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Judgment
N. Kumar, J.
The appellant has preferred this appeal against the order passed by the learned Company Judge dismissing the petition filed for winding up of the company under Section 433(e) and (f) read with Section 439 of the Companies Act, 1956.
The respondent is duly served and remained unrepresented.
The learned Single Judge has clearly set out the facts, the terms of the agreement, the endorsement as well as the case law on the point. Therefore, it is unnecessary for us to reproduce the same thing in this order.
The appellants entered into an agreement with the Directors of the Company for purchase of the entire shares for a consideration of Rs. 23 crores. They paid a sum of Rs. 8.5 crores. The agreement is not in dispute and also the payment of Rs. 8.5 crores is not in dispute. After entering into the agreement, it came to the notice of the petitioners that one M/s. Tilak Nagar Industries Limited had filed a winding up petition against the company. In order to save the company from being wound up, as they had entered into an agreement to purchase the shares of the company from its Directors, they paid a sum of Rs. 2.5 crores to M/s. Tilak Nagar Industries Limited on behalf of the Company. The said payment is acknowledged by the Directors of the Company on behalf of the Company. In the reply notice issued before filing of the company petition regarding this payment of Rs. 2.5 crores, this is what has been stated in para 13:
"....your clients arranged an amount of Rs. 2.5 crores out of the balance consideration payable by them and the said amount of Rs. 2.5 crores was directly arranged in the name of M/s. Tilaknagar Industries Limited on my client''s behalf and on payment of the same, the said Company Petition had withdrawn and my client arranged the compromise letter and the order of the withdrawal of the Company Petition to your clients promptly showing the satisfaction of the liability payable to M/s. Tilaknagar Industries Limited. The allegation that the sale consideration under the agreement was reduced from 23.00 crores to 19.6 crores by extending the time would clearly show that your clients used co-receive methods in arranging a part payment to satisfy the liability of M/s. Tilaknagar Industries Limited as a condition precedent to obtain endorsement of Mr. Manoj Rupani who was not competent enough to make any such decision to reduce the consideration contrary to the terms of the agreement dated 29.8.2010, to which, all the addressees were neither parties, nor their consent or written permission was obtained. Your clients cannot claim that the consideration was reduced or that the time was extended and this would clearly show that your clients being unable to perform their part of obligation and by using coercive tactics by delaying the payment of consideration, while putting my client to undue hardship and unwarranted litigation, obtained an endorsement from second addressee, which does not bind my client and the same has no legal sanction."
From the said reply, it is clear that the company is admitting the payment of Rs. 2.5 crores by the appellants to the company. The company is not prepared to treat this payment of Rs. 2.5 crores as a payment under the agreement entered into between the appellants and Directors of the Company. The total consideration payable was reduced to Rs. 19.6 crores from Rs. 23 crores. The appellants have filed a suit in O.S. No. 2/2012 on the file of the District and Sessions Judge, Chickballapur against the Directors of the Company for recovery of Rs. 8.5 crores paid under the agreement as they have terminated the contract. By way of abundant caution, they also filed an application under Order II Rule 2 of the Code of Civil Procedure seeking liberty to sue this Rs. 2.5 crores with interest and the said liberty was granted to the Directors as well as the company. Thereafter, they presented the company petition for winding up.
The learned Single Judge proceeded on the basis that when the appellants contend that this Rs. 2.5 crores is adjusted towards the consideration agreed under the agreement, it becomes a part of payment under the agreement. As the said payment is to be treated as a payment to the Directors, the said claim cannot be enforced against the company and therefore, when such a stand is taken, he was of the view that the defence taken by the respondent is not a moon-shine. It is a matter to be investigated when already a Civil suit is pending and liberty is also given to the petitioners to include this claim in the said suit, he was under the impression that the petition for winding up is not maintainable. What the learned Judge failed to notice on this admitted fact is that, the agreement was between the petitioners and the Directors of the company and the payment of Rs. 8.5 crores is made to the Directors. For recovery of the said amount, they could not file a petition for winding up of the company because, that is not a debt due to the company. Similarly, when Rs. 2.5 crores is paid to the petitioner in a winding up proceedings, it is a payment made on behalf of the company and not on behalf of the Directors. The Directors, on behalf of the Company acknowledged that payment. Therefore, in law, Rs. 2.5 crores is paid to the company and not to the Directors. Therefore, rightly they could not include this Rs. 2.5 crores in the claim, which they have to put forth in the suit against the Directors. Merely because on one side is the petitioner and on the other side the company and the Directors, in law they are distinct and independent legal entities. By consent of the parties they act together. But if they take a stand that one has nothing to do with other in law, they are justified. This aspect has been completely missed by the learned Single Judge. When once the payment of Rs. 2.5 crores by the petitioners to the company is acknowledged and on issuance of a legal notice, they admit the liability, the amount was not refunded on the ground of breach of the terms of the agreement entered into between the petitioner and the Directors, it cannot be said that there is a valid defence, which is put forth by the respondent. Under these circumstances, the impugned order passed by the learned Company Judge cannot be sustained. The debt of Rs. 2.5 crores is admitted. The respondent prima facie have shown their unwillingness to pay the said amount. The defence taken by them appears to be only a moon shine. The matter is to be investigated during trial. The dismissal of the company petition at the stage of admission is erroneous and calls for interference. Hence, we pass the following order:
(a) Appeal is allowed.
(b) The impugned order passed by the learned Single Judge is hereby set-aside.
(c) The Company Petition is admitted.
(d) The matter is remitted back to the learned Single Judge to consider the company petition in accordance with law.