This judgment upholds the High Court's order winding up the appellant company, finding it commercially insolvent despite its alleged assets. The court dismissed appeals against the impugned judgment, noting lack of bona fides and failure to provide a prima facie case against the creditors' claims.
No costs to the respondents.
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 KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
FRIDAY, THE 16TH DAY OF OCTOBER 2020 / 24TH ASWINA, 1942
Co.Appeal.No.8 OF 2014
AGAINST THE JUDGMENT DATED 21-05-2014 IN CP 2/2012 OF HIGH COURT OF KERALA
APPELLANT/RESPONDENT IN C.P.:-
M/S.TRANSWORLD HIRE PURCHASE INDIA LTD HAVING ITS REGISTERED OFFICE AT TRANSWORLD TOWERS, BUSINESS LANE, KOLLAM-691 001, REPRESENTED BY ITS MANAGING DIRECTOR, M.K.SUNDARAN PILLAI.
BY ADVS. SRI.P.CHANDRASEKHAR SRI.SOORAJ T.ELENJICKAL
RESPONDENTS/PETITIONERS IN C.P.:
1 JOY C. MIDHUNAM, VALIYAVILAYIL, KOVOOR, ARINALLOOR P.O., KOLLAM.
2 ASHA ABRAHAM
D/O.JOY.C., MIDHUNAM, VALIYAVILAYIL, KOVOOR, ARINALLOOR P.O., KOLLAM.
Company Appeal Nos. 8, 9 & 10 of 2014 -2-
BY ADV. SRI.N.VIMALAN
THIS COMPANY APPEAL HAVING BEEN FINALLY HEARD ON 30.09.2020, ALONG WITH Co.Appeal.9/2014, Co.Appeal.10/2014, THE COURT ON 16.10.2020 DELIVERED THE FOLLOWING:
Company Appeal Nos. 8, 9 & 10 of 2014 -3-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
FRIDAY, THE 16TH DAY OF OCTOBER 2020 / 24TH ASWINA, 1942
Co.Appeal.No.9 OF 2014 IN Co.Pet. 40/2011
AGAINST THE JUDGMENT DATED 21-05-2014 IN CP 40/2011 OF HIGH COURT OF KERALA
APPELLANT/RESPONDENT IN C.P.:
M/S. TRANSWORLD HIRE PURCHASE INDIA LTD. HAVING ITS REGISTERED OFFICE AT TRANSWORLD TOWERS, BUSINESS LANE, KOLLAM-691001, REPRESENTED BY ITS MANAGING DIRECTOR, M.K.SUNDARAN PILLAI.
BY ADVS. SRI.P.CHANDRASEKHAR SRI.SOORAJ T.ELENJICKAL
RESPONDENTS/PETITIONERS IN C.P.:
1 ANWAR SAJITH AGED ABOUT 43 YEARS, S/O.ABDUL RASHEED, RESIDING AT FLAT NO.8A, WHITE WATERS, P.K.ROAD, THEVARA, ERNAKULAM.
2 SAJEENA FAIZAL W/O.M.H.FAIZAL, AGED 39 YEARS, RESIDING AT SAJITHALAYAM, MADAVANA P.O., KODUNGALLOOR.
THIS COMPANY APPEAL HAVING BEEN FINALLY HEARD ON 30.09.2020, ALONG WITH Co.Appeal.8/2014, Co.Appeal.10/2014, THE COURT ON 16.10.2020 DELIVERED THE FOLLOWING:
Company Appeal Nos. 8, 9 & 10 of 2014 -4-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
FRIDAY, THE 16TH DAY OF OCTOBER 2020 / 24TH ASWINA, 1942
Co.Appeal.No.10 OF 2014 IN Co.Pet. 55/2011
AGAINST THE JUDGMENT DATED 21-05-2014 IN CP 55/2011 OF HIGH COURT OF KERALA
APPELLANT/RESPONDENT IN C.P.:
M/S.TRANSWORLD HIRE PURCHASE INDIA LIMITED HAVING ITS REGISTERED OFFICE AT TRANSWORLD TOWERS, BUSINESS LANE, KOLLAM-691 001, REPRESENTED BY ITS MANAGING DIRECTOR, M.K.SUNDARAN PILLAI.
BY ADVS. SRI.P.CHANDRASEKHAR SRI.SOORAJ T.ELENJICKAL
RESPONDENTS/PETITIONERS IN C.P.:
1 A.VICTOR V.VILLA, 173, SARAVAN NAGAR, ERAVIPURAM, KOLLAM DISTRICT.
2 MERCY VICTOR V.VILLA, 173, SARAVAN NAGAR, ERAVIPURAM, KOLLAM DISTRICT.
BY ADV. SRI.B.KRISHNA MANI
THIS COMPANY APPEAL HAVING BEEN FINALLY HEARD ON 30.09.2020, ALONG WITH Co.Appeal.8/2014, Co.Appeal.9/2014, THE COURT ON 16.10.2020 DELIVERED THE FOLLOWING:
Company Appeal Nos. 8, 9 & 10 of 2014 -5-
J U D G M E N T
Haripal, J.
These are appeals preferred under Section 483 of the Companies Act, 1956, hereinafter referred to as 'the Act', read with Section 5 of the High Court Act, challenging the correctness of the judgment passed by the learned Single Judge in Company Petition Nos.2/2012, 40/2011 and 55/2011 respectively. Appellant is the respondent in all the petitions. As common questions are involved and since the company petitions were disposed of together by the impugned judgment, these matters were heard together and are being disposed of by this common judgment.
Company Appeal Nos. 8, 9 & 10 of 2014 -6-
due to the creditors and thus they wanted the company to be wound up.
has become commercially insolvent and thus the substratism of the company has been eroded, that it is unable to pay off its debts due to the creditors. They have also annexed copy of receipts proving investment of various amounts as claimed by the petitioners and also copy of the lawyer notice, postal receipt and copy of the envelope addressed to the appellant showing that it was returned to the lawyer with the endorsement that the office of the company remained locked.
Company Appeal Nos. 8, 9 & 10 of 2014 -7-
stating among other things that only seven creditors have joined the petition. According to him, the amount alleged to be due to them is not correct, details shown in the deposit receipts, Annexures A to M are not supported by documents, that the claim is frivolous and not based on any substance, that he did not receive any notice as Annexure N that the petition is bad for the mandatory requirement under Section 434(1)(e) (sic) of the Act. It was also stated that the company has sufficient asset such as immovable properties situated in prime locations and it is making earnest efforts to dispose of the property and raise funds, in the meantime, if winding up is ordered, that would adversely affect the interest of creditors. According to him, the petitioners did not make out a prima facie case. In the penultimate paragraph, he prayed for dismissing the company petition and in the alternative, to provide sufficient time to the company for at least one year for raising funds for clearing the liabilities, till such time winding up may not be ordered. The counter affidavit was filed on 01.01.2013.
Company Appeal Nos. 8, 9 & 10 of 2014 -8-
after 36 months with 12% interest. Through Annexure C notice though they had demanded back the amount, the notice returned with the endorsement that the company remains closed, the notice was unclaimed and thus returned to the sender.
Company Appeal Nos. 8, 9 & 10 of 2014 -9-
premise, it was ordered to be wound up and the Official Liquidator was appointed for taking over the assets. The appeals were filed against the said judgment dated 21.05.2014. The appeals were filed with applications for condoning the delay. The delay was condoned on 13.02.2019.
counter affidavit filed in Company Petition No.2/2012 he had denied the allegation in the petition that so much amount was due to the petitioners. Still the Court did not take the denial seriously and was proceeding to dispose of the matter without affording him opportunity to substantiate his case. The Court was not justified in presuming the correctness of the claims made by the petitioners in all the petitions. In the light of the contentions in the counter affidavit, the Court ought to have looked into the correctness of the claims made by the petitioners. The learned counsel also urged that though the company had suffered some set back during a period of time, it is not correct to say that it has become insolvent or unable to repay the debts. It has solid assets to its credit, the Directors have not mis-utilised the income of the
company, the company has large number of fixed assets like landed
Company Appeal Nos. 8, 9 & 10 of 2014 -10-
properties, only thing is that they should be given breathing time to dispose of the properties and to repay the amount, if any, due to the creditors. But without affording opportunity to hear the case, the learned Single Judge was proceeding to wind up the company which is an extreme step, which has caused considerable hardship to the appellant.
Company Appeal Nos. 8, 9 & 10 of 2014 -11-
had left without instructions. Copy of 13 documents were also annexed to the petition. To these specific allegations, as mentioned earlier, the appellant filed a counter affidavit in an evasive and hedging manner that the amount alleged to be due is not correct, that the details shown in deposit receipts marked as Annexures A to M are not supported by documents, that the claim is frivolous and not based on any substance etc. In other words, he has not categorically denied the receipt of so much money, Rs.15 lakhs, referred in the claim. It is not known as to what he had meant by averring that 'Annexures A to M were not supported with any document'. Those are copy of fixed deposit receipts shown issued by the appellant proving receipt of money from the depositors. Similarly, the appellant did not file any counter affidavit in the other two company petitions, though the counsel had entered appearance for him.
Company Appeal Nos. 8, 9 & 10 of 2014 -12-
numerous aspects. Firstly, against the specific allegation of deposits having made, the company has not given any specific denial, instead evasive averments are made in the counter affidavit. It is trite that when there is no specific denial against the assertions made by the creditors, it implies admission. (See: Lohia Properties (P) Ltd. Tinsukia, Dibrugarh Assam v. Atmaram Kumar [JT 1993 (5) S.C.223] and M. Venkataramana Hebbar (D) By L.Rs v. M. Rajagopal Hebbar & others [JT 2007(6) SC 164] ). Secondly, all these company petitions were filed after sending registered notices under Section 434(1) of the Act, addressed to the registered office of the Company. But all the notices were returned unserved with the endorsement that the addressee had left the station.
Company Appeal Nos. 8, 9 & 10 of 2014 -13-
how the learned Single Judge made the observation that the hope nursed by the appellant on the revival of the business was without any bonafides.
Company Appeal Nos. 8, 9 & 10 of 2014 -14-
Dismissed. No costs.
Sd/-
C.T. RAVIKUMAR, JUDGE
Sd/-
K.HARIPAL, JUDGE
DCS/12.10.2020
Company Appeal Nos. 8, 9 & 10 of 2014 -15-
APPENDIX IN CO.APPEAL NO.8/2014
APPELLANT'S/S ANNEXURE:
ANNEXURE- A1:TRUE COPY OF THE AGREEMENT DATED 08.08.2014 SIGNED BY THE MANAGING DIRECTOR OF THE COMPANY WITH ONE NIYAS MAHIN
Company Appeal Nos. 8, 9 & 10 of 2014 -16-
APPENDIX IN CO.APPEAL NO.9/2014
APPELLANT'S/S ANNEXURE:
ANNEXURE- A1:TRUE COPY OF THE AGREEMENT DATED 08.08.2014 SIGNED BY THE MANAGING DIRECTOR OF THE COMPANY WITH ONE NIYAS MAHIN
Company Appeal Nos. 8, 9 & 10 of 2014 -17-
APPENDIX IN CO.APPEAL NO.10/2014
APPELLANT'S/S ANNEXURE:
ANNEXURE- A1:TRUE COPY OF THE AGREEMENT DATED 08.08.2014 SIGNED BY THE MANAGING DIRECTOR OF THE COMPANY WITH ONE NIYAS MAHIN
3 issues framed by the court
Whether the High Court can interfere with the Single Judge's finding that the company was commercially insolvent.
Whether the appellant's admission via failure to specifically deny deposit claims justifies the winding-up order.
Whether the lack of bona fides in the appellant's conduct to repay debts warrants dismissal of the appeal.
Colour shows how this judgement treated each authority
Lohia Properties (P) Ltd. v. Atmaram KumarExplained¶87
Lohia Properties (P) Ltd., Tinsukia, Dibrugarh Assam v. Atmaram Kumar [JT 1993 (5) S.C.223] · Who else cites this
M. Venkataramana Hebbar (D) v. M. Rajagopal HebbarExplained¶87
M. Venkataramana Hebbar (D) By L.Rs v. M. Rajagopal Hebbar & others [JT 2007(6) SC 164] · Who else cites this
4 provisions across 2 enactments
M/S. Transworld Hire Purchase India Ltd.
Joy C. Midhunam
Asha Abraham
B. Vijayan Pillai Revathy
Aswathy G.R. Neelakandam
R. Gopalakrishna Pillai
C.T. RAVIKUMAR
K. HARIPAL
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
