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2016 (12) TMI 367 - CALCUTTA HIGH COURT

2016 (12) TMI 367 - CALCUTTA HIGH COURT - TMI - Neglect to discharge of debt payable under a loan transaction - winding up petition - Held that:- The explanation offered by the company of a sale transaction and that the parties proceeded on a misconception that the area is larger than 2.73 acres and, accordingly, an excess amount was paid by the petitioning creditor which subsequently on ascertainment of the actual area was refunded without refund of the excess stamp duty and registration cost p .....

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mo of Consideration. The necessity to prepare a survey report allegedly on 28th May, 2014 without notice to the petitioner and significantly coinciding with the date of execution of the sale deed is something more that it meets the eyes. The survey report was not at all necessary or required as the recitals of the sale deed would clearly show that the vendor purchased 2.73 acres of land on 14th December, 2005. The very fact that the said sum of ₹ 1.90 Crores was not mentioned in the Memo o .....

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required to file a suit for the remaining balance amount of ₹ 52 lakhs together with interest within a period of four weeks thereafter. However, if the petitioner fails to institute such proceeding notwithstanding the compliance of this order by the company, the Registrar, Original Side, High Court, Calcutta shall refund the said amount together with interest of the company on payment without any further reference. The Registrar, Original Side, High Court, Calcutta shall deposit the said .....

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tioner has filed this winding up petition on the ground that the company has neglected to discharge its debt for a sum of ₹ 1.38 Crores payable under a loan transaction. The petitioner has referred to a cheque dated April 15, 2014 drawn on Union Bank of India in favour of the Company for a sum of ₹ 1.90 Crores by way of a loan. The petitioner alleged that the company in part discharge of its obligation had paid a sum of ₹ 52 lakhs on 17th July, 2014 through RTGS and has failed .....

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itioner has referred to the cheque, bank statement, a notice dated 4th February, 2015 and the statutory notice and submits that indisputably the company had failed to discharge its debt. Mr. Abhrajit Mitra, the learned Senior Counsel appearing on behalf of the Company submits that the said amount, in fact, represents a part of sale consideration payable in terms of an agreement for sale that was entered between the petitioner and the company. It is submitted that the petitioner has suppressed th .....

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The rest of the land measuring 0.685 acres in R.S. Dag No.270 and 0.095 acres in R.S. Dag No.270/306 belonged to Pragma Builtech Pvt. Ltd. Pragma Builtech Pvt. Ltd. and Vigneshwara Properties Pvt. Ltd. herein are sister concerns having common Directors and Shareholders. The deponent of the affidavit on behalf of the company is in control of both these two companies. The price that was fixed by agreement was ₹ 1.65 crore per acre. At the time of entering into the contract, the Company and i .....

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ccordingly, the total consideration was determined at ₹ 5.50 Crores. In fact, if the area of the land is measured based on the plans annexed to the conveyance deeds it would be more than 3 acres and, in fact, around 3.30 acres. It was agreed that before the conveyance is executed, the land would be measured by a surveyor and the final consideration, accordingly, determined. The petitioner Ranjit Kumar Saha was not willing to declare the entire consideration as price of land in question. Th .....

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Deeds to be executed by the company herein and Pragma Builtech Pvt. Ltd. in favour of I.P. Traders Pvt. Ltd. As to the balance amount, the petitioner agreed to pay by cheque but not as land price. This, the said companies decided to accept partly in the name of the company herein, partly in the name of Pragma Builtech Pvt. Ltd. and partly in the name of ATC Logistics Pvt. Ltd., an associate concern which is also under the control and management of the present company. This agreement was reached .....

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8377; 90 lakhs only, to Pragma and ₹ 2 Crores only to ATC Logistics Pvt. Ltd.. These payments were made between 15th April, 2014 and 16th April, 2014, particulars whereof are given below:- Date Amount Paid to 16.04.2014 Rs.2,00,00,000/- ATC Logistic 15.04.2014 Rs.1,90,00,000/- Vigneshwara 15.04.2014 Rs.90,00,000/- Pragma It was agreed and understood that after final measurement, necessary adjustments in the price would be made. The land was thereafter measured sometime around end May, 2014 .....

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of which that applicable to the company for 5 bighas 18 cottahs of land was ₹ 3,68,54,472/- and that for Pragma Builtech Pvt. Ltd. for 2 bighas 7 cottahs and 3 chittacks was ₹ 1,65,91,615/-. Only after the full stamp duty was paid by the petitioner on the market value so assessed by the Registering Authority, the Conveyance Deeds were accepted for registration on 2nd June, 2014. Thereafter, dispute arose between the parties with regard to the refund of excess amount received by the C .....

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of which ₹ 52 lakhs was repaid by the company on 16th July, 2014 and ₹ 48 lakhs was repaid by ATC Logistics Pvt. Ltd. With such payment, the accounts stood settled and no money remained due or payable by any of the companies either to the petitioner or to his company, I.P. Traders Pvt. Ltd. Mr. Mitra has submitted that since there is no amount due and payable and the parties have agreed to settle their dispute by accepting a sum of ₹ 1 Crore, the winding up petition is liable .....

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14 dated 14th March, 2016; iii) In the Goods of: Kamal Kumar Mitra and In the Matter of: Taxation Services Syndicate Ltd. reported at 2008 (3) CHN 384; iv) Niranjan Lal Todi & Anr. VS. Nandlal Todi & Ors. reported at 2011 (1) CHN (Cal) 762; v) V.N. Devadoss Vs. Chief Revenue Control Officer-cum-Inspector & Ors. reported at (2009) 7 SCC 438. In reply, Mr. Mainak Bose led by Mr. Utpal Bose, learned Senior Counsel submits that the story as spun in the affidavit is completely unbelievabl .....

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petitioner. In this regard reference is placed on the judgment of the Hon ble Supreme Court in IBA Health (India) Pvt. Ltd. Vs. Info Drive Systems SDN. BHD reported at 2010(10) SCC 553. In order to admit a petition for winding up, the Court has to be satisfied that there is a neglect to pay a debt. The refusal to pay a sum of money on legitimate grounds cannot constitute a neglect to pay a debt. The Court has to be satisfied that the Company is required to discharge a debt and has without any j .....

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ny for not paying the amount which is being claimed as a debt by the petitioning creditor. The Court is also required to keep in mind that an order admitting the winding up is likely to visit the company with severe civil consequences. The Court before admitting the winding up is required to arrive at a conclusion that the claim of the petitioning creditor was indisputable. The standard of proof required by petitioning creditor to prove his case in the winding up application is of the same degre .....

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issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. (c) If the defendant discloses such facts as may be deemed sufficient to entitled him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shows such a state of facts as leads to the inference that at the .....

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nt and the defendant is not entitled to leave to defend. (e) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence. .....

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Jessel Master of the Rolls in London and Paris Bank Corporation reported at 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. The company must be in a completely defenceless position. It would suffice if the company raised a triable issue, for relegation of the winding up application to a civil forum. In the instant case, the company has set up a defence of a sale transaction. The compan .....

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uditor observed as follows:- The company does not have any pending litigation which would impact its financial position . The loan apparently was treated as profit in absence of candid and honest disclosure made by the company to the independent auditor. In a fairly recent decision, the Hon ble Supreme Court in IBA Health (India) Pvt. Ltd. Vs. Info-Drive System SDN. BHD. reported at (2010) 10 SCC 553 has elaborated on the issue and indicated the guideline that the Court is required to follow in .....

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ived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor s debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his .....

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neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to 14 pay its debts is not substantiated and non-payment of the amount of such a bona fide disputed debt cannot be termed as neglect to pay so as to incur the liability under Section 433(e) read with Section 434(1)(a) of the Companies Act, 1956. 31. Where the company has a bona fide dispute, the petitioner cannot be regarded as a creditor of the company for the purposes of winding .....

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r a bona fide dispute in which the dispute can only be adjudicated by a trial in a civil court. 34. A creditor s winding up petition, in certain situations, implies insolvency or financial position with other creditors, banking institutions, customers and so on. Publication in the Newspaper of the filing of winding up petition may damage the creditworthiness or 20 financial standing of the company and which may also have other economic and social ramifications. Competitors will be all the more h .....

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not be misused. A Company Court, therefore, should act with circumspection, care and caution and examine as to whether an attempt is made to pressurize the company to pay a debt which is substantially disputed. A Company Court, therefore, should be guarded from such vexatious abuse of the process and cannot function as a Debt Collecting Agency and should not permit a party to unreasonably set the law in motion, especially when the aggrieved party has a remedy elsewhere. The explanation offered b .....

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of ₹ 1.90 crores as consideration for the sale of land on the basis of stamp duty assessed by the collector at ₹ 3,68,54,472/- on 2nd June, 2014 as opposed to a sum of ₹ 49.74 lakhs mentioned in the said deed as sale consideration. There is no document to show that the petitioner had agreed to pay a sum over and in excess ₹ 49.74 lakhs as consideration for sale and/or on that basis a cheque for a sum of ₹ 1.90 crores covering the balance amount was issued. The agree .....

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the company had paid a sum of ₹ 52 lakhs towards refund of excess amount received which is difficult to accept a sum of ₹ 86 lakhs would still be due and payable by the company to the petition creditor. Moreover, the consideration for sale of land was paid by separate cheque subsequent to the loan transaction. If the contention of the company were to be accepted then there would be no requirement to issue separate cheques on 15th April, 2014 and May 30, 2014 for ₹ 48,00,000/- .....

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