TaxTMI 
TaxTMI 
2018 (1) TMI 503
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....-fund based credit facilities to the extent of Rs. 950 lakhs and foreign exchange ('FOREX', for short) cover limit of Rs. 95 lakhs, with an aggregate limit of Rs. 1100 lakhs. In order to avail these facilities, the respondent executed security documents, including a master credit facility agreement dated 30th October 2007, demand promissory notes for the sum of Rs. 4 crores, Rs. 9.5 crores, Rs. 1.5 crores, Rs. 1.10 crores and Rs. 95 lakhs, letter giving a lien on fixed deposit receipts ('FDRs', for short) of Rs. 60 lakhs and Rs. 95 lakhs and the hypothecation agreement of goods, vehicle, plant and machinery and book debts for Rs. 1100 lakhs. The directors of the respondent Company also executed a deed of guarantee and another deed of corporate guarantee was executed by M/s Prem Softech Pvt. Ltd. Various properties belonging to the company M/s Prem Softech Pvt. Ltd., which is a group company of the respondent, were also mortgaged. From time to time various other securities including reiteration of creation of mortgage, assignments of lease, rentals etc. were executed. 4. The respondent defaulted in its repayments to the appellant and according to the appellant it was unable to pa....
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....cember, 2013. Thereafter, the Division Bench had directed the parties to explore mediation, which failed. The OL had prepared a full inventory of the assets of the company and the OL was directed to hand over the physical possession of the factory premises to the Managing Director of the respondent. Further, maintenance of status quo of title and possession of the properties of the company was also directed. On 17th February 2016, the OL and Registrar of Companies were also directed to rectify the status on the website and delete the reference that the company was facing liquidation. 7. Arguments have been heard in the matter. During the course of arguments some proposals were also exchanged between the parties for exploring settlement, however, the same have not fructified. Thus, the matter has been decided on merits. Appellant's submissions 8. The stand of Mr. Kunal Tandon, Advocate for the Appellant is that the impugned order wrongly records that service of the winding up notice was not properly effected on the Respondent. In support of his submission, he relies upon the winding up notice dated 1st October 2012, courier receipts, speed post receipts, tracking reports, a....
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....ps taken by the bank. Analysis and Findings 12. The facts that emerge from the record, at this stage, are that the appellant has extended various credit facilities to the respondent, which have been availed of by the respondent. It is the position of the appellant that there were several outstanding dues to be paid by the respondent to the appellant. Despite long drawn proceedings, the appellant had been unable to recover its dues from the respondent. Under such circumstances, the appellant had issued the winding up notice dated 1st October, 2012. This notice was addressed by the Solicitors of the appellant to the registered office of the respondent being Khasra No.261/1, Village Ghitorni, New Delhi-110030 (hereinafter `Ghitorni address') as also at the alternate addresses of the respondent at Udhyog Vihar, Gurgaon, MIDC Bhandara, Nagpur, Maharashtra and to four directors of the respondent and one to the guarantee company M/s. Prem Softech Pvt. Ltd. There is no dispute that the Ghitorni address was the registered office of the respondent. The documents which have been placed on record include copies of 8 courier receipts, 8 speed post receipts, which clearly show that the....
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....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. (2) The demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf, or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm." 16. As per clause (e) to Section 433, a company can be wound up if it is unable to pay its debt. Sub-section (1) to Section 433 refers to three different clauses, when a company is deemed to be unable to pay its debt. As per clause (a), a company is deemed to be unable to pay its debt if it neglects to pay the sum exceeding Rs. 1 lac or to secure or compound it to the satisfaction of the creditor, after it is served with a notice demanding the said payment by causing the said notice to be delivered at the registered office by registered post or otherwise. The object behind the provision is that the company, which is a limited liability and a juristic person, must pa....
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.... serve statutory demands. The practical reason for that is that if a statutory demand is served, three weeks have to pass until a winding up petition can be presented. If, after the petition has been presented, a winding up order is made, the winding up is only treated as commencing at the date of the presentation of the petition; thus, if the creditor takes the course of serving a statutory demand, it would be giving the company an extra three weeks' grace in which such assets as the company may have may be dissipated in attempting to keep an insolvent business afloat, or may be absorbed into the security of a debenture holder bank. So there are practical reasons for not allowing extra time, particularly where commercial conditions and competition require promptness in the payment of companies' debts so that the creditor companies can manage their own cash flow and keep their own costs down. ... The first limb is that if a debt is due and an invoice sent and the debt is not disputed, then the failure of the debtor company to pay the debt is itself evidence of inability to pay." 34. That apart, in the present case, it has been averred in the Company Petition th....
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....eld as under:- "13. It is clear from Section 27 of the General Clauses Act, 1897 and Section 114 of the Evidence Act, 1872, that once notice is sent by registered post by correctly addressing to the drawer of the cheque, the service of notice is deemed to have been effected. Then requirements under proviso (b) of Section 138 stand complied, if notice is sent in the prescribed manner. However, the drawer is at liberty to rebut this presumption. 14. It is well settled that interpretation of a statue should be based on the object which the intended legislation sought to achieve." In this judgment, reference was also made to Jagdish Singh v. Natthu Singh, (1992) 1 SCC 647 and V. Raja Kumari v. P. Subbarama Naidu, (2004) 8 SCC 774. 19. Thus, the notice under Section 434 has to be served on the company "by causing it to be delivered at its registered office by registered post or otherwise". The term "causing it to be delivered" has been interpreted in several judgements. In Kotak Mahindra Bank (supra), this Court had the occasion to deal with a case where the registered office of the company was lying closed as the operation of the company was shut down on account o....