This Court, by order dated 23.6.2009, by recording the affidavit filed by the respondent admitting the liability to pay an amount of Rs.3,86,93,000/- to the applicant, directed the petitioner/respondent to pay an amount of Rs.1 crore on or before 3.8.2009 stipulating that if the amount is not paid, further orders will be passed. While passing such order, it is no doubt true that the request of the respondent for payment of the said amount in instalments at the rate of Rs.5 lakhs has not been accepted by this Court. The respondent has not actually complied with the said order, but filed the present application for modification.
2. Mr.R.Venkatavaradhan, learned counsel for the petitioner/respondent who has filed the present application for modification would submit that as on date the respondent is willing to pay an amount of Rs.20 lakhs and the balance amount may be directed to be paid in instalments. However, Mr.A.K.Mylsamy, learned counsel for the respondent would submit that on facts the petitioner is not entitled for such concession at all.
3. In the modification application, the petitioner has stated that while the liability was agreed as stated in the affidavit filed by the respondent dated 23.6.2009, the respondent company is not actually in a position to pay the said amount. It is also stated that the liability of the respondent company towards the bank is also pending and the applicant is only an unsecured creditor.
4. Mr.R.Venkatavaradhan, learned counsel for the respondent company would submit that the proposal for making schedule of payment to the bank is pending and in fact, the conduct of the respondent company as a debtor is watched and monitored by the bank, who is the secured creditor and in such view of the matter, even without settling the secured credits the payment of Rs.1 crore is not proper.
5. On the other hand, Mr.A.K.Mylsamy, learned counsel would submit that the application for modification does not deserve any consideration due to the conduct of the respondent. It is his case that the respondent has in fact gained enormous amount by virtue of sale of wind mills to the extent of Rs.2= crores and the same has not been brought to the notice of this Court even at the earliest point of time. He would also submit that the respondent had originally taken a stand that the respondent is not liable to make the payment which has become untenable and later, by affidavit dated 23.6.2009, the respondent has admitted the liability to the extent of Rs.3,86,93,000/-. He would rely upon the judgement in Phosphate Chemicals Export Association Inc. vs. Southern Petrochemical Industries Corporation Ltd., [2009(150) Com.Cas. 524] to substantiate his contention that when the liability is admitted, there is no further defence available to the company except to meet the consequences of the winding up order.
6. On the face of it, I am not satisfied with the reasons assigned by the petitioner in the modification petition. It is not as if the petitioner in the modification petition was not aware of the proposal with the secured creditor/bankers at the earlier occasion. Further, the fact that the petitioner in the modification petition has stated that it sold the wind mills to the extent of Rs.2= crores was well within the knowledge of the party at the time when the earlier order was passed and the said sale consideration was not disclosed. Further, as correctly submitted by Mr.A.K.Mylsamy, learned counsel for the respondent herein that the petitioner/respondent company has been taking different stands at different occasions. The records show that at the first instance the respondent company has chosen to state that the respondent company is not liable to pay any amount at all and disputed the liability to the applicant on the basis that there was some sale agreement and denied even the fixed deposit receipts, and later, realising certain aspects, the respondent company filed an affidavit agreeing for repayment of the amount and only taking note of the fact that the amount to the extent of Rs.3,86,93,000/- was admitted, the payment of Rs.5 lakhs per month was not favourably considered by this Court and this Court, having taken note of the entire facts, passed the above order directing the respondent company to pay an amount of Rs.1 crore to show its bona fide. Inasmuch as the said order has not been complied with, the modification petition does not deserve any merit and the same is dismissed.
7. It is held in Madhusudan Gordhandas & Co., vs. Madhu Wollen Industries Pvt.Ltd., [AIR 1971 SC 2600] that when there is a bona fide dispute regarding the debt, the Court should not order winding up of the company, but in cases where the debt is undisputed, the mere ability of the company to pay the debt, but at the same time the Company chooses not to pay the amount, cannot be a defence for the winding up petition. The relevant portion of the judgement is as follows:
" 21. 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 Cooperation [1874] L.R. 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 Re.Brighton Club and Norfold Hotel Co.LOtd., [1865] 35 Beav.204.
22. 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 chooses not to pay that particular debt (See Re.A Company 94 S.J. 369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debi precisely (See Re.Tweeds Garages Ltd. [1962] Ch.406. The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends."
8. Following the same, this Court in Phosphate Chemicals Export Association Inc. vs. Southern Petrochemical Industries Corporation Ltd., [2009 (150) Com.Cas. 524] held that in cases where substantial defence is not made out and there is no bona fide dispute regarding the liability to pay, the consequential result would be to admit the company petition.
9. In these circumstances, the following order is passed:
(i)Admit. Notice returnable by 16.09.2009.
(ii)The petitioner is directed to publish the company petition in one issue of English daily, 'Indian Express' and in one issue of Tamil daily, 'Dinamani' returnable by 16.9.2009.
(iii) The petitioner is directed to publish the company petition giving atleast fourteen days of clear advance notice.
Call on 16.9.2009.
kh