TMI Blog2011 (3) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... 23-3-2011 - MANMOHAN, J. Krishna Kumar and Kaustubh Shukla for the Petitioner. Rajiv Nayar and P.C. Sen for the Respondent. JUDGMENT 1. The present winding up petition has been filed under sections 433( e ) and 434 of the Companies Act, 1956 ( the Act ). 2. The relevant facts of the present case are that both the petitioner and respondent are engaged in the business of manufacturing of aluminium products. During the course of their business dealings, the petitioner had purchased from respondent, aluminium products like ingots, wire rods and sheets/coils. For this purpose, petitioner and respondent had executed a number of Memorandums of Understanding. The first Memorandum of Understanding executed between the parties dated 1st April, 2003 is reproduced hereinbelow:- "Ref MKT/MOU/Dated 1st April, 2003 Memorandum of understanding MOU between M/s. Anish Metals (P.) Ltd., Group Companies and Bharat Aluminum Company Limited (BALCO) for sale of CG/EC Grade Aluminum Properzi Rods. M/s. Anish Metals Pvt. Ltd. Group Companies agrees to purchase and Balco agrees to supply approx. 600 MT of CG/EC Road during the period 1-4-2003 to 30-6-2003 on com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your sister concern. In such circumstances, we are adjusting the aforesaid sum of Rs. 3,38,16,720 from out of the sum of Rs. 3,52,26,499 lying in the credit of Pankaj Aluminium Industries Ltd. as on 30-1-2006. For the balance sum of Rs. 14,09,779 lying to your credit, supply of shall be made to you. This is for your information. Thanking you For Bharat Aluminium Company Limited Sd/- Associate Manager (Finance)" [Emphasis supplied] 7. It is the petitioner s case that after they objected to the aforesaid adjustment, the respondent not only accepted the petitioner s stand but also dispatched to petitioner 26.379 metric tons of aluminium wire rods, ingots and another aluminium products. But later on respondent contrary to its earlier stand, recalled the goods dispatched from Raipur. 8. Being aggrieved by the aforesaid decision, the petitioner on 22-3-2006 filed a suit bearing Suit No. 1071/2006 in the Bombay High Court. 9. On 7-7-2006, petitioner also issued a winding up notice to the respondent. As there was no response to the said winding up notice, the petitioner on 9-4-2008 filed the present winding up petition. 10. Mr. Krishna Kumar, learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. v. Union of India [1995] 1 SCC 478 ([1998] 15 SCL 148 .), Life Insurance Corpn. of India s case ( supra ) and Singer India Ltd. v. Chander Mohan Chadha [2004] 7 SCC 1. According to him, upon lifting the corporate veil, petitioner could not say that it was not liable for its sister concerns or that respondent could not have adjusted set off debts of Anish Metals against petitioner s credit. Mr. Nayar emphasised that group accounts were kept and dealings between respondent and petitioner as well as other companies were as group companies. 16. Mr. Nayar also denied that the group transaction came to an end after Settlement dated 31-3-2005. According to him, the Settlement was related to interest on account of late issuance of credit notes by respondent, excess interest charged etc. Mr. Nayar stated that the said Settlement nowhere mentioned that group transaction had come to an end or that the Settlement was to settle all liabilities in this regard. According to him, the Settlement itself proposes a fresh reconciliation statement to be made and, therefore, it was open ended. 17. Mr. Nayar emphatically denied that the respondent s conduct was improper. In any ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rishnaswami [1965] 35 Comp. Cas. 456 (SC) and Madhusudan Gordhandas v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 (SC) have been paraphrased]; ( vi )If the stance of the adversaries hangs in balance it is always open to the Company Court to order the Respondent Company to deposit the disputed amount. This amount may be retained by the Court and be held to the credit of the suit, if any. [ see Ambala Bus Syndicate Pvt. Ltd. v. Bala Finance Pvt. Ltd. 1983 (2) SCC 322 and Civil Appeal No. 720 of 1999 arising out of SLP(C) No. 14096 of 1998 - M/s. Nishal Enterprises v. Apte Amalgamations Ltd., decided on February 5, 1999]; ( vii )Generally speaking, an admission of debt should be available and/or the defence that has been adopted should appear to the Court not to be dishonest and/or a moonshine, for proceedings to continue. If there is insufficient material in favour of the petitioners, such disputes can be properly adjudicated in a regular civil suit. It is extremely helpful to draw upon the analogy of a summary suit under Order XXXVII of the Code of Civil Procedure. If the Company Court reaches the conclusion that, had it been exercising ordinary orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Private Ltd. Sd Director/Auth. Signatory Applicants Signature Name: (B)Bharat Aluminium Company Limited P.O Balconagar, korba-495684 Chhattisgarh Application form for Authorised Dealership for Rolled Products 1. Name of the firm Pankaj Aluminium Industries. Ltd. ** ** ** Applied for any other name 1. Anish Metals Pvt. Ltd. sister firms, etc., if yes 2. Pankaj Metals Pvt. Ltd. specify 3. Pankaj Extrusion Ltd. 4. Hiren Aluminium Ltd. ** ** ** For Pankaj Aluminium Ind. Ltd. Sd/- Director Applicants Signature Name: (C)Bharat Aluminium Company Limited P.O Balconagar, korba-495684 Chhattisgarh Application form for Authorised Dealership for Rolled Products 1. Name of the firm Pankaj Extrusion Limited. ** ** ** Applied for any other name 1. Anish Metals Pvt. Ltd. sister fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85028 BC-227 28035 Shortage of 304 Kgs (3-3-1999) 113063 Total 113063 Statement of Claims Receivable from Balco as on 30-9-2002 Name of the Party Party Amount Code Anish Metals Pvt. Ltd. Mumbai BC-204/AA-452 1705213 Anish Metals Pvt. Ltd. Ahmedabad BC-205/AA-453 873030 Anish Metals Pvt. Ltd. Abu Road BC-236/AA-547 237865 Anish Metals Pvt. Ltd. Silvassa BC-236/AA-605 445531 Pankaj Aluminium Inds Ltd. AP-307/338 1782791 Pankaj Metals Pvt. Ltd. AP-308 2658085 Pankaj Extrusion Ltd. 341302 Hiren Aluminium Ltd. AH-156 881835 Total 8925650 8925650 Excess Interest Charged by Balco Name of the Party Party Amount Code Avnish Metals Pvt. Ltd. BC-204/205/ 879440 226/236 Pankaj Metals Pvt. Ltd. AP- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed but also well recognized by Courts. In DHN Food Distributors Ltd. v. London Borough of Tower Hamlets [1976] 3 ALL ER 462, the Court held as under:- "....We all know that in many respects a group of companies are treated together for the purpose of general accounts, balance sheet and profit and loss account. They are treated as one concern. Professor Gower in his book on company law says : there is evidence of a general tendency to ignore the separate legal entities of various companies within a group, and to look instead at the economic entity of the whole group . This is especially the case when a parent company owns all the shares of the subsidiaries, so much so that it can control every movement of the subsidiaries. These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says. A striking instance is the decision of the House of Lords in Harold Holdworth Co. (Wakefield) Ltd. v. Caddies . So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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