TMI Blog2013 (6) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... ld shift on the company to rebut such claim by raising bona fide dispute. Once the bona fide dispute is raised it would weaken the chance to have admission of the winding up petition, otherwise admission is an obvious consequence. - The judgement and order of His Lordship to the extent it declined to admit the winding up petition, is set aside. Winding up petition is remanded back to His Lordship for necessary direction with regard to admission and advertisement. - A.P.O. Nos. 469 & 470 of 2012 - - - Dated:- 13-2-2013 - ASHIM KUMAR BANERJEE AND Shukla Kabir (Sinha), JJ. For the Appellant Anindya Kumar Mitra, Debangshu Basak, Deep Nath Roy Chowdhury and Sourav Mukherjee. For the Respondent S.N. Mookherjee, Ratnanko Banerjee and Subhankar Nag. JUDGMENT:- Ashim Kumar Banerjee, J. - Short question would involve in these appeals as to whether a secured creditor was within its right to maintain a petition for winding up without giving up its security and without pleading that the security they had, would be insufficient to satisfy their claim. 2. Eastern Spinning Mills and Industries Ltd., a company incorporated under the provisions of the Companies Act, 1956 availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are quoted below: "It is, thus, the inevitable conclusion from the discussion herein that a secured creditor of a company which has not established the inefficacy or the inadequacy of the security held by it may maintain a petition for winding up the company but such petition, if founded solely on the legal fiction under Section 434(1)(a) of the Act, will not qualify either to be admitted or for any order of winding up to be passed thereon. Since the petitioning creditor here has neither averred nor otherwise established that the security that it enjoys is inefficacious or inadequate to meet its claim against the company, the petition cannot be admitted. In any event, even if the petitioning creditor had crossed that hurdle and had established that a debt was due which was unmatched by any efficacious security, its conduct in advertising the statutory notice prior to instituting this petition is a good ground for exercising the limited discretion available to the company court to refuse to admit a creditor's petition even if the debt were unimpeachably established." 5. Being aggrieved, Kotak filed two appeals, one for dismissal of the winding up and the other for not entertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured assets would be insufficient to meet the claim. Once the creditor could prove his status as a creditor having a claim of more than Rs. 500/- the winding up petition would be maintainable. It could be resisted by the company by raising a bona fide dispute that the present company utterly failed. He cited the decision in the case of V.V. Krishna Iyer Song v. New Era Manufacturing Co. Ltd. [1965] 35 Comp. Cas. 410 (Ker.) to support his proposition, the balance-sheet would itself prove the commercial insolvency of the company that would maintain the winding up petition. He cited the Madras decision in the case of Sree Shanmugar Mills Ltd. By Managing Agents Sri Alagai Ltd v. S.K. Dharmaraja Nadar AIR 1970 Mad. 203 to support his contention that value of the fixed assets was not at all relevant to maintain a winding up petition. The petition could never be resisted by the company without a bona fide dispute being raised as observed by the Apex Court in the case of Madhusudan Gordhandas Co. v. Madhu Woollen Industries (P.) Ltd. [1971] 3 SCL 632. 8. According to the learned Advocate General, different High Courts including the Calcutta High Court, Madras High Court and Bombay Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant to publish the statutory notice of demand in the newspaper. He referred to Section 434 (1)(a) and Section 433 (e) and (f) to contend, the claim must be an admitted one that would require a winding up petition to be admitted. He also referred to the parallel proceedings and contended, the same was contrary to each other. It was nothing but an attempt to put pressure upon the company to accede to the unreasonable demand of the respondent. According to him, the claim was a disputed one. He was however unable to highlight the dispute on merits. He would contend, winding up petition was not maintainable by a secured creditor. In this regard he cited the Apex Court decision in the case of National Conduits (P) Ltd. v. S.S. Arora [1967] 37 Comp. Cas. 286 (SC). He lastly contended, once the appellant initiated proceeding under SARFAESI Act to realize its own dues the winding up petition being a representative action would no longer be maintainable at its instance. 12. Further taking it over from Mr. Banerjee, Mr. S.N. Mookherjee, learned senior counsel also appearing for the respondent placed reliance on the decision in the case of V.V. Krishna Iyer (supra) cited by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. He lastly cited the decision in the case of State Trading Corpn. of India Ltd. v.. Punjab Tanneries Ltd. [1989] 66 Comp. Cas. 634 (Punj. Har.) and in the case of Manipal Finance Corpn. Ltd. v. CRC Carrier Ltd. [2001] 107 Comp. Cas. 288 (Bom.) and in the case of: Cambrian Mining Co. In re 1881 WNP 125 to support his contentions. 17. Mr. Mookherjee summed up his argument by contending as follows : (i) In view of the provisions of Section 13(1) and 13(4) of the SARFAESI Act, the winding up petition would not be maintainable. (ii) The right of a secured creditor under the SARFAESI Act was inconsistent with others connected with the company. Hence, the winding up at the instance of a secured creditor would run contrary to the SARFAESI proceeding and as such would not be maintainable. (iii) The appellant based their petition for winding up on a notice of demand issued under Section 434(1) (a) and not beyond. Hence, the learned Judge was right in not admitting the same after observing, the appellant failed to prove insufficiency of security. (iv) Reliance on the balance-sheet as an annexure in absence of appropriate pleading would not help the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt published the statutory notice of demand and not the notice of petition for winding up. Hence, this decision was of no assistance to the appellant. 20. The Advocate General further contended, the appellant did urge the plea of commercial insolvency before His Lordship. He referred to the Apex court decision in the case of Ramdas Shrinivas Nayak (Supra) in this regard. He referred to the judgement and the order impugned to say, the plea of commercial insolvency was duly taken as would be appearing from the judgement and order impugned. In this regard he referred to page 403 and 430 of paper book. He also referred to page 427 wherein the learned judge considered decision in the case of Bukhtiarpur, Bihar Light Railway Company Ltd. v. UOI AIR 1954 Cal. 499. 21. Distinguishing the decision in the case of Bengal Flying Club (supra) the learned Advocate General contended, the facts would differ in the said case where substratum of the company was gone whereas such plea was never taken in this case. Distinguishing the decision in the case of Mica Export Promotion Council (Supra) he contended, the plea taken therein was never pleaded nor argued whereas in the present case such averm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be wound up. These two provisions could be invoked by the creditor as we find from section 439. Section 439 (1) (b) would permit any creditor to maintain the winding up petition. Sub section (2) would also include a secured creditor as a creditor within the meaning of sub section (1)(b). Section 434 (1) (a) would give right to a creditor by assignment or otherwise having a claim more than Rs. 500/- to serve the notice of remand and if the demand is not satisfied he would be entitled to claim deemed insolvency as per sub section (2). From the analysis as above, we would find as follows:- (i) A creditor could maintain the winding up petition. (ii) A secured creditor is also creditor to maintain winding up petition. (iii) A creditor should have the claim for Rs. 500 and above. (iv) He would serve the notice of demand, that demand, if unattended and/or unsatisfied, would permit the creditor to claim deemed insolvency (v) The creditor would maintain the winding up petition on the ground of inability to pay. (vi) He would have to prove, it is otherwise just and equitable that the company should be wound up. 24. In the present case, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner maintained the petition exclusively under this provision. There were enough material to hold, the company was commercially insolvent. We asked Mr. Mookherjee in vain, how he would propose to clear off the dues. He was unable to give any suitable reply. The entire fixed assets were mortgaged. The company did not have sufficient funds to pay off the dues. The balance sheet would clearly demonstrate such insolvency. Even if we hold, their fixed assets were sufficient enough to pay off the dues, that could only be possible upon sale of those assets and the company would hardly have anything left to carry out day to day business. The learned Judge possibly overlooked this aspect. 28. A creditor who has unpaid dues could only be reasonably satisfied if company has means to pay. When the creditor serves the notice upon the company asking them to pay off the dues the company has option either to pay off or dispute the same. Even if the company has means to pay and does not pay without any reasonable cause it would be liable to be wound up. However, this question may not be relevant here as the record shows, the company was in involved circumstances due to its precarious financ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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