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In Re : Concast Exim Ltd.

Winding up petition - argument regarding equitable set off - Held that:- The company has been able to prima facie establish a strong case that the goods that the petitioning creditor shipped were in fact in lieu of payment for the goods shipped to them by Concast Bengal in 2009. Both the shipments have been proved by invoices, delivery, payment of VAT and so on. But there is no evidence of either party making payment of the price. There is also strong evidence produced by the company to show tha .....

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pleaded for the first time in the affidavits in opposition. That would determine whether the set off was legal or equitable and whether it could be claimed.

Having advanced a substantial defence there is no question of a winding up order being passed. The defence is so substantial that is not even inclined to ask the company to provide security.

This winding up applications are disposed of, by refusing to admit the same and relegating the petitioning creditor to a civil rem .....

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r. Abhrajit Mitra, Sr. Adv., Mr. Jishnu Chowdhury, Ms. Noelle Banerjee, Mr. Dipak Kr. Dey I.P. MUKERJI, J. These are winding up applications U/S 433, 434 and 439 under the Companies Act, 1956. The transactions which are the subject matter of these applications are very similar. All the above applications can be disposed of by this common judgement and order. As far as the facts are concerned, I will narrate those of C.P.No.86 of 2014, In the matter of: Concast Exim Ltd, Re: R.A.V Dravya (P) Ltd. .....

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le showing the details of all those invoices together with the copies of the invoices are annexed to the petition. Copies of the value added tax returns showing payment of this tax on the entire quantity of goods is also annexed to the petition. A statutory notice dated 11th December, 2013, U/s 434 of the said Act, was issued by the petitioning creditor to the Company, asking them to pay up the above invoice value together with interest @ 24% per annum, within three weeks from the date of the no .....

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n paragraph 14(f) of the Affidavit in Opposition of the Company affirmed on 24th July, 2014 it admitted the transaction. If one considers the nature and weight of evidence brought on record by the petitioning creditor, regarding the sale and delivery of these goods, one would immediately tend to form an opinion that the petitioning creditor is entitled to summary judgement. Points in defence have been taken in the Affidavit in Opposition of the Company, as follows. It is a part of a group of eig .....

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ty. The petitioning creditor is also a member of a group of industries, the other Companies being Ram Swarup Vyapar Ltd. and Ram Swarup Industries Ltd. They are controlled by the Jhunjhunwala family. The group is known as the Ram Swarup Group of Companies and is to be taken as one entity. From a table consisting three sheets of papers being Annexure- I at pages 529 to 541 of the Affidavit in Opposition, it is shown that Concast Bengal Industry Ltd. between 2nd January, 2009 and 9th March 2009 so .....

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paid by the company. The value added tax return was for the period from 1st January, 2009 to 31st March, 2009. The total value added tax paid by the respondent was over ₹ 10,00,000/- (Rupees Ten Lakhs), she said. She also submitted that the price receivable by the petitioning creditor in respect of the said sale of goods by them to the Company between July 2011 and August 2011, was set off by the company against the price receivable by them for the sale made in 2009. This was shown by one .....

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on the understanding that they were being treated as one entity for the purposes of the transaction. Mr. Saha maintained that the transactions which were being referred to by the respondent company in their Affidavit in Opposition were between the petitioning creditor and Concast Bengal Industries Ltd. The transactions which were the subject matter of the winding up the petition were between petitioning creditor and Concast Exim Ltd. which was altogether a different entity from Concast Bengal In .....

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ing that no proceedings were taken to realise the price of goods sold and delivered by Concast Bengal Industries Ltd. to the petitioning creditor Concast had to wait till the winding up petition was filed in 2014, and claim a set off in respect of transactions which took place between the petitioning creditor and Concast Exim Ltd, learned counsel submitted. Learned Counsel also argued that since Concast Exim Ltd. and Concast Bengal Industries Ltd. were different juristic entities the petitioning .....

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transaction of 2009 on a claim made in a winding up petition in 2014 in respect of goods supplied by the petitioning creditor between July, 2011 and August, 2011. In the company petition C.P.No-89 of 2014, the transaction was between Concast Global and the petitioning creditor. The invoice value was ₹ 6,06,56,729.12/-. The total claim made in paragraph 21 of the petition was ₹ 10,20,35,779.20/-. In C.P. No. 91 of 2014, the transaction was between Dankuni Steels Limited and the petiti .....

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vit in Opposition that during the subject period the Ram Swarup Group had sold goods worth ₹ 29,01,91,266/- to the Concast Group, while the Concast group sold goods worth ₹ 31,19,08,705/- to the Ram Swarup Group. Therefore, the Concast Group was entitled to receive a sum of ₹ 21717439/- from the Ram Swarup Group. In my opinion, the cross transactions appear to be real. There is no evidence brought on record by the petitioning creditor to show that it ever made any payment for t .....

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n as group companies or a single entity for adjudging the liability of each of these companies towards the petitioning creditor is to be seen. The provision in the Companies Act 1956, namely, Section 370 (1) (B) does not really answer the controversy. The said Section refers to the circumstances when two companies might be treated to be under the same management. Now, two Companies may be under the same management and yet be completely different business entities or it may be under the same mana .....

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erson behind the actions of the company, the fault of the company and also to locate the real seat of the company. Lifting the corporate veil is necessary to detect fraud and crime. The doctrine of lifting of the corporate veil is being increasingly used in modern times to scrutinize corporate action. This concept was beautifully analysed by Mr. Justice S.C.Agrawal in New Horizons Ltd. and Another v. Union Of India and Others reported in (1995) 1 SCC 478, cited by Mr. Mitra for the Company. Mr. .....

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t affidavit whereas the Jhunjhunwalas control the Ram Swarup Group of Companies. Whether each of the companies with the name Concast is so associated with Sanjay Surekha that he could be said to be the controlling mind of these companies can only be investigated on affidavit. It would also have to be seen whether Mr. Jhunjhunwala similarly controlled Companies described as the Ram Swarup Companies. It has to be ascertained that the real arrangement was between Jhunjhunwala and Surekha. The goods .....

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us analyse the legal principles. A company is liable to be wound up if it is unable to pay its debts. Now, how does a Court adjudge that a company is unable to pay its debts. A winding up application is made by affidavit, setting forth the claim of the petitioning creditor. Annexed to the petition are documents to substantiate the claim. The documents are photocopies. If so desired by the company the petitioning creditor has to give inspection of the original. The defence is also in the form of .....

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, this judgement follows an ancient decision of this Court Smt. Kiranmoyee Dasi v. Dr. J. Chatterjee reported in (1945) 49 CWN 246. The principles are these:- 8.(a) If the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgement and the defendant is entitled to unconditional leave to defend. (b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a .....

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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 d .....

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R 1971 SC 2600, the Supreme Court held that if the Company raises a defence in good faith or a defence which is likely to succeed or prima facie likely to succeed at the trial, in that event the winding up application would fail. Sir George Jessel Master of the Rolls in London and Paris Banking Corporation reported in 19 Equity Cases 444 said that the Company should have reasonable ground for not paying the debt of the petitioning creditor, to avoid liquidation proceedings. Ajoy Nath Ray, A.C.J, .....

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conclusive between the petitioning creditor, the company, the creditors and all other persons who joined the winding up. The standard of proof required by the petitioning creditor to prove his case in the winding up application is the same standard that is required to prove a plaintiff s case in a summary suit. (see SRC Steel Pvt. Ltd. Vs. Bharat Industrial Corporation Ltd. reported in 2005(4) CHN 343). The company must be in a completely defenceless position. It would suffice if the company ra .....

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