TMI Blog1999 (4) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ental to the business interests of the company and its shareholders. Lastly, it is contended that there was a bona fide dispute. It is further averred that the company is liable to pay the amounts decided by the competent court or by mutual negotiations. 2. The case of the petitioners is that the company had approached the petitioners for deposit and at the request of the company the petitioner lent and advanced working capital between 5-12-1995 and 23-10-1996, as inter-corporate deposit totalling Rs. 2,30,00,000. To secure due repayment the company issued 8 post-dated cheques. In the meantime the company approached the petitioners for renewing the deposits as the company was not in a position to repay the amounts on maturity. At the request of the company the petitioners agreed to further renew the deposit totalling Rs. 2,30,00,000 on the company executing fresh sets of security documents. Towards the various amounts which were renewed the petitioners were secured by the following documents: ( i )demand promissory note; ( ii )post-dated cheques for the same; ( iii )Inter-corporate deposit receipt; ( iv )letters of assurance. The various dates are not being referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that the petition is not bona fide and the petitioners have approached the court with unclean hands by suppressing material facts from the court. It is then also contended that when the statutory notice was issued, no amounts were due and payable and as such no cause of action has accrued in favour of the petitioners. It is also pointed out without prejudice that all the amounts advanced have been secured. It is also pointed out that the company is a running concern. It has been elected as one of the 500 most valuable companies in India by the magazine Business Today and reported to be amongst the fastest growing companies. In that light of the matter if the petition for winding up is ordered, it will be against the interest of the creditors and shareholders as also against the public and national interest. The company, it is pointed out, has 350 employees and 1680 shareholders. The products manufactured by the company are used by leading automobile manufacturers in the country. The amounts at any rate have been secured by valid leave and licence agreement. Various other contentions have been set out. Reliance has been placed on the leave and licence agreements and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive liabilities of the company are more than its assets or net worth, it must be rejected. Apart from the averments in para 19, there is no other material placed in support thereof. In fact in para 5 of the petition, the petitioners themselves have pointed out that the issued and subscribed share capital of the company is Rs. 15 crores. In that light of the matter, I do not propose to consider the petition for winding up. I propose only to consider whether the petitioners have made out a case under section 434(1)( a ), read with section 433( e ). The petitioners have produced documentary evidence to show that the petitioners had advanced to the company various amounts which were secured by various securities. Even if the promissory note and the receipts are excluded on the ground that they are improperly stamped as has been contended, there are still other documents in the form of cheques issued and acknowledgements evidencing payment by the petitioners to the company. It is in this context that the contentions raised need to be examined whether they are bona fide or credible to relegate the petitioners to file a suit. 7. The first contention is that these are all group t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities relied upon as I propose to accept the said contention that the promissory notes which were not properly stamped or the receipts which were not stamped could not have been tendered in evidence. The petition, however, is not based on the promissory notes or the receipts alone. They were merely collateral securities and as such even if such documents are excluded, the petitioners have independently been able to show that the amounts were advanced and secured by the company. Hence, the said contention is rejected. The fifth contention is that the amounts were secured by way of leave and licence agreement. A reading of the agreement itself shows that the agreements were entered into as a collateral security. That security was for the due repayment of the loan by the company to the petitioners. Even otherwise in para 12 of the petition the petitioners have pointed out that the agreements were never acted upon. It is no doubt true that the company contended that the power of attorney had been given in favour of the petitioners by the persons with whom the leave and licence agreement had been entered into. Even assuming that such a power of attorney had been granted, no permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with or in addition to any other business. Company has been defined under clause ( 4 ) of section 2 and means a company as defined in the Companies Act. Clause ( 6 ) of section 2 defines interest to include any sum, by whatsoever name called, in excess of the principal paid or payable to a money-lender in consideration of or otherwise in respect of a loan, but does not include any sum lawfully charged by a money-lender on account of costs, charges or expenses in accordance with the provisions of the Act, or any other law for the time being in force. Loan is defined in section 2( 9 ). It will be essential to reproduce the relevant provisions of the same: "(9) loan means an advance at interest whether of money or in kind but does not include ( a )a deposit of money or other property in a Government post office, bank or in any other bank or in a company or with a co-operative society; ( b )to ( e )****** ( ee )loan to, or by, or deposit with, anybody (being a body not falling under any of the other provisions of this clause), incorporated by any law for the time being in force in the State; ( f )an advance, of any sum exceeding rupees three thousand made on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) must be read to include only such corporations or companies which are incorporated by an Act of Parliament unlike companies which are incorporated under the Indian Companies Act. To my mind there is merit in that submission. Looking at the definition clauses wherein reference is made to a company as defined under the Companies Act, the exclusion of deposit in a company, a loan by an insurance corporation or by a bank it is clear that what the Legislature had in mind while introducing section 2( 9 )( ee ) were those corporations or companies incorporated by an Act. 11. However, after I resumed hearing on 16-4-1999, the learned counsel for the petitioners pointed out that any rate the loan as advanced if it be a loan, is executed from the definition of loan by virtue of section 2( 9 )( a ) being a deposit in a company or an advance on the basis of a negotiable instrument and/or at any rate an advance made bona fide by any person carrying on any business not having as his primary object the lending of money, if such advance is made in the regular course of his business. My attention was invited to the definition of advance as contained in the law lexicon, Vol. 1, 1989 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a of authorities on the statutes regulating and controlling money-lenders in which the expression money-lender has been so construed as to exclude isolated transaction or transactions of money-lending." Vivian Bose, J. while dealing with the Act which concerns us, in Sitaram Shrawan v. Bajya Parnya AIR 1941 Nag. 177 said: "The word regular shows that the plaintiff must have been in the habit of advancing loans to persons as a matter of regular business. If only an isolated act of money-lending is shown to the court it is impossible to state that constitutes a regular course of business. It is an act of business, but not necessarily an act done in the regular course of business." (p. 2013) 14. On behalf of the company my attention was invited to the judgment of this Court in Suleman Haji Ahmed Umer v. Haji Abdulla Haji Rahimtulla 42 BLR 971. The Indian Limitation Act, 1908, provided for separate periods of limitation for money lent and money deposited. It is in that context this Court considered the expression loan or deposit . That, however, may not be very relevant for the purpose of the present case where the loan has been defined as an advance at interest, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was considering the question on the complaint filed by a money-lender doing money-lending business without licence. The learned Single Judge held that the cheque must relate to a debt or liability enforceable in law. I find no difficulty in so also construing section 434(1)( c ) to hold that a petition for winding up under section 433( e ), read with section 434(1)( a ), would lie only if the debt was legally recoverable. The fact that the present is a company petition and under the Bombay Money-Lenders , Act no relief will be granted if the suit is filed would also make the debt unenforceble under the Act. It is no doubt true that a company petition is not a petition for recovery of dues from a company. Nevertheless, to wind up a company under section 434(1)( a ) the amount must be a debt which is legally recoverable. If the recovery itself is barred under section 10 of the Bombay Money-Lenders , Act, I am of the opinion, therefore, that in such a case the petition filed on the ground that the company is unable to pay such a debt, would also not be maintainable. A consistent view has been taken that in respect of time-barred debts, no petition would be maintainable. This is becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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