Allowed

Asset Reconstructions Com (India ) Ltd. v. Uni-Worth Apparels Ltd.

Bombay HC14 Jan 2011CP/105/2001

Case brief

AI extract

What is this about?

The Court heard a winding up petition originally filed by ICICI Ltd., which was amended when the petitioner became Asset Reconstructions Company. The Court found the respondent company unable to pay its dues, having defaulted on a loan, ceased operations, and faced internal management disputes.

What did the court decide?

The winding up petition made absolute in terms of the prayer clauses; no costs awarded.

Asset Reconstructions Com (India ) Ltd. Vs Uni-Worth… — Company and Corporate | Bombay HC (2011)

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CP105-01

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.105 OF 2001

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Asset Reconstructions Company .. Petitioner Versus Uni-worth Apparels Ltd. .. Respondent

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Mr.Virag Tulzapurkar, Senior Advocate with Dr.Birendra Saraf and Sachin Chandarana i/b. M.K.Ambalal & Co. for petitioner Ms.Priya Ranade i/b. Markand Gandhi & Co. for respondent Dr.T.D.Pandian, O.L. present.

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CORAM : S.C.DHARMADHIKARI, J.

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DATE : 14th January 2011

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P.C.:

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1] Heard Mr.Tulzapurkar, learned Senior Counsel for petitioner

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and learned Counsel for respondent company.

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2] This petition for winding up has been presented by ICICI Ltd.

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3] However, on Company Application No.1211 of 2009 which was

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moved by the present petitioner, an order came to be made on 26th November 2009, permitting amendment and that is how the name of the original petitioner came to be deleted and the name of the present petitioner - applicant in the above Company Application has been substituted.

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4] Mr.Tulzapurkar, learned Senior Counsel submits that in law, after taking over debt of ICICI Bank, the petitioner can proceed with this petition for winding up. He submits that jurisdiction of this Court under section 433(e) read with section 434 has been invoked because the ICICI bank had sanctioned a foreign currency loan, details whereof are set out in paras 5 and 6 of this petition. He further submits that the documents in relation to the loan agreement are undisputed. The company has also created security in favour of the ICICI as set out in para 9 of the petition.

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5] It is stated that the management of the company underwent a change and there was lock out and that is how certain defaults were

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committed in repayment of the loan under the agreement and the facilities. Therefore, a statutory notice dated 10th September 1999 was issued calling upon the company to pay the sums under the said facilities or to secure or compound the same to the satisfaction of petitioners' predecessor. In response to that notice a reply was received from the company which is dated 16th June 2000, a copy of which is at page 362 of paperbook. The company admitted entire liability and pointed out as to why commercial operations/ production was delayed. However, it is pertinent to note that the default was admitted but it was stated that there is some reconstruction plan and if the same is put into operation, the commercial production may start and, thereafter, the company will be in a position to repay the outstanding amount. It was stated that ICICI should not take any drastic steps in public interest and also on account of number of workmen/ employees.

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6] Mr.Tulzapurkar submits that particulars of claim Annexure L page 366 of the paperbook would show that the total sum of Rs.

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35,41,24,123 is due and payable under the facilities mentioned therein.

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7] He submits that when this company petition was placed for admission before this Court, this Court referred to all these aspects and made an order admitting this petition and appointing provisional Liquidator. This Court also recorded a statement of the company that it intends to submit a proposal for settlement. Instead, the company took advantage of the time given by this Court and approached the BIFR. Thereafter, this petition could not be proceeded with. Ultimately, the proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 were concluded and the petition has been placed for final hearing.

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8] Mr.Tulzapurkar has invited my attention to the reply filed by the company to this petition and has submitted that identical stand has been taken as in reply to the statutory notice. There is no denial of the liability nor any dispute raised to the claim. All that was stated was

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that the petitioner's predecessor should have approached the DRT under The Recovery of Dues to Banks and Financial Institution Act, 1993 and particularly under section 17 thereof would over-ride any other prior enactment. It was submitted that the company petition was not, therefore, maintainable. However, according to Mr.Tulzapurkar, even that legal position is clarified now and as far as winding up is concerned, this Court has exclusive jurisdiction and that is uncontroverted. For all these reasons and when it is clear that the company is unable to clear its dues, it is commercially insolvent, there are no business operations and even the sub-stratum has gone and one of the assets of the properties have also been sold, that this is a fit case for passing winding up order of the company.

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9] Learned Counsel appearing for respondent company does not dispute any of the above aspects and facts and submits that the company is unable to pay its debts. In fact, there is no serious opposition from the respondent and it also does not state that the position has undergone any change after the order admitting this

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winding up petition and appointment of provisional Liquidator was passed. Even there are no affidavits other than one filed at initial stage of admission of this petition.

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10] In such circumstances, with the assistance of the learned Counsel I have perused the petition and the annexures thereto so also the reply and the order made at the time of admission of this petition.

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11] I am satisfied from the reading of this material that this is a fit

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case for winding up respondent company. The company has not been able to commence the commercial operations as is admitted in the

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reply to the statutory notice. It has not been able to meet even day to day expenses. The debt of ICICI itself is to the tune of Rs.35 Crores and more. Besides that the business operations have come to stand still and the sub-stratum has virtually disappeared. In such circumstances and when there are internal disputes within the management of the respondent company, this is a fit case where permitting continuation of operations would not be beneficial to the

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Creditors nor will be the same in public interest.

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12] For the reasons that have persuaded the Court to admit this petition which still hold good, this petition is allowed. It is made absolute in terms of prayer clauses (a) and (b). No costs.

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(S.C.DHARMADHIKARI, J)

Asset Reconstructions Com (India ) Ltd. v. Uni-Worth Apparels Ltd.

Case brief

What is this about?

What did the court decide?

Asset Reconstructions Com (India ) Ltd. v. Uni-Worth Apparels Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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