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Showing 341 to 360 of 585 Records

• 2005 (4) TMI 310
  
  Issues:
  Application under sections 391 and 394 of the Companies Act, 1956 for dispensing with meetings of shareholders and creditors regarding the scheme of amalgamation of multiple companies in the petitioner Transferee Company.
  
  Analysis:
  The petitioner, Shyam Basic Infrastructure Projects, filed an application under sections 391 and 394 of the Companies Act, 1956, seeking an order to dispense with the meetings of shareholders and creditors regarding the scheme of amalgamation of five transferor companies into the petitioner Transferee Company. The petitioner contended that all seven shareholders and five creditors had given their no objection to dispensing with the meetings. However, upon reviewing the list of creditors and shareholders, the court found it in the larger interest of the petitioner and the creditors to hold the meetings for consideration of the scheme of amalgamation.
  
  The court ordered separate meetings of shareholders and creditors of the petitioner Transferee Company to be convened and held on specified dates and times at the registered office of the company. The court also directed that necessary advertisements and notices be issued at least 21 days before the meetings, as per the requirements of the Companies Act, 1956. The Advocate for the petitioner was instructed to file the necessary documents in court within the prescribed time, and the Chairman of the meetings was appointed with a specified remuneration amount to be deposited by the petitioner.
  
  Furthermore, the court allowed proxy voting, set the quorum as per legal provisions, and instructed the Chairman to determine the value of each creditor if disputed. The Chairman was required to report the meeting results to the court within seven days of conclusion, verified by an affidavit. With these directions, the court disposed of the application, ensuring compliance with legal procedures and safeguarding the interests of the parties involved in the scheme of amalgamation.

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• 2005 (4) TMI 309
  
  Issues:
  Dispensing with the calling of a meeting for consideration and approval of a scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956.
  
  Analysis:
  The High Court of Rajasthan, in the case of Shyam Cellular Infrastructure Projects Limited, addressed the issue of dispensing with the calling of a meeting for the consideration and approval of a scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956. The petitioner, a transferor company, sought an order to dispense with the meeting of its shareholders regarding the scheme of amalgamation with a transferee company. The court noted the shareholdings of the petitioner, which included percentages held by the transferee company, another company, and several individual members. The court observed that the shareholders had provided their "no objection" to dispensing with the meeting, as evidenced by documents submitted with the application. It was highlighted that the petitioner had no creditors. Based on the documents presented, the court was satisfied that the request to dispense with the meeting deserved acceptance. Consequently, the court ruled to dispense with the holding of the meeting of the shareholders of the petitioner-transferor-company as required under sections 391 and 394 of the Companies Act, 1956, for the consideration and approval of the scheme of amalgamation with the transferee company. The application was thus disposed of by the court.

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• 2005 (4) TMI 308
  
  Issues:
  Application for dispensing with calling of meetings of shareholders and creditors for approval of scheme of amalgamation.
  
  Analysis:
  The High Court of Rajasthan, in the case involving Rajasthan Telecom Company Limited and Shyam Basic Infrastructure Projects Private Limited, dealt with an application seeking dispensation of the requirement to hold meetings of shareholders and creditors for the approval of a scheme of amalgamation. The petitioner transferor company, a wholly owned subsidiary of the transferee company, requested the court to dispense with the calling of such meetings. The court noted that shareholders and creditors had provided a 'no objection' to dispensing with the meetings as mandated under sections 391 and 394 of the Companies Act, 1956. The court carefully examined the documents presented, including the shareholders' no objection at page 180 and creditors' no objection at pages 182 to 184 of the application. Based on the evidence and compliance with legal requirements, the court found merit in the petitioner's request. Consequently, the court granted the application and dispensed with the necessity of holding meetings of shareholders and creditors for the consideration and approval of the scheme of amalgamation. The court's decision was based on the satisfaction derived from the documents submitted by the petitioner transferor company, leading to the disposal of the application with the specified directions.

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• 2005 (4) TMI 307
  
  Issues:
  Dispensing with calling meetings of shareholders and creditors for approval of scheme of amalgamation.
  
  Analysis:
  The judgment deals with an application filed by a transferor company seeking an order to dispense with the calling of meetings of shareholders and creditors for the consideration and approval of a scheme of amalgamation with a transferee company. The court, after hearing the counsel for the transferor company and examining the relevant documents, noted that the transferor company is a wholly owned subsidiary of the transferee company. The shareholders of the transferor company have provided their "no objection" for dispensing with the meeting, as required under sections 391 and 394 of the Companies Act, 1956. Similarly, both creditors of the transferor company have also given their "no objection" for dispensing with the meeting, as mandated by the Companies Act. Based on the documents presented, the court found merit in the application and decided to dispense with the requirement of holding meetings of shareholders and creditors for the approval of the scheme of amalgamation. Consequently, the court disposed of the application with the given directions. The judgment emphasizes the compliance with the statutory provisions of the Companies Act, particularly sections 391 and 394, in the context of approving a scheme of amalgamation, and highlights the significance of obtaining no objection from shareholders and creditors in such matters.

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• 2005 (4) TMI 306
  
  Issues Involved:
  1. Jurisdiction of the court.
  2. Validity of the cancellation of nominations by the Election Officer.
  3. Requirement of filing statutory declaration in Form DD-A.
  4. Correctness of the auditor's report and subsequent erratum.
  
  Detailed Analysis:
  
  1. Jurisdiction of the Court:
  The court examined whether it had the jurisdiction to entertain the suit. It was argued that the entire cause of action arose outside the court's territorial jurisdiction. However, the court noted that the auditor's report, which was part of the cause of action, was prepared and furnished within its jurisdiction. Therefore, the court held that it had jurisdiction to try the suit as leave under clause 12 of the letters patent had been granted and not revoked.
  
  2. Validity of the Cancellation of Nominations by the Election Officer:
  The plaintiffs challenged the decision of the Election Officer to cancel all nominations on the grounds of non-filing of the statutory declaration in Form DD-A. The court examined the election rules of the club and found that the rules did not require the filing of such a declaration for the validity of nominations. The court held that the decision to cancel the nominations was not in accordance with the club rules and was invalid.
  
  3. Requirement of Filing Statutory Declaration in Form DD-A:
  The court addressed whether filing the statutory declaration in Form DD-A was necessary. It was acknowledged that the club was a limited company and that members of the Executive Committee were akin to directors. The court held that while the declaration was not required at the time of filing nominations, it must be filed immediately after being elected. Failure to do so would render the election illegal.
  
  4. Correctness of the Auditor's Report and Subsequent Erratum:
  The plaintiffs contended that the auditor's report was manipulated. The court noted that the auditor had a statutory duty to report disqualifications under section 227(3)(f) of the Companies Act, 1956. However, the court found that the auditor had not followed the proper procedure, such as collecting materials or seeking views from the affected directors. The court held that the auditor's report should have been more thorough and that the subsequent erratum was not conclusively based on proper materials.
  
  Conclusion:
  The court directed the club to proceed with the annual general meeting and elections based on the already filed nominations. It mandated that immediately after the election, the elected candidates must furnish the required statutory declarations. To ensure fairness, the court appointed a Special Officer to supervise the election and annual general meeting. The Special Officer was tasked with ensuring compliance with the club rules and the court's observations, with a report to be submitted to the court post-election. Costs were reserved to be decided later.

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• 2005 (4) TMI 305
  
  Issues:
  Petitioner seeks a writ of mandamus to stop police investigation, claiming lack of jurisdiction. Whether the police have the authority to investigate a criminal complaint against the petitioner under the Sick Industrial Companies (Special Provisions) Act, 1985.
  
  Analysis:
  The petitioner, a managing director of a sick industrial company, faces a criminal complaint of forgery and fabrication by a shareholder. The petitioner argues that the police investigation is illegal due to the special provisions of the Act. The Act establishes a Board for Industrial and Financial Reconstruction to handle sick companies. It suspends civil proceedings during its inquiry and provides penalties for mismanagement. However, the Act does not shield individuals from criminal offenses under the Indian Penal Code.
  
  The respondent claims the complaint is unrelated to a civil suit by another party and accuses the petitioner of forgery and breach of trust. The Act protects the company and management during scheme implementation but does not bar criminal proceedings. The court notes that the Act does not protect individuals from criminal liability. The petitioner's alleged actions fall under criminal law, warranting police investigation.
  
  The court cites a Supreme Court case stating that the Act does not impede criminal prosecutions. The Act's focus is on sick companies, not individual criminal actions. The complaint against the petitioner involves forgery and cheating, falling under criminal law jurisdiction. The court finds no basis to halt the police investigation, as the Act does not shield individuals from criminal offenses.
  
  In conclusion, the court dismisses the writ petition, stating the petitioner is not entitled to relief under the Act for criminal acts. The Act's provisions are limited to company proceedings, not individual criminal liabilities. The police investigation into the petitioner's alleged offenses is justified under criminal law, and the writ petition lacks merit.

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• 2005 (4) TMI 304
  
  Issues:
  1. Invocation of section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 without proper hearing.
  2. Quashing of notice dated 22-12-2003 and direction to consider one-time settlement offer.
  
  Analysis:
  1. The petitioners, borrowers from Punjab National Bank, defaulted on payments leading to classification as "non-performing assets" per RBI guidelines. The bank invoked the guarantee, demanding outstanding dues with interest. The petitioners challenged the notice under Article 226, alleging lack of proper hearing as required by section 13 of the Act.
  
  2. The Supreme Court in Mardia Chemicals Ltd. v. Union of India addressed the constitutionality of section 13 and the mechanism for borrower objections. The Court upheld section 13(2) as valid, emphasizing the need for borrower input before recovery actions. The RBI's guidelines on asset classification were highlighted, emphasizing the non-performing asset criteria.
  
  3. The Court stressed the necessity of a 60-day notice before taking measures under section 13(4) and the obligation to consider borrower objections. In this case, the petitioners were not given a hearing or opportunity to present facts, violating section 13(2) requirements.
  
  4. Consequently, the Court allowed the petitions, quashing the notice and directing the bank to serve a 60-day notice before any enforcement actions. The bank must consider objections raised by the borrowers, communicating reasons for rejection without granting a right to approach the Debt Recovery Tribunal at that stage.
  
  5. The Court clarified that the absence of a one-time settlement agreement on record didn't preclude the parties from reaching such an agreement. The petitions were disposed of without costs, ensuring compliance with due process under the Act.

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• 2005 (4) TMI 303
  
  Issues Involved:
  1. Confirmation of Sale
  2. Inter Se Bidding
  3. Adequacy of Price
  4. Re-auction and Setting Aside Confirmed Sales
  5. Legal Precedents and Court's Powers
  
  Issue-wise Detailed Analysis:
  
  1. Confirmation of Sale:
  The company was ordered to be wound up, and the official liquidator was appointed to take over and sell the assets. The official liquidator issued advertisements for selling the assets in two lots. Initial bids were received and a higher bid was accepted by the official liquidator subject to court confirmation. Surinder Kumar emerged as the highest bidder with Rs. 1.05 crores, and the sale was confirmed in his favor. However, subsequent higher bids led to further inter se bidding, where Surinder Kumar again emerged as the highest bidder with Rs. 1.31 crores. The court confirmed the sale in his favor on an "as is where is, whatever is" basis.
  
  2. Inter Se Bidding:
  Inter se bidding was conducted multiple times. Initially, Surinder Kumar, M/s. S. R. Buildcon, and Gulzar Singh participated, with Surinder Kumar emerging as the highest bidder. Later, M/s. Mittal and Garg Enterprises offered a higher bid, leading to another round of inter se bidding where Surinder Kumar again emerged as the highest bidder. The process was repeated when M/s. S. R. Buildcon further hiked the bid to Rs. 1.50 crores.
  
  3. Adequacy of Price:
  The valuation reports indicated a higher value for the assets compared to the bids received. The court considered whether the highest bid was adequate and whether a re-auction could fetch a price closer to the valuation. The court noted that the purpose of court auctions is to obtain the maximum price for the benefit of the company's creditors and workmen.
  
  4. Re-auction and Setting Aside Confirmed Sales:
  The court examined whether it had the power to set aside a confirmed sale based on inadequacy of price or other factors. It referred to various judgments, concluding that even a confirmed sale could be set aside if a substantially higher bid was received. The court emphasized the duty to ensure the best possible price for the assets, considering the interests of unsecured creditors, secured creditors, and workmen. The court decided to recall the orders confirming the sale and directed the official liquidator to undertake re-auctioning of the assets.
  
  5. Legal Precedents and Court's Powers:
  The court referred to several Supreme Court judgments, including Divya Manufacturing Co. (P.) Ltd. v. Union Bank of India, Union Bank of India v. Official Liquidator, and Allahabad Bank v. Bengal Paper Mills Co. Ltd., which established that a confirmed sale could be set aside if a higher bid was received. The court also considered its own judgment in Punjab Wireless Systems Ltd. (In Liquidation) v. Indian Overseas Bank, which affirmed the court's power to set aside confirmed sales to ensure the best price for the company's assets.
  
  Conclusion:
  The court concluded that the highest bid of Rs. 1.50 crores deserved consideration and decided to recall the previous orders confirming the sale to Surinder Kumar. The official liquidator was directed to re-auction the assets, with expenses borne by the secured creditors. The deposits made by the parties were to be refunded expeditiously. The court emphasized the importance of obtaining the maximum price for the benefit of the company's creditors and workmen, and the necessity of maintaining the integrity and openness of court auctions.

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• 2005 (4) TMI 302
  
  Issues Involved:
  1. Nature of the transaction between the petitioner and the respondent.
  2. Whether the respondent-company owes a debt to the petitioner.
  3. The respondent's defense regarding the equity application and allotment.
  4. Legal implications of the RBI clearance and FERA regulations.
  5. The maintainability of the petition based on the power of attorney.
  
  Issue-wise Detailed Analysis:
  
  1. Nature of the Transaction Between the Petitioner and the Respondent:
  The petitioner, a non-resident Indian, remitted US $100,000 to the respondent-company, which he claims is a debt owed to him. The respondent argues the amount was for equity shares, not a loan. The court needed to determine the true nature of the transaction to decide the case.
  
  2. Whether the Respondent-Company Owes a Debt to the Petitioner:
  The petitioner argued that the amount is a debt since the respondent failed to return it despite a statutory notice under sections 433 and 434 of the Companies Act, 1956. The respondent countered that the amount was meant for equity shares. The court found that the respondent agreed to refund the amount if the petitioner did not wish to participate in the equity, as evidenced by the respondent's letter dated 3rd October 1996, which stated, "your initial remittance for issuance of equity amounting to US $ 1,00,000 will be refunded to you soon after the financial closure of the project."
  
  3. The Respondent's Defense Regarding the Equity Application and Allotment:
  The respondent claimed the petitioner did not complete the equity application process, thus no shares were allotted. The court noted that the respondent initially sent an incorrect form meant for Indian residents and later agreed to refund the amount. The respondent's subsequent claim that the form was sent inadvertently and that there was no prescribed form for foreign investors was deemed an afterthought.
  
  4. Legal Implications of the RBI Clearance and FERA Regulations:
  The court observed that the respondent-company did not have the necessary clearance from the Reserve Bank of India (RBI) to receive the funds as foreign equity. The respondent's request to treat the amount as an interest-free loan pending RBI approval, which the petitioner did not agree to, further complicated the matter. The court found no evidence of RBI approval or issuance of shares to other foreigners, reinforcing the petitioner's claim.
  
  5. The Maintainability of the Petition Based on the Power of Attorney:
  The respondent challenged the petition's maintainability, arguing that Mr. Yogesh Gulati, who filed the petition, did not have a valid power of attorney. The petitioner provided a power of attorney dated 16th July 1997, which was later confirmed and ratified by another power of attorney dated 18th October 2004, executed on proper stamp paper and attested by the Consulate General of India. The court found this sufficient to dismiss the respondent's objection.
  
  Conclusion:
  The court concluded that the respondent is indebted to the petitioner for US $100,000, along with interest, as the respondent had agreed to refund the amount. The court admitted the petition for hearing and directed the respondent to deposit Rs. 50 lakhs with the Registrar General of the court within six weeks, failing which the petitioner could proceed with the publication of citations. The appointment of a provisional liquidator was deferred.
  
  Ordered accordingly.

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• 2005 (4) TMI 301
  
  Issues Involved:
  1. Petition for winding up under Section 433(f) read with Section 439(1)(c) and (3) of the Companies Act, 1956.
  2. Allegations of non-cooperation and deadlock in the management.
  3. Alternative remedies and the principle of "just and equitable" grounds for winding up.
  4. Disputes regarding the appointment of directors and control over the company.
  
  Issue-wise Detailed Analysis:
  
  1. Petition for Winding Up:
  The petitioners sought the winding up of M/s. Kobashi Machine Tools Private Limited under Section 433(f), read with Section 439(1)(c) and (3) of the Companies Act, 1956, on the grounds that the company should be wound up on "just and equitable" grounds. They requested the appointment of an Official Liquidator pending the hearing and disposal of the petition.
  
  2. Allegations of Non-Cooperation and Deadlock in Management:
  The petitioners alleged that the second respondent was not cooperating, preventing board meetings, and causing a deadlock in the management of the company. They claimed that this non-cooperation led to the non-finalization of accounts, non-payment of employee salaries, and the inability to reappoint statutory auditors. The second respondent was also accused of forming a rival company with a similar name and business objectives, further complicating the management deadlock.
  
  3. Alternative Remedies and the Principle of "Just and Equitable" Grounds:
  The respondents argued that the petitioners had alternative remedies under the Companies Act and that winding up should be a last resort. They contended that the petitioners were using the winding-up petition to settle personal disputes rather than addressing genuine management issues. The court emphasized that winding up on "just and equitable" grounds should consider the interests of the company and all its shareholders, not just the petitioners.
  
  4. Disputes Regarding the Appointment of Directors and Control Over the Company:
  The petitioners attempted to appoint Mr. E.S. Raghavan as a director, which was opposed by the second respondent. This opposition led to further disputes and allegations of misconduct. The court noted that the petitioners controlled the company's records and administrative functions, which complicated the situation. The second respondent's objections and the petitioners' failure to provide requested documents contributed to the deadlock.
  
  Court's Analysis and Conclusion:
  The court concluded that the petitioners were not genuinely interested in resolving the disputes but were focused on winding up the company. The court highlighted the importance of considering the company's overall interests, including its employees and shareholders, before deciding on winding up. The court also noted the company's financial health and its importance to national defense and aerospace sectors.
  
  Judgment:
  The court dismissed the petition for winding up, emphasizing that winding up should be a last resort and that the petitioners had not demonstrated sufficient grounds for such an order. The court ordered the petitioners to pay the cost of valuing the company's assets.

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• 2005 (4) TMI 300
  
  Issues Involved:
  1. Dismissal and/or suspension of Company Petition No. 259 of 1999 under section 22(1) of SICA.
  2. Withdrawal and vacation of interim orders in Company Petition Nos. 263 of 2000, 43 of 2000, and 259 of 1999 due to the sanctioned rehabilitation scheme.
  3. Compliance with the High Court's directions regarding the setting apart of funds for LKP Merchant Financing Ltd.
  4. Implementation and binding nature of the sanctioned rehabilitation scheme on the company and creditors.
  5. Objections by LKP Merchant Financing Ltd. to the sanctioned scheme and its provisions.
  
  Issue-wise Detailed Analysis:
  
  1. Dismissal and/or Suspension of Company Petition No. 259 of 1999:
  The applicant, Mafatlal Industries Ltd., sought the dismissal and/or suspension of Company Petition No. 259 of 1999 under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). This petition was filed by LKP Merchant Financing Limited for the winding up of the company due to unpaid lease rentals. The court noted that the company had made a reference to the Board for Industrial and Financial Reconstruction (BIFR) and was declared a sick industrial company. The BIFR had sanctioned a rehabilitation scheme for the company. However, the court emphasized that despite the sanctioned scheme, the company must comply with the obligations and directions given by the High Court, particularly concerning the setting apart of funds for LKP Merchant Financing Ltd.
  
  2. Withdrawal and Vacation of Interim Orders in Company Petition Nos. 263 of 2000, 43 of 2000, and 259 of 1999:
  The applicant sought an order declaring that the respective company petitions filed by different creditors had stood withdrawn and all interim orders vacated from the date of the sanction of the rehabilitation scheme by BIFR. The court highlighted that the scheme, sanctioned on 30-10-2002, included a provision stating that all pending legal cases against the company for recovery of dues and winding up petitions would stand withdrawn. However, the court underscored that the company must first fulfill its obligations under the scheme, including the specific directions given by the High Court, before seeking dismissal of the winding up petitions.
  
  3. Compliance with the High Court's Directions Regarding the Setting Apart of Funds for LKP Merchant Financing Ltd.:
  The court reiterated its earlier direction to the company to set apart a sum of Rs. 1,38,47,333 for LKP Merchant Financing Ltd. The court noted that the company had not complied with this direction and emphasized that the company must honor this commitment as part of the sanctioned scheme. The court rejected the argument that the company and its promoters were separate entities concerning this obligation, stating that the company could not escape its liabilities.
  
  4. Implementation and Binding Nature of the Sanctioned Rehabilitation Scheme:
  The court examined the statutory provisions of SICA, particularly sections 17 and 18, which outline the process for preparing and sanctioning a rehabilitation scheme. Section 18(8) specifies that the sanctioned scheme is binding on the sick industrial company, its creditors, and other stakeholders. The court emphasized that the company must implement the scheme in its entirety, including the provisions for repayment to creditors. The court held that the company's failure to comply with the scheme's provisions precluded it from seeking the dismissal of the winding up petitions.
  
  5. Objections by LKP Merchant Financing Ltd. to the Sanctioned Scheme:
  LKP Merchant Financing Ltd. raised objections to the sanctioned scheme, particularly regarding the reduction of its dues and the waiver of interest and other charges. LKP filed an application before BIFR for review and clarification of the sanctioned scheme. The court noted that BIFR had directed LKP to make its submissions in writing and for the monitoring agency and the company to provide their comments. The court acknowledged that the review application was still pending and that the company's failure to address LKP's objections further complicated the matter.
  
  Conclusion:
  The court concluded that it was not just, proper, or equitable to dismiss the winding up petitions solely based on the sanctioned scheme. The company must first fulfill its obligations under the scheme, including complying with the High Court's directions. The court rejected the applications seeking dismissal of the winding up petitions and emphasized the need for the company to implement the scheme in its true letter and spirit. The court also directed that a copy of the order be forwarded to BIFR to ensure proper implementation of the scheme.

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• 2005 (4) TMI 299
  
  Issues Involved:
  1. Winding up of the respondent-company under sections 433 and 434 of the Companies Act, 1956.
  2. Alleged non-payment of Rs. 4,93,000 by the respondent-company to the petitioner.
  3. Allegations of perjury against the Director of the respondent-company.
  
  Detailed Analysis:
  
  1. Winding up of the respondent-company under sections 433 and 434 of the Companies Act, 1956:
  The petitioner filed a petition for winding up the respondent-company due to its failure to pay Rs. 4,93,000. The petitioner claimed to have advanced Rs. 5 lakhs to the respondent-company, which partially repaid Rs. 2,50,000, leaving an outstanding balance of Rs. 2,50,000 plus interest. Despite repeated requests, the respondent-company did not fulfill the payment obligations, leading to the issuance of statutory notice and the subsequent filing of the winding-up petition.
  
  2. Alleged non-payment of Rs. 4,93,000 by the respondent-company to the petitioner:
  The respondent-company denied the petitioner's claims, arguing that the Rs. 5 lakhs paid was commission for business procured by the respondent-company, not a loan. The respondent-company contended that the petitioner had assured commission and brokerage for sales promotion, which was fulfilled by procuring business worth Rs. 40 lakhs. The respondent-company also claimed that the petitioner was supposed to execute necessary documents for securing finance, which was not done, leading to the dishonoring of cheques issued by the respondent-company. The petitioner countered these claims, asserting that no commission or brokerage was agreed upon and that the respondent-company's defense was fabricated.
  
  3. Allegations of perjury against the Director of the respondent-company:
  The petitioner accused the respondent-company's Director of filing false affidavits and misleading the Court. The Court initially issued a perjury notice, directing the Director to show cause. Despite the Director's repeated apologies and explanations, the Court found no conclusive evidence of intentional false statements. The Court emphasized that determining perjury requires a detailed trial and evidence, which was not feasible in the current proceedings. Consequently, the Court discharged the perjury notice, concluding that the discrepancies pointed out did not suffice to establish perjury.
  
  Conclusion:
  The Court dismissed the winding-up petition due to non-compliance with statutory requirements, specifically the failure to prove the publication of the advertisement. The Court also discharged the perjury notice against the respondent-company's Director, citing the need for a full-fledged trial to conclusively determine the allegations. The petition was disposed of without any order as to costs.

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• 2005 (4) TMI 298
  
  Issues Involved:
  1. Appointment of a provisional liquidator during the pendency of the winding-up petition.
  2. Winding up of the respondent-company under the provisions of the Companies Act, 1956.
  3. Award of costs.
  4. Other orders deemed fit and proper by the court.
  
  Detailed Analysis:
  
  1. Appointment of a Provisional Liquidator:
  The petitioner-company requested the appointment of a provisional liquidator during the pendency of the winding-up petition. The court, however, did not find sufficient grounds to appoint a provisional liquidator. The respondent-company's argument that it was a solvent and running company with a significant turnover and regular payments to its creditors, including farmers and employees, was persuasive. The court emphasized that the appointment of a provisional liquidator could have serious repercussions on the company's operations and its stakeholders, including employees and farmers dependent on the company.
  
  2. Winding Up of the Respondent-Company:
  The petitioner-company filed the winding-up petition under sections 433(e), (f), read with sections 434 and 439(1)(b) of the Companies Act, 1956, alleging that the respondent-company was unable to pay its debts. The petitioner argued that the respondent's failure to comply with a conditional stay order from the High Court of Madras indicated its commercial insolvency. The respondent countered by asserting its solvency and ongoing operations, emphasizing that the disputed debt was still under adjudication in appeals pending before the High Court of Madras.
  
  The court considered several precedents, including the principles that a winding-up petition is not a substitute for execution proceedings and should not be used merely to recover a debt. The court noted that the appeals regarding the disputed debt were still pending, and thus, the debt had not reached finality. The court also highlighted the potential adverse impact on the respondent-company's operations and stakeholders if a winding-up order were issued.
  
  3. Award of Costs:
  The petitioner sought costs associated with the winding-up petition. However, given the court's decision to dismiss the petition, the request for costs was also dismissed. The court did not find it appropriate to award costs in favor of the petitioner, considering the circumstances and the ongoing disputes between the parties.
  
  4. Other Orders Deemed Fit and Proper:
  The petitioner requested any other orders the court deemed fit and proper in the interests of justice. The court, however, declined to exercise its jurisdiction in favor of the petitioner for the admission of the company petition. The court emphasized that the admission of a winding-up petition could have serious consequences, including the potential freezing of the company's accounts and disruption of its operations, which would adversely affect employees and farmers dependent on the company.
  
  Conclusion:
  The court dismissed the company petition, emphasizing that the disputes between the petitioner and respondent were still under adjudication, and there was no concluded debt. The court highlighted the serious consequences of admitting a winding-up petition and the potential impact on the respondent-company's operations and stakeholders. The court's decision was based on the principles that winding-up proceedings should not be used as a substitute for execution and should only be admitted if there is a clear and undisputed debt.

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• 2005 (4) TMI 297
  
  Issues Involved:
  1. Winding Up Petition: Whether the respondent-company is unable to pay its debts, justifying an order of winding up.
  2. Existence of Debt: Whether there is a subsisting and determined liability by the respondent-company to the petitioner-firm.
  3. Limitation: Whether the claims made by the petitioner are barred by the statute of limitations.
  4. Reconciliation of Accounts: Whether the accounts between the parties were reconciled as stipulated in their agreements.
  5. Interest Claims: Whether the petitioner is entitled to claim interest on the outstanding amounts.
  
  Issue-wise Detailed Analysis:
  
  1. Winding Up Petition:
  The petitioner sought an order of winding up of the respondent-company under sections 433(e), 434(1)(a), and 439(1)(b) of the Companies Act, 1956, claiming that the respondent-company was unable to pay its debts. The petitioner argued that the respondent had defaulted on payments for cotton bales supplied, and despite multiple agreements and demands, the dues remained unpaid.
  
  2. Existence of Debt:
  The petitioner claimed an outstanding balance of Rs. 5,89,157 from transactions during 1997-98, which was acknowledged in an agreement dated 16-12-1997 (Exhibit A12). Subsequent agreements (Exhibits A54 and A59) also referenced outstanding amounts, but reconciliation of accounts was stipulated and not completed. The respondent disputed the liability, arguing that the claims were settled or barred by limitation and that no determined liability existed due to the lack of reconciliation.
  
  3. Limitation:
  The respondent contended that the claims were barred by limitation, as the transactions dated back to 1997-98. The petitioner argued that the running account between the parties extended up to 31-5-2002, thus keeping the claims within the limitation period. However, the court noted that no material evidence was presented to show a continuous running account up to the claimed date, and even if the last entry was on 23-3-2002, the petition was barred by limitation as three years had elapsed.
  
  4. Reconciliation of Accounts:
  The agreements between the parties, particularly Exhibits A54 and A59, required reconciliation of accounts to determine the exact liability. The petitioner admitted that no such reconciliation was conducted. The court emphasized that without reconciliation, the debts could not be considered ascertained or determined, making it challenging to establish a clear liability.
  
  5. Interest Claims:
  The petitioner claimed interest at 24% per annum on the outstanding amounts. However, the court noted that the invoices did not contain an interest clause, and the agreements did not provide for interest payments. The court referenced the decision in Multimetals Ltd. v. Suryatronics (P.) Ltd., stating that interest claims in winding-up proceedings are not akin to those in civil suits for recovery of money.
  
  Conclusion:
  The court dismissed the petition, concluding that there was no ascertained or determined debt due to the lack of reconciliation of accounts and that the claims were barred by limitation. The court reiterated that winding-up petitions should not be used as a means to enforce disputed debts and that the petitioner failed to establish a clear, undisputed liability.

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• 2005 (4) TMI 296
  
  Issues Involved:
  1. Whether the respondent company is liable to pay the outstanding lease rentals and other charges to the petitioner.
  2. Whether the petition for winding up of the respondent company is maintainable given the pending arbitration proceedings.
  3. Whether the claim made by the petitioner is barred by limitation.
  4. Whether the affidavit filed by the respondent's Managing Director in a different proceeding can be considered as an acknowledgment of debt.
  
  Detailed Analysis:
  
  1. Liability of the Respondent Company:
  The petitioner, a finance company, entered into a lease agreement with the respondent company for certain equipment. The respondent was required to pay quarterly lease rentals but failed to make payments from 1-4-1999 onwards. Despite repeated requests and a statutory notice, the respondent did not pay the outstanding amount. The petitioner claimed a total of Rs. 61,19,497, including lease rentals, delayed payment charges, and other penalties. The respondent denied liability, arguing that the lease period expired on 30-8-2000 and was not renewed. They also contended that no amounts were due after the lease expired and disputed the relevance of an affidavit filed in another proceeding.
  
  2. Maintainability of Winding Up Petition:
  The respondent argued that the petitioner had initiated arbitration proceedings in Mumbai, which were still pending, and thus, the winding-up petition was a pressure tactic. The petitioner contended that the arbitration was independent of the present proceedings and relied on various legal precedents to argue that a winding-up petition is maintainable if there is an undisputed debt. However, the court noted that if the debt is disputed and requires adjudication, a winding-up petition under section 433 of the Companies Act would not lie. The court found that the matter was referred to arbitration, indicating no admitted liability by the respondent.
  
  3. Limitation of the Claim:
  The respondent claimed that the petition was barred by limitation, as the alleged liability related to a period before 2000, and the petition was filed in 2004. The court referred to the decision in Benares Cotton & Silk Mills Ltd. v. Sulbha Devi Gupta, which held that the period of limitation continues to run even after the filing of the winding-up petition and stops only when an order is passed. Applying this principle, the court found the claim to be prima facie barred by limitation. Even if the affidavit filed by the respondent's Managing Director in 2001 was considered an acknowledgment of debt, the petition was filed beyond the three-year limitation period.
  
  4. Affidavit as Acknowledgment of Debt:
  The petitioner relied on an affidavit filed by the respondent's Managing Director in a different proceeding to argue that it constituted an acknowledgment of debt. The court noted that the affidavit was not filed in a proceeding between the petitioner and the respondent and could not be taken as an acknowledgment of debt. The court also referred to the Supreme Court decision in Lakshmiratan Cotton Mills Co. Ltd. v. Aluminium Corpn. of India Ltd., which dealt with the acknowledgment of debt by an authorized person. However, even if the affidavit was considered, the claim was still barred by limitation as the petition was filed after the three-year period from the date of the affidavit.
  
  Conclusion:
  The court dismissed the company petition, finding that the claim was barred by limitation and that there was no admitted debt. The pending arbitration proceedings indicated a dispute requiring adjudication, making the winding-up petition under section 433 of the Companies Act inappropriate. The affidavit filed in another proceeding could not be considered an acknowledgment of debt to extend the limitation period.

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• 2005 (4) TMI 295
  
  Issues Involved:
  1. Maintainability of the petitions under section 433(e) read with section 434 of the Companies Act, 1956.
  2. Compliance with procedural requirements of the Companies (Court) Rules, 1959.
  3. Validity of the arbitration award and its acceptance by the parties.
  4. Financial status and solvency of the respondent company.
  5. Allegations of suppression of material facts by the petitioners.
  6. Petitioners' entitlement to the claimed deposits and interest.
  7. Equitable jurisdiction of the Court in winding up petitions.
  
  Issue-wise Detailed Analysis:
  
  1. Maintainability of the petitions under section 433(e) read with section 434 of the Companies Act, 1956:
  The petitions were filed by the petitioning creditors for winding up the respondent company. The Court initially admitted the petitions and ordered advertisement, but the respondent company challenged this, leading to multiple applications and hearings. The respondent company argued that the petitions were not maintainable in law or on facts, contending that the petitions were frivolous and involved highly disputed questions of facts requiring a full-fledged trial.
  
  2. Compliance with procedural requirements of the Companies (Court) Rules, 1959:
  The respondent company argued that the petitions were not in proper form and did not comply with the requirements of the Companies (Court) Rules, 1959. They claimed the affidavits were not valid, warranting dismissal of the petitions on this ground alone.
  
  3. Validity of the arbitration award and its acceptance by the parties:
  The respondent company highlighted that the original partnership firm was converted into a private limited company and that disputes regarding liabilities, including deposits, were referred to arbitration. The arbitrator's award settled the liabilities, and the company claimed to have paid the majority of the amount, leaving a small balance. The petitioners, however, contended they were not parties to the arbitration and had not received any amounts under the award.
  
  4. Financial status and solvency of the respondent company:
  The respondent company presented evidence of its financial health, including turnover, profits, and employee status, arguing it was a profit-making entity with no statutory defaults. They contended that the company was solvent and capable of paying its debts, contradicting the petitioners' claims of insolvency.
  
  5. Allegations of suppression of material facts by the petitioners:
  The Court found that the petitioners had not disclosed the arbitration proceedings and the award in their petitions, which was a material fact. This non-disclosure suggested that the petitioners had not approached the Court with clean hands, impacting the equitable jurisdiction of the Court.
  
  6. Petitioners' entitlement to the claimed deposits and interest:
  The petitioners claimed that they had deposited amounts with the original partnership firm, which the respondent company was liable to repay with interest. The respondent company argued that these claims were settled through the arbitration award and that the petitioners' claims were baseless and misconceived.
  
  7. Equitable jurisdiction of the Court in winding up petitions:
  The Court emphasized that winding up petitions are not a legitimate means of enforcing debt payments if the debt is bona fide disputed. The Court noted that the respondent company had raised a genuine and bona fide dispute, and the petitioners had suppressed material facts. The Court also considered the company's financial health and ongoing profitability, concluding that it was not justifiable to wind up the company.
  
  Conclusion:
  The Court dismissed the winding up petitions, finding no substance or merits in the claims. The petitions were dismissed without any order as to costs, considering the respondent company's genuine dispute and financial solvency. The Court did not delve into the technical aspects of the petitions' form, focusing instead on the substantive issues and equitable considerations.

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• 2005 (4) TMI 294
  

  Levying the penalty debarring the appellant from accessing the capital market for a period of two years - determination of differential price - Held that:- In view of the concession made by the learned Solicitor General of India set aside the impugned judgment and remit the case back to the Division Bench of the Gujarat High Court for a fresh decision in accordance with law.

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• 2005 (4) TMI 293
  
  Issues:
  Interpretation of trust deed clauses for employee benefits and entitlement to corpus distribution upon company dissolution. Determination of the effective date for a scheme of amalgamation under the Companies Act, 1956.
  
  Analysis:
  The judgment addresses the interpretation of a trust deed governing employee benefits and the entitlement to corpus distribution upon the dissolution of a company. The trust, established for the employees of a specific company, outlined criteria for beneficiaries based on gross emoluments and employment status. The key clauses of the trust deed were scrutinized, particularly focusing on definitions of "Settlor," "Employee," and "Beneficiaries." The trust also specified conditions for adding employees to the beneficiary list and the cessation of benefits upon leaving the company's service.
  
  Regarding the scheme of amalgamation between the Settlor Company and another entity, the judgment deliberated on the effective date of the scheme's operation. The court examined the implications of the appointed date in the scheme, emphasizing that the scheme's effectiveness should be determined based on the appointed date rather than the date of court sanction. Reference was made to a previous apex court judgment highlighting the significance of the specified date in an amalgamation scheme for determining the date of transfer or amalgamation.
  
  The legal arguments presented by the counsels representing different factions focused on whether employees who had ceased employment before the dissolution of the company were entitled to benefits under the trust deed. The plaintiffs contended that only employees in service at the time of dissolution were eligible for corpus distribution, citing specific clauses of the trust deed. Conversely, other counsels argued that successorship following amalgamation entitled former employees to benefits, even if they had resigned before the dissolution. The judgment emphasized the clear operation of clause 8(b) in ceasing benefits for employees no longer in service, regardless of successorship claims.
  
  Ultimately, the court ruled in favor of interpreting the trust deed clauses strictly, determining that only employees in service at the company's dissolution were entitled to benefits. Additionally, the judgment affirmed that the scheme of amalgamation should be effective from the appointed date specified in the scheme, leading to the dissolution of the Settlor Company and the entitlement of certain employees to benefits based on their employment status on the appointed date. Both originating summonses and suits were disposed of accordingly, with a consistent approach to the interpretation of trust provisions and scheme effectiveness.
  
  In a separate judgment concerning employees in the officer category, the court found similarities to the previous case but noted differences in the number of beneficiaries and salary criteria. The judgment in this matter aligned with the interpretation of trust provisions and scheme effectiveness, leading to the disposal of the originating summons and suit without costs.

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• 2005 (4) TMI 292
  

  Whether the Delhi Stock Exchange is State under Article 12 of the Constitution of India and is amenable to writ jurisdiction ?

  Whether the issue relating to the termination of service of the General Manager is purely in the realm of contract and, therefore, not amenable to writ jurisdiction ?

  Whether the termination of contract of employment of the General Manager of Delhi Stock Exchange by the Board of Directors after taking into account the material on record which leads to loss of confidence is not valid in law ?

  Whether in case where the Stock Exchange has lost confidence in its General Manager who was holding the post of trust should be reinstated on the Stock Exchange or is it not appropriate to grant him compensation in lieu of reinstatement?

  Whether the Writ Court committed an error of jurisdiction in not considering one of the fundamental contentions as was pressed that being a case of loss of confidence and the employee having the post of trust ?

  Held that:- Appeal allowed with modifications. Taking into consideration all circumstances although the termination of the appellant’s service was illegal and unjustified, the totality of the circumstances of the case rendered it improper and unjust to direct the relief of reinstatement with full back wages. The High Court, even while moulding the relief on agreement of the parties, directed a sum of Rs. 12 lakhs to be paid to the appellant as compensation from which the amounts already paid from time to time under orders of the High Court were to be adjusted which needs to be upheld with a slight modification on the issue of compensation as the compensation payable in lieu of reinstatement and back wages shall be increased to Rupees Fifteen lakhs.

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• 2005 (4) TMI 291
  
  Issues Involved:
  1. Liability for payment of goods supplied.
  2. Agency relationship and its implications under Section 230 of the Contract Act, 1872.
  3. Admission of liability and its binding nature.
  4. Inspection of documents and procedural fairness.
  5. Bona fide defense and grounds for winding up.
  
  Detailed Analysis:
  
  1. Liability for Payment of Goods Supplied:
  The petitioner supplied various lubricants and oil to the respondent's vessels between June 1999 and February 2000, issuing invoices for the goods. The petitioner claimed an outstanding amount of US $62,046.96, with a part payment cheque of US $22,000 issued by Glenrich Ltd. being dishonored. Despite multiple assurances from Admiral Shipping Ltd. (a group company) to clear the dues, the payment was not made, leading to the issuance of a statutory notice under sections 433 and 434 of the Companies Act, 1956, for winding up the respondent-company.
  
  2. Agency Relationship and Section 230 of the Contract Act, 1872:
  The respondent-company contended that it was merely acting as a technical agent for Glenrich Ltd., UK, and thus not liable for the payment. The respondent argued that under Section 230 of the Contract Act, an agent cannot be personally bound by contracts made on behalf of a disclosed principal. The court examined whether the petitioner was aware of the agency relationship and whether the respondent had disclosed the principal's name. The court found no evidence that the respondent disclosed Glenrich Ltd. as the principal at any point during the transactions.
  
  3. Admission of Liability:
  The court noted several letters from Admiral Shipping Ltd. admitting liability and promising payment. The respondent-company argued that these admissions were not binding on them as they were made by a different entity. However, the court held that irrespective of these admissions, the respondent-company was liable due to the direct contractual relationship established by the purchase orders and invoices.
  
  4. Inspection of Documents:
  The respondent-company raised grievances about not receiving inspection of documents. The court directed the petitioner to provide all relevant documents, which were subsequently furnished. Despite this, the respondent continued to raise inspection issues, which the court found to be a tactic to avoid liability. The court emphasized that the documents provided were sufficient for the respondent to verify the claims.
  
  5. Bona Fide Defense and Grounds for Winding Up:
  The court found that the defenses raised by the respondent were not bona fide but rather desperate attempts to avoid liability. The respondent's denial of operating as part of a group of companies was contradicted by evidence, including a greeting card listing the respondent as part of the Sunrich group. The court concluded that no serious bona fide defenses were raised and directed the respondent to deposit specified amounts in court within six weeks. Failure to do so would result in the petitions being admitted and advertised.
  
  Conclusion:
  The court directed the respondent-company to deposit the equivalent of US $75,000 and US $50,000 in Indian rupees for the respective company petitions within six weeks. If the amounts were not deposited, the petitions would be admitted and advertised. The court found the respondent's defenses to be insincere and aimed at evading payment obligations.

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