TMI Blog2012 (5) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... ith hand over all the records of the respondent company to the Provisional Liquidator including its books of account. The Directors of respondent company are also directed to provide the statement of affairs and file their statements under Rule 130 within a period of twenty one days as provided for in the Act. Citations are directed to be published in the newspapers, namely, 'The Statesman (English edition) and 'Veer Arjun' (Hindi edition) as well as in 'Delhi Gazette'. - Co. Pet. 94/2000 - - - Dated:- 28-5-2012 - Mr. Manmohan, J. For Appellant/Petitioner/Plaintiff: Mr. Virender Ganda, Senior Advocate with Mr. S.K. Giri, Ms. Runjita Das Mr. Amarjit Singh, Advocates For Respondents/Defendant: Mr. Niraj Kumar Singh, Advocate Mr. Manmohan 1. Present winding up petition has been filed under Section 433(e) read with Sections 434 and 439 of the Companies Act, 1956 (for short 'Act') stating that respondent is unable to pay its debts. The facts as stated in the petition are that on 04 September, 1996, the respondent company (Lunar Finance Limited) passed a Board Resolution guaranting the loan amount of `52,55,500/-advanced by the petitioner to the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from the aforesaid clause that requirement under the Negotiable Instruments Act is only of giving notice. There is no requirement of ensuring effective service of the said notice. For the aforesaid reason, it cannot be said that the deliberation of the Apex Court in the judgment relied upon by learned counsel for the petitioner can be applied to the facts and circumstances of the present case. So far as the issue of giving notice is concerned, the same would definitely be governed by the observations made by the Supreme Court. The Companies Act requires that a company which is to pay a debt must be informed of the same, and must be called upon to discharge its debt through a notice. The notice must actually be served on the respondent-company. Thereafter, if despite service of notice, the company does not discharge its debt, it is open to the creditor to file a winding up petition. Since I have already recorded above that in the facts and circumstances of the instant case, notice cannot be deemed to have been actually served on the respondent, it is, therefore, futile to proceed any further with this petition. Accordingly this petition is dismissed, as the statutory n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the whole transaction. Then there must be a contract between the surety and the creditor, by which the surety guarantees the debt, and no doubt the consideration for that contract may move either from the creditor or from the principal debtor or both. But if those are the only contracts, in my opinion, the case is one of indemnity. In order to constitute a contract of guarantee there must be a third contract, by which the principal debtor expressly or impliedly requests the surety to act as surety. Unless that element is present, it is impossible in my view to work out the rights and liabilities of the surety under the Indian Contract Act. Section 145 provides that in every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety. It is impossible to imply a promise by the principal debtor to indemnify the surety, unless the principal debtor is privy to the contract of suretyship. A promise cannot be implied against a stranger to the transaction of guarantee. Again, the right of a surety to call upon the principal debtor to discharge the debt of the creditor which has become due,-a right which is referred to in Mulla's note to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies on such terms and for such price that the LENDER thinks, and apply the proceeds towards the satisfaction of the bill discounting facility amount, bill discounting charges and penal bill discounting charges outstanding against the said penal bill discounting charges outstanding against the BORROWER including legal charges and incidental expenses etc. 12. Lastly, Mr. Niraj Kumar Singh submitted that the present petition was not maintainable as the petitioner had failed to first encash the securities furnished in its favour by the principal debtor inasmuch as it had failed to act upon the Bills of Exchange as well as cheques given by the principal debtor. 13. In rejoinder, Mr. Virender Ganda, learned senior counsel for petitioner submitted that Section 434 had to be read with Sections 51 and 53 of the Act. The relevant portion of the said Sections are reproduced hereinbelow: 51. Service of documents on company.-A document may be served on a company or an officer thereof by sending it to the company or officer at the registered office of the company by post under a certificate of posting or by registered post, or by leaving it at its registered office. [Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Companies are known to have their registered office in premises where they do not carry on any significant manufacturing, trading or administrative activities. The premises are used as a registered office only for the purpose of convenience and for complying with statutory provisions. In such a case, the company could well avoid service of notices and then refuse to claim the same despite notification from the postal authority to do so. 17. In K. Bhaskaran (supra) the Supreme Court in paragraph 21 held that Section 138 of the Negotiable Instruments Act invites a liberal interpretation in so far as it relates to the giving of a notice. The Supreme Court in relation to a notice under Section 138 of the Negotiable Instruments Act applied the principle in Maxwell's Interpretation of Statutes that provisions relating to giving a notice often received a liberal interpretation. In my view this principle is equally applicable and ought to be applied in respect of a question regarding the delivery of a notice issued under Section 434(1)(a) of the Companies Act. Indeed such an interpretation would cause no prejudice to the company either. If in a given case the concerned off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt. The person who gives the guarantee is called the 'surety', the person in respect of whose default the guarantee is given is called the 'principal debtor', and the person to whom the guarantee is given is called the 'creditor'. A guarantee may be either oral or written. 19. On a holistic reading of the Agreement-cum-Pledge, this Court is of the opinion that the respondent was a guarantor as in consideration of the loan advanced by the petitioner to a third person namely the principal debtor, the respondent had pledged shares owned by it in the event of default of repayment of loan. Moreover, in the opinion of this Court, the Agreement-cum-Pledge constituted a composite Tripartite Agreement amongst the Lender, Principal Debtor and Guarantor. In this regard, relevant clauses 4, 12 and 17 of the Agreement-cum-Pledge are reproduced hereinbelow : 4. In consideration of the said bill discounting facility, the original Securities mentioned in the Schedule attached to this Agreement, are hereby pledged in favour of the LENDER as an exclusive charge to the LENDER towards repayment of the principal etc. due to the LENDER under the bill discounting facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court is of the view that the respondent would not have assumed the role of a guarantor and would not have described itself as a guarantor in the Agreement-cum-Pledge. In the opinion of this Court, the argument advanced by the learned counsel for the respondent-guarantor is contrary to the written document executed between the parties. 23. This Court is further of the opinion that Agreement-cum-Pledge did not limit the liability of the respondent-guarantor. In fact, the respondent's liability by virtue of Section 128 of the Indian Contract Act, 1872 has to be co-extensive with that of the principal debtor. Section 128 of the Indian Contract Act, 1872 is reproduced hereinbelow:- 128,. Surety's liability-The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. 24. Further, Sections 172 to 176 of the Indian Contract Act, 1872 defines the relationship amongst the Pledge, Pawnor and Pawnee and the rights of the Pawnee when the Pawnor commits a default. This Court is of the view that in the event of default in re-payment of the loan by the principal debtor, the petitioner under the Agreement-cum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in Bank of Maharashtra v. M/s Racmann Auto (P) Ltd., AIR 1991 Delhi 278. In the said decision, the question which came up for considerations was whether there was any legal duty cast on the plaintiff Bank to take early steps for disposing of the pledged goods. Construing Section 176, it was held that the very wording of the section makes it clear that it is the discretion of the pawnee to sell the goods in case the pawnor makes default but if the pawnee does not exercise that discretion no blame can be put on the pawnee and pawnee has the right to bring a suit for recovery of the debt and retain the goods pledged as collateral security. Doubt was also expressed whether a defendant as pawnor could force the pawnee to dispose of the pledged goods without defendant clearing the debt. However, on the facts of the present case, we need not go into this latter aspect on which doubt has been expressed. It has been categorically held in the cited decision that it is the discretion of the plaintiff Bank to have filed the suit for recovery of the debt and retain the pledged goods as collateral security or in the alternative it could resort to selling the pledged goods after giving re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respondent company. For this purpose, Provisional Liquidator would be entitled to obtain police aid and the local police is directed to render all assistance to the Provisional Liquidator. 28. In the meantime, respondent-company, its Directors, officers, employers, authorised representatives are restrained from selling, transferring, alienating, encumbering and parting with the possession of any movable and immovable assets and funds of the respondent company. They are also restrained from withdrawing any money from the accounts of the respondent company. 29. The Directors of the respondent company are directed to forthwith hand over all the records of the respondent company to the Provisional Liquidator including its books of account. The Directors of respondent company are also directed to provide the statement of affairs and file their statements under Rule 130 within a period of twenty one days as provided for in the Act. 30. Citations are directed to be published in the newspapers, namely, 'The Statesman (English edition) and 'Veer Arjun' (Hindi edition) as well as in 'Delhi Gazette'. The petitioner is directed to deposit a sum of `50,000/-wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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