TMI Blog1998 (6) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... which different documents including demand promissory note, stamped receipt and security by way of deposit share of the company were executed by and on behalf of the respondent-company. The terms and conditions as stated in the letter dated August 12, 1996, were accepted between the parties and thereupon the petitioner-company released a sum of Rs. 1 crore, vide cheque No. 441977, which was duly encashed. The sum of Rs. 1 crore was released to the respondent-company by the aforestated cheque by Bharti Tele Ventures Limited, a subsidiary company of the petitioner-company. The respondent-company is stated to have further approached the petitioner-company with a request that the said company having decided to issue 20 per cent. redeemable non-convertible preferential shares carrying a dividend of 20 per cent. per annum and maturity date being March 31, 1997, had requested for conversion of inter-corporate deposit of Rs. 1 crore advanced on August 14, 1996, as subscription amount towards the issue of 10 lakhs, 20 per cent. redeemable non-convertible preferential sharer Based on this request the petitioner-company further issued a cheque of Rs. 1 crore bearing No. 441979, dated August 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-1997 (Sd.) Swatanter Kumar Judge. Present : Mr. P.S. Patwalia, advocate. Mr. Arvind Kashyap, advocate. In view of the order passed in C.A. No. 427 of 1997, this petition is dismissed as withdrawn. 24-10-1997 (Sd.) Swatanter Kumar Judge." Consequently, the present winding up petition was filed. Notice of this petition was issued to the respondents, vide order dated November 21, 1997. The respondents were served and they put in appearance on January 29, 1998. The respondents were granted time to file reply within one week which was not filed. The matter was adjourned to February 13, 1998 Vide order dated February 20, 1998, it was mentioned that there is a likelihood of the parties settling the matter amicably and as such the matter was adjourned to March 6, 1998. Thus, there was no question of filing any reply nor request for filing of a reply was ever made after January 29, 1998, as liability was clearly admitted thereafter. Learned counsel appearing for the respondent-company submitted that the matter practically has been settled and it is only the question of instalments and the period in which such instalments has to be made that remains to be settled. As suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tories and a lot of people are dependent for their livelihood on this company. But, equally true is that this cannot be raised as a universal defence to a petition for winding up. In the interest of justice this matter is directed to be listed on May 8, 1998, on which date the authorised signatory of the respondent-company shall be present in court with a bank draft for Rs. ten lakhs at least, may be more and they shall file an affidavit in court as to the mode of repayment of the liability without varying the terms of contract between the parties. Order Dasti." In order to establish its bona fides and to press upon the court to avoid the winding up order on these dates, the respondent-company took further time to produce in court a sum of Rs. 10 lakhs, as noticed in the order of April 24, 1998. This time as the adjournment prayed was granted, the matter was listed on May 28, 1998. On this date the respondent-company took a somersault. The bona fides of the respondent-company were found not only lacking in all respects but to the court it appears that all this time was being gained to achieve such ends which would frustrate the proceedings before this court. On May 28, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping in view the larger interest of the company, the court had been granting time to the respondent-company to pay amounts and to show its bona fides in that regard but the above attitude of the company clearly shows that the time sought for all this period was primarily to frustrate the proceedings before this court. On April 3, 1998, learned counsel appearing for the petitioner had expressed his serious doubts about the intention of the respondent-company to repay the amount and the bona fides of the proposals which were being put forward before the court. However, in the interest of justice still another opportunity was granted to discuss the matters, the result of which is apparent from the afore-narrated facts. In view of the recent pronouncement by the Hon'ble apex court in the case of Real Value Appliances Ltd. v. Canara Bank [1998] 93 Comp Cas 26 ; [1998] 3 JT SC 715, such controversies stand fully settled and do not leave much of scope for interpretation on diverse submissions. In this case, the Supreme Court held that the stage of enquiry as contemplated under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, begins or is reached wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings. The respondent-company, therefore, cannot derive any benefit by producing this document on record to suspend the proceedings before this court. In any case, the request of the respondent-company lacks bona fides and is a clear attempt to undermine the administration of justice under this special Act, i.e. , the Companies Act. The Sick Industrial Companies (Special Provisions) Act, 1985, was enacted keeping the larger public interest in mind and these special provisions were enacted with a view to secure the timely detection of sick and potentially sick companies owning industrial undertakings. The speedy determination by a board of experts and to remedy and revive financial stability in the company were the prime functions vested in the Board under the provisions of the Act. The purpose of this special legislation was, thus, to embark upon reconstruction of industries which were sick or likely to get sick. The legislation never intended that the provisions of this Act should be used to defraud the creditors and apply as an instrument to abuse the process of law established under any other general or special enactment. The application of mind by the Board, therefore, has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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