TMI Blog2008 (7) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory notice having been served upon the respondent company. 2. The notice was issued by this Court on 17-4-2007. The notice was sent through Registered Post A.D. and the same was returned with an endorsement refused . This Court has, therefore, passed further order on 8-5-2007 giving direct service to the petitioner. Over and above the direct service, the petitioner was permitted to affix notice at the conspicuous place of registered office of the Company. Thereafter, Mr. Navin K. Pahwa, learned advocate filed his appearance on behalf of the respondent Company. 3. It is the case of the petitioner that the petitioner Company was supplying aluminum products to the respondent Company. The said raw material was used by the respondent company for the purpose of its manufacture of aluminum extrusions circles etc. for sale. The petitioner was supplying material from time to time till 3-10-2003. After October, 2003, the respondent company stopped making purchases from the petitioner Company. As on 31-3-2004, there was outstanding amount of Rs . 89,70,839 including principal amount of Rs. 50,82,974. After giving credit of the payment made by the said Company on 7-10-2004, the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was correctly tallied, the respondent company has not included interest amount in its said accounts. The confirmation was duly signed of the amount due from the respondent company and was returned to it. The petitioner company has also sent notice dated 13-12-2006. There was no reply to the said notice. The petitioner Company thereafter issued winding up notice on 18-1-2007, to which reply was sent by the respondent company on 8-2-2007 making false claims in the said reply. Instead of accepting its liabilities the respondent company raised a demand of Rs. 78,66,463 in the said reply. 6. It is in the above background of the matter, the present petition is filed by the petitioner for winding up of the respondent company. 7. Mr. A.C. Gandhi, learned advocate appearing for the petitioner has submitted that the respondent company has failed to discharge and/or neglect to pay its dues to the petitioner. The stand taken by the respondent company in its reply dated 8-2-2007 is baseless, false and frivolous. The counter claim made by the respondent company is also false. This was an after thought only for evading the liabilities. No such supply was ever made by the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were controlled through cross-holding by all the five brothers. The operation and management control of the respective units/companies were divided amongst brothers/sons according to their respective experience and skills. A family settlement took place with effect from 1-4-2003 between the five brothers who mutually agreed to divide the group companies/units and the respective assets. All inter group companies transactions were stopped and all the accounts were frozen. The brothers agreed to have separate business without having any inter connection whatsoever. Since certain issues as to accounts were not settled mutually, the family appointed arbitrators to resolve the disputes. The arbitrators gave an award on 2-7-2005. However, while implementing the award, the brothers felt certain difficulties in settling the issues with respect to assets and companies. Certain issues as to the accounts also remained unsettled. Amongst other issues, the issue as to settlement of inter group companies accounts and valuation/transfer of shares are pending adjudication before the arbitrators. The brothers, therefore, have once again referred the disputes to arbitrators in July, 2006. 11. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akchand N. Shah and family are not relevant for consideration of the present petition. He has, therefore, submitted that since there are admitted dues and no bona fide defence is raised by the respondent company the petition is required to be admitted and order of admission and advertisement deserve to be passed accordingly. 13. An affidavit in sur-rejoinder is filed on behalf of the respondent-company wherein the reference to the proceedings of company petition filed by Shri Harakchand N. Shah and others before the Company Law Board, Mumbai under the provisions of section 111A(2), (3) and (4) of the Companies Act, 1956 against the petitioner company and its directors seeking various relief was made. A counter affidavit was filed by the petitioner and its directors to the Company petition pending before the Company Law Board. In the said counter affidavit it was admitted that there has been division of the Companies and firms by all the brothers under mutual discussion and under a family settlement which was effective from 31-3-2003. All the five brothers including the Director of present respondent company and Shri Dineshbhai Shah together with the respective family members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 14. Based on these facts, it is submitted by Mr. Pahwa that though there has been no claim whatsoever made by the petitioner in respect of the amounts which are claimed for the first time in the present winding up petition at any time for a period of 4 years, a general reference was made to the arbitrators which included issues concerning statement of accounts for the period prior to 1-4-2003 which were based on the queries raised by three accountants. That the award has already been given by the arbitrators which however is subject to the outcome of the proceedings pending before the competent District Court wherein the award is challenged under section 34 of the Arbitration Conciliation Act, 1996. He has, therefore, submitted that though the claims made by the present petitioner are after thought and are barred by limitation, issues arising from accounts of the group companies in respect of the transactions up to 1-4-2003 are the subject-matter of the award given by the arbitrators and now subject matter of proceedings before the competent District Court. He has, therefore, submitted that the Court should not entertain the present winding up petition. 15. Apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. From the above affidavit-in-reply filed on behalf of the respondent-company it is revealed that the respondent-company is fully commercially solvent and is a going concern. The respondent-company has mentioned figures of value of fixed assets which is about Rs. 26 crores as per the balance sheet as on 31-3-2006. The paid up share capital of the company is Rs. 8 crores and the reserves are Rs. 11 crores. The total net worth of the company is thus Rs. 19 crores. The respondent-company enjoys working capital and term loan facilities of Rs. 11 crores which are secured by charge over the current assets and fixed assets of the respondent-company. The turnover of the company as on 31-3-2006 is about Rs. 98.65 crores. It is further revealed that the respondent-company employs about 217 persons as direct employees and about 102 employees are working through contractor pay roll. The respondent-company has paid excise duty of about Rs. 11.18 crores and about Rs. 12 lakhs towards other Government dues as on 31-3-2007. 19. As far as merits of the matter is concerned, the petitioner and the respondent-company both formed part of Pankaj Group representing five families which include th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled, reference was again made to the arbitrators in July, 2006. All the brothers have submitted undertaking before the arbitrators stating that they will abide by the decision of arbitrators. The undertaking also records that a team of three accountants drawn from Pankaj Group of Companies have been asked to prepare the statement of assets and liabilities of the group companies and the individual brothers of the Pankaj Group. While preparing these statements, three accountants have raised certain issues and needed clarification from the arbitrators to enable them to prepare proper statement of assets and liabilities of each group company and for each brother of Pankaj Group. 21. It is true that the arbitrators have given the final award on 25-1-2008. In the concluding part of this award, the Arbitrators issued certain directions for accounts and payments. All the three Accountants representing the five brothers were directed to prepare their final account as per the directions given in earlier award dated 2-7-2005 and in the subsequent award dated 25-1-2008 up to date and get it confirmed among themselves on or before 15-2-2008 and forward the same to the Arbitrator. On fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. s case ( supra ) a view was taken that whether arbitration proceedings are pending or ultimately culminated into award, winding up petition may not be, entertained by the Court under sections 433 and 434 of the Companies Act, 1956. 24. It is true that there is reference in the balance sheet of the amounts claimed by the petitioner. However, clause 19 provided that "any receivables from any group company cannot be written off for settlement purpose. The fact still remains that all the claims made by the petitioner are covered by arbitration and/or family settlement and, therefore, the winding up petition for such claims is not maintainable. 25. It is also revealed from the fact that the respondent company has counter claims against the petitioner company to the tune of Rs. 78,66,463. In addition, the respondent company is also required to recover fixed deposit receipts given by Shri Harakchand N. Shah to Bank of Baroda under lien account on behalf of the petitioner company which is equivalent to Rs. 1 crore. Considering all these aspects of the matter, it cannot be believed that the defence taken by the respondent company is not bona fide defence. 26. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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