TMI Blog2008 (12) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... paid up share capital is ₹ 8,34,06,690/-. Except the allegation that the 2nd respondent company is a subsidiary of the 1st respondent company, there has admittedly been no dealings between the creditor/appellant and the 1st respondent company and there is no direct link of the appellant against the 1st respondent. All the transactions, which are subject matter of the present dispute, are only between the appellant and the 2nd respondent- company. 4. The 2nd respondent-company is wholly owned subsidiary of the 1st respondent-company and has authorized share capital of ₹ 25.00 lakhs and paid up share capital of ₹ 15,01,800/-. The 2nd respondent-company carries on business of manufacture, trade, import, export in all kinds of stationery products, which include educational and office stationery, computer stationeries and other allied paper products. 5. The appellant is a small scale industry and is engaged in the business of manufacture of pre-printed cartons made out of paper boards, note books and otherwise equipment like calendars machinery etc. It is alleged that in December 2000, the 2nd respondent company approached the appellant to process their products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailure to return the material, the cost of material of ₹ 80,300/- will be deducted from the appellant's account. It appears that thereafter, there were still discussions between the parties as to allowing of the percentage of wastage as the appellant was demanding that the wastage percentage be raised from 1.5% to 4.5% and under the 2nd respondent's letter dated 01-08-2001, the appellant was informed that the said office of the 2nd respondent has agreed allowing wastage of 4.5% as requested and once again called upon the appellant to return its material immediately to enable the 2nd respondent to process the payment to the appellant. Under further letter of the 2nd respondent, dated 14- 09-2001, the appellant was informed that wastage of 4.5% was allowed on defective boards and 2.25% for normal board was already allowed by the 2nd respondent and requested for return of balance material. c) In response there to, however, the appellant sent legal notice dated 17-09- 2001 to the 2nd respondent pointing out ₹ 3,59,339/- remains due, which has not been paid in spite of demand. The appellant, therefore, called upon the 2nd respondent to pay the said dues with inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2nd respondents by specifically threatening under Section 433 (e) of the Act as well as under the Central Act 32 of 1993. g) The said notice was replied to, separately, under reply, dated 17-08-2004, by the 2nd respondent-company pointing out that even though the principal amount, which is being treated as a basis for reply of the appellant, was disputed, as there were delays in execution of the orders by the appellant and that there was no default on the part of the 2nd respondent-company and only as a goodwill gesture that a sum of ₹ 2.24 lakhs was offered to be paid in full and final settlement and as such the inability to pay will not arise as there is no default on the part of the company. h) The 1st respondent also separately replied under reply dated 20-08-2004, pointing out that the 1st respondent cannot be roped in day to day business dealings between the appellant and 2nd respondent and the 1st respondent as a holding company was not in the picture at any point of time and as such the question of winding up of the 1st respondent does not arise. Thereafter, the present company petition has been filed on 26-11-2004. 7. The 1st and the 2nd respondents have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utstanding material account, the main account cannot be settled. It is only thereafter that the appellant has returned the material on 04-06-2002. 12. The appellant, however, sent the second legal notice, dated 08-04-2003, demanding principal amount with interest at 36% and thereafter, there were admittedly discussions between the appellant and the 2nd respondent which is evidenced by the letter of the appellant, dated 20-01-2004. At this stage also the appellant did not even envisage any inability to pay on the part of the 2nd respondent. 13. In fact, said letter of the appellant shows that it could receive the principal amount without prejudice to its claim for balance amount towards interest. The appellant, therefore, obviously, did not doubt the capacity of the 2nd respondent to pay the principal amount as well as the balance and was, in fact, intending to recover the balance amount and as such reserved its right to proceed against the 2nd respondent. 14. Even thereafter, the third legal notice, in paragraph-8, also shows that the appellant did not doubt inability of the 2nd respondent and in fact, was insisting on the alleged promise that principal amount will be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .24 lakhs towards full and final settlement of the appellant while the appellant was insisting that it will receive the said amount without prejudice to its other claims and was insisting on entire due interest and additional amounts as claimed in the 3rd legal notice. The claim of the appellant, therefore, was clearly made for unascertained and un-adjudicated amount, which was not admitted by the 2nd respondent. 19. During hearing of this appeal, we had indicated the learned counsel for the appellant, as to whether they would accept ₹ 2.24 lakhs as said to have been agreed between the parties towards full and final settlement. But obviously the same was not agreeable with the appellant, as their claim according to him was well justified. 20. The learned company Judge has rightly relied upon the decision of the Supreme Court in M/s. Madhusudan Gordhandas And Co., Appellant v. Madhu Woolen Industries Private. Ltd., Respondent; Mahendra B. Parikh and others, Creditors, AIR 1971 S.C. 2600. In terms of the principles therein, we agree with the view of the learned company Judge that the debt is bona fide disputed by the 2nd respondent. In fact, the third legal notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said sum towards full and final settlement and was desirous of pressing it's claim with respect to interest etc. till future date, before the appropriate forum. This also establishes that 'inability to pay' was not the stand of the appellant. Further, there is neither any pleading nor any material to establish that liabilities of the 2nd respondent-company are disproportionate to it's assets and as such the commercial insolvency of the 2nd respondent-company has not been established by the appellant. 25. The learned counsel for the respondent relied upon a decision reported in Softsule (P) Ltd. Re (1977) 47 Company Case 438 (Bombay), a decision of the Bombay High Court, which was approved by the Supreme Court in Mediquit Systems' case (supra) as well as the decision of the Madras High Court in Tube Investments Of India Ltd. v. Rim And Accessories (P) Ltd (1990) 3 Comp LJ 322 (Mad). In Mediquit Systems' case (supra), the Supreme Court held that a debt under Section 433 of the Act must be determined and the company must be unable to pay the same and that inability referred to in the expression 'unable to pay its dues' should be taken in the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement is same. However, it was held that both the companies being separate legal entities and the liability of one cannot be passed on to the other, even if they are managed by the same Board of Directors. To the same effect, a decision of the Panjab High Court by a learned Single Judge, reported in Punjab National Bank V. M/s. Bareja Knipping Fastners Ltd. Under Liquidation Through Official Liquidator, Chandigarh And Others, P.L.R. 1995 (1) 75 is also relevant. 30. In the light of the above, therefore, even if 1st respondent is a holding company of the 2nd respondent till 30-09-2004, it cannot be made liable and, the company petition as against 1st respondent-company is liable to be dismissed. Further, it is also significant that the appellant also did not involve the 1st respondent in any of the correspondence or in the first two legal notices and had roped the 1st respondent for the first time in the third legal notice. Since the company petition is not maintainable against the 1st respondent, irrespective of the maintainability vis-- vis the 2nd respondent, the third question framed for consideration viz., lifting of corporate veil etc., does not arise for consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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