v/s. Western India Art Litho Works Pvt. Ltd.

Transcription

1 1 cp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO of 2000 Solar Printing Inks v/s. Western India Art Litho Works Pvt. Ltd....Petitioner...Respondent Ms. N.S. Moily for the petitioner. Mr. V.V. Kanade a/w. Prateek Sanghvi i/b. R.A. Fernandes for the respondent. P.C. CORAM : S.C.DHARMADHIKARI, J. Dated : 27 th January, This Company Petition for winding up was admitted and infact allowed by an order dated 12 th July, Subsequently that order came to be set aside and the petition was restored to the file of this Court for deciding afresh on merits and in accordance with law. 2. In pursuance of the subsequent order, I have heard both sides and with their assistance I have perused the petition and all annexures thereto. 3. The Company petition invokes the provisions of Companies Act in particular Section 434 thereof on the ground that the petitioners carry on

2 2 cp business of manufacturing printing ink products at Mumbai. The respondent placed orders for supply of printing ink material from 15 th July, 1996 till 30 th November, The material was supplied and bills were raised in the sum of Rs. 10,75,817/- A reminder was sent to make this payment in writing on 17 th February, The amount outstanding was confirmed and repeatedly time was given to make payment. Part payments were made but the installments also were not regular. Therefore, a summary suit was filed in this Court being Summary Suit No. 5694/1998 for recovery. However, during the pendency of the said summary suit and on the footing that despite receipt of statutory notice, the company has failed to pay the amount demanded or secure the debt of the petitioner or compound it to the satisfaction of the petitioner that this petition for winding up has been filed. 4. It has been also pointed out that the Company Petition was admitted by a conditional order but there was a default committed in complying with the conditional order. Therefore, the petitioner s debt is admitted. In the meanwhile, even in the Summary Suit an order was passed on 17 th July, 2002 decreeing the said suit in the sum of Rs. 10,50,000/- alongwith interest at the rate of 8.5%. There is no appeal preferred against the decree in the Summary Suit. The Execution Application was preferred by the

3 3 cp petitioners but that was withdrawn on 24 th April, 2009 to take recourse to such remedies as are available in law. In the meanwhile this winding up petition was pending and reached hearing on 12 th July, It was allowed after it was pointed out that the claim of the petitioner now exceeds Rs. 35 lacs. Thereafter, the Company Application No. 272/2010 was moved to recall the order of 12 th July, That Company Application was disposed of on 14 th July, It is in these circumstances and on account of later order recalling the winding up, that this Company Petition has been placed for hearing and final disposal. 5. It is argued on behalf of petitioners that the original debt which is on account of the supply of goods which were ordered remains unsatisfied. There is also a statutory notice which has been issued based on which the Company Petition was filed. It may be that simultaneously a Summary Suit was also filed in this Court but there is no substance in the contentions now sought to be canvassed that the original debt of the respondent company stands extinguished and, therefore, the Company Petition for winding up cannot be proceeded with. It is stated that all that has happened is that post institution of this Company Petition for winding up, even the suit has been decreed but the fact remains that even under the decree nothing has been paid. When the Company Petition was admitted

4 4 cp on the basis that there is a default committed in complying with the conditional order, then, if that default continues and there are no changed circumstances but the company is found to be heavily indebted, commercially insolvent and unviable that it should be wound up. 6. The Company has only filed one affidavit-in-reply to this petition. In that affidavit what has been stated is that the petition is lodged without providing vital and material facts and this petition be dismissed. That affidavit of 30 th January, 2008 is on record. Thereafter, no further affidavits have been filed. In this affidavit, it is pertinent to note that there is no denial of the facts set out and alleged in the petition. A prior affidavit-inreply of 11 th April, 2001 was already considered by this Court when the conditional order came to be passed on 12 th April, Thereafter this petition was placed before learned Single Judge of this Court on 8 th August, 2001 and it came to be admitted. 7. Post admission of the Company Petition, the additional affidavit-inreply dated 30 th January, 2008 does not deal with any of the allegations and averments in the Company Petition insofar as merits of the claim but raises some technical objections with regard to composition and constitution of the petitioner. That objection has not been pursued any further.

5 5 cp The only argument that has been canvassed when this Petition was placed for hearing and final disposal is that the petitioner is not a registered partnership firm and, therefore, it cannot file a winding up petition. Secondly, it is argued that petitioner is trying to extract money from the respondent. It has filed a civil suit which civil suit was decreed and an execution application to execute/enforce that decree was also filed. However, that has been withdrawn. Once that is withdrawn, the petition for winding up cannot be proceeded with for recovery of the same amount covered by the decree. In any event, the petition is not based on the sum payable under the decree in the Summary Suit but on the original debt covered by a statutory notice preceding the filing of this Company Petition. Therefore, this petition cannot be proceeded with and should be dismissed. My attention is invited to page-18 of the petition and it is stated that there is no further MOU. If there is no further MOU, then the petition filed for recovery of the amount on the basis that the Company is unable to pay its debt is not maintainable and must be dismissed. 9. I have heard the learned Advocate appearing for the petitioner and Mr. Kanade appearing for the respondents on the basis of the above material. Mr. Kanade has relied upon the decision of learned Single Judge

6 6 cp of this Court in the case of Manipal Finance Corporation Limited vs. CRS Carrier Limited reported in (2002) I Comp LJ 71 (Bom). 10. After hearing both sides and perusing with their assistance, the petitions and the annexures thereto so also all affidavits on record, I am of the opinion that there is no substance in any of the objections raised by Shri Kanade. Section 69 of the Partnership Act, 1932 based on which the first objection is raised is clear in its applicability. That Section would apply provided a suit is sought to be filed. Sub-section 3 of Section 69 itself clarifies that sub-sections (1) and (2) would not apply in cases of insolvency and for releasing the property of insolvent partner. Mr. Kanade was unable to point out as to how this Section is applicable to a petition for winding up. Therefore, there is no substance in this objection. 11. Equally untenable is the 2 nd objection that the petition is founded on the original debt and, therefore, once that debt is made subject matter of recovery in a Summary Suit and that Summary Suit is decreed, the only remedy is to enforce and execute the decree and not pursue this winding up petition. It is common ground that the same debt is demanded in the statutory notice and in the recovery proceedings by way of Summary Suit. Mr. Kanade does not dispute that the same transaction is the subject matter

7 7 cp of both proceedings. He was unable to point out anything in law by which it will not be possible for the petitioner to pursue the winding up petition merely because the Summary Suit is decreed. In fact, on the basis of the decree in the Summary Suit, a winding up petition can always be filed. It is not as if the original debt has been extinguished as contended. The original debt was foundation of the winding up petition and that was sought to be secured by a conditional order. Not only there is default in compliance of the conditional order but even after the suit was filed, nothing has been paid to the petitioners by the respondent and, therefore, a decree had to follow. In such circumstances, when this petition cannot come to an end in law merely because the Summary Suit is decreed or execution application filed to enforce and execute decree is withdrawn, then the 2 nd objection must also fail. It is accordingly rejected. 12. There is nothing to indicate that merely because further MOU is not executed, the petition cannot lie or cannot proceed further. The MOU at Annexure-C page-18 of the petition itself is without prejudice. The Company offered to pay sum amount and that would have been accepted in full and final settlement but in the petition it is stated that even after the writing at Annexure-C only a sum of Rs. 25,817/- by cheque was paid. There was a default in making subsequent payment in terms of this

8 8 cp writing. Therefore, a statutory notice was issued demanding the amount under the invoices and bills. Once a statutory notice could be issued and the Company Petition for winding up can be filed and it is admitted, then it is too late now to urge that only the MOU would enable a petition for winding up to be filed and by satisfying this Court that there is a default in complying with the same. Beyond seeking time to pay the moneys and admitting the liability there is nothing new in this MOU. The respondent company cannot rely on this MOU and claim any advantage or benefit when it is a defaulter. 13. Therefore, even the 3 rd objection must fail. Shri Kanade s reliance on the judgment of learned Single Judge of this Court in the case of Manipal vs. CRC Carrier Ltd. (supra) is misplaced because in that case the petition was placed for admission. A Company Petition cannot be admitted for recovery of an amount and the petitioners had to resort to civil remedy. The debt of the petitioner in that case was doubtful and it was not crystallised and finding that petitioners want to proceed with the civil proceedings as also the company petition to recover the debt which is bonafide disputed, that this Court dismissed the company petition for winding up on the ground that it is sheer abuse of process of law. This decision is clearly distinguishable on facts. Here there is no dispute to the

9 9 cp debt much less bonafide. The claim is admitted and accepted throughout. Even in the affidavit-in-reply the company has failed to point out any defence which could be said to be bonafide and substantial. In these circumstances, reliance on this decision and observations in paragraph 8 thereof is misplaced. 14. As a result of the above discussion, the Company Petition succeeds. It is made absolute in terms of prayer clauses (a) and (b). (S.C. Dharmadhikari, J)