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TMI Blog2015 (4) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... I understand from the statute law so explained by the judge made law so far pronounced, would perhaps not permit the company Court to admit this petition for winding up. Let me discuss the law as I understand: In a winding up proceeding, the learned company Judge has wide discretion to exercise. Even if the learned Judge is satisfied on the claim of the creditor, it could be refused considering various other aspects. In a civil suit, where creditor seeks a debtor and the debtor has successfully proved his claim decree would be a natural course. In a petition for winding up, it would depend upon various other factors irrespective of proof of claim. At the pre admission stage, the company Court would examine the claim and if it is a just debt that would have no defence from the company, the admission would be inevitable. Section 434 of the Companies Act 1956 would give handle to an unsecured creditor to sue the debtor company for winding up on the strength of the presumption of insolvency. The provision would provide, when the creditor would raise a demand on the company, the company would have two courses left open, either to secure the claim to the satisfaction of the creditor or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the defendant is entitled to unconditional leave to defend. c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say although the affidavit does not positively and immediately make it clear that he had a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security. d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. e) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uit. In the appeal before us, My Lord considered the issue and observed, the defence, that Globe Forex and Travels Limited would take, could be available on the doctrine of equitable set-off. My Lord relied on two Apex court decisions in the case of Raja Bhupendra Narain Singha Bahadur vs. Maharaj Bahadur Singh and Others reported in All India Reorter 1952 Supreme Court Page- 201 and Jitendra Kumar khan and others vs. Peerless General Finance and Investment Company Limited and Others reported in 2013 Supreme Court Cases Volume-VIII Page-769 and observed, since it was a distinct transaction unconnected with the other one the plea taken by Globe Forex and Travels Limited could not lawfully resist admission of winding up. His Lorship was of the view, appeal would be liable for dismissal. Here I join issue I fully agree with My Lord when His Lordship would describe the investment as independent transaction without having any nexus with the share transfer agreement. It was nobody's case, the agreement would prescribe the guideline and/or modality as to repayment of the investment as well. I fully agree, it was an out and out share transfer agreement coupled with modalities as to transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion." This sentence in my view, should not be read in isolation rather, paragraph 7 and 8 if read together, would describe the situation under which the Apex Court observed so. The Apex Court in paragraph 8 observed, "A wrongdoer who has wrongfully withheld moneys belonging to another cannot invoke any principles of equity in his favour and seek to deduct therefrom the amounts that during this period have fallen due to him. There is nothing improper or unjust in telling the wrongdoer to undo his wrong, and not to take advantage of it. Such a person cannot be helped on any principles of equity to recover amounts for the recovery of which he could have taken action in due course of law and which for some unexplained reason he failed to take and which claim may have by now become barred by limitation." I think the extract quoted (supra), would make the decision clear. The principle of law that the Apex Court discussed in Jitendra Kumar khan and others (supra) would rather support my view. Paragraph 11 and 16 being relevant herein are quoted below: "On a reading of the aforesaid Rule it is noticeable that certain conditions precedent is to be satisfied for application of the said Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be existing as on the date of issuance of the statutory notice of demand and the other, concocted and/or cooked up after receipt of the statutory notice with the sole purpose to resist an order of admission of winding up when the creditor would be having an admitted due that would have no plausible ground to reject. In the instant case, the parties had discord much prior to the issuance of the statutory notice of demand. Globe Forex and Travels Limited filed the suit prior to the statutory notice of demand issued by Siddharth Sett. In fact, Sanjay Sett never disputed the issue of Travelport. He would explain, Travelport waved the charges whereas Globe Forex and Travels Limited wanted to reopen the relationship with Travelport when they demanded their earlier dues. Whether such dispute would sustain or not, is nobody's concern in a proceeding for winding up. Rather, it should be decided the Civil Court being competent to deal with the same. If we follow Kiranmoyee Dassi (supra) and/or M/s Mechalec Engineers and Manufacturers (supra), we would find, a defence for the sake of defence without any bona fide would definitely invite Court to reject such defence. In the instant case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant out of which he was refunded Rs. 14.50 lacs, by account payee cheques drawn in his name. As on the date of cessation as a director of the appellant company, on April 3, 2013 a sum of Rs. 31.10 lacs remained outstanding to him. By a notice dated January 30, 2014, under Sections 433 and 434 of the Companies Act, 1956, the respondent called upon the appellant to repay the said sum of Rs. 31.10 lacs along with interest at the rate of 18% per annum on and from December 22, 2012 until repayment. By a letter dated February 20, 2014, the appellant through its advocates replied to the said notice dated January 30, 2013 and refused to pay any money to the respondent. According to the respondent creditor the allegations contained in the said letter dated February 20, 2014 are misconceived, and the same have no connection with him. In support of his claim the respondent relied upon the balance sheet of the appellant company as at March 31, 2013 where the appellant admitted that the said sum of Rs. 31.10 lacs was remaining outstanding to him. After March 31, 2013 no payment was made by the respondent to the appellant. In view of refusal of the appellant to pay the said sum Rs. 31.10 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of tours and travel and as such the appellant filed a suit together with Ramkrishna Forgrings Ltd., being C.S. No. 462 of 2013, before this Hon'ble Court, against the respondent , his father Sanjay Kumar Sett, company namely Good Earth Travel Group India (P) Ltd. and its employees claiming various reliefs of permanent injunction restraining breach of the negative covenant and as also decree for Rs. 5 crores against the said defendants on account of damages. They also placed reliance on the interim orders passed by a learned Single Judge restraining some of the defendants in the said suit, from making any representation to the clients of the appellant prejudicing them against the appellant and soliciting the clients of the appellant and diminishing the business of the appellant. The appellant asserted that since in the said suit, it had claimed a decree for Rs. 5 crore against the defendants, on account of damages, the respondent being one of defendant, could not maintain the winding up application. None of the aforesaid contentions of the appellant found favour with the learned Company Judge and the impugned order was passed. By an order dated August 6, 2014, while admitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted to the new management at the time of execution of the said share purchase agreement.] Thus, Mr. Saha contended, the appellant was entitled to invoke Clause 10 of the said share purchase agreement claimed indemnification by the respondent and the respondent was not entitled to receive the said sum of Rs. 31.10 lacs from the appellant. He, however, admitted, the appellant did not issue any notice to the respondent claiming to be indemnify as required under Clause 10.5 of the said share purchase agreement. Mr. Saha also relied upon the correspondence dated June 10, 2013, August 5, 2013 and September 12, 2013 exchanged between the appellant and the said Sanjay Sett (the father of the appellant and previous Managing Director of the appellant Company) and submitted that the said Sanjay Sett had accepted that in view of the aforesaid facts the appellant was entitled to claim indemnification and they could not realize any money from the hold back amount at the moment. Mr. Saha placed the plaint filed in the suit being C.S. No. 462 of 2013 filed by the appellant and Ram Krishna Forgings (P) Ltd. and claimed that in the said suit the appellant has claimed decree for Rs. 5 crores again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging the said the dues of the respondent for Rs. 31.10 lacs. According Mr. Singhvi, from the correspondence dated June 10, 2013, August 5, 2013 and September 12, 2013 relied by Mr. Saha, it was evident, those were exchanged between the appellant and the said Sanjay Sett and not the respondent. In the said correspondence, even the said Sanjay Sett asserted that the claim of the respondent for refund of the loan granted to the appellant was independent of transactions under the said share purchase agreement. He further urged, from the plaint filed in the said suit being C.S. No. 462 of 2013, it was further evident that the appellant and its owner Ramkrishna Forgings Ltd. had filed the said suit against the respondent and other defendants for enforcement of their right of negative covenant under Clause 9 of the said share purchase agreement which prevented the sellers under the said share purchase agreement from carrying on any similar travel or tour business for a period of two years. Even the interim orders of injunction, obtained by the appellant in the said suit, as recorded by the order dated August 13, 2014 shall continue till December 21, 2014, that was, up to the expiry of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioning creditor, the said claim should be relegated to suit for trial. Now, we proceed to find out whether the facts urged by the appellant as discussed above, constitute a bona fide dispute to resist the admission of the winding up application filed by the respondent. So far as the deposit of the said sum of Rs. 31.10 lacs by the appellant with the Registrar Original Side of this Court, we are of view, that as has been held in paragraph 25 of the said decision of the Supreme Court in the case of IBA Health (India) Pvt. Ltd. (supra), that the same simpliciter substantiates, the ability of the appellant company, to pay the amount claimed by the respondent creditor and same alone would not prove the defence raised by the appellant on basis of the said suit being C.S. No. 462 of 2013 or set-off, the principle of equitable based on Clause 10 of the said share purchase agreement, to be bona fide. It is well settled that when the company opposing the winding up application has already filed a suit against the petitioning creditor for realization of its dues arising out of the same contract or set of transactions, the same constitutes "bona fide dispute" for rejection of the wind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent from the transactions arising out of the said share purchase agreement. There is also no dispute that a substantial part of the consideration amount under the said share purchase agreement is remaining outstanding from the appellant company to the sellers. In the said letter dated June 10, 2013 addressed to the said Sanjay Sett, the appellant claimed that on account of the demand raised by Travelport for US $ 6000 against it and due to the non-completion of the Income Tax assessment, as also on the ground of some people using the letter heads of Globe to carry on any Cargo business which may have potential, financial implication for them, they are entitled to claim indemnification from Sanjay Sett, in terms of the said Clause 9 of the share transfer agreement. In response to the said letter dated June 10, 2013, Sanjay Sett by his letter dated August 5, 2013 categorically asserted the loan granted by the respondent in this appeal to the appellant has got nothing to do with the share transfer agreement. The said letter was replied by the appellant, by its letter dated September 12, 2013 wherein the respondent did not dispute that the said loan transaction between them and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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