At, High Court of Madhya Pradesh Bench at Indore
By, THE HONOURABLE MR. JUSTICE PRAKASH SHRIVASTAVA
For the Petitioner: Somya Sharma, Advocate. For the Respondent: Vijayesh Atre, Advocate.
This order will govern disposal of Comp. 4/16 & 5/16 since it is jointly stated by counsel for the parties that both the company petitions involve same issue in identical facts situation based upon similar documents. The petitioners in both the petitions are husband and wife and respondent is a common party.
2. For convenience the facts have been noted from Comp. 4/16.
3. This company petition has been filed for winding upon of respondent company under Section 433(1)(e) of Companies Act on the ground of inability to pay the debts.
4. The case of petitioner is that respondent company has authorized share capital of Rs. 12,50,00,000/- and paid up capital of 12,27,77,710/- and it has been incorporated for trading business of taking agencies, franchises etc. of various products. Further case of petitioner is that she had advanced unsecured loan of Rs. 5 lakhs to respondent on 27/3/15 for a period of 4 months ending on 27/7/2015. Receipt post dated cheques, letter of undertaking and demand promissory note Annexures P-1 to P-4 were issued by respondent but respondent did not repay the amount therefore, statutory notice dated 14/12/2015 Annex. P-5 was sent by petitioner demanding repayment and informing about invocation of Sections 433 and 439 of the Act. Respondent had sent reply dated 5/1/16 denying the transaction. Hence the present petition is filed.
5. In connected company petition No. 5/16 similar allegation is at the instance of husband of petitioner that sum of Rs. 20 lakhs was advanced to respondent company for which similar documents Annexs. P-1 to P-4 were executed and similar notice dated 14/12/15 Annex. P-1 was given which was replied on 5/1/2016 denying the liability.
6. The respondent has filed preliminary objection denying the transaction and taking the plea that petitioner and her husband were arranging the short term loan of Rs. 25 lakhs for the respondent company from the private lenders, therefore, blank documents were kept with petitioner which have been misused by petitioner and that there is no proof of advancing the loan of Rs 5 lakhs or 25 lakhs by the petitioners.
7. In additional reply respondent has further taken the plea that original documents have not been filed and documents relied upon are fabricated and that the respondent is a going concerned engaged in trading of pharmaceutical drugs having distributorship/C & F agency of 25 pharmaceutical manufacturing companies giving employment to more than 100 persons.
8. In the rejoinder further plea has been raised by petitioner giving example of another transaction by respondent company.
9. Learned counsel for petitioner submits that documents Annexures P-1 to P-4 show that respondent had taken unsecured loan of Rs. 25 lakhs by both the petitioners and since amount has not been paid inspite of the statutory notice therefore, case of winding up is made out. She further submits that in respect of another transaction by respondent company with Radix Impex LLP similar documents were executed by respondent but the amount was not repaid and said company had issued legal notice and after negotiation respondent company had issued fresh cheques but same was also dishonoured which shows the general conduct and that respondent company is not intending to repay the amount to petitioners.
10. As against this learned counsel for respondent has disputed the documents of loan transaction and has submitted that no such amount was taken and that documents are fabricated and documents in respect of Radix Impex LLP were different in nature and respondent is going concerned hence no case for winding up is made out and petitioner should approach the civil court for establishing the claim by leading the evidence.
11. I have heard the learned counsel for parties and perused the record.
12. Though the case of petitioners is that they had given unsecured loan of Rs. 25 lakhs to respondent but they have not produced their account statement or balance sheet or any other document to show that any such amount was withdrawn from them for payment to respondent from their account or it was transferred from their account to the account of respondent. A plea has been raised that the amount was paid in cash but nothing has been stated as to whom in the respondent company the amount was paid or in whose presence the same was paid. The petitioners are placing reliance upon the receipts Annex. P-1 & P-2, letter of undertaking, Annex. P-3 and demand promissory note Annex. P-4 but in all these documents the names of petitioners have been filled up by ink in the space left blank. Respondent has seriously disputed execution of these documents in favour of petitioner and has alleged that petitioners have fabricated these documents in their favour whereas these blank documents were given for some other purpose.
13. It is also worth noting that though the post dated cheque Annex. P-2 is said to be in possession of petitioners but original document has not been produced before this court nor it was presented in the bank for encashment.
14. The reply dated 5/1/16 Annex. P-8 reveals that at the first instance itself, after receiving the notice, the respondent had denied the execution of the documents and had alleged them to be false and fabricated. In such a situation when the debt itself is in dispute the petitioners are required to approach the appropriate forum and establish the debt by leading evidence.
15. So far as the documents filed as Annexure P-1 to P-4 which are said to have been executed by respondent company in favour of Radix Impex LLP is concerned, a perusal of those documents reveal that those are different documents where the names were not filled up by ink, hence no benefit can be derived by petitioners on the basis of said documents.
16. Supreme court in the matter of Amalgamated Commercial Traders Vs. A. C. K. Krishnaswami and another, 1965 35 CompCas 456 SC has held that the winding up is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. In the matter of M/s Madhusudan Gordhandas and Co Vs. Madhu Woolen Industries Pvt. Ltd, 1971 3 SCC 632, Supreme court has held that if the debt is bonafide dispute and the defence is substantial one, the court will not wind up the company. Karnataka High court in the matter of Kamadenu Enterprises Vs. Vivek Textile Mills Pvt. Ltd, 1984 55 CompCas 68 (Karnataka) has held that the court exercising jurisdiction under section 433 of the Act is not a court which is meant for settling money disputes between the parties but the jurisdiction of the court is to subserve the object of winding up the companies which have not paid their debts or which are unable to pay their debts. Hence the first pre-requisite must be to establish prima facie a debt against the respondent but when a claim or debt is disputed, the proper forum for that is a civil court. Karnataka High court in the matter of Srinivasa (T) Vs. Flemming (India) Apotheke P. Ltd, 1990 68 CompCas 506 (Kar) has held that in summary procedure followed by the company Court the factual issues cannot be investigated in depth and if the court is satisfied that the defence raised is bonafide and likely to succeed in a civil court and if prima facie case is found that would constitute sufficient reason for rejecting the petition and relegating the parties to the civil court, then said course should be followed.
17. Supreme court in the matter of IBA health (India) Private Ltd Vs. Info-Drive Systems SDN BHD, 2010 10 SCC 553 has held that where a company has bonafide dispute, the petitioner cannot be regarded as creditor of company for the purpose of winding up and where the Company Court is satisfied that a debt upon which a petition is founded is a hotly contested debt and also doubtful, the Company Court should not entertain such a petition.
18. As against this learned counsel for petitioner has placed reliance upon judgment of the Andhra Pradesh High court in the matter of Surendra Constructions Pvt. Ltd. Vs. M. Venkata Rao Infra Projects Pvt Ltd,2014 Supreme 626 but in that case also the similar proposition of law in respect of bonafide dispute of debt has been laid down and on facts said case is distinguishable because respondent company therein had changed the stand in respect of issuance of cheque. Similarly the judgment of Himachal Pradesh High court relied upon by counsel for petitioner in the matter of Arvind Agrawal Vs. Adhunik Packagers (P) Ltd, 2008 1 ShimLC 348 is distinguishable on facts because in that case necessary balance sheet and statement of account were filed showing the debt.
19. Counsel for petitioner has also placed reliance upon judgment of Karnata High court in the matter of Mysore Sales International Ltd. Vs. Unite Brewe
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ries Ltd, 2002 112 CompCas 391 (Kar) but in that case also it has been held that only summary enquiry is to be held for ascertaining the debt whereas in the present case looking to the nature of dispute about the debt, the summary enquiry is not sufficient. 20. Having regard to the aforesaid factual and legal position, I am of the opinion that since the debt is bonafidely disputed by the respondent and the defence is substantial one, therefore, no case is made out for admitting the petitions and passing winding up order under Section 433(e) of the Act. The petitioners are required to establish the debt by approaching the Civil court and leading necessary evidence in this regard. The company petitions are accordingly dismissed, however with liberty to petitioners to approach the civil court. 21. The signed order be placed in the record of Company petition No. 4/16 and copy whereof be placed in the record of connected company petition. C. C. as per rules.