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Hongkong And Shanghai Banking Corporation Limited Versus Agnite Education limited

(2013) 176 Comp. Cases 313 - Company Petition No. 180 of 2009 - Dated:- 25-7-2012 - R.S.Ramanathan J. JUDGEMENT- ( 1. ) This petition is filed under Section 433 (e) and (f) r/w Sections 434 (i) (a) and Section 439(i) and (b) of the Companies Act 1956 for winding up of the respondent company. ( 2. ) It is stated in the company petition that the respondent company approached the petitioner for advancing advance, performance and financial guarantee favouring one Bunge SA. The petitioner granted the .....

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s bound to pay the said amount to the petitioner company as per the terms of Omnibus guarantee dated 28.08.2007. As the respondent company failed to make the repayment, the petitioner company by its recall notice dated 26.12.2008, recalled the guarantee facility granted to the respondent and called upon the respondent to repay the outstanding including the interest accrued thereon. The respondent did not come forward to repay the outstanding and therefore, the petitioner forced to appropriated a .....

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Arrangements". Therefore, a notice under Section 138 of Negotiable Instrument Act, 1881 was issued dated 02.01.2009 calling upon the respondent to pay the sum due and the respondent also admitted their liability to the tune of ₹ 20,02,84,721.93 along with interest in its reply notice dated 16.01.2009 and prayed for further time for settlement of the outstanding amount. As the respondent did not pay the amount, a statutory notice was issued by the petitioner on 04.05.2009 calling upon .....

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down and ICRA, an independent credit rating agency, revised its rating of long term bank limits of the respondent company to "LC" meaning poor credit quality rating and the rating assigned to short term bank limits of the respondent company has been revised to "A5" which means lowest credit quality rating. It is further stated that the respondent has been listed as willful defaulters published by Reserve Bank of India for an outstanding amount of ₹ 24,27,00,000/ - to t .....

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company is getting orders and it is not commercially insolvent as contended by the petitioner and considering the business turnover of the respondent it cannot be stated that the respondent company is not in a position to repay its debt. It is further stated that the interest claim at the rate of 35% is usurious and the amount claimed by the petitioner is also disputed and the petitioner has already initiated proceedings before the Debts Recovery Tribunal for the recovery of amount due and also .....

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nt company further stated that it has taken all steps for his revival and 50% of the process was also got completed and respondent company is now getting various projects across the globe and therefore, there is every possibility of the respondent getting more income from those office and the turn over of 3rd quarter of the respondent company is estimated around 20 Crores, which ends up to December 2010 and it is comparatively much higher than 2009 -10 and the respondent company is not commercia .....

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a secured creditor and therefore, it is not bothered about the liability of the respondent company, whereas the petitioner is an unsecured creditor left with no assets to realise its debts and therefore, if the company is allowed to function, the petitioner may not be in a position to realise any amount and the working of the company is also not sound as projected by the respondent and as per the Audit Annual Report as on 31.03.2010 submitted to the Bombay Stock Exchange by the respondent compa .....

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ondent company is liable to be wound up. ( 4. ) Mr .A.L.Somayaji, learned Senior Counsel appearing for the petitioner submitted that the filing of application before the Debts Recovery Tribunal -II, Chennai, for the recovery of the amount and initiation of criminal prosecution under Section 138 of the Negotiable Instruments Act will not be a bar for filing the present application for winding up, when the petitioner is able to prove that the respondent company is not able to pay its due when dema .....

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not disputed and when the respondent company is not in a position to repay the amount when demanded, even after the issuance of statutory notice, a presumption can be raised that the company is unable to pay its dues and therefore, the respondent company is liable to be wound up and no document has been placed by the respondent company to prove its credit worthiness and the respondent gave a proposal on 24.03.2011 agreed to discharge the admitted amount payable to the petitioner in installment a .....

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espondent revised the proposal by its letter dated 19.04.2011 and offered to pay 2.5 lakhs for the first quarter of 2011 -12, ₹ 5 lakhs for the second and third quarter and ₹ 10 lakhs for the 4th quarter and for the years 2012 -13 offered to pay ₹ 15 lakhs for first and second quarter and ₹ 35 lakhs for 3rd and 4th quarters and though the offer was given, no payment was made to show the bonofide and therefore, it cannot be contended by the respondent that the respondent c .....

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r of Small Industries Development Bank of India Vs. Shri Niranjan Ayurved Bhawan Ltd., and equivalent to 128CompCas1007(Bom) in the matter of Global Trust Bank Ltd. Vs. Kullici Nixon Ltd, in support of his contention that initiation of proceedings before the Debts Recovery Tribunal will not be a bar for filing an application for winding up the company. Further the learned Senior Counsel appearing for the petitioner relied upon the judgments reported in 126 company cases 15 (Gujarat) in the matte .....

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s the petitioner has got alternate remedy and the petitioner has also availed the alternate remedy by filling application before the Debts Recovery Tribunal -II Chennai for recovery of the amount. He further submitted that the respondent did not admit the amount payable by it and respondent bonofidly disputed the claim of the petitioner and the interest claimed at the rate of 35% is also usurious and therefore, the petitioner is not entitled to claim that the amount. ( 5. ) He further submitted .....

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ompany cannot be wound up and as per the provisions of Section 433 of the Companies Act even after satisfying the requirements as stated in the section, the company can be ordered to be wound up only when it is just equitable and therefore, the petitioner cannot claim wind up of the company as of right and he relied upon the judgments reported in 128 CompCas 402 (Madras) in the matter of Allahabad Bank Vs. Kothari Petrochemicals Ltd., (2011) 1 MLJ 745 (SC) in the matter of IBA HEalth (I) P. Ltd. .....

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petition for winding up is not legally sustainable. ( 6. ) Having regard to the submissions made on both the learned Senior counsel, we will have to see whether the present petition for winding up is maintainable as the petitioner has already initiated proceedings before the Debts Recovery Tribunal -II Chennai for the recovery of the amount. It is not in dispute that the petitioner filed O.A.No.70 of 2009 on the file of the Debts Recovery Tribunal -II Chennai for the recovery of ₹ 23,63,7 .....

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he respondent company did not pay that amount within 30 days from the date of the order and therefore, the order dated 06.10.2009 for the issuance of interim recovery certificate for the above said sum has become final. Thereafter, the Debts Recovery Tribunal -II Chennai issued another recovery certificate for the balance amount of ₹ 3,60,86,636.40 by an order dated 11.01.2011. Even after the issuance of recovery certificate, no amount was paid by the respondent. In the judgment reported i .....

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. The same principle is reiterated in the judgment reported in in the matter of Small Industries Development Bank of India Vs. Shri Niranjan Ayurved Bhawan Ltd. Therefore, it cannot be contended that the invocation of recovery proceedings under the Recovery Act before the Debts Recovery Tribunal is a bar to initiate proceedings under the companies act for winding up the company. ( 7. ) The next contention of the learned Senior Counsel appearing for the respondent is that when there is a bonofide .....

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ndent to pay a sum of ₹ 20,02,84,721.93 with the interest at the rate of 35% p.a. THE petitioner company also issued a notice under Section 138 of Negotiable Instrument Act when the respondent company failed to honour the cheque issued in favour of the petitioner company. While sending reply to that notice, the respondent in its reply dated 16.01.2009 clearly admitted that the respondent company is liable to pay the said sum and assured that the said sum would be paid with interest as per .....

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ed having regard to the fact that the transaction between the respondent and petitioner is a commercial transaction and as per the contract agreed by the respondent, the respondent agreed to pay interest at the rate of 35% p.a. and that amount was also accepted by the Debts Recovery Tribunal -II Chennai while passing an award in O.A.No.70 of 2009. Therefore, in respect of commercial transaction when the parties agreed for a certain rate of interest, the parties cannot be heard to say at a later .....

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the learned Senior Counsel for the following reasons: (i) During the pendency of the company proceedings the respondent offered to discharge liability for a period of 5 years and also proposed a scheme of payment. Though the petitioner did not accept the scheme of payment suggested by the respondent, the respondent did not make any payment as suggested by them for the various quarters stated in those proposals. That also would prove that the respondent company is not in a position to pay its due .....

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is true that in the case of running concern and considering the larger interest of the employees and workmen, the Court should be very slow in entertaining the winding up petitions. The Court should equally be concerned with the interests of Banks, Financial Institutions, Creditors, Goods suppliers etc. Once having availed credit facilities, taken delivery of goods or received services for valuable consideration, the recipients of such facilities, goods or services will start making defaults in .....

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ot be allowed to defend winding up petitions under the guise of workers' interests. (ii) Similarly in the judgment reported in (Gujarat) in the matter of Board Opinion Vs. Hathising Mfg. Co. Ltd., it has been held as follows: "23. .... The funds provided by the secured creditors to the sick unit are also public funds and if the recovery is not enforced or their funds are blocked for indefinite period, the public at large would be a sufferer. The non -performing assets of the banks and f .....

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