S.J.MUKHOPADHAYA, J.
This appeal has been preferred by Gujarat Industrial Investment Corporation Ltd. (hereinafter referred to as 'Corporation') against order dated 22nd Dec., 2006, passed by learned Company Judge in C.P. No.213/01. By the said order, learned Judge closed and rejected the company petition preferred by the appellant u/s 433 (e), (f), 434 (1) (a) and 439 (1) (b) of the Companies Act r/w Rule 11 (a) of the Companies (Court) Rules, 1959.
2. The facts as appears from the pleadings shows that Sterling Holiday Resorts India Ltd., (hereinafter referred to as 'Company') approached the appellant for a sum of Rs.500 lakhs. As per loan agreement dated 6th Nov., 1996, loan amount was to be repaid within a period of two years in six equal quarterly instalments with interest @ 24% p.a., and additional interest of 3% p.a., on the total amount defaulted. The loan was acquired by personal guarantees of some of the Directors of the company and the shares of some of the shareholders were pledged by the company. A promissory note was executed by the company in favour of the appellant for Rs.5 Crores. The company was disbursed with a sum of Rs.1 Crore on 8th Nov., 1996, followed by Rs.50 lakhs on 13th Nov., 1996 and Rs.3 Crores on 1st Nov., 1997. The company accepted the liability of total amount of Rs.4.5 Crores, the loan amount as disbursed.
The company could pay a sum of Rs.2,04,411/= towards interest on 11th Dec., 1996, but failed to pay the rest amount and could not keep its obligation. According to appellant, inspite of repeated requisition and reminders, the respondent neglected to pay the amount. As on 31st May, 2001, a sum of Rs.18,04,13,083/= comprising of Rs.4,50,00,000/= towards principal and Rs.13,54,13,083/= towards interest was due from the company. The security given by pledging of the shares and personal guarantees were inadequate to secure the amount and, therefore, a statutory notice u/s 434 of the Companies Act was issued on 28th June, 2001, which was received by the company on 29th June, 2001, but having received no reply, a petition for winding up the company was preferred.
3. The case of the appellant is that the financial status of the company is not good; it is not in a position to pay back its dues. The debt has been admitted by them and, thereby, prayed for winding up.
4. Learned Judge noticed other facts as brought on record that a suit, C.S. No.577/99 was filed by the appellant against the Directors of the Company in the City Civil Court, Ahmedabad for a judgment and decree of a sum of Rs.7,75,64,563/= together with interest thereon @ 36% p.a., from 1st Dec., 1998 and that the said suit is pending. The borrowing under the terms of the loan agreement dated 6th Nov., 1996, was guaranteed by defendants 4 to 6 in the said suit, apart from 8,39,800 equity shares of Rs.10/= each under the unattested document dated 6th Nov., 1996, alongwith blank transfer deeds in favour of the respondent. On 28th Jan., 1997, further 17,53,000 shares of the company were pledged in favour of the corporation. Thus, the company's shares, totalling to 25,92,800 were placed with the corporation as security for the amount advanced. It was also noticed by learned Judge that in view of difficult financial situation between 1998 and 2003, fifteen company petitions were filed by various creditors before the court. A number of suits were preferred by financial institutions against the company before the Debts Recovery Tribunal. Counsel for the company brought to the notice that in all such cases, on negotiation, one time settlements were made with all creditors except the corporation, which had refused the one time settlement. It was specifically stated that the company having made profit since 2004, i.e., Rs.17.3 Crores for the year ending 31st March, 2004, and the same having gone up to Rs.44.18 Crores during the current year, such profit facilitated one time settlement with all the creditors. It was also brought to the notice of the learned Judge that in view of interim order passed by City Civil Court, Ahmedabad in C.S. No.577/99, the company has already deposited a sum of Rs.7.50 Crores and the suit is pending.
5. Similar plea has been taken by the parties before this Court. While according to learned senior counsel for the appellant, there is no dispute relating to liability of debt amount, as the company is unable to pay the total debt. On the other hand, according to learned senior counsel for the company, the admitted liability has been paid and dispute, if any, relates to pendente lite interest, which is pending for determination before the City Civil Court, Ahmedabad. There being bona fide dispute with regard to interest, the petition for winding up was uncalled for. Both the parties relied on almost same judgments rendered by Supreme Court or this Court.
6. We have noticed the relevant facts and the rival contentions and also gone through the judgments as referred to by the parties.
7. The only question that requires determination in this case is whether there is a bona fide dispute and the petition for winding up should proceed or not.
8. The question relating to winding up of company fell for consideration before the Supreme Court in Pradeshiya Industrial and Investment Corporation of U.P. - Vs North India Petrochemicals Ltd. & Anr. reported in (1994) 3 SCC 348 :: (1994) Vol. 79 Comp. Cases 835. In the said case, having noticed
Section 433 of the Companies Act, the Supreme Court held that a company could be wound up under clause (e) of the said section, if the company is unable to pay its debts, that means -
(i) there must be a debt; and
(ii) the company must be unable to pay the same.
In the said case, the Supreme Court further observed that sub-section (e) to
Section 433 is discretionary and a debt under the said section must be determined or a definite sum of money payable immediately or at a future date.
Earlier in the case of Madhusudan Gordhandas & Co. - Vs Madhu Woollen Industries Pvt. Ltd. Reported in (1972) 42 Comp. Cases 125 (SC), the Supreme court, while dealing with the scope of
Section 433 (e), the Supreme Court held :-
"....... that if the debt is bona fide disputed and the defence is a substantial one, court will not wind up the company."
In the case of Amalgamated Commercial Traders (P) Ltd. - Vs V.Krishnaswami & Anr. reported in (1965) 35 Comp. Cases 456, the Supreme Court held that a winding up petition is not a legitimate means of seeking to enforce payment of a debt, which is bona fide disputed by the company. A petition presented ostensibly for a winding up order, but really to exercise pressure will be dismissed and in circumstances may be stigmatised as a scandalous abuse of process of the court.
Similar was the view expressed by the Supreme Court in the case of Mediqup Systems Pvt. Ltd. - Vs Proxima Medical System GmbH reported in (2005) Vol. 125 Comp. Cases 473 (SC) : 2005 (4) LW 475 (SC).
9. In the present case, as evident from the pleading made by the parties and the facts noticed by learned Judge, the respondent company is running smoothly and earning profit. Its sale had gone up as back as in the year 2005 to the tune of Rs.44.18 Crores. Though a number of suits, etc., were preferred by other financial institutions, except the appellant-Corporation, the company was in a position to make settlement with all the creditors and paid back its liability. It is not in dispute that the Corporation has already preferred a suit against the company and its Directors, C.S. No.577/99, before the City Civil Court, Ahmedabad, and prayed for a judgment and decree for a sum of Rs.7,75,64,563/= together with interest thereon @ 36% p.a., from 1st Dec., 1998. In the said suit, in view of the interim order of the City Civil Court, Ahmedabad, the company has already deposited a sum of Rs.7.50 Crores, almost the amount claimed in the suit with interest. It has not been disputed that apart from 8,39,800 equity shares of Rs.10/= each pledged under an unattested document dated 6th Nov., 1996 along with a blank transfer deed in favour of the corporation on 28th Jan., 1997, another 17,53,000 shares of the company were pledged in favour of the corporation. Thus, a total of 25,92,800 shares were pledged with the corporation as security for the amount advanced.
10. Learned counsel appearing on behalf of the company rightly pointed out that the claim amount in the winding up petition is to the tune of Rs.4.50 Crores towards principal and another sum of Rs.13.50 Crores towards interest, i.e., Rs.18,04,13,083/=, which is the amount equal to interest pendente lite in the suit before the City Civil Court, Ahmedabad. Thus, there is a genuine dispute of interest, particularly with regard to pendente lite interest, which has to be determined in the suit aforesaid.
11. From the records it will be evident that even before this Court the company gave a better offer in favour of the appellant corporation to settle the dispute, but the Corporation did not choose to accept the same. Thereby, it will be evident that the company is in a position to pay the debts and whatever amount not agreed upon is a disputed amount between the parties.
12. In the aforesaid background, we hold that the learned Judge rightly dismissed the petition for winding up as was preferred by the appellant, being not maintainable. There being no merit, the appeal is dismissed. But there shall be no order as to costs.