TaxTMI 
TaxTMI 
2010 (10) TMI 86
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....d counsel appearing for IDBI were heard. 3. The first respondent-company is a limited company with authorised share capital of Rs. 5 crores divided into 50 lakhs shares of Rs. 10 each and its main object is to carry on the business of manufacturing, bleaching, dyeing, printing and selling yarn, cotton and/or staple fibre, cloth and other fabrics made from raw cotton, jute, wool and other suitable materials and generally to carry on the business of cotton spinning and as weaving mill proprietors in all branches : (a)It is stated that originally one M/s. Sivakami Textiles Ltd., borrowed loans from various banks including the second respondent-bank to the tune of Rs. 4,49,63,000 and it was unable to repay the loan because of recession and the matter was referred to the BIFR. At that time, the first respondent-company made a negotiation for taking over the said mill. It is stated that in the meantime, the said M/s. Sivakami Textiles Ltd., moved the AAIFR and the scheme was sanctioned by the appellate authority on 24-9-2001 and based on the scheme, the said M/s. Sivakami Textiles Ltd., was merged with the first respondent. (b)After merger, the appeal filed before the AAIFR by t....
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....the office of the Sub-Registrar, Chokkikulam and under the mortgage, the properties described therein were furnished as security for repayment of a total sum of Rs. 70 lakhs. A further advance of Rs. 16,68,000 was paid towards electricity charges to the first respondent and for that, the said Mrs. J.S.P. Jeyarani, one of the directors of the first respondent-company executed another registered simple mortgage deed dated 8-9-2006, mortgaging further extent of property described in the schedule to the said document as security for repayment. It is stated that till September, 2006, the total advance amount paid by the petitioner to the first respondent was Rs. 1.92 crores which was acknowledged by the first respondent through account statement along with confirmation letter dated 20-9-2006. (g)It is stated that at the request of the first respondent, for the purpose of making payment of Deepavali advance to the workers, the petitioner made a further payment of Rs. 16.62 lakhs by way of two cheques drawn in UTI Bank for Rs. 9.62 lakhs and Rs. 7 lakhs. It is stated that the first respondent mill was locked on 25-10-2006, due to non-payment of labour wages though the petitioner had al....
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....n 21 days with interest and the first respondent gave an evasive reply on 9-5-2008, for which a rejoinder was issued by the petitioner on 19-3-2008. Since there was no reply, the present petition has been filed for winding up of the first respondent-company. 4. The statutory notice dated 29-2-2008, issued by the petitioner through its counsel was sent to the first respondent at two addresses, viz., No. 2, Kiruba Nagar, Thiruppalai, Madurai and No. 61, Mengles Road, Nagal Nagar, Dindigul-624 003. After the merger of the first respondent-company with M/s. Sivakami Textiles Ltd., in the agreement between the petitioner and the first respondent represented by its managing director, Mr. R. John Sundara Pandian, the address of the first respondent is stated to be M/s. Sheela Rani Textiles Ltd., Thenur, Samayanallur Post, Madurai. In the subsequent agreement dated 7-9-2006, entered between the petitioner and the first respondent, the address of the first respondent is stated as M/s. Sheela Rani Textiles Ltd., Thenur, Samayanallur Post, Madurai while the address of its managing director, Mr. R. John Sundara Pandian is stated as, No. 2, Kiruba Nagar, Thiruppalai, Madurai-624 014. 5. O....
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....roceedings as not maintainable, as the same was initiated on the basis of statutory notice, which was not addressed to the registered office. (b)He would also contend that as per the documents filed before the Registrar of Companies in Form No. 23AC pursuant to section 220 of the Companies Act, 1956, the address of registered office of the first respondent is stated as Thenur, Samayanallur Post, Madurai and therefore, the notice issued to a different address cannot be termed to be one that was sent in compliance with the provisions of the Companies Act, 1956. (c)He would also refer to Form No. 18 issued by the Registrar of Companies wherein it is stated that the registered office of the first respondent-company has been changed from 61, Mengles Road, Nagal Nagar, Dindigul to Thenur, Samayanallur Post, Madurai with effect from 7-5-2002. (d)It is his submission that even in the suit filed by the petitioner before the Principal District Judge, Madurai in O.S. No. 139 of 2007, the address of the first respondent is given by the petitioner as Thenur, Samayanallur Post, Madurai-625 402 and that suit was filed on 9-3-2007 and therefore, the petitioner was aware of the address of ....
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....was originally having its registered office at No. 2, Kiruba Nagar, Thiruppalai, Madurai is not in dispute and in fact, even in the scheme of amalgamation/merger entered on 24-6-2001, the address of registered office of the first respondent-company is stated as above. In the said scheme of amalgamation in which the first respondent is a transferee, its address is given as follows : "Transferee company means M/s. Sheela Rani Textiles Ltd., a company formed and registered under the Companies Act, 1956 and having its registered office at No. 2, Kirupa Nagar, Thiruppalai, Madurai, Tamil Nadu." 11. In clause No. 3.5(d ), the scheme states that the transferor company on merger with the transferee company shall have the registered office changed from Thenur, Madurai District, Tamil Nadu to No. 2, Kiruba Nagar, Thiruppalai, Madurai, Tamil Nadu and the said clause reads as follows : "On merger, the activities of M/s. Sri Sivakami Mills Ltd., (SSML) will be carried on in the name and style of M/s. Sheela Rani Textiles Ltd. (SRTL) and the registered office of the company shall be changed from Thenur, Madurai District, Tamil Nadu at No. 2, Kiruba Nagar, Thiruppalai, Madurai, Tamil Nad....
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....y its debts.-(1) A company shall be deemed to be unable to pay its debts - (a)if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor ; (b)if execution or other process issued on a decree or order of any court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part ; or (c)if it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, and in determining whether a company is unable to pay its debts, the Tribunal shall take into account the contingent and prospective liabilities of the company." 16. Section 434(1), especially sub-clause (a) makes it a condition that the creditor shall serve a notice on the company at its registered office by registered post and it is only such creditor who can file an applic....
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....y the respondent immediately before the despatch of the statutory notice, I hold that it is not open to the respondent to contend that the statutory notice was addressed to the old address and hence, the statutory notice is not valid. The address of the registered office is mentioned as 36, Wallajah Road, Chennai, not only in the letters issued prior to the statutory notice, but also in the letters subsequently issued by the respondent from August, 1997, to January, 1998. Moreover, subsequent to the statutory notice, the respondent has admitted its liability in the agreement dated September 20, 1997. The purpose of issuing notice is to give an opportunity to the respondent to discharge the liability and when subsequent to the notice the respondent admitted the liability and agreed to pay the amount, the wrong reference as to the address of the registered office of the respondent in the statutory notice would not vitiate the notice. Further, this court in Rajearajeswari Packaging Products v. Dev Fasteners Ltd. [2002] 108 Comp. Cas. 715 (Mad)/[2002] 2 LW 658, has taken the view that in the case of petition filed under section 433(e) read with section 434 of the Companies Act, notice ....
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....tice under section 434(1)(a) must be served only on the registered office of the company and that service on the administrative office is invalid. However the Karnataka High Court has taken a different view in Manganese Ore (India) Ltd. v. Sandur Manganese & Iron Ores Ltd. [1999] 98 Comp. Cas. 755. In this pronouncement, the Karnataka High Court held that a notice served not on the registered office of the company, but on its administrative office, a company petition is maintainable. Learned counsel for the respondent relied upon the judgment of AR. Lakshmanan J., as he then was, in B. Viswanathan v. Seshasayee Paper & Boards Ltd. [1992] 73 Comp. Cas. 136 (Mad.), where the learned judge held that the notice is invalid because in the notice wrong pin code was mentioned. In the same case it was pointed out that the notice caused was addressed to the managing director only and not to the company. Further the registered office of the company is at Pallipalayam, Salem District while the notice has been sent to Pallipalayam with a wrong pin code and in view of the said defect the learned judge held that the notice does not conform to the mandatory requirement of section 434(1)(a) of t....
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....ties of the company. A creditor can claim winding up of the company under section 433(e) of the Act with the aid of section 434(1)(a) and/or 434(1)(c) of the Act. If the case under section 434(1)(a) is not proved, he can prove his case under section 434(1)(c). Under these circumstances, merely because notice under section 434(1)(a) of the Act was not validly served on the respondent-company, the application for winding up cannot be thrown out, because, as noted above, the petitioner-firm has proved the indebtedness of the respondent-company as also its failure and/or negligence to pay the debt in question. The question whether the respondent-company is unable to meet its current liabilities as also the contingent and prospective liabilities is a question to be decided after advertisement of the petition and during the enquiry." 20. That was also followed by the Andhra Pradesh High Court subsequently in Hyderabad Abrasives &. Minerals (P.) Ltd.'s case (supra). 21. The same was also the view of the Punjab and Haryana High Court in Luxmi Industrial Gases (P.) Ltd.'s case (supra ), wherein it was held as follows (page 434) : "The other contention raised on behalf of the respon....
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....a) are, on facts, different. Therefore, I have absolutely no hesitation to hold on the facts of the present case that even if the statutory notice issued by the petitioner was not sent to the correct address of the registered office of the first respondent-company, the same shall not stand in the way of considering the company petition and the company petition cannot be thrown out. 23. The further submission of learned senior counsel for the first respondent that the filing of suit by the petitioner will bar the winding up proceedings under the Companies Act is unsustainable. While the civil court is to vindicate the private rights of parties, the company petition filed for winding up is to decide about the capacity of the company to repay its debts which has got larger ramification while considering the plight of creditors and contributories of the company. Simply because the petitioner has filed a suit based on the mortgages stated to have been executed by one of the directors of the first respondent-company creating security for repayment of amount, which has been subsequently advanced by the petitioner, that cannot stand in the way of the petitioner in maintaining the compan....