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TMI Blog2001 (3) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act, 1956 be not admitted for hearing on 9-3-2000. On 20-4-2000, Mr. R.P.S. Gulati, the Assistant General Manager entered appearance on behalf of the respondent-company and sought time to engage counsel to represent the respondent-company as well as to file written statement in response to the instant C.P. No. 47 of 2000. Eventually, Mr. Anand Chhiber, advocate was engaged by the respondent-company to defend it before this Court. Despite the fact that a large number of opportunities were afforded by this Court to the respondent-company, it failed to file any response. Eventually on 13-10-2000, six weeks further time was granted to the respondent-company to file written statement, subject to the payment of Rs. 5,000 as costs. However, on the adjourned date, i.e., on 10-11-2000, Mr. Anand Chhiber, advocate stated that he was not in an effective position to file written statement on behalf of the respondent-company, which fact was duly noticed by the Court in its order. It would be pertinent to mention that costs imposed by this Court vide order dated 13-10-2000 were not paid. 3. A large number of winding up petitions had been filed against Punjab Wireless Systems L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arg, who has filed the written statement (in response to the instant winding up petition), was authorised to do so by a communication dated 20-2-2001 by the said receivers. A copy of the aforesaid communication was produced by the learned counsel representing the receivers and has been marked as Annexure 'A' and has been taken on record of this case. 6. Insofar as the merits of the instant winding up petition are concerned, the petitioner, i.e., Titan Industries Ltd. has claimed that an order dated 22-9-1998 was placed by the respondent-company, on the petitioner, for supply of 15050 Titan watches, to be delivered at different centres of the respondent-company. Out of the total consideration; 25 per cent was payable by way of advance and 75 per cent was payable after proof of despatch. In terms of the agreed price and the settled terms, an advance of Rs. 24,29,331 was to be paid by the respondent-company for the aforesaid 15050 watches. As against the aforesaid advance, payable, the respondent-company paid a sum of Rs. 15,00,000 vide cheque dated 22-9-1998. The remaining amount of Rs. 9,22,331 towards advance was paid later by the respondent-company vide cheque dated 10-10-1998. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-company to the petitioner in furtherance of its liability of Rs. 49 lakhs on account of the watches supplied. The said cheques, were again dishonoured and returned with the remarks 'insufficient funds'. It is claimed that no payment was made, thereafter, despite earnest personal efforts by the representatives of the petitioner. 10. As a matter of last resort, a notice under section 434 of the Companies Act was addressed by the petitioner to the respondent-company. Despite its receipt no payment was made, eventually leading to the filing of the instant winding up petition. 11. In the written statement filed at the behest of the receivers (details already referred to above), the response in nutshell is to the following effect : (i)The purchase orders placed by Ms. Nidhi Verma, Marketing Head of the respondent-Company 'appears to be in collusion with officials of the petitioner-Company to cause wrongful loss to the petitioner Company'. In this behalf, it is stated that a first information report stands registered against the said Ms. Nidhi Verma; (ii)Even if the instant winding up petition succeeds, the petitioner being an unsecured creditor is unlikely to realise even a single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Punwire vide order dated 1-2-2001) has submitted that the order of appointment of the receiver dated 18-12-2000 flows out of the order of attachment dated 2-2-2000. It is submitted that the order of attachment dated 2-2-2000 being void, the order of appointment of the receiver dated 18-12-2000 by necessary implication must be deemed to be void. In this behalf, reliance has been placed on the provisions of section 537 and 441 of the Companies Act. The aforesaid two provisions have been extracted hereunder for the facility of reference :- "537. Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of Court.-(1) Where any company is being wound up by or subject to the supervision of the Court : (a )any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the company, after the commencement of the winding up; or (b)any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement; shall be void." "441. Commencement of winding up by Court.-(1) Where, before the presentation of a petition for the winding up of a company by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the execution of the order passed by this Court on 13-3-1995 is affected in view of the commencement of the winding up against the defendant No. 1 company, by virtue of section 537(1) read with section 441 of the Companies Act and the order dated 13-3-1995 cannot be executed without obtaining leave from Delhi High Court where winding up petition is pending. The plaintiffs cannot be granted any relief thus is this chamber summons and the chamber summons is liable to be dismissed." (p. 310) 16. Insofar as the instant case is concerned, it is submitted that C.P. No. 323 of 1999 titled as Century Steel Industries Ltd. v. Punwire Mobile Communications Ltd., which was a winding up petition filed against the respondent-company was placed for hearing before this Court on 24-12-1999. The order of attachment passed by the registrar, co-operative societies, Punjab is admittedly dated 2-2-2000. Consequent upon the passing of the order of attachment, the Deputy Registrar, Co-operative Societies, Ropar appointed the receiver vide order dated 18-12-2000. It would be pertinent to mention here that after ordering attachment, the Registrar Co-operative Societies, Punjab by his award dated 9- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hment as well as the order of appointment of receivers have been passed under a special enactment namely Punjab Co-operative Societies Act, 1961 and the rules framed thereunder, the same have an overriding effect. It is contended that a special enactment cannot be given a go-bye vis-a-vis an enactment under the general law. It is submitted that the debt between the Punjab State Co-operative Bank and the respondent-company is liable to be regulated under the Punjab Co-operative Societies Act, 1961, specially in view of the terms and conditions agreed to between the Punjab State Co-operative Bank Ltd. and the respondent company. 19. To deal with the contention of the learned counsel representing the receivers, who has placed reliance on the provisions of the Punjab Co-operative Societies Act, 1961 and used the said legislative enactment as an impermeable shield to counter the proceedings initiated by the petitioner in C.P. No. 47 of 2000 under section 439 of the Companies Act, it would be appropriate first to examine the ambit and scope of the aforesaid legislative enactment. In this behalf, it would be pertinent to mention that the following statement of objects and reasons was exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of a co-operative society arises- (a )among members, past member and persons claiming through members, past members and deceased member; or (b)between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or (c )between the society or its committee and any past committee, any officer, agent or employee; or any past officer, past agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the society; or (d)between the society and any other co-operative society, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society; such dispute shall be referred to the Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute. (2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a co-operative society, namely :- (a )a claim by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry 32 is extracted hereunder : "32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities, unincorporated trading, literary, scientific, religious and other societies and associations; co-operative societies." 22. Sections 433, 434 and 439 relate to the winding up of a company by a court and are contained in Part-VII of the Companies Act. Part-VII aforesaid includes the power to appoint a provisional liquidator under section 450. The provisions contained in Part-VII of the Companies Act, are referable to entry 43 in List-I (Union List) contained in the Seventh Schedule of the Constitution. Entry 43 is extracted hereunder :- "43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies." 23. It has been held in Delhi Cloth & General Mills Co. Ltd. v. Union of India [1983] 4 SCC 166 as under : ". . . Entry 43 in the Union List is : 'Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies'. Entry 44 refers to ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers including inter alia recovery of money due to a Co-operative Society from its members and this right being a special enactment and later enactment will oust the jurisdiction of a Company Court. On the basis of principle of law laid down in the recent Judgment of the Hon'ble Supreme Court of India in case titled Allahabad Bank v. Canara Bank." 25. There can be no doubt about the fact that Part-VII of the Companies Act is clearly relatable to entry 43 of List-I (Union List) of the Seventh Schedule of the Constitution of India. The aforesaid Parliamentary enactment which provides for winding up of a company including the appointment of a official liquidator is obviously within the ambit and scope of the powers vested in the Parliament. Even if it is accepted that the State legislation, i.e., the Punjab Co-operative Societies Act, had also been validly enacted under Entry 32 of List-II (State List) in the Seventh Schedule of the Constitution of India and that sections 55 and 56 of the Co-operative Societies Act are valid in law, the same are liable to yield to the Parliamentary enactment; in the instant case to the Companies Act in the case of any repugnancy/conflict. Under arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993. 28. The aforesaid judgment has no relevance insofar as the present controversy is concerned. The Apex Court in the aforesaid judgment had occasion to examine the repugnancy between two Parliamentary enactments. The controversy in this case, however, relates to an alleged conflict between an enactment promulgated by the Parliament on the one hand, and an enactment promulgated by the State Legislature on the other. The decision relied upon by the learned counsel is, therefore, irrelevant insofar as the present controversy is concerned, specially in view of the express mandate of article 246 of the Constitution. 29. The second submission of the learned counsel appearing for the liquidator of Punwire is that at the time of institution of the proceedings by the Punjab State Co-operative Bank, Chandigarh, there was no Board of Directors in the respondent company to look after its affairs. In this behalf, it is stated that Dr. S.S. Ahuja, had resigned from the Board of Directors in August, 1999. Shri Gurpal Singh, who was the Chief Managing Director and Shri Ved Parkash, who was another Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wire. In the detailed written statement filed by the Punjab State Co-operative Bank Ltd., it has not been expressly or impliedly denied, that the recovery ordered by the award of the Registrar, Co-operative Societies, Punjab dated 9-8-2000 includes within its ambit Punwire as well. 31. The learned counsel for the petitioner in C.P. No. 4 of 2001 on the basis of the factual position narrated above states that the award of the Registrar, Co-operative Societies, Punjab dated 9-8-2000 must be deemed to be an award obtained without contest, i.e., an award obtained at the back of the contesting parties. It is submitted that the aforesaid award cannot be made a basis of deprivation either against the respondent company or Punwire in the peculiar facts and circumstances of this case. 32. The learned counsel for the receivers has, however, stated that this Court has no jurisdiction to determine the validity of the award passed by the Registrar, Co-operative Societies, Punjab on 9-8-2000 on the basis of the fact that the award of the registrar, co-operative societies, Punjab was without due opportunity to the respondent-company. In fact, pointed attention of this court has been drawn by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were advanced during the course of arguments. The said submissions are being rejected on account of the fact that the attachment order passed by the Registrar, Co-operative Societies, Punjab and the order passed by the Deputy Registrar, Co-operative Societies, Ropar appointing receivers have been held to be void in view of section 537; and also because the argument advanced by the learned counsel for the receivers based on the provisions of the Punjab Co-operative Societies Act, 1961 has not found favour. 35. Last of all, it is contended by the learned counsel for the petitioner in C.P. No. 4 of 2001 that 10 separate winding up petitions have been filed by creditors against debts allegedly due to them from the respondent company. All the said petitions have been filed by unsecured creditors. Besides, the aforesaid unsecured creditors, it is stated that large debts are due even to secured creditors. The debts due to the secured creditors stand secured against immovable property and machinery of the respondent-company. Despite the fact that the debts due to the Punjab State Co-operative Bank Ltd. were secured, the same was, however, only as against 'stock in trade in hand and to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eadings unless an averment made in a petition is not expressly denied, the same is liable to be presumed to be correct. The aforesaid general principle which has also been incorporated in Order VIII rule 5 of the Code of Civil Procedure, requires this Court to presume by inference that in the absence of an express or implied denial of the claims made by the petitioner, the facts narrated in the petition must be taken to be admitted as the same have not been disputed. In view of the aforesaid presumption, it is inevitable to conclude that the respondent-company is not in an effective position to discharge its debts and in the peculiar circumstances of this case, specially in view of the fact that nothing whatsoever has been paid by the respondent-company to the petitioner despite the fact that the statutory notice was issued as far back as on 12-1-2000 calling upon the respondent-company to discharge its debt. Accordingly, it would be just and proper to admit the instant petition. The instant petition is, accordingly, admitted. The factum of admission of this petition is directed to be published in the Indian Express, Chandigarh, and in the Dainik Tribune, Chandigarh as also in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of orders passed by the Registrar, Co-operative Societies, Punjab and the Deputy Registrar, Co-operative Societies, Ropar are holding the reins of the respondent-company, though, unauthorizedly as concluded above. It must be noticed that there was no-one to challenge either the award passed by the arbitrator or the order of attachment of the properties of the respondent-company, or even to assail the order of appointment of the receivers. Had it not been for the provisional liquidator appointed for Punwire. C.W.P. No. 139 of 2001 and C.P. No. 4 of 2001 would not even have been filed. (vi)It is disclosed in the written statement filed by the receivers that 12 teams of professionals had been appointed to assess the actual position/standing of the respondent-company. It has also been pleaded in C.P. No. 4 of 2001 that a firm of Chartered Accountants has been appointed for the same purpose by the provisional liquidator/liquidator of Punwire. It is, therefore, evident that for the same purpose, expenses are being incurred twice over. Naturally, these expenses are liable to be debited to the accounts of the respondent company. (vii)The limited object of the receivers is only to recove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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