Winding-Up Petition Upheld, Respondent Liable for Debt

The court found the winding-up petition maintainable, as proceedings before the Debts Recovery Tribunal and criminal prosecution did not bar the filing. The court held the respondent liable for the claimed amount and interest rate, considering it a commercial transaction. Despite the respondent's claims of financial soundness and creditworthiness, the court noted its failure to make payments and accumulating losses. Due to the respondent's inability to pay its dues, the court ordered the winding up of the company in the interests of unsecured creditors and public funds. The court issued various notices and appointed a Provisional Liquidator.

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Issues Involved:
1. Maintainability of the winding-up petition.
2. Bona fide dispute regarding the amount payable.
3. Financial soundness and creditworthiness of the respondent company.
4. Just and equitable grounds for winding up.

Summary:

1. Maintainability of the Winding-Up Petition:
The petition was filed u/s 433(e) and (f) r/w Sections 434(i)(a) and 439(i) and (b) of the Companies Act, 1956, for winding up the respondent company. The petitioner argued that the initiation of proceedings before the Debts Recovery Tribunal (DRT) and criminal prosecution u/s 138 of the Negotiable Instruments Act does not bar the filing of the present winding-up petition. The court held that proceedings before the DRT and under the Companies Act are distinct and separate remedies, and invocation of one does not bar the other. The court cited judgments in *Global Trust Bank Ltd. Vs. Kullici Nixon Ltd.* and *Small Industries Development Bank of India Vs. Shri Niranjan Ayurved Bhawan Ltd.* to support this view.

2. Bona Fide Dispute Regarding the Amount Payable:
The respondent admitted the guarantee furnished by the petitioner and the invocation of the guarantee by ICICI Bank. However, the respondent contended that the interest claim at the rate of 35% is usurious and disputed the amount claimed by the petitioner. The court noted that the respondent had admitted liability in its reply to the statutory notice and had sought time for settlement. The court held that the amount claimed by the petitioner is not disputed and the agreed interest rate of 35% p.a. is binding as it was a commercial transaction.

3. Financial Soundness and Creditworthiness of the Respondent Company:
The respondent argued that it is not commercially insolvent and is in the process of revival, with credit facilities from State Bank of India amounting to Rs. 310 Crores. The petitioner countered that the respondent's creditworthiness has deteriorated, as evidenced by ICRA's poor credit rating and the respondent being listed as a willful defaulter by the Reserve Bank of India. The court found that the respondent's failure to make any payment as per its own proposed schedule indicated its inability to pay its dues. The court also noted the significant accumulated losses against minimal profits.

4. Just and Equitable Grounds for Winding Up:
The court held that the failure to pay the amount even after the issuance of recovery certificates by the DRT indicated that the respondent is not in a position to pay its dues. The court emphasized the interests of unsecured creditors and cited judgments in *UTI Bank Ltd. Vs. Shree Rama-Multitech Ltd.* and *Board Opinion Vs. Hathising Mfg. Co. Ltd.* to highlight the importance of recovering public funds advanced by banks and financial institutions. The court concluded that it is just and equitable to order the winding up of the respondent company.

Order:
The court admitted the petition and directed the following:
1. Notice on the Court Notice Board.
2. Notice to the respondent.
3. Notice to the Registrar of Companies, Madras.
4. Affixure of notice at the premises of the Registered Office of the respondent company.
5. Publication of the company petition in "The Hindu" and "Indian Express" and in the Tamil Nadu Government Gazette, fixing the date of hearing on 06.09.2012.
6. Appointment of the Official Liquidator, High Court, Madras, as Provisional Liquidator to take charge of the assets of the respondent company.
7. The Ex-Directors of the respondent company to file their statement of affairs before the Official Liquidator within 21 days.
8. The company to deposit Rs. 15,000 towards initial expenses before the Official Liquidator.

The case was adjourned to 06.09.2012.

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