TMI Blog2018 (2) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... - Company Petition No. 187 of 2013 - - - Dated:- 5-10-2017 - MR. R. M. CHHAYA, J. For The Petitioner : Mr Mm Saiyed, Advocate For The Respondent : Mr Si Nanavati, Senior Advocate With Mrs Vd Nanavati, Advocate ORAL JUDGMENT 1. Heard Mr. M.M. Saiyed, learned advocate for the petitioner and Mr. Sudhir Nanavati, learned Senior Advocate assisted by Mrs. V.D. Nanavati, learned advocate for the respondent. 2. By this petition under Sections 433 and 434 of the Companies Act, 1956 (hereinafter referred to as the Act ), the petitioner has prayed for winding up of the Company named Arcoy Bio Refinery Pvt. Ltd. 3. It is the case of the petitioner that the respondentCompany gave various purchase orders for undertaking different job works at the Company premises of the respondent situated at Panoli GIDC Industrial Estate, Taluka Ankleshwar, District Bharuch and the petitioner has carried out and completed all such purchase orders within time and to the satisfaction of the respondentCompany. It is the case of the petitioner that 8 such purchase orders have remained unpaid. It is further the case of the petitioner that no dispute has ever been raised by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first time before this Court, disputes are being raised. 5.2 It is contended that since 2013, plant is stopped and no manufacturing activities are going on. 5.3 It is also contended that more than ₹ 50 crores are due and payable to other creditors and the State Bank of India has already resorted the proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and therefore, the respondentCompany deserves to be wound up as provided under Section 433(c) and (e) of the Companies Act, 1956. It is contended that in other matter, a statement was made and amount has been paid and even the bills which are annexed with this petition are admittedly unpaid and therefore, the defence of disputed amount raised by the respondent is incorrect. It is also contended that the suit proceedings of Special Civil Suit no.134 of 2013 has nothing to do with the present petition filed under the provisions of the Companies Act, 1956 and the deposition given by the Accountant of the petitioner is being decided and misused by the respondent as a defence which should be discarded by this Court. Mr. Saiyed has relied upon the judgment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed with costs. This principle is, succinctly, established in following English Cases. 1. Imperial Silver Quarries (1868) 14 W.R. 1220; 2. Kings Cros Industrial Dwellings Co. (1870) L.R. 11 Eq. 149; 3. London Paris Banking Corp. (1875) L.R. 19 Eq. 44, 446; 4. Cadiz Waterworks Co. v. Barnett, (1875) L.R. 19 Eq. 182; 5. Cercle Restaurant Castiglione Co. v. Lavery (1881) 18 Ch. D. 555; 6. Imperial Hydropathic Hotel Co. (1882) 49 L.T. 147; 7. K.L. Tractors Ltd. In re (1954) V.L.R. 505; 8. Bryanston Finance Ltd. v. De Vries (No.2) (1976) Ch. 63 (C.A.) 9. Re Claybridge Shipping Co. S.A. the Times, March 14, 1981 (C.A.); (1981) C.A.T. 143. To fall within the general principle, the controversy, really, must be bonafide in both, subjective and objective sense. This means that, it must be, honestly, believed to exist and must be based on substantial or reasonable grounds. 'Substantial' means having substance and not frivolous or vexatious and which the Court should ignore. There must be so much doubt and question about the liability to pay the debt that the Court sees that there is a question to be decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed. The appeal was, accordingly, allowed and windingup order came to be discharged. Similarly, for dismissal of winding up petition where the company has a genuine defence or dispute or a crossclaim, it has been observed in Halsbury's Laws (4th edn) (1996 reissue) para 2212. 4 Halsbury's Statutes (4th edn) (1998 reprint) 821 succinctly propounds the winding up issue in similar cases when discretion is sought to be exercised under section 125 of the Insolvency Act, 1986. The pith and substance of the observations made in the Halsbury's Laws, in this connection, could be highlighted in following terms: A petition founded on a debt which is disputed in good faith and on substantial grounds is demurrable for the reason that the petitioner is not a creditor of the company within the meaning of section 224(1) at all and the question whether he is or is not a creditor of the company is not appropriate for adjudication in winding up proceedings. In fact, in such a situation, the dismissal of the petition is not at any rate, initially, a matter of discretion of the court. It is founded on the petitioner's inability to establish the locus standi to present a peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on that ground. 9. It would also be advantageous to refer to the judgment of the Apex Court in the case of Madhusudan Gordhandas and Co., Vs. Madhu Woollen Industries Pvt. Ltd., reported in (1972) 42 Company Cases 125 (S.C.) , wherein it has been observed as under: 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 Corporation, In re [1875] LR 19 Eq.444). 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 Norfolk Hotel Co.Ltd., In re [1865] 35 Beav. 204). 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 choses not to pay that particular debt. (See A Company, In re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnaswami (A.C.K.)[1965] 35 Comp Case 456, 463 (SC) this court quoted with approval the following passage from Buckley on the Companies Acts, 13th edition, page 451: It is wellsettled that a windingup petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a windingup order but really to exercise pressure will be dismissed, and under circumstances may be stigmated as a scandalous abuse of the process of the court. 10. Similarly, a view has been expressed by the Apex Court in the case of Pradeshiya Industrial Investment Corporation of U.P. Vs. North India Petrochemicals Ltd., reported in (1994) 3 SCC 348 , wherein the Hon'ble Apex Court has held that where there exists bonafide dispute and the dues are not admitted, the winding up petition is required to be dismissed. 11. Similarly, the Apex Court in the case of IBA Healt (India) Pvt. Ltd vs. InfoDrive Systems SDN. BHD. Reported in (2010) 10 SCC 553, has observed thus 22. The above mentioned decision was later followed by this Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. (1971 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing with its creditors or customers and even among the public. PUBLIC POLICY CONSIDERATIONS 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 financial standing of the company and which may also have other economic and social ramifications. Competitors will be all the more happy and the sale of its products may go down in the market and it may also trigger a series of crossdefaults, and may further push the company into a state of acute insolvency much more than what it was when the petition was filed. The Company Court, at times, has not only to look into the interest of the creditors, but also the interests of public at large. 35. We have referred to the above aspects at some length to impress upon the Company Courts to be more vigilant so that its medium would 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 deb ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
