TMI Blog2009 (9) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act", for brevity) M/s. Kitti Steels Ltd., the petitioner herein, seeks an order to wind up the respondent-company. This court ordered notice on 27-8-2008. After receiving notice, the respondent entered appearance. Counter affidavit is filed opposing publication of petition under rule 99 of the Companies (Court) Rules, 1959 ("the Rules", for brevity). 2. The petitioner is engaged in the business of constructions, fabrications, engineering consultants and manufacturing of heavy machinery. The respondent is a company incorporated under the Act on 14-6-1995, with the main objectives of manufacturing and marketing clinker and cement products, marketed in India and outside. The authorised share capital of respondent is Rs. 550,00,00,000 (rupees five hundred and fifty crores only). It is the case of the petitioner that the respondent placed a purchase order dated 19-4-1995, with the petitioner for supply of four ship loaders for bagged and bulk material of value of Rs. 11,00,00,000 (rupees eleven crores only). The respondent had drawn a hundi dated 25-12-1996, for an amount of Rs. 1,78,08,795 (rupees one crore seventy eight lakhs eight thousand seven hundred and ninety five only), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 2.17 crores, the company cannot be wound up. 4. The respondent also raised other objections, which are as follows. The company petition is not filed in accordance with rule 25 of the Rules and the petitioner failed to plead that the respondent is unable to pay its debts and therefore, the company petition would not lie. By filing this case, the petitioner is seeking to execute a decree and when the respondent-company has capital adequacy and huge turnover, the company petition would not lie under section 443(2) of the Act. Rule 95 of the Rules is not complied with. In the absence of any specific pleading that the respondent is unable to pay its debts or neglected to pay its debts, a petition for winding up is liable to be dismissed. 5. In addition to the above pleas, the respondent also alleged the following. The respondent-company, which is the world s largest cement company, has capacity of 3 MTPA with technology of Fuller International Incorporated, U.S.A. It has sold 17,15,509 tonnes of cement as well as 41,483 clinker for domestic market and 83.827 tonnes of cement and 2,45,630 tonnes of clinker in the export market earning foreign exchange of Rs. 199.66 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceability of the debt. When the debt is disputed, the question of enforceability does not arise. 6. Learned counsel for the petitioner and learned counsel for the respondent made their submissions to which, reference shall be made at the appropriate place. In view of the pleadings and submissions, three main issues arise, namely, ( i ) whether the appeal filed by the respondent before this court, which is pending adjudication, bars the winding up petition under section 433( e ) of the Act ( ii ) whether the company petition has to be rejected for non-compliance with rule 95 of the Rules and section 434(1)( c ) of the Act and ( iii ) whether the petitioner has, prima facie, made out the case for winding up and whether the defence pleaded by the respondent that the debt is bona fide disputed, has any substance. 7. Insofar as the first issue is concerned, the law appears to be fairly settled. Section 443(2) of the Act empowers the Court to refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioner and that the petitioner is acting unreasonably in seeking to have the company wound up instead of pursuing other remedy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solvent concern the advertisement would have such effect or irreparable damage, must exercise scrupulous care and caution to come with absolute altogether candour by disclosing to the court why they are pursuing the alternative remedies they have or which they may have availed of before filing such a petition." 9. In Maharashtra Apex Corpn. Ltd. v. Spartex Ceramics India Ltd. [2005] 57 SCL 467, this court considered the case, wherein, the petitioner obtained an award from the arbitrator against which, the respondent had filed an application before the District Court, Chittoor. The company petition for winding up was opposed on this ground contending that unless and until the award passed by the arbitrator is enforceable, the company petition for winding up would not lie. This court upheld the contention of the respondent therein, observing as follows : "It is settled that if a decree or order passed by the court or judicial forum is enforceable, and after receiving statutory notice an incorporated company fails to pay the amount, presumption can be drawn relying on section 434 of the Act, that the company is unable to pay debts. In such an event, it would always be a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative remedy, and has approached this court under sections 433( e ) and 434 of the Companies Act, without availing the said effective alternative remedy, and in the absence of any proof placed by the petitioner about the non-satisfaction of the award passed by the arbitrator, which subsequently became a decree of the court, by executing it before a competent court having jurisdiction, no order or winding up can be passed presuming that the company has become commercially insolvent. Be that as it may, since the petitioner has an alternative remedy of executing the award is a competent Civil Court having jurisdiction of the company court, for executing the award passed by the arbitrator, which subsequently became a decree." 11. The petitioner, who obtained a decree instead of filing an execution petition, filed the present company petition. Further, the decree in O.S. No. 1177 of 1997 is under appeal. Both counsel brought to the notice of this court that the judgment and decree under appeal have been suspended. As a necessary corollary, it becomes clear as on today, the decree is unenforceable and hence, it cannot be said that there is enforceable debt against the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up voluntary or subject to the supervision of the court, set out the facts showing that the voluntary winding up or winding up subject to the supervision of the court cannot be continued with due regard to the interests of the creditors]. 9. The petitioner therefore prays as follows : (1) That the . . . . . . . Co. (Ltd.), may be wound up by the court under the provisions of the Companies Act, 1956, and (2) Such other order may be made in the premises as shall be just. Advocate for the petitioner.Petitioner 14. As can be seen from the above, when a petition is presented by a creditor under section 433( e ) and/or section 433( e ) read with section 433( f ) of the Act, the petition must contain essential pleadings that the respondent-company failed and neglected to pay the petitioner s debt even after receipt of notice of demand in writing and that such company is insolvent and unable to pay its debts. This appears to be essential in view of section 434(1)( c ) of the Act, which stipulates that the company shall be deemed to be unable to pay its debts if it is proved to be so. When there is a proper pleading as required in Form No. 46, the question of proof under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the dispute or defence is raised as an afterthought before the court, the company can be ordered to be wound up. Further, in its discretion, the court may refuse the order of winding up, if it is of opinion that such winding up would not be in the interests of members, employees, workmen and creditors of company. A perusal of section 443 of the Act would show that absolute discretion is vested in the court to make an order for winding up. The court can refuse to make an order of winding up, if it is of opinion that the person is acting unreasonably in seeking to have the company wound up instead of pursuing with other remedy. See Madhusudan Gordhandas Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 (SC), Mediqup Systems (P.) Ltd. v. Proxima Medical System GmbH [2005] 124 Comp. Cas. 473 1 (SC) and Tata Iron Steel Co. v. Micro Forge (India) Ltd. [2001] 104 Comp. Cas. 533 2 (Guj.). 17. The petitioner herein, filed a suit and obtained decree. The same is under appeal before this court. Therefore, it cannot be in absolute terms said that there is an enforceable debt against the respondent. The very fact that the respondent appealed to this co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
