2015 (8) TMI 1591 - HC - Companies Law

Seeking winding up of the respondent company AAT Academy India Limited - alleged failure of the respondent AAT Academy to pay its debt which is claimed to be due under promissory note - petitioner alleged that borrower and the respondent had dishonest intentions to defraud the petitioner and at a later point of time since they were unable to pay the dues they have become inaccessible - HELD THAT - From the materials available on record it is seen that the 1, 00, 000 shares of Greycells were sold to Keynote Commodities Limited (for short Keynote Commodities) which is owned and controlled by Vineet Suchanti and Nirmal Suchanti brothers of Vivek Sunchanti founder of Concept Communication who introduced the Managing Director of the answering respondent to Bela and Sanjay with whom Vivek Suchanti is closely associated. It is also seen that Keynote Commodities is engaged in stock broking business and has close links to the stock broking business carried on by Bela and Sanjay. First of all this Court has to see whether there is a debt and if so whether it is admitted and if admitted whether the company can pay the same. While deciding the question of inability to pay the debt alleged it is to be seen whether it is genuine. Inability is the non-payment of the debt within the statutory period. However such inability has to be determined from the facts of each case - the alleged Inability to pay its debts by the respondent has to be considered and examined taking into various aspects. It is settled principle that winding-up is not a matter of right but it is the discretion of Court on any one of the grounds mentioned in Section 433 of the Companies Act. Though the statutory notice raised the presumption as to the inability to pay its debts it is rebuttable. Admittedly in this case the company is only a guarantor for the loan borrowed by the Director without any resolution of the Board. Whether the Court can presume the inability of respondent to pay the alleged debt due under the notice? - HELD THAT - Though ordinarily the petitioning-creditor may be entitled to an order of winding-up considering the business in which the respondent is involved the same becomes the discretion of the Court. It has also been held in a catena of cases that even if more than one ground is made out as enumerated under Section 433 of the Companies Act there is no compulsion on the part of the Court to order winding-up. In the case on hand the indebtedness is vehemently disputed by the respondent-company. Therefore an order of winding-up at the instance of the company - petitioner would affect the career prospectus of many of the students who are undergoing education training during the current year and also in the ensuing years. Solvency of the respondent-company - HELD THAT - The business of the company is only providing educational services employing more than 60 persons. In such circumstances winding-up of the same at the instance of the Petitioning- Creditor would deprive the employment of the persons with the respondent organization resulting in great prejudice and serious hardship to them. The respondent-company being only a guarantor in the absence of resolution to sell the shares of the company or even act as a guarantor without a resolution the alleged transactions by the Petitioning-Company are subject matter of proof and evidence. While so ordering winding-up would be like pressurizing the respondent to pay the money. Even presuming that there is a dispute with the respective debt payable in the given circumstances the dispute can be resolved only before the Civil Court and not through the company Court. The Company Petition filed as such is not maintainable and hence the same is dismissed.

Issues Involved:

1. Whether the respondent company is liable to pay the debt claimed by the petitioner.
2. Whether the petition for winding up of the respondent company is maintainable.
3. Whether there was a fraudulent intention or breach of trust by the petitioner and associated parties.
4. The validity of the pledge and sale of shares.
5. The impact of winding up on the respondent company's operations and stakeholders.

Issue-wise Detailed Analysis:

1. Liability to Pay the Debt:

The petitioner claimed that the respondent company, through its Managing Director, borrowed Rs. 37,50,000 under a promissory note dated 15.4.2010. The loan was secured by a Guarantee Agreement and the pledge of 1,00,000 Equity Shares in M/s Greycells. The petitioner argued that the respondent company failed to repay the loan and interest, leading to the sale of the pledged shares. The respondent contested this, stating that the loan was a personal transaction of the Managing Director and not of the company, and that the company was not part of the financial transaction. The court examined whether the debt was admitted and if the company could pay it, considering the claim was disputed and the company was only a guarantor without a board resolution.

2. Maintainability of the Winding Up Petition:

The petitioner sought the winding up of the respondent company under Sections 433 and 434 of the Companies Act, citing the company's inability to pay its debts. The court noted that winding up is discretionary and not a matter of right, even if statutory notice raises a presumption of inability to pay debts. The court found that the indebtedness was vehemently disputed, and the company was a going concern with ongoing operations and employees. It held that winding up would adversely affect the company's educational services and employment, and the dispute over debt should be resolved in civil court, not through company court proceedings.

3. Alleged Fraudulent Intention and Breach of Trust:

The respondent alleged that the petitioner, with her associates, engaged in fraudulent activities to retrieve shares and exert pressure on the company. It was claimed that the petition was filed for collateral purposes, influenced by Bela, Sanjay, and Greycells. The court acknowledged these allegations as contentious, requiring examination in a civil suit, and highlighted the pending civil suit filed by the respondent challenging the legality of the share sale and seeking their return.

4. Validity of Pledge and Sale of Shares:

The respondent challenged the validity of the share pledge and sale, arguing it was barred by Section 295 of the Companies Act, and no notice under Section 176 of the Contract Act was issued before invoking the pledge. The court noted the contentious nature of these claims, indicating they required resolution through civil litigation rather than winding up proceedings.

5. Impact on Operations and Stakeholders:

The court considered the solvency and operational status of the respondent company, which was engaged in providing specialized education and employed over 60 people. It emphasized that winding up would result in significant prejudice and hardship to employees and students, and noted the company's commercial solvency and ongoing educational services. The court concluded that ordering winding up would unduly pressure the respondent to settle disputed debts and was not in the best interest of creditors or stakeholders.

Conclusion:

The court dismissed the company petition, finding it not maintainable due to the disputed nature of the debt, the company's operational status, and the need for civil court adjudication of the contentious issues raised.

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