The present petition is preferred by the petitioner seeking winding up of the respondent Company under Sections 433 and 434 of the Companies Act.
Heard Mr. Mehta for the petitioner and Mr.Bhatt for the respondent Company.
It appears that the basis of the present petition is that the petitioner has to recover the amount of Rs.1,38,246/- towards courier service rendered by the petitioner to the respondent Company including the interest therein as per the agreement and inspite of the statutory notice served, the amount has not been paid and the liability is denied and therefore, the present petition.
It appears that pending the petition, this Court on 28.08.2008 had passed the order and on behalf of the respondent, the statement was made that it shall deposit the amount of Rs.50,000/- and the Court simultaneously observed that upon such deposit, the petitioner would be entitled to withdraw the same. Accordingly, the amount has been deposited and the petitioner has withdrawn the said amount. Thereafter, it appears that on 12.01.2009, the following order was passed:
1. This is a winding up petition filed against the respondent Company. This Court has passed an order on 28.08.2008 directing the respondent Company to deposit a sum of Rs.50,000/-. The Court has also permitted the petitioner to make an application for withdrawal of the said amount after it was deposited. Thereafter, the amount of Rs.50,000/- as directed by this Court was deposited by the respondent Company and this Court vide its order dated 20.10.2008 allowed the petitioner to withdraw the said amount.
2. The matter was thereafter heard on 29.12.2008. Mr. Hriday Buch, learned advocate appearing for the respondent Company has strongly objected to the winding up petition and submitted before the Court that there was serious dispute so far as the claim of the petitioner is concerned. However, after hearing the parties, the Court is of the view that the petitioner will forgo its claim regarding interest and further amount of Rs.50,000/- be ordered to be deposited in the Court. Accordingly, Mr. Buch wrote a letter dated 04.01.2009 and informed the respondent about the discussion took place in the Court. However, Mr. Buch has received a letter from the respondent Company on 10.01.2009 submitting that the respondent Company is not liable to pay any amount to the petitioner. The respondent Company has shown its willingness to deposit the entire amount claimed by the petitioner in the present petition. Accordingly, the respondent Company is hereby directed to deposit the amount of Rs.88,246/- before the Court within two weeks from today.
3. After deposit of the said amount, the Court will pass further order as to whether the petitioner is directed to file the Civil Suit before the competent Civil Court for the entire balance amount or as to whether the balance principal amount is ordered to be given to the petitioner and only direction be issued with regard to file the suit for the interest amount.
4. S.O.
to 27.01.2009. The above order is passed after full-fledged hearing and if the sitting is changed on or before the next date of hearing, it is open for the parties to request the Hon'ble Chief Justice as to whether the matter is to be placed before this Court or before any other Court.
Again the matter was considered on 27.01.2009 and the following order was passed -
This Court has passed an order on 12.1.2009 directing the respondent Company to deposit the amount of Rs.88,246/- before the Court within two weeks from today. The office has put the note that the amount has not been deposited. Mr.Sandip Shah, learned advocate submits that he has an instruction to appear on behalf of the respondent Company in place of Mr.Hriday Buch. The cheque is ready with him. Since there was three intervening holidays the amount could not be deposited. However, he is ready and willing to deposit the cheque today itself. Accordingly, registry is hereby directed to accept the cheque of Rs.88,246/- from Mr.Sandip Shah. He requests to grant some time as he is not having complete details of this petition. The matter is, therefore, adjourned to 6.2.2009.
Pursuant to the aforesaid order, the remaining amount of Rs.88,246/- has been deposited with this Court.
Under the above circumstances, it appears that the full amount of Rs.1,38,246/- which was the basis of the petition by the petitioner to contend that the respondent Company is unable to pay the debt of Rs.1,38,246/- would not survive inasmuch as initially the amount of Rs.50,000/- has been deposited and subsequently, the amount of Rs.88,246/- has been deposited, total Rs.1,38,246/-, equivalent to the claim of the petitioner in the statutory notice.
The attempt on the part of the learned counsel for the petitioner is to contend that even if the Company is able to pay the debt, if this Court finds that the defence is dishonest defence or moonshine defence or non-substantial defence, the power for ordering winding up may be exercised by this Court. He further submitted that in the present case, the amount has been deposited and therefore, even if this Court is to proceed on the basis that there is ability to pay the debt, since the defence raised in the petition is dishonest defence and moonshine defence, it would be just and proper on the part of the Court to apply deeming fiction that the Company is unable to pay the debt and therefore, be ordered to be wound up.
In furtherance to the submission, the learned counsel for the petitioner contended that the statute gives a specific obligation upon the Company which is a corporate body to obey the law and to discharge its liability in accordance with law and if any attempt is made to get away from such lawful liability by way of dishonest defence or moonshine defence or non-substantial defence, the consequence of the winding up would follow and therefore, this Court may exercise the power. In support of his contention, he relied upon two decisions of the Apex Court, one in the case of M/s. Vijay Industries Vs. M/s. NATL Technologies Ltd. reported in 2009 AIR SCW 1229 and another in the case of M/s. Madhusudan Gordhandas & Co. Vs. Madhu Woolen Industries Pvt. Ltd. reported at (1971) 3 SCC 632.
Whereas, on behalf of the respondent Company, it has been contended that as per the affidavit in reply filed, the consignment was assigned to the petitioner with specific instruction to recover freight and other charges from the consignee which has not been recovered and therefore, there is failure on the part of the petitioner to recover the said amount and the liability cannot be fastened upon the respondent company for such purpose. It has also been submitted that the agreement upon which the reliance is placed by the petitioner though is stated that was executed on 08.09.2006, is irrespective of the instructions already given for a particular consignment in favour of Judricks Enterprises Ltd., Canada with the specific instruction. Therefore, it was submitted that since the petitioner has not acted as per the instructions given by the respondent Company being consignor, there is no liability to pay the amount as claimed by the petitioner. However, to show the ability of respondent Company to pay the amount, full amount is deposited as ordered. It has also been stated that financial condition of the Company is such that it cannot be said that it is unable to pay the alleged debt and therefore, the power of winding up may not be exercised.
On the aspects of ability or inability to pay the debt by the respondent Company, as observed earlier, since the full amount has been deposited, it is not possible to record the conclusion that the Company is unable to pay the debt. If the contention of the learned counsel for the petitioner is to be further examined on the premise that even there is ability to pay the debt, if this Court finds that there is dishonest defence or moonshine defence or non-substantial defence, it would not be a case for ordering winding up of the respondent Company. It appears that as such, in view of the defence raised in the affidavit in reply of the respondent Company, it is not possible to record the conclusion that the defence is dishonest defence or moonshine defence or non-substantial defence. The defence is raised to the effect that the instructions for recovering the freight from the consignee is independent of the agreement on the basis of which the claim is sought to be made by the petitioner. It will essentially be the question of facts to be examined and concluded in the appropriate proceedings, which in any case, cannot be conveniently undertaken by this Court in the present proceedings. If the petitioner is to maintain the claim for recovering of the amount, proper remedy for the petitioner would be to file Civil Suit wherein there will be full-fledge inquiry and adjudication of the facts and the conclusion on facts would be recorded and the liability can be fastened, if proved to that extent. Therefore, it is not possible to accept the contention of the learned counsel for the petitioner that the defence is ex facie dishonest defence or moonshine defence or non-substantial defence.
Apart from the above, it deserves to be recorded that this Court has the power to order for winding up of the Company upon various contingencies as narrated under clause (a) to (i) of Section 433 of the Companies Act. As the power has been invoked of this Court on the ground that the petitioner had to recover the amount on the premise that it was lawful liability of the respondent Company and such liability has not been discharged, such ground would fall under Section 433(e) of the Act on the basis that the Company is unable to pay the debts. Therefore, there is invoking of the power under Section 433(e) of the Act in substance in the present petition. There is no other averment made in the petition to bring about the other grounds mentioned in the petition and whole tenor of the petition, and more particularly the concluding statements made at para 16 of the petition is that the Company is unable to pay the debts or be deemed to be unable to pay its debts and as the Company is commercially insolvent, it should be wound up and that it is just and equitable in the interest of general body of the creditors that the Company be wound up. So far as the interest of the other creditors or the general body of the creditors is concerned other than the petitioner, no material whatsoever has been produced. Further, there is no material produced on record to show that the Company has become commercially insolvent as sought to be canvassed. On the contrary, the extract of the balance sheet produced together with the affidavit in reply goes to show that the Company is financially sound and under these circumstances, the allegation of commercially insolvent cannot be accepted.
The only strong ground contended in the petition is that the petitioner has to recover the amount of Rs.1,38,539/- for which the Company is liable to pay and has not been paid and therefore, the Company be treated as unable to pay the debt or be deemed to be unable to pay the debt and therefore, the winding up power may be exercised. As observed earlier, the question of presumption of inability to pay the debt or deemed to be unable to pay the debt may arise, if there is no concrete or reliable material before the Court to show otherwise, but in a case where there is concrete and reliable evidence on record to show the ability of the Company to pay the debt, the conclusion cannot be recorded or deeming fiction cannot be applied. Further, if the ability is shown by actually depositing of the amount, on the contrary, the ground of inability to pay would not more survive. The attempt to contend that inspite of the ability, if there is dishonest defence, the Court may deem it as inability to pay also cannot be countenanced in view of the reasons recorded that the defence cannot be said as dishonest defence or moonshine defence.
It is hardly required to be stated that when the power of this Court is invoked for winding up of the Company on the ground that the Company is unable to pay the debt, the prime requirement for exercise of the power would be the satisfaction of the Court of inability to pay the debt by the Company concerned and such can be said as sine qua non for exercise of the power by the Court under Section 433(c) of the Act. It may be that in a given case the Court may simultaneously undertake the exercise of considering the defence raised on behalf of the respondent Company concerned, but if there is finding recorded that the Company is able to pay the debt, the question of considering the second aspect of dishonest defence or moonshine defence or non-substantial defence may not arise. As observed earlier, the petitioner has not been able to successfully demonstrate that the defence is dishonest defence or moonshine defence or non-dsubstantial defence. The attempt to contend that since the respondent is corporate body, even if it is able to pay the debt, if resorts to dishonest defence or moonshine defence or non-substantial defence, the power for winding up deserves to be exercised by this Court can hardly be countenanced. If any citizen or may be a corporate body is to resist the liability on the ground of defence, it may also be accepted at a full fledge trial. Such can hardly be considered as valid ground for attracting the power of this Court for winding up, which is by way of a last resort. The permissible defence under the law cannot be foreclosed in any proceedings. Further, if the spirit for exercise of the power under Section 433(c) of inability to pay the debt is not coming out from the record, the condition precedent for exercise of the power would not be satisfied and therefore, the Company cannot be ordered to be wound up.
The decision upon which the reliance has been placed by the learned counsel is also of no help to the petitioner inasmuch as in the case of M/s. Vijay Industries(supra), the essential question which came up for consideration was whether the interest could be said as falling within the word 'debt' used under Section 433/434 of the Act or not and the said decision cannot be read as for laying down the principal that even if it is satisfactorily demonstrated before the Court that the Company is able to pay the debt, more particularly by actually depositing of the amount with this Court, on the ground of dishonest defence or moonshine defence or non-substantial defence, the power be exercised for winding up of the Company.
In the case of M/s. Madhusudan Gordhandas & Co.(supra) the facts before the Apex Court were that the learned Single Judge had refused to order to wind up the Company and asked the Company to deposit the amount. At that stage, the matter came up for consideration and the appeal against the said order was dismissed. Therefore, the said decision is of no help to the petitioner. It may be recorded that the first step for exercise the power for winding up in a given facts and circumstances may be that the Court may be required to examine both the aspects that whether the defence is dishonest defence or not, whether the Company is able to pay the debt or not. But, both can at the most be combined and cannot be independent on the ground as sought to be canvassed. If the contention of the learned counsel for the petitioner is to be entertained, that if the defence is dishonest, then irrespective of the fact that the Company is able to pay the debt, the power of winding up be exercised, the consequence would arise of nullifying the effect and spirit of Section 433(1)(c) of the Act, wherein the legislature has authorised the Court to pass the order of winding up, if the Company is unable to pay the debt. The resultant effect may also be to rewrite Section 433(1)(c) of the Act, which can hardly be countenanced by this Court sitting as a Company Court. In view of the aforesaid, the prayer for winding up of the Company cannot be granted.
However, it is observed that the amount of Rs.88,246/- shall remain as deposit with this Court for a period of three months from today. It is also observed that in the event the Suit is filed by the petitioner for recovery of the amount, the said amount of Rs.88,246/- shall stand transferred to such suit proceeding upon the report made by the petitioner for such purpose to the office. Otherwise, upon the expiry of the period, it would be open to the respondent Company to withdraw the amount.
The petition is disposed of accordingly.
(JAYANT PATEL, J.) *bjoy Top