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Judgment
Alok Sharma, J.—This petition under Section 439(1)(b) read with 433(e) of the Companies Act, 1956 (hereinafter ''the Act of 1956'') has been filed by the petitioner Kotak Mahindra Bank Limited (hereinafter ''the Bank'') against the respondent Hari Ugam Marketing & Distribution Company Private Limited (hereinafter ''the respondent Company'') having its registered office at Hari Ugam, E-61, Chitranjan Marg C-Scheme, Jaipur.
The case of the petitioner Bank is that the respondent company is engaged in the business of distributors, stockist, retailers, clearing and forwarding agents etc. and has a nominal capital of Rs. 10,000,000/- (One Crore) divided into 10,000,000 share of Rs. 10 each of which the paid up capital is Rs. 10,000,000/-. It has been submitted that on account of business loan advanced as per loan agreement No. SA338718 dated 29-12-2010 the respondent company is indebted to the petitioner Bank in a sum of Rs. 32,12,485.21 as on 23-6-2012. As per the agreement the loan advanced was to be repaid along with interest at the rate of 36% p.a. computed on monthly basis in 36 instalments of Rs. 90,815/- commencing 10-2-2011 and ending 10-1-2014. However, after obtaining the loan from the petitioner Bank, the respondent Company failed to maintain proper financial discipline and did not abide by payment of instalments scheduled in the loan agreement and neglected to repay the due instalments. Even the post dated cheques issued by the respondent company were dishonoured. The respondent company''s loan account has been foreclosed whereupon as on 23-6-2012 an amount Rs. 32,12,485.21 became due against the respondent company.
Thereafter despite repeated requests the respondent failed to repay the outstanding amount Rs. 32,12,485.21 as on 23-6-2012. A statutory notice under Section 434(1)(a) of the Act of 1956 was also sent to the registered office of the respondent company, which was returned on 27-6-2012 with a remark of "Left". No change of registered address of the respondent company was recorded with the Registrar of Companies or otherwise intimated to the petitioner Bank. The debt amount remains unpaid evidencing that the respondent company in law is deemed to be commercially insolvent and hence liable to be wound up in public interest.
The respondent company filed reply to the petition. Preliminary objections have been laid. It has been submitted that on 3-11-2011 an original Application No. 163/2011 was filed by the petitioner Bank against the respondent Company under Section 19 of the Recovery of Debts due to Bank and Financial Institutions Act, 1993 (hereinafter ''the Act of 1993'') before the Debt Recovery Tribunal (hereinafter ''the Tribunal'') for recovery of an amount of Rs. 26,66,945.79 along with pendent-lite and future interest @ 36% p.a. This application was allowed by the Tribunal on 2-4-2014. The petitioner Bank has also filed complaint under Section 138 of the Negotiable Instruments Act against the respondent Company. It has been submitted that the registered office of the respondent Company had to be vacated on 4-2-2012 as the Allahabad Bank auctioned the said property under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Hence the notice sent by the petitioner Bank on 25-6-2012 was returned with the remark "left". It has been submitted that in the facts of the case the petitioner Bank having resorted to its remedy in law for recovery of due amount, this winding up petition filed by the petitioner Bank is a misuse of legal process and is liable to be dismissed. No other argument in defence has been advanced.
Heard learned counsel for the parties and perused the petition as also the documents on record.
From the facts on record, it is established that despite statutory notice under Sections 433(e) read with 434(1)(a) of the Act of 1956 the respondent company did not discharge its liability to repay the amount of loan admittedly obtained from the petitioner bank--which amount on 23-6-2012 aggregated to Rs. 32,12,485.21. Even the reply to winding up petition does not seek to raise any bona fide dispute with regard to the debt to the petitioner Bank. The only defence taken is that the petitioner Bank had availed its remedies to recover the due amount by resort to application under Section 19 of the Act of 1993 before the Debt Recovery Tribunal, whereupon a certificate of recovery was issued by the Tribunal in favour of the petitioner Bank. It has been submitted that while proceedings under the Act of 1993 were taken on 3-11-2011 for recovery of Rs. 26,66,945.79 along with interest thereon the company petition was filed thereafter without disclosure in regard thereto, tantamounting to suppression of fact making the company petition liable to be dismissed.
Heard. Considered.
The only submission of counsel for the respondent Company in defence to the winding up petition is contrary to the judgments in the case of Viral Filaments Ltd., Mumbai Vs. Indusind Bank Ltd., Mumbai, and the case of The Bank of Nova Scotia Vs. RPG Transmission Limited, , and Haryana Telecom Ltd. Vs. Sterlite Industries (India) Ltd., wherein it has been categorically held that mere filing of application for recovery of debt before the Tribunal under the provisions of the Act of 1993 would not entail a bar in law to laying a winding up petition under the provisions of Act of 1956, where conditions therefore provided are proved to have been satisfied. It was held that recovery proceedings under the provisions of Act of 1993 entail a wholly distinct jurisdiction as against the provisions of Section 433(e) of the Act of 1956, which are statutorily proceeding in public interest such that a company unable to pay its debt in the normal course of its business would not be allowed to operate under its limited liability regime in an affront to commercial morality. It is noteworthy that the defendant company has not even denied the availing of a loan from the petitioner Bank or the fact that the said loan amount was not repaid despite the statutory notice, and even thereafter on receipt of notices of the winding up petition.
The Hon''ble Apex Court in the case of Vijay Industries Vs. NATL Technologies Limited, has held that the considerations to be kept in mind by the Company Court while addressing a winding up petition are whether a crystallized debt as claimed by the petitioner obtains and whether the respondent has neglected to pay it despite statutory notice or whether there is a bona fide dispute on substantial grounds with regard to the debt claimed by the petitioner.
In the context of aforesaid enunciation of law by the Hon''ble Supreme Court, and the facts of the instant case detailed hereinabove, it is prima facie evident that the respondent company has neglected to pay its due debt to the petitioner Bank despite its obligation and notice, and therefore per se is deemed to be insolvent.
The petition is accordingly, admitted. The citation of the winding up petition being admitted be published by the petitioner in two news papers i.e. The Times of India (English) and Dainik Bhaskar (Hindi) Jaipur Edition in terms of Rule 24 of the Companies (Courts) Rules, 1959.
The Citation be also published in Official Gazette.
All costs to the account of the petitioner Bank.
A copy of this order be supplied to the Official Liquidator.
This petition under Section 439(1)(b) read with 433(e) of the Companies Act, 1956 (hereinafter ''the Act of 1956'') has been filed by the petitioner Kotak Mahindra Bank Limited (hereinafter ''the Bank'') against the respondent Hari Ugam Marketing & Distribution Company Private Limited (hereinafter ''the respondent Company'') having its registered office at Hari Ugam, E-61, Chitranjan Marg C-Scheme, Jaipur.
The case of the petitioner Bank is that the respondent company engaged in the business of distributors, stockist, retailers, clearing and forwarding agents etc. The nominal capital of the company is Rs. 10,000,000/- (One Crore) divided into 10,000,000 share of Rs. 10 each. The amount of paid up capital is Rs. 10,000,000/-. It has been submitted that the respondent company is indebted to the petitioner Bank to a sum of Rs. 32,12,485.21 as on 23-6-2012 on account of business loan of Rs. 25,00,000/- obtained from the petitioner Bank as per Loan Agreement No. SA338718 dated 29-12-2010. The loan was to be repaid along with interest at the rate of 36% p.a. computed on monthly basis in 36 instalments of Rs. 90,815/- commencing from 10-2-2011 till 10-1-2014. The respondent Company agreed to pay late payment charges, cheque bounce charges along with other costs charges in case of default in repayment of loan instalments. It has been submitted that after obtaining the loan from the petitioner Bank, the respondent Company failed to maintain proper financial discipline and did not abide by payment of instalment scheduled. The respondent company neglected to repay the instalments. The post dated cheques were dishonoured, and the respondent''s loan account was foreclosed. As on 23-6-2012 an amount Rs. 32,12,485.21 became due against the respondent company.
Despite repeated requests the respondent failed to repay the outstanding amount Rs. 32,12,485.21 as on 23-6-2012, a statutory notice under Section 434(1)(a) of the Act of 1956 was sent to the registered office of the respondent company, which was returned on 27-6-2012 with a remark of "Left". The due amount was not paid. Thus the respondent company despite a statutory notice has clearly neglected to repay its due debt of Rs. 32,12,485.21 along with interest @ 36% per annum. Therefore the respondent company is deemed in law to be commercially insolvent. It has been submitted that the respondent company is thus an insolvent debtor, and hence be wound up in public interest.
The respondent company has filed reply to the petition. Preliminary objections have been laid. It has been submitted that on 3-11-2011 an original Application No. 163/2011 was filed by the petitioner Bank against the respondent Company under Section 19 of the Recovery of Debts due to Bank and Financial Institutions Act, 1993 (hereinafter ''the Act of 1993'') before the Debt Recovery Tribunal (hereinafter ''the Tribunal'') for recovery of an amount of Rs. 26,66,945.79 along with pendent-lite and future interest @ 36% p.a., which application was allowed by the Tribunal on 2-4-2014. The petitioner Bank has also filed complaint under Section 138 of the Negotiable Instruments Act against the respondent Company.
It has been submitted that the place which was registered office of the respondent Company had to be vacated on 4-2-2012 as Allahabad Bank auctioned the said property under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), therefore the notice sent by the petitioner Bank on 25-6-2012 was returned with the remark of left. It has been submitted that on the basis of the same documents, this winding up petition has been filed by the petitioner Bank. It has been submitted that the petitioner Bank has got relief from the Tribunal therefore this winding up petition is not maintainable and is liable to be dismissed.
Heard learned counsel for the parties and perused the petition as also the documents on record.
From the facts on record, it is established that despite statutory notice under Sections 433(e) read with 434(1)(a) of the Act of 1956 the respondent company did not discharge its liability to repay the amount of loan obtained from the petitioner bank and on 23-6-2012 and amount Rs. 32,12,485.21 became due against the respondent Company. Even the reply to winding up petition does not seek to raise any bona fide dispute with regard to payment of outstanding amount to the petitioner Bank. The only defence which is take is that the petitioner Bank had availed remedy by resort to application under Section 19 of the Act of 1993 before the Tribunal and certificate of possession was issued by the Tribunal in favour of the petitioner Bank. It has been submitted that proceedings under the provisions of the Act of 1993 were taken on 3-11-2011 for recovery of Rs. 26,66,945.79 along with interest thereon and the company petition having been filed thereafter ought to disclose the aforesaid fact, therefore the company petition is liable to be dismissed.
The submission of counsel for the respondent Company is contrary to the judgments in the case of Viral Filaments Ltd., Mumbai Vs. Indusind Bank Ltd., Mumbai, and in the case of The Bank of Nova Scotia Vs. RPG Transmission Limited, , and Haryana Telecom Ltd. Vs. Sterlite Industries (India) Ltd., wherein it has been categorically held that mere filing of application for recovery of debt before the Tribunal under the provisions of the Act of 1993 would not entail a bar in law to laying a winding up petition under the provisions of Act of 1956, where conditions therefore provided are proved to have been satisfied. It was held that recovery proceedings under the provisions of Act of 1993 entail a wholly distinct jurisdiction as against the provisions of Section 433(e) of the Act of 1956, which was a proceeding in public interest such that a company unable to pay its debt in normal course of its business would not be allowed to operate under its limited liability to regime in affront commercial morality.
The Hon''ble Apex Court in the case of Vijay Industries Vs. NATL Technologies Limited, has held that the considerations to be kept in mind by the Company Court while addressing a winding up petition are whether a crystallized debt as claimed by the petitioner obtains and whether the respondent has neglected to pay it despite statutory notice or whether there is a bona fide dispute on substantial grounds with regard to the debt claimed by the petitioner.
In the context of aforesaid enunciation of law by the Hon''ble Supreme Court, and the facts of the instant case detailed hereinabove, it is prima facie established that the respondent company has neglected to pay its due debt to the petitioner Bank despite its obligation and the statutory notice, and therefore the respondent company is deemed to be insolvent. The loan obtained by the respondent company has not bee repaid. Cheques issued by the respondent company have been admittedly dishonoured. The amount thereagainst remain unpaid despite statutory notice.
The petition is accordingly, admitted. The citation of the winding up petition being admitted be published by the petitioner in two news papers i.e. The Times of India (English) and Dainik Bhaskar (Hindi) Jaipur Edition in terms of Rule 24 of the Companies (Courts) Rules, 1959.
The Citation be also published in official gazette.
All costs to the account of the petitioner Bank.
A copy of this order be supplied to the Official Liquidator.