TMI Blog1992 (3) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... bleaching, dyeing, printing and processing materials and of buying, selling, importing and exporting yarn, cotton and other cotton staple fibre, yarn waste, silk, artificial silk, rayon, nylon, wool, jute and other fibre substance materials. Between the months of February, 1987, and June, 1987, the company drew 47 D.A. bills of exchange amounting to Rs. 1,29,76,000 which were duly accepted by one Fashion Prints Ltd. The said Fashion Prints Ltd. honoured only 14 DA. bills of exchange out of the said 47 DA. bills of exchange and paid only the sum of Rs. 33,00,000 to the petitioners leaving the remainingJ53 DA bills of exchange amounting to Rs. 96,38,013 unpaid by them. The company as drawer of the said 33 D.A. bills of exchange was bound and liable to pay to the petitioners the amounts of the said 33 D.A. bills of exchange together with interest thereon. Further, between the months of October, 1987 and December, 1987, the company drew 20 D.A. bills of exchange on the said Khatau Mills amounting to Rs. 76,06,623 which were duly accepted. The said Khatau Mills did not honour the said D.A. bills of exchange on their maturity and the company as drawer thereof was bound and liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,30,43,588 and interest in instalments as mentioned therein which the company failed and neglected to pay. Neither the said Khatau Mills nor even Sumit Chandrakant Khatau made any payment on behalf of the company to the petitioners under the said consent terms. The petition accordingly stood admitted and the same has been duly advertised. On behalf of the company, an affidavit of the said Sunit Khatau has been filed in reply to the petition. Though the company has admitted that the said amount is due and payable by the company to the petitioners, the company has resisted a winding up order being passed against it. According to the company, it is a wholly owned subsidiary company of the said Khatau Mills which is under the protective umbrella of the Board for Industrial and Financial Reconstruction {hereafter referred as "BIFR") and as such, by reason of order passed under section 22(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter referred to as "the said SICA Act"), no proceedings for recovery of any amount including winding up proceedings can lie or proceeded with either against the said Khatau Mills or the company. It is also the case of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be primarily liable to pay to or that the company would be secondarily liable to pay to the petitioners. The petitioners have also denied that, by reason of the said Khatau Mills being under the protective umbrella of the BIFR as contended by the company, no proceedings for recovery of any amount including winding up proceedings can lie or be proceeded with against the company. According to the petitioners, there is no bona fide dispute to the debt due and payable by the company and the company being unable to pay its debt, it is just and equitable that the company should be wound up. Mr. Cooper, learned counsel appearing for the company, has submitted that the fact that the company is unable to pay its debt does not necessarily entitle the court to order winding up of the company as the discretion to pass such an order, even in the case of the inability of a company to pay its debts is, by section 433 of the said Act, vests in the court. Mr. Cooper has further submitted that, in the facts and circumstances of the case, even though the company has not paid the amount payable to the petitioners, neither can it be deemed that the company is unable to pay its debt not is it e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same, it was in the contemplation of the parties thereto that the said Khatau Mills would make payment of the amount due thereunder in the first instance and that the company would only be secondarily liable for payment of the same. Although the company is a subsidiary company of the said Khatau Mills in respect whereof a reference has been made to the BIFR and an enquiry is pending, and, as a result whereof, all proceedings for winding up or execution in respect of any properties of the said Khatau Mills and for appointment of a receiver for the property or undertaking of the said Khatau Mills have been suspended under the provisions of section 22 of the said Sick Industrial Companies (Special Provisions) Act, 1985, yet the various provisions of the said Act dealing with holding companies and their subsidiaries maintain the distinction between-the two as separate legal entities. The company is a separate legal entity separate from the said Khatau Mills and the existing protective umbrella of the BIFR over the said Khatau Mills is not extended to and does not cover the company. The company not being under the protective umbrella of the BIFR, proceedings for winding up of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company beyond the time prescribed after the statutory notice, before filing his petition. But the court may, if there are sufficient counter-balancing equitable grounds, deny an immediate winding-up order, or, in appropriate cases, even refuse it altogether in spite of the proved inability of a company to pay its debts. Exercise of such discretionary power must necessarily be governed by justice and equity. " However, the discretion has to be exercised judicially. The Orissa High Court, in the case of Misrilal Dharamchand P. Ltd. v. B. Patnaik Mines P. Ltd. [1978] 48 Comp. Cas. 494 has, on the facts of the case before it, thought it appropriate to direct the winding up of the company but to stay its enforcement for a period of six months from the date of the order to enable the company to pay up the dues of the petitioning company therein. However, in the instant case, although, according to Mr. Cooper, the company is solvent, since August 7, 1989, i.e., the day when the said consent terms were filed in this court and the company in terms admitted its liability to pay to the petitioner the sum of Rs. 2,30,43,588 together with interest in instalments as provided for ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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