TMI Blog2005 (4) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the Act and originally incorporated on 24-6-1981 as a public limited Company with registered office at Gondiparla, Kurnool-518004. The respondent Company is limited by shares and the authorized share capital of the Company is Rs. 55,00,00,000 divided into 5,50,00,000 equity shares with nominal value of Rs. 10 each. The issued and paid up share capital is Rs. 39,33,40,600 divided into 3,93,34,060 equity shares of Rs. 10 each. The objects of the respondent Company were to manufacture various types of chemicals, alkalis, and allied products. The petitioner company was carrying on the business of providing finance. It is stated that in the process, the petitioner Company had entered into a lease agreement with the Respondent Company on 29-9-1995 in respect of three recuperators viz., E1301B recuperator, G50 recuperator and M108 FM recuperator. Before executing the agreement, the respondent company and the petitioner company executed a letter dated 27-9-1995 in which all the terms and conditions were broadly set out under which the equipment belongs to the petitioner company were agreed to be given on payment of lease rentals in terms of the agreement. In terms of the lease ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03 the respondent was directed not only to handover the leased equipments, but also to pay a sum of Rs. 56,98,612 comprising of outstanding lease rentals plus, delayed payment charges, plus penal charges and bank charges, in addition to the lease rentals for the period between October 2000 to September 2003. In spite of receiving the said notice, the respondent did not respond positively by paying the amount. Therefore, the petitioner issued a statutory notice dated 19-1-2004 giving three weeks time for effecting the payment of the arrears, which, according to the petitioner, had come to Rs. 61,19,497 with further interest from 1-1-2004 as there was no response even to the statutory legal notice, which shows the inability of the respondent-company to pay off the debts. However, the respondent sent a reply dated 27-2-2004 denying the claim of the petitioner company stating that the claim made by the petitioner company is the subject-matter of the dispute before the Arbitrator, Sri Kartik Desai and the entire matter is before the said Arbitrator and therefore, the notice issued by the petitioner is not valid. Hence the petition. 5. Upon issuing notice before admission of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner that it is entitled to recover or repossess the machinery and equipment as well as lease rentals is totally denied. The respondent also denied its liability to make good the loss in the tax benefits that may raise on the completion of assessment by the Income-tax authorities due to disallowing of the depreciation benefits claimed by the petitioner. With reference to the claim of the petitioner for the period between October 2000 to September 2003, the liability for this period is totally denied and no such amounts are payable, and the claims are fanciful and time barred. The claim of the petitioner that the Respondent Company became insolvent and was not in a position to discharge the debts of other creditors is also denied. It is stated that as on the date of issuance of statutory notice, the petitioner got an arbitral reference for adjudication of the alleged dispute and when the said matter is pending for adjudication before the Arbitrator, the petitioner has come up with the present petition deliberately to pressurize the respondent company for effecting the payments, though the respondent company is not liable to make any payments. Finally, it is stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up petition, provided the claim is undisputed or there is no dispute as to the debt or there is no substance either in law or in fact, in the defence sought to be raised in the winding up petition. Reliance is also placed on the decision of Punjab and Haryana High Court in Trilok Chand Jain v. Swastika Strips (P.) Ltd. [1991] 70 Comp. Cas. 197, wherein almost a similar view as in S.M Enterprises (P.) Ltd. s case ( supra ) had been expressed by a learned Singh Judge of the Punjab and Haryana High Court. The Bombay High Court in Dhootpapeshwar Sales Corpn. (P.) Ltd., In re [1972] 42 Comp. Cas. 139 , expressed the view that in spite of a statutory notice given under section 434(1)( a ) of the Companies Act, 1956 by the petitioner to the company for payment of his declared debt, the Company failed and neglected to pay the debt due to the petitioner. The Company did not have sufficient assets to meet its liabilities and it was unable to pay and discharge its liabilities, that arose in the ordinary course of business. The Company, was, therefore, commercially insolvent and it was a fit case where an order of winding up should be passed. 8. The learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the respondent, and the said dispute was referred for adjudication to the Arbitrator. In such circumstances, it is not open to the petitioner to claim that there is an admitted debt, which is due and payable by the respondent to the petitioner, the non-payment of which would give cause of action for the petitioner to move the Company Court under section 433 seeking an order of winding up. The learned Counsel also contend that the liability as alleged by the petitioner is disputed by the respondent and therefore, it is a matter for adjudication. Therefore, the present proceedings are misconceived and are liable to be dismissed. The learned Counsel also relied upon the decision of the Allahabad High Court in Benares Cotton Silk Mills Ltd. v. Sulbha Devi Gupta [1986] 60 Comp. Cas. 639 , wherein it was held that the period of limitation continues to run even after the date when the petition for winding up is filed and stops to run only on the date of the order for winding up is passed. Relying upon the said decision, it is contended by the learned Counsel that the present claim of the petitioner is barred by limitation even assuming that there is a debt due and payable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease agreement was terminated by notice dated 23-9-2003, and therefore, claimed the lease rentals upto that date. It is further claimed that a statutory notice under the provisions of the Act was issued on 19-1-2004 giving three weeks time for the respondent for effecting the payment of the amount claimed. As the said amount was not paid, the petitioner has come up with the present company petition. In the petition it is also stated that a reference was made to arbitration with reference to the claim of the petitioner and the decision in the arbitration proceedings is still awaiting. 12. Though the respondent disputed the liability, as a matter of fact, he claimed that the petitioner s claim is barred by limitation. In the reply notice issued to the statutory notice issued by the petitioner, the respondent has clearly stated that "Our client deny that there is any admission of liability on part of our clients under the Lease Deed. As regards the affidavit, dated 15-6-2001 of the Chairman and Managing Director of our clients is concerned, the statement made therein were made in a particular reference to the context and does not amount to admission of any liability on part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n another proceedings before the Madras High Court, but the said petition was not a proceeding between the petitioner and the respondent herein. Therefore, the petitioner cannot take advantage of the said affidavit. Further, the reference to arbitration by the petitioner itself shows that there is no admitted liability on the part of the respondent. 14. Another contention advanced on behalf of the Respondent Company is that the claim of the petitioner is barred by limitation, as the alleged liability relates to the period prior to the year 2000, and the present company petition is filed in 2004 i.e., on 10-8-2004. The learned Counsel also relied upon a decision of the Allahabad High Court in Benares Cotton Silk Mills Ltd. s case ( supra ), wherein it was held that the period of limitation continues to run even after the date of filing of the petition for winding up and the period of limitation stops running only when an order of winding up of the respondent company is passed. If the said principle is applied, prima facie, the claim of the petitioner is barred by limitation. But, however, as the matter has already been referred to the Arbitrator for adjudication, the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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