TaxTMI 
TaxTMI 
2013 (11) TMI 241
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....cates in support of their case. 3. Petitioners contend that they entered into an agreement dated 29.08.2010 for stake sale of respondent company as a going concern by way of sale whereunder it was agreed that entire paid up capital of Rs. 50,00,000 equity shares would be transferred by way of sale to them. Petitioners contended that a sum of Rs. 8,50,00,000/- was paid pursuant to the agreement and they took out paper publication on 11.12.2011 in Times of India, newspaper, Bangalore edition their intention to purchase the stakes in respondent company and an objection was received from M/s.Tilak Nagar Industries Limited to the effect that respondent company was liable to pay a sum of Rs. 2,68,10,772/- to it and a company petition No.223/2011 has been filed before the Company Court for winding up of the respondent company and at the request of the respondent company and its stake holders petitioners paid the said amount of Rs. 2.50 crores to M/s. Tilak Nagar Industries Limited for and on behalf of the respondent company. In view of the same company petition 223/2011 came to be dismissed as withdrawn and thereafter petitioners by notice dated 14.08.2012 have terminated the agreement....
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....t Rs. 2.50 crores was paid by petitioner to said M/s. Tilak Nagar Industries Limited but it is contended that for the purpose of same being accounted to and adjusted as additional consideration that was required to be paid in terms of agreement dated 29.08.2010. It is also contended that if said payment of Rs. 2.50 crores was not made by petitioners to M/s. Tilak Nagar Industries Limited, the respondent company had to be wound up which situation if had arisen was on account of the non-payment of further consideration by the petitioners in terms of the agreement dated 29.08.2010. Respondent had denied that it has failed to discharge the debts. The statutory notice has been duly replied and payment made to M/s. Tilak Nagar Industries Limited was neither treated as a debt of the respondent company nor was it an understanding that same would constitute a debt by the respondent company capable of being repaid. But on the other hand payment was made in compliance of the terms of the agreement dated 29.08.2010 as additional consideration for purchase of 100% stake of equity shares from the shareholders. Payment of Rs. 2.50 crores by the petitioner to M/s. Tilak Nagar Industries Limited is....
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....ng judgments: 1. Madhusudan Gordhandas & Co., v. Madhu Woollen Industries (P.) Ltd.,[1972] 42 Comp. Cas. 125 (SC) 2. Vijay Industries v. Natl Technilogies Ltd. [2009] 89 SCL 205 (SC) 6. Per contra, Sri Ravishankar, learned counsel appearing for respondent would contend that the basis on which the winding up of the respondent company is sought for is undisputably traceable to an agreement dated 29.08.2010 whereunder the stake holders of the respondent company had agreed to transfer by sale, the entire paid up share capital of Rs. 50,00,000 equity shares in favour of the petitioners and the amount of Rs. 2.50 crores paid by petitioners to M/s. Tilak Nagar Industries Limited is relatable to the consideration agreed under the agreement dated 29.08.2010 and there is no other independent agreement between petitioner and respondent or there is no other contract between the parties in this regard. He would draw the attention of the court to the agreement produced by the petitioner at Annexure-D to contend that one of the stake holders of the respondent company namely Sri. Manoj Rupani has acknowledged the receipt of demand drafts o....
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.... has made out a case for winding up of the respondent-company under Section 433(e) and (f) read with section 439 of the Companies Act, 1956? OR Whether the defence set up by the respondent company is genuine and a bona fide dispute, to reject the company petition by refusing to grant the prayer sought for by the petitioner?" FACTUAL MATRIX: 8. Petitioners have entered into an agreement dated 29.08.2010 for purchase of entire paid up capital of Rs. 50,00,000 equity shares in respondent-company from Sriyuths Manoj Rikpani, Sidda Reddy, Venkataraghunatina Reddy, M/s. Madira Online Private Limited and M/s. Mahalakshmi Liquor Promoters Private Limited whereunder the petitioners have paid a sum of Rs. 8.5 crores undisputedly. 9. Petitioners contend that respondent company ought to have furnished the financial statements including the list of creditors and debtors of the respondent company and since it was not being furnished despite repeated requests by the petitioners, it had to take out paper publication on 11.12.2011 in Times of India, Newspaper, Bangalore edition by way of public notice to ascertain as to whether there ....
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....e disputed debt. 11. As to whether the debt claimed to be due by the petitioner is a bona fide dispute? and, whether defence set up by the respondent is a substantial one which requires examination is an issue required to be considered at the threshold; as also and whether medium of the company court can be allowed to be triggered to coerce the respondent to pay the disputed amount requires to be examined in the background of the plea put forward by the petitioner company and the defence set up by the respondent company. 12. The Hon'ble Apex Court in the case of IBA Health (I) (P.) Ltd. (supra) has held that if a debt is bona fide disputed, there cannot be 'neglect to pay' within the meaning of Section 434(1)(a) of the Act and if there is no neglect, the deeming provision does not come into play. It has also been held that a duty is cast on the company court to not only look into interest of creditors but also interest of public at large. It has been held as under: "17. The respondent Company in company petition alleged that the appellant had failed to comply with the terms and conditions of the deed of settlement and since no payment was forthcomi....
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.... the compromise deed which calls for detailed investigation of facts and examination of evidence and calls for interpretation of the various terms and conditions of the deed of settlement and the compromise entered into between the parties. A company petition cannot be pursued in respect of contingent debt unless the contingency has happened and it has become actually due. In the absence of any evidence, it is not possible to conclude that M/s. Solutions Protocol Sdn. Bhd. had in fact paid any amount to the appellant company towards commission charges due to the respondent company before the cut off date. A legal notice prior to the institution of the company petition could be served on the company only in respect of a debt (then due) and a company could be wound up only if it was unable to pay its' debts. In this case, there is a bona fide dispute as to whether the amount claimed is presently due and if, at all, it is due, whether the appellant company is liable to pay the sum unless they have received the same from M/s. Solutions Protocol Sdn. Bhd. Where the company has a bona fide dispute, the petitioner cannot be regarded as a creditor of the company for the purposes of winding....
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.... the Court can only exercise its discretion in one way namely by granting the order. These statements can be reconciled on the basis that although the matter is 'a complete and unfettered judicial discretion' the discretion is exercised in accordance with certain established principles, but the principles do not bind the Court in an all or nothing way. In accordance with these principles the creditor has a prima facie right to a winding up order which is subject to certain exceptions." Again, Palmer is quoted, as to the exceptional circumstances under which discretion to wind up would not be exercised:- "(1) " Where the petitioner's debt is less than $200; (2) The debt is bona fide disputed by the company; (3) The company has paid or tendered payment of the petitioner's debt; (4) The winding up is opposed by other creditors; and (5) The company is in the process of being wound up voluntarily." Words of caution against invoking the Court's jurisdiction to pressurize a company are found in the decision of the Supreme Court in Amalgamated Co....
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....uld be granted; a decision whether the defence pleaded is bona fide or honest at the initial stage of a suit, can only be hazardous; but, still, the Court is called upon to apply its judicial mind on this question. Similarly is the situation when, the respondent company is asked to show cause against a winding up order, at the initial stage; the respondent, here, has to show cause as to why the petition filed should not be advertised; such an advertisement has adverse effects on the reputation of a company and therefore, it is given an opportunity to show cause against ordering the advertisement- (vide: The National Conducts (P) Ltd. v. S.S. Arora) Therefore, whenever the respondent company comes forward and sets forth its defence, this Court has to examine the nature of the respective cases pleaded by the parties and if a prima facie case is made out by the petitioner, the respondent should shoulder the onus of disproving it, by showing that its defence is in good faith and one of substance, and it is likely to succeed in point to law.' 14. The Division Bench of this Court in the case of Shakti Prakash Metal Finishers (P.) Ltd. v. Hindustan Machine Tools Ltd. [2002] 35 SCL 370 ....
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....notice have terminated the said agreement and have filed a suit for recovery of money advanced to the tune of Rs. 8,50,00,000/- together with interest and damages in O.S.No.2/2012 on the file of Principal District & Sessions Judge, Chikkaballapur. Copy of the plaint has also been produced as Annexure-H to the present petition. A perusal of the same would indicate that plaintiffs therein i.e., petitioners herein have referred to the said agreement dated 29.08.2010 and all other details pertaining thereto in extenso. In this petition, petitioners are claiming the amount of Rs. 2.50 Crores paid to M/s.Tilak Nagar Industries. Facts relating to the transactions between the respondent and said M/s.Tilak Nagar Industries as well as circumstances under which the petitioners paid Rs. 2.50 Crores to M/s.Tilak Nagar Industries have also been elaborately stated in the petition. In this background, it has to be examined as to whether the transaction which led to payment of Rs. 2.50 Crores by the petitioners to M.s. Tilak Nagar Industries is a separate, independent and distinct contract/ agreement/transaction or it is referable/traceable to the contract dated 29.08.2010. 18. The averments mad....
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....ansaction when examined on the basis of the pleadings and the supporting documents produced thereto, it would emerge as under: (i) On 22.12.2012 by e-mail respondent -company has forwarded the details of its unsecured loans which is admitted by the petitioner in paragraph 10 of the plaint in O.S.No.2/2012. (ii) Petitioner claims that unsecured loans of respondent-company was more than the amount fixed for sale consideration and as such, the petitioners by e-mail sought for documents listed therein for verification as admitted in paragraph 10 of the plaint in O.S.No.2/2012. (iii) Petitioners also admit that by e-mail dated 24.06.2011 they had requested the respondent to furnish accounting entries after discussion was held it was suggested by the petitioners that credit balance in the business associates can be adjusted by accounting all purchases and payments made by M/s. Tilak Nagar Industries routed through their respective heads of account in the respondent-company vide paragraph 12 of the plaint in O.S.No.2/2012. (iv) The above request by the petitioners was followed u....
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....etitioners were unable to fulfil their commitment and default had been committed by them from time to time. As against this claim, petitioners contend that details requisitioned by them relating to the financial transaction of the respondent - company was not being furnished, payments were withheld and they contend that payment of Rs. 2.5 crores to M/s.Tilak Nagar Industries itself acts as a mirror to depict the conduct of the respondent and as such, they have contended that there is no breach of the terms of contract on their part. This Court, would not be in a position to examine these aspects at this stage for the simple reason that petitioners have already filed a suit in O.S.No.2/2012 before the Civil Court and the matter is seized by the said Court. Any observation or finding if given on these contentious issues, it would necessarily prejudice either of the parties. Hence, same is not delved upon and it is left open to be adjudicated in the said suit. 23. Be that as it may. The fact remains that on payment of Rs. 2.5 crores by the petitioners to M/s. Tilak Nagar Industries on behalf of the respondent-company petitioners have obtained endorsement in the agreement dated 29.0....