TMI Blog2000 (12) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents relied upon, in this behalf in view of the fact that at the very outset, Mr. R.C. Setia, the learned counsel for the respondent-company, acknowledged that now the liability of the respondent-company was approximately Rs. 8 crores as suggested by the learned counsel for the petitioners. 2. To recover the aforesaid amount, the petitioners had issued a statutory notice dated 12-2-1997, in response to which the respondent-company paid a sum of Rs. 30 lakhs on 18-2-1997, which was admittedly adjusted towards interest payable by the respondent-company to the petitioners. Since the petitioners felt that the respondent-company was not in an effective position to discharge its liabilities, they filed the instant petition, whereupon this Court issued notice to the respondent-company on 10-7-1997. It is, therefore, clear that this matter has been pending in this Court now for over three years. 3. During the course of the pendency of the instant petition, a statement was made to this Court on 4-9-1997, on behalf of the respondent-company to the effect that efforts were being made to settle the matter with the petitioners and that the company had paid a sum of Rs. 15 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid by the respondent-company to the petitioners, before and during the pendency of the instant petition out of the acknowledged debt of about Rs. 8 crores. 6. Negotiations to settle claims between the petitioners and the respondent-company were held on various occasions. This Court vide its order dated 15-3-1999, directed the respondent-company to get in touch with the four main financial institutions and to file an affidavit before this Court within two weeks to indicate whether or not there was any possibility of giving a final schedule for payment. An affidavit placed on the record of the case clearly depicts that no final agreement could be arrived at. According to the learned counsel for the petitioners, this was again an effort on the part of the respondent-company to delay the finalisation of the proceedings in this case, in view of the ultimate reality that the respondent-company could not discharge its debts. 7. Another order dated 6-4-1999, passed by this Court was referred to by the learned counsel for the petitioners, wherein this Court noticed (the contention of the petitioners) that there was no bona fides or genuineness in the intention of the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities. It was claimed by the respondent-company that the assets of the units at Sikandrabad and Baddi were substantially more than the liabilities of the respondent-company towards the petitioners. However, before an order was passed on the aforesaid application filed on behalf of the respondent-company, this Court considered it appropriate to associate other creditors in order to obtain their consent in this behalf. Before any such deliberation could take place, an affidavit was filed on behalf of Standard Chartered Bank, dated 12-1-2000. Along with the aforesaid affidavit, the applicants appended Annexure C, an order passed by the Debt Recovery Tribunal, New Delhi, in O.A. No. 166 of 1999 (preferred by the Standard Chartered Bank against the respondent-company), where the respondent-company was directed to pay a sum of Rs. 2,05,63,111.48 along with pendente lite and future interest a t the rate of 20.92 per cent from the date of filing of the original application. Besides determining the liability of the respondent-company, it was observed that in the event of failure of the respondent- company to discharge its debt, the same would be recovered by sale of the three properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners in approaching this Court is misconceived as the petitioners in the aforesaid view of the matter have no locus standi to approach this Court. 12. Secondly, it is submitted that the respondent-company in spite of having suffered losses for some time yet it is confident of revival. It is stated in this behalf that there are 1,456 regular employees in the various units referred to above. All these employees have been paid their salaries regularly and without any interruption. It is further stated that the respondent-company has been discharging the liabilities of approximately Rs. 10 crores towards excise tax annually without any default. All other taxes besides excise tax have also been regularly paid by the respondent-company. To show the involvement of the public interest in the matter, it is emphasized that there are 85,000 to 90,000 shareholders and at least 120 dealers are associated with the respondent-company. Even during the course of the proceedings before this Court rather than approaching BIFR, the respondent-company had decided to stand on its own feet. The only aim and object of the respondent-company is to earn profits and discharge its liabilities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted hereunder for facility of reference: "8.1 Event of default. If one or more of the events specified in this clause (hereinafter called events of default ) shall have occurred then the debenture trustee by a notice in writing to the company may declare all the debentures outstanding and all accrued interest thereon to be due and payable forthwith upon the happening of such event, and upon such declaration the same shall thereupon become due and payable forthwith as provided in such notice and the security created in terms of article III hereof shall forthwith become enforceable (anything in this deed to the contrary notwithstanding). 8.1-b Default in payment of interest. Default shall have occurred in the payment of any instalment of interest on a debenture and such default shall have continued for a period of thirty days; or. 8.2 Consequences of default. On the happening of any of the events of default, in addition to the rights specified in clause 8.1 hereof, mutual fund and the debenture trustees shall have the following further rights; mutual fund and the debenture trustees shall be entitled to appoint and remove from time to time whole-time and other direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have continued for a period of thirty days after notice in writing thereof shall have been given to the company by any of the debenture holders/trustees and such default shall have continued for a period of thirty days after notice in writing thereof shall have been given to the company by any of the debenture holders." Cumulatively on the basis of the terms of the agreement extracted above, the learned counsel for the petitioners stated that action to be initiated by the debenture trustees envisaged under the agreement dated 20-12-1995, is limited to the action to be taken against the directors of the board of directors. It is specifically pointed out that there are no remedial measures indicated in the agreement for the recovery of the dues payable to the debenture holders by the respondent-company. In the aforesaid view of the matter it is submitted that the scope of the action contemplated by the agreement (in the event of default) is only limited and cannot be extended to govern the issue of recovery of dues payable by the respondent-company to the debenture holders. 17. It is pointed out that the petitioners addressed a communication dated 10-12-1996, copy of which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioners, it is evident that the debt payable by the respondent-company to the petitioners is not disputed. It is also evident that ever since the filing of the instant petition in 1997 not a single penny has been released by the respondent-company to the petitioners. Despite best efforts of this Court nothing whatsoever till date has been paid to the petitioners. In fact, during the course of deliberation before this Court in August, 1999, the respondent-company accepted to sell two of its four units and from the proceeds thereof agreed to pay off the petitioners. It was pointed out by the learned counsel for the petitioners that the offer of the respondent-company to sell two of its units was not bona fide. It was an effort on its part to deceive not only the petitioners but also this Court in view of the fact that one of the two units offered for sale at Sikandrabad could not be sold on account of an order passed by the Debts Recovery Tribunal, New Delhi. 21. The learned counsel for the respondent-company states that the aforesaid factual position, though correct in its broader perspective, does not rightly depict the factual position. In this behalf, it is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controverted. The assertion made in the affidavit dated 6-4-1999, indicating that the respondent-company is moving towards revival needs to be noticed. On the basis of the said affidavit it has expressly been suggested that the company is covering its losses and moving towards profitability. No reply has been filed by the petitioners to the said affidavit dated 6-4-1999. Even the number of shareholders and dealers involved in the activities of the company as projected by the learned counsel for the respondent, details of which have been referred to above, have not been disputed by the learned counsel for the petitioners. 23. On the basis of the aforesaid factual and undisputed position, the learned counsel for the respondent vehemently argued that the order of winding up of the respondent-company would not only affect thousands of workers and the shareholders but would also be a public loss in view of the annual contribution towards tax by the respondent-company. It is, therefore, submitted that the winding up of the respondent-company at the present juncture would not be in the interest of any one including the petitioners. In this behalf, reliance has been placed by the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties, in my considered view, although there is an admitted debt which is to be paid by the respondent-company to the petitioners and although not a penny has been paid despite the service of the statutory notice on 12-2-1997 and the filing of the instant petition on 7-7-1997, yet the claim of the respondent-company is weightier. At the present juncture, it has about 3,000 employees who are being paid their salaries regularly. The company has also been honouring its tax liability by paying approximately Rs. 10 crores annually and there are no arrears on account of tax payable by the respondent-company. Further, there are a large number of shareholders, i.e., between 85,000 and 90,000 and at least 120 dealers associated with the respondent-company. All the employees and also their families must be deemed to be surviving on the respondent-company. The shareholders and the dealers of the company have an indirect financial nexus with the company. The shareholders and dealers would be the losers if the claim of the petitioners is accepted. The winding up of the company will undoubtedly be a loss for all of them. The most important aspect of the matter, however, is that the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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