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M/s. HDFC Bank Ltd. Versus M/s. Prem Power Construction Pvt. Ltd. & Anr.

2018 (1) TMI 503 - DELHI HIGH COURT

Notice of winding up u/s 433/434 of Companies Act, 1956 as duly served upon the Respondent or not - Held that:- In the present case, apart from the fact that the notice was sent by the appellant at several addresses of the respondent, an effort was also made to send the said notice even at the new registered office address. Thus, it is obvious that the appellant left no stone unturned in sending the notices by various modes to the registered office of the respondent. Moreover, under Section 51 o .....

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be a ground to dismiss the company petition. - In view of the above discussion, the winding up notice dated 1st October, 2012 and 11th December, 2012 are held to be in compliance with the requirement under Section 434 read with Section 51 of the Act as also under Section 27 of the General Clauses Act, 1897. The company petition is restored to its original position. The petition shall be listed before the Company Judge for further proceedings. The respondent shall maintain status quo of all .....

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es Act, 1956 (for short the Act ) was duly served upon the Respondent or not. 2. The present appeal arises out of the judgement of the learned Single Judge dated 6th December, 2013 by which the company petition filed by the appellant/HDFC bank ( appellant , for short) was dismissed on the ground that the winding up notice was not properly served on the Respondent. Brief Background 3. It is the case of the appellant that on 25th October, 2007 the respondent Company was sanctioned fund based credi .....

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crores and ₹ 95 lakhs, letter giving a lien on fixed deposit receipts ( FDRs , for short) of ₹ 60 lakhs and ₹ 95 lakhs and the hypothecation agreement of goods, vehicle, plant and machinery and book debts for ₹ 1100 lakhs. The directors of the respondent Company also executed a deed of guarantee and another deed of corporate guarantee was executed by M/s Prem Softech Pvt. Ltd. Various properties belonging to the company M/s Prem Softech Pvt. Ltd., which is a group company .....

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sum of ₹ 6,01,35,890.68 together with future interest and costs and further sum of ₹ 19,17,841 and Euros 2,65,427.30. All these amounts were due and payable according to the appellant. Since the payments were not forthcoming, the appellant approached the Debt Recovery Tribunal ( DRT ), which case is pending adjudication. It is the case of the appellant that on 3rd May, 2010 the respondent admitted its liability in a proposed onetime settlement letter. The settlement proposal was, how .....

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o. 63 of 2013 on 15th February, 2013, restraining the respondent from creating any charge, alienating, transferring, parting of possession of any of the immovable assets and certain other directions were also passed directing the filing of affidavit by the Managing Director of the respondent. On 1st May 2013, despite the respondent being served, since there was no appearance, the Company Court proceeded further and appointed Provisional Liquidator. This order was challenged in appeal by the Resp .....

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om time to time. Initially, a restraint order to secure the assets of the company was passed and the Official Liquidator ( OL , for short) was also directed to maintain status quo on 20th December, 2013. Thereafter, the Division Bench had directed the parties to explore mediation, which failed. The OL had prepared a full inventory of the assets of the company and the OL was directed to hand over the physical possession of the factory premises to the Managing Director of the respondent. Further, .....

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n decided on merits. Appellant s submissions 8. The stand of Mr. Kunal Tandon, Advocate for the Appellant is that the impugned order wrongly records that service of the winding up notice was not properly effected on the Respondent. In support of his submission, he relies upon the winding up notice dated 1st October 2012, courier receipts, speed post receipts, tracking reports, and the original envelopes for the same. The original envelopes were also produced in the Court at the time of the heari .....

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n the provisions of the Act to submit that whenever notices are sent by registered post they are deemed to be served. He specially relies upon the following cases: Kotak Mahindra Bank Ltd. v. Hermonite Associates Ltd. 2011 (161) CompCas 214 (hereinafter Kotak Mahindra Bank ) Global Infosystem Ltd. v. Lunar Finance Ltd. 2012 (130) DRJ 307 (hereinafter Global Infosystem ) State of M.P. v Hiralal & Ors. (1996) 7 SCC 523 (hereinafter Hiralal ) N. Parameswaran Unni v. G. Kannan & Anr. (2017) .....

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l Clauses Act, 1897 ought not to be made applicable. According to the respondent, because of the unreasonable conduct of the bank for recalling the loan facility, it has suffered huge losses. The respondent employs more than 500 persons in its business in the field of power transmission and construction of distribution systems. It has successfully settled with other banks such as ICICI bank, Yes bank and ABN Amro bank. Thus, it is only HDFC bank i.e. the appellant, which is refusing to agree to .....

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the position of the appellant that there were several outstanding dues to be paid by the respondent to the appellant. Despite long drawn proceedings, the appellant had been unable to recover its dues from the respondent. Under such circumstances, the appellant had issued the winding up notice dated 1st October, 2012. This notice was addressed by the Solicitors of the appellant to the registered office of the respondent being Khasra No.261/1, Village Ghitorni, New Delhi-110030 (hereinafter Ghitor .....

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addresses. The tracking reports have been placed on record in respect of some of the notices. The original envelope addressed to the registered office, was returned unserved by courier, and has also been placed on record. The notice sent by speed post, however, was not returned to the Solicitors. 13. The second notice dated 11th December, 2012 was sent to the Respondent at the new registered office at B-1/2065, Vasant Kunj, which address was obtained from the Ministry of Corporate Affairs (MCA) .....

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ices dated 1st October, 2012 and 11th December, 2012 were sent to the respondent through all possible modes i.e. by courier and speed post registered A.D. The question is as to whether this satisfies the requirement under law that the notices were delivered. 15. Section 433 (e) and 434 of the Act reads as under: "433. Circumstances in which company may be wound up by Tribunal.-A company may be wound up by the Tribunal,- XXXXXXXXX (e) if the company is unable to pay its debts; XXXXXXXXX 434. .....

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re or compound for it to the reasonable satisfaction of the creditor; (b) if execution or other process issued on a decree or order of any Court [or Tribunal] in favour of a creditor of the company is returned unsatisfied in whole or in part ; or (c) if it is proved to the satisfaction of the [Tribunal] that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the [Tribunal] shall take into account the contingent and prospective liabilities of .....

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ompany is deemed to be unable to pay its debt. As per clause (a), a company is deemed to be unable to pay its debt if it neglects to pay the sum exceeding ₹ 1 lac or to secure or compound it to the satisfaction of the creditor, after it is served with a notice demanding the said payment by causing the said notice to be delivered at the registered office by registered post or otherwise. The object behind the provision is that the company, which is a limited liability and a juristic person, .....

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hold as not maintainable and bad in law. The deeming fiction under Section 434(1)(a) is not exhaustive of the power of the Company Court. 17. In case the contention of the respondent has to be accepted, then a company may refuse to accept notice on one pretext or the other and ensure that the notice sought to be served is returned. It is, in this context that the Bombay High Court in Cavendish Shipping Limited versus Poaris Marine Management Private Limited and Others, [2010] 156 Company Cases 1 .....

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on is sought to be pressed in aid. The deeming fiction under Section 434(1)(a) is, however, not exhaustive of the power of the Company Court if a Company is unable to pay its debts within the meaning of clause (e) of Section 433. The effect of Section 434(1)(a) is to create a deeming fiction that the Company is unable to pay its debts if a creditor has served upon the Company by registered post or otherwise a demand under his hand requiring the Company to pay the sum due and the Company has negl .....

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weeks have to pass until a winding up petition can be presented. If, after the petition has been presented, a winding up order is made, the winding up is only treated as commencing at the date of the presentation of the petition; thus, if the creditor takes the course of serving a statutory demand, it would be giving the company an extra three weeks' grace in which such assets as the company may have may be dissipated in attempting to keep an insolvent business afloat, or may be absorbed in .....

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pay. 34. That apart, in the present case, it has been averred in the Company Petition that the statutory notice was addressed to the Registered Office of the Company as stated in the records of the Registrar of Companies, Maharashtra (ROC). The Petitioner obtained a certified copy from the record of the ROC with regard to the registered office address of the Company. However, the notices having been remitted on the address of the Registered Office as shown in the record of the ROC, all notices .....

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e Delhi High Court held that the documents which were placed on the record indicated that the Petitioner had sent the statutory notices to the Company at the address at which the Registered Office was located. In the meantime, the Company changed the address of its Registered Office as a result of which the statutory notices were not served. The Court held that sending of the notices by the Petitioner at the Registered Office of the Company in terms of the official records had to be regarded as .....

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essing it to the drawer, the service of notice should be deemed to be affected. In the said case, this it was observed that the attempt would satisfy the requirements of proviso (b) to Section 138 of the Negotiable Instruments Act, 1881. The Supreme Court elucidated that notice sent by registered post returned with postal endorsement refusal, not available, house locked or addressee not in station would be sufficient for the Court to presume due service. The Supreme Court held as under:- 13. It .....

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he object which the intended legislation sought to achieve. In this judgment, reference was also made to Jagdish Singh v. Natthu Singh, (1992) 1 SCC 647 and V. Raja Kumari v. P. Subbarama Naidu, (2004) 8 SCC 774. 19. Thus, the notice under Section 434 has to be served on the company by causing it to be delivered at its registered office by registered post or otherwise . The term causing it to be delivered has been interpreted in several judgements. In Kotak Mahindra Bank (supra), this Court had .....

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registered office, as per the official records, was held to be duly delivered and served even though the registered office was lying closed. A similar view has been taken in Global Infosystem (supra). 20. In the present case, apart from the fact that the notice was sent by the appellant at several addresses of the respondent, an effort was also made to send the said notice even at the new registered office address. Thus, it is obvious that the appellant left no stone unturned in sending the noti .....

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gistered office. Provided that where the securities are held in a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic mode or by delivery of floppies or discs. 21. A conjoint reading of Section 434 and Section 51 of the Act leaves no doubt that the appellant had made repeated efforts to serve the winding up notices to the respondent. There are certain other facts which go to show that the respondent may, in fact, have been av .....

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