IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF APRIL, 2019 BEFORE:
THE HON’BLE MRS. JUSTICE S.SUJATHA COMPANY PETITION No.199/2010 BETWEEN:
M/s SBI GLOBAL FACTORS LTD., (FORMERLY KNOWN AS GLOBAL TRADE FINANCE LTD.,) HAVING ITS OFFICE AT METROPOLITAN BUILDING, 6TH FLOOR, BANDRA – KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 REP. BY ITS VICE PRESIDENT Mrs. REKHA VARADARAJ. ... PETITIONER (BY SRI C.K.NANDAKUMAR, ADV.) AND:
M/s MADANAPALLE SPINNING MILLS LIMITED, HAVING ITS REGISTERED OFFICE AT NO.105/106, RAHEJA CHAMBERS 12, MUSEUM ROAD, BANGALORE-560001, REP. BY ITS MANAGING DIRECTOR Mr. LAXMIKANT BHANDARI …RESPONDENT (BY SRI A.MURALI & SRI PERIKAL K. ARJUN, ADVS.) THIS COMPANY PETITION FILED UNDER SECTION 433(e) & 433(f) READ WITH SECTION 434 OF THE COMPANIES ACT, 1956, PRAYING TO WIND UP THE RESPONDENT COMPANY M/s MADANAPALLE SPINNING MILLS LIMITED AND APPOINT THE OFFICIAL LIQUIDATOR ATTACHED TO THIS HON'BLE COURT OR ANY OTHER FIT PERSON AS THE LIQUIDATOR OF THE RESPONDENT COMPANY MAY BE GIVEN ALL POWERS UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND ETC.
THIS PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R This petition is filed by the petitioner against the respondent – Company under Section 433(e) and (f) of the Companies Act alleging that the respondent - company is indebted to the petitioner in a sum of Rs.3,48,58,079.36 (Rupees Three Crores Forty Eight Lakhs Fifty Eight Thousand and Seventy Nine and Paise Thirty Six). It is further alleged that they are unable to pay their admitted debts and as such, the company be ordered to be wound up. The respondent – company have filed their objections opposing the petition. After hearing the parties at length, this Court by an order dated 02.04.2012, admitted the petition and permitted the petitioner to take out advertisement of admission of this petition.
2. The advertisement though was directed as far back as 02.04.2012, the same was deferred on account of the promises and assurance made by the respondent – company to clear all the debts. After noticing that the respondent - company has merely paid Rs.1.80 crores out of settled amount of Rs.2.80 crores and interest, and the case being hanging fire in this Court for more than seven years, this Court finally directed to issue advertisement in terms of the order dated 15.06.2017. The advertisement was taken out on 10.07.2017 and the same has been accepted by this Court on 08.06.2018. Further, on the request made by the learned counsel for the respondent - company that a sum of Rs.1 crore shall be arranged by two weeks and the same shall be deposited before this Court, further opportunity was provided by this Court on 22.03.2019 to show the bonafides. However, today the learned counsel appearing for the respondent fairly submits that respondent – company is not in a position to arrange the outstanding debt and the company may be wound up in accordance with law.
3. In this background, it is apparent that presently the respondent – company is not in a position to pay the remaining settled amount of Rs.1 crore with interest to the petitioner - company. The ample opportunities provided to the respondent - company for more than seven years to settle the debt has not been availed by the respondent - company.
4. It is well settled law that for passing of winding up order the necessary factors to be analyzed by the Court are that the defence of the company whether is in good faith or not is the primary determination to be made by the Court. Secondly the defence whether is substantial and likely to succeed in point of law and thirdly the company adduced prima facie proof of the facts on which the defence depends.
5. As could be seen from the material on record, it is a moonshine defence of the respondent to defer the winding up proceedings since seven years from the date of admission of the company petition. On the prima-facie case being proved inasmuch the admitted debt and inability of the respondent – company (commercially insolvent) to pay the same is now further strengthened by the action and submissions of the respondent - company to wound up the company. In the circumstances, there is no other option for this Court except to pass winding up order under Section 433(e) and (f) of the Companies Act, 1956. Accordingly, the respondent – company M/s. Madanapalle Spinning Mills Limited is ordered to be wound up.
6. The Official Liquidator is appointed to take over the assets of the company to proceed with the winding up proceedings. The petitioner is permitted to take out advertisement of the winding up order in English Daily Newspaper “The Hindu” and Kannada Daily Newspaper “Vijaya Karnataka” within four weeks.
Notice of this order may be sent to Official Liquidator, Regional Director and Registrar of Companies.
Company Petition stands disposed of accordingly.
Sd/- JUDGE PMR.