1996 (5) TMI 356 - HC - Companies Law

Court dismisses stay application, orders winding up of respondent company, appoints liquidator, and orders publication of winding-up citation.

The court dismissed the respondent's application for stay of advertisement and proceedings, imposing costs of Rs. 25,000. The petition for winding up was ... Company when deemed unable to pay its debts Issues Involved:1. Intercorporate Loans and Repayment2. Application for Stay of Advertisement and Proceedings3. Alleged Bona Fide Dispute and Secured Creditor Status4. Admission of Petition and Citation Publication5. Amendment of Petition6. Limitation Period7. Adequacy of Security Provided8. Compliance with Companies (Court) Rules9. Statutory Notice Requirement10. Conduct of RespondentIssue-wise Detailed Analysis:1. Intercorporate Loans and Repayment:The petitioner advanced intercorporate loans totaling Rs. 182 lakhs to the respondent, including Rs. 150 lakhs in 1991 and Rs. 32 lakhs in January 1992. The respondent acknowledged receiving Rs. 150 lakhs in 1991 but denied receiving Rs. 150 lakhs in January 1992. The court noted that the respondent admitted the receipt of Rs. 182 lakhs in an affidavit dated December 7, 1995.2. Application for Stay of Advertisement and Proceedings:The respondent filed an application (C.A. No. 738 of 1995) to stay the advertisement and proceedings, arguing that the petitioner was a secured creditor and there was no need for a winding-up petition. The court observed that the application was a tactic to delay proceedings and create an impression of a bona fide dispute.3. Alleged Bona Fide Dispute and Secured Creditor Status:The respondent claimed that the petitioner was a secured creditor due to the security in shares and collateral security provided. However, the court found that the respondent's actions were intended to delay the proceedings and that the security provided was not real or valuable.4. Admission of Petition and Citation Publication:The petition was admitted on August 21, 1995, and citation was ordered to be published in the Delhi Gazette, Statesman (English), and Vir Arjun (Hindi) for December 4, 1995. The respondent's application to stay the advertisement was dismissed due to lack of bona fide defense.5. Amendment of Petition:The petitioner sought to amend the petition to include additional details and correct addresses. The court noted that the amendments were not necessary as the relevant documents were already on record. The application for amendment (C.A. No. 57 of 1996) was dismissed as withdrawn.6. Limitation Period:The respondent argued that the petition was barred by limitation as the loans were obtained in January 1992. The court held that the transaction was a running transaction, and the petition was not barred by limitation. The court also noted that the amendments sought were not intended to extend the limitation period.7. Adequacy of Security Provided:The respondent claimed that adequate security in the form of shares and a collateral agreement was provided. The court found that the shares had no real market value and the collateral agreement was not validly executed. The court held that the security provided was not real and did not satisfy the debt.8. Compliance with Companies (Court) Rules:The respondent argued that the affidavit in support of the winding-up petition did not comply with the Companies (Court) Rules. The court held that the requirements of Form 3 were fully complied with by the petitioner.9. Statutory Notice Requirement:The respondent contended that no statutory notice was served as required under sections 433, 434, and 439 of the Companies Act. The court found that notice dated August 1, 1994, was sent by registered post and delivered to the respondent's office address.10. Conduct of Respondent:The court noted the respondent's conduct in not filing a reply to the main petition, filing an application for modification without filing the reply, and attempting to delay the proceedings. The court found the respondent's actions to be dilatory tactics and an abuse of the process of law.Conclusion:The court dismissed the respondent's application for stay of advertisement and proceedings with costs of Rs. 25,000. The petition for winding up was admitted, and the respondent-company was ordered to be wound up. The official liquidator was appointed to take possession of the company's assets, and citation of the winding-up was ordered to be published.