Gujarat High Court
Jahnvi Makwana Construction Pvt Ltd vs Marwar Hotels Limited on 17 August, 2009
Author: Jayant Patel
Bench: Jayant Patel
COMP/303/2008 1/23 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION No. 303 of 2008
With
COMPANY PETITION No. 305 of 2008
With
COMPANY PETITION No. 304 of 2008
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JAHNVI MAKWANA CONSTRUCTION PVT LTD - Petitioner(s)
Versus
MARWAR HOTELS LIMITED - Respondent(s)
=========================================================
Appearance :
M/S WADIA GHANDY &CO for Petitioner(s) : 1,
MR SS PANESAR for Respondent(s) : 1,
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CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL
Date : 17/08/2009
ORAL ORDER
1. As common questions arise for consideration in all the petitions, they are being considered by this Court common order.
2. All the petitions are for seeking winding up of the Company viz. Marwar Hotels Ltd. on the ground that the amount as per the consent decree has not been paid and therefore, the cause of winding up would be required to be revived and the Company is unable to pay such amount. Another ground in the petitions is that after the consent decrees were filed and the proceedings of OJ Appeals were disposed of in terms of the consent terms, Civil Suit Nos.
1493/08, 1494/08 and 1491/08 have been filed in
COMP/303/2008 2/23 ORDER
the City Civil Court at Ahmedabad for
frustrating the consent terms and therefore
also, the present petitions.
3. Heard Mr.Mahapatra, learned counsel for the
petitioners and Mr.Panesar for the respondent
Company.
4. It may also be recorded that this Court on
17.07.2009, had passed the following order:
"1. Prima facie it appears that there is ex facie ingenious devise on the part of the respondent company to file Civil Suit No.1493/2008 and others seeking a prayer for being relieved from undertaking filed before this Court in the proceedings of Company Petition No.175 of 2003. This Court has, by order dated 05.12.2008, already stayed the proceedings of civil suit. However, the question may also arise for taking appropriate action against the concerned Officer/Director of the company who had given undertaking for misuse of the process of law and thereby to nullify not only the undertaking before this Court but the orders passed by this Court based on such undertaking.
2. However, Mr. Panesar, learned counsel for the respondent seeks time to file reply. Hence, S.O. to 28th July, 2009. Mr. Khumansingh B. Solanki, Director of Marwar Hotels Ltd. shall personally remain present on that date. Mr. Panesar has agreed to communicate the order."
5. Pursuant thereto, Mr. Khumansingh B. Solanki, the Director of the respondent Company is COMP/303/2008 3/23 ORDER present and he has also filed affidavit resisting the petitions on the aspects of maintainability as well as he has reconfirmed that the Suits have been rightly filed in the Civil Court.
6. It appears that earlier, petitioner of Company Petition No.303/08 had preferred Company Petition No. 175/03, the petitioner of Company Petition No.304/08 had preferred Company Petition No.316/03 and petitioner of Company Petition No.305/08 had preferred Company Petition No.174/03 for winding up of Marwa Hotels Ltd. (hereinafter referred to as the "respondent Company" for the sake of convenience) on the ground that that the contract for work was given to the respective petitioning Companies and the payment has not been made by the respondent Company and therefore, the respondent Company is unable to pay its debts and therefore, Company be wound up. It may be recorded that the aforesaid petitions were filed after service of the statutory notice under Section 434 of the Companies Act. Thereafter, as no payment was made as per the statutory notice, the petitions were filed. In the said petitions, together with the other petitions, which were filed against the respondent Company for winding up, this Court (Coram : D.A. Mehta, J.), after hearing the respondent Company, had passed the COMP/303/2008 4/23 ORDER following order -
"ORDER IN COMPANY PETITION No.214 of 2003
1. This petition is presented seeking an order of winding-up of Marwar Hotels Limited ('the Company' in short) in the facts and circumstances more particularly stated in the petition.
2. Mr.A.S.Vakil, learned advocate for the petitioner, has submitted that the Company is indebted to the petitioner to the tune of Rs.8,46,170/= comprised of Rs.8,03,382/= (principal sum) and interest of Rs.42,788/=, being the interest calculated @ 18% p.a. from 14-05-2003 till the date of filing of the petition.
It is submitted that vide purchase order dated 25-02-2000 (Annexure-B) the Company contracted with the petitioner to undertake external painting and application of 'Renovo' synthetic plaster at the hotel premises situated at Jodhpur. The total value of the purchase order was Rs.21,95,040/= and one of the terms stipulated taking joint measurements of the actual surface area on which the petitioner had carried out the work. It is an accepted position that as per terms of the contract 10% of amount was to be paid as advance along with the Letter of Intent; 75% against Running Account Bills; 10% against completion and handling over; and balance 5% cash was to be retention money to be retained by the Company for a period of twelve months from the date of completion. It is further an admitted position between the parties that between 30-03-2000 to 06-10-2000, a sum of Rs.13,67,467/= was paid by the Company against the Running Account Bills. It is submitted by Mr.Vakil that on 27-11-2000 a letter was addressed by the petitioner giving the total area as per joint measurements in relation to the work carried out and after deducting payment received till date the balance due was worked out at Rs.8,03,382/=. It is further stated that on 21-01-2001 the petitioner addressed another letter calling upon the respondent Company to make the payment as the outstanding dues had not been cleared. Thereafter on 14-05-2003 a notice, in terms of provision of Section 433 (e) read with Section 434 of the Companies Act, 1956, came to be issued. The Company has responded to the notice by its reply dated 10-07-2003 wherein the Company took up the defence that the quality of the materials and workmanship had been defective, sub standard, inferior and poor and do not meet with the specification stipulated in the contract. Accordingly, the Company in its reply also stated that the Company had become entitled to claim compensation for the breach of the contract and intended to initiate appropriate legal actions against the petitioner to recover such compensation or to make a counter-claim or to seek a set off. The petitioner, through its advocates, once again wrote on 17-07-2003 stating that the allegation regarding inferior quality of material and workmanship had been raised at a belated stage and at no point of time the petitioner was informed about such COMP/303/2008 5/23 ORDER alleged sub standard, inferior and poor quality of material and workmanship. The petitioner has placed on record, vide Annexure-J, Search Report wherein on perusal, it appears that the Company has paid up Capital of Rs.41,41,00,000/=, Reserves and Surplus of Rs.4,13,774/=, Secured Loans of Rs.41,14,00,000/= and odd, and against Current Assets of Rs.2,91,00,000/= and odd, there are Current Labilities to the tune of Rs.8,42,00,000/= and odd.
3. Upon notice being issued the Company appeared and filed an affidavit dated 20-12-2003 by one Shri Pradip A. Jardosh, General Manager (Finance and Accounts). In the said affidavit the respondent - Company has denied its liability in Paragraph 3 in the following terms :-
"3. At the outset and before adverting to the petition parawise, the respondent submits that there is no liability to pay the sum of Rs.8,03,396.40 or any part thereof. Such liability is neither accepted nor admitted at any stage. . . . . . ."
Thereafter, various averments regarding sub standard and poor quality of work, etc. have been made without placing on record any evidence in support of the same. It is further averred that the respondent - Company has requested financial institutions like IDBI, LIC, etc. that its debt may be restructured and that the Company expected the hotel's performance to improve in due course of time. In the result, a request is made that the petition be dismissed.
4. Thereafter, the matter was adjourned from time to time and ultimately came up for hearing on 11-02-2004 along with two other Company Petitions filed against the same respondent - Company, being Company Petition Nos.222 of 2003 and 237 of 2003. On 11-02-2004 the Court recorded the following statement made by the learned advocate Mr.Kunjal Pandya on behalf of the respondent Company :-
" Mr.Kunjal Pandya, learned advocate on behalf of Mr.Tarang Pandya for the respondent - Company, prays for time so as to enable the respondent Company to give a proposal to the petitioners in relation to the admitted liability of the respondent - Company. It is further stated that such proposal shall be tendered in writing on or before 13-02-2004 and shall be accompanied by token payment by way of Demand Draft / Pay Order of bank so as to establish the bona fides of the respondent - Company. It is further stated that this proposal shall be without prejudice to the rights and contentions of all the parties.
To come up on 13-02-2004.
Sd/-
COMP/303/2008 6/23 ORDER
[ D.A.MEHTA, J ]
5. When the matter again came up on 25-02-2004, the learned advocate prayed for time on the ground that he needed time to prepare the matter. Accordingly, the matter was adjourned to 26-02-2004 and was directed to be listed along with the Company Petition Nos.174 of 2003 and 175 of 2003. On 26-02-2004 the learned advocate for the respondent - Company was substituted and the advocate representing the Company on the said date made a statement that she seeks time to obtain instructions as to when and how the liability of the respondent Company, admitted by way of TDS Certificate dated 27-06-2001 annexed with the communication dated 14-07-2001 shall be discharged by the respondent - Company. Accordingly, the matter was posted on 03-03-2004. When the matter was taken up for hearing on 10-03-2004 Additional Affidavit dated 08-03-2004 has been tendered and the affidavit is sworn by the same gentleman viz. Mr.Pradip Jardosh, who has described himself as General Manager (Finance & Accounts) and authorized signatory of the Company.
6. The reason for filing the Additional Affidavit has been stated in Paragraph 1 of the said Affidavit that in the previous affidavit para-wise reply had not been given and hence, the Additional Affidavit. In the said Affidavit it is stated that the petition is not maintainable in view of the fact that the respondent Company is a running concern and that during current year, there is an upsurge in profit and, therefore, the respondent - Company is not commercially insolvent. It is further stated in the Affidavit that "since the Company has to repay the term loan to the financial institutions and as they are the secured creditors, the winding up petition cannot be survived". Further that Corporate Debt Restructuring Cell has by letter dated 12-03-2003 restructured the entire dues as stated in the said communication. That the amount claimed by the petitioner is a bona fide disputed amount, and even if the amount is undisputed, it is not obligatory for the Court to admit the petition. Along with the Affidavit the Company has placed on record letters dated 07-09-2000, 31-07-2001 and 29-09-2001. The learned advocate for the respondent Company read extensively from the said letters to contend that the Company had bona fide dispute with the petitioner.
7. During the course of hearing on 10-03-2004 when the Court raised a query as to whether the scheme of restructuring had been implemented or not, because as per terms of the scheme itself it was to become operational only from 01-04-2004 in relation to payment of interest, despite the cut off date having been mentioned on 01-04-2004, the learned advocate for the respondent Company sought instructions from Shri Pradip Jardosh, General Manager (Finance & Accounts) of the respondent Company, who was present in the Court. The said gentleman made a categorical statement that the respondent - company has made an application to the financial instructions seeking modification in the rate COMP/303/2008 7/23 ORDER and the schedule of interest and accordingly the scheme has not become operational. When attention was invited that in the Additional Affidavit the entire case was built on the basis of such a Corporate Debt Restructuring Scheme and the statement made in the Court was at variance, the learned advocate submitted that Shri Jardosh tendered unconditional apology for not placing complete facts on record before the Court and the learned advocate further undertook to file an affidavit. Accordingly, today, an affidavit has been placed on record wherein the said gentleman has stated that he tenders unconditional apology for not clarifying the query raised in relation to Corporate Debt Restructuring Cell due to lack of knowledge. That on receiving information from the Vice President of the Company, the correct position in relation to restructuring proposal is as stated in Paragraphs 2 and 3 of the affidavit dated 11-03-2004.
8. In the affidavit filed today the respondent Company has again reiterated the position which was stated in affidavit dated 08-03-2004. It is necessary to take note of the fact that the deponent of both the affidavits dated 08-03-2004 and 11-03-2004 had made a categorical statement before the Court on 10-03-2004 to the effect that what was stated in relation to the rate and schedule of interest in affidavit of 08-03-2004 was not acceptable to the respondent - Company and the respondent - Company had applied for rescheduling the same some time in December 2003. However, today, by Affidavit of 11-03-2004 the same gentleman has, for the reasons best known to him, reiterated the stand mentioned in affidavit of 08-03-2004. It is very apparent that either the respondent - Company does not intend to place full and correct facts before the Court, or the management has chosen not to divulge fully and truly all material facts to its employee, who is the deponent on behalf of the Company. Be that as it may, this discussion is left at this stage without any further observations. Suffice it to state that such conduct reflects very poorly on the bona fides of the Company.
9. The learned Advocate for the respondent - Company has placed reliance on various decisions in support of the contention that where there is a bona fide dispute the Court should not make an order of admitting the petition or winding up the Company on merely asking by the petitioner; that winding up proceedings cannot be treated for pressurising the respondent - Company; that various factors should be taken into consideration before an order of admission or winding up is made.
(i) AMERICAN EXPRESS BANK LTD. Vs. CORE HEALTH CARE LTD., 1999(96) Company Cases 841;
(ii) NAVJIVAN TRADING FINANCE PVT. LTD., In re REGISTRAR OF COMPANIES Vs. NAVJIVAN TRADING FINANCE PVT. LTD. 1978(48) Company Cases 402;
COMP/303/2008 8/23 ORDER
(iii) TATA IRON & STEEL COMPANY LTD. Vs.
MICRO FORGE (INDIA) LTD. 2000(2) GLR
1594;
(vi) DLF INDUSTRIES LTD. Vs. ESSAR STEEL
LTD., 1999(3) GLR 1968;
(v) AMALGAMATED COMMERCIAL TRADERS (P.) LTD.
Vs. A.C.K. KRISHNASWAMI AND ANOTHER, 1965 (35) Company Cases 456;
(vi) M/s. MIDWEST LEASING LIMITED Vs. AMBALAL SARABHAI ENTERPRISES LTD., 2001(4) GLR 3441;
(vii) PRADESHIYA INDUSTRIAL & INVESTMENT
CORPORATION OF U.P. Vs. NORTH INDIA
PETROCHEMICALS LTD. AND ANOTHER, (1994)
3 SCC 348;
(viii) GLOBAL POLYMERS & IMPEX LTD. Vs.
DAN-INJECT APS, DENMARK, I(2004) BC 415.
10. Having heard the parties at length, it is apparent that there can be no dispute, and in fact there is none as to the legal principles stated in the catena of decisions cited on behalf of the respondent Company. However, whether a dispute is a bona fide dispute or not would also be a question of fact which requires to be determined on the basis of evidence placed on record. In the present case, as can be seen from the correspondence which has come on record, the first letter in point of time is of 07-09-2000 addressed by the respondent Company to the petitioner, wherein all that is stated is whether the job was complete in part or full was subject to verification and hence with the help of the representative of the petitioner the measurements may be got verified; that on receipt of the certificate the respondent - Company shall be able to release the balance sum outstanding. The next letter in the chain of events is communication dated 27-11-2000 from the petitioner to the respondent - Company wherein the Statement of Accounts on the basis of joint measurements has been mentioned in the letter and after giving credit of the amount already received till the said date the balance due has been requested to be paid. On 12-01-2001 the petitioner reminds the respondent - Company to make payment of the outstanding dues. On 31-07-2001 the respondent - Company writes to the petitioner stating that the respondent - Company has not received final bill duly certified and due to want of certification of completion of work payment of 15% (including retention money of 5%) has been withheld. Thereafter in Paragraphs 2, 3 and 4 of the said letter the respondent - Company states that as per final bill 127697 sq. ft. of work has been executed but 1423 sq. ft. of work was left out. Without entering into what is stated in the succeeding paragraphs it is apparent that in this communication the dishonest stand adopted by the respondent - Company becomes apparent. In Paragraph 1 of COMP/303/2008 9/23 ORDER the said letter respondent - Company refers to its earlier letter dated 07-09-2000 and states that final bill duly certified has not been received, while in the immediate succeeding Paragraph 2 it has referred to final bill denoting 127697 sq. ft. of work, which is the exact figure stated in communication dated 27-11-2000 addressed by the petitioner to the respondent - Company, on the basis of joint measurements. On 29-09-2001 the respondent - Company once again refers to its communications dated 07-09-2000 and 31-07-2001 without referring to the communication addressed by the petitioner and reiterates what was stated in earlier letter of 31-07-2001.
11. As can be seen from the correspondence referred to hereinbefore it is only on 31-07-2001 that the respondent - Company comes forward with so-called dispute in relation to the work done by the petitioner. However, before that on 14-07-2001 the respondent Company has vide communication bearing forwarding No.MHL/0001/TDS/4/4133 forwarded Tax Deduction Certificate dated 27-06-2001 to the petitioner - Company. It is necessary to take note of the fact that the payment / credit to the petitioner is at the figure of Rs.21,70,865.15 and tax of an amount of Rs.47,758/= has been deducted. The figure of payment/ credit to the account of the petitioner tallies with the figure mentioned in communication dated 27-11-2000 from the petitioner to the Company which is based on the joint measurements undertaken by the representatives of both the sides. In the circumstances, it is apparent that the stand adopted by the respondent Company is not only not bona fide but is in fact a dishonest attempt to get away from discharging its liability towards the petitioner, while at the same time, crediting the account of the petitioner in its books and claiming deduction against its taxable income so as to reduce the taxable income. It is not possible to accept the contention in light of the aforesaid sequence of events and facts which have come on record that the dispute was bona fide, because, as can be seen from the communication dated 14-07-2001 and the TDS Certificate dated 27-06-2001 there was no dispute. In absence of any dispute there cannot be any question as to whether a dispute is bona fide or not.
12. In the circumstances, the petition requires to be admitted and accordingly it is directed that the petition be admitted. Advertisement be published in Gujarati Daily - "Jansatta" and English Daily - "Indian Express", both in Ahmedabad Editions. Publication of notice in the Official Gazette is dispensed with.
13. At this stage, the learned advocate for the respondent - Company submits that publication of advertisement be deferred for a period of four weeks so as to enable the respondent - Company to make payment on terms which may be settled between the parties. Order of publication of advertisement is deferred for a period three weeks and the matter to come up on 06-04-2004.
14. In the meantime, a copy of this order shall be COMP/303/2008 10/23 ORDER served on the Assistant Commissioner of Income Tax Circle-I, Aaykar Bhavan, Ahmedabad so as to enable him to ensure as to whether the respondent - Company has taken credit for the entire sum in the name of payment / credit to the petitioner by claiming deduction vide TDS Certificate No.4 dated 27-06-2001, when the respondent Company is not inclined to make payment of the full amount to the petitioner. The Assistant Commissioner is directed to make appropriate inquiry in this regard and disallow the proportionate deduction if the respondent Company viz. Marwar Hotels Limited fails to show by cogent evidence on record that it has discharged its full liability towards the petitioner.
ORDER IN COMPANY PETITION Nos.316, 222, 237, 174 AND 175 of 2003 In light of the aforesaid order made in Company Petition No.214 of 2003, ADMIT. Publication of advertisement is deferred till 06-04-2004."(Emphasis supplied)
7. The pertinent aspect is that this Court had taken into consideration the resistance of the respondent Company by way of defence in the proceedings of the winding up and after having considered the same, the Court found that the stand adopted by the respondent Company is not only not bonafide, but is in fact a dishonest attempt to get away from discharging its liabilities towards the petitioners concerned. The aforesaid observations were made in para 11 of the order referred to hereinabove. The Court had ordered admission of the petitions and publication in the newspaper was deferred for a period of four weeks so as to enable the respondent Company to make payment on the terms which may be settled between the parties. The Court had further ordered for forwarding of the copy of the order to the Assistant Commissioner of Income Tax, Circle-I, Aaykar Bhavan for COMP/303/2008 11/23 ORDER verification of the aspects of TDS as stated in the order.
8. It appears that thereafter, the respondent Company had preferred OJ Appeal Nos. 16, 18 and 20 of 2004. In the said appeals, the consent terms were produced between the original petitioners and the respondent Company. The pertinent aspect is that clause 4(iv) provided as under:
"The Respondent-company agrees that in the event of its failing to make payment of the three installments at any given time, the Respondent would be deemed to be unable to pay its debt of Rs.16,16,799/- and the Petitioner would be entitled to revive the proceedings of abovementioned Petition to the extent of amount remaining unpaid by the respondent-company. (Emphasis supplied) The amount of Rs.16,16,799/- would be different in respect of other consent terms, but the conditions of the consent terms as referred to hereinabove were the same in all the petitions. Further, the pertinent aspect is that in para 5 of the consent terms, it was stated as under:
"The Petitioner and the Respondent agree that these Consent Terms shall be placed on record of the Petition and the Petition shall stand disposed of as withdrawn with a liberty to the Petitioner to revive the proceedings as it stands by making an application, in case of three defaults made by the Respondent at any given time"
(Emphasis supplied) COMP/303/2008 12/23 ORDER
9. It appears that the consent terms were tendered before the Division Bench in the OJ Appeal and this Court, vide order dated 28.07.2004, in the respective OJ Appeals, ordered as under -
"Learned counsel places the consent terms dated 28th July, 2004 on the record of this appeal and pray that in terms of the consent terms, this appeal as well as the main Company Petition No.175 of 2003 be disposed of. Accordingly, both O.J. Appeal as well as main Company Petition are disposed of in terms of the consent terms dated 28.07.2004"
(Emphasis supplied)
10.Therefore, the pertinent aspect is that the Appeals as well as the Company Petitions were disposed of in terms of the consent terms dated 28.07.2004. It may also be recorded that in the consent terms, at para 3, there was undertaking to make the payment of the amount which was the basis of the concerned winding up petition and in para 4, there was agreement to make payment, even otherwise also, till the approval of CDR, i.e. Corporate Debt Restructuring Cell. The respondent Company thereafter, has partly acted upon the consent terms and has also made the payment of certain installments. However, it is the case of the petitioner concerned that the consent terms as per clause 4(iii) has not been fully complied with by paying the installments as per the agreement and the following amount have not been paid though agreed as per the COMP/303/2008 13/23 ORDER consent terms -
1. Rs.7,41,441/- to the petitioners of Company Petition No.303/08.
2. Rs.26,20,835/- to the petitioners of Company Petition No.304/08.
3. Rs.19,89,500/- to the petitioners of Company Petition No.305/08.
11.It also appears from the letter dated May 21, 2007 produced at Annexure-I that the aforesaid unpaid amount is admitted by the respondent Company.
12.It appears that thereafter, the petitioners concerned moved application for revival of OJ Appeal No.16/04 and Company Petition No.175/03 and similarly, other connected OJ Appeals and connected Company Petitions by preferring similar Misc. Civil Applications. However, the said Misc. Civil Applications came to be withdrawn since the demand was made on behalf of the applicant therein-petitioner herein that the applicant will take out winding up proceedings afresh. It is under these circumstances, the petitioners have preferred the present petition before this Court seeking winding up of the respondent Company.
13.The another development in the present proceedings is that the petitioners herein are COMP/303/2008 14/23 ORDER served with the summons of the Suit Nos.1493/08, 1494/08 and 1491/08 filed by the respondent company seeking prayer for directing the payment of compensation and the another prayer in the suit is as under:
"(B) The Hon'ble Court be pleased to declare that the plaintiff is completely discharged from their liability to make payment under the consent terms dated 28th July, 2004 and be further pleased to declare that the defendant has no legal right or claim to recover Rs.7,41,441/- [Rupees Seven Lacs Fourty One Thousand Four Hundred Fourty One only] from the plaintiff".
(C) The Hon'ble Court be pleased to grant permanent injunction restraining the defendant or any other person claiming through them from enforcing or implementing the consent terms dated 28th July, 2004 against the plaintiff."
In other Suits, the amount is of Rs.26,20,835/- and 19,89,500/-, but the prayer is the same.
14.The aforesaid facts and circumstances prima facie goes to show that thought the respondent Company has agreed to pay the amount as per the consent terms, the payment has not been made of the aforesaid remaining amount and therefore, it can be said that the Company is unable to pay the dues of the petitioner which may attract the exercise of power by this Court for winding up of the respondent Company.
15.Mr. Panesar, learned counsel appearing for the COMP/303/2008 15/23 ORDER respondent Company raised the preliminary contention that the second petition in absence of the statutory notice is not maintainable and therefore, the petitions may be dismissed and the respondent Company may not be ordered to be wind up. He alternatively contended that as per the consent terms, the petitioners had agreed that the liabilities arising out of the work of the execution on account of the Work Contract Tax were to be borne by them and not by the respondent Company and therefore, the respondent Company had agreed to pay the amount as stated in the consent terms. He also contended that there was oral agreement though not recorded in the consent terms for undertaking the rectification work by the petitioner concerned. As per the respondent Company, since the rectification work was not completed nor the proof was produced to show the discharge of the liability of the work contract tax and central excise duty, the payment as per the consent terms could not be insisted by the petitioner concerned and was therefore, rightly withheld by the respondent Company. He submitted that as the rectification work was not undertaken, the respondent Company had to suffer and therefore, the suits were filed for recovering the damages and to be relieved from the consent terms. In the contention of Mr.Panesar, such was genuine ground for the respondent Company to withhold the payment and therefore, would not attract the COMP/303/2008 16/23 ORDER power of this Court to order winding up of the respondent Company.
16.The defence as sought to be raised prima facie appears to be attractive but on the close scrutiny, it appears that such is nothing but a dishonest attempt on the part of the respondent Company to avoid the liability and to come out from the legal consequences of winding up for the reasons as stated hereinafter -
(1)In the consent terms, there is no whisper at all for any so called rectification work nor there is any whisper at all for production of the proof to discharge the liability of Work Contract Tax as well as Central Excise Duty before payment as per the consent terms.
(2)It is not the case of the respondent Company that the Work Contract Tax or Central Excise liability was not discharged by the petitioner and any recovery was sought to be effected from the respondent Company nor it is a case of the respondent Company that any proceedings for the Work Contract Tax or for Central Excise were initiated for non-discharge of the liability by the petitioners.
(3)The aforesaid two circumstances clearly go to show that the respondent Company being left to the position of unable to pay the remaining installments, has found out an ingenious COMP/303/2008 17/23 ORDER device of so called rectification work and of non-discharge of the Work Contract Tax liability or as well as Central Excise Duty. The platform is created for such ingenious devise by correspondence by the respondent Company.
(4)Such ingenious device has not ended just by way of correspondence, but has further resulted into an action by the respondent Company by misusing the process of law by filing the aforesaid three suits in the City Civil Court. The above referred prayers made in the Civil Suits is directly running counter to the orders passed by the Division Bench of this Court in the proceedings of OJ Appeals as well as Company Petitions. When an undertaking or declaration is made, may be by way of consent terms in the proceedings of the Company Court or appeal arising from the proceedings of this Court, no litigant can resort to the proceedings before any other forum to come out from the liability or the consequences for non-compliance to the orders passed by this Court. By no stretch of imagination or interpretation of any provisions of the Constitution or Civil Procedure, the power can be read with the Civil Court to nullify the effect of the order passed by this Court in the Company jurisdiction or may be the orders passed by COMP/303/2008 18/23 ORDER the Division Bench in the OJ Appeals. If any of the litigant who is party to the proceedings before this Court has made a declaration to abide by a particular terms, is desirous to back out from the same or is desirous to be relieved of the liability and the consequences, the proper forum is the Court which has passed the order, i.e. this Court or the Division Bench sitting in the OJ Appeal. Such power would not be available with the Civil Court. The pertinent aspect is that the respondent is a Limited Company having assistance of the Directors who are educated persons and they have also capacity to engage lawyers for seeking their advice. Inspite of the aforesaid position, the attempt is made by the respondent Company to invoke the jurisdiction of the Civil Court by filing Suits, which if granted, would result in to not only nullifying the order of this Court, but would also result into interference in the course of justice for implementation of the orders of this Court. In any case, invoking of the power of the Civil Court by filing Suits in the present circumstances can also be termed as misuse of the process of law by respondent Company and the Director, who has filed the Civil Suits.
17.In light of the aforesaid conduct of the
respondent Company, if the contention of the
COMP/303/2008 19/23 ORDER
non-service of the statutory notice is examined, the same can also be said as a dishonest defence raised by the Company to resist the present petitions when it was already agreed between the parties to the concerned proceedings and this Court having disposed of the matter in terms of the consent terms, permitted revival of the petitions for winding up and with the specific deeming fiction of its inability to pay the debt as per clause 4(iv) of the consent terms. It does not lie in the mouth of the respondent Company to contend that for bringing the cause for winding up of the respondent Company, another statutory notice for the net amount was required to be served and having not served, the petition would not be maintainable. If such a contention is countenanced by this Court, the resultant effect would be that the dishonest litigant are permitted to earn premium on account of their own conduct, which considering the facts and circumstances cannot be permitted. Therefore, the said contention raised on behalf of the respondent company deserves to be rejected outright.
18. Two judgements were relied upon by the learned counsel Mr. Panesar; one is the decision of the Bombay High Court in the case of Shantilal Khushaldas and Bros. Pvt. Ltd Vs. Smt. Jaybala Suresh Shah & Anr. reported at 90(1997) Company Cases 399 which is not applicable at all to the COMP/303/2008 20/23 ORDER facts of the present case. As observed earlier, in the present case, there is express deeming fiction by way of admission on the part of the respondent Company to be unable to pay the outstanding debt upon the failure to pay the installments as agreed as per the consent terms with a further clause of allowing revival of the Company Petition for winding up. Such were not the fact situation in the aforesaid case upon which the reliance is placed by Mr. Panesar and therefore, the same is of no help to the respondent Company.
19.The another decision relied upon by Mr.Panesar is in the case of Asian Bearing C. Vs. Vansant Engineering Pvt. Ltd. reported at 104 (2001) Company Cases 262, wherein based on the consent terms, the Company Petition was withdrawn and therefore, the view was taken by the Court that it will not be a contempt of Court. Such is not the fact situation in the present case. In the present case, after the consent terms were filed, the petitions or the OJ Appeals are not withdrawn, but based on the consent terms, the OJ Appeals as well as the Company Petitions are disposed of in terms of the consent terms. Therefore, when the consent terms are made as a part of the order of this Court, the said decision, which relates to the withdrawal of the petition would not be of any help to the respondent Company.
COMP/303/2008 21/23 ORDER
20.The additional aspect in the present case for prima facie initiation of the proceedings under the Contempt of Court Act is that by misuse of the process of law, the respondent Company has not only invoked the jurisdiction of the Civil Court, but the said dishonest attempt qua the misuse of the process of law is further aggravated by the statement made in para 7 of the affidavit-in-reply, wherein the language used by the respondent is as under:
"the Respondent has rightly filed above civil suit against the petitioner in the City Civil Court, Ahmedabad"
21.Inspite of the earlier order dated 27.07.2009, the Director of the respondent Company has an audacity to make the aforesaid declaration in the affidavit.
22.Under these circumstances, if the conduct of the respondent Company is considered, it is prima facie a case for initiation of the the proceedings under the Contempt of Court Act against the respondent Company and its Director Shri Khumansingh B. Solanki for misuse and abuse of the process of law by filing Civil Suit Nos. 1493/08, 1494/08 and 1491/08 in the City Civil Court and thereby, creating an obstruction in the proper implementation of the order passed by this Court in the proceedings of the concerned OJ Appeals as well as Company COMP/303/2008 22/23 ORDER Petitions for winding up.
23.In view of the aforesaid, the following orders-
A) The petitions are admitted.
B) The advertisement to be published in Gujarat daily Jansatta and Indian Express English daily, both Ahmedabad edition.
C) Publication in the official gazette is dispensed with.
D) Until further orders, the respondent company, its agents and servants, including Directors and the Managing Directors are restrained from transferring or alienating in any manner whatsoever, its movable and immovable properties.
E) Let the matter come up after six weeks for appointment of the provisional liquidator/official liquidator, as the case may be, after publication is made in the respective newspaper.
F) Proceedings under the Contempt of Court Act be initiated against the concerned Director of the respondent Company Shri Khumansingh B. Solanki. Office to place the matter before the appropriate Bench as per roster.
G) Until further orders, proceedings of Civil Suit Nos.1493/08, 1494/08 and 1491/08 shall COMP/303/2008 23/23 ORDER remain stayed.
24.Mr.Panesar, learned counsel appearing for the respondent Company prays that the operation of this order be stayed for some time so as to enable the respondent Company to approach before the higher forum.
25.Considering the facts and circumstances, the said prayer is declined.
(JAYANT PATEL, J.) *bjoy