TaxTMI 
TaxTMI 
2008 (7) TMI 585
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....3. It is the case of the petitioner that the petitioner Company was supplying aluminum products to the respondent Company. The said raw material was used by the respondent company for the purpose of its manufacture of aluminum extrusions circles etc. for sale. The petitioner was supplying material from time to time till 3-10-2003. After October, 2003, the respondent company stopped making purchases from the petitioner Company. As on 31-3-2004, there was outstanding amount of Rs . 89,70,839 including principal amount of Rs. 50,82,974. After giving credit of the payment made by the said Company on 7-10-2004, the total outstanding as on 30-11-2006 worked out to Rs. 83,66,605. The last part payments were made of Rs. 6,07,984 under three different cheques. Thereafter, there was no payment. As the principal amount itself was not paid, interest was debited merely for the first year and for the subsequent years interest was not debited as the petitioner Company could not pay income-tax on the amounts which were not realised due to the default of the respondent company. The petitioner was entitled to charge interest at the rate of 2 per cent per month as per the terms on the principal outst....
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....d reply. 6. It is in the above background of the matter, the present petition is filed by the petitioner for winding up of the respondent company. 7. Mr. A.C. Gandhi, learned advocate appearing for the petitioner has submitted that the respondent company has failed to discharge and/or neglect to pay its dues to the petitioner. The stand taken by the respondent company in its reply dated 8-2-2007 is baseless, false and frivolous. The counter claim made by the respondent company is also false. This was an after thought only for evading the liabilities. No such supply was ever made by the respondent company to the other company. The respondent company has deliberately and wantonly refused to make the payment only because it has assumed that no action will be taken by the petitioner- company because of close relationship between the parties. The conduct of the respondent company demonstrates that there is total negligence on its part. He has, therefore, submitted that this is a fit case for winding up of the respondent company. 8. An affidavit-in-reply is filed by the respondent company. Mr. Navin K. Pahwa, learned advocate appearing for the respondent company has submitted that the....
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....t settled mutually, the family appointed arbitrators to resolve the disputes. The arbitrators gave an award on 2-7-2005. However, while implementing the award, the brothers felt certain difficulties in settling the issues with respect to assets and companies. Certain issues as to the accounts also remained unsettled. Amongst other issues, the issue as to settlement of inter group companies accounts and valuation/transfer of shares are pending adjudication before the arbitrators. The brothers, therefore, have once again referred the disputes to arbitrators in July, 2006. 11. Mr. Pahwa further submitted that the petitioner is claiming past outstanding amount for the transactions carried out before the year 2003. The inter group transactions were common. Group support and capital to manufacturing companies were given as a part of supply of material from trading companies within the group. However, since separation of business in the year 2003, all such transactions have stopped. He has, therefore, submitted that it is only because of these facts, the petitioner has not produced any document evidencing execution of the transaction between the petitioner and respondent. 12. An affidav....
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....Act, 1956 against the petitioner company and its directors seeking various relief was made. A counter affidavit was filed by the petitioner and its directors to the Company petition pending before the Company Law Board. In the said counter affidavit it was admitted that there has been division of the Companies and firms by all the brothers under mutual discussion and under a family settlement which was effective from 31-3-2003. All the five brothers including the Director of present respondent company and Shri Dineshbhai Shah together with the respective family members sat together on 10-4-2003 and agreed to distribute Pankaj Group of companies amongst themselves as per the details given in the said counter affidavit. It was admitted in the said counter affidavit that the distribution of the companies in terms of ownership and management was complete in all respects. It was also stated that on the question of preparation of statement of assets and liabilities and statement of accounts, a reference was made to arbitration vide agreement dated 20-6-2005. It was further stated that an award was given on 2-7-2005 by the arbitrators. However, the brothers felt that certain issues with r....
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....n the award is challenged under section 34 of the Arbitration & Conciliation Act, 1996. He has, therefore, submitted that though the claims made by the present petitioner are after thought and are barred by limitation, issues arising from accounts of the group companies in respect of the transactions up to 1-4-2003 are the subject-matter of the award given by the arbitrators and now subject matter of proceedings before the competent District Court. He has, therefore, submitted that the Court should not entertain the present winding up petition. 15. Apart from the above facts, as per the say of Mr. Pahwa the respondent company has huge claim against the petitioner company. The respondent company is entitled to recover an amount of Rs. 78,66,463 from the petitioner. The respondent-company is also entitled to recover back the fixed deposit receipts with Bank of Baroda under lien account given by Shri Harakchand Shah, the Managing Director of the respondent-company as collateral security for securing the repayment of the dues of the petitioner to the Bank. The said amounts as of 31-3-2008 is equivalent to Rs. 1 crore. Since the petitioner has not provided adequate alternative securiti....
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.... turnover of the company as on 31-3-2006 is about Rs. 98.65 crores. It is further revealed that the respondent-company employs about 217 persons as direct employees and about 102 employees are working through contractor pay roll. The respondent-company has paid excise duty of about Rs. 11.18 crores and about Rs. 12 lakhs towards other Government dues as on 31-3-2007. 19. As far as merits of the matter is concerned, the petitioner and the respondent-company both formed part of Pankaj Group representing five families which include the family of Shri Dineshbhai N. Shah which owns and controls the petitioner company and Shri Harakchand N. Shah which owns and controls the respondent company. Shri Harakchand N. Shah is the elder brother. These five families decided to have a family settlement and distribute the companies, firms assets and liabilities amongst different families. Accordingly, a reference was made to arbitrators while keeping the cut of date as 31-3-2003. It is recorded in the final award dated 25-1-2008 rendered by the arbitrators that the five brothers have operated all the group companies and managed the group assets and liabilities as one unit, undivided upto 31-3-2003....
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....other of Pankaj Group. 21. It is true that the arbitrators have given the final award on 25-1-2008. In the concluding part of this award, the Arbitrators issued certain directions for accounts and payments. All the three Accountants representing the five brothers were directed to prepare their final account as per the directions given in earlier award dated 2-7-2005 and in the subsequent award dated 25-1-2008 up to date and get it confirmed among themselves on or before 15-2-2008 and forward the same to the Arbitrator. On final confirmation of accounts the necessary modalities for settlement of payments between the brothers were to be done. Settlement of all the payments were directed to be completed on or before 31-3-2008. Since the final accounts have not reached to the Arbitrators they could not finalise the award. They were of the view that parties to the arbitral proceedings have not cooperated whole heartedly. They have, therefore, cancelled their earlier directions given on 25-1-2008 and all other decisions, awards discussions etc. Hence the said proceedings were stated to be null and void. All the three Arbitrators had resigned from the arbitral proceedings. Shri Harakchan....