TMI Blog2016 (5) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... istrar of Companies, Madras. (iv) Affixure of notice at the premises of the Registered Office of the respondent company. (v) The petitioner is directed to publish the company petition in one issue of Tamil daily "Malai Murasu" in one issue of English Daily "Indian Express" and in the Tamil Nadu Government Gazette fixing the date of hearing on 10.6.2016. (vi) The petitioner is directed to publish the company petition giving at least fourteen days clear advance notice. (vii) The Official Liquidator, High Court, Madras as Provisional Liquidator is directed to take charge of the assets of the respondent company. The Ex-Directors of the respondent company is directed to file their statement of affairs before the Official Liquidator within a period of 21 days. The company shall deposit a sum of ₹ 20,000/- towards initial expenses before the Official Liquidator in this matter. - C. P. Nos. 2 of 2009 - - - Dated:- 5-4-2016 - K. Ravichandrabaabu, J. For the Petitioner : Ms. Jayna Kothari for M/s. B. N. Suchindran For the Respondent : Mr. G. Kalyan Jhabakh for M/s.Surana Surana ORDER This company petition is filed to wind up the respondent company an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months through another agreement dated 19.11.2004. The petitioner experienced problems with the respondent company in respect of his demand towards monthly consideration and reimbursements. The petitioner sent invoice every month for his consulting fees. By March 2005, the respondent was due to the tune of US$ 164,500 to the petitioner. The respondent company avoided in making the payment under the pretext of one or another. The petitioner tendered his resignation on 28.03.2005. The respondent company started negotiation with the petitioner. As a gesture of good faith, the petitioner agreed to settle for an amount of US$ 140,000. As per the settlement, the respondent company executed a promissory note in favour of the petitioner on 31.03.2005. Despite the said fact, the respondent company failed to make the payment. On 22.02.2008, the petitioner sent a legal notice demanding the payment which was acknowledged by the respondent on 29.02.2008. After receiving the said legal notice, the respondent requested the petitioner to settle for an amount of US $ 100,000 to be paid in three or four phases. The respondent indicated that it did not have funds to pay the entire claim due to the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a financial crisis and therefore, they could not honour the commitment. When there is an admitted liability followed by their admission of their incapacity to make the payment in view of financial crisis, it is enough for this court to admit this company petition for further course of action. The statutory notice issued by the petitioner was not replied even though it was acknowledged. 6. In support of her contention, the learned counsel for the petitioner relied on the decision of the Hon'ble Supreme Court reported in AIR 1971 Supreme Court 2600, M/s.Madhusudan Gordhandas vs Madhu Woolen Industries Private Ltd., to contend that the court has to see as to whether the defense of the companies is in good faith and that the court will not act upon a defense that the company has the ability to pay the debt where the debt is undisputed. She also relied on the decision reported in 2002 (3) MLJ 750, Imperial Corporate and Services (P) Limited vs Aruna Sugars and Enterprises, Chennai. 7. Per contra, the learned counsel appearing for the respondent submitted as follows: The alleged liability is not an undisputed liability. The promissory note was not issued by the respondent c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation. 11. The said order of the Company Court was taken on appeal in O.S.A.No.11 of 2013. The Division Bench of this Court by order dated 30.04.2013 allowed the appeal by setting aside the order of the Company Court and remitted the matter back to this court for disposal of the company petition on merits and in accordance with law. The relevant finding at paragraphs 38 and 39 of the above said order of the Division Bench are extracted hereunder: 38. It is also noted that the E-mail dated 1.4.2008, had been sent by the Managing Director, Gopalakrishnan, admitting the liability of the respondent company and the issuance of the promissory note is in favour of the appellant. In the said E-mail the respondent company had clearly admitted the fact that it could not make the payments, payable to the appellant, due to financial constraints. The admission of the Managing Director of the respondent company in the E-mail, dated 1.4.2008, relates to the issuance of the promissory note and to the fact that the respondent company owed an amount of US $ 1,40,000 to the appellant. While so, the learned Single Judge had dismissed the company petition, in C.P.No.2 of 2009, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Judge to be disposed of on merits and in accordance with law. Accordingly, the original side appeal stands allowed. 12. From perusal of the order passed by the Division Bench which has become final, conclusive and binding on parties, as the Special Leave Petition filed by the company before the Hon'ble Supreme Court of India also came to be withdrawn on 22.04.2014, it is crystal clear that the contention of the respondent company with regard to the limitation or the questioning the execution of the promissory note cannot be agitated once again before this court. The Division Bench has categorically found that the respondent company who extended the promissory note also sent the e-mail dated 01.04.2008. It is the further finding of the Division Bench that the claim is not barred by limitation. Therefore, the fact remains that there is a promissory note executed by the respondent company promising to pay a sum of 140,000 US$ to the petitioner followed by the e-mail dated 01.04.2008, confirming the execution of such promissory note in favour of the company petitioner. However now an attempt is made by the learned counsel appearing for the respondent that the promissory not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany 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 quantify the debt precisely (See Re.Tweeds Garages Ltd. 1962 Ch. 406). 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. 15. The learned counsel appearing for the company petitioner further relied on 2002(3) MLJ 750, Imperial Corporate and Services (P) Limited vs. Aruna Sugars and Enterprises, Chennai, wherein this court has observed at paragraph Nos.7 and 8 as follows: 7...It is clear that 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. I have already referred to the admission of the Managing Director of the respondent company-vide letter dated 30.12.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems Sdn. Bhd. and (1965) 35 Compcas 456(SC), Amalgamated Commercial Traders (P.) Ltd. vs A.C.K.Krishnaswami, are cited to contend that a Company Court cannot be reduced as a debt collecting agency or as a means of bringing improper pressure on the company to pay a bonafidely disputed debt. This court is fully conscious of its jurisdiction as well as the scope of the company petition. Certainly, this court is not functioning as debt collecting agency. At the same time, under the present facts and circumstances of the case, when this court finds that there is no dispute on the debt much less a bonafide one and that this winding up petition is also not for collecting the debt and on the other hand, only to wind up the company which has failed to pay the admitted debt/liability, as contemplated under section 433(E) of the Companies Act, 1956, I do not think that the above decisions of the Apex court will help the respondent company in any manner. 18. Further, the conduct of the respondent company all throughout the proceedings would show that their inability to pay the debt to the petitioner is evident. This company petition is filed in the year 2009. No doubt, the same was dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch execution however by making only a lesser amount, not on the ground of no business but on the ground of financial crunches of the company, has taken place. The answer to such question certainly would go against the company. 21. On the other hand, on appreciation of entire facts and circumstances of the case, this court finds a justification on the part of the company petitioner to knock the door of the company court seeking for winding up of the company. When that is the one of the legal course available to the company petitioner, this court cannot shut its door to the company petitioner, on technical reasons. In my considered view, while rendering substantial justice, neither the technicalities nor, to certain extent, untenable factual objections, can block the way of this court in doing so. In this case, the Division Bench has already rejected those objections. It is well settled that when substantial justice and technicalities are pitted against each other, only the substantial justice should prevail over all other technicalities. On this principle, I always prefer to refer to the decision of the Apex Court reported in 2013(4) SCC 97, Laxmibai vs Bhagwantbuva, wherein at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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