TaxTMI 
TaxTMI 
2011 (11) TMI 534
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....spondent-company. The said cheque was handed over to the respondent-company's management on 08th December, 1994 and a receipt for the said cheque was issued by the Accounts officer of the respondent-company. The receipt dated 08th December, 1994 issued by the respondent-company is reproduced hereinbelow:- " RECEIPT Received Rs. 5,000,000.00 (Rs. Fifty Lakhs Only) from Mr. Bhajan Singh Samra, S/o Mr. Bikar Singh vide draft no. 735085 dt. 05.12.94 drawn on Algemene Bank, Nederland14, Veer Nariman Road, Bombay-400023. For Goodwill Foods Pvt. Ltd. Sd/- (Rajiv Singhal) DATE: 08/12/94 Accounts Officer" 3. It is stated in the petition that the aforesaid loan was given for a period of two years with interest @ 22% per annum. Upon petitioner's request for redemption of his loan with interest in 1996, respondent-company instead of redeeming the loan, offered to convert it into equity shares in petitioner's favour and also agreed to appoint petitioner as an Executive Director. 4. It is stated that as despite repeated assurances, neither the shares were issued by the respondent-company nor the petitioner was made a Director, the petitioner initiated criminal proceedings in the year 20....
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.... only a part payment of Rs. 50,00,000/- towards the Share Application Money, the shares could not be issued to the petitioner. 10. Learned counsel for respondent-company repeatedly emphasised that the amount received by the respondent-company was towards Share Application Money and not loan as alleged by the petitioner. Learned counsel for respondent-company further stated that neither there is any provision for payment of any interest on the alleged loan nor any such document had been filed by the petitioner. He stated that respondent-company is a legal entity and its accounts are duly audited and maintained in accordance with law. 11. Learned counsel for respondent-company submitted that the winding up proceedings cannot be used as a pressure tactic to recover an alleged debt for which a normal remedy, i.e., a civil suit is always available to the creditor. In this connection, he relied upon a judgment of the Bombay High Court in QSS Investors (P.) Ltd. v. Allied Fibres Ltd. [2001] 107 Comp. Cas. 587/[2002] 36 SCL 145 (Bom.), wherein it has been held as under:- "It is crystal clear from the petition as well as the affidavits that the claim of the petitioners is not an ascertai....
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....ants/creditors. The Supreme Court has always propounded this legal position that it would be a coercive and oppressive action on the part of the petitioners to file a company petition under sections 433, 434 and 439 of the Companies Act for the purpose of recovery of the alleged debt. Even, section 443 of the Act is very clear that a winding up petition cannot be used as a lever to recover the debt from the company. The petitioners having filed a regular suit for recovery of the debt they cannot be permitted to resort to this extraordinary remedy of winding up of the respondent-company. The supreme Court has always mandated that the parties must resort to the legitimate civil remedy for recovery of the alleged debt and no company petition should be entertained for recovery of such debt which has been bona fide disputed by the respondent-company. I am more than satisfied in the present case that the respondents have bona fide disputed the debt claimed by the petitioners and the petitioners have already resorted to the civil remedy and, therefore, the petition cannot be entertained. The petition, therefore, stands dismissedâEUR¦.." 12. Learned counsel for petitioner, i....
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....rtis Financial Services Ltd. v. K.H.S.L. Industries Ltd. [1999] 95 Comp. Cas. 622 (All) held that an acknowledgement by an Assistant Vice-President of the debtor company was sufficient for computing a fresh period of limitation from the date of such acknowledgement. 15. The Calcutta High Court in the case of Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, AIR 1962 Cal. 115 held that in an appeal arising from a money decree against a company, even statement of a liability in the balance-sheet of the company amounted to admission/ acknowledgement of a debt giving rise to a fresh period of limitation, notwithstanding the fact that the balance-sheet was prepared under 'compulsions of statute and of the articles of association of the company'. 16. In Vijaya Kumar Machinery & Electrical Stores v. Alaparthi Lakshmikanthamma, [1969] 74 ITR 224 (AP), the Andhra Pradesh High Court after following Bengal Silk Mills Co. (supra), Rajah of Vizianagaram v. Official Liquidator, Vizianagaram Mining Company Ltd. AIR (39) 1952 MAD. 136, Lahore Enamelling and Stamping Co. Ltd. v. A.K. Bhalla, AIR 1958 Punj. 341 and Jones v. Bellegrove Properties Ltd. [1949] 2 All.ER 198 held, "What emerges fro....
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.... and if the allotment is not made within the prescribed period, the said monies have to be refunded forthwith to the applicants. The Scheme of the Act itself obligates the company crediting the money as Share Application Money to either forthwith issue shares or refund the monies at the earliest. In fact, the Bombay High Court in Reserve Bank of India v. Bank of Credit & Commerce International (Overseas) Ltd. [1993] 78 Comp. Cas. 230 at 235 held. "The capacity in which the company or the bank receives the said amount (share application money) is a fiduciary capacityâEUR¦âEUR¦âEUR¦.The provisions of the Act impose a statutory prohibition on user of the application money for any purpose other than for the purposes specified in section 73(3A) of the Act. The said provisions are mandatory and incapable of being waived." 22. In the opinion of this Court, the judgment of QSS Investors (P.) Ltd. (Supra), relied upon by the respondent, is inapplicable to the facts of the present case as in the said case, the company from day one was willing to issue shares to the petitioning creditors and it was the petitioning creditor who was not complying with Se....