2015 (3) TMI 23 - HC - Companies Law

Court upholds winding up application against appellant company for Rs. 4,00,06,655.52. Appellant found liable based on acknowledgments of debt.

The court rejected the appellant's appeal and upheld the winding up application against the appellant company for Rs. 4,00,06,655.52. The court found the ... Admissibility of Winding up application - Factoring of receivables - Denial of liability by borrower company - Held that:- In the instant case, it an admitted position that the appellant had issued the first cheque of ₹ 4,00,06,655.52/- in favour of the respondent and on February 19, 2010 substituted the said cheque by issuing a fresh cheque of ₹ 4,00,06,655.52/- and the said cheque remained unpaid. Thus, the onus was on the appellant company to prove that it had no liability to pay the said sum of ₹ 4,00,06,655.52/- to the respondent which the appellant company has failed to discharge. In the instant case, we find the defence put up by the appellant lacks bona fide and good faith. Thus, we find no merit in the appeal being APO 302 of 2014 and the same stands rejected. Interim orders, if any also stands vacated. - Decided against the appellant. Admissibility of winding up application at lesser value - Held that:- The learned Single Judge admitted the application for ₹ 3,00,06,655/-, as from the documents disclosed it appears that the appellant in this appeal accepted the said two demand drafts for ₹ 75 lac and ₹ 25 Lac against six of the said twenty nine invoices . According to Mr. Vinayak the respondent in this appeal had issued the said two post dated cheques of ₹ 4,00,06,655.52/- and ₹ 1,00,000,536 in acknowledgement of their dues to the appellant in this appeal for factoring said twenty nine and other invoices. However, when the respondent forwarded the said demand drafts of ₹ 75 lacs and ₹ 25 lacs respectively, there was no mention about any specific invoice. Thus, he contended, it was within the right of the appellant in this case to appropriate the said sum of ₹ 1 crore said by the said in respect of some of the said twenty nine bills. Thus, once the respondent had issued the said two post dated cheques for a total sum of ₹ 5,00,07,191/-, even after giving credit to the payment of the said sum of ₹ 1 crore, a sum of ₹ 4,00,06,655.52/- still remains due and payable by the respondent to the appellant. We find merit in such contention made on behalf of the appellant in this appeal. - Decided in favour of appellant. Issues Involved:1. Admissibility of the winding up application.2. Liability of the appellant company to the respondent.3. Effect of the factoring agreement and assignment of debt.4. Bona fide nature of the appellant's defense.5. Quantum of the admitted amount for winding up.Issue-wise Detailed Analysis:1. Admissibility of the Winding Up Application:The primary issue in these appeals was whether the learned Single Judge erred in admitting the winding up application against the appellant company. The appellant company contended that it had no outstanding dues to the respondent and that the learned Single Judge made an error in admitting the winding up petition. The learned Single Judge admitted the winding up application for Rs. 3,00,06,655/- while the petitioning creditor argued it should have been for Rs. 4,00,06,655.52/-.2. Liability of the Appellant Company to the Respondent:The appellant company argued that it was not liable to make any payment to the respondent as it was not a party to the factoring agreement between the respondent and the borrower company. However, the court found that the appellant had acknowledged its obligation to make payments directly to the respondent by issuing post-dated cheques and admitting its liability in various correspondences and before the Judicial Magistrate.3. Effect of the Factoring Agreement and Assignment of Debt:The factoring agreement between the respondent and the borrower company assigned the receivables to the respondent. The appellant was informed of this assignment and agreed to make payments directly to the respondent. The court noted that the appellant had issued post-dated cheques to the respondent, indicating acceptance of this assignment and its obligation to pay.4. Bona Fide Nature of the Appellant's Defense:The court scrutinized the appellant's defense that it had already paid the borrower company and that the borrower company was holding the sums in trust for the respondent. The court found the defense lacked bona fide. The appellant's claim of having paid Rs. 3.85 crores to the borrower company was not substantiated with contemporaneous evidence. Furthermore, the appellant's Managing Director had admitted liability before the Judicial Magistrate and made partial payments, which contradicted the defense.5. Quantum of the Admitted Amount for Winding Up:The respondent argued that the winding up application should have been admitted for the full amount of Rs. 4,00,06,655.52/-. The court found merit in this contention, noting that the appellant had issued cheques for a total of Rs. 5,00,07,191/- and had only made partial payments of Rs. 1 crore. Thus, the court modified the order to admit the winding up application for Rs. 4,00,06,655.52/-.Conclusion:The court rejected the appellant's appeal (APO 452 of 2014) and found no merit in the appellant's defense. The court modified the order of the learned Single Judge to admit the winding up application for Rs. 4,00,06,655.52/-. The respondent was granted the right to advertise the winding up application in specified newspapers within two weeks. The winding up application was made returnable in eight weeks. The appeals were disposed of without any order as to costs.