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Maheshwary Ispat Limited Versus Tata Capital Financial Services Limited

2015 (5) TMI 798 - CALCUTTA HIGH COURT

Default in repayment of financial assistance - Winding up application filed - Company praying for modification of the order of disposal - Court said that the Order of admission of winding up is hanging as a sword on their shoulder. Little respite, they would seek, should, in our view, be acceded to that would meet the ends of justice - Held that:- Ordinarily we would have disposed of the application of the like nature upon re-scheduling the payment that would meet the substantial justice. Howeve .....

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ntention of the appellant and rejected the same. However, we re-scheduled the payment that was within the power of the Company Court and the Division Bench being an extension of the Company Court under Section 483, was competent to give such direction in a petition for winding up that would meet the substantial justice as recognized by Section 443 of the Companies Act, 1956. Accordingly, the Division Bench granted installments. When the company paid installments to a substantial extent and praye .....

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orce. These rules of 1959 would take care of the procedural part of the company proceedings before the Company Court. Rule 6 would inter-alia provide, while the said rule is silent, the provisions of Civil Procedure Code would apply. Rule 9 would extend inherent power to the Company Court to pass any Order to do substantial Justice in the matter. If we read these two provisions we would find, Rule 6 might make the code applicable in Company proceedings however, Rule 9 would have a dominant role .....

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l humility, may we say, his argument on the issue was totally without any basis. Neither of the decisions cited at the bar would support his contention in the present scenario. We reject the same.

With this mind set, let us now deal with the case on merits. Out of ₹ 4.12 crores the applicant paid ₹ 2.95 crores, the balance is due. If we reject the application and the company would not be in a position to pay and clear off the installments the Order of winding up would come .....

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ceded to that would meet the ends of justice. We however, do not agree with the schedule that Maheswari would suggest. We would consider their prayer for re-scheduling after six months. In the mean-time, they should continue to make payment at the rate ₹ 10 lacs per month. In case they do so they would be at liberty to approach the learned Company Judge for re-scheduling the installment and the learned Company Judge would be free to deal with such application in accordance of law.

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cate For The Respondent : Mr. Tilak Bose, Senior Advocate, Ms. Manju Bhutoria, Advocate, Mr. Souvik Chowdhury, Advocate ASHIM KUMAR BANERJEE, J. BACKDROP: Tata Capital Finance Limited filed a winding up petition against Maheswari Ispat Limited, the applicant above named, inter-alia praying for its winding up on the ground, Maheswari failed to repay the financial assistance to the extent of ₹ 5 crore approximately. Maheswari partly secured the claim through pledge of a fixed deposit receipt .....

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winding up petition. Tata also initiated proceedings under the Arbitration and Conciliation Act 1996 on the strength of the arbitration clause incorporated in the matrix contract. Maheswari contested the winding up proceeding that ultimately resulted in its admission. Being aggrieved, Maheswari preferred an appeal before the Division Bench. The Division Bench rejected the contention of Maheswari assailing the Order of admission, however, disposed of the appeal re-scheduling the repayment progra .....

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s per month until the entire dues are cleared off. iv) Upon payment of the aforesaid sums for three years in case any dues are still outstanding, that would be paid in four equal monthly installments payable on the date fixed as above. v) The payment of interest at the contractual rate would be at the yearly rest and be paid on the reducing claim. However, the frozen amount as on the date of the foregoing order would be taken as a principal sum and would be cleared off first and the subsequent i .....

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ude them to do so. THE PRESENT LIS: Maheswari approached us by filing an application, inter-alia, praying for modification of the order of disposal. In effect, it was nothing but an application praying for mercy, inter-alia, asking for re-scheduling the payment terms. They would contend, they already paid a sum of ₹ 1.95 crores leaving a balance sum of ₹ 2,17,98,703. They wanted to clear it off in a phased manner, they wanted to pay ₹ 5 lacs per month in six months and thereaft .....

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clearing the dues of other creditors as well by making payment of monthly installment. The present application was made only to gain some respite. This Court, in its discretion, should suitably modify the schedule so as to help Maheswari to clear off the dues. Per contra, Mr. Tilak Bose learned Senior Counsel would submit, once the appeal stood disposed of, the Division Bench would lose its competence and became functus officio hence, the present application would not be maintainable. To support .....

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ould contend, the conduct of Maheswari was deplorable. They initially made payments for few months and then started defaulting. Ultimately they stopped paying since November, 2013 when Tata had to move the learned Company Judge for appointment of Provisional Liquidator, then Maheswari paid a sum of ₹ 30 lacs to clear off the arrears as on that date. Moreover, they were not regular in conducting their day to day affairs. The statutory returns were also not filed that the learned Company Jud .....

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. OUR VIEW: Ordinarily we would have disposed of the application of the like nature upon re-scheduling the payment that would meet the substantial justice. However, because of the vociferous objection raised by Tata, the high mighty multi-national, questioning the competence of the Court in entertaining the present application, we felt it necessary to reserve our judgment so that we could deal with all the contentions that Tata raised before us including the question of law. Before we go into me .....

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ould depict, the learned munsif passed a decree for ejectment and arrears of rent. In execution, the judgment debtor applied for installment that the learned munsif acceded to. This Court observed, it was not permissible without the consent of the decree holder in view of the provisions of Order XX Rule 11(2) of the Code of Civil Procedure however, this Court dismissed the revisional application observing, an appeal would lie. ii) 54 Calcutta Weekly Notes Page-568 (Piyaratana Unnanse and another .....

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which passed the decree would still be entitled to correct the same. iii) Volume-I Calcutta Law Journal Page-406 (Central Bank of India & Ors. Vs. Ashoke Kumar Bose) The Court decreed a mortgaged suit ex-parte and omitted to allow interest under Order XXXIV Rule 11. The decree holder prayed for amendment under Section 151 and/or Section 152. The Division Bench observed, the Court was not competent, the only remedy would lie in appeal. ii) 76 Company Cases Page-247 (Badri Prasad Vs. Bhartiya .....

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or was not entitled to pray for modification of said decree in view of the provisions of Order XX Rule 11(2) of the Code of Civil Procedure. Order XX Rule 11(2) would not permit a Court to alter the decree after it was passed in absence of consent of the decree holder or the judgment debtor as the case may be. In the case of Manmohan (supra) the learned munsif attempted to do so that the Court rightly negated. Similarly, in the case of Piyara Tana (supra), the District Judge, while passing the d .....

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ment despite no objection being raised by the decree holder. The learned Judge held, with the express consent of the decree holder it could be possible under Order XX Rule 11(2). If we consider all the four cases cited by Mr. Bose we would find, in two cases the Court attempted to alter the decree that would change the nature and character thereof whereas in other two cases, the power to grant of installment was in question. We, the Chartered High Court judges would derive power from the Letters .....

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ode. In our considered view, the High Court, being a Court of record, is always entitled to correct its own mistake to set its record right. Similarly, this Court is not so powerless to do substantial justice by moulding the relief that would not affect the ultimate decision. The Division Bench was approached with the principal issue as to whether the appellant was entitled to upset the order of admission of winding up. We did not accept the contention of the appellant and rejected the same. How .....

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would be within its right to consider such prayer and examine as to whether the applicant would deserve such treatment and the Court would not be so powerless to entertain such application. Even if we entertain such application and grant relief that would not in any way hit the provisions of Order XX Rule 11(2) of the Civil Procedure Code as it would not affect the ultimate decision. Company (Court) Rules 1959 is having a statutory force. These rules of 1959 would take care of the procedural par .....

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of the provisions of the Code. In short, the principles relating to the statutory provisions of the Code might apply in Company proceeding where there was no conflict however, any of the provisions of the Code, if comes in conflict with any of the provisions of the said rules of 1959, the provision of the said rules of 1959 would be applicable and rule 9 is no exception thereof. With deepest regard, we have for Mr. Bose, and with all humility, may we say, his argument on the issue was totally w .....

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