A single judge dismissed a company petition filed by a creditor seeking the winding up of the respondent company for failure to pay a substantial admitted debt of over one crore rupees despite multiple opportunities to make payments.
The winding up petition was made absolute under Section 433 and 434 of the Companies Act.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY PETITION NO.948 OF 1997
Hindustan Thompson Associates Ltd. ...Petitioners
Versus
Skyline NEPC Ltd. ...Respondents
Mr.Pankaj Sawant i/b M/s.Rustamji & Ginwala
for Petitioners.
Mr.G.R.Kinkhabwala i/b Mulla & Mulla & Craigie
Blunt & Caroe for Respondents.
CORAM: A.M.KHANWILKAR, J.
AUGUST 9, 2005.
P.C.
1. Heard Counsel for the Petitioners.
2. This Petition is filed under Section 433
and 434 of the Companies Act for directing winding
up of the Respondent Company.
3. According to the Petitioners, the
Petitioners undertook advertisement services to the
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group, of which the Respondent Company forms a
part. The advertising services rendered by the
Petitioner included rendering assistance and
guidance for effective advertising and publicity of
the Respondent Company’s products in the media.
Suffice it to observe that the total outstanding
bills payable by the Respondent Company towards the
services rendered by the Petitioners as on 31st
March 1996, according to the Petitioners, was in
the sum of Rs.1,51,25,790/- (Rupees One Crore
Fifty-one Lakhs Twenty-five Thousand Seven Hundred
Ninety). This position was communicated to the
Respondent Company by the Petitioners on May 8,
1996. The communication sent by the Petitioners
has been duly acknowledged by the Respondent
Company. In fact, under the signature and seal of
the Company, the Petitioners have been informed on
behalf of the Respondent Company that the balance
mentioned in the communication sent by the
Petitioners is incorrect. In fact the outstanding
balance showed to the credit of the Petitioners was
little more, to the extent of Rs.1,52,00,482.98
(Rupees One Crore Fifty-two Lakhs Four Hundred
Eighty-two & Paise Ninety-eigth Only) and statement
: 3 :
in support thereof was also enclosed by the
Respondent Company.
4. Inspite of acknowledgement of this
liability, only part amount was received by the
Petitioners. The Petitioners later on, sometime in
August 1996, forwarded a statement of outstanding
bills as on August 1996, which was to the tune of
Rs.1,21,96,489.34 (Rupees One Crore Twenty-one
Lakhs Ninety-six Thousand Four Hundred Eighty-nine
& Paise Thirty-four Only). This statement has been
duly received by the Respondent Company. The
endorsement appearing as cancelled by the
Respondent Company indicate that the same has been
verified and found to be correct by one Mr.A.Rajesh
on 19th August 1996. As substantial amount was
outstanding and was not being received, Petitioners
sent statutory notice on November 20, 1996, calling
upon the Respondent Company to pay the outstanding
amount of Rs.1,13,51,790.59 (Rupees One Crore
Thirteen Lakhs Fifty-one Thousand Seven Hundred
Ninety & Paise Fifty-Nine Only) along with interest
thereon at the rate of 24% per annum. In reply to
the statutory notice, the Respondent Company on
: 4 :
December 23, 1996 has, however, disputed the
liability and asserted that the claim of the
Petitioners is unjust and dishonest. In Para 6 of
the said reply, it is stated that the Respondents
had great faith in the accounts produced by the
Petitioners and had also confirmed the accounts
without verifying the accounts, which are not
supported by original bills and supporting
documents. This stand is taken to get over the
acknowledgment and endorsement appearing in the
statement of accounts at Page 45 Exhibit ‘L’.
There is not even remote suggestion in the reply as
sent to the statutory notice that the person
(Mr.A.Rajesh), who has made the endorsement, was
not the authorised Officer of the Respondent
Company.
5. Be that as it may, as the amount was not
received, Petitioners filed present Petition under
Section 433 and 434 of the Act on 8th October 1997.
The Petition was contested by the Respondents and
the stand taken on behalf of the Respondents was
prima facie found to be incorrect and dishonest, as
can be seen from the reasons recorded in the
: 5 :
decision dated 23rd February 1999. Nevertheless,
this Court granted opportunity to the Respondent
Company to deposit at least the principal amount of
Rs.1,13,51,790.59 (Rupees One Crore Thirteen Lakhs
Fifty-one Thousand Seven Hundred Ninety & Paise
Fifty-nine only) within eight weeks from the date
of the order. Even that opportunity has not been
availed by the Respondent Company.
6. As the Respondent failed to comply with
the conditional order, this Court formally directed
admission of the Petition, to be advertised and
published on 3rd May 1999. In this backdrop, the
present matter has riped for hearing before this
Court.
7. After hearing Counsel for the parties and
perusing the documents accompanying the Petition
and the reply filed by the Respondents, I have no
hesitation in taking the view that this is a fit
case for allowing the Petition in terms of prayer
clauses (a) and (b) of the Petition. This is so,
because the fact that the Petitioners have rendered
services to the Respondent Company from time to
: 6 :
time is not in dispute. The Respondent Company
raised bills for the services so rendered from time
to time. The outstanding claim of the Petitioners
as on 31st March 1996 was stated to be
Rs.1,51,25,790/- (Rupees One Crore Fifty-one Lakhs
Twenty-five Thousand Seven Hundred Ninety). This
position was communicated to the Respondents vide
letter dated May 8, 1996. The Respondents have not
disputed that liability. In fact, has conceded
that the outstanding amount shown in their books of
account to the credit of the Petitioners was
Rs.1,52,00,482.98 (Rupees One Crore Fifty-two Lakhs
Four Hundred Eighty-two & Paise Ninety-eight).
Indeed, thereafter, part payment has been received
by the Petitioners. But as of August 1996, the
outstanding amount according to the Petitioners was
to the extent of Rs.1,21,96,489.34 (Rupees One
Crore Twenty-one Lakhs Ninety-six Thousand Four
Hundred Eighty-nine & Pasie Thirty-four) and which
position was acknowledged and approved at the
instance of the Respondents by one Mr.A.Rajesh, as
is evident from the endorsement appearing on the
statement of outstanding bills Exhibit ‘L’ at page
45.
: 7 :
8. As substantial amount was outstanding,
statutory notice was sent, in reply of which, for
the first time, the Respondent Company disputed the
position reflected in the accounts of the
Petitioners. In the reply sent to the statutory
notice, it is not even remotely mentioned that the
person (Mr.A.Rajesh) who has made endorsement on
the statement of accounts Exhibit ‘L’ was not
authorised to do so. That case is made out by the
Respondents for the first time in the reply
affidavit filed before this Court.
9. The stand taken before this Court to
oppose the present Petition is twofold. Firstly
that there is dispute with regard to the accounts
maintained by the Petitioners. The second
objection is that the Respondents cannot be bound
by the endorsement appearing in Exhibit ‘L’ made by
Mr.A.Rajesh, as he was not authorised person to do
so. In my opinion, both these objections deserve
to be only stated to the rejected.
10. The objections are not at all bonafide.
: 8 :
But only ruse to defeat the claim of the
Petitioners. The Respondent is not in a position
to dispute the acknowledgement appearing on
document Exhibit C which is under the signature and
seal of the Company dated 19th June 2006, which in
fact, concedes the position that the Company was
liable to pay sum of Rs.1,52,00,482.98 (Rupees One
Crore Fifty-two Lakhs Four Hundred Eighty-two and
Paise Ninety-eight) to the Petitioners as on 31st
March 2005. The objection now raised on behalf of
the Respondents that Mr.A.Rajesh was not authorised
person to acknowledge the account, is only an
argument of desperation.
11. Be that as it may, it is obvious from the
record that the Respondent Company was offered
opportunity to pay at least the principal
outstanding amount of Rs.1,13,51,790.59 (Rupees One
Crore Thirteen Lakhs Fifty-one Thouand Seven
Hundred Ninety & Paise Fifty-nine), no payment has
been made since February 1999 by the Respondent
Company. In other words, the legal presumption
arising against the Respondent Company that it is
unable to pay its debt has remained unrebutted.
: 9 :
The claim of the Petitioners against the Respondent
Company, far exceeds sum of Rs.500/- (Rupees Five
Hundred) as is the requirement under Section 433
and 434 of the Companies Act for making order of
winding up of the Respondent Company. Besides, I
am informed across the bar by the Counsel for the
Petitioners, of which, judicial notice can be taken
that the Respondent Company has stopped operating
flights since long. Initially, the Respondent
Company was operating flights in the name of Damani
Airways later on in the name of Skyline NEPC Ltd.
However, those flights are not operated for quite
sometime. In addition, there is another Petition
pending before this Court against the Respondent
Company being Company Petition No.449 of 1999, in
which, claim against the Respondent Company is to
the tune of Two Lakh U.S. dollars. Taking any
view of the matter, this Petition ought to succeed.
12. In the circumstances, Petition is made
absolute in terms of prayer clauses (a) and (b).
A.M.KHANWILKAR, J.
3 issues framed by the court
Whether the petition for winding up of the respondent company is maintainable given the admission of debt and failure to pay.
Whether the respondent company is unable to pay its debts on a substantial part of its assets.
Whether the alleged unauthorized nature of the endorsement on Exhibit 'L' can defeat the established liability.
1 provisions across 1 enactments
Hindustan Thompson Associates Ltd.
Skyline NEPC Ltd.
A.M.KHANWILKAR
As recorded by the court registry
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