Allowed

M/S.Sundeep Polymers(P) Ltd. v. M/S.Bhansali Eng.Polymers Ltd.

Bombay HC28 Aug 2013CA/160/2015

Case brief

AI extract

What is this about?

The Court allowed the winding-up petition of the Respondent company for failing to pay debt. The Court held that the SICA bar was inapplicable as the BIFR reference was rejected as not maintainable due to the Respondent's lack of cooperation, and the Respondent failed to offer any substantive defense to the debt.

What did the court decide?

Company Petition allowed; Company Application dismissed; Stay granted for 4 weeks.

M/S.Sundeep Polymers(P) Ltd. Vs M/S.Bhansali… — Company and Corporate | Bombay HC (2013)

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1 of 9 CP.376.2012

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY PETITION NO.376 OF 2002 WITH COMPANY APPLICATION (L) NO.386 OF 2013

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Bhansali Engineering Polymers Limited Petitioner versus

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M/s.Sundeep Polymers Pvt.Ltd.

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Respondent

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Ms.Rita S. Panjwani for Petitioner.

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Mr.B.N.Shukla with Mr.Deepak Shukla i/by B.N.Shukla & Co. for Respondent.

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CORAM : N.M.JAMDAR, J.

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DATE : 28 August 2013

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PC :

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The company petition is placed on board for hearing. The petition seeks winding-up of the Respondent M/s.Sundeep Polymers Pvt.Ltd. A company application is taken out by the Respondent with a prayer that the company petition be dismissed as barred under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. Both the company petition and the company application are taken up together for hearing.

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The Respondent company is incorporated under Companies Act, 1956 (`the Act'). It has authorized share capital of Rs.3.00 crores divided into three lakhs equity shares of Rs.100/- each. The main

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2 of 9 CP.376.2012

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object of the company is business of manufacturing plastic and other allied processes. The Petitioner supplied certain goods to the Respondent between 28 May 1999 and 31 March 2000 for Rs.17,99,016/-. The Petitioner sent demand notice on 21 August 2001. Since the Respondent company did not pay the amount, the Petitioner issued a statutory notice under Section 434 of the Act. Thereafter the present petition was filed.

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The petition was filed on 20 November 2001. Thereafter in regular course, it was placed before the registry for acceptance. The petition came up on 22 November 2002 before the Court for admission and the following order came to be passed :

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"Shri Bohra states that proceedings before B.I.F.R. is pending.

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In view of above, Petition adjourned to sine die. Company to inform the outcome of proceedings before B.I.F.R. to the otherwise and to this registry."

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Thus, at that time, the Respondent company informed the Court that the proceedings before B.I.F.R. are pending and the matter was adjourned sine-die. The company was to inform the outcome of the proceedings before the B.I.F.R. to the other side and the registry.

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The reference was taken up for hearing before the BIFR on 29 June 2005. At the hearing nobody from the Respondent was present. The Bench of BIFR expressed its displeasure and took serious note of

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3 of 9 CP.376.2012

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the willful absence of the Respondent and directed that the CMD of the company to show cause why the reference should not be rejected. The Bench directed that the company should file reply within fifteen days failing which suitable action as per law would be taken by the Board. The proceedings were again taken up on 5 July 2005 before the Board. The Board noted that the company has not sent any reply to the show cause notice issued by the Board. The Bench noted that no reply was filed and the company was not at all interested in reviving the unit. Accordingly, the Bench came to the conclusion that scope of continuing the enquiry under Section 16 of SICA leading to revival of the company is bleak and rejected the reference as not maintainable.

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Company petition thereafter was taken up on 24 November 2012 for disposal. On 29 October 2012 it was adjourned at the request of the Respondent. Again the matter was adjourned on 1 February 2013 at the request of the Respondent. By an order dated 13 February 2013, it was noted that the matter is pending since 2002 and two weeks time was granted by way of last chance for filing additional affidavit. It was directed that if no additional affidavit was filed, the matter shall proceed on the basis of reply already filed. On 27 February 2013 when the matter was called out, none appeared. The counsel appearing on behalf of the Respondent sought to tender an affidavit and the matter was kept back at 3.00 p.m. when neither the learned counsel for the Respondent nor the Respondent was present. Taking note of the conduct of the Respondent and by way of indulgence, the matter was adjourned and the Respondent was

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4 of 9 CP.376.2012

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directed to pay costs. On 14 March 2013 the representative of the Respondent stated that the Respondent company proposes to change its Advocate. The hearing of the petition was deferred till 28 April 2013. The Court observed that the Respondent company will not be granted any further adjournment on any count and it shall make arrangement of an Advocate before the returnable date.

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Thereafter the matter was placed for admission on 28 June 2013 which was taken up for admission on 28 June 2013. At that time the learned counsel appeared on behalf of the Respondent and addressed the Court. The petition was admitted with following observations :

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" (3) The Company Petition is filed in the year 2002. On 22nd November, 2002 when the matter came up before the court for admission, the Court was informed that the proceedings before B.I.F.R. under the Sick Industrial Companies (Special Provision) Act, 1985 were pending. The court thereupon adjourned the Petition sine die. It is informed by the learned counsel for the petitioner and the learned counsel for the respondent that the proceedings before the B.I.F.R. were dismissed as not maintainable on 1st September, 2005. Thereafter, the petition appeared on board on 24th September, 2012 and again on 29th December, 2012 when it was adjourned at the request of the respondent. Again on 1st February, 2013 the petition was adjourned to 13th February, 2013 at the request of the learned counsel for the respondent. On 13th February, 2013 the petition was adjourned at the request of the respondent by way of last chance. Since inspite of adjourning the matter by way of a last chance, none remained present on behalf of the respondent company. By the order dated 27th February, 2013 the respondent was directed

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5 of 9 CP.376.2012

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to pay cost of Rs.5000/- to the petitioner. Again on 14th March, 2013 the matter was adjourned to 28th March, 2013 at the request of respondent by way of a last chance. Thereafter, the matter has been taken up for admission today.

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(4) The learned counsel for the petitioner submits that, there is absolutely no defence raised by the respondent except bare denial, both by way of reply to the statutory notice and by way of reply to the present petition. The learned counsel submits that the goods were supplied, duly received and no objection what so ever about the quality and quantity of the goods was raised. The learned counsel submits that, it is clear that the petitioner company is unable to pay its debt.

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(5) The learned counsel for the respondent has relied on the reply to the statutory notice as well as reply filed in this petition. He submits that the respondent company is not liable to pay the debt. It is submitted that the petitioner had earlier filed Summary Suit which was withdrawn and, therefore, present winding up Petition should not be entertained.

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(6) I have perused the correspondence annexed to the petition. The petitioner has placed sufficient material on record to demonstrate that the goods supplied to the respondent company was duly received. The reply to the statutory notice only states that they are denying that there is any debt, without any explanation what so ever. The affidavit in reply filed to this petitioner contains only general averments regarding the law and averments of bare denial. No specific stand is taken in the affidavit in reply. The Summary Suits are already withdrawn. The grounds taken by the respondent company in the reply do not disclose any defence must less prima facie defence. The reference before the B.I.F.R. has already been rejected in the year 2005 itself. It appears that the Respondent Company is unable to pay its debt and is not commercial solvent. Case for admission of the petition is made out."

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6 of 9 CP.376.2012

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It was directed that as the company petition is pending since 2002, it shall be placed for hearing on board immediately after all clerical compliances are made. Thereafter the matter is taken up for hearing today. Again today, in the morning session, a request is made for adjournment on the ground that the arguing counsel is unwell. Taking note of the earlier orders passed, the matter was kept back at 3.00 p.m.

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I have heard the learned counsel for the Petitioner and learned counsel for the Respondent. As far as merits of the claim of the Petitioner is concerned, the Petitioner has placed on record the correspondence as regards the liability of the Respondent. It is averred by the Petitioner that the Petitioner had supplied goods to the Respondent as per invoices and debit notes. It is stated that the Respondent accepted its products without any dispute as regards quality and quantity and has refused to pay.

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In the reply affidavit filed, the Respondent has only pleaded legal position and the fact that summary suits filed by the Petitioner have been withdrawn. There is except vague and evasive denials, the case of the Petitioner has not been controverted. Even today, the learned counsel for the Respondent has not addressed the Court on merits but except on one ground that the petition is not maintainable in view of Section 22 of the SICA.

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It is the contention of the Respondent that when the petition

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7 of 9 CP.376.2012

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was accepted, the reference was registered before the B.I.F.R. under the provisions of SICA and, therefore, the petition is not maintainable and, therefore, it should be dismissed. The learned counsel for the Respondent has sought to rely upon the decision of the Apex Court in the case of M.D.Bhoruka Textiles Limited Vs. Kashmiri Rice Industries¹ .

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The learned counsel for the Petitioner, on the other hand, contended that the petition was filed on 20 November 2011. At that time there was no reference made by the Petitioner. The learned counsel submitted that when the matter was placed for admission, this grievance was not made by the Respondent and at the request of the Respondent, the petition was adjourned sine-die. Even at the time of admission of the petition, this submission was not made. The learned counsel for the Petitioner submits that the B.I.F.R. reference was rejected on the ground of it not being maintainable and, therefore, there is no question of the bar of Section 22 of the Act applying.

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Firstly the conduct of the Respondent needs to be noticed and deprecated. When the petition was placed for admission, the Respondent informed the Court that the reference before the B.I.F.R. was instituted. The Court after taking notice of the said fact adjourned the petition sine-die. No contention was advanced at that time that the petition is not maintainable. The only request made was an adjournment of the petition on the ground that the reference before the B.I.F.R. is pending. Even before the B.I.F.R; the Respondent showed no interest in pursuing the matter; so much so that a show 1 AIR-2009-SC (Supp)-1947

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8 of 9 CP.376.2012

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cause notice was issued to the CMD of the Respondent as to why the reference be not rejected for complete non co-operation on the part of the Respondent. Even this show cause notice was not replied. The Bench of BIFR, therefore, dismissed the reference on the ground that it was not maintainable as right from the beginning the Respondent had no chance of revival and had no intentions of reviving itself. Since the reference was dismissed as not maintainable, this order will mean that the reference was deemed to not have been instituted. Thus, there is no question of the petition being dismissed at this stage on the ground that when the petition was accepted, that time the reference was registered on 14 March 2002. In any case, the Petitioner had lodged the petition much before the reference i.e. on 20 November 2001.

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As noted above, during the hearing of the company petition, the Respondent had only sought to delay the hearing on some pretext or the other. On all these dates, no argument is made that the petition was not maintainable. Even otherwise, as noted above, the petition was filed before the reference was made to the B.I.F.R. and that the reference was dismissed on the ground of it not being maintainable.

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The reliance placed on the decision of the Apex Court by the Respondent in the case of M.D.Bhoruka (supra) is misplaced. In this decision the Apex Court has considered the provisions of Section 22 of the SICA and has held that the suit instituted without taking the permission of the Board will not not be maintainable. As narrated above, such are not the facts in the present petition. In the present

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9 of 9 CP.376.2012

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case, the petition for winding-up was lodged on 20 November 2001 and the reference was dismissed as not maintainable. In the circumstances, there is absolutely no defence to the petition. As noted above, the reply is vague and evasive. There is no other point urged than the one urged at the time of admission of the petition except one regarding applicability of SICA, which has been dealt with above. In the circumstances, the petition is required to be allowed.

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Accordingly, the petition is allowed in terms of prayer clauses (a) and (b). Resultantly, Company Application (L) No.386 of 2013 stands dismissed. There shall be no order as to costs.

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At this stage the learned counsel for the Respondent seeks stay of the order. The grant of prayers (a) and (b) is stayed for a period of four weeks from today. The Petitioner, however, will not dispose of its assets or create any liabilities in respect thereof for a period of four weeks from today i.e. till the time the stay of prayers (a) and (b) is in operation.

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(N.M.JAMDAR, J.)

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MST

M/S.Sundeep Polymers(P) Ltd. v. M/S.Bhansali Eng.Polymers Ltd.

Case brief

What is this about?

What did the court decide?

M/S.Sundeep Polymers(P) Ltd. v. M/S.Bhansali Eng.Polymers Ltd.

Case brief

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What did the court decide?

What the court decided

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