TMI Blog2014 (7) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... either remains unreplied or is dealt with without any plausible defence. For the company, once it faces a winding up proceeding followed by a statutory notice of demand it has to rebut the presumption of insolvency that would arise on service of the statutory notice. The presumption could only be rebutted on raising a bona fide dispute. Merely raising a dispute having no support from reality, would be moonshine, sham, colourable and would not be regarded as a good defence to resist a winding up proceeding. In this regard, we would be failing in our duty if we do not mention and rely upon a decision in the case of M/s Mechalec Engineers and Manufacturers [1976 (11) TMI 194 - SUPREME COURT] which quoted the celebrated decision of this Court in the case of Kiranmoyee Dassi, five criteria stipulated therein, to deal with summary proceeding that would also be available for consideration by a Company Judge dealing with a winding up proceeding, would be apt in the present case. On the other way, we find, as many as four letters would remain unreplied. It is not a fact, the company was silent. The letters would show, there had been at least two meetings on the issue yet, the company did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date of communication of such deposit, the respondent would be entitled to refund of the same. - A.P.O. No. 183 of 2014, C.P. No. 659 of 2013 - - - Dated:- 16-7-2014 - Ashim Kumar Banerjee and Arijit Banerjee, JJ. For The Appellant : Mr. S.N. Mookherjee, Senior Advocate, Mr. Ratnanko Banerjee, Senior Advocate, Mr. Shaunak Mitra, Advocate For The Respondent : Mr. Abhrajit Mitra, Senior Advocate, Mr. Jishnu Chaudhuri, Advocate, Mr. Soumabha Ghose, Advocate, Ms. Rajashree Kajaria, Advocate JUDGMENT : ASHIM KUMAR BANERJEE, ACJ. This appeal would relate to an order refusing to admit a winding up petition filed on behalf of the appellant as against the respondents. The parties had commercial relationship under which the appellant acted as a carrier of the respondent s products over a long period of time. The parties would say, it would be for 6-7 years. According to the appellant, they were carrying goods on behalf of the respondents hence, they were entitled to have the freight charges that the respondent company kept outstanding for a long time. The company would say, the transaction was carried on for years together. As per the agreement, the rate was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id. The company would dispute the outstanding, as according to them, although the appellant billed the respondent at an exorbitant rate the respondent company had verified those bills and had duly paid whatever had been found due and payable. When the winding up petition was initially heard by the learned Single Judge, His Lordship passed an order on February 10, 2014 when His Lordship observed, the dispute would be on limited issue of fixation of rate as the factum of carriage of goods by the appellant was an admitted fact. His Lordship observed, the parties should be reconcile the accounts and submit their respective statements in Court. On a querry made by this Court, we came to know, neither of the parties preferred any appeal from the said order and acted upon the same. However, once the issue could not be finally resolved, they were permitted to take back their respective accounts. We asked Mr. Abhrajit Mitra, learned Counsel appearing for the respondent what according to them, was due and payable. Mr. Mitra replied, ₹ 1.84 crores. In deference to the desire of this Court, he also offered to pay off the same in installment. However, the appellant did not agree. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence that the company took in the pleadings, was sufficient enough to raise a bona fide dispute. Merely because the respondent failed to reply to the statutory notice of demand, would not make the situation worse for him. The learned Judge rightly approached the situation and thus, declined to admit the winding up proceeding that would not deserve any interference by this Court. Mr. Mitra would further say, the four e-mails that Mr. Mookherjee relied, would relate to past transactions for which bills had already been paid. He would also refer to the Statement of Account to show, there had been payments corresponding to the current supplies. The dispute would thus relate to past transactions that would require thorough reconciliation for the entire period. The winding up Court would not be the proper forum for the same. While giving reply, Mr. Shaunak Mitra would reiterate what he had submitted earlier. He would contend, the respondent company miserably failed to raise any dispute whatsoever on merits that would itself lead to admission of the winding up proceeding. Before we deal with the subject controversy, may we discuss the law on the subject. In a winding up proceeding, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in view of the provisions of section 434(1)(a) the creditor could maintain the petition upon service of notice of demand and the company s inability to pay or secure or compound to the reasonable satisfaction of the creditor. His Lordship was of the view, to claim deemed insolvency the creditor would have to show, securities were insufficient. Even if we accept the said view, the petition could not be held to be not maintainable due to mere absence of such fiction. In our view, His Lordship erred in holding, the petitioner maintain 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 of the dues, that would only be possible upon sale of those assets and the company would hardly have anything left to carry out the day to day business. The learned Judge possibly overlo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Section 439(1)(b) and (2). We thus conclude, an unsecured creditor would maintain a winding up proceeding with a just claim upon service of statutory notice of demand that either remains unreplied or is dealt with without any plausible defence. For the company, once it faces a winding up proceeding followed by a statutory notice of demand it has to rebut the presumption of insolvency that would arise on service of the statutory notice. The presumption could only be rebutted on raising a bona fide dispute. Merely raising a dispute having no support from reality, would be moonshine, sham, colourable and would not be regarded as a good defence to resist a winding up proceeding. In this regard, we would be failing in our duty if we do not mention and rely upon a decision in the case of M/s Mechalec Engineers and Manufacturers vs. M/s Basic Equipment Corporation reported in All India Reporter 1977 Supreme Court Page 577 which quoted the celebrated decision of this Court in the case of Kiranmoyee Dassi vs. Dr. J. Charterjee reported in Calcutta Weekly Notes 1945 volume-49 Page-246, five criteria stipulated therein, to deal with summary proceeding that would also be available for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 would be 6.37 crores that would mean, there was a constant flow of fund as there were contemporaneous bills also raised that would find place in the statement. Hence, it is not a case where there would be outstanding pending for a long time. From the statement disclosed by the appellant, we find debit and credit entries on regular basis. Hence, it could not be said, there had been dues kept pending long. This is our prima facie view on examination of the Statement of Account that was disclosed in the pleading. However, unless we examine the entire transaction, it would not be proper for the Court to come to a conclusion on the issue. Hence, winding up may not be the right approach. On the other way, we find, as many as four letters would remain unreplied. It is not a fact, the company was silent. The letters would show, there had been at least two meetings on the issue yet, the company did not confront the creditor by replying to their letters. Those four letters were followed by the statutory notice of demand that would also remain unreplied. Mr. Abhrajit Mitra, Learned Senior Counsel could not give any plausible explanation why the letters were not dealt with. This woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 lacs by September 1, 2014 iii) Balance ₹ 1 crore by ten equal monthly installments. iv) Interest at the rate of 9 per cent per annum on the said sum of ₹ 1.84 crores on reducing balance be paid as and by way of thirteenth installment payable on and from October 1, 2014 and thereafter on the first day of each succeeding month. In case of default of making payment of any of the aforesaid sum, the winding up petition would stand admitted for the said sum of ₹ 1.84 crores together with interest @ 9 per cent per annum, in such case, the entire sum of ₹ 1.84 crores or any part thereof together with interest thereof as aforesaid, would become due and payable and the winding up petition would stand admitted and be proceeded with accordingly. For the balance claim the parties are relegated the suit subject to the respondent disposing the balance sum with the Registrar Original Side, by September 15, 2014. In case the above sum is deposited, the Registrar would invest the said sum in any nationalized Bank of his choice and keep the same renewed till the disposal of the suit. In default of deposit, the balance sum would immediately become due and payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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