STV Enterprises Ltd. vs Shin Satellite Public Co. Ltd.

T.S. Thakur, J.—This appeal arises out of an order passed by the company court in Company Petition No. 128 of 2005 whereby the said court has admitted the winding up petition filed against the appellant and appointed the official liquidator attached to the court as the provisional liquidator with a direction to forthwith take over all the assets and books of account of the appellant-company. The appellant has been further restrained from transferring, alienating, encumbering or dealing with any of its movable or immovable assets, bank accounts and other securities, except for the purpose of, and to the extent it is necessary to meet the liability which the appellant-company owes to the respondent and to meet the expenses in the usual course of business. The court has, however, directed that the order passed by it would stand vacated in case the appellant-company pays to the respondent-creditor the outstanding debts quantified at US$ 125700 as on September 6, 2006, with interest at 12 per cent. per annum from September 6, 2006, after adjustment of the amount already paid within two weeks from the date of the said order. The injunction by which the appellant-company has been restrained from dealing with any of its movable and immovable assets, bank accounts and other securities would notwithstanding that direction remain operative.

We have heard learned Counsel for the parties at considerable length and perused the impugned order. It is in our view unnecessary to set out in detail the factual matrix in which the controversy arises. We say so because the short point which was raised by learned Counsel for the appellant-company in support of the appeal related to the extension of time for payment of the outstanding amount. He submitted that the appellant-company shall liquidate the entire balance amount which after adjustment as on date works out to US$ 37284 with interest at the rate stipulated by the company court. It was urged by learned Counsel for the appellant that the appellant-company shall pay in three monthly instalments the aforementioned amount by September 30, 2008. The first of these payments would be of a sum of US$ 15000 to be paid by July 30, 2008. A further payment of US$ 15000 shall be made by the appellant-company by the end of August, 2008, whereas the balance of US$ 7284 and the interest component calculated at 12 per cent. per annum on the amount of US$ 37284 by September 30, 2008. It was submitted on behalf of the appellant that the appellant-company would, through Shri S.P. Gupta, s/o Shri B. P. Gupta, one of the principal officer and vice president of the appellant-company, give an undertaking to this Court to the effect that the payments as indicated above shall be made on time and no further extension for doing so sought by the appellant.

On behalf of the respondent, it was on the other hand argued that the appellant-company does not deserve any further indulgence from this Court having regard to the fact that the company has in the past, despite the indulgence shown to it, failed to pay the amount lawfully recoverable from it. It was also pointed out that the appellant-company had itself furnished an undertaking in the form of an affidavit and given a schedule for payment of the outstanding amount but failed to abide by the said schedule and assurance. Despite the said failure, the company court had on two subsequent occasions, given further time to the appellant to make the payment of the outstanding amount which the company failed to do thereby leaving no option for the company court except to admit the company petition and to appoint a provisional liquidator with consequential directions. It was also submitted that the failure on the part of the appellant-company to pay is writ large on the face of the record and manifestly shows its inability to pay its debts thereby justifying not only the admission of the petition but also the appointment of the provisional liquidator.

We have given our careful consideration to the submissions made at the bar and are of the view that the limited prayer made by the appellant for extension of time beyond two weeks can, on the terms suggested by the appellant, be granted as a last opportunity to the appellant to liquidate the outstanding liability. It is true that the appellant-company has, despite an undertaking furnished by it and two subsequent extensions granted by the company court, failed to make the payment of the entire amount payable by it to the respondent creditor. It is also true that the company court has initiated contempt proceedings against the appellant-company and Shri S.P. Gupta, its principal officer for the breach of the undertaking furnished to it which the proceedings are now listed for further orders on August 18,2008. Even so, the company court had considered it appropriate to grant a final opportunity to the appellant to pay the outstanding amount within a period of four weeks. Before us, the only submission which learned Counsel for the appellant made was that instead of two weeks, this Court could grant time till September 30, 2008, within which time the appellant-company would liquidate the entire amount outstanding as on date with interest as indicated earlier. It was in support of that submission pointed out by learned Counsel for the appellant that there are nearly 300 workers presently in employment with the appellant-company who are likely to be adversely affected in case the winding up proceedings would be allowed to go any further.

In the circumstances therefore and keeping in view the fact that the appellant is ready and willing to pay the balance amount and also furnishing an undertaking to this Court to abide by the schedule now proposed, we dispose of this appeal with the following directions:

(i) The challenge to the merits of the order under appeal having been withdrawn by the appellant, the order passed by the learned company court admitting the petition and issuing consequential directions upheld and the appeal to that extent dismissed.

(ii) Two weeks'' time granted by the company court for payment of the outstanding amount is, however, extended to September 30, 2008, subject to the condition that the appellant shall, during this period, pay a sum of US$ 15000 by July 30, 2008, another sum of US$ 15000 by the end of August, 2008 and the balance amount of US$ 7284 with interest at 12 per cent. per annum on the sum of US$ 37284 calculated at 12 per cent. with effect from September 6, 2006, till the date of actual payment by September 30, 2008. We make it clear that the extension hereby granted would cease to be effective and the order passed by the company court shall become operative with immediate effect no sooner there is a default in the making of the payment as per the above schedule.

(iii) The grant of extension of time till September 30, 2008, as indicated above, is also subject to the appellant through its principal officer filing an undertaking to this Court to the effect that it shall abide by the time schedule now fixed for payment of the outstanding amount. The undertaking shall be filed within two weeks from today, failing which the direction regarding extension of time shall stand vacated.

(iv) We make it clear that the injunction issued by the learned single judge restraining the appellant-company from transferring, alienating, encumbering or dealing with any of its movable and immovable assets, bank accounts and other securities, except for the purpose and to the extent it is necessary to meet the liabilities which it owes to the respondent creditor and to meet the day-to-day expenses shall remain intact and effective notwithstanding the extension of time granted by this Court.

The parties are left to bear their own costs.