Gauhati High Court
Golden Menthol Export Pvt. Limited vs Sheba Wheels (P) Ltd. on 4 January, 2007
Equivalent citations: 2007(2)GLT47
Author: A. Roy
Bench: Amitava Roy
JUDGMENT A. Roy, J.
This application under Section 439 of the Companies Act, 1956 (hereinafter also referred to as the 'Act'), read with Section 433 (e) thereof, registers a prayer for winding up the respondent-company, Sheba Wheels (P) Ltd., Ziakur Villa, Bishanpur, Shillong (Meghalaya).
2. I have heard Mr. VK Chopra, learned Counsel for the petitioner. None has entered appearance on behalf of the respondent.
3. The petition having been filed on 25.08.2006, this Court issued notice thereon on 31.08.2005, requiring the respondent to be served by registered post. Steps were accordingly taken by the petitioner and notice was issued on the respondent by registered post vide memo No. 242-HC-XIV dated 22.09.2005. The A/D card also returned after service of the notice on the sole respondent. The respondent, however, abstained from entering appearance in the proceeding. This Court on 12.12.2005 noticing the unrebutted statements in the petition and the nonappearance of the respondent-company inspite of being served with the notice, directed advertisement of the petition in the prescribed form and in accordance with the Companies (Court) Rules 1959 (hereinafter also referred to as the 'Rules') in two dailies, namely, "Assam Tribunel" and "Aji". The paper clippings evidencing such advertisement are available on records. Though, the notices in the newspapers disclose the date of hearing of the company petition to be 20.03.2006, till date the respondent-company has chosen to remain away from the proceedings. The petition having been listed for hearing, the learned Counsel for the petitioner made his submissions on the basis of the pleaded facts reiterating the above prayer.
4. A brief outline of the petitioner's case has to be necessarily drawn to lay the factual foundation. The respondent, which is a Private Limited Company and incorporated under the Act, had approached the petitioner for a financial accommodation of Rs. 15,00,000/-for a period of three months to enable the former to overcome the subsisting financial constraints. The petitioner obliged and made the advance vide Cheque No. 691127 dated 24.06.2002, drawn on the City Bank and payable at New Delhi. The said cheque was cleared by the petitioner's bank on 25.06.2002. Though, the respondent-company at the time of receiving the amount, agreed to refund the principal sum on the expiry of three months, with interest at the rate of 18% per annum, it failed to do so and on his request, the petitioner extended time on many occasions. Eventually, the respondent-company issued a Cheque bearing No. 130166, dated 24.03.2003 drawn on Punjab National Bank New Delhi purporting to repay the principal amount as well as the interest accrued after statutory deductions. The petitioner having deposited the said cheque with its bank i.e., the City Bank, it was forwarded to the respondent's bank, namely, Punjab National Bank for collection. The latter Bank, returned the cheque with the remark "Exceeds arrangement", on 02.04.2003. The petitioner through its Advocate issued a notice dated 26.04.2003 to the respondent-company, as well as its Managing Director and the Directors, intimating them of the above. Thereby, a demand for payment of the amount mentioned in the cheque so dishonoured, was made indicating that in case the payment as requested was not made within 15 days of the receipt of the notice, appropriate action under Section 138/141 and 142 of the Negotiable Instruments Act 1881, as well as Section 420/406 of the IPC would be initiated. As the said notice also remained unresponded, the petitioner filed a complaint under the above provisions of law in the Court of the learned Chief Metropolitan Magistrate, New Delhi against the respondent-company and its Directors. The petitioner on 06.01.2005 also addressed a notice to the respondent-company and its Managing Director named therein for payment of a sum of Rs. 21,43,475 within 21 days of the receipt thereof, clarifying that in case of the failure to company with the request, interalia proceedings for winding up of the company under the Act would be instituted. The said notice was sent by registered post with A/D to the addresses and according to the petitioner, was served on the respondent-company on 12.01.2005. As the respondent-company failed either to respond to the notice or to make the payment as demanded, the petitioner approached this Court for an order for winding it up. The above statements figuring in the company petition, are supported by an affidavit. The documents referred to hereinabove, also form a part of the petition.
5. Mr. Chopra has argued that as the uncontroverted recorded facts in terms of Section 433(e) and 434 of the Act, unequivocally demonstrate that the respondent-company is unable to pay its debts, the petitioner is entitled an order directing that it (the respondent-company) be wound up. The learned Counsel has argued that the essential preconditions enumerated in Section 434 of the Act to render a defaulter company unable to pay its debts having been established, the relief as prayed for ought to be granted by this Court. This is more so, as neither the.petitioner's claim nor the facts stated in the petition have been refuted. In response to a pointed query made by this Court bearing on the maintainability of the petition in the face of a pending proceeding under Section 138 of the Negotiable Instrument Act 1988, the learned Counsel has urged that as the said lis is essentially one for recovery of the sum lying outstanding in the account of the respondent-company, the same cannot by any means be a bar for pursuing the remedy under the Act. The proceeding under the Negotiable Instrument Act 1988, being penal in nature, the same cannot be treated to be an alternative remedy rendering the present petition not maintainable in law, argued. In support of his submissions, Mr. Chopra has placed reliance on the decision of the Gujrat High Court in UTI Bank Ltd. v. Shree Rama Multitoch Ltd. 2005 (Vol. 126) Company Cases 15.
6. The arguments advanced have been duly assessed. As noticed hereinabove, the averments constituting the substratum of the petitioner's case have remained unrefuted. The respondent-company inspite of service of notice of the instant proceeding, have neither denied the correctness of the statements made in the petition nor have resisted the petitioner's claim for the reliefs prayed for.
7. A plain reading of the pleaded facts makes it patently clear that the respondent-company had availed financial accommodation from the petitioner-company and the amount due according to the former, as on 24.03.2003 was Rs. 16,59,975/-. The materials on record establish that the cheque dated 24.03.2003 by the respondent-company to liquidate the said amount was dishonoured by its banker i.e., the Punjab National Bank on 02.04.2003. A demand for the amount was made by the petitioner through its notice dated 06.04.2003, following which the above criminal proceeding was instituted. The notice dated 06.01.2005, demanding the said amount within a period of 21 days from the receipt thereof, also remained uncomplied. Apart from the fact that the said notice had been issued by registered post with A/D, the assertion that it had been received on the respondent-company on 12.01.2005, has remained unquestioned. The photocopy of one of the A/D cards accompanying the notice and addressed to the respondent-company at its registered office at Siakur Villa, Bishanpur, Shillong (Meghalaya), annexed to the petition, proclaims that it had been served on behalf of the respondent-company on 12.01.2005. The irresistible conclusion thus, is that the respondent-company inspite of being served with the notice registering a demand of the amount due from it to the petitioner, had failed and/or neglected to pay the same without any justification whatsoever. In terms of Section 434 of the Act therefore, the respondent-company is deemed to be unable to pay its debts.
8. Section 433 of the Act, enumerates the circumstances in which a company may be wound up by the Court. One of the recognized eventualities, is when it is unable to pay its debts. By applying the deeming provision of law incorporated in Section 434 of the Act, the respondent-company being unable to pay its debts, it is permissible to pass an order to wind it up under the Act. Noticeably, the respondent-company throughout has displayed an indifferent and non-challant attitude not only to the petitioner's demands for liquidation of its dues but also to the instant proceeding.
9. In UTI Bank Ltd. (Supra), in which a prayer for winding up of the respondent-company therein, was involved, the petitioner had additionally instituted a criminal proceeding under Section 138 of the Negotiable Instruments Act 1881 (as amended) by filing a criminal complaint in the appropriate Court. The plea against its maintainability on that count was negatived bythe jurisdictional High Court.
10. As it is Section 138 of the Negotiable Instrument Act, 1881, defines a criminal offence consequent upon the dishonour of a cheque drawn by a person to discharge in whole or any part, his debts or any other liability. Though the said penal provision provides for a sentence of imprisonment, as well as of fine to the extent of an amount twice the sum of the cheque, a proceeding thereunder cannot be construed to be for recovery of the money in default. In other words, a proceeding under Section 138 of the Negotiable Instrument Act 1881, cannot be construed to be an alternative to a civil suit or any other proceeding for realization of the amount remaining unpaid as a debt following the dishonour of a cheque by the debtor. The empowerment of a Court under the legal provision to impose a fine of a sum, which may extend to twice the cheque amount, per se does not render the proceeding to be dominantly one for the recovery thereof. The remedies comprehended under the Negotiable Instrument Act 1881 and the Act, are therefore, distinctively different and not mutilative each other. In that view of the matter, I feel persuaded to sustain the contention of the learned Counsel for the petitioner bearing on the maintainability of the company petition.
11. In the wake of the above, the petition is allowed. While rendering this decision this Court is not oblivious of the detrimental consequences likely to visit the respondent-company. However, in the face of the overwhelming facts on record and the legal provisions noticed hereinabove, the prayer made ought to be acceded to. It is therefore, ordered that the respondent-company, namely, Sheba Wheels (P) Ltd., Ziakur Villa, Bishanpur Shillong (Meghalaya), be wound up in terms of the relevant provisions of the Act and the Rules framed thereunder. The Registry would take the follow up steps in accordance with the relevant legal provisions. No costs.