TMI Blog2016 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the claim made in the Petition. For all the aforesaid reasons, find that the substantial sum is undisputedly due and payable by the Respondent Company to the Petitioner which would warrant admission of the Company Petition. In this view of the matter, the following order is passed:- (i) The Company Petition is admitted and made returnable on 16th August, 2016. (ii) The learned counsel appearing on behalf of the Respondent Company waives service of the Company Petition under rule 28 of the Company (Court) Rules, 1959. (iii) The Company Petition shall be advertised in two local newspapers viz. (i) Free Press Journal (in English) and (ii) Navshakti (in Marathi) as also in (iii) Maharashtra Government Gazette. Any delay in publication of the advertisement in the Maharashtra Government Gazette and any resultant inadequacy of notice shall not invalidate such advertisement or notice and shall not constitute non-compliance with this direction or with the Companies (Court) Rules, 1959. (iv) The Petitioner shall, on or before 8st July, 2016 deposit a sum of ₹ 10,000/- towards publication charges with the Prothonotary and Senior Master, under intimation to the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THE TERM LOAN OF ₹ 35 CRORES SANCTIONED AND DISBURSED TO BORROWER NO.1:- 3 On 30th July, 2009, the Petitioner sanctioned a Term Loan for ₹ 35 Crores to Borrower No.1. This loan was disbursed on 28th August, 2009. It is the case of the Petitioner that this Term Loan was availed of by Borrower No.1 for partly repaying the outstandings under another Term Loan that they had availed of from the Housing and Urban Development Corporation (HUDCO) and part to finance the capital expenditure for Borrower No.1's property at Nanded, Maharashtra. This Term Loan of ₹ 35 Crores was inter alia secured by an Indenture of Mortgage dated 27th August, 2009 (Exhibit-D to the Petition) as well as two separate Deeds of Guarantee executed by one Mr. Manish Kalani as well as the Respondent Company on the same date. The relevant clauses read as under:- 1. If at any time default shall be made by the Company in the repayment of the said Term Loan of ₹ 35,00,00,000/- (Rupees Thirty Five Crores Only) lent and advanced to be lent and advanced by SICOM to the Company or any part thereof or interest thereon or any other moneys for the time being due and owing by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h interest and all costs, charges and expenses and all other moneys as aforesaid. 16. The Guarantor further declares that as between SICOM and the Guarantor, the Guarantor will be treated as principal debtor jointly with the Company and accordingly the Guarantor shall not be entitled to and the Guarantor hereby waives all the costs conferred on the Guarantor by Sections 133, 134, 135, 139 and 141 of the Indian Contract Act. (emphasis supplied) 4 Thereafter, on 27th April, 2010, the Petitioner sanctioned another Term Loan of ₹ 12 Crores to Borrower No.1. This loan was disbursed in two tranches of ₹ 5 Crores each on 6th May, 2010, and one tranche of ₹ 2 Crores on 17th May, 2010. This loan of ₹ 12 Crores was also secured inter alia by a Deed of Mortgage dated 4th May, 2010 as well as a personal Guarantee of one Mr. Manish Kalani. It is not in dispute before me that as far as this loan of ₹ 12 Crores is concerned, the Respondent Company has not executed any corporate Guarantee to secure the same. 5 Be that as it may, in relation to the Term Loan of ₹ 35 Crores, Borrower No.1 continued to pay the EMI's on a regular basis for the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Term Loan of 35 Crores, on 31st January, 2013, the Petitioner issued a statutory notice to the Respondent Company calling upon it to pay its outstanding dues. The Respondent Company replied to the same by their letter dated 2nd February, 2013 and refuted the claim of the Petitioner on the grounds more particularly set out therein. As mentioned earlier, according to the Petitioner, as on 31st July, 2015, an amount of ₹ 58.24 Crores is outstanding as due and payable by the Respondent Company against the Term Loan of ₹ 35 Crores. TERM LOAN OF ₹ 25 CRORES SANCTIONED TO BORROWER NO.2. 9 On 21st June, 2010, the Petitioner sanctioned an inter corporate deposit by way of a Short Term Loan for ₹ 25 Crores to Borrower No.2. This loan was inter alila secured by an indenture of mortgage dated 25th June, 2010. To secure this loan of ₹ 25 Crores, the Respondent Company executed a Deed of Guarantee dated 26th June, 2010 in favour of the Petitioner (Exhibit-K to the Petition). The terms and conditions of this Guarantee are almost identical to the Deed of Guarantee executed by the Respondent Company in relation to the loan sanctioned by the Petitioner to Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Sections 433 and 434 of the Companies Act, 1956 to the Respondent calling upon them to pay the outstanding amount. As far as this loan is concerned, it is the case of the Petitioner that as on 31st July, 2015, an amount of ₹ 36.13 Crores is outstanding and which is due and payable by the Respondent Company to the Petitioner. It is in these circumstances that the present Company Petition has been filed. 14 In this factual background, Mr. Rajadhyaksha, the learned counsel appearing on behalf of the Petitioner, submitted that the dues of the Petitioner and as claimed in their further affidavit dated 2nd February, 2016, are really undisputed. He submitted that there is no dispute with reference to the fact that both these loans (Term Loan of ₹ 35 Crores and Term Loan of ₹ 25 Crores), have been availed off by Borrower Nos.1 and 2. It is not in dispute that to secure these loans, the Respondent Company executed two Deeds of Guarantee dated 27th August, 2009 and 26th June, 2010 respectively. He submitted that the terms of these Guarantees clearly stipulate that if the borrowers default in repayment of the loans sanctioned to them, the Respondent Company will w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for ₹ 25 Crores whereas in fact only a sum of ₹ 20 Crores was disbursed to Borrower No.2; (iii) a sum of ₹ 9 Crores was paid by Borrower No.2 on/about March, 2013 which fact is suppressed in the Petition and no credit for the same is given to the Respondent Company; (iv) even though the Petitioner has filed proceedings in the DRT for recovery of their dues in respect of both these loans, the same is suppressed in the Company Petition. (c) Since a substantial portion of the debt is disputed by the Respondent Company, this Court, in the peculiar facts of this case, ought not to enter upon any adjudicatory process which is in the exclusive domain of the DRT, by virtue of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993; (d) The Deeds of Guarantee are not adequately stamped under the provisions of the Maharashtra Stamp Act, 1958 and are therefore inadmissible in evidence; and (e) The Respondent Company is a profit making company and is a running concern, and therefore, it ought not be wound up. 16 I must mention here that Mr. Cama fairly stated that the issue of stamping has not been pleaded in the Affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor. It is undisputed that the Petitioner qua the Respondent Company is an unsecured creditor. The Respondent Company has not given any security by way of mortgage or otherwise to secure the dues of the Petitioner. Section 434 contemplates that the Company who is called upon to pay pursuant to the notice issued thereunder has to either pay or secure the dues to the satisfaction of the person giving the notice. Therefore, at least, prima facie, I am unable to accept the submission of Mr. Cama that the Petitioner is fully secured as contemplated under Section 434 (1) (a) of the companies Act, 1956. Secondly, even otherwise, it is not in dispute before me that after valuation of the mortgaged property (valued at approx ₹ 74 Crores) was done by this Court, it was put up for sale. Despite this valuation, the highest bid received was only for a sum of ₹ 22.82 Crores. In view of the fact that the valuation of the said property was much higher, the parties agreed that the same should not be sold for ₹ 22.87 Crores. Thereafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for winding up or to reject the same on judicial consideration. 19 This being the position, I am unable to accept the submission of Mr. Cama that the claim of the Petitioner is adequately secured, and therefore, the Company Petition ought to be dismissed. 20 The next argument canvassed by Mr. Cama was that the Petitioner was guilty of suppression, and therefore, not entitled to any equitable reliefs in company jurisdiction. The instances of suppression narrated by Mr. Cama have been set out by me earlier. In the facts of the present case and on going through the Petition as well as the affidavits filed, I do not find that there has been any suppression as contended by Mr. Cama. It is true that in the Petition, none of these facts have been disclosed. However, before the matter was argued for admission, the Petitioner has filed a further affidavit dated 2nd February, 2016 making clean breast of affairs and have revised their claim as mentioned in their further affidavit. It has been clearly disclosed in the said affidavit that the Respondent Company was not a Guarantor in relation to the Term Loan of ₹ 12 Crores granted by Borrower No.1 and therefore the claim to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally disclosed in the further affidavit dated 2nd February, 2016. The Respondent Company was given an opportunity to respond to the said affidavit, if it so chose. However, it chose not to controvert any of the contents made in the said further affidavit. I therefore do not find that the Petitioner is guilty of suppression on this count. 21 As far as the issue of not giving credit of ₹ 9 Crores is concerned (even though the same was paid before filing of the Company Petition), Mr. Rajadhyaksha submitted that this mistake occurred because the claim made in the Petition was as on 12th December, 2012 (as mentioned in the particulars of claim) whereas the payment of ₹ 9 Crores was made only sometime in March 2013. He very fairly did not try to justify this and in fact submitted that the particulars of claim in the Petition ought to have been set out as on the date of filing of the Company Petition. However, this was not done and this is why a mistake was made in not giving credit of ₹ 9 Crores to the Respondent Company in the Company Petition. He however submitted, and in my view rightly so, that credit for the same has in fact now been given to the Respondent Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion pales into insignificance. 23 In view of what I have held, I find that the reliance placed by Mr. Cama on the decision of the Supreme Court in the case of S. P. Chengalvaraya Naidu ( Dead) by LRS v/s Jagannath (Dead) by LRS and Others(1994) 1 SCC 1 is wholly misplaced. The facts of this case would reveal that a partition decree was obtained from the Court by suppressing a vital document, namely the release deed. It is in these circumstances, that the observations of the Supreme Court as set out in paragraphs 5 and 6 have to be read and understood. In fact, the short question before the Supreme Court was whether in the facts of that case Jagannath had obtained a preliminary decree by playing a fraud on the Court. It is in these circumstances that the Supreme Court held that non-production and even non-mentioning of the release deed at the trial tantamounted to playing a fraud on the Court. When a party withholds a vital document in order to gain an advantage on the other side then he would be guilty of playing a fraud on the court as well as on the opposite party, is what was held by the Supreme Court in the said decision. I do not see how this decision advances the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 12 Crores for which admittedly the Respondent Company was not a Guarantor. However, as far as the Term Loan of ₹ 35 Crorers is concerned, Mr. Cama has not raised any defense in relation to the same. The fact that the Guarantee was executed by the Respondent Company in relation to the Term Loan of ₹ 35 Crores has been very fairly admitted by Mr. Cama before me. In the further affidavit, a specific statement has been made on behalf of the Petitioner that the Respondent Company is not a Guarantor in relation to the Term Loan of ₹ 12 Crores that was sanctioned by Borrower No.1. After excluding the amounts that were due under the Term Loan of ₹ 12 Crores, the Petitioner has specifically stated in the further affidavit that an amount of ₹ 58.24 Crores, as on 31st July, 2015, is due and payable by the Respondent Company in relation to the Term Loan of ₹ 35 Crores. This statement has remained uncontroverted and I find from the record that in relation to the Term Loan of ₹ 35 Crores, the Respondent Company as a Guarantor, has absolutely no defense. 26 As held by the Supreme Court in the case of M/s Madhusudan Gordhandas and Co (1971) 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been advanced before the appellate Court that the winding-up order which was being considered was bad because the creditor had demanded a sum of 628, and it appeared that he was entitled only to 411 7s. 9d. This argument has been decisively rejected by Lord Chelmsfore, L.C. speaking for the Bench at page 410 of the report. It has been observed that even if the creditor has made a demand upon the company for payment of more than was due, that per se will not make the notice or the consequential winding up order bad or invalid, provided that there was a debt in exeess of 50 due to the creditor. 9. Both the above decisions have been cited and followed by a Single Judge of the Calcutta High Court in Ofu Lynx Ltd. v. Simon Carves India Ltd. [AIR 1970 Cal. 418.] The learned Single Judge was considering the validity of a notice under section 434 of the companies Act, 1956, and the contention raised was that the notice must be deemed to be bad because a portion of the claim in respect of which notice had been given was disputed and prima facie the dispute was required to be upheld. It was observed: I, therefore, hold that notice under section 434 of the companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors will, in such case, be entitled to a winding-up order. This is clear from the following observations of the Supreme Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries, (1972) 42 Comp Cases 125: Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. The Court has dismissed a petition for winding-up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. (See London and Paris Banking Corpn., Re. 4) Again, a petition for winding-up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed. (See Brighton Club and Horfold Hotel Co. Ltd. Re. 5) Where the debt is undisputed the Court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. (See A Company, Re. 6) Where, however, there is no doubt that the company owes the creditor a debt entitling him to a wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed the limit of ₹ 500/- indicated in section 434 of the Act, it would be unjust to refuse wind up order on the ground that there is dispute as to precise amount owned.In re Tweeds Garages Ltd., (1962) 1 Ch. 406: it was clearly held that it would be unjust to refuse a winding up order to the petitioner who has admittedly owned moneys which have not been paid merely because there is a dispute as to the precise amount owning. Almost to the same effect are the observations in Cardiff Preserved Coal and Coke Co. v. Norton, (1867) 2 Ch. App. 405. 12. The learned single judge of Calcutta High Court in Ofu Lynx Ltd. v. Simon Carves India Ltd., (1971) 41 Comp Cas 174 has observed: I, therefore, hold that a notice under section 434 of the Companies Act, 1956, will not be rendered invalid only because of the fact that the amount of debt mentioned in the notice may not be exactly correct amount of the debt due, provided the amount mentioned in the notice includes debt due and exceeds sum of ₹ 500/-. 13. The Judgment of single judge of Calcutta High Court has been cited with approval by the Division Bench of this Court in Pfizer Ltd. v. Usan Laboratories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now well settled that the Company Court does not adjudicate the claim of the Petitioner nor does it pass any decree ordering the Respondent Company to pay the sum claimed in the Company Petition. It only has to come to the conclusion that the Respondent Company is indebted to the Petitioner in a sum exceeding to ₹ 1 lakh as more particularly set out in Section 434 of the Company Act, 1956 before passing an order of winding up. Any findings given by the Company Court in relation to the indebtedness of the Respondent Company to the Petitioner would certainly not be binding on the Civil Court or the DRT whilst adjudicating the claim made by the Petitioner as to what is the exact amount due and payable by the Respondent Company. If I was to accept the submissions of Mr Cama as canvassed earlier, it would effectively mean that no bank or the financial institution would be able to file a Company Petition and seek orders of winding up. This is not how I understand the law to be. In fact, a Division Bench of this Court in the case of Viral Filaments Ltd. Vs Indusind Bank Ltd. 2001(3) Mh.L.J. 552 has categorically held that the exclusion of jurisdiction as set out in Sections 17 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Company fails to do so or fails to secure the said debt within the prescribed time, the Company shall be deemed to be unable to pay its debt. Once such a contingency has arisen, and the statutory fiction has come into play, it is perfectly open to the Company Court to entertain the petition under section 433(e) of the Companies Act, 1956. 6. The argument of Mr. Shah that what could be done by the Company Court can equally be done by the DRT under the RDB Act is erroneous. There is no provision in the RDB Act empowering the Tribunal to wind up a Company which owes the debt to the applicant financial institution. The jurisdiction of the Tribunal under the RDB Act is only to adjudicate the liability of the respondent before it, ascertain the debt due to the bank/financial institution and issue a certificate for recovery thereof. Once such a certificate of recovery is issued to the Recovery Officer, the Recovery Officer is empowered to execute the same in the manner prescribed under the RDB Act. We find that the jurisdiction to wind up the Company is wholly unavailable to the DRT. Hence, what could be done by the Company Court under section 433(e) could obviously not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 434 of the Companies Act, 1956, mentioning that the Appellant Company (Mediquip Systems Pvt. Ltd. ) was liable to pay to the Respondent a sum of US$ 5000 and US$ 11000 aggregating to US$ 16,000. Since, this payment was not made, the Respondent filed a winding up petition against the Appellant Company praying that the Company be wound up. The Company Judge disposed of the winding up petition holding inter alia that sofar as US$ 5000 was concerned, there was a serious dispute raised by the Appellant Company. However, in sofar as the amount of, US$ 11,000 was concerned, the learned Company Judge directed the Appellant Company to deposit US$ 11,000 in the Company Court. This order of the Company Judge was challenged before a Division Bench of Calcutta High Court without any success. Being aggrieved thereby, the Appellant Company approached the Supreme Court. The Supreme Court after considering the facts of the case held that, even with reference to US$ 11,000 there was a bonafide dispute raised by the Appellant Company. This is evident from paragraph 15 and 16 of the said decision. On going through the aforesaid decision, I do not find that the Supreme Court has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogical code, whereas every lawyer must acknowledge that the law is not always logical at all. (emphasis supplied) We entirely agree with the above observations. 15. In Ambica Quarry Works v. State of Gujarat [(1987) 1 SCC 213] (vide SCC p. 221, para 18) this Court observed: 18 . The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is only an authority for what it actually decides, and not what logically follows from it. 16. In Bhavnagar University v. Palitana Sugar Mill (P) Ltd. [(2003) 2 SCC 111] (vide SCC p. 130, para 59) this Court observed: 59 . It is also well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision . 17. As held in Bharat Petroleum Corpn. Ltd. v. N.R. Vairamani [(2004) 8 SCC 579 : AIR 2004 SC 4778] a decision cannot be relied on without disclosing the factual situation. In the same judgment this Court also observed: (SCC pp. 584-85, paras 9-12) 9 . Courts should not place reliance on decisions without discussing as to how the factual situation fits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedents have become locus classicus: ( Abdul Kayoom v. CIT [AIR 1962 SC 680] , AIR p. 688, para 19) 19 . Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect , in deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. *** Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches . My plea is to keep the path to justice clear of obstructions which could impede it. (emphasis supplied) 18. We have referred to the aforesaid decisions and the principles laid down therein, because often decisions are cited for a proposition without reading the entire decision and the reasoning contained therein. In our opinion, the decision of this Court in Sarguja Transport case [(1987) 1 SCC 5 : 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
