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2015 (10) TMI 411
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.... award has become final and the respondent has failed to satisfy it, despite the statutory notice. The learned counsel also contended that the objections, raised by the respondent in their reply notice, are untenable and the claim, with regard to another contract, has to be proved by initiating new and separate arbitration proceedings, which has not been done by the respondent till date and in any case, the same cannot be a reason to defeat the claim based on a decree. The learned counsel also contended that the respondent Company is unable to clear its liabilities and the defence of counter claim is only an afterthought. The learned counsel also contended that once the award against the respondent has become final and held to be enforceable, it is open to the Petitioner to exercise all the remedies available under the law to secure the payment. The learned counsel also contended that the respondent cannot now assail the award after the same has attained finality. The learned counsel also placed reliance upon the following judgements and pleaded for winding up of the Respondent Company:- 1. AIR 1961 Cal 439 (Sarkar Estates (P) Limited Vs. Kusumika Iron Works (P) Limited and othe....
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.... AIR 1966 SC 1707 (Harinagar Sugar Mills Limited Vs. M.W.Pradhan) relied on by the learned counsel for the Petitioner, it is held as under:- "Under this order, all the necessary powers under O.XL, R.1, of the Code of Civil Procedure were conferred upon the Receiver, including the right to file suits. Assuming that a petition for winding up of a company is not a suit within the meaning of O.XL, R.1(d) of the said Code, the other powers mentioned therein are comprehensive enough to enable the Receiver to take necessary proceedings to realise the property of and debts due to the joint family. Can it be said that the petition filed by the Receiver for winding up of the Company is not a mode of realisation of the debt due to the joint family from the Company? In Palmer's Company Precedents, Part 11, 1960 Edn., at P.25, the following passage appears:- "A winding up petition is a perfectly proper remedy for enforcing payment of a just debt. It is the mode of execution, which the Court gives to a creditor against a company unable to pay its debts." This view is supported by the decisions in Bowes v. Hope Life Insurance and Guarantee Co., Re General Company for Promotion of Land C....
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....f three weeks thereafter. As against this, Section 434(1)(b) states that if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part, the company shall be deemed to be unable to pay its debts. The question for consideration, therefore, is whether, simply because a creditor has instituted a suit against a company and obtained a decree, he has no remedy under Section 434(1)(a) and he has to confine his remedy only under Section 434(1)(b) of the Act. We are of the opinion that there is no such mutually exclusive dichotomy between Section 434(1)(a) and Section 434(1)(b) of the Act. From the very language of Section 434(1)(b), it may be stated that it does not even contemplate a money decree or order for payment of money and it generally uses the expression "if execution or other process issued on a decree or order of any court in favour of a creditor of the company". Therefore, the decree or order, that is contemplated by Section 434(1)(b), is not confined only to a money decree or an order for payment of money. On the other hand, it is general in nature. However, what we have to concentrate o....
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....out any merits. Clauses (a) and (b) provide two alternative methods of showing that the company is unable to pay its debts. A creditor does not cease to be a creditor, if he obtains a decree in his favour against the company. Clause (a) becomes applicable when a creditor has served on the company a demand under his hand requiring it to pay the sum due and the company has neglected to pay the same. The provision, in Clause (b) that if the creditor has a decree of a court in his favour and the execution is returned unsatisfied in whole or in part, the company shall be deemed to be unable to pay its debts, does not mean that the effect of Clause (a) is negatived in the case of a decree-holder creditor. The object of the two clauses is the same, that is, to show that the company concerned is unable to pay its debts. Action can be taken under either of them." 8. Thus, it will be seen that the view taken by the learned judge of the Delhi High Court is on the same lines as we ourselves have taken in the present case." 10. In yet another decision reported in 2014 183 CC 395 (Bom) (Intesa Sanpaolo SPA Vs. Videocon Industries Limited), relied on by the learned counsel for the Petitione....
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....ecision of the learned Single Judge of this court in case of China Shipping Development Company Ltd. Vs. Lanyard Foods Limited. In this case, the respondent had, pursuant to the contract of affreightment, had executed four letters of indemnity. The indemnity bonds executed by the Respondent indemnified the Petitioner in respect of loss, damages, expenses that the Petitioner would suffer. The Petitioner delivered the cargo in compliance with the request made by the Respondent. The Petitioner therein gave a notice under Section 433 and 434 of the Companies Act, calling upon the Respondent to pay the amount due under the judgement of the Court in England and thereafter the petition for winding-up was filed. A defence was sought to be urged that the notice is based on a decree of English Court and not on indemnity and the decision of the English Court does not fulfill the requirement of Section 13 of the Code of Civil Procedure and that the petition for winding-up is not moved for execution of decree. The learned Single Judge accepted the locus of the Petitioner as a creditor of the Company. The learned Single Judge did not refuse to entertain the petition on the ground that the Petiti....
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.... the plaintiff, but thereby, it cannot be said that there is no foreign judgement against the Respondent Company. After having being served the statutory notice by the Petitioner, nothing prevented the Respondent Company for filing the suit for a declaration that the decree is not binding, but such an option available has not been exercised. Further, when there is a decree/judgement of a foreign Court for fastening the liability, it cannot be prima facie said that their would not be any liability at all of the Respondent. In any case, the aspects of non-enforceability may be required to be considered in execution proceedings, if resorted to, but such cannot be a sole ground to deny the entertainment of the petition for winding up of the Company, on the basis of such liability. The reference may be made to the decision of the Andhra Pradesh High Court in the case of Enernorth Industries Inc. Vs. VBC Ferro Alloys Ltd. reported at [2006]133 Comp Case 130 (AP), more particularly, the observations made at para 34 and 35 that merely because the other modes are available, it cannot be said that the petition for winding up is not maintainable. The learned Single Judge accordingly procee....
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....the winding up proceedings of the Company in the country where it is incorporated." Though these observations were made interpreting the Companies Act, 1913, there is no change in the position under the 1956 Act, that any creditor is entitled to bring a petition for winding up. What this decision indicates is that irrespective of status of the creditor a distinction amongst them is not warranted. 46. If a creditor, with or without a decree of an Indian Court, can file a petition for winding up based upon a original cause of action, pending the suit and after decree, there is no warrant to deprive a creditor with a decree of foreign Court to present a petition for winding up, independently of the decree, in the Company court having jurisdiction. The Companies Act does not contemplate such exclusion. To deprive a creditor with a decree of foreign court of this statutory right, will also not be in larger public interest. If a foreign creditor with decree of foreign Court is barred from presenting a petition for winding up on the original course of action and till the decree by Indian Court is passed in its favour, it will make a distinction between two classes of creditors. This....
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....d as no appeal is pending against the order in O.P.No.56/2014 and therefore, the award has become final and enforceable. As per Section 49 of the Arbitration and Conciliation Act, once the court finds that the foreign award is enforceable, the award shall be deemed to be a decree of that court. Therefore, the Petitioner is deemed to have obtained a decree from this court. As this court has already held that the decree holder would still continue to be creditor, this petition for winding up is maintainable. This court is also of the view that any leave or permission need not to be obtained when the right is conferred by law. Therefore, the contention of the learned senior counsel for the rtthat the decree in O.P.No.56/2014 only permits the Petitioner to file an execution petition is also rejected. 15. Now coming to next issue, the learned senior counsel for the Respondent has contended that the respondent has a claim against the petitioner with respect to another contract and has relied upon numerous e-mail communications between the parties from 2008 onwards. The learned senior counsel Senior has relied upon the judgement reported in 2010 (10) SCC 553 cited supra, wherein the Ho....
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....r pressure on the company to pay a bona fide disputed debt. Of late, we have seen several instances, where the jurisdiction of the Company Court is being abused by filing winding up petitions to pressurize the companies to pay the debts which are substantially disputed and the Courts are very casual in issuing notices and ordering publication in the newspapers which may attract adverse publicity. Remember, an action may lie in appropriate Court in respect of the injury to reputation caused by maliciously and unreasonably commencing liquidation proceedings against a company and later dismissed when a proper defence is made out on substantial grounds. A creditor's winding up petition implies insolvency and is likely to damage the company's creditworthiness or its financial standing with its creditors or customers and even among the public. Public Policy Considerations:- 34. A creditor's winding up petition, in certain situations, implies insolvency or financial position with other creditors, banking institutions, customers and so on. Publication in the Newspaper of the filing of winding up petition may damage the creditworthiness or financial standing of the company....
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....peal is pending, but it is well settled that the mere fact that an appeal is pending does not prevent the judgement debt from being made the foundation of a winding up petition unless stay of execution of the decree is obtained pending the disposal of the appeal. So, this point also appears to be devoid of any substance. " (b) In 2014 183 CC 395 (Bom) (Intesa Sanpaolo SPA Vs. Videocon Industries Limited), it is held as under:- "62. Lastly, it is sought to be argued that the Respondent Company is commercially solvent and on that ground, the court should not exercise its jurisdiction for winding up and also larger public interest be kept in mind. It is submitted that the net profit of the Respondent Company for the period from 1-January-2012 to 3-June-2012 is Rs. 100.43 crores. The revenue generated from consumer durables for last six months ended on 30-June-2012, is Rs. 5,294.324 crores, from crude oil and natural gas it is Rs. 718.39 crores. It is averred in the reply that the Respondent has 335000 shareholders and 78 offices in India, 4 factories and employs around 4500 employees. It has been urged that the Respondent Company is one of the leading Indian Company, having seve....
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.... the Company has the ability, but not the willingness to pay the debt. 18. Section 433 of the Companies Act sets out the circumstances, under which a Company may be wound up by the Court, which are to be quoted hereunder:- "Section 433:- Circumstances, in which Company may be wound up by Court:- A Company may be wound up by the Court:- (a) ... (b) ... c) ... (d) ... (e) if the Company is unable to pay its debts; (f) if the Court is of the opinion that it is just and equitable that the Company should be wound up." 19. Section 434 explains as to when a Company is deemed to be unable to pay its debts as under:- (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 five hundred 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....