."
2. The final direction was as follows :--
"In that view of the matter, considering the facts and circumstances of this case, I direct that Interest should be paid at the rate of 22% until the date of filing of the winding up petitioner on the admitted principal amount of Rs. 4 crores and thereafter at the rate of 12%. The company is allowed to pay the principal amount along with interest which has accrued due by six monthly instalments, the first of such instalment to be paid on 4th November. 1996 and all subsequent instalments will be paid on the 15th of each and every succeeding month. In the event of default the petitioner will be at liberty to mention and obtain direction from the Court for advertisement."
3. On an appeal, the Division Bench considered the facts involved in the case including the fact that a sum of Rs. 3 crores had already been paid and there was still due and payable a sum to the extent of Rs. 2.31 crores having due regard to the interest rate as directed by the learned trial Judge. The relevant portion of the order of the Appeal Court is as follows :-
"Having considered the matter in its entirety and having due regard to the concept of justice and fairness, we deem it expedient to dispose of this stay application and the appeal, upon treating the same as on the day's list by consent of the parties, in the manner following :-The company is directed to pay a sum of Rs. 2,60,00,000 (Rupees two crores six lakhs) in total including of all interests to the appellant by Instalments. The first of such instalments shall be for a sum of Rs. 60 lacs to be paid within a period of four weeks from the date hereof. All subsequent instalments shall be for a sum of Rs. 50 lacs each to be paid on or before the last day of each succeeding month. Be it recorded that the learned trial Judge has been pleased to direct that in the event of default of payment, the matter should be brought to the notice of the Court. We, however, do not feel It expedient to keep such a direction and the same is set aside. We direct that in the event of default of payment of any one or the instalments within the due dates as specified above, the Company petition being No. 248 of 1996 shall stand admitted and advertisements be issued once in two local dailies being Stateman and Aajkall and publication in the Calcutta Gazette stands dispensed with."
4. By an order dated January 10. 2001 though certain directions were passed regarding payment to creditors but for those creditors not receiving payment in terms thereof, were kept outside its scope. Present applicant did not receive payment in terms of the said order and thus remaining outside the same, made this application relying on the earlier order of the appellate Court.
5. Mr. A.K. Panja, learned counsel for the petitioner contended that appeal Court actually modified the order of the trial Court to the extent it has been indicated in the order itself and the rest of the order Including the order relating to interest passed by the trial Court stood approved. It is also contended that principles of equity requires such a reading or the said order of the appeal Court as in respect of such commercial transaction involving loan, the appeal Court's order cannot be read as no Interest was directed even in case of a default of payment of the amount quantified therein. The law was relied on as contained in section 34 of the Code of Civil Procedure. Rules 7 and 9 of the Companies (Court) Rules, and as decided in the judgment in the case of Devendra Kumar Jain v. Polar Forgings and Tools Ltd. reported in 84 Company Cases 776.
6. Mr. Sudipta Sarkar, learned counsel for the company stated that the appeal Court while passing the final direction, quantified the entire amount held to be due at Rs. 2,60,00,000 which included the then due amount Rs. 2.31 crores. The specific expression used by the Appeal Court that the company is directed to pay a sum of Rs. 2,60,00,000 in total inclusive of all interest, makes it clear that the appeal Court took into consideration the interest also which in its decision was payable by the company to the petitioner. Even in case of default, no further amount of interest was provided in the said order. It is stated that in such circumstances, there could not be any direction further for payment of interest on the aforesaid amount even in case of default as the order of the appeal Court categorically provided the only consequences in case of default as admission of the company petition and liberty to advertise. Learned counsel relied on the judgment in the case of Thirugnanavalli Ammal v. P. Venugopals pillar & Ors. reported in AIR 1940 Madras 29 and Dwaraka Das v. State of Madhya Pradesh .
7. The Judgment in the case of D.K. Jain v. Polar Forgings and Tools Ltd, reported in (1995) 84 Company Cases 766 decides the power of the Company Court in appropriate facts. But the same does not help in deciding the present question relating to interpretation of the judgment by Division Bench. Here the position has been finally settled by the Appeal Court. If it is held that the appeal Court's order approved the order of the trial Court in respect of payment of Interest, the petitioner's contention has to be accepted. It is true that by reason of Rules 6 and 9 of the Company (Court) Rules, the provisions of Code of Civil Procedure are applicable in the present proceeding. It is also true that in sub section 1 of section 34 of the Code read with proviso the Court has power to order payment of Interest at a rate higher than 6 percent per annum, in respect of post decretal period. But as provided in sub section 2 of section 34 of the Code, in case of commission of a direction in respect of interest in a decree, interest has to be presumed to have been refused. In such circumstances, and upon careful scrutiny of the language of the order passed by the Appeal Court, it appears that Appeal Court took into consideration the question of interest and the amount lying in arrear on that day of judgment. A finding has been recorded that Rs. 2.31 core was then due in view of payment of Rs. 3 crore made already. On such finding taking further interest into consideration the sum quantified was directed to be paid by company. It was specifically recorded that the amount so quantified was inclusive of all interests. The default clause provided by the learned trial Judge was set aside and the only consequence of default has been provided by the Appeal Court as the admission of the company petition and liberty to advertise. Therefore, in my opinion, direction of the Appeal Court was clearly for payment of the quantified amount inclusive of all interest. There is no scope for finding that the appeal Court did not direct payment of interest or that it provided for liability to pay interest in case of any default. In absence of any specific observation by the appeal Court to the contrary, it is the appellate order which is to be effective and in the present facts the trial Court's order merged in the appellate order. Law decided in the case of Kunhayammed v. State of Kerala also supports such view. As the appeal Court has taken into consideration the aspect of payment of interest and quantified the total amount inclusive of "all interest" and no payment of interest was directed in case of default, this Court cannot give any direction for payment of interest and it has to accept that the appeal Court refused any further interest. Therefore, the company is liable to pay the said quantified amount found due from the company to the petitioner on the date of the order of the appeal Court. The company is liable to pay the petitioner the sum as specified by the appeal Court.
8. The Registrar, Original Side, High Court, Calcutta is directed to pay the said amount to the petitioner forthwith out of the sum lying deposited with him on account of the company.
This order is subject to stay order passed by the appeal Court in ACO No. 8 of 2001 in connection with APOT No. 54 of 2001.
All parties are to act on a xeroxed signed copy of this judgment on the usual undertaking.
9. Order accordingly