Madhya Pradesh High Court
Senior Manager Uco Bank vs M/S Suman Organic And Fertilizers Pvt. ... on 25 August, 2015
1
Co.P. No.31/2013 & Co.P. No.32/2013
25/08/2015
Shri D.S.Panwar, learned counsel for petitioner.
Shri Nisheet Wishard, learned counsel for respondents.
Heard on the question of admission.
This order will govern the disposal of Co.P. No.31/2013 and Co.P. 32/2013 since it is jointly submitted by learned counsel for both the parties that these two company petitions involved the same issue on the similar fact situation filed by the same petitioner on the same ground.
Both these company petitions have been filed seeking winding up of the respondent company u/S.433(e) and 434 of the Companies Act on the ground of inability to pay debt.
For convenience, the facts from Co.P. No.31/2013 have been noted first.
The plea of the petitioner is that the respondent company had opened a current bank account with the petitioner company and on the respondent's request the letters of credits were discounted by the petitioner bank and credits thereof were given to the current account of the respondent company maintained with petitioner's bank. The respondent had failed 2 to repay the amounts of credit facilities which resulted into the default of indebtedness to the extent of Rs.6,50,63,727/- as on 3/7/2013. It is alleged that the letters of credit discounted by the respondent's were later found to be fake and not honoured by the concerned bank and the cheque issued by the respondent on 4/7/2013 for Rs.6,50,63,727/- was also dishonoured. Hence, the notice u/S.434 of the Act was given on 20th July, 2013 which was duly served upon the respondent and was replied on 23/7/2013 but the payment of the amount was not made, therefore, the winding up of the respondent company has been sought.
The respondent has filed the reply taking the stand that the outstanding amount has been paid from time to time and the respondent is still ready and willing to pay the entire outstanding amount. The plea relating to the fake letter of credit and dishonour of cheque has been denied and it is pleaded that subject to giving of certain time the respondent will meet out all the outstanding dues of the petitioner and the petitioner is harassing the respondent by filing the winding up petition.
Same is the case in connected Co.P. No.32/2013 where 3 the petitioner has raised the plea that respondent company had submitted the letter of credit of Rs.7,93,50,584/- issued by the ICICI Bank and IDBI Bank to the petitioner bank for discounting and the petitioner after discounting the letter of credit had credited the amount to the current account of the respondent company but the letters of credits were later found to be fake and as per the petitioner, the outstanding amount is to the tune of Rs.8,20,83,024/-. The statutory notice was given on 20th July, 2013 and the reply was sent by the respondents on 23/7/2013 admitting the liability. The respondent in the reply to the winding up petition has taken the same stand as taken in the winding up petition No.31/2013.
Having heard the learned counsel for parties and on the perusal of the record, it is noticed that in both the company petitions the liability to repay the amount has not been disputed by the respondents. The respondents have sought time to repay the amount. Before this court also the respondents had submitted the affidavit dated 28 th March, 2014 expressing willingness to repay the outstanding amount enclosing therewith a repayment schedule. Along with the affidavit, the communication dated 19/3/2014 is enclosed sent 4 by the respondent to the petitioner proposing the repayment schedule. The petitioner has filed the reply dated 3/12/2014 in response to offer for repayment made by the respondents objecting to the offer raising the plea that the petitioner is entitled to the interest @ 18.60%. The respondents have filed the communication dated 4/12/2014 as additional document proposing to repay the entire amount within a period of 1 ½ years. The respondents thereafter have also filed the affidavit dated 6/4/2015 before this court reiterating their willingness to pay the entire outstanding amount as per the repayment schedule already submitted along with the interest @ 10.5%, but before this court the petitioner bank has insisted upon the payment of interest @ 18.60%. This Court by order dated 20/3/2014, 22/4/2014, 22/7/2014, 10/11/2014, 4/12/2014, 27/1/2015 etc had repeatedly noted the offer of the respondent to repay the amount and had granted time to the petitioner bank to obtain instructions on the said offer, but the offer has not been accepted by the petitioner bank. The record reflects that though the respondents are ready to repay the amount in instalments but there is a dispute between the parties in respect of rate of interest. The respondents have also filed the 5 documents before this court indicating that the respondents are running profit making companies. The sale details of previous months have been filed. The salary details have also been filed to show the number of employees working. Provisional balance sheet has also been placed on record to show that respondents are profit making companies. The additional documents filed by the respondents also reveal that the petitioner has initiated recovery proceedings before the DRT by filing application u/S.19 of the Recovery and Debts due to the Bank and Financial Institutions Act. The petitioner has also initiated the proceedings against the respondents u/S.138 of the Negotiable Instrument Act.
The Supreme Court in the matter of M/s. Madhusudan Gordhandas & Co. Vs. Madhu Woollen Industries Pvt. Ltd reported in [1971] 3 SCC 632 has reiterated the well settled rule as to when winding up should not be ordered. These Rules are firstly, if the debt is bona-fide disputed and the defence of the company is in good faith and substance and secondly the defence is likely to succeed in the point of law and thirdly the company adduces prima-facie proof of the facts on which the defence depends. The supreme Court in the 6 matter of M/s. Madhusudan Gordhandas & Co. (supra) has held as under:-
"20. Two rules are well settled, First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. See London and Paris Banking Corporation. Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been properly, was not allowed. See Re.Brighton Club and Horfold Hotel Co.Ltd."
21. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt, see Re. A Company. Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the Court will make a winding up order without requiring the creditor to quantify the debt precisely see Re.Tweeds Garages Ltd. The principles which the court 7 acts are first that the defence of the Company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends".
The Gujarat High Court in the matter of Rishi Enterprises, In re. reported in [1992] Co.Cases 271 has held that if there is inability to pay the debts owing to the temporary financial crisis the winding up petition need not be admitted.
The Punjab & Haryana High Court also in the matter of State Trading Corporation of India Ltd Vs. Punjab Tanneries Ltd reported in the matter of [1989]66 Co.Cases 634 in a case where the suit was already filed by the petitioner for recovery of its debt has held that the winding up order need not be passed merely on the plea that the debt was not paid and that the machinery for winding up cannot be allowed merely as a means for realising a debt due from the company. The said view has been taken placing reliance upon the judgment of the supreme court in the matter of Harinagar Sugar Mill Co. Ltd. Vs. M.W. Pradhan [1966] 36 Co.Cases 426(SC).
The Patna High Court also in the matter of Registrar of Companies, Bihar Vs. Chauhan Brothers Industries 8 Private Ltd reported in [1973]43 Co.Cases 525 has held that the substratum of the company is deemed to be gone when the subject matter of the company is gone; or the object for which it was incorporated has substantially failed; or it is impossible to carry on the business of the company except at a loss, that is to say, that there is no reasonable hope that the object of trading at a profit can be attained.
Gauhati High Court in the matter of Tinsukia Vastra Bhandar Vs. Assam Tea Corporation Ltd reported in [1991]71 Co.Cases 178 has reiterated the position that the winding up is a discretion of a court. Such a discretion is to be exercised considering the entire circumstances of the case.
In the present case, though the liability is undisputed but the respondent had made bona-fide attempt before this court for repayment of the entire outstanding amount in instalments. The dispute between the parties is in respect of the rate of interest payable on the amount due. The repeated offer which has been made by the respondent before this court for repayment of the amount have not been accepted by the petitioner bank. The documents have been filed before this court disclosing the financial position of the respondents 9 which demonstrate that it is a running profit making concern. In terms of the judgment of the supreme court in the matter of IBA Health (I) Pvt. Ltd. Vs. Info-Drive Systems Sdn.Bhd reported in SCC (2010) 10 553, the financial position of the company is also one of the factor which is required to be looked into. The petitioner has already initiated the recovery proceedings before the DRT. Considering the circumstances of the case, I am of the opinion that it is not a fit case for exercising the discretion and admitting the winding up petition as the aforesaid facts do not reflect the inability of the respondents to repay the debts or that the substratum of the respondent companies has gone. On the contrary, it reflects the bona-fide dispute between the parties in respect of the rate of interest and the machinery of this court in winding up cannot be used to pressurise the respondent to recover the amount calculated on the basis of rate of interest in respect of which there is serious dispute between the parties.
Counsel for petitioner has placed reliance upon the judgment of this court in the matter of UCO Bank Vs. M/s.Zoom Developers (Pvt) Ltd dated 20/11/2014 passed in Company Petition No.9/2011 but in that case the winding up 10 petition was admitted on reaching to the conclusion that respondent company had neglected to pay the amount inspite of the service of statutory notice whereas in the present case the respondent company had made sincere offer before this court to repay the amount.
In these circumstances, the present petition filed for winding up of the respondent company is dismissed.
Original order is placed in Co.P. No.31/2013 and a copy whereof be placed in the record of connected Co.P. No.32/2013.
(PRAKASH SHRIVASTAVA) Judge VM