TMI Blog2013 (8) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... e proof of the facts on which the defence depends - No bona fide defence in the winding up petition and was unwilling and therefore unable to pay the admitted liability - the defence as to why it will not pay the admitted debt was neither one of substance nor in good faith – they had also not been able to satisfy the Court that it was willing to make payment of the admitted debt – prima facie case had been made out for admitting the petition and appointing a provisional liquidator - the order to be kept in abeyance for a period of six weeks - If such payment was not made then the order will become immediately operational. - Co. Petition No. 198 of 2008 - - - Dated:- 3-5-2013 - S. Muralidhar, J. For the Appellant : Sushil Dutt Salwan. for the Respondent : Ravi Gupta, Mohit Gupta and Ms.Megha. ORDER:- Madhya Pradesh State Industrial Development Corporation ('MPSIDC') has filed this petition under Section 439 read with Sections 433(e) and 434 of the Companies Act, 1956 ('Act') seeking the winding up of the Respondent, Som Distillers and Breweries Ltd. ('SDBL'), having its registered office at New Delhi. 2. The background facts are that MPSIDC sanctioned and disbu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 4807.06 lakhs comprising ICD overdues of Rs. 700 lakhs and interest overdues of Rs. 4107.06 lacs. It was stated that an OTS offer for approximately 798.96 lacs, subject to reconciliation, could be considered. SDBL was asked to submit a proposal on that basis. 6. In response to MPSIDC's letter dated 1st January 2011 informing SDBL of the outstanding due amount of Rs. 4807.06 lacs, SDBL wrote to MPSIDC on 7th February 2011 offering three options for settling the dues with regard to ICD of Rs. 700 lacs. This was not agreed to by MPSIDC. On 18th March 2011, MPSIDC informed SDBL that "As per prevailing OTS Policy, a minimum OTS amount of approximately Rs. 798.96 lacs, subject to reconciliation, is payable by the Company" and that "if the Company makes payment within fifteen days from the issue of the sanction letter. Besides, legal and other expenses as per actuals." By another letter dated 26th March 2011, MPSIDC wrote to SDBL stating that "as per prevailing OTS Policy, a minimum OTS amount of approximately Rs. 1415.46 lacs, subject to reconciliation, is payable by the Company, if the Company makes payment in maximum 36 equal monthly instalments carrying simple interest @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all the creditors of SDBL, MPSIDC did not participate. This contributed to the delay in SDBL repaying the loan. It is stated that due to change in the excise policy of the State of Madhya Pradesh, SDBL suffered setbacks which also contributed to the delay. It was stated that MPSIDC has initiated several cases under Sections 138 and 140 of the Negotiable Instruments Act, 1888 ('NI' Act) as well as civil cases against SDBL which were pending in the various Courts in Bhopal. It was further submitted that SDBL has submitted a proposal on 7th February 2011 along with a cheque amount of Rs. 25,00,000 drawn on Punjab National Bank ('PNB') with three payment options for settlement of all the dues. It was mentioned in the said proposal that if MPSIDC accepted any of the three options mentioned therein, it could encash the cheque under intimation to SDBL. It was stated that inasmuch as MPSIDC had encashed the said cheque for Rs. 25,00,000, the proposal of SDBL constituted a contract that was binding on both the parties. SDBL stated that it submitted another proposal to MPSIDC for repayment on 15th September 2011, which was in line with the OTS policy of MPSIDC to which there was no respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in the midst of dictating the order, Mr. Ajay Arora, authorized representative of the Respondent -company states that the official of the Respondent -company shall immediately meet the officers of the petitioner Corporation and repay the entire amount that is due and payable to the petitioner Corporation within a period of three weeks. List on 14th May, 2012 Order dasti" 10. On 12th April 2012, SDBL wrote to MPSIDC enclosing an interest calculation sheet which showed that a sum of Rs.7,77,00,000 was payable. It was stated that with Rs. 25,00,000 having been paid by cheque on 7th February 2011 and Rs. 50,00,000 having been paid by DD on 3rd January 2012, a sum of Rs. 75,00,000 had already been paid. According to SDBL, Rs. 77,77,000 being 10% down payment for the OTS amount was required to be made. After subtracting Rs. 75,00,000 already paid, the balance was Rs. 2,70,000. Therefore, along with the letter dated 12th April 2012, SDBL enclosed a cheque for Rs. 2,70,000 and thereby submitted an OTS proposal for Rs. 7,77,00,000 with the balance payable after deducting the above sums calculated as Rs. 69,930,000. 11. The above OTS proposal as suggested by SDBL was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptable to it. SDBL protested against the sum of Rs. 75,00,000 not being adjusted against the OTS amount. It was stated that if the OTS proposal was not going to be accepted, then the sum of Rs. 75,00,000 ought not to have been encashed. SDBL objected also to the recovery of "Brisc incentive amount on RRC of Rs. 15.48 lakhs, being 2% of the settlement amount." The SDBL enclosed a revised calculation whereby the amount payable under the OTS was calculated as Rs. 6,92,87,036 after appropriating Rs. 75,00,000 towards repayment of the principal amount in terms of the letter dated 26th March 2011. 14. Meetings took place on 29th May 2012 and 1st June 2012. SDBL wrote to MPSIDC again protesting against the appropriation of Rs. 75,00,000 but not adjusting it against the OTS amount. The stand of SDBL was that once the payment of Rs. 75,00,000 has been encashed by MPSIDC "it is deemed and understood that our proposal has been accepted by MPSIDC and the same amounts to legally enforceable contract." SDBL blamed MPSIDC of being reluctant to settle the matter and termed the behaviour of MPSIDC "irresponsible" since the Economic Offences Wing had registered a First Information Report against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... figure. In case no settlement is arrived at, the matter shall be heard on merits on the next date. Renotify on 11.03.2013." 18. Thereafter, on 25th April 2013, the following order was passed: "1. It is seen that in the order dated 10th December 2012 it was recorded that Board of Directors of the Petitioner, Madhya Pradesh State Industrial Development Corporation, had passed a resolution stating that they were ready to forgo Rs. 25 lakhs out of an amount of Rs. 7,77,66,667 which was owing to the Petitioner by the Respondent company. It was made clear that if there was no settlement, then the case would be heard on merits on the next date, i.e., 11th March 2013. 2. Mr. Ravi Gupta, learned Senior counsel appearing for the Respondent refers to a cheque tendered in Court on that date in the sum of Rs.6,92,87,036 and states that the Respondent is still willing to pay the same amount. 3. However, Mr. Sushil Dutt Salwan, learned counsel for the Petitioner categorically states that the said amount is not acceptable to the Petitioner. He states that as a last chance the Petitioner is prepared to give one more opportunity to the Respondent to pay to the Petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Authority ('MPSLA') on 21st November 2012 to MPSIDC regarding settlement of pending cases of MPSIDC under Sections 138 and 140 of the NI Act, a decision has been taken by the Cabinet of the Madhya Pradesh Government that "all arrears deposited by the people availing loan should not be settled towards interest. It should be deposited in OTS." (This is the English translation of the Hindi letter which was shown to this Court by Mr. Gupta). Mr. Gupta, therefore, insisted that MPSIDC was being unfair in not adjusting the sum of Rs. 50,00,000 towards the principal OTS amount. He referred to the offer made by SDBL in its letter dated 18th March 2013 that they were ready to pay Rs. 7.05 crore after adjusting the sum of Rs. 75,00,000 against the sum of Rs. 7,79,66,000 demanded by MPSIDC before the MLA and submitted that it was a reasonable offer which ought not to have been rejected by MPSIDC. 21. Mr. Sushil Dutt Salwan, learned counsel for MPSIDC submitted that the whole object of the OTS was that the amount should be immediately paid by SDBL. In the instant case there was no dispute about the fact that as on 31st December 2010 the amount payable by SDBL was over Rs. 48 crores. Even t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany chooses not to pay that particular debt (See Re. A Company 94 S.J. 369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debt precisely (See Re. Tweeds Garages Ltd. [1865] 35 Beav. 204, 208) The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends." (Emphasis supplied) 23. The admitted liability of SDBL as reflected in its balance sheet as on 31st March 2010 under the caption "Schedule D unsecured loans" shows that the sum owing to MPSIDC is Rs. 10,97,70,329. Consequently, the objection of SDBL that the claim of MPSIDC is time-barred is without basis. The registered office of SDBL is in New Delhi and, therefore, the objection as to the jurisdiction of this Court is also without basis. On the question of receipt of notice, the Court is satisfied that the statutory notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DBL that the proposal made by SDBL by its letter dated 21st March 2011 was not acceptable to it. It conveyed to SDBL on what basis it might consider an OTS proposal and on that basis again, SDBL was advised "to submit OTS proposal in accordance with prevailing OTS policy." On 12th April 2012 also, a letter was written by MPSIDC, following the order dated 30th March 2012 by this Court to SDBL stating that "so far MPSIDC has not received any settlement proposal in accordance to the government approved OTS proposal 2007 from your company." It was also pointed out that as per the demand letter dated 7th April 2012 of MPSIDC, the ICD overdues of SDBL as on 31st March 2012 was Rs. 6,098.75 lacs (ICD overdues Rs. 700 lacs + interest overdues Rs. 5398.75). On 12th April 2012, SDBL made its OTS proposal of repaying Rs. 7.77 crores and that was rejected by MPSIDC by its letter dated 10th May2012. 26. The Court has to proceed on the basis of OTS sum that has been finally determined by MPSIDC. To recapitulate, the OTS amount determined by MPSIDC was Rs. 791.20 lacs i.e. Rs. 774.08 lacs (Principal Rs. 7,00,00,000+ Interest Rs. 74.08 lakhs) along with recoverable expenses of Rs. 17.12 lakhs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the admitted debt. The Court is, therefore, satisfied that a case has been made out for admitting the petition and appointing a provisional liquidator for SDBL. 29. The petition is, therefore, admitted. A copy of this petition be served on the Official Liquidator ('OL') attached to this Court. The OL is appointed as the Provisional Liquidator ('PL') of the SDBL. The OL is directed to take over all the assets, books of account and records of the SDBL immediately upon this order becoming effective as indicated hereafter. The OL shall in that event also prepare a complete inventory of all the assets of the SDBL before sealing the premises in which they are kept. He may also seek the assistance of a valuer to value the assets. He is permitted to take the assistance of the local police authorities, if required. 30. Publication of the citation of the petition be effected in the Official Gazette, 'The Statesman' (English) and 'Veer Arjun' (Hindi) in terms of Rule 24 of the Companies (Court) Rules, 1959 ('Rules'). The cost of publication shall be borne by MPSIDC. 31. The Directors of the SDBL are directed to strictly comply with the requirements of Section 454 of the Act and Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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