1985 (12) TMI 345 - HC - Companies Law

Company ordered winding-up, official liquidator appointed. Debt owed, limitation defense rejected.

Indian Turpentine and Rosin Co. Ltd. Versus Pioneer Consolidated Co. of India Ltd.

Indian Turpentine and Rosin Co. Ltd. Versus Pioneer Consolidated Co. of India Ltd. - [1988] 64 COMP. CAS. 169 (DELHI) Issues Involved:1. Whether there is a clear and undisputed debt owing to the petitioner company from the respondent company.2. Whether the petitioner's claim is barred by limitation.3. Validity of the respondent's opposition to the winding-up petition.4. Impact of arbitration proceedings on the winding-up petition.5. Opposition to winding-up by creditors and workmen.Detailed Analysis:1. Existence of Clear and Undisputed DebtThe petitioner, Indian Turpentine and Rosin Co. Ltd. (ITR), sought the winding up of the respondent, M/s. Pioneer Consolidated Co. of India Ltd. (PCC), under section 433, clauses (e) and (f), read with section 439, of the Companies Act, 1956, claiming a debt of Rs. 43,57,198.31. This amount included:- Principal amount: Rs. 28,41,571.70 (debit balances of PCC's branches after adjusting a security deposit of Rs. 2,00,000).- Interest: Rs. 4,40,443.61 from September 1, 1979, to August 31, 1980.- Incidental charges: Rs. 10,70,000 realized by PCC from customers.The respondent disputed the incidental charges, arguing that the petitioner had agreed to revised rates in a letter dated September 26, 1979. The court found reasonable basis for some dispute on this account. However, the court noted clear admissions by the respondent of substantial liabilities to the petitioner, including an affidavit filed on October 7, 1982, acknowledging a debt of Rs. 21,83,162.50, and further admissions in February 1984.2. Barred by LimitationThe respondent argued that the petitioner's claim was barred by limitation as the sales agency agreement ended on August 31, 1979, and the suit for recovery should have been filed within three years. The court noted that the plea of limitation is relevant only at the date of presentation of the winding-up petition. The court overruled this plea, following the Division Bench decision in Diwan Chand Kapoor v. New Rialto Cinema P. Ltd. [1987] 62 Comp Cas 810 (Delhi), which held that the relevant date for limitation purposes is the date of presentation of the petition, not the date of the winding-up order. The court also found that the respondent's acknowledgments in 1982 and 1984 extended the limitation period under section 18 of the Limitation Act, 1963.3. Validity of Respondent's OppositionThe respondent's opposition was based on claims of inflated and unreasonable demands by the petitioner and the potential for the company's revival. Affidavits from creditors and workmen opposed the winding-up, citing the company's valuable assets and potential for rehabilitation. However, the court found these affidavits unconvincing, noting the lack of concrete proposals for financial reconstruction and the company's inability to meet its liabilities, including the court-directed payments.4. Impact of Arbitration ProceedingsThe respondent argued that arbitration proceedings under section 20 of the Arbitration Act were pending, which should preclude the winding-up order. The court found that the arbitration proceedings had been effectively stayed and were not a valid ground to oppose the winding-up petition. The respondent had not sought a stay of the winding-up petition under section 34 of the Arbitration Act or leave under section 446 of the Companies Act to continue the arbitration.5. Opposition by Creditors and WorkmenSeveral creditors and workmen opposed the winding-up, arguing that it would harm their interests and that the company had potential for revival. The court acknowledged the workers' right to be heard but found that the opposition was primarily from persons related to the management, with no substantial evidence of the company's ability to revive. The court noted that the company had been unable to meet its expenses and had no concrete plan for financial recovery.Conclusion:The court concluded that the respondent company (PCC) should be wound up, appointing the official liquidator to take charge of the assets and proceed with the winding-up process. The court directed immediate communication of the winding-up order to the Registrar of Companies, Delhi.