TaxTMI 
TaxTMI 
2011 (9) TMI 763
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....e oral agreement lent and advanced substantial amounts to the respondent-company. A sum of Rs. 2,15,50,000 was advanced by the appellant in the first mentioned appeal (hereinafter referred to as "the first appeal"), whereas a sum of Rs. 4,18,00,000 was advanced by the appellant in the second mentioned appeal (hereinafter referred to as "the second appeal") to the company. The appellant in the first appeal lent the aforesaid sum of Rs.2,15,50,000 on various dates between June 29, 2006 to July 19, 2006. The said payments were made by twelve account-payee-cheques and the same were admittedly encashed. In case of the second appeal the aforesaid payments were made by the appellant/petitioning creditor between June 19, 2006 and November 7, 2006, on diverse dates by thirty several cheques and the same were duly encashed and appropriated. In spite of repeated demands and requests the company did not repay or secure the said sum of Rs. 2,15,50,000 to the appellant in the first appeal as such the said appellant is entitled to claim repayment of the amount of loan and interest at the rate of 10 per cent per annum thus an aggregate sum of Rs. 2,60,11,250 have become due and payable. As far as ....
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.... two companies are really alter ego of both the petitioning-creditors/appellants. 4. In the affidavit in reply it has been emphatically stated that those letters are forged and manufactured and they were never written. This assertion has been made in the affidavit in reply after obtaining inspection of the original of the same by no less than a person of the director of the companies. 5. The learned company judge after hearing found that there has been circular transaction in relation to the said payment and there has been no bona fide transaction actually. The petitioning-creditors have no reason to lend such amount, and it was a fictitious transaction. Moreover a case of fraud and forgery have been made out. Hence disputed question of fact has been raised before the learned judge. His Lordship, therefore, refused to pass any winding up order and had permanently stayed the proceedings as stated above. 6. Mr. Pramit Roy, learned counsel appearing for the petitioning-creditors/appellants in both the matters advances common argument. He contends that there is no dispute and denial that the appellants have made payment by account payee cheques and the same have been received. Two l....
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....the company in connection with purported grant of inter corporate deposit of such huge amount. Even in the absence of any prior commercial relationship between the appellant and the companies it is surprising that there has been no exchange of correspondences between the parties before issuance of statutory notice. He further submits that the appellants Swarnasathi had no substantial balance to provide inter corporate deposit of Rs. 4.15 crores as its net worth on the date of alleged transaction was only Rs. 2.67 crores. He contends further that actually it was incident of circular transaction and the meaning of the circular transaction could be found in the Oxford Dictionary of finance and banking, an artificial transaction between companies in a group, or under a single control, the purpose of which is to inflate the turnover of one or more of the companies. 10. It has been stated in the affidavit that such artificial transaction was entered into with the object of window dressing its financial position prior to an intended public issue. These were accordingly never reflected in the annual company's balance-sheet as either loan or inter corporate deposit. The company in its affi....
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....s could be seen from the statement and averment made in the affidavit in opposition filed by the company in answer to the two winding up petitions. In both the winding up petitions it has been stated in paragraph 7 the respective amounts were paid by way of inter corporate deposit by several cheques and these were encashed. In the affidavit in opposition the aforesaid statement and averment have not been denied and disputed, rather it is stated in places of the affidavits that the deposits were made but it was repaid to the respective sister concerns of the respective appellants/creditors as per their written instructions. Apparently those letters were written on the respective letter heads of the appellant/petitioning-creditor. The genuineness of these letters are seriously disputed and denied by the appellants herein in their affidavits in reply after having inspection of the original of the same. The defence of the company would have been absolutely clear cut had there been no challenge to the same for it is specifically mentioned that inter corporate loan need not be repaid and it should be transferred to some other company. It is also alleged by the appellant-company that thes....