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2008 (3) TMI 475 - HIGH COURT OF ANDHRA PRADESHWinding up - whether the petitioner has made out a case under section 433(e) of the Act for ordering publication of petition ? - whether the first respondent-holding company is liable to discharge debt of the second respondent-subsidiary company; and if the answer is in the affirmative, whether holding company is also liable to be wound up upon failure of subsidiary company to discharge debt ? Held that:- The chronology of events would show that Walnut gave three notices—in 2001, 2003 and 2004—even while exploring possibilities to get money by way of mediation and negotiations. Walnut even went to the extent of retaining unused material informing second respondent that material would be returned only on payment of amount. All these practices were intended only to bring pressure on second respondent. Ultimately, when second respondent failed to pay disputed debt, petitioner issued final notice on 23-7-2004, to holding company and subsidiary company on the premise that the holding company is also liable to discharge alleged debt of subsidiary company. This attitude of Walnut certainly amounts to pressurising debtor to part with the money. Therefore, this court is of considered opinion that this is not a fit case to admit and order publication of petition. When admittedly Walnut was engaged by subsidiary company, which had supplied material, when admittedly unused material was sent back to subsidiary company, when admittedly first two notices were issued to subsidiary company, mere issue of final notice under section 434 of the Act to holding company, cannot and should not lead to an inference that it is liable to pay the debt of subsidiary company. The principle of lifting veil cannot be applied for ordering winding up of a holding company when creditor is unable to receive money from subsidiary company.
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